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<SEC-DOCUMENT>0001001614-03-000013.txt : 20031219
<SEC-HEADER>0001001614-03-000013.hdr.sgml : 20031219
<ACCEPTANCE-DATETIME>20031219170908
ACCESSION NUMBER:		0001001614-03-000013
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20031218
ITEM INFORMATION:		Acquisition or disposition of assets
FILED AS OF DATE:		20031219

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			TENGASCO INC
		CENTRAL INDEX KEY:			0001001614
		STANDARD INDUSTRIAL CLASSIFICATION:	CRUDE PETROLEUM & NATURAL GAS [1311]
		IRS NUMBER:				870267438
		STATE OF INCORPORATION:			TN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-15555
		FILM NUMBER:		031065899

	BUSINESS ADDRESS:	
		STREET 1:		603 MAIN AVE
		STREET 2:		SUITE 500
		CITY:			KNOXVILLE
		STATE:			TN
		ZIP:			37902
		BUSINESS PHONE:		4235231124

	MAIL ADDRESS:	
		STREET 1:		630 MAIN AVENUE
		STREET 2:		SUITE 500
		CITY:			KNOXVILLE
		STATE:			TN
		ZIP:			37902
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>eightkdec.htm
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<!-- MARKER FORMAT-SHEET="Head Minor Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SECURITIES and
EXCHANGE COMMISSION<br>WASHINGTON, D.C. 20549 </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FORM 8-K </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Current Report
Pursuant to Section 13 or 15(d) of theSecurities <BR>Exchange Act of 1934 </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date of Report (Date
of Earliest Event Reported):<br>December 3, 2003 </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></H1>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Tengasco, Inc.
<BR> (Exact Name of Registrant as specified in its charter) </U></FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Commission File Number<u>
0-20975</u> </FONT></P>

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     <TH COLSPAN=2></TH>
     <TH COLSPAN=2></TH></TR>
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     <TD WIDTH=58% ALIGN=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tennessee</TD>
     <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=35% ALIGN=LEFT>87-0267438</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=center>(State or other jurisdiction of</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>(I.R.S. Employer</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=center>incorporation or organization)</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Identification No.)</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>603 Main Avenue,
Suite 500, Knoxville, Tennessee 37902 </U><br>(Address of Principal
Executive Office)</FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>(865) 523-1124 </U><br>(Registrant&#146;s Telephone number) </FONT></P>



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         Item 2. ACQUISITION OR DISPOSITION OF ASSETS

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;KNOXVILLE,
Tenn., December 19, 2003 &#151; On December 3, 2003, the Board of Directors of Tengasco,
Inc. (AMEX:TGC) authorized management to execute additional promissory notes to
consolidate and extend $1.65 million of existing indebtedness payable to Dolphin Offshore
Partners, LP (&#147;Dolphin&#148;) and to borrow up to $1.7 million in additional funds
from Dolphin.&nbsp; Dolphin is deemed to own approximately 20.1 percent of the common
stock of the Company.&nbsp; Peter E. Salas is the managing partner of Dolphin and is a
director of the Company.&nbsp; The Board&#146;s action authorizes the Company to issue one
or more notes which would consolidate and extend all present indebtedness of $1.65 million
to Dolphin which is secured by a lien upon an undivided 66% of the Company&#146;s interest
in pipeline assets, and to incur an additional $1.7 million of indebtedness for a total
indebtedness to Dolphin, for a total principal amount of up to $3,350,000. The notes are
to bear interest at 12% per annum, and are to be due and payable on April 4, 2004. None of
the notes being consolidated, extended, or issued are convertible into shares of the
Company&#146;s common stock. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If all of the authorized additional
$1.7 million is borrowed, Dolphin would be granted a security interest upon a total
undivided 96.64% interest in the pipeline assets of the Company and its wholly owned
subsidiary, Tengasco Pipeline Corporation (&#147;TPC&#148;) in Tennessee and Kansas and a
pledge of TPC&#146;s common stock.&nbsp; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Board found that the terms from
Dolphin are at least as favorable as may be reasonably expected to be offered by a third
party lender. Moreover, the Board found that since no third party lender has expressed a
willingness to the Company to lend such funds to the Company on the same or more favorable
terms or on any terms, given the Company&#146;s current financial position and dispute
with its primary lender, that the terms of the Company&#146;s borrowings from Dolphin are
fair to the Company. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant to the Board&#146;s
authorization, the Company has executed two promissory notes dated December 3, 2003 in
amount of $225,000 and December 8, 2003 in amount of $250,000 representing a portion of
the additional $1.7 million in authorized borrowings from Dolphin.&nbsp; As a result of
these loans, the Company granted an additional 19% undivided interest in the pipeline
assets as collateral for these two notes, for a total of an 85% undivided security
interest as of the date of this filing.&nbsp; A separate note consolidating and extending
from January 4, 2004 to April 4, 2004 the existing $1.65 principal indebtedness is being
prepared pursuant to the Board&#146;s authorization, but has not yet been signed by the
Company. </FONT></P>


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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 7. Financial
Statements and Exhibits </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following exhibits are filed herewith: </FONT></P>


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               <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
                    <TR VALIGN=TOP>
                    <TD ALIGN=RIGHT WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.42 </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

                     Promissory note dated December 3, 2003 made by Tengasco, Inc. to Dolphin
                    Offshore Partners, LP in the amount of $225,000 </FONT></TD>
                    </TR>
                    </TABLE>
                    <BR>

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                    <TD ALIGN=RIGHT WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.43 </FONT></TD>
                    <TD ALIGN=LEFT WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

                     Promissory note dated December 9, 2003 made by Tengasco, Inc. to Dolphin
                    Offshore Partners, LP in the amount of $250,000 </FONT></TD>
                    </TR>
                    </TABLE>
                    <BR>


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<P ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp; 10.44&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Continuing
Security Agreement dated December 3, 2003 between Tengasco, Inc. and Dolphin Offshore Partners, LP </FONT></P>



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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SIGNATURES </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly
caused and authorized this report to be signed on its behalf by the undersigned. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated: December 19, 2003.,<br>Tengasco, Inc. </FONT></P>









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<TD width=65%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD>
<TD width=35%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By:&nbsp;<u>/s/RICHARD T. WILLIAMS</U><br>Richard T. Williams<br>
Chief Executive Officer</font></td>
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<TYPE>EX-4
<SEQUENCE>2
<FILENAME>securityagreement.htm
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<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CONTINUING SECURITY
AGREEMENT </FONT></H1>

<H1 ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 10.44 </FONT></H1>

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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated: December 3, 2003 </FONT></P>

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<TABLE width=100% BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TD>NAME </TD>
     <TD> NO. AND STREET</TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD>Tengasco, Inc.  </TD>
     <TD>603 Main Avenue, Suite 500</TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD><br><br>CITY, VILLAGE  OR TOWN<br>Knoxville</TD>
     <TD><br><br>COUNTY &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;STATE<br>Tennessee 37902 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(collectively, Obligor) and</TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD><br><br>Dolphin Offshore Partners LP,<br>c/o  Dolphin Asset Management Corp.</TD>
     <TD><br><br>NO. AND STREET  <br>126 East 17th Street</TD>
     <TD><br><br>CITY&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;STATE<br>New York&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;New York
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Secured Party)</TD></TR>
</TABLE>


