Exhibit 10.07

[EXECUTION VERSION]

$200,000,000

CREDIT AGREEMENT

dated as of

September 23, 2010,

among

EL PASO ELECTRIC COMPANY,

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

not in its individual capacity,

but solely in its capacity as successor trustee of the

Rio Grande Resources Trust II,

THE LENDERS PARTY HERETO,

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

and Issuing Bank,

and

UNION BANK, N.A.,

as Syndication Agent,

 

 

 

 

UNION BANK, N.A. and J.P. MORGAN SECURITIES INC.,

as Joint Lead Arrangers

UNION BANK, N.A.,

as Sole Bookrunner

BANK OF AMERICA, N.A. and

U.S. BANK NATIONAL ASSOCIATION,

as Co-Documentation Agents

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TABLE OF CONTENTS

 

          Page   

ARTICLE I

     Definitions      1   

SECTION 1.01.

     Defined Terms      1   

SECTION 1.02.

     Terms Generally      19   

ARTICLE II

     The Credits      19   

SECTION 2.01.

     Commitments      19   

SECTION 2.02.

     Loans      20   

SECTION 2.03.

     Borrowing Procedure      21   

SECTION 2.04.

     Evidence of Debt; Repayment of Loans      22   

SECTION 2.05.

     Fees      23   

SECTION 2.06.

     Interest on Loans      23   

SECTION 2.07.

     Default Interest      24   

SECTION 2.08.

     Alternate Rate of Interest      24   

SECTION 2.09.

     Termination and Reduction of Commitments      24   

SECTION 2.10.

     Conversion and Continuation of Borrowings      25   

SECTION 2.11.

     Optional Prepayment      26   

SECTION 2.12.

     Reserve Requirements; Change in Circumstances      27   

SECTION 2.13.

     Change in Legality      28   

SECTION 2.14.

     Indemnity      29   

SECTION 2.15.

     Pro Rata Treatment      29   

SECTION 2.16.

     Sharing of Setoffs      30   

SECTION 2.17.

     Payments      30   

SECTION 2.18.

     Taxes      31   

SECTION 2.19.

     Replacement or Termination of Lenders Under Certain Circumstances; Duty to
Mitigate      34   

SECTION 2.20.

     Letters of Credit      35   

SECTION 2.21.

     Increase of Commitments      39   

ARTICLE III

     Representations and Warranties      41   

SECTION 3.01.

     Organization; Powers      41   

SECTION 3.02.

     Authorization      41   

SECTION 3.03.

     Enforceability      42   

SECTION 3.04.

     Governmental Approvals      42   

SECTION 3.05.

     Financial Statements      42   

SECTION 3.06.

     No Material Adverse Change      42   

SECTION 3.07.

     Subsidiaries      42   

SECTION 3.08.

     Litigation; Compliance with Laws      42   

SECTION 3.09.

     Federal Reserve Regulations      43   

SECTION 3.10.

     Investment Company Act      43   

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SECTION 3.11.

     Use of Proceeds      43   

SECTION 3.12.

     Tax Returns      43   

SECTION 3.13.

     No Material Misstatements      43   

SECTION 3.14.

     Employee Benefit Plans      43   

SECTION 3.15.

     Environmental Matters      44   

SECTION 3.16.

     Insurance      44   

SECTION 3.17.

     Anti-Terrorism Laws, etc      44   

ARTICLE IV

     Conditions of Lending      45   

SECTION 4.01.

     All Credit Events      45   

SECTION 4.02.

     Closing Date      45   

ARTICLE V

     Affirmative Covenants      47   

SECTION 5.01.

     Existence; Businesses and Properties      47   

SECTION 5.02.

     Insurance      47   

SECTION 5.03.

     Obligations and Taxes      48   

SECTION 5.04.

     Financial Statements, Reports, etc      48   

SECTION 5.05.

     Litigation and Other Notices      49   

SECTION 5.06.

     Employee Benefits      49   

SECTION 5.07.

     Maintaining Records; Access to Properties and Inspections      49   

SECTION 5.08.

     Use of Proceeds      50   

SECTION 5.09.

     Subsidiary Guarantors      50   

SECTION 5.10.

     Maintenance of Ratings      50   

ARTICLE VI

     Negative Covenants      50   

SECTION 6.01.

     Subsidiary Indebtedness      50   

SECTION 6.02.

     Liens      51   

SECTION 6.03.

     Sale and Lease-Back Transactions      53   

SECTION 6.04.

     Investments, Loans and Advances      53   

SECTION 6.05.

     Mergers, Consolidations and Sales of Assets and Acquisitions      54   

SECTION 6.06.

     Transactions with Affiliates      54   

SECTION 6.07.

     Businesses of Borrowers and Material Subsidiaries      54   

SECTION 6.08.

     Other Agreements      54   

SECTION 6.09.

     Debt to Capitalization Ratio      54   

SECTION 6.10.

     Fiscal Year      55   

 

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ARTICLE VII

     Events of Default      55   

ARTICLE VIII

     The Administrative Agent      57   

ARTICLE IX

     Guarantee      59   

SECTION 9.01.

     Guarantee      59   

SECTION 9.02.

     Obligations Not Waived      60   

SECTION 9.03.

     Guarantee of Payment      60   

SECTION 9.04.

     No Discharge or Diminishment of Guarantee      60   

SECTION 9.05.

     Defenses of the Trustee Waived      60   

SECTION 9.06.

     Agreement to Pay; Subrogation      61   

SECTION 9.07.

     Information      61   

SECTION 9.08.

     Termination      61   

ARTICLE X

     Miscellaneous      62   

SECTION 10.01.

     Notices      62   

SECTION 10.02.

     Survival of Agreement      63   

SECTION 10.03.

     Binding Effect      63   

SECTION 10.04.

     Successors and Assigns      63   

SECTION 10.05.

     Expenses; Indemnity      67   

SECTION 10.06.

     Right of Setoff      68   

SECTION 10.07.

     Applicable Law      68   

SECTION 10.08.

     Waivers; Amendment      68   

SECTION 10.09.

     Interest Rate Limitation      69   

SECTION 10.10.

     Entire Agreement      69   

SECTION 10.11.

     Waiver of Jury Trial      70   

SECTION 10.12.

     Severability      70   

SECTION 10.13.

     Counterparts      70   

SECTION 10.14.

     Headings      70   

SECTION 10.15.

     Jurisdiction; Consent to Service of Process      71   

SECTION 10.16.

     Confidentiality      71   

SECTION 10.17.

     Texas Revolving Credit Statute      72   

SECTION 10.18.

     No Recourse; Multiple Capacities      72   

SECTION 10.19.

     Limited Representations, Warranties and Covenants of Trustee      72   

SECTION 10.20.

     USA Patriot Act Notice      72    SCHEDULES        

Schedule 2.01

     Commitments   

Schedule 3.04

     Governmental Approvals   

Schedule 3.07

     Subsidiaries   

Schedule 3.08

     Litigation and Compliance with Laws   

 

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Schedule 3.15

     Environmental Matters   

Schedule 4.02(a)

     Local Regulatory Counsel   

Schedule 6.02

     Liens   

Schedule 6.04

     Certain Investments   

EXHIBITS

 

Exhibit A        Form of Administrative Questionnaire

Exhibit B        Form of Assignment and Acceptance

Exhibit C        Form of Borrowing Request

Exhibit D        Form of Subsidiary Guarantee Agreement

 

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CREDIT AGREEMENT, dated as of September 23, 2010 (as amended from time to time,
this “Agreement”), among EL PASO ELECTRIC COMPANY, a Texas corporation
(“El Paso”), THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking
association with trust powers, not in its individual capacity, but solely in its
capacity as successor trustee of the Rio Grande Resources Trust II (said trustee
being the successor to JPMorgan Chase Bank, N.A., formerly known as JPMorgan
Chase Bank, successor by merger to The Chase Manhattan Bank, successor by merger
to Chase Bank of Texas, National Association, successor by change of name to
Texas Commerce Bank National Association, as trustee of the Rio Grande Resources
Trust II) (the “Trustee”; each of El Paso and the Trustee is referred to
individually herein as a “Borrower” and collectively as the “Borrowers”), the
Lenders (as defined in Article I), JPMORGAN CHASE BANK, N.A., as issuing bank
(in such capacity, including any successor thereto, the “Issuing Bank”) and as
administrative agent (in such capacity, including any successor thereto, the
“Administrative Agent”) for the Lenders, and UNION BANK, N.A., as syndication
agent (in such capacity, including any successor thereto, the “Syndication
Agent”).

The Borrowers have requested that the Lenders extend credit in the form of Loans
(such term and each other capitalized term used but not defined herein having
the meaning given to it in Article I) at any time and from time to time prior to
the Maturity Date, in an aggregate principal amount not to exceed $200,000,000,
as such amount may be adjusted from time to time in accordance with the terms of
this Agreement. The proceeds of the Loans are to be used (a) by El Paso solely
(i) to repay the principal of, interest on and accrued fees with respect to the
outstanding loans to El Paso under the Existing Credit Agreement, (ii) to
provide working capital to El Paso, (iii) for general corporate purposes,
including commercial paper back-up, and (iv) to pay related fees and expenses
and (b) by the Trustee solely (i) to repay the principal of, interest on and
accrued fees with respect to the outstanding loans to the Trustee under the
Existing Credit Agreement, (ii) to finance the purchase of Nuclear Fuel by the
Trustee in accordance with the Trust Agreement and the Purchase Contract,
(iii) to pay interest on and accrued fees with respect to the Trust Senior
Unsecured Notes, (iv) to pay interest and other amounts payable hereunder by the
Trustee as needed and (v) to pay related fees and expenses. The Letters of
Credit shall be issued, if for the account of El Paso, solely for general
corporate purposes and, if for the account of the Trustee, solely to support
obligations incurred by the Trustee in respect of the purchase of Nuclear Fuel
in accordance with the Trust Agreement and the Purchase Contract.

Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Defined Terms. As used in this Agreement, the following terms
shall have the meanings specified below:

“ABR Borrowing” shall mean a Borrowing comprised of ABR Loans.

“ABR Loan” shall mean any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Article II.

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“Adjusted LIBO Rate” shall mean, with respect to any Eurodollar Loan for any
Interest Period, an interest rate per annum equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.

“Administrative Agent” shall have the meaning assigned to such term in the
preamble to this Agreement.

“Administrative Agent Fees” shall have the meaning assigned to such term in
Section 2.05(b).

“Administrative Questionnaire” shall mean an Administrative Questionnaire in the
form of Exhibit A, or such other form as shall be approved by the Administrative
Agent.

“Affiliate” shall mean, when used with respect to a specified person, another
person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the person specified.

“Agent” shall mean each of the Administrative Agent and the Syndication Agent.

“Aggregate Credit Exposure” shall mean the aggregate amount of the Lenders’
Credit Exposures.

“Alternate Base Rate” shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect
on such day plus  1/2 of 1% and (c) the Adjusted LIBO Rate for an Interest
Period of one month beginning on such day (or, if such day is not a Business
Day, the immediately preceding Business Day) plus 1% (provided that, for the
avoidance of doubt, such Adjusted LIBO Rate for any day shall be based on the
rate appearing on the Reuters Screen LIBOR01 (or on any successor or substitute
screen or page of such service) at approximately 11:00 a.m. London time two
Business Days prior to such day). If for any reason the Administrative Agent
shall have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Federal Funds Effective Rate for any
reason, including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms of the definition thereof,
the Alternate Base Rate shall be determined without regard to clause (b) of the
preceding sentence until the circumstances giving rise to such inability no
longer exist. Any change in the Alternate Base Rate due to a change in the Prime
Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be
effective on the effective date of such change in the Prime Rate, the Federal
Funds Effective Rate or the Adjusted LIBO Rate, respectively.