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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Additional Obligor
information:  </FONT></H1>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tengasco Pipeline
Corporation603 <BR>Main Avenue Suite 500Knoxville,Tennessee <BR>37902 </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Obligors are corporations organized
under the laws of Tennessee. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Obligor&#146;s Tax ID Number (Federal
Employer ID Number or if none, Social Security Number): 87-0267438. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Obligor&#146;s Organization Number:
<U> Control No. 0294055 </U> . (Not necessary if organized in Connecticut, Indiana,
Massachusetts, Michigan, Nebraska, New Hampshire, New York, Oklahoma, South Carolina,
South Dakota, Vermont or West Virginia). </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As used in this
Agreement: </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Collateral</U>&#148;
means all right, title and interest of Obligor in and to any and all of the following
property, whether now or hereafter existing or acquired and wherever located, whether or
not affixed to realty, all products and Proceeds (including but not limited to insurance
proceeds) of such property, wherever located and in whatever form, and all books and
records pertaining to such property and all other property of Obligor in which Secured
Party now or hereafter is granted a security interest pursuant to this Agreement or
otherwise and Products thereof in any form, and all parts, accessories, attachments,
special tools, additions, replacements, substitutions and accessions thereto or therefor
and in all increases or profits received therefrom: </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          A seventy fiver percent (75%) undivided interest in and to Tengasco Pipeline
          Corporation&#146;s right, title, and interest in, to the following property
          rights-of-way, leases (other than the right to produce oil or gas under any
          lease granting pipeline installation and use rights) and/or easements located in
          Hancock County, Hawkins County, and Sullivan County, Tennessee: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[PHASE
I]: That certain steel pipeline main, 6 inches and 8 inches in diameter, as it has been
installed, together with all associated permits, pipeline rights-of-way, and pipeline
installation rights under oil and gas leases (but excluding any rights to produce oil and
gas leases under any oil and gas lease granting such pipeline installation rights), from a
point at the Big Creek Missionary Baptist Church at the intersection of Upper Caney Valley
Road and Big Creek Road in Hancock County, Tennessee, extending generally eastward north
of the Clinch River, boring under the Clinch River and proceeding generally southward
along an existing Tennessee Valley Authority power line easement along and within
rights-of-way thereon, which are incorporated by reference for all purposes but without
limiting the generality of the foregoing description, proceeding further into Hawkins
County, Tennessee, to a point of intersection of the existing installed pipeline with the
distribution system of Hawkins County Gas Utility District, a total distance described in
this paragraph of approximately 26.0 miles; together with </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[PHASE
II]: That certain steel pipeline main 8 inches and 12 inches in diameter as it has been
installed, together with a 4-inch supply line already constructed, with all associated
contracts, permits, agreements, and pipeline rights-of-way, extending from a point of
intersection of the existing installed Phase I pipeline described above with the
distribution system of Hawkins County Gas Utility District and proceeding from that point
generally eastward along rights-of-way along Highway 11W, and proceeding further along and
within the right-of-way of Highway 11W in accordance with the permit granted by Tennessee
Department of Transportation to Tengasco Pipeline Corporation dated April 11, 2000, and
proceeding generally eastwards to a point located on the grounds of Holston Army
Ammunition Plant in accordance with the Tenant Use Agreement between Royal Ordinance North
America, Inc. (now BAE Systems Ordnance Systems, Inc.) and Tengasco Pipeline Corporation
dated June 16, 2000, which agreement is incorporated by reference for all purposes,
proceeding to a point on the grounds of the Holston Army Ammunition Plant known as Mead
Station, proceeding from that point further both as a 4-inch supply line to Holston Area A
and ending at the Area A boilers and as a 12-inch main line generally southward, off the
grounds of Holston Army Ammunition Plant and across rights-of-way to and including
property owned by Eastman Chemical Company, and proceeding to the point of interconnection
with the existing natural gas system owned by Eastman Chemical Company in Kingsport,
Sullivan County, Tennessee, a total distance described in this paragraph of approximately
30.4 miles, together with compressors, valves, stations and metering equipment installed
to effect deliveries through the pipeline together with: </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          An undivided seventy five percent (75%) interest in and to Tengasco, Inc.&#145;s
          existing pipeline system, together with all easements, rights of way, and
          equipment and appurtenances thereunto pertaining, located in Rush County,
          Kansas, consisting of approximately the following: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=20%>&nbsp;</TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Seven
miles of ten-inch diameter steel pipeline; Seven and one-half miles of eight-inch diameter
steel pipeline; Sixty-nine miles of four-inch diameter steel pipeline; Two miles of
two-inch pipeline; Compressor station and equipment thereon including but not limited to 3
No. 342 CAT motors with a JG2 Aerial Compression Unit.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;<U>Collateral
Location</U>&#148; means the following address(es) where all Collateral consisting of
Inventory, Equipment or Fixtures or other tangible property is located: Kingsport,
Sullivan County, Tennessee and Rush County, Kansas. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;<U>Obligor</U>&#148; means the
Obligor named above and its successors and assigns, and if more than one Person is named
as Obligor, &#147;Obligor&#148; shall mean each, any or all of them, and their liabilities
and obligations hereunder shall be joint and several. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
consideration of any extension of credit or other financial accommodation heretofore, now
or hereafter made by Secured Party to or for the account of Obligor, or to or for the
account of any other Person made by Secured Party at the request of Obligor or with
respect to which Obligor&#146;s agreements hereunder have been required by Secured Party,
and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Obligor, Obligor agrees as follows: </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Security Interest.</U> As security for the prompt and unconditional payment
          and performance of any and all Obligations, Obligor does hereby grant to Secured
          Party a continuing lien upon and security interest in, and does hereby pledge,
          assign and transfer to Secured Party, all of the Collateral, it being understood
          and agreed that for additional funds, if any, borrowed by Obligor from Secured
          Party at any time after December 3, 2003 the Collateral shall be considered to
          be the undivided 75% interest in the assets described as Collateral plus an
          additional one percent undivided interest for each additional $25,000 borrowed. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Representations of Obligor</U>. Obligor represents and warrants to Secured
          Party that (a) no financing statement or other filing listing any of the
          Collateral as collateral is on file in any jurisdiction (other than any
          financing statement filed on behalf of Secured Party, as secured party) (b) the
          chief executive office of Obligor, if any, is located at the address set forth
          in the space provided therefor in this Agreement and the state of organization
          of Obligor, if any, is as specified in the space provided therefor in this
          Agreement; (c) all Collateral, other than intangible property and property which
          is in the possession of Secured Party or its agents, is located at the
          Collateral Location(s) and Obligor has no place of business other than the chief
          executive office specified herein, if any, and the Collateral Location(s); (d)
          Obligor has rights in or the power to transfer the Collateral or is the legal
          and beneficial owner of the Collateral and the Collateral is free and clear of
          all Liens, other than the Lien created by this Agreement in favor of Secured
          Party; (e) if Obligor is not a natural person, the execution, delivery and
          performance of this Agreement have been duly authorized by all required
          corporate, limited liability company, partnership or other applicable actions of
          Obligor; (f) this Agreement constitutes a valid, binding and enforceable
          obligation of Obligor; (g) the execution, delivery and performance of this
          Agreement do not violate any law or any agreement or undertaking to which
          Obligor is a party or by which Obligor may be bound and do not result in the
          imposition of any Lien upon any Collateral other than the Lien in favor of
          Secured Party created by this Agreement; (h) all consents, approvals,
          authorizations, permits and licenses necessary for Obligor to enter and perform
          its obligations under this Agreement and the Obligations and/or to conduct its
          business have been obtained; and (i) Obligor did not have or conduct business
          under any name or trade name in any jurisdiction during the past six years other
          than its name and trade names, if any, set forth on the signature page of this
          Agreement, and Obligor is entitled to use such name and trade names. </FONT></P>


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<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Covenants</U>. Unless and until all of the Obligations have been indefeasibly
          paid in full and all commitments of Secured Party to extend credit which, once
          extended, would give rise to Obligations, have expired or been terminated,
          Obligor shall: (a) keep the Collateral free and clear of any Lien of any kind
          other than the Lien created by this Agreement or other Liens in favor of Secured
          Party; (b) promptly pay, when due, all taxes and transportation, storage,
          warehousing and other charges and fees affecting or arising out of the
          Collateral and defend the Collateral against all claims and demands of all
          Persons at any time claiming any interest therein adverse to or the same as that
          of Secured Party; (c) at all times keep all insurable Collateral insured at the
          expense of Obligor to Secured Party&#146;s satisfaction against loss by fire,
          theft and any other risks to which the Collateral may be subject, and cause all
          such policies to be endorsed in favor of Secured Party and to name Secured Party
          as loss payee and as an additional insured, and, if Secured Party so requests,
          deposit the same with Secured Party, and cause all such policies to provide that
          each insurer will give Secured Party not less than 30 days&#146; notice in
          writing prior to the exercise of any right of cancellation; (d) keep the
          Collateral in good condition at all times (normal wear and tear excepted) and
          provide Secured Party with such information as Secured Party may from time to
          time request with respect to the location of the Collateral and Obligor&#146;s
          places of business; (e) give Secured Party at least 30 days&#146; prior written
          notice before changing Obligor&#146;s name or chief executive office or changing
          the location or disposing of any Collateral (other than in connection with the
          sale of any Inventory in the ordinary course of business) or change its state of
          organization; (f) not sell or otherwise dispose of any Collateral except on
          commercially reasonable terms and in the ordinary course of business (it being
          understood that Secured Party does not authorize the sale of any Collateral by
          Obligor free of the security interest of Secured Party granted; (g) permit
          Secured Party, by its officers and agents, to have access to, examine and copy
          at all reasonable times the Collateral, properties, minute books and other
          corporate, limited liability company, or partnership records, books of accounts,
          and financial and other business records of Obligor (including, without
          limitation, all books, records, ledger cards, computer programs, tapes and
          computer disks and diskettes and other property recording, evidencing or
          relating to any Collateral); and (h) promptly notify Secured Party upon the
          occurrence of any Event of Default of which Obligor has knowledge. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Events of Default</U>. The occurrence of any of the following events shall
          constitute an Event of Default: (a) an event of default as defined in the two
          separate Notes dated December 3, 2003 or subsequently dated notes secured by the
          Collateral as amended by and among the Secured Party, and the Obligor has
          occurred and is continuing, or (b) any representation or warranty made herein by
          Obligor or in any document furnished to Secured Party under this Agreement is
          incorrect in any material respect when made, or (c) the Obligor fails to comply
          with any of the terms and conditions of this Security Agreement within the time
          set forth for same or if no time is set forth, within the ten (10) days after
          notice from the Secured Party. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Remedies of Secured Party</U>. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          After the occurrence of an Event of Default, Secured Party shall have no
          obligation to make further loans, extensions of credit or other financial
          accommodations to or on behalf of Obligor, anything in any other agreement to
          the contrary notwithstanding. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          After the occurrence of an Event of Default Secured Party may declare by notice
          to Obligor, any and all Obligations to be immediately due and payable and all of
          the Obligations shall automatically be and become due and payable, without
          presentment, demand, protest or notice of any kind, all of which are hereby
          waived by Obligor, anything in any other agreement to the contrary
          notwithstanding. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          After the occurrence of an Event of Default, Secured Party may, without notice
          to or demand (other than any notice required by law, the giving of which is not
          waivable) upon Obligor (all of which are hereby waived by Obligor), without
          releasing Obligor from any obligation under this Agreement or any other
          instruments or agreements with Secured Party and without waiving any rights
          Secured Party may have or impairing any declaration of default or election to
          cause the Collateral to be sold or any sale proceeding predicated on the same:
          (i) demand, collect or receive upon all or any part of the Collateral and
          assemble or require Obligor, at Obligor&#146;s expense, to assemble all or any
          part of the Collateral and, if Secured Party so requests, Obligor shall assemble
          the Collateral and make it available to Secured Party at a place to be
          designated by Secured Party; (ii) without notice, demand or other process and
          without charge enter any of Obligor&#146;s premises and without breach of peace
          until Secured Party completes the enforcement of its rights in the Collateral,
          take possession of such premises or place custodians in exclusive control
          thereof, remain on such premises and use the same and any of Obligor&#146;s
          equipment for the purpose of completing any work-in-process, preparing any
          Collateral for disposition and disposing of or collecting any Collateral, and in
          exercise of its rights under this Agreement, without payment of compensation of
          any kind, use any and all trademarks, trade styles, trade names, patents, patent
          applications, licenses, franchises and the like to the extent of Obligor&#146;s
          rights therein and Obligor hereby grants a license and the right to grant
          sublicenses for that purpose; (iii) in such manner and to such extent as Secured
          Party may deem necessary to protect the Collateral or the interests, rights,
          powers or duties of Secured Party, enter into and upon any premises of Obligor
          and take and hold possession of all or any part of the Collateral (Obligor
          hereby waiving and releasing any claim for damages in respect of such taking)
          and exclude Obligor and all other Persons from the Collateral, operate and
          manage the Collateral and rent and lease the same, perform such reasonable acts
          of repair or protection as may be reasonably necessary or proper to conserve the
          value of the Collateral, collect any and all income, rents, issues, profits and
          proceeds from the Collateral, the same being hereby assigned and transferred to
          Secured Party, and from time to time apply or accumulate such income, rents,
          issues, profits and proceeds in such order and manner as Secured Party, in its
          sole discretion, shall instruct, it being understood that the collection or
          receipt of income, rents, issues, profits or proceeds from the Collateral after
          declaration of default and election to cause the Collateral to be sold under and
          pursuant to the terms of this Agreement shall not affect or impair any event of
          default or declaration of default under any agreement or instrument between
          Obligor and Secured Party or election to cause any Collateral to be sold or any
          sale proceedings predicated on the same, but such proceedings may be conducted
          and sale effected notwithstanding the collection or receipt of any such income,
          rents, issues, profits and proceeds; (iv) deliver a notice of exclusive control
          under any Control Agreement specifying that Secured Party has the exclusive
          right to give Entitlement Orders with respect to the Investment Property covered
          by such Control Agreement or to otherwise direct the disposition of any Deposit
          Account subject to a Control Agreement or any Electronic Chattel Paper or
          Letter-of-Credit Rights controlled by Secured Party; (v) take control of any and
          all of the Accounts, contractual or other rights that are included in the
          Collateral and Proceeds arising from any such Accounts or contractual or other
          rights, enforce collection, either in the name of Secured Party or in the name
          of Obligor, of any or all of the Accounts, contractual and other rights that are
          included in the Collateral and Proceeds by suit or otherwise, receive, receipt
          for, surrender, release or exchange all or any part of such Collateral or
          compromise, settle, extend or renew (whether or not longer than the original
          period) any indebtedness under such Collateral; (vi) sell all or any part of the
          Collateral at public or private sale at such place or places and at such time or
          times and in such manner and upon such terms, whether for cash or credit, as
          Secured Party in its sole discretion may determine; (vii) endorse in the name of
          Obligor any Instrument, however received by Secured Party, representing
          Collateral or Proceeds of any of the Collateral; (viii) require Obligor to turn
          over, or instruct the financial institutions holding the same to turn over, all
          monies and investments in any of Obligor&#146;s accounts to Secured Party; and
          (viii) exercise all the rights and remedies granted to a secured party under the
          UCC, and all other rights and remedies given to Secured Party under this
          Agreement or any other instrument or agreement or otherwise available at law or
          in equity. Secured Party shall be under no obligation to make any of the
          payments or do any of the acts referred to in this Section 6 or elsewhere in
          this Agreement and any of the actions referred to in this Section 6 or elsewhere
          in this Agreement may be taken regardless of whether any notice of default or
          election to sell has been given under this Agreement (provided, however, that
          all notices required by law, the giving of which may not be waived, shall be
          given in accordance with such law) without regard to the adequacy of the
          security for the Obligations. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Obligor hereby waives notice of the sale of any Collateral by Secured Party
          pursuant to any provision of this Agreement or any applicable provisions of the
          UCC, or other applicable law. In the event that notice of the sale of Collateral
          cannot be waived or Secured Party gives notice of such sale to Obligor, Secured
          Party will give Obligor notice of the time and place of any public sale of the
          Collateral or of the time after which any private sale or any other intended
          disposition thereof is to be made by sending notice, as provided below, at least
          ten days before the time of the sale or disposition, which provisions for notice
          Obligor and Secured Party agree are reasonable. No such notice need be given by
          Secured Party with respect to Collateral which is perishable or threatens to
          decline speedily in value or is of a type customarily sold on a recognized
          market. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Secured Party may apply the net proceeds of any sale, lease or other disposition
          of Collateral, after deducting all costs and expenses of every kind incurred
          thereon or incidental to the retaking, holding, preparing for sale, selling,
          leasing, or the like of the Collateral or in any way relating to the rights of
          Secured Party thereunder, including attorneys&#146; fees and expenses
          hereinafter provided for, to the payment, in whole or in part, in such order as
          Secured Party may elect, of one or more of the Obligations, whether due or not
          due, absolute or contingent, making proper rebate for interest or discount on
          items not then due, and only after so applying such net proceeds and after the
          payment by Secured Party of any other amounts required by any existing or future
          provision of law (including Section 9-615(a)(3) of the Uniform Commercial Code
          of any jurisdiction in which any of the Collateral may at the time be located)
          need Secured Party account for the surplus, if any. Obligor shall remain liable
          to Secured Party for the payment of any deficiency, with interest at the default
          rate provided for in the instruments, if any, evidencing the Obligations, but if
          there is no such instrument with respect to any Obligation or no default rate is
          specified therein, at a variable rate equal to 4% above Secured Party&#146;s
          reference lending rate applicable to domestic commercial loans as established by
          Secured Party from time to time, but in no event shall such rate exceed the
          maximum rate allowed by law. Secured Party may make loans to its customers
          above, at or below its reference rate. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Whether or not an Event of Default shall have occurred, Secured Party may sell
          all or any part of the Collateral, although the Obligations may be contingent or
          unmatured, whenever in its discretion Secured Party considers such sale
          necessary for its protection. Any such sale may be made without prior demand for
          payment on account, margin or additional margin or any other demands whatsoever;
          the making of any such demands shall not establish a course of conduct nor
          constitute a waiver of the right of Secured Party to sell the Collateral as
          herein provided or of the right of Secured Party to accelerate the maturity of
          the Obligations as herein provided. </FONT></P>