“Anti-Terrorism Order” shall mean Executive Order 13224 of September 23, 2001,
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), as amended from
time to time.

“Applicable Percentage” of any Lender at any time shall mean the percentage of
the Total Commitment represented by such Lender’s Commitment. In the event the

 

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Commitments shall have expired or been terminated, the Applicable Percentages
shall be determined on the basis of the Commitments most recently in effect.

“Applicable Ratings” shall mean at any time the credit ratings at such time by
the Rating Agencies of the Index Debt.

“Applicable Spread” shall mean, for any day, with respect to any Eurodollar Loan
or ABR Loan, or with respect to the Commitment Fee, as the case may be, the
applicable percentage set forth below under the caption “LIBOR Spread”, “ABR
Spread” or “Commitment Fee”, as the case may be, based upon the higher of the
Applicable Ratings:

 

  

Applicable Ratings

(S&P/Moody’s)

     LIBOR

Spread

   ABR

Spread

   Commitment

Fee

Category 1

   A-/A3 or better      1.650%    0.650%    0.200%

Category 2

   BBB+/Baa1      1.900%    0.900%    0.250%

Category 3

   BBB/Baa2      2.150%    1.150%    0.375%

Category 4

   BBB-/Baa3      2.400%    1.400%    0.500%

Category 5

  

Less than BBB-/Baa3

(or unrated)

     2.650%    1.650%    0.625%

Notwithstanding the foregoing, (a) if (i) both Rating Agencies cease to provide
a current Applicable Rating or (ii) the Applicable Rating of either Rating
Agency shall be below BBB- or Baa3, as the case may be, the Applicable Spread
shall correspond to the percentages listed in Category 5; (b) if the Applicable
Ratings of the Rating Agencies fall within different Categories, and the higher
numbered Category is more than one numbered Category higher than the lower
numbered Category, then the Applicable Spread shall correspond to the
percentages listed in the next higher numbered Category from that of the lower
numbered Category; and (c) at any time after the occurrence and during the
continuation of an Event of Default, the Applicable Spread shall correspond to
the percentages listed in Category 5. The Applicable Spread shall be increased
or decreased in accordance with the foregoing table upon any change in the
Applicable Ratings. The Applicable Ratings in effect at any date are those in
effect at the close of business on such date.

“Assignment and Acceptance” shall mean an assignment and acceptance entered into
by a Lender and an assignee, and accepted by the Administrative Agent, in the
form of Exhibit B or such other form as shall be approved by the Administrative
Agent.

“Atomic Energy Act” shall mean the Atomic Energy Act of 1954, 42 U.S.C. §§ 2011
et seq. and the rules and regulations promulgated thereunder, as amended from
time to time.

“Augmenting Lender” shall have the meaning assigned to such term in Section 2.21

 

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“Board” shall mean the Board of Governors of the Federal Reserve System of the
United States of America.

“BONY” shall mean The Bank of New York Mellon Trust Company, N.A., together with
its successors and assigns.

“Borrower” and “Borrowers” shall have the meanings assigned to such terms in the
preamble to this Agreement.

“Borrowing” shall mean a group of Loans of a single Type made by the Lenders to
the same Borrower on a single date and as to which a single Interest Period is
in effect.

“Borrowing Request” shall mean a request by a Borrower in accordance with the
terms of Section 2.03 and substantially in the form of Exhibit C.

“Business Day” shall mean any day other than a Saturday, Sunday or day on which
banks in New York City are authorized or required by law to close; provided,
however, that when used in connection with a Eurodollar Loan, the term “Business
Day” shall also exclude any day on which banks are not open for dealings in
dollar deposits in the London interbank market.

“Capital Lease Obligations” of any person shall mean the obligations of such
person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.

A “Change in Control” shall be deemed to have occurred if (a) any “person” or
“group” (within the meaning of Rule 13d-5 of the Securities Exchange Act)
becomes the “beneficial owner” (within the meaning of Rules 13d-3 and 13d-5 of
the Securities Exchange Act), directly or indirectly, of more than 50% of the
outstanding shares of common stock of El Paso entitled to vote for members of
the board of directors or equivalent governing body of El Paso or (b) a majority
of the members of the Board of Directors of El Paso are not Continuing
Directors; provided, however, that a “Change in Control” shall be deemed not to
have occurred solely as a result of the formation of a holding company for El
Paso as part of any transaction (merger, consolidation, plan of exchange, or
otherwise) in which, immediately following such transaction, (i) such holding
company owns 100% of the common stock of El Paso and (ii) such holding company
is beneficially owned by the former holders of El Paso’s common stock in
substantially the same proportions as their beneficial ownership of El Paso’s
common stock immediately prior to such transaction.

“Change in Law” shall mean (a) the adoption of any law, rule, regulation or
treaty after the date of this Agreement, (b) any change in any law, rule,
regulation or treaty or in the interpretation or application thereof by any
Governmental Authority after the date of this Agreement or (c) compliance by any
Lender or the Issuing Bank (or, for purposes of Section 2.12(b), by any lending
office of such Lender or by such Lender’s or the Issuing Bank’s

 

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holding company, if any) with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority made or issued after
the date of this Agreement.

“Closing Date” shall mean the date on which the conditions specified in
Sections 4.01 and 4.02 are satisfied (or waived in accordance with
Section 10.08), which date is September 23, 2010.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.

“Commitment” shall mean, with respect to each Lender, the commitment of such
Lender to make Loans hereunder as set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender assumed its Commitment,
or, with respect to an Augmenting Lender, in the documentation executed by such
Augmenting Lender pursuant to Section 2.21(a), as applicable, as the same may be
(a) reduced from time to time pursuant to Section 2.09 or pursuant to
Section 2.19, (b) increased (with the consent of such Lender) from time to time
pursuant to Section 2.21 and (c) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04.

“Commitment Fee” shall have the meaning assigned to such term in
Section 2.05(a).

“Confidential Information Memorandum” shall mean the Confidential Information
Memorandum of El Paso dated September 2010.

“Continuing Directors” shall mean, as of any date of determination, any member
of the board of directors of El Paso who (i) was a member of such board of
directors on the Closing Date or (ii) was nominated for election or elected to
such board of directors with the approval of a majority of Continuing Directors
who were members of such board at the time of such nomination or election.

“Control” shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a person, whether
through the ownership of voting securities, by contract or otherwise, and
“Controlling” and “Controlled” shall have meanings correlative thereto.

“Credit Event” shall have the meaning assigned to such term in Section 4.01.

“Credit Exposure” shall mean, with respect to any Lender at any time, the
aggregate principal amount at such time of all outstanding Loans of such Lender
plus the aggregate amount at such time of such Lender’s L/C Exposure.

“Default” shall mean any event or condition which upon notice, lapse of time or
both would constitute an Event of Default.

“dollars” or “$” shall mean lawful money of the United States of America.

 

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“Domestic Subsidiary” shall mean any Subsidiary that is incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia.

“El Paso” shall have the meaning assigned to such term in the preamble to this
Agreement.

“El Paso L/C Exposure” shall mean that part of the L/C Exposure attributable to
all Letters of Credit issued for the account of El Paso.

“El Paso Obligations” shall mean (i) the due and punctual payment of (A) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans made to El Paso, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (B) all
monetary obligations of El Paso pursuant to the Guarantee in Article IX hereof,
(C) each payment required to be made by El Paso under this Agreement in respect
of any Letter of Credit, when and as due, including payments in respect of
reimbursement of disbursements, interest thereon and obligations to provide cash
collateral and (D) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of El Paso to the
Administrative Agent and the Lenders under this Agreement and the other Loan
Documents and (ii) the due and punctual performance of all covenants,
agreements, obligations and liabilities of El Paso under or pursuant to this
Agreement and the other Loan Documents.

“Environment” shall mean ambient air, surface water and groundwater (including
potable water, navigable water and wetlands), the land surface or subsurface
strata, flora and fauna, natural resources or the workplace.

“Environmental Claim” shall mean any written accusation, allegation, notice of
violation, claim, demand, order, directive, consent decree, cost recovery action
or other cause of action by, or on behalf of, any Governmental Authority or any
person for damages, injunctive or equitable relief, personal injury (including
sickness, disease or death), Remedial Action costs, tangible or intangible
property damage, natural resource damages, nuisance, pollution, any adverse
effect on the Environment caused by any Hazardous Material, or for fines,
penalties or restrictions, resulting from or based upon: (a) the existence, or
the continuation of the existence, of a Release (including sudden or non-sudden,
accidental or non-accidental Releases); (b) exposure to any Hazardous Material;
(c) the presence, use, handling, transportation, storage, treatment or disposal
of any Hazardous Material; or (d) the violation or alleged violation of any
Environmental Law or Environmental Permit.

“Environmental Law” shall mean any and all applicable present and future
treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
Environment, preservation or reclamation of natural

 

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resources, the management, Release or threatened Release of any Hazardous
Material or to health and safety matters, including but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
§§ 9601 et seq. (collectively “CERCLA”), the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and
Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq., the Federal Water
Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C.
§§ 1251 et seq., the Clean Air Act of 1970, 42 U.S.C. §§ 7401 et seq., as
amended, the Toxic Substances Control Act of 1976, 15 U.S.C. §§ 2601 et seq.,
the Occupational Safety and Health Act of 1970, as amended by 29 U.S.C. §§ 651
et seq., the Emergency Planning and Community Right-to-Know Act of 1986,
42 U.S.C. §§ 11001 et seq., the Safe Drinking Water Act of 1974, as amended by
42 U.S.C. §§ 300(f) et seq., the Hazardous Materials Transportation Act,
49 U.S.C. §§ 5101 et seq., the Atomic Energy Act and Low-Level Radioactive Waste
Policy Act, 42 U.S.C. §§ 2014 et seq., as amended, and any similar or
implementing state or local law, and all amendments or regulations promulgated
thereunder.

“Environmental Permit” shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the
same may be amended from time to time.

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated)
that, together with El Paso, is treated as a single employer under
Section 414(b) or (c) of the Code, or solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

“ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043
of ERISA or the regulations issued thereunder, with respect to a Plan; (b) the
adoption of any amendment to a Plan that would contravene Section 436 of the
Code or Section 303 of ERISA; (c) a determination that any Plan is in “at risk”
status (within the meaning of Section 430 of the Code or Section 303 of ERISA)
or any Multiemployer Plan to which El Paso or any ERISA Affiliate makes or is
obligated to make contributions, or during the preceding five plan years has
made or been obligated to make contributions, is in “endangered status” or
“critical status” within the meaning of Section 432 of the Code; (d) the failure
with respect to any Plan to meet the minimum funding standards (within the
meaning of Section 412 or 430 of the Code or Section 302 of ERISA), whether or
not waived; (e) the filing pursuant to Section 412(c) of the Code or
Section 303(c) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (f) the incurrence of any liability under
Title IV of ERISA with respect to the termination of any Plan or the withdrawal
or partial withdrawal of El Paso or any of its ERISA Affiliates from any Plan or
Multiemployer Plan; (g) the receipt by El Paso or any ERISA Affiliate from the
PBGC or a plan administrator of any notice relating to the intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan;
(h) the receipt by El Paso or any ERISA Affiliate of any notice concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA; (i) the occurrence of a

 

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“prohibited transaction” with respect to which El Paso or any of the
Subsidiaries is a “disqualified person” (within the meaning of Section 4975 of
the Code) or with respect to which El Paso or any such Subsidiary could
otherwise be liable; and (j) any other event or condition with respect to a Plan
or Multiemployer Plan that could reasonably be expected to result in liability
of El Paso.