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<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Additional Rights of Secured Party and Duties of Obligor Regarding
          Obligations and Collateral</U>. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          If Obligor, as registered holder of any Collateral, shall become entitled to
          receive or does receive any stock or other certificate, option, right, dividend
          or other distribution (whether payable in cash, Investment Property or &#147;in
          kind&#148;), whether in respect of, as an addition to, in substitution of, or in
          exchange for, such Collateral, or otherwise, Obligor agrees to accept same as
          Secured Party&#146;s agent and to hold same in trust for Secured Party, and to
          forthwith deliver the same to Secured Party in the exact form received, with
          Obligor&#146;s endorsement when necessary or requested by Secured Party, to be
          held by Secured Party as Collateral. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Obligor waives protest, demand for payment, notice of default or nonpayment to
          Obligor or any other party liable for or upon any of said Obligations or
          Collateral. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Obligor consents that the obligation of any party upon or of any guarantor,
          surety or indemnitor for, any Obligations or any collateral may, from time to
          time, in whole or in part, be renewed, extended, modified, accelerated,
          compromised, settled or released and that any collateral or Liens for any
          Obligations may, from time to time, in whole or in part, be exchanged, sold,
          released or surrendered, by Secured Party, all without any notice to, or further
          assent by, or any reservation of rights against, Obligor, and all without in any
          way affecting or releasing the liability of Obligor with respect to such
          Obligations or any security interest hereby created. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Secured Party shall not be liable for failure to collect or realize upon the
          Obligations or upon any collateral, or any part thereof, or for any delay in so
          doing, nor shall Secured Party be under any obligation to take any action
          whatsoever with regard thereto. Secured Party shall use reasonable care in the
          custody and preservation of the Collateral in its possession but need not take
          any steps to preserve rights against prior parties or to keep the Collateral
          identifiable. Secured Party shall have no obligation to comply with any
          recording, re-recording, filing, re-filing or other legal requirements necessary
          to establish or maintain the validity, priority or enforceability of, or Secured
          Party&#146;s rights in and to the Collateral or any other collateral or any part
          thereof. Secured Party may exercise any right of Obligor with respect to any
          Collateral. Secured Party shall have no duty to exercise any of the aforesaid
          rights, privileges or options with respect to any collateral and shall not be
          responsible for any failure to do so or delay in so doing. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          In any statutory or non-statutory proceeding affecting Obligor or any
          Collateral, Secured Party or its nominee may, whether or not an Event of Default
          shall have occurred and regardless of the amount of the Obligations, file a
          proof of claim for the full amount of any Collateral and vote such Claim for the
          full amount thereof (i) for or against any proposal or resolution; (ii) for a
          trustee or trustees or for a committee of creditors; and/or (iii) for the
          acceptance or rejection of any proposed arrangement, plan of reorganization,
          wage earners&#146; plan, composition or extension; and Secured Party or its
          nominee may receive any payment or distribution and give acquittance therefor
          and may exchange or release any Collateral. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Whether or not an Event of Default shall have occurred, Secured Party may,
          without notice to or demand upon Obligor, (i) commence, appear in or defend any
          action or proceeding purporting to affect all or any part of the Collateral or
          the interests, rights, powers or duties of Secured Party, whether brought by or
          against Obligor or Secured Party; and/or (ii) pay, purchase, contest or
          compromise any claim, debt, lien, charge or encumbrance which in the judgment of
          Secured Party may affect or appear to affect the Collateral or the interests,
          rights, powers or duties of Secured Party. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Additional Security</U>. If Secured Party shall at any time hold security for
          any Obligations in addition to the Collateral, Secured Party may enforce the
          terms of this Agreement or otherwise realize upon the Collateral, at its option,
          either before or concurrently with the exercise of remedies as to such other
          security or, after a sale is made of such other security, it may apply the
          proceeds upon the Obligations without affecting the status of or waiving any
          right to exhaust all or any other security, including the Collateral, and
          without waiving any breach or default or any right or power whether exercised
          under this Agreement, contained in this Agreement, or provided for in respect of
          any such other security. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Preservation and Protection of Security Interest; Power of Attorney</U>.
          Obligor will faithfully preserve and protect the Lien in the Collateral created
          by this Agreement and will, at its own cost and expense, cause such Lien to be
          perfected and continue to be perfected and to be and remain prior to all other
          Liens, so long as all or any part of the Obligations are outstanding and unpaid,
          and for such purpose Obligor will from time to time at the request of Secured
          Party (i) make notations of the security interest in certificates of title of
          Collateral, a security interest in which is perfected by such notation, and
          deliver the same to Secured Party, (ii) deliver possession of Collateral
          (concurrent with the acquisition of such Collateral) to Secured Party, a
          security interest in which is perfected by the taking of possession or at
          Secured Party&#146;s option, cause each Person in possession of Collateral to
          acknowledge that it is holding the Collateral for the benefit of Secured Party,
          and (iii) file or record, or cause to be filed or recorded, such instruments,
          documents and notices, including financing statements and amendments thereof (in
          jurisdictions in which Secured Party is unable to file financing statements or
          amendments without signature or authentication by Obligor based on the
          authorization to do so contained herein), as Secured Party may reasonably deem
          necessary or advisable from time to time in order to perfect and continue to
          perfect such Liens and to maintain their priority over all other Liens. Obligor
          will do all such other acts and things and will execute and deliver all such
          other instruments and documents, including further security agreements, pledges,
          endorsements, stock powers, assignments, and notices as Secured Party may
          reasonably deem necessary or advisable from time to time in order to perfect and
          preserve the priority of the Liens in the Collateral as contemplated by this
          Agreement. Secured Party, acting through its officers, employees and authorized
          agents, is hereby irrevocably appointed the attorney-in-fact of Obligor to do,
          at Obligor&#146;s expense, all acts and things which Secured Party may
          reasonably deem necessary or advisable to preserve, perfect, continue to perfect
          and/or maintain the priority of such Liens in the Collateral, including the
          signing of financing, continuation or other similar statements and notices on
          behalf of Obligor, and which Obligor is required to do by the terms of this
          Agreement, the registration of any and all Investment Property held by Secured
          Party as Collateral hereunder in the name of Secured Party or its nominee or the
          transfer of same to a Securities Account held in the name of Secured Party or
          its nominee. Obligor hereby authorizes Secured Party to file financing
          statements with respect to the Collateral and any proceeds of the Collateral and
          hereby ratifies and consents to the filing of any such financing statements by
          Secured Party prior to the date this agreement is executed. Obligor shall pay
          all filing fees for financing statements with respect to the Collateral. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Risk of Loss; Insurance</U>. Risk of loss of, damage to or destruction of the
          Collateral is and shall remain upon Obligor. If Obligor fails to obtain and keep
          in force insurance covering the Collateral as required by Section 4 of this
          Agreement, or fails to pay the premiums on such insurance when due, Secured
          Party may, but is not obligated to, do so for the account of Obligor and the
          cost of so doing shall thereupon become an Obligation. Such amounts shall be
          payable by Obligor upon demand by Secured Party and following demand shall bear
          interest at a variable rate equal to 4% above Citibank&#146;s reference lending
          rate applicable to domestic commercial loans as established by Secured Party
          from time to time, but in no event shall such rate exceed the maximum rate
          allowed by law. Secured Party, acting through its officers, employees and
          authorized agents, is hereby irrevocably appointed the attorney-in-fact of
          Obligor to endorse any draft or check that may be payable to Obligor in order to
          collect the proceeds of such insurance or any return or unearned premiums. </FONT></P>