“Eurodollar Borrowing” shall mean a Borrowing comprised of Eurodollar Loans.

“Eurodollar Loan” shall mean any Loan bearing interest at a rate determined by
reference to the Adjusted LIBO Rate in accordance with the provisions of
Article II.

“Event of Default” shall have the meaning assigned to such term in Article VII.

“Excluded Taxes” shall mean, with respect to any payment made by any Loan Party
under any Loan Document, any of the following Taxes imposed on or with respect
to a Recipient: (a) Other Connection Taxes, (b) Taxes that would not have arisen
but for a failure by a Non-U.S. Lender to comply with the provisions of
Section 2.18(f) and (c) in the case of a Lender (other than an assignee pursuant
to a request by a Borrower under Section 2.19(a)), any U.S. Federal withholding
Taxes resulting from any law in effect (including FATCA) on (and, in the case of
FATCA, including any regulations or official interpretations thereof issued
after) the date such Lender becomes a party to this Agreement (or designates a
new lending office), except to the extent that such Lender (or its assignor, if
any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrowers with respect to
such withholding Taxes pursuant to Section 2.18(a).

“Existing Credit Agreement” shall mean the Credit Agreement, dated as of
April 11, 2006, among the Borrowers, the lenders party thereto and JPMorgan, as
issuing bank and as administrative agent, as the same has been amended,
supplemented or otherwise modified from time to time prior to the Closing Date.

“FATCA” shall mean Sections 1471 through 1474 of the Code, as in effect on the
date hereof, and any applicable Treasury regulations promulgated thereunder or
published administrative guidance implementing such Sections.

“Federal Funds Effective Rate” shall mean, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.

“Federal Power Act” shall mean the Federal Power Act of 1920, 16 U.S.C. §§ 791a
et seq., and the rules and regulations promulgated thereunder, as amended from
time to time.

“Fee Letter” shall mean the Fee Letter, dated September 3, 2010, between El Paso
and JPMorgan, as the Administrative Agent and the Issuing Bank.

 

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“Fees” shall mean the Commitment Fees, the Administrative Agent Fees, the L/C
Participation Fees and the Issuing Bank Fees.

“FERC” shall mean the Federal Energy Regulatory Commission, or any Governmental
Authority succeeding to any or all of such Commission’s authority.

“Financial Officer” of any person shall mean the chief financial officer,
principal accounting officer, treasurer, controller or other vice president with
financial planning responsibilities of such person.

“First Mortgage Bonds” shall mean any series of First Mortgage Bonds of El Paso
issued pursuant to a Mortgage Indenture after the date hereof.

“GAAP” shall mean generally accepted accounting principles in the United States
of America applied on a consistent basis.

“Governmental Authority” shall mean any Federal, state, local or foreign court
or governmental agency, authority, instrumentality or regulatory body.

“Guarantee” of or by any person shall mean any obligation, contingent or
otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the “primary obligor”) in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness of the payment of such
Indebtedness or (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; provided, however, that the
term Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business.

“Hazardous Materials” shall mean all explosive or radioactive substances or
wastes, hazardous or toxic substances or wastes, pollutants, solid, liquid or
gaseous wastes, including petroleum or petroleum distillates, asbestos or
asbestos-containing materials, polychlorinated biphenyls (“PCBs”) or
PCB-containing materials or equipment, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.

“Increasing Lender” shall have the meaning assigned to such term in
Section 2.21(a).

“Incremental Facility Amount” shall mean, at any time, the excess, if any, of
(a) $100,000,000 over (b) the aggregate increase in the Total Commitment
established prior to such time pursuant to Section 2.21.

“Indebtedness” of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all

 

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obligations of such person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such person upon which interest charges are
customarily paid, (d) all obligations of such person under conditional sale or
other title retention agreements relating to property or assets purchased by
such person, (e) all obligations of such person issued or assumed as the
deferred purchase price of property or services (excluding trade accounts
payable and accrued obligations incurred in the ordinary course of business),
(f) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, (g) all Guarantees by such person
of Indebtedness of others, (h) all Capital Lease Obligations of such person,
(i) all obligations of such person in respect of interest rate protection
agreements, foreign currency exchange agreements or other interest or exchange
rate hedging arrangements, (j) the principal component of all obligations of
such person as an account party in respect of letters of credit (other than any
letter of credit in respect of which a back-to-back letter of credit has been
issued under, or in a transaction permitted by, this Agreement, provided that
the commercial bank issuing such back-to-back letter of credit (if other than
the Issuing Bank) has a long-term senior unsecured debt rating of not less than
A- by S&P and not less than A3 by Moody’s) and (k) the principal component of
all obligations of such person as an account party in respect of bankers’
acceptances. The Indebtedness of any person shall include the Indebtedness of
any partnership in which such person is a general partner, other than to the
extent that the instrument or agreement evidencing such Indebtedness expressly
limits the liability of such person in respect thereof.

“Indemnified Taxes” shall mean (a) Taxes, other than Excluded Taxes, imposed on
or with respect to any payment made by any Loan Party under any Loan Document
and (b) Other Taxes.

“Index Debt” shall mean the senior, unsecured, non-credit enhanced, long-term
debt of El Paso.

“Interest Payment Date” shall mean, (a) with respect to any ABR Loan, the last
day of each March, June, September and December, and (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a Eurodollar Borrowing with an
Interest Period of more than three months’ duration, each day that would have
been an Interest Payment Date had successive Interest Periods of three months’
duration been applicable to such Borrowing.

“Interest Period” shall mean, as to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the
applicable Borrower may elect; provided, however, that if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day. Interest shall accrue from
and including the first day of an Interest Period to but excluding the last day
of such Interest Period.

 

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“IRS” shall mean the United States Internal Revenue Service.

“Issuing Bank” shall have the meaning assigned to such term in the preamble to
this Agreement.

“Issuing Bank Fees” shall have the meaning assigned to such term in
Section 2.05(c).

“JPMorgan” shall mean JPMorgan Chase Bank, N.A., together with its successors
and assigns.

“L/C Commitment” shall mean the commitment of the Issuing Bank to issue Letters
of Credit pursuant to Section 2.20.

“L/C Disbursement” shall mean a payment or disbursement made by the Issuing Bank
pursuant to a Letter of Credit.

“L/C Exposure” shall mean at any time the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
principal amount of all L/C Disbursements that have not yet been reimbursed at
such time. The L/C Exposure of any Lender at any time shall mean its Applicable
Percentage of the aggregate L/C Exposure at such time.

“L/C Participation Fee” shall have the meaning assigned to such term in
Section 2.05(c).

“Lenders” shall mean (a) the financial institutions listed on Schedule 2.01,
(b) any financial institution that has become a party hereto pursuant to an
Assignment and Acceptance and (c) any Augmenting Lender, in each case other than
any such financial institution or Augmenting Lender that has ceased to be a
party hereto pursuant to an Assignment and Acceptance.

“Letter of Credit” shall mean any letter of credit issued pursuant to
Section 2.20.

“LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on the Reuters Screen LIBOR01 (or on any
successor or substitute screen or page of such service, or any successor to or
substitute for such service, providing rate quotations comparable to those
currently provided on such screen of such service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the “LIBO Rate” with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.

 

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“Lien” shall mean, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, encumbrance, charge or security interest in or on such asset,
(b) the interest of a vendor or a lessor under any conditional sale agreement,
capital lease or title retention agreement (or any financing lease having
substantially the same economic effect as any of the foregoing) relating to such
asset and (c) in the case of securities, any purchase option, call or similar
right of a third party with respect to such securities.

“Loan Documents” shall mean this Agreement, the Letters of Credit, the Fee
Letter, any Notes and each Subsidiary Guarantee Agreement.

“Loan Parties” shall mean the Borrowers and the Subsidiary Guarantors.

“Loans” shall mean the loans made by the Lenders to the Borrowers pursuant to
Section 2.01. Each Loan shall be a Eurodollar Loan or an ABR Loan.

“Margin Stock” shall have the meaning assigned to such term in Regulation U.

“Material Adverse Effect” shall mean (a) a materially adverse effect on the
business, assets, operations or financial condition of El Paso and the
Subsidiaries, taken as a whole, (b) material impairment of the ability of the
Trustee, El Paso or the Subsidiary Guarantors (taken as a whole) to perform any
of their respective payment or other material obligations under any Loan
Document to which it is or will be a party or (c) material impairment of the
rights of the Lenders under any Loan Document.

“Material Subsidiary” shall mean, at any time, (a) a Domestic Subsidiary of El
Paso (other than a Receivables Subsidiary) with consolidated total assets at
such time equal to or greater than 10% of El Paso’s consolidated total assets at
such time or (b) any other Subsidiary which becomes a Subsidiary Guarantor.

“Maturity Date” shall mean the fourth anniversary of the Closing Date, which
anniversary date is September 23, 2014.

“Moody’s” shall mean Moody’s Investors Service, Inc., and its successors.

“Mortgage Indenture” shall mean any indenture (including, without limitation,
any indenture entered into by El Paso following the date hereof) secured by a
mortgage Lien upon El Paso’s Operating Property.

“Multiemployer Plan” shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.

“Non- U.S. Lender” shall mean a Lender that is not a U.S. Person.

“Note” shall have the meaning assigned to such term in Section 2.04(e).

“Nuclear Fuel” shall have the meaning assigned to such term in the Purchase
Contract.

 

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“Nuclear Waste Act” shall mean the Nuclear Waste Policy Act of 1982, 42 U.S.C.
§§ 10101 et seq., the Nuclear Waste Policy Amendments Act of 1987, 42 U.S.C.
§§ 10172, 10172a et seq., and the rules and regulations promulgated thereunder,
as amended from time to time.

“Obligations” shall mean, collectively, the Trust Obligations and the El Paso
Obligations.

“Obligation Termination Date” shall have the meaning assigned to such term in
Section 12.12(a).

“Operating Property” shall mean, as of any particular time, (a) all of the real,
personal and mixed property which is an integral part of or is used or to be
used as an integral part of the regulated electric generating, transmission
and/or distribution operations of El Paso, (b) any undivided legal interest of
El Paso in any such property which is jointly owned by El Paso and any other
person or persons and (c) franchises and permits owned by El Paso in connection
with the regulated electric generating, transmission and/or distribution
operations of El Paso, including, without limitation, all of such property which
is acquired by El Paso after the Closing Date; provided, however, that Operating
Property shall not be deemed to include any Operating Property excepted under a
Mortgage Indenture.

“Other Connection Taxes” shall mean, with respect to any Recipient, Taxes
imposed as a result of a present or former connection between such Recipient and
the jurisdiction imposing such Taxes (other than a connection arising solely
from such Recipient having executed, delivered, enforced, become a party to,
performed its obligations under, received payments under, received or perfected
a security interest under, or engaged in any other transaction pursuant to any
Loan Document).