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<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Change in Law</U>. In the event of the passage, after the date of this
          Agreement, of any law which has the effect of changing in any way the laws now
          in force for the taxation of security documents such as this Agreement or debts
          secured by such security documents or the manner of the collection of any such
          taxes so as in any case to affect this Agreement or to impose payment of the
          whole or any portion of any taxes, assessments or other similar charges against
          the Collateral upon Secured Party, the Obligations shall immediately become due
          and payable at the option of Secured Party and upon 30 days&#146; notice to
          Obligor. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Expenses</U>. Obligor hereby agrees to pay any and all expenses incurred by
          Secured Party in enforcing any rights under this Agreement or in defending any
          of its rights to any amounts received hereunder. Without limiting the foregoing,
          Obligor agrees that whenever any attorney is used by Secured Party to obtain
          payment hereunder, to advise it as to its rights, to adjudicate the rights of
          the parties hereunder or for the defense of any of its rights to amounts
          secured, received or to be received hereunder, Secured Party shall be entitled
          to recover all reasonable attorneys&#146; fees and disbursements, court costs
          and all other expenses attributable thereto. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Notices</U>. Each notice or other communication hereunder shall be in
          writing, shall be sent by messenger, by registered or certified first class
          mail, return receipt requested, by Federal Express, Express Mail or other
          recognized overnight delivery service or by facsimile transmitter or tested
          telex (if such facsimile or telex number is noted as provided herein), and shall
          be effective if by hand, upon delivery, if by such overnight delivery service,
          one (1) day after dispatch, and if mailed by first class mail as above-provided,
          five (5) days after mailing, and shall be sent as follows: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
to Obligor, to the address, facsimile or tested telex number set forth below its signature
or such other address, facsimile or tested telex number as it may designate, by written
notice to Secured Party as herein provided or to any other address, facsimile or tested
telex number as may appear in the records of Secured Party as Obligor&#146;s address. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
to Secured Party, to the address that appears on the first page of this Agreement, or such
other address as it may designate, by written notice to Obligor as herein provided. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Additional Definitions</U>. The following terms have the following meanings
          unless otherwise specified herein: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;<U>Agreement</U>&#148; means
this Continuing Security Agreement. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;<U>Secured Party</U>&#148;
means Dolphin Offshore Partners LP, and its successors and assigns, and any Person acting
as agent or nominee for Dolphin Offshore Partners LP and any corporation the stock of
which is owned or controlled directly or indirectly by, or is under common control with,
Dolphin Offshore Partners LP. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;<U>Claims</U>&#148; means each
&#147;claim&#148; as that term is defined under Section 101(5) of the United States
Bankruptcy Code, and any amendments thereto (Title 11, United States Code). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;<U>Event of Default</U>&#148;
means any of the events described in Section 5 of this Agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;<U>Lien</U>&#148; means any
lien, security interest, pledge, hypothecation, encumbrance or other claim in or with
respect to any property. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;<U>Obligations</U>&#148; means
any and all indebtedness, obligations and liabilities of Obligor to Secured Party, and all
Claims of Secured Party against Obligor, now existing or hereafter arising, direct or
indirect (including participations or any interest of Secured Party in indebtedness of
Obligor to others), acquired outright, conditionally, or as collateral security from
another, absolute or contingent, joint or several, secured or unsecured, matured or
unmatured, monetary or non-monetary, arising out of contract or tort, liquidated or
unliquidated, arising by operation of law or otherwise, and all extensions, renewals,
refundings, replacements and modifications of any of the foregoing. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;<U>Person</U>&#148; means any
natural person, corporation, limited liability company, partnership, trust, government or
other association or legal entity. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;<U>Responsible
Parties</U>&#148; includes all Obligors and all makers, endorsors, acceptors, sureties and
guarantors of, and all other parties to, the Obligations or the Collateral. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;<U>UCC</U>&#148; means the
Uniform Commercial Code as in effect from time to time in the State of Tennessee </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Other capitalized terms have the meanings
assigned to those terms by the UCC. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Miscellaneous</U>. This Agreement shall remain in full force and effect and
          shall be binding upon Obligor, its successors and assigns, in accordance with
          its terms, notwithstanding any increase, decrease or change in the partners of
          Obligor, if it should be a partnership, or the merger, consolidation, or
          reorganization of Obligor, if it be a corporation or a limited liability
          company, or any other change concerning the form, structure or substance of any
          such entity. If there is more than one Person named as an Obligor in this
          Agreement, this Agreement shall be binding upon each of Obligors who execute and
          deliver this Agreement to Secured Party even if this Agreement is not executed
          by any other Person or Persons also named as an Obligor herein. Secured Party
          may assign all or a portion of its rights under this Agreement and may deliver
          the Collateral, or any part thereof, to any assignee and such assignee shall
          thereupon become vested with all the powers and rights given to Secured Party in
          respect thereof; and Secured Party shall thereafter be forever relieved and
          discharged from any liability or responsibility in the matter but, with respect
          to any Collateral not so delivered or assigned, Secured Party shall retain all
          powers and rights given to it hereby. The execution and delivery hereafter to
          Secured Party by Obligor of a new security agreement shall not terminate,
          supersede or cancel this Agreement, unless expressly provided therein, and this
          Agreement shall not terminate, supersede or cancel any security agreement
          previously delivered to Secured Party by Obligor, and all rights and remedies of
          Secured Party hereunder or under any security agreement hereafter or heretofore
          executed and delivered to Secured Party by Obligor shall be cumulative and may
          be exercised singly or concurrently. <B>This Agreement may not be changed or
          terminated orally, but only by a writing executed by Obligor and a duly
          authorized officer of Secured Party; <U>provided</U>, that Secured Party is
          authorized to fill in any blank spaces and to otherwise complete this Agreement
          and correct any patent errors herein</B>. Unless Secured Party, in its
          discretion, otherwise agrees, the security interests granted in this Agreement
          shall not terminate until all of the Obligations have been indefeasibly paid in
          full and all commitments of Secured Party to extend credit which, once extended,
          would give rise to Obligations have expired or been terminated. No delay on the
          part of Secured Party in exercising any of its options, powers or rights, or
          partial or single exercise thereof, shall constitute a waiver thereof. No
          modification or waiver of this Agreement or any provision hereof or of any other
          agreement or instrument made or issued in connection herewith or contemplated
          hereby, nor consent to any departure by Obligor therefrom, shall in any event be
          effective, irrespective of any course of dealing between the parties, unless the
          same shall be in a writing executed by a duly authorized officer of Secured
          Party, and then such waiver or consent shall be effective only in the specific
          instance and for the specific purpose for which given. No notice to or demand on
          Obligor in any case shall thereby entitle Obligor to any other or further notice
          or demand in the same, similar or other circumstances. The remedies herein
          provided are cumulative and not exclusive of any other remedies provided at
          equity or by law and all such remedies may be exercised singly or concurrently.
          If any one or more of the provisions contained in this Agreement or any document
          executed in connection herewith shall be invalid, illegal or unenforceable in
          any respect under any applicable law, the validity, legality and enforceability
          of the remaining provisions contained herein shall not (to the full extent
          permitted by law) in any way be affected or impaired. The descriptive headings
          used in this Agreement are for convenience only and shall not be deemed to
          affect the meaning or construction of any provision hereof. The word
          &#147;including&#148; shall be deemed to be followed by the words &#147;without
          limitation.&#148; Obligor waives any and all notice of the acceptance of this
          Agreement by Secured Party, or of the creation, accrual or maturity (whether by
          declaration or otherwise) of any and all Obligations, or of any renewals or
          extensions thereof from time to time, or of Secured Party&#146;s reliance on
          this Agreement. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Governing Law; Consent to Jurisdiction; Service of Process</U>. This
          Agreement shall be governed by and construed in accordance with the laws of the
          State of New York applicable to contracts made and to be performed wholly within
          that state. Obligor hereby consents to the jurisdiction of the courts of the
          State of New York and the courts of the United States of America for the
          Southern District of New York and consents that any action or proceeding
          hereunder may be brought in such courts, and waives any objection that it may
          now or hereafter have to the venue of any such action or proceeding in any such
          court or that such action or proceeding was brought in an inconvenient court and
          agrees not to plead or claim the same; and authorizes the service of process on
          Obligor by registered or certified mail sent to any address authorized in
          Section 15 as an address for the sending of notices. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>RIGHT OF SECURED PARTY TO ARBITRATE DISPUTES</U>. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <B>OBLIGOR AGREES THAT ANY ACTION, DISPUTE, PROCEEDING, CLAIM OR CONTROVERSY
          BETWEEN OR AMONG THE PARTIES WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE
          (&#147;DISPUTE&#148; OR &#147;DISPUTES&#148;) SHALL, AT SECURED PARTY&#146;S
          ELECTION, WHICH ELECTION MAY BE MADE AT ANY TIME PRIOR TO THE COMMENCEMENT OF A
          JUDICIAL PROCEEDING BY SECURED PARTY, OR IN THE EVENT OF A JUDICIAL PROCEEDING
          INSTITUTED BY OBLIGOR, AT ANY TIME PRIOR TO THE LAST DAY TO ANSWER AND/OR
          RESPOND TO A SUMMONS AND/OR COMPLAINT MADE BY OBLIGOR, BE RESOLVED BY
          ARBITRATION IN NEW YORK, NEW YORK IN ACCORDANCE WITH THE PROVISIONS OF THIS
          SECTION 16 AND SHALL, AT THE ELECTION OF SECURED PARTY, INCLUDE ALL DISPUTES
          ARISING OUT OF OR IN CONNECTION WITH (I) THIS AGREEMENT OR ANY RELATED
          AGREEMENTS OR INSTRUMENTS, (II) ALL PAST, PRESENT AND FUTURE AGREEMENTS
          INVOLVING THE PARTIES, (III) ANY TRANSACTION CONTEMPLATED HEREBY AND ALL PAST,
          PRESENT AND FUTURE TRANSACTIONS INVOLVING THE PARTIES AND (IV) ANY ASPECT OF THE
          PAST, PRESENT OR FUTURE RELATIONSHIP OF THE PARTIES. </B>Secured Party may elect
          to require arbitration of any Dispute with Obligor without thereby being
          required to arbitrate all Disputes between Secured Party and Obligor. Any such
          Dispute shall be resolved by binding arbitration in accordance with Article 75
          of the New York Civil Practice Law and Rules and the Commercial Arbitration
          Rules of the American Arbitration Association (&#147;AAA&#148;). In the event of
          any inconsistency between such Rules and these arbitration provisions, these
          provisions shall supersede such Rules. All statutes of limitations which would
          otherwise be applicable shall apply to any arbitration proceeding under this
          subsection 16(a). In any arbitration proceeding subject to these provisions, the
          arbitration panel (the &#147;arbitrator&#148;) is specifically empowered to
          decide (by documents only, or with a hearing, at the arbitrator&#146;s sole
          discretion) pre-hearing motions which are substantially similar to pre-hearing
          motions to dismiss and motions for summary adjudication. In any such arbitration
          proceeding, the arbitrator shall not have the power or authority to award
          punitive damages to any party. Judgment upon the award rendered may be entered
          in any court having jurisdiction. Whenever an arbitration is required, the
          parties shall select an arbitrator in the manner provided in subsection 16(d). </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          No provision of, nor the exercise of any rights under, subsection 16(a) shall
          limit the right of any party (i) to foreclose against any real or personal
          property collateral through judicial foreclosure, by the exercise of a power of
          sale under a deed of trust, mortgage or other security agreement or instrument,
          pursuant to applicable provisions of the UCC, or otherwise pursuant to
          applicable law, (ii) to exercise self help remedies including but not limited to
          setoff and repossession, or (iii) to request and obtain from a court having
          jurisdiction before, during or after the pendency of any arbitration,
          provisional or ancillary remedies and relief including but not limited to
          injunctive or mandatory relief or the appointment of a receiver. The institution
          and maintenance of an action or judicial proceeding for, or pursuit of,
          provisional or ancillary remedies or exercise of self help remedies shall not
          constitute a waiver of the right of Secured Party, even if Secured Party is the
          plaintiff, to submit the Dispute to arbitration if Secured Party would otherwise
          have such right. </FONT></P>


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<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Secured Party may require arbitration of any Dispute(s) concerning the
          lawfulness, unconscionableness, propriety, or reasonableness of any exercise by
          Secured Party of its right to take or dispose of any Collateral or its exercise
          of any other right in connection with Collateral including, without limitation,
          judicial foreclosure, exercising a power of sale under a deed of trust or
          mortgage, obtaining or executing a writ of attachment, taking or disposing of
          property with or without judicial process pursuant to Article 9 of the UCC or
          otherwise as permitted by applicable law, notwithstanding any such exercise by
          Secured Party. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Whenever an arbitration is required under subsection 16(a), the arbitrator shall
          be selected, except as otherwise herein provided, in accordance with the
          Commercial Arbitration Rules of the AAA. A single arbitrator shall decide any
          claim of $100,000 or less and he or she shall be an attorney with at least five
          years&#146; experience. Where the claim of any party exceeds $100,000, the
          Dispute shall be decided by a majority vote of three arbitrators, at least two
          of whom shall be attorneys (at least one of whom shall have not less than five
          years&#146; experience representing commercial Secured Parties). </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          In the event of any Dispute governed by this Section 16, each of the parties
          shall, subject to the award of the arbitrator, pay an equal share of the
          arbitrator&#146;s fees. The arbitrator shall have the power to award recovery of
          all costs and fees (including attorneys&#146; fees, administrative fees,
          arbitrator&#146;s fees, and court costs) to the prevailing party. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>WAIVER OF TRIAL BY JURY</U>. <B>EACH OF SECURED PARTY AND OBLIGOR HEREBY
          WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING, COUNTERCLAIM OR CROSS-CLAIM
          BROUGHT BY OR AGAINST IT ON ANY MATTERS WHATSOEVER, IN CONTRACT OR IN TORT,
          ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR THE OBLIGATIONS.</B> </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;18.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>WAIVER OF CERTAIN OTHER RIGHTS</U>. <B>OBLIGOR HEREBY WAIVES THE RIGHT TO
          INTERPOSE ANY DEFENSE, SET-OFF, COUNTERCLAIM OR CROSS-CLAIM OF ANY NATURE OR
          DESCRIPTION, ANY OBJECTION BASED ON FORUM NON CONVENIENS OR VENUE, AND ANY CLAIM
          FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.</B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, Obligors have executed this Continuing Security Agreement.<br><br>Tengasco, Inc. </FONT></P>



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<TD width=65%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD>
<TD width=35%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By:&nbsp;/s/Jeffrey R. Bailey<u></U><br>Jeffrey R. Bailey<br>President<br>
Tengasco Pipeline Corporation
</font></td>
</TR>
</TABLE><br><br>


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<TD width=65%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD>
<TD width=35%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By:&nbsp;<u>/s/Richard T. Williams</U><br>Richard T. Williams<br>
Chief Executive Officer</font></td>
</TR>
</TABLE>











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<SEQUENCE>3
<FILENAME>decemberthreenotefinal.htm
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<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR"  -->
<H1 ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROMISSORY NOTE</FONT></H1>


<H1 ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 10.42</FONT></H1>
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     <TD>$225,000.00</TD>
     <TD>Knoxville, Tennessee<br>December December 3, 2003, 2003</TD></TR>
</TABLE>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FOR
VALUE RECEIVED, the undersigned, TENGASCO, INC., a Tennessee corporation and TENGASCO
PIPELINE CORPORATION, a Tennessee corporation (the <B>&#147;Maker&#148;</B> whether one or
more), jointly and severally promise to pay to the order of Dolphin Offshore Partners, LP,
whose address is care of Dolphin Asset Management Corporation, 129 East 17<SUP>th</SUP>
St., New York, N.Y. its successors and/or assigns (said parties and any subsequent holders
hereinafter being collectively called the <B>&#147;Holder&#148;</B> at 129 East
17<SUP>th</SUP> St., New York, N.Y (or at such other place as the Holder hereof may
designate) the principal sum of TWO HUNDRED TWENTY FIVE THOUSAND ($225,000), (the
&#147;Principal&#148;), plus interest (the &#147;Interest&#148;) at the rate set forth
below on the Principal from time to time remaining unpaid. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest
on the outstanding Principal balance shall accrue at a rate of twelve percent (12%) per
annum based upon a 360-day year. Interest on the unpaid principal balance shall accrue
from date hereof and shall be payable forty-five days after the end of each calendar
quarter. The entire unpaid Principal and any accumulated unpaid Interest thereon shall be
due (the &#147;Due Date&#148;) on April&nbsp;4, 2004. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Note is secured by a lien on following property wherever located and whether now/owned or
hereafter owned or acquired by Maker, whether or not affixed to realty, and all Proceeds
and Products thereof in any form, and all parts, accessories, attachments, special tools,
additions, replacements, substitutions and accessions thereto or therefor and in all
increases or profits received therefrom (Collateral): all of Maker&#146;s interest, either
real or personal, tangible or intangible; in that certain undivided interest in pipeline
facilities owned by the Company and described in <U>Exhibits&nbsp;A and B</U> attached
hereto and incorporated herein by reference. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maker
agrees that Maker will pay the principal and all accumulated and unpaid interest in full
within ten days of closing of any sale by the Maker of either of the pipelines described
on <U>Exhibits&nbsp;A or B</U> attached hereto to any third party. Holder agrees, however,
that as to any sale of the pipeline described on Exhibit&nbsp;B which is subject to prior
lien in favor of Bank One, N. A. under Credit Agreement dated November&nbsp;8, 2001,
payment by Maker of this Note shall be made only to the extent funds are released by Bank
One as lienholder thereon. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Note is the Note referred to in the Security Agreement, and is entitled to the benefits
and subject to the terms thereof and may be prepaid in whole or in part and secured by the
collateral as provided therein. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>
<U>This Note is in addition to</U> those certain promissory notes dated December 4, 2002
in the principal amount of $250,000.00; February 3, 2003 in the principal amount of
$250,000.00; February 28, 2003 in the principal amount of $250,000.00; May 20, 2003 in the
principal amount of $750,000.00; and August 6, 2003 in the principal amount of
$150,000.00.</B> </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Default</U>. The happening of any of the following events shall constitute an
          event of default hereunder: failure of Maker to pay in full any Principal
          payment or Interest Payment due hereunder promptly when it becomes due; the
          occurrence of any one or more of the Events of Default specified in the Security
          Agreement or the Maker becoming bankrupt, insolvent or if any bankruptcy
          (voluntary or involuntary) or insolvency proceedings (as said terms
          &#147;insolvent&#148; and &#147;insolvency proceedings&#148; are defined in the
          Uniform Commercial Code of Tennessee) are instituted or made by or against
          Maker, or if application is made for the appointment for a receiver for the
          Maker or for any of the assets of any Maker, or as assignment is made for the
          benefit of the Maker&#146;s creditors. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
the happening of any event of default as defined herein, the Holder, at its option, may
declare the entire unpaid Principal balance of this Promissory Note without notice or
demand, together with accrued Interest, to be immediately due and payable without notice
or demand. In the event of default, the then unpaid principal balance hereof shall bear
interest from the time of such default at the maximum legal rate permissible. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition to payment of Interest and Principal, if there is a default in this Note, the
Holder shall be entitled to recover from the Maker all the Holder&#146;s costs of
collection, including the Holder&#146;s attorneys&#146; fees (whether incurred in
connection with any judicial, bankruptcy, reorganization, administrative, appeals or other
proceedings and whether such fees or expenses arise before proceedings are commenced or
after entry of any judgment), and all other costs or expenses incurred in connection
therewith. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Waiver</U>. With respect to the payment hereof, the Maker waives all rights
          of exemption of property from levy or sale under execution or the process for
          the collection of debts under the Constitution or laws of the United States or
          of any state thereof, and demand, presentment, protest, notice of dishonor, suit
          against any party, and all other requirements necessary to charge or hold any
          Maker liable hereunder. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
failure or delay on the part of the Holder in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the Maker or the
Holder at law, in equity or otherwise. Any amendment, supplement or modification of or to
any provision of this Note, any waiver of any provision of this Note and any consent to
any departure by the Maker from the terms of any provision of this Note, shall be
effective (i) only if it is made or given in writing and signed by the Maker and the
Holder of this Note and (ii) only in the specific instance and for the specific purpose
for which made or given. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Fees and Costs</U>. The Maker agrees to pay all filing fees and taxes, and
          all costs of collection or securing or attempting to collect or secure the
          payment thereof, including attorneys&#146; fees, whether or not involving
          litigation and/or appellate proceedings. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Remedies</U>. The Holder shall not by any act, delay, omission or otherwise
          be deemed to have waived any of its rights or remedies, and no waiver of any
          kind shall be valid, unless in writing and signed by the Holder. All rights and
          remedies of the Holder shall be cumulative. Furthermore, the Holder shall be
          entitled to all the rights of a Holder in due course of a negotiable instrument.
          In the event of default, Holder shall have all remedies available to a secured
          party under the Uniform Commercial Code. Holder shall give Maker ten business
          days notice in writing of any public or private sale of the property securing
          this note. Holder shall incur no liability as a result of the sale of the
          property securing this note, other than for its own negligence, willful
          misconduct, or bad faith. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Warranty of Title</U>. The seller warrants that the Maker&#146;s title to the
          property is free of any encumbrance other than the interests of Bank One, N. A.
          as Lender under Credit Agreement dated November&nbsp;8, 2001. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Governing Law</U>. This Note shall be governed by and construed in accordance
          with the laws of the State of New York. Any provision of this Note that may be
          unenforceable or invalid under any law shall be ineffective to the extent of
          such unenforceability or invalidity without affecting the enforceability or
          validity of any other provision hereof. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Notice</U>. Any notice required to be given to any person shall be deemed
          sufficient if mailed, postage prepaid, to such person&#146;s address as set
          forth in this Note. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Successors and Assigns</U>. The provisions of this Note are binding on the
          assigns and successors of Maker and shall inure to the benefit of the Holder and
          its successors and assigns. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Collection</U>. If this Note is not paid upon demand or according to the
          tenor hereof and strictly as above provided, it may be placed in the hands of an
          attorney at law for collection. In such event, each party liable for payment
          thereof, as Maker, endorser, guarantor or otherwise, hereby agrees to pay the
          holder hereof, in addition to the sums above stated, a reasonable
          attorneys&#146; fee, whether or not suit be initiated, which fee shall include
          attorneys&#146; fees at the trial level and on appeal, together with all costs
          incurred. IN THE EVENT THAT LITIGATION IS INITIATED FOR THE COLLECTION OF THE
          OBLIGATION EVIDENCED BY THIS NOTE, THEN MAKER HEREBY WAIVES ANY RIGHT TO TRIAL
          BY JURY REGARDING THIS NOTE AND ANY AGREEMENT OR INSTRUMENT SECURING SAME, AND
          THE PREVAILING PARTY IN SUCH LITIGATION SHALL BE ENTITLED TO AN AWARD FOR COSTS
          AND REASONABLE ATTORNEYS&#146; FEES INCURRED IN THE LITIGATION, INCLUDING ALL
          TRIALS AND APPEALS RELATING THERETO. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Maker hereby irrevocably consents and submits to the exclusive jurisdiction of the United
States federal courts and the courts of the State of New&nbsp;York located in
New&nbsp;York, New&nbsp;York, in connection with any action or proceeding arising out of
or relating to this Note or any document or instrument delivered pursuant hereto. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
purposes of any action that may be brought to enforce this Note, the Maker agrees that
this Note constitutes an instrument for the payment of money only within the meaning of
Section&nbsp;3213 of the Civil Practice Law and Rules of the State of New&nbsp;York. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding
anything to the contrary, in no event, whether by reason of advancement of the proceeds
hereof, acceleration of maturity of the unpaid balance hereof, or otherwise, shall the
amount taken, reserved or paid, charged or agreed to be paid, for the use, forbearance or
detention of money advanced pursuant hereto or pursuant to any other document executed in
connection herewith, exceed the maximum rate allowed by New York law. If any one or more
of the provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any other provisions hereof shall not be in any way
impaired, unless the provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions hereof. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Maker shall execute such documents and perform such further acts (including, without
limitation, obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any governmental authority or any other
person) as may be reasonably required or appropriate to carry out or to perform the
provisions of this Note.<br><br>TENGASCO, INC. </FONT></P>