“Other Taxes” shall mean, any present or future stamp, court, documentary,
intangible, recording, filing or similar excise or property Taxes that arise
from any payment made under, from the execution, delivery, performance,
enforcement or registration of, or from the registration, receipt or perfection
of a security interest under, or otherwise with respect to, any Loan Document,
except any such Taxes that are Other Connection Taxes imposed with respect to an
assignment (other than an assignment under Section 2.19(a)).

“Participant Register” has the meaning assigned to such term in
Section 10.04(f).

“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.

“Permitted Investments” shall mean:

(a)    direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing within one year
from the date of acquisition thereof;

 

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(b)    investments in commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, a rating of P-1 (or
higher) according to Moody’s or a rating of A-1 (or higher) according to S&P;

(c)    investments in certificates of deposit, banker’s acceptances and time
deposits maturing within one year from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank (including the Trustee)
organized under the laws of the United States of America or any state thereof
which has a combined capital and surplus and undivided profits of not less than
$250,000,000;

(d)    investments in obligations of United States Federal agencies sponsored by
the Federal government, including the Federal Home Loan Bank, the Federal Farm
Credit Bank, the Federal Home Loan Mortgage Corporation, the Federal National
Mortgage Association and the Student Loan Marketing Association;

(e)    repurchase obligations with a term of not more than seven days for
underlying securities of the type described in clauses (a) and (d) entered into
with financial institutions which have a combined capital and surplus and
undivided profits of not less than $250,000,000;

(f)     investments in tax exempt securities, including municipal issued notes
and bonds and variable-rate demand notes and bonds, having a rating at the time
of acquisition thereof of at least BBB from S&P or Baa from Moody’s;

(g)    investments in corporate bonds or notes having maturities of not more
than three years from the date of acquisition thereof and having a rating at the
time of acquisition thereof of at least BBB from S&P or Baa from Moody’s;

(h)    investments in money market or other mutual funds substantially all of
the assets of which consist of investments of the types described in clauses (a)
through (g) above; and

(i)    other investment instruments approved in writing by the Required Lenders
and offered by financial institutions which have a combined capital and surplus
and undivided profits of not less than $250,000,000.

“person” shall mean any natural person, corporation, business trust, joint
venture, association, company, limited liability company, partnership or
government, or any agency or political subdivision thereof.

“Plan” shall mean any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 307 of ERISA, and in respect of which El Paso or any ERISA Affiliate
is (or, if such plan were terminated, would under Section 4069 of ERISA be
deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

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“Prime Rate” shall mean the rate of interest per annum publicly announced from
time to time by the Administrative Agent as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as being effective.

“Purchase Contract” shall mean the Purchase Contract dated as of February 12,
1996, as amended as of February 11, 1999, July 12, 2007 and August 17, 2010,
between the Trustee and El Paso, as the same may be further amended,
supplemented or otherwise modified from time to time in accordance with the
provisions thereof and hereof.

“Purchase Contract Default” shall have the meaning assigned to the term “Event
of Default” in Section 19(a) of the Purchase Contract.

“Rating Agency” shall mean S&P and Moody’s.

“Receivables” shall have the meaning assigned to such term in the definition of
“Receivables Facility”.

“Receivables Facility” shall mean one or more receivables financing facilities,
as amended from time to time, the obligations in respect of which are
non-recourse (except for customary representations, warranties, covenants,
servicing obligations and indemnities made in connection with such facilities)
to El Paso and the Subsidiaries (other than any Receivables Subsidiary),
pursuant to which El Paso and/or any Subsidiary transfers its accounts
receivable and other financial and related assets (collectively, “Receivables”)
to a Receivables Subsidiary; provided, that all terms and conditions of, and all
documentation relating to, a Receivables Facility shall be in form and substance
customary to comparable receivables securitization facilities.

“Receivables Facility Documents” shall mean all agreements, in form and
substance customary to a Receivables Facility, that may from time to time be
entered into by El Paso or a Subsidiary in connection with any Receivables
Facility, as such agreements may be amended, supplemented or otherwise modified
from time to time in accordance with the provisions thereof and hereof.

“Receivables Subsidiary” means a wholly owned Domestic Subsidiary of El Paso
formed solely for the purpose of engaging in a Receivables Facility and which
acts as a purchaser of Receivables under a Receivables Facility.

“Recipient” shall mean, as applicable, (a) the Administrative Agent, (b) any
Lender and (c) the Issuing Bank.

“Regional Transmission Organization” shall mean an entity that satisfies the
minimum characteristics, performs the functions, and accommodates the open
architecture condition set forth in FERC regulations.

“Register” shall have the meaning given such term in Section 10.04(d).

 

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“Regulation T” shall mean Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

“Regulation U” shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

“Regulation X” shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

“Release” shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.

“Remedial Action” shall mean (i) “remedial action” as such term is defined in
CERCLA, 42 U.S.C. § 9601(24), and (ii) all other actions required by any
Governmental Authority or voluntarily undertaken to: (x) clean up, remove,
treat, abate or in any other way address any Hazardous Material in the
Environment; (y) prevent the Release or threat of Release, or minimize the
further Release of any Hazardous Material; or (z) perform studies and
investigations in connection with, or as a precondition to, (x) or (y) above.

“Required Lenders” shall mean, at any time, Lenders having Loans, L/C Exposure
and unused Commitments representing more than 50% of the sum of all Loans
outstanding, L/C Exposure and unused Commitments at such time.

“Responsible Officer” of any person shall mean any executive officer or
Financial Officer of such person and any other officer or similar official
thereof responsible for the administration of the obligations of such person in
respect of this Agreement.

“Rio Grande Resources Trust II” shall mean the trust created by the Trust
Agreement.

“SEC” shall mean the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

“Securities Act” shall mean the Securities Act of 1933, as amended from time to
time.

“Securities Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended from time to time.

“Senior Unsecured Notes” shall mean El Paso’s (i) 6.0% Senior Notes due May 15,
2035 in an initial aggregate principal amount of $400,000,000 and (ii) 7.5%
Senior Notes due March 15, 2038 in an initial aggregate principal amount of
$150,000,000, in each case issued pursuant to the Indenture dated as of May 1,
2005, between El Paso and JPMorgan.

“S&P” shall mean Standard & Poor’s Rating Services and its successors.

 

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“Statutory Reserve Rate” shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Administrative Agent or any Lender (including any branch,
Affiliate, or other fronting office making or holding a Loan) is subject for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.

“Stockholders’ Equity” shall mean, as at any date of determination, the
stockholders’ equity at such date of El Paso, as determined in accordance with
GAAP.

“subsidiary” shall mean, with respect to any person (herein referred to as the
“parent”), any corporation, partnership, association or other business entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or more than 50% of
the general partnership interests are, at the time any determination is being
made, owned, controlled or held, or (b) that is, at the time any determination
is made, otherwise Controlled, by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.

“Subsidiary” shall mean any subsidiary of El Paso.

“Subsidiary Guarantee Agreement” shall mean each guarantee agreement delivered
pursuant to Section 5.09, each substantially in the form of Exhibit D.

“Subsidiary Guarantor” shall mean each Subsidiary that becomes a party to a
Subsidiary Guarantee Agreement.

“Syndication Agent” shall have the meaning assigned to such term in the preamble
to this Agreement. Notwithstanding anything contained in this Agreement to the
contrary, no Lender identified as the Syndication Agent shall have any separate
duties, responsibilities, obligations, authority or, except as expressly set
forth in this Agreement, rights as Syndication Agent.

“Taxes” shall mean, any present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.

“Total Consolidated Capital” shall mean, as at any date of determination, the
sum of Total Consolidated Debt on such date and Stockholders’ Equity at such
date.

 

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“Total Commitment” shall mean, at any time, the aggregate amount of the
Commitments, as in effect at such time. The Total Commitment as of the Closing
Date is $200,000,000.

“Total Consolidated Debt” shall mean, as of any date of determination, all
Indebtedness (other than (a) Indebtedness of the type referred to in clause (i)
of the definition of the term “Indebtedness”, (b) Indebtedness of the type
referred to in clause (j) of the definition of the term “Indebtedness”, except
to the extent of unreimbursed drawings thereunder, and (c) Indebtedness of the
type referred to in clause (k) of the definition of the term “Indebtedness”) of
El Paso at such date.

“Transactions” shall have the meaning assigned to such term in Section 3.02.

“Trust Agreement” shall mean the Trust Agreement dated as of February 12, 1996,
between the Trustee and El Paso, providing for the creation of the Rio Grande
Resources Trust II, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the provisions thereof and hereof.

“Trustee” shall have the meaning assigned to such term in the preamble to this
Agreement.

“Trustee L/C Exposure” shall mean that part of the L/C Exposure attributable to
all Letters of Credit issued for the account of the Trustee.

“Trust Indenture Act” shall mean the Trust Indenture Act of 1939, and the rules
and regulations promulgated thereunder, as amended from time to time.

“Trust Obligations” shall have the meaning assigned to such term in
Section 9.01.

“Trust Senior Unsecured Notes” shall mean the Rio Grande Resources Trust II’s
(i) 3.67% Senior Notes due August 15, 2015 in an initial aggregate principal
amount of $15,000,000, (ii) 4.47% Senior Notes due August 15, 2017 in an initial
aggregate principal amount of $50,000,000 and (iii) 5.04% Senior Notes due
August 15, 2020 in an initial aggregate principal amount of $45,000,000, in each
case issued pursuant to the Note Purchase Agreement, dated as of August 17,
2010, among El Paso, the Rio Grande Resources Trust II and the Purchasers (as
defined therein) party thereto.

“Trust Termination Date” shall mean the date of any termination of the Purchase
Contract.

“Type”, when used in respect of any Loan or Borrowing, shall refer to the Rate
by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined. For purposes hereof, the term “Rate” shall include the
Adjusted LIBO Rate and the Alternate Base Rate.

“Union Bank” shall mean Union Bank, N.A., together with its successors and
assigns.

 

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“USA Patriot Act” shall mean The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).

“U.S. Person” shall mean a “United States person” within the meaning of
Section 7701(a)(30) of the Code.

“U.S. Tax Certificate” has the meaning assigned to such term in
Section 2.18(f)(ii)(D)(2).

“Wholly Owned Subsidiary” of any person (the “Parent”) shall mean a subsidiary
of the Parent of which securities (except for directors’ qualifying shares) or
other ownership interests representing 100% of the equity or 100% of the
ordinary voting power or 100% of the general partnership interests are, at the
time any determination is being made, owned, controlled or held by the Parent
and/or one or more Wholly Owned Subsidiaries of the Parent.

“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

“Withholding Agent” shall mean any Loan Party and the Administrative Agent.

SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. All references
herein to Articles, Sections, Exhibits and Schedules shall be deemed references
to Articles and Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. Except as otherwise expressly
provided herein, (a) any reference in this Agreement to any Loan Document shall
mean such document as amended, restated, supplemented or otherwise modified from
time to time and (b) all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided,
however, that, if El Paso notifies the Administrative Agent that El Paso wishes
to amend any covenant in Article VI or any related definition to eliminate the
effect of any change in GAAP occurring after the Closing Date on the operation
of such covenant (or if the Administrative Agent notifies El Paso that the
Required Lenders wish to amend Article VI or any related definition for such
purpose), then El Paso’s compliance with such covenant shall be determined on
the basis of GAAP in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn or such covenant is
amended in a manner satisfactory to El Paso and the Required Lenders.

ARTICLE II

The Credits

SECTION 2.01. Commitments. Subject to the terms and conditions and relying upon
the representations and warranties herein set forth, each Lender agrees,
severally and not

 

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jointly, to make Loans to the Trustee or El Paso, at any time and from time to
time on or after the date on which the conditions set forth in Section 4.02 are
satisfied, and until the earlier of the Maturity Date and the termination of the
Commitment of such Lender in accordance with the terms hereof, in an aggregate
principal amount at any time outstanding that will not result in such Lender’s
Credit Exposure exceeding such Lender’s Commitment. Within the limits set forth
in the preceding sentence and subject to the terms, conditions and limitations
set forth herein, the Borrowers may borrow, pay or prepay and reborrow Loans.

SECTION 2.02. Loans. (a) Each Loan shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in accordance with their
respective Commitments; provided, however, that the failure of any Lender to
make any Loan shall not in itself relieve any other Lender of its obligation to
lend hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan required to be
made by such other Lender). Except for Loans deemed made pursuant to
Section 2.02(f), the Loans comprising any Borrowing shall be in an aggregate
principal amount that is (i)(A) with respect to any Eurodollar Borrowing, an
integral multiple of $1,000,000 and not less than $5,000,000 or (B) with respect
to any ABR Borrowing, an integral multiple of $1,000 and not less than $100,000
or (ii) equal to the remaining available balance of the Commitments.

(b)    Subject to Sections 2.08 and 2.13, each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the applicable Borrower may request
pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrowers to repay such Loan in accordance with the terms of
this Agreement. Borrowings of more than one Type may be outstanding at the same
time; provided, however, that the Borrowers shall not be entitled to request any
Borrowing that, if made, would result in more than eight (8) Eurodollar
Borrowings outstanding hereunder at any time. For purposes of the foregoing,
Borrowings having different Interest Periods, regardless of whether they
commence on the same date, shall be considered separate Borrowings.

(c)    Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds to such
account in New York City as the Administrative Agent may designate not later
than 1:00 p.m., New York City time, and the Administrative Agent shall by
2:00 p.m., New York City time, credit the amounts so received to an account in
the name of the applicable Borrower maintained with the Administrative Agent and
designated by such Borrower in the applicable Borrowing Request or, if a
Borrowing shall not occur on such date because any condition precedent herein
specified shall not have been met, return the amounts so received to the
respective Lenders.

(d)    Unless the Administrative Agent shall have received notice from a Lender
prior to the date of any Borrowing that such Lender will not make available to
the Administrative Agent such Lender’s portion of such Borrowing, the
Administrative Agent may assume that such Lender has made such portion available
to the Administrative Agent on the date of such Borrowing in accordance with
paragraph (c) above and the Administrative Agent may, in reliance upon such
assumption, make available to the applicable Borrower on

such date a corresponding amount. If the Administrative Agent shall have so made
funds available then, to

 

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the extent that such Lender shall not have made such portion available to the
Administrative Agent, such Lender and the applicable Borrower severally agree to
repay to the Administrative Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the applicable Borrower until the date such amount is repaid to the
Administrative Agent at (i) in the case of either Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing and (ii) in the
case of such Lender, the Federal Funds Effective Rate. If such Lender shall
repay to the Administrative Agent such corresponding amount, such amount shall
constitute such Lender’s Loan as part of such Borrowing for purposes of this
Agreement.

(e)    Notwithstanding any other provision of this Agreement, (i) neither
Borrower shall be entitled to request any Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date and (ii) the
Trustee shall not be entitled to request any Borrowing on or after the Trust
Termination Date.

(f)     If the Issuing Bank shall not have received from the Trustee or El Paso,
as the case may be, the payment required to be made by Section 2.20(e) within
the time specified in such Section, the Issuing Bank will promptly notify the
Administrative Agent of the L/C Disbursement and the Administrative Agent will
promptly notify each Lender of such L/C Disbursement and its Applicable
Percentage thereof. Each Lender shall pay by wire transfer of immediately
available funds to the Administrative Agent not later than 2:00 p.m., New York
City time, on such date (or, if such Lender shall have received such notice
later than 12:00 (noon), New York City time, on any day, not later than
10:00 a.m., New York City time, on the immediately following Business Day), an
amount equal to such Lender’s Applicable Percentage of such L/C Disbursement (it
being understood that such amount shall be deemed to constitute an ABR Loan of
such Lender and such payment shall be deemed to have reduced the L/C Exposure by
such amount), and the Administrative Agent will promptly pay to the Issuing Bank
amounts so received by it from the Lenders. The Administrative Agent will
promptly pay to the Issuing Bank any amounts received by it from the Trustee or
El Paso, as the case may be, pursuant to Section 2.20(e) prior to the time that
any Lender makes any payment pursuant to this paragraph (f); any such amounts
received by the Administrative Agent thereafter will be promptly remitted by the
Administrative Agent to the Lenders that shall have made such payments and to
the Issuing Bank, as their interests may appear. If any Lender shall not have
made its Applicable Percentage of such L/C Disbursement available to the
Administrative Agent as provided above, such Lender and the Trustee or El Paso,
as the case may be, severally agree to pay interest on such amount, for each day
from and including the date such amount is required to be paid in accordance
with this paragraph to but excluding the date such amount is paid, to the
Administrative Agent at (i) in the case of the Trustee or El Paso, as the case
may be, a rate per annum equal to the interest rate applicable to ABR Loans
pursuant to Section 2.06(a), and (ii) in the case of such Lender, for the first
such day, the Federal Funds Effective Rate, and for each day thereafter, the
Alternate Base Rate.

SECTION 2.03. Borrowing Procedure. In order to request a Borrowing (other than a
deemed Borrowing pursuant to Section 2.02(f), as to which this Section 2.03
shall not apply), the applicable Borrower shall hand deliver or telecopy to the
Administrative Agent a duly completed Borrowing Request (a) in the case of a
Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three
Business Days before a proposed Borrowing, and (b) in

 

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the case of an ABR Borrowing, not later than 12:00 noon, New York City time, on
the day of the proposed Borrowing. Each Borrowing Request shall be irrevocable,
shall be signed by or on behalf of the applicable Borrower and shall specify the
following information: (i) whether the Borrowing then being requested is to be a
Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Borrowing (which
shall be a Business Day); (iii) the number and location of the account to which
funds are to be disbursed (which shall be an account that complies with the
requirements of Section 2.02(c)); (iv) the amount of such Borrowing; and (v) if
such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect
thereto; provided, however, that, notwithstanding any contrary specification in
any Borrowing Request, each requested Borrowing shall comply with the
requirements set forth in Section 2.02. If no election as to the Type of
Borrowing is specified in any such notice, then the requested Borrowing shall be
an ABR Borrowing. If no Interest Period with respect to any Eurodollar Borrowing
is specified in any such notice, then the applicable Borrower shall be deemed to
have selected an Interest Period of one month’s duration. The Administrative
Agent shall promptly advise the Lenders of any notice given pursuant to this
Section 2.03 (and the contents thereof), and of each Lender’s portion of the
requested Borrowing.

SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) Each Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender the then unpaid principal amount of each Loan made to such Borrower
on the Maturity Date; provided, however, that if the Purchase Contract shall
terminate prior to the Maturity Date, the Trustee shall repay the unpaid
principal amount of each Loan made to it on the earlier of (i) the Maturity
Date, (ii) the 150th day following the Trust Termination Date, (iii) if any
Event of Default that is not a Purchase Contract Default shall be in existence
on the Trust Termination Date or shall thereafter occur, the 10th day following
the later to occur of the Trust Termination Date or such Event of Default or
(iv) if a Purchase Contract Default shall have occurred, on (A) the date of such
occurrence or (B) such later date as the Administrative Agent may elect.

(b)    Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of each Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid such Lender from time to time
under this Agreement.

(c)    The Administrative Agent shall maintain accounts in which it will record
(i) the amount of each Loan made hereunder, the Type thereof and the Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from each Borrower to each Lender hereunder
and (iii) the amount of any sum received by the Administrative Agent hereunder
from each Borrower and each Lender’s share thereof.

(d)    The entries made in the accounts maintained pursuant to paragraphs (b)
and (c) above shall be prima facie evidence of the existence and amounts of the
obligations therein recorded; provided, however, that the failure of any Lender
or the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligations of the Borrowers to repay the Loans in
accordance with their terms.

(e)    Notwithstanding any other provision of this Agreement, in the event any
Lender shall request and receive a promissory note payable to such Lender and
its registered

 

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assigns (each, a “Note”), the interests represented by such Note shall at all
times (including after any assignment of all or part of such interests pursuant
to Section 10.04) be represented by one or more Notes payable to the payee named
therein or its registered assigns.

SECTION 2.05. Fees. (a) The Borrowers agree, jointly and severally, to pay to
each Lender, through the Administrative Agent, on the last day of March, June,
September and December in each year and on each date on which the Commitment of
such Lender shall expire or be terminated as provided herein, a commitment fee
(a “Commitment Fee”) equal to the Applicable Spread per annum in effect from
time to time on the daily unused amount of the Commitment of such Lender during
the preceding quarter (or other period commencing on the Closing Date or ending
on the Maturity Date or the date on which the Commitments of such Lender shall
expire or be terminated). All Commitment Fees shall be computed on the basis of
the actual number of days elapsed in a year of 360 days. The Commitment Fees due
to each Lender shall commence to accrue on the Closing Date and shall cease to
accrue on the date on which the Commitment of such Lender shall expire or be
terminated as provided herein.

(b)    The Borrowers agree, jointly and severally, to pay to the Administrative
Agent the fees set forth in the Fee Letter at the times and in the amounts
specified therein (the “Administrative Agent Fees”).

(c)    The Borrowers agree, jointly and severally, to pay (i) to each Lender,
through the Administrative Agent, on the last day of March, June, September and
December of each year and on the date on which the Commitment of such Lender
shall be terminated as provided herein, a fee (an “L/C Participation Fee”)
calculated on such Lender’s Applicable Percentage of the daily aggregate L/C
Exposure (excluding the portion thereof attributable to unreimbursed L/C
Disbursements) during the preceding quarter (or shorter period commencing on the
Closing Date or ending on the Maturity Date or the date on which all Letters of
Credit have been canceled or have expired and the Commitments of all Lenders
shall have been terminated) at a rate per annum equal to the Applicable Spread
from time to time used to determine the interest rate on Eurodollar Loans
pursuant to Section 2.06(b) and (ii) to the Issuing Bank with respect to each
Letter of Credit the fronting fees set forth in the Fee Letter (the “Issuing
Bank Fees”). All L/C Participation Fees and Issuing Bank Fees shall be computed
on the basis of the actual number of days elapsed in a year of 360 days.

(d)    All Fees shall be paid on the dates due, in immediately available funds,
to the Administrative Agent for distribution, if and as appropriate, among the
Lenders, except that the Issuing Bank Fees shall be paid directly to the Issuing
Bank. Once paid, none of the Fees shall be refundable under any circumstances.

SECTION 2.06. Interest on Loans. (a) Subject to the provisions of Section 2.07,
the Loans comprising each ABR Borrowing shall bear interest (computed on the
basis of the actual number of days elapsed over a year of 365 or 366 days, as
the case may be, when the Alternate Base Rate is determined by reference to the
Prime Rate and over a year of 360 days at all other times) at a rate per annum
equal to the Alternate Base Rate plus the Applicable Spread in effect from time
to time.

 

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(b)    Subject to the provisions of Section 2.07, the Loans comprising each
Eurodollar Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Spread in effect from time to time.

(c)    Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this Agreement. The
applicable Alternate Base Rate, Adjusted LIBO Rate and Applicable Spread for
each Interest Period or day within an Interest Period, as the case may be, shall
be determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.

SECTION 2.07. Default Interest. If either Borrower shall default in the payment
of the principal of or interest on any Loan or any other amount becoming due
hereunder, by acceleration or otherwise, or under any other Loan Document, such
Borrower shall on demand from time to time pay interest, to the extent permitted
by law, on such defaulted amount to but excluding the date of actual payment
(after as well as before judgment) (a) in the case of overdue principal, at the
rate otherwise applicable to such Loan pursuant to Section 2.06 plus 2.00% per
annum and (b) in all other cases, at a rate per annum (computed on the basis of
the actual number of days elapsed over a year of 365 or 366 days, as the case
may be, when determined by reference to the Prime Rate and over a year of
360 days at all other times) equal to the sum of the Alternate Base Rate plus
the Applicable Spread in effect from time to time plus 2.00%.

SECTION 2.08. Alternate Rate of Interest. In the event, and on each occasion,
that on the day two Business Days prior to the commencement of any Interest
Period for a Eurodollar Borrowing the Administrative Agent shall have determined
that dollar deposits in the principal amounts of the Loans comprising such
Borrowing are not generally available in the London interbank market, or that
the rates at which such dollar deposits are being offered will not adequately
and fairly reflect the cost to any Lender of making or maintaining its
Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the LIBO Rate, the Administrative Agent shall, as soon as
practicable thereafter, give written or facsimile notice of such determination
to the Borrowers and the Lenders. In the event of any such determination, until
the Administrative Agent shall have advised the Borrowers and the Lenders that
the circumstances giving rise to such notice no longer exist, any request by
either Borrower for a Eurodollar Borrowing pursuant to Section 2.03 shall be
deemed to be a request for an ABR Borrowing. Each determination by the
Administrative Agent hereunder shall be conclusive absent manifest error.

SECTION 2.09. Termination and Reduction of Commitments.    (a)    The
Commitments and the L/C Commitment shall automatically terminate on the Maturity
Date.

(b)    Upon at least three Business Days’ prior irrevocable written or facsimile
notice to the Administrative Agent, the Borrowers may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the
Commitments; provided, however, that (i) each partial reduction of the
Commitments shall be in an integral multiple of $1,000,000 and in a minimum
amount of $5,000,000 and (ii) the Total Commitment shall not be reduced to an
amount that is less than the Aggregate Credit Exposure at the time; provided
that a

 

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notice of termination of the Commitments delivered by the Borrowers may state
that such notice is conditioned upon the effectiveness of other credit
facilities or debt financing (such notice to specify the proposed effective
date), in which case such notice may be revoked by the Borrowers (by notice to
the Administrative Agent on or prior to such specified effective date) if such
condition is not satisfied and the Borrowers shall indemnify the Lenders in
accordance with Section 2.14 in connection therewith.

(c)    Each reduction in the Commitments hereunder shall be made ratably among
the Lenders in accordance with their respective Commitments. The Borrowers shall
pay to the Administrative Agent for the account of the applicable Lenders, on
the date of each termination or reduction, the Commitment Fees on the amount of
the Commitments so terminated or reduced accrued to but excluding the date of
such termination or reduction.

SECTION 2.10. Conversion and Continuation of Borrowings. The applicable Borrower
shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 12:00 (noon), New York City time, one
Business Day prior to conversion, to convert any Eurodollar Borrowing into an
ABR Borrowing, (b) not later than 11:00 a.m., New York City time, three Business
Days prior to conversion or continuation, to convert any ABR Borrowing into a
Eurodollar Borrowing or to continue any Eurodollar Borrowing as a Eurodollar
Borrowing for an additional Interest Period, and (c) not later than 11:00 a.m.,
New York City time, three Business Days prior to conversion, to convert the
Interest Period with respect to any Eurodollar Borrowing to another permissible
Interest Period, subject in each case to the following:

(i)     each conversion or continuation shall be made pro rata among the Lenders
in accordance with the respective principal amounts of the Loans comprising the
converted or continued Borrowing;

(ii)     if less than all the outstanding principal amount of any Borrowing
shall be converted or continued, then each resulting Borrowing shall satisfy the
limitations specified in Sections 2.02(a) and 2.02(b) regarding the principal
amount and maximum number of Borrowings of the relevant Type;

(iii)    each conversion shall be effected by each Lender and the Administrative
Agent by recording for the account of such Lender the new Loan of such Lender
resulting from such conversion and reducing the Loan (or portion thereof) of
such Lender being converted by an equivalent principal amount; accrued interest
on any Eurodollar Loan (or portion thereof) being converted shall be paid by
such Borrower at the time of conversion;

(iv)    if any Eurodollar Borrowing is converted at a time other than the end of
the Interest Period applicable thereto, such Borrower shall pay, upon demand,
any amounts due to the Lenders pursuant to Section 2.14;

(v)    any portion of a Borrowing maturing in less than one month may not be
converted into or continued as a Eurodollar Borrowing;

 

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(vi)     any portion of a Eurodollar Borrowing that cannot be converted into or
continued as a Eurodollar Borrowing by reason of the immediately preceding
clause shall be automatically converted at the end of the Interest Period in
effect for such Borrowing into an ABR Borrowing; and

(vii)    upon notice to the Borrowers from the Administrative Agent given at the
request of the Required Lenders, after the occurrence and during the continuance
of a Default or Event of Default, no outstanding Loan may be converted into, or
continued as, a Eurodollar Loan.

Each notice pursuant to this Section 2.10 shall be irrevocable and shall refer
to this Agreement and specify (A) the identity and amount of the Borrowing that
the applicable Borrower requests be converted or continued, (B) whether such
Borrowing is to be converted to or continued as a Eurodollar Borrowing or an
ABR Borrowing, (C) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (D) if such Borrowing is to be
converted to or continued as a Eurodollar Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a Eurodollar Borrowing, the
applicable Borrower shall be deemed to have selected an Interest Period of one
month’s duration. The Administrative Agent shall advise the Lenders of any
notice given pursuant to this Section 2.10 and of each Lender’s portion of any
converted or continued Borrowing. If a Borrower shall not have given notice in
accordance with this Section 2.10 to continue any Borrowing into a subsequent
Interest Period (and shall not otherwise have given notice in accordance with
this Section 2.10 to convert such Borrowing), such Borrowing shall, at the end
of the Interest Period applicable thereto (unless repaid pursuant to the terms
hereof), automatically be continued into an ABR Borrowing.

SECTION 2.11. Optional Prepayment. (a) Each Borrower shall have the right at any
time and from time to time to prepay any Borrowing, in whole or in part, upon
written or facsimile notice (or telephone notice promptly confirmed by written
or facsimile notice) to the Administrative Agent before 12:00 (noon), New York
City time (i) in the case of any prepayment of a Eurodollar Borrowing, at least
three Business Days prior to the date designated for such prepayment or (ii) in
the case of any prepayment of an ABR Borrowing, on the date of such prepayment;
provided, however, that each partial prepayment shall be in an amount that is
(x) in the case of any partial prepayment of a Eurodollar Borrowing, an integral
multiple of $1,000,000 and not less than $5,000,000 or (y) in the case of any
partial prepayment of an ABR Borrowing, an integral multiple of $1,000 and not
less than $100,000.

(b)     In the event of a termination of all the Commitments, each Borrower
shall repay or prepay all of its outstanding Borrowings on the date of such
termination, together with accrued interest to but excluding the date of such
payment. In the event of any partial reduction of the Commitments, then (i) at
or prior to the effective date of such reduction or termination, the
Administrative Agent shall notify the Borrowers and the Lenders of the Aggregate
Credit Exposure after giving effect thereto and (ii) if the Aggregate Credit
Exposure would exceed the Total Commitment after giving effect to such reduction
or termination, then the Borrowers shall, on the date of such reduction or
termination, repay or prepay Borrowings in an amount sufficient to eliminate
such excess.

 

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(c)    Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the applicable Borrower to prepay such Borrowing by
the amount stated therein on the date stated therein. All prepayments under this
Section 2.11 shall be subject to Section 2.14 but otherwise without premium or
penalty. All prepayments under this Section 2.11 (other than prepayments of ABR
Loans prior to the Maturity Date) shall be accompanied by accrued interest on
the principal amount being prepaid to but excluding the date of payment.

SECTION 2.12. Reserve Requirements; Change in Circumstances. (a) Notwithstanding
any other provision of this Agreement, if after the date of this Agreement, but
prior to the first date on which the events described in clauses (A), (B),
(C) and (D) of subsection (d) of this Section 2.12 shall have occurred (the
“Obligation Termination Date”), any Change in Law shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets
of, deposits with or for the account of or credit extended by any Lender or the
Issuing Bank or shall impose on such Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or Eurodollar
Loans made by such Lender or any Letter of Credit or participation therein or
subject any Recipient to any Taxes (other than (i) Taxes imposed on or with
respect to any payment made by any Loan Party under any Loan Document, which
shall be solely governed by Section 2.18, (ii) Other Taxes, and (iii) Other
Connection Taxes on gross or net income, profits or receipts (including
value-added or similar Taxes, franchise Taxes and branch profits Taxes)) on its
loans, letters of credit, commitments, or other obligations, or its deposits,
reserves, other liabilities or capital attributable thereto, and the result of
any of the foregoing shall be to increase the cost to such Lender or such other
Recipient of making or maintaining any Eurodollar Loan or increase the cost to
any Lender, the Issuing Bank or such other Recipient of issuing or maintaining
any Letter of Credit or purchasing or maintaining a participation therein or to
reduce the amount of any sum received or receivable by such Lender, the Issuing
Bank or such other Recipient (whether of principal, interest or otherwise) by an
amount deemed by such Lender, the Issuing Bank or such other Recipient to be
material, then the applicable Borrower will pay to such Lender, the Issuing Bank
or such other Recipient, as the case may be, upon demand such additional amount
or amounts as will compensate such Lender, the Issuing Bank or such other
Recipient, as the case may be, for such additional costs incurred or reduction
suffered.

(b)    If any Lender or the Issuing Bank shall have determined that the adoption
after the date hereof, but prior to the Obligation Termination Date, of any law,
rule, regulation, agreement or guideline regarding capital adequacy, or any
change after the date hereof, but prior to the Obligation Termination Date, in
any such law, rule, regulation, agreement or guideline (whether such law, rule,
regulation, agreement or guideline has been adopted) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or the Issuing Bank or any Lender’s or the
Issuing Bank’s holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any Governmental Authority
has or would have the effect of reducing the rate of return on such Lender’s or
the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing
Bank’s holding company, if any, as a consequence of this Agreement or the Loans
made or participation in Letters of Credit purchased by such Lender pursuant
hereto or the Letters of Credit issued by the Issuing Bank pursuant hereto to a
level below that which such Lender or the Issuing Bank or

 

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such Lender’s or the Issuing Bank’s holding company could have achieved but for
such applicability, adoption, change or compliance (taking into consideration
such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s
or the Issuing Bank’s holding company with respect to capital adequacy) by an
amount deemed by such Lender or the Issuing Bank to be material, then from time
to time the applicable Borrower shall pay to such Lender or the Issuing Bank, as
the case may be, such additional amount or amounts as will compensate such
Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding
company for any such reduction suffered.

(c)    A certificate of a Lender or the Issuing Bank setting forth the amount or
amounts necessary to compensate such Lender or the Issuing Bank or its holding
company, as applicable, as specified in paragraph (a) or (b) above shall be
delivered to the applicable Borrower and shall be conclusive absent manifest
error. The applicable Borrower shall pay such Lender or the Issuing Bank the
amount shown as due on any such certificate delivered by it within 30 days after
its receipt of the same.

(d)    Failure or delay on the part of any Lender or the Issuing Bank to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
such Lender’s or the Issuing Bank’s right to demand such compensation under this
Section 2.12 for any costs incurred or reduction suffered with respect to any
date so long as such Lender or the Issuing Bank, as applicable, shall have
notified the applicable Borrower that it will demand compensation for such costs
or reduction under paragraph (c) above, not more than 90 days after the later of
(i) such date and (ii) the date on which such Lender or the Issuing Bank, as
applicable, shall have become aware of such costs or reduction. Notwithstanding
the foregoing, no notification contemplated by the preceding sentence shall in
any event be made more than 30 days after the date that (A) all the Obligations
have been indefeasibly paid in full, (B) the Lenders have no further commitment
to lend to either of the Borrowers under this Agreement, (C) the L/C Exposure
has been reduced to zero and (D) the Issuing Bank has no further obligation to
issue Letters of Credit under this Agreement. The protection of this
Section 2.12 shall be available to each Lender and the Issuing Bank regardless
of any possible contention of the invalidity or inapplicability of the law,
rule, regulation, agreement, guideline or other change or condition that shall
have occurred or been imposed.

SECTION 2.13. Change in Legality. (a) Notwithstanding any other provision of
this Agreement, if, after the date hereof, any Change in Law shall make it
unlawful for any Lender to make or maintain any Eurodollar Loan or to give
effect to its obligations as contemplated hereby with respect to any Eurodollar
Loan, then, by written notice to the Borrowers and to the Administrative Agent:

(i)     such Lender may declare that Eurodollar Loans will not thereafter (for
the duration of such unlawfulness) be made by such Lender hereunder (or be
continued for additional Interest Periods) and ABR Loans will not thereafter
(for such duration) be converted into Eurodollar Loans, whereupon any request
for a Eurodollar Borrowing (or to convert an ABR Borrowing to a Eurodollar
Borrowing or to continue a Eurodollar Borrowing for an additional Interest
Period) shall, as to such Lender only, be deemed a request for an ABR Loan (or a
request to continue an ABR Loan as such or to convert a

 

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Eurodollar Loan into an ABR Loan, as the case may be), unless such declaration
shall be subsequently withdrawn; and

(ii)    such Lender may require that all outstanding Eurodollar Loans made by it
be converted to ABR Loans, in which event all such Eurodollar Loans shall be
automatically converted to ABR Loans as of the effective date of such notice as
provided in paragraph (b) below.

In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.

(b)    For purposes of this Section 2.13, a notice to the Borrowers by any
Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrowers.

SECTION 2.14. Indemnity. Each Borrower shall indemnify each Lender against any
loss or expense that such Lender may sustain or incur as a consequence of
(a) any event, other than a default by such Lender in the performance of its
obligations hereunder, which results in (i) such Lender receiving or being
deemed to receive any amount on account of the principal of any Eurodollar Loan
to such Borrower prior to the end of the Interest Period in effect therefor,
(ii) the conversion of any Eurodollar Loan to such Borrower to an ABR Loan, or
the conversion of the Interest Period with respect to any Eurodollar Loan to
such Borrower, in each case other than on the last day of the Interest Period in
effect therefor, or (iii) any Eurodollar Loan to be made by such Lender to such
Borrower (including any Eurodollar Loan to be made pursuant to a conversion or
continuation under Section 2.10) not being made after notice of such Loan shall
have been given by such Borrower hereunder (any of the events referred to in
this clause (a) being called a “Breakage Event”) or (b) any default by such
Borrower in the making of any payment or prepayment required to be made
hereunder. In the case of any Breakage Event, such loss shall include an amount
equal to the excess, as reasonably determined by such Lender, of (i) its cost of
obtaining funds for the Eurodollar Loan that is the subject of such Breakage
Event for the period from the date of such Breakage Event to the last day of the
Interest Period in effect (or that would have been in effect) for such Loan over
(ii) the amount of interest likely to be realized by such Lender in redeploying
the funds released or not utilized by reason of such Breakage Event for such
period. A certificate of any Lender setting forth any amount or amounts which
such Lender is entitled to receive pursuant to this Section 2.14 shall be
delivered to the applicable Borrower and shall be conclusive absent manifest
error.

SECTION 2.15. Pro Rata Treatment. Except as required under Section 2.13, each
Borrowing, each payment or prepayment of principal of any Borrowing, each
payment of interest on the Loans, each payment of the Commitment Fees and the
L/C Participation Fees, each reduction of the Commitments and each conversion of
any Borrowing to or continuation of any Borrowing as a Borrowing of any Type
shall be allocated pro rata among the Lenders in accordance with their
respective applicable Commitments (or, if such Commitments shall have

 

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expired or been terminated, in accordance with the respective principal amounts
of their outstanding Loans). Each Lender agrees that in computing such Lender’s
portion of any Borrowing to be made hereunder, the Administrative Agent may, in
its discretion, round each Lender’s percentage of such Borrowing to the next
higher or lower whole dollar amount.

SECTION 2.16. Sharing of Setoffs. Each Lender agrees that if it shall, through
the exercise of a right of banker’s lien, setoff or counterclaim against either
Borrower, or pursuant to a secured claim under Section 506 of Title 11 of the
United States Code or other security or interest arising from, or in lieu of,
such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Loan or Loans or L/C
Disbursement as a result of which the unpaid principal portion of its Loans and
participation in L/C Disbursements shall be proportionately less than the unpaid
principal portion of the Loans and participation in L/C Disbursements of any
other Lender, it shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the
purchase price for, a participation in the Loans and L/C Exposure of such other
Lender, so that the aggregate unpaid principal amount of the Loans and L/C
Exposure and participation in Loans and L/C Exposure held by each Lender shall
be in the same proportion to the aggregate unpaid principal amount of all Loans
and L/C Exposure then outstanding as the principal amount of its Loans and L/C
Exposure prior to such exercise of banker’s lien, setoff or counterclaim or
other event was to the principal amount of all Loans and L/C Exposure
outstanding prior to such exercise of banker’s lien, setoff or counterclaim or
other event; provided, however, that if any such purchase or purchases or
adjustments shall be made pursuant to this Section 2.16 and the payment giving
rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustment restored without interest. Each Borrower expressly
consents to the foregoing arrangements and agrees that any Lender holding a
participation in a Loan or L/C Disbursement deemed to have been so purchased may
exercise any and all rights of banker’s lien, setoff or counterclaim with
respect to any and all moneys owing by such Borrower to such Lender by reason
thereof as fully as if such Lender had made a Loan directly to such Borrower in
the amount of such participation.

SECTION 2.17. Payments.    (a)    Each Borrower shall make each payment
(including principal of or interest on any Borrowing or any L/C Disbursement or
any Fees or other amounts) hereunder and under any other Loan Document not later
than 2:00 p.m., New York City time, on the date when due in immediately
available dollars, without setoff, defense or counterclaim. Each such payment
(other than Issuing Bank Fees, which shall be paid directly to the Issuing Bank
if other than the Administrative Agent) shall be made to the Administrative
Agent at its offices at 1111 Fannin Street, 10th Floor, Houston, TX 77002.
Notwithstanding the foregoing, each request by El Paso or the Administrative
Agent to the Trustee for a payment under this Agreement must be by an authorized
officer of the requesting party and must contain wire instructions for the
account to which that payment is to be made.

(b)    Whenever any payment (including principal of or interest on any Borrowing
or any Fees or other amounts) hereunder or under any other Loan Document shall
become due, or otherwise would occur, on a day that is not a Business Day, such
payment may

 

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be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or Fees, if applicable.

SECTION 2.18. Taxes. (a) Withholding of Taxes; Gross-Up. Each payment by any
Loan Party under the Loan Documents shall be made without withholding for any
Taxes, unless such withholding is required by any law. If any Withholding Agent
determines, in its sole discretion exercised in good faith, that it is so
required to withhold Taxes, then such Withholding Agent may so withhold and
shall timely pay the full amount of withheld Taxes to the relevant Governmental
Authority in accordance with applicable law. If such Taxes are Indemnified
Taxes, then the amount payable by such Loan Party shall be increased as
necessary so that, net of such withholding (including such withholding
applicable to additional amounts payable under this Section), the applicable
Recipient receives the amount it would have received had no such withholding
been made.

(b)    Payment of Other Taxes by the Borrower.    The Borrowers shall timely pay
any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.

(c)    Evidence of Payments.    As soon as practicable after any payment of
Indemnified Taxes by any Loan Party to a Governmental Authority, such Loan Party
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

(d)    Indemnification by the Borrowers.    The Borrowers shall jointly and
severally indemnify each Recipient for any Indemnified Taxes that are paid or
payable by such Recipient in connection with any Loan Document (including
Indemnified Taxes with respect to amounts paid or payable under this
Section 2.18(d)) and any reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes were correctly or legally imposed
or asserted by the relevant Governmental Authority. The indemnity under this
Section 2.18(d) shall be paid within 15 days after the Recipient delivers to any
Borrower a certificate stating the amount of any Indemnified Taxes so paid or
payable by such Recipient. Such certificate shall be conclusive of the amount so
paid or payable absent manifest error. Such Recipient shall deliver a copy of
such certificate to the Administrative Agent.

(e)    Indemnification by the Lenders.    Each Lender shall severally indemnify
the Administrative Agent for any Taxes (but, in the case of any Indemnified
Taxes, only to the extent that any Loan Party has not already indemnified the
Administrative Agent for such Indemnified Taxes and without limiting the
obligation of the Loan Parties to do so) attributable to such Lender that are
paid or payable by the Administrative Agent in connection with any Loan Document
and any reasonable expenses arising therefrom or with respect thereto, whether
or not such Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. The indemnity under this Section 2.18(e) shall be paid
within 10 days after the Administrative Agent delivers to the applicable Lender
a certificate stating the amount of Taxes so paid or payable by the
Administrative Agent. Such certificate shall be conclusive of the amount so paid
or payable absent manifest error.

 

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(f)    Status of Lenders. (i) Any Lender that is entitled to an exemption from,
or reduction of, any applicable withholding Tax with respect to any payments
under any Loan Document shall deliver to the Borrowers and the Administrative
Agent, at the time or times reasonably requested by the Borrowers or the
Administrative Agent, such properly completed and executed documentation
reasonably requested by the Borrowers or the Administrative Agent as will permit
such payments to be made without, or at a reduced rate of, withholding. In
addition, any Lender, if requested by the Borrowers or the Administrative Agent,
shall deliver such other documentation prescribed by law or reasonably requested
by the Borrowers or the Administrative Agent as will enable the Borrowers or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements. Notwithstanding
anything to the contrary in the preceding two sentences, the completion,
execution and submission of such documentation (other than such documentation
set forth in Section 2.18(f)(ii) and (iii) below) shall not be required if in
the Lender’s reasonable judgment such completion, execution or submission would
subject such Lender to any material unreimbursed cost or expense or would
materially prejudice the legal or commercial position of such Lender. Upon the
reasonable request of a Borrower or the Administrative Agent, any Lender shall
update any form or certification previously delivered pursuant to this
Section 2.18(f). If any form or certification previously delivered pursuant to
this Section expires or becomes obsolete or inaccurate in any respect with
respect to a Lender, such Lender shall promptly (and in any event within 10 days
after such expiration, obsolescence or inaccuracy) notify the Borrowers and the
Administrative Agent in writing of such expiration, obsolescence or inaccuracy
and update the form or certification if it is legally eligible to do so.

(ii)    Without limiting the generality of the foregoing, each Lender shall, if
it is legally eligible to do so, deliver to the Borrowers and the Administrative
Agent (in such number of copies reasonably requested by the Borrowers and the
Administrative Agent) on or prior to the date on which such Lender becomes a
party hereto, duly completed and executed copies of whichever of the following
is applicable:

 (A)    in the case of a Lender that is a U.S. Person, IRS Form W-9 certifying
that such Lender is exempt from U.S. Federal backup withholding tax;

 (B)    in the case of a Non-U.S. Lender claiming the benefits of an income tax
treaty to which the United States is a party (1) with respect to payments of
interest under any Loan Document, IRS Form W-8BEN establishing an exemption
from, or reduction of, U.S. Federal withholding Tax pursuant to the “interest”
article of such tax treaty and (2) with respect to any other applicable payments
under this Agreement, IRS Form W-8BEN establishing an exemption from, or
reduction of, U.S. Federal withholding Tax pursuant to the “business profits” or
“other income” article of such tax treaty;

 (C)    in the case of a Non-U.S. Lender for whom payments under this Agreement
constitute income that is includible in gross income for U.S. federal income tax
purposes because it is effectively connected with such Lender’s conduct of a
trade or business in the United States, IRS Form W-8ECI;

 

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(D)   in the case of a Non-U.S. Lender claiming the benefits of the exemption
for portfolio interest under Section 881(c) of the Code both (1) IRS Form W-8BEN
and (2) a certificate (a “U.S. Tax Certificate”) to the effect that such Lender
is not (a) a “bank” within the meaning of Section 881(c)(3)(A) of the Code,
(b) a “10 percent shareholder” of either Borrower within the meaning of
Section 881(c)(3)(B) of the Code (c) a “controlled foreign corporation”
described in Section 881(c)(3)(C) of the Code and (d) conducting a trade or
business in the United States with which the relevant interest payments are
effectively connected (or the interest payments are effectively connected but
are not includible in the Non-U.S. Lender’s gross income for U.S. federal income
tax purposes under an income tax treaty);

(E)    in the case of a Non-U.S. Lender that is not the beneficial owner of
payments made under this Agreement (including a partnership or a participating
Lender) (1) an IRS Form W-8IMY on behalf of itself and (2) the relevant forms
prescribed in clauses (A), (B), (C), (D) and (F) of this paragraph (f)(ii) that
would be required of each such beneficial owner or partner of such partnership
if such beneficial owner or partner were a Lender; provided, however, that if
the Lender is a partnership and one or more of its partners are claiming the
exemption for portfolio interest under Section 881(c) of the Code, such Lender
may provide a U.S. Tax Certificate on behalf of such partners; or

(F)    any other form prescribed by law as a basis for claiming exemption from,
or a reduction of, U.S. Federal withholding Tax together with such supplementary
documentation necessary to enable the Borrowers or the Administrative Agent to
determine the amount of Tax (if any) required by law to be withheld.

(iii)    If a payment made to a Lender under any Loan Document would be subject
to U.S. Federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Withholding Agent, at the time or times prescribed by law
and at such time or times reasonably requested by the Withholding Agent, such
documentation prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Withholding Agent as may be necessary for the
Withholding Agent to comply with its obligations under FATCA, to determine that
such Lender has complied with such Lender’s obligations under FATCA or to
determine the amount to deduct and withhold from such payment.

(g)    Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 2.18 (including
additional amounts paid pursuant to this Section 2.18), it shall pay to the
indemnifying party an amount equal to such refund (but only to the extent of
indemnity payments made under this Section with respect to the Taxes giving rise
to such refund), net of all out-of-pocket expenses (including any Taxes) of such
indemnified party and without interest (other than any interest paid by the
relevant Governmental

 

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Authority with respect to such refund). Such indemnifying party, upon the
request of such indemnified party, shall repay to such indemnified party the
amount paid to such indemnified party pursuant to the previous sentence (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event such indemnified party is required to repay such refund
to such Governmental Authority. Notwithstanding anything to the contrary in this
Section 2.18(g), in no event will any indemnified party be required to pay any
amount to any indemnifying party pursuant to this Section 2.18(g) if such
payment would place such indemnified party in a less favorable position (on a
net after-Tax basis) than such indemnified party would have been in if the
indemnification payments or additional amounts giving rise to such refund had
never been paid. This Section 2.18(g) shall not be construed to require any
indemnified party to make available its Tax returns (or any other information
relating to its Taxes which it deems confidential) to the indemnifying party or
any other Person.

(h)    Issuing Bank. For purposes of Section 2.18(e) and (f), the term “Lender”
includes the Issuing Bank.

SECTION 2.19. Replacement or Termination of Lenders Under Certain Circumstances;
Duty to Mitigate. (a) In the event (i) any Lender or the Issuing Bank delivers a
certificate requesting compensation pursuant to Section 2.12, (ii) any Lender or
the Issuing Bank delivers a notice described in Section 2.13, (iii) either
Borrower is required to pay any additional amount or to make any indemnification
payment to any Lender or the Issuing Bank or any Governmental Authority on
account of any Lender or the Issuing Bank pursuant to Section 2.18 or (iv) any
Lender refuses to consent to any amendment, waiver or other modification of any
Loan Document requested by either Borrower that requires the consent of a
greater percentage of the Lenders than the Required Lenders and such amendment,
waiver or other modification is consented to by the Required Lenders, the
Borrowers may, at their sole expense and effort (including with respect to the
processing and recordation fee referred to in Section 10.04(b)), upon notice to
such Lender or the Issuing Bank and the Administrative Agent, either (A) except
in the case of clause (iv) above, so long as the Applicable Rating of either
Rating Agency shall not be below BBB- or Baa3, as applicable, terminate the
Commitment of such Lender and repay on the termination date specified in the
applicable notice all obligations of the Borrowers owing to such Lender under
this Agreement and the other Loan Documents as of such date (including, without
limitation, any amounts under Section 2.12, 2.14 or 2.18) or (B) require such
Lender or the Issuing Bank to transfer and assign, without recourse (in
accordance with and subject to the restrictions contained in Section 10.04), all
of its interests, rights and obligations under this Agreement to an assignee
that shall assume such assigned obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (x) such termination
or such transfer and assignment (as the case may be) shall not conflict with any
law, rule or regulation or order of any court or other Governmental Authority
having jurisdiction, (y) with respect to any such transfer and assignment
pursuant to clause (B) above, except in connection with an assignment to another
Lender or an Affiliate thereof, the Borrowers shall have received the prior
written consent of the Administrative Agent and the Issuing Bank, which consent
shall not unreasonably be withheld, and (z) the Borrowers or such assignee shall
have paid to the affected Lender or the Issuing Bank in immediately available
funds an amount equal to the sum of the principal of and interest accrued to the
date of such payment on the outstanding Loans or L/C Disbursements of such
Lender or the Issuing Bank, respectively, plus all Fees and other amounts
accrued for the account of such Lender or the Issuing Bank hereunder (including
any amounts

 

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under Section 2.12 and Section 2.14); provided further that, if prior to any
such termination or any such transfer and assignment (as the case may be) the
circumstances or event that resulted in such Lender’s or the Issuing Bank’s
claim for compensation under Section 2.12 or notice under Section 2.13 or the
amounts paid pursuant to Section 2.18, as the case may be, cease to cause such
Lender or the Issuing Bank to suffer increased costs or reductions in amounts
received or receivable or reduction in return on capital, or cease to have the
consequences specified in Section 2.13, or cease to result in amounts being
payable under Section 2.18, as the case may be (including as a result of any
action taken by such Lender or the Issuing Bank pursuant to paragraph (b)
below), or if such Lender or the Issuing Bank shall waive its right to claim
further compensation under Section 2.12 in respect of such circumstances or
event or shall withdraw its notice under Section 2.13 or shall waive its right
to further payments under Section 2.18 in respect of such circumstances or event
or shall consent to the proposed waiver, amendment or other modification, as the
case may be, then (1) the Borrowers shall not have the right to terminate the
Commitment of such Lender pursuant to clause (A) above and (2) such Lender or
the Issuing Bank shall not thereafter be required to make any such transfer and
assignment hereunder, as applicable.

(b)    If (i) any Lender or the Issuing Bank shall request compensation under
Section 2.12, (ii) any Lender or the Issuing Bank delivers a notice described in
Section 2.13 or (iii) either Borrower is required to pay any additional amount
to any Lender or the Issuing Bank or any Governmental Authority on account of
any Lender or the Issuing Bank pursuant to Section 2.18, then such Lender or the
Issuing Bank shall use reasonable efforts (which shall not require such Lender
or the Issuing Bank to incur an unreimbursed loss or unreimbursed cost or
expense or otherwise take any action inconsistent with its internal policies or
legal or regulatory restrictions or suffer any disadvantage or burden deemed by
it to be significant) (x) to file any certificate or document reasonably
requested in writing by the Borrowers or (y) to assign its rights and delegate
and transfer its obligations hereunder to another of its offices, branches or
affiliates, if such filing or assignment would reduce its claims for
compensation under Section 2.12 or enable it to withdraw its notice pursuant to
Section 2.13 or would reduce amounts payable pursuant to Section 2.18, as the
case may be, in the future. The Borrowers hereby agree, jointly and severally,
to pay all reasonable costs and expenses incurred by any Lender or the Issuing
Bank in connection with any such filing or assignment, delegation and transfer.

SECTION 2.20. Letters of Credit.    (a)    General.    Each of the Borrowers may
request the issuance of a Letter of Credit, in a form reasonably acceptable to
the Administrative Agent and the Issuing Bank, appropriately completed, for the
account of such Borrower, at any time and from time to time while the
Commitments remain in effect and, in the case of the Trustee only, the Trust
Termination Date has not occurred. This Section 2.20 shall not be construed to
impose an obligation upon the Issuing Bank to issue any Letter of Credit that is
inconsistent with the terms and conditions of this Agreement.

(b)    Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. In
order to request the issuance of a Letter of Credit (or to amend, renew or
extend an existing Letter of Credit), the requesting Borrower shall hand deliver
or telecopy to the Issuing Bank and the Administrative Agent (reasonably in
advance of the requested date of issuance, amendment, renewal or extension) a
notice requesting the issuance of a Letter of Credit, or identifying the

 

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Letter of Credit to be amended, renewed or extended, the date of issuance,
amendment, renewal or extension, the date on which such Letter of Credit is to
expire (which shall comply with paragraph (c) below), the amount of such Letter
of Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare such Letter of Credit. A Letter of
Credit shall be issued, amended, renewed or extended for the account of a
Borrower only if, and upon issuance, amendment, renewal or extension of each
Letter of Credit for the account of such Borrower, such Borrower shall be deemed
to represent and warrant that, after giving effect to such issuance, amendment,
renewal or extension, the Aggregate Credit Exposure shall not exceed the Total
Commitment.

(c)    Expiration Date.    Each Letter of Credit shall expire at the close of
business on the earlier of the date one year after the date of the issuance of
such Letter of Credit and the date that is five Business Days prior to the
Maturity