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<TR VALIGN="BOTTOM">

<TD width=65%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD>
<TD width=35%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By:&nbsp;/s/Jeffrey R. Bailey<u></U><br>Jeffrey R. Bailey<br>President<br>
Tengasco Pipeline Corporation
</font></td>
</TR>
</TABLE><br><br>


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<TR VALIGN="BOTTOM">

<TD width=65%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD>
<TD width=35%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By:&nbsp;<u>/s/Richard T. Williams</U><br>Richard T. Williams<br>
Chief Executive Officer</font></td>
</TR>
</TABLE>























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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EXHIBIT&nbsp;A
to PROMISSORY NOTE Dated December 3, 2003 between Tengasco, Inc. and Tengasco Pipeline
Corporation as</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Maker and Dolphin
Offshore Partners, LP as Holder. </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An
undivided nine percent (9%) in and to Tengasco Pipeline Corporation&#146;s right, title,
and interest in, to the following property rights-of-way, leases (other than the right to
produce oil or gas under any lease granting pipeline installation and use rights) and/or
easements located in Hancock County, Hawkins County, and Sullivan County, Tennessee, it
being understood and agreed that the undivided interest herein described is in addition to
the undivided interest or interests in the properties described in other note or notes
dated December 3, 2003 or thereafter: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[PHASE
I]: That certain steel pipeline main, 6 inches and 8 inches in diameter, as it has been
installed, together with all associated permits, pipeline rights-of-way, and pipeline
installation rights under oil and gas leases (but excluding any rights to produce oil and
gas leases under any oil and gas lease granting such pipeline installation rights), from a
point at the Big Creek Missionary Baptist Church at the intersection of Upper Caney Valley
Road and Big Creek Road in Hancock County, Tennessee, extending generally eastward north
of the Clinch River, boring under the Clinch River and proceeding generally southward
along an existing Tennessee Valley Authority power line easement along and within
rights-of-way thereon, which are incorporated by reference for all purposes but without
limiting the generality of the foregoing description, proceeding further into Hawkins
County, Tennessee, to a point of intersection of the existing installed pipeline with the
distribution system of Hawkins County Gas Utility District, a total distance described in
this paragraph of approximately 26.0 miles; together with </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[PHASE
II]: That certain steel pipeline main 8 inches and 12 inches in diameter as it has been
installed, together with a 4-inch supply line already constructed, with all associated
contracts, permits, agreements, and pipeline rights-of-way, extending from a point of
intersection of the existing installed Phase I pipeline described above with the
distribution system of Hawkins County Gas Utility District and proceeding from that point
generally eastward along rights-of-way along Highway 11-W, and proceeding further along
and within the right-of-way of Highway 11 -w in accordance with the permit granted by
Tennessee Department of Transportation to Tengasco Pipeline Corporation dated April 11,
2000, and proceeding generally eastwards to a point located on the grounds of Holston Army
Ammunition Plant in accordance with the Tenant Use Agreement between Royal Ordinance North
America, Inc. (now BAE Systems Ordnance Systems, Inc.) and Tengasco Pipeline Corporation
dated June 16, 2000, which agreement is incorporated by reference for all purposes,
proceeding to a point on the grounds of the Holston Army Ammunition Plant known as Mead
Station, proceeding from that point further both as a 4-inch supply line to Holston Area A
and ending at the Area A boilers and as a 12-inch main line generally southward, off the
grounds of Holston Army Ammunition Plant and across rights-of-way to and including
property owned by Eastman Chemical Company, and proceeding to the point of interconnection
with the existing natural gas system owned by Eastman Chemical Company in Kingsport,
Sullivan County, Tennessee, a total distance described in this paragraph of approximately
30.4 miles, together with compressors, valves, stations and metering equipment installed
to effect deliveries through the pipeline . </FONT></P>


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<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EXHIBIT&nbsp;B
to PROMISSORY NOTE Dated December 3, 2003 between Tengasco, Inc. and Tengasco Pipeline
Corporation as</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Maker and Dolphin
Offshore Partners, LP as Holder. </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An
undivided nine percent (9%) interest in and to Tengasco, Inc.&#145;s existing pipeline
system, together with all easements, rights of way, and equipment and appurtenances
thereunto pertaining, located in Rush County, Kansas, it being understood and agreed that
the undivided interest herein described is in addition to the undivided interest or
interests in the properties described in other note or notes dated December 3, 2003 or
thereafter, consisting of approximately the following: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=20%>&nbsp;</TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Seven
miles of ten-inch diameter steel pipeline; Seven and one-half miles of eight-inch diameter
steel pipeline; Sixty-nine miles of four-inch diameter steel pipeline; Two miles of
two-inch pipeline; Compressor station and equipment thereon including but not limited to 3
No. 342 CAT motors with a JG2 Aerial Compression Unit.</FONT></TD>
</TR>
</TABLE>
<BR>
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</TEXT>
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<DOCUMENT>
<TYPE>EX-99.A4
<SEQUENCE>4
<FILENAME>decemberninenote.htm
<TEXT>
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<BODY>
<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROMISSORY NOTE </FONT></H1>


<H1 ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 10.43 </FONT></H1>





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     <TD>$250,000.00  </TD>
     <TD>Knoxville, Tennessee<br>December 9, 2003</TD></TR>
</TABLE>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FOR
VALUE RECEIVED, the undersigned, TENGASCO, INC., a Tennessee corporation and TENGASCO
PIPELINE CORPORATION, a Tennessee corporation (the <B>&#147;Maker&#148;</B> whether one or
more), jointly and severally promise to pay to the order of Dolphin Offshore Partners, LP,
whose address is care of Dolphin Asset Management Corporation, 129 East 17<SUP>th</SUP>
St., New York, N.Y. its successors and/or assigns (said parties and any subsequent holders
hereinafter being collectively called the <B>&#147;Holder&#148;</B> at 129 East
17<SUP>th</SUP> St., New York, N.Y (or at such other place as the Holder hereof may
designate) the principal sum of TWO HUNDRED FIFTY THOUSAND ($250,000.00), (the
&#147;Principal&#148;), plus interest (the &#147;Interest&#148;) at the rate set forth
below on the Principal from time to time remaining unpaid. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest
on the outstanding Principal balance shall accrue at a rate of twelve percent (12%) per
annum based upon a 360-day year. Interest on the unpaid principal balance shall accrue
from date hereof and shall be payable forty-five days after the end of each calendar
quarter. The entire unpaid Principal and any accumulated unpaid Interest thereon shall be
due (the &#147;Due Date&#148;) on April&nbsp;4, 2004. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Note is secured by a lien on following property wherever located and whether now/owned or
hereafter owned or acquired by Maker, whether or not affixed to realty, and all Proceeds
and Products thereof in any form, and all parts, accessories, attachments, special tools,
additions, replacements, substitutions and accessions thereto or therefor and in all
increases or profits received therefrom (Collateral): all of Maker&#146;s interest, either
real or personal, tangible or intangible; in that certain undivided interest in pipeline
facilities owned by the Company and described in <U>Exhibits&nbsp;A and B</U> attached
hereto and incorporated herein by reference. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maker
agrees that Maker will pay the principal and all accumulated and unpaid interest in full
within ten days of closing of any sale by the Maker of either of the pipelines described
on <U>Exhibits&nbsp;A or B</U> attached hereto to any third party. Holder agrees, however,
that as to any sale of the pipeline described on Exhibit&nbsp;B which is subject to prior
lien in favor of Bank One, N. A. under Credit Agreement dated November&nbsp;8, 2001,
payment by Maker of this Note shall be made only to the extent funds are released by Bank
One as lienholder thereon. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Note is the Note referred to in the Security Agreement, and is entitled to the benefits
and subject to the terms thereof and may be prepaid in whole or in part and secured by the
collateral as provided therein. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>
<U>This Note is in addition to</U> those certain promissory notes dated December 4, 2002
in the principal amount of $250,000.00; February 3, 2003 in the principal amount of
$250,000.00; February 28, 2003 in the principal amount of $250,000.00; May 20, 2003 in the
principal amount of $750,000.00; August 6, 2003 in the principal amount of $150,000.00,
and December 3, 2003 in the principal amount of $225,000.</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Default</U>. The happening of any of the following events shall constitute an
          event of default hereunder: failure of Maker to pay in full any Principal
          payment or Interest Payment due hereunder promptly when it becomes due; the
          occurrence of any one or more of the Events of Default specified in the Security
          Agreement or the Maker becoming bankrupt, insolvent or if any bankruptcy
          (voluntary or involuntary) or insolvency proceedings (as said terms
          &#147;insolvent&#148; and &#147;insolvency proceedings&#148; are defined in the
          Uniform Commercial Code of Tennessee) are instituted or made by or against
          Maker, or if application is made for the appointment for a receiver for the
          Maker or for any of the assets of any Maker, or as assignment is made for the
          benefit of the Maker&#146;s creditors. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
the happening of any event of default as defined herein, the Holder, at its option, may
declare the entire unpaid Principal balance of this Promissory Note without notice or
demand, together with accrued Interest, to be immediately due and payable without notice
or demand. In the event of default, the then unpaid principal balance hereof shall bear
interest from the time of such default at the maximum legal rate permissible. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition to payment of Interest and Principal, if there is a default in this Note, the
Holder shall be entitled to recover from the Maker all the Holder&#146;s costs of
collection, including the Holder&#146;s attorneys&#146; fees (whether incurred in
connection with any judicial, bankruptcy, reorganization, administrative, appeals or other
proceedings and whether such fees or expenses arise before proceedings are commenced or
after entry of any judgment), and all other costs or expenses incurred in connection
therewith. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Waiver</U>. With respect to the payment hereof, the Maker waives all rights
          of exemption of property from levy or sale under execution or the process for
          the collection of debts under the Constitution or laws of the United States or
          of any state thereof, and demand, presentment, protest, notice of dishonor, suit
          against any party, and all other requirements necessary to charge or hold any
          Maker liable hereunder. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
failure or delay on the part of the Holder in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the Maker or the
Holder at law, in equity or otherwise. Any amendment, supplement or modification of or to
any provision of this Note, any waiver of any provision of this Note and any consent to
any departure by the Maker from the terms of any provision of this Note, shall be
effective (i) only if it is made or given in writing and signed by the Maker and the
Holder of this Note and (ii) only in the specific instance and for the specific purpose
for which made or given. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Fees and Costs</U>. The Maker agrees to pay all filing fees and taxes, and
          all costs of collection or securing or attempting to collect or secure the
          payment thereof, including attorneys&#146; fees, whether or not involving
          litigation and/or appellate proceedings. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Remedies</U>. The Holder shall not by any act, delay, omission or otherwise
          be deemed to have waived any of its rights or remedies, and no waiver of any
          kind shall be valid, unless in writing and signed by the Holder. All rights and
          remedies of the Holder shall be cumulative. Furthermore, the Holder shall be
          entitled to all the rights of a Holder in due course of a negotiable instrument.
          In the event of default, Holder shall have all remedies available to a secured
          party under the Uniform Commercial Code. Holder shall give Maker ten business
          days notice in writing of any public or private sale of the property securing
          this note. Holder shall incur no liability as a result of the sale of the
          property securing this note, other than for its own negligence, willful
          misconduct, or bad faith. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Warranty of Title</U>. The seller warrants that the Maker&#146;s title to the
          property is free of any encumbrance other than the interests of Bank One, N. A.
          as Lender under Credit Agreement dated November&nbsp;8, 2001. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Governing Law</U>. This Note shall be governed by and construed in accordance
          with the laws of the State of New York. Any provision of this Note that may be
          unenforceable or invalid under any law shall be ineffective to the extent of
          such unenforceability or invalidity without affecting the enforceability or
          validity of any other provision hereof. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Notice</U>. Any notice required to be given to any person shall be deemed
          sufficient if mailed, postage prepaid, to such person&#146;s address as set
          forth in this Note. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Successors and Assigns</U>. The provisions of this Note are binding on the
          assigns and successors of Maker and shall inure to the benefit of the Holder and
          its successors and assigns. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Collection</U>. If this Note is not paid upon demand or according to the
          tenor hereof and strictly as above provided, it may be placed in the hands of an
          attorney at law for collection. In such event, each party liable for payment
          thereof, as Maker, endorser, guarantor or otherwise, hereby agrees to pay the
          holder hereof, in addition to the sums above stated, a reasonable
          attorneys&#146; fee, whether or not suit be initiated, which fee shall include
          attorneys&#146; fees at the trial level and on appeal, together with all costs
          incurred. IN THE EVENT THAT LITIGATION IS INITIATED FOR THE COLLECTION OF THE
          OBLIGATION EVIDENCED BY THIS NOTE, THEN MAKER HEREBY WAIVES ANY RIGHT TO TRIAL
          BY JURY REGARDING THIS NOTE AND ANY AGREEMENT OR INSTRUMENT SECURING SAME, AND
          THE PREVAILING PARTY IN SUCH LITIGATION SHALL BE ENTITLED TO AN AWARD FOR COSTS
          AND REASONABLE ATTORNEYS&#146; FEES INCURRED IN THE LITIGATION, INCLUDING ALL
          TRIALS AND APPEALS RELATING THERETO. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Maker hereby irrevocably consents and submits to the exclusive jurisdiction of the United
States federal courts and the courts of the State of New&nbsp;York located in
New&nbsp;York, New&nbsp;York, in connection with any action or proceeding arising out of
or relating to this Note or any document or instrument delivered pursuant hereto. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
purposes of any action that may be brought to enforce this Note, the Maker agrees that
this Note constitutes an instrument for the payment of money only within the meaning of
Section&nbsp;3213 of the Civil Practice Law and Rules of the State of New&nbsp;York. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding
anything to the contrary, in no event, whether by reason of advancement of the proceeds
hereof, acceleration of maturity of the unpaid balance hereof, or otherwise, shall the
amount taken, reserved or paid, charged or agreed to be paid, for the use, forbearance or
detention of money advanced pursuant hereto or pursuant to any other document executed in
connection herewith, exceed the maximum rate allowed by New York law. If any one or more
of the provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any other provisions hereof shall not be in any way
impaired, unless the provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions hereof. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Maker shall execute such documents and perform such further acts (including, without
limitation, obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any governmental authority or any other
person) as may be reasonably required or appropriate to carry out or to perform the
provisions of this Note.<br><br>TENGASCO, INC. </FONT></P>


<TABLE width=100% BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">

<TD width=65%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD>
<TD width=35%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By:&nbsp;/s/Jeffrey R. Bailey<u></U><br>Jeffrey R. Bailey<br>President<br>
Tengasco Pipeline Corporation
</font></td>
</TR>
</TABLE><br><br>


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<TR VALIGN="BOTTOM">

<TD width=65%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD>
<TD width=35%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By:&nbsp;<u>/s/Richard T. Williams</U><br>Richard T. Williams<br>
Chief Executive Officer</font></td>
</TR>
</TABLE>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EXHIBIT&nbsp;A
to PROMISSORY NOTE Dated December 9, 2003 between Tengasco, Inc. and Tengasco Pipeline
Corporation as</B> </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Maker and Dolphin
Offshore Partners, LP as Holder. </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An
undivided ten percent (10%) in and to Tengasco Pipeline Corporation&#146;s right, title,
and interest in, to the following property rights-of-way, leases (other than the right to
produce oil or gas under any lease granting pipeline installation and use rights) and/or
easements located in Hancock County, Hawkins County, and Sullivan County, Tennessee, it
being understood and agreed that the undivided interest herein described is in addition to
the undivided interest or interests in the properties described in other note or notes
dated December 3, 2003 or before: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[PHASE
I]: That certain steel pipeline main, 6 inches and 8 inches in diameter, as it has been
installed, together with all associated permits, pipeline rights-of-way, and pipeline
installation rights under oil and gas leases (but excluding any rights to produce oil and
gas leases under any oil and gas lease granting such pipeline installation rights), from a
point at the Big Creek Missionary Baptist Church at the intersection of Upper Caney Valley
Road and Big Creek Road in Hancock County, Tennessee, extending generally eastward north
of the Clinch River, boring under the Clinch River and proceeding generally southward
along an existing Tennessee Valley Authority power line easement along and within
rights-of-way thereon, which are incorporated by reference for all purposes but without
limiting the generality of the foregoing description, proceeding further into Hawkins
County, Tennessee, to a point of intersection of the existing installed pipeline with the
distribution system of Hawkins County Gas Utility District, a total distance described in
this paragraph of approximately 26.0 miles; together with </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[PHASE
II]: That certain steel pipeline main 8 inches and 12 inches in diameter as it has been
installed, together with a 4-inch supply line already constructed, with all associated
contracts, permits, agreements, and pipeline rights-of-way, extending from a point of
intersection of the existing installed Phase I pipeline described above with the
distribution system of Hawkins County Gas Utility District and proceeding from that point
generally eastward along rights-of-way along Highway 11-W, and proceeding further along
and within the right-of-way of Highway 11 -w in accordance with the permit granted by
Tennessee Department of Transportation to Tengasco Pipeline Corporation dated April 11,
2000, and proceeding generally eastwards to a point located on the grounds of Holston Army
Ammunition Plant in accordance with the Tenant Use Agreement between Royal Ordinance North
America, Inc. (now BAE Systems Ordnance Systems, Inc.) and Tengasco Pipeline Corporation
dated June 16, 2000, which agreement is incorporated by reference for all purposes,
proceeding to a point on the grounds of the Holston Army Ammunition Plant known as Mead
Station, proceeding from that point further both as a 4-inch supply line to Holston Area A
and ending at the Area A boilers and as a 12-inch main line generally southward, off the
grounds of Holston Army Ammunition Plant and across rights-of-way to and including
property owned by Eastman Chemical Company, and proceeding to the point of interconnection
with the existing natural gas system owned by Eastman Chemical Company in Kingsport,
Sullivan County, Tennessee, a total distance described in this paragraph of approximately
30.4 miles, together with compressors, valves, stations and metering equipment installed
to effect deliveries through the pipeline . </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EXHIBIT&nbsp;B
to PROMISSORY NOTE Dated December 9, 2003 between Tengasco, Inc. and Tengasco Pipeline
Corporation as</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Maker and Dolphin
Offshore Partners, LP as Holder. </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An
undivided ten percent (10%) in and to Tengasco, Inc.&#145;s existing pipeline system,
together with all easements, rights of way, and equipment and appurtenances thereunto
pertaining, located in Rush County, Kansas, it being understood and agreed that the
undivided interest herein described is in addition to the undivided interest or interests
in the properties described in other note or notes dated December 3, 2003 or before,
consisting of approximately the following: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=20%>&nbsp;</TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Seven
miles of ten-inch diameter steel pipeline; Seven and one-half miles of eight-inch diameter
steel pipeline; Sixty-nine miles of four-inch diameter steel pipeline; Two miles of
two-inch pipeline; Compressor station and equipment thereon including but not limited to 3
No. 342 CAT motors with a JG2 Aerial Compression Unit.</FONT></TD>
</TR>
</TABLE>
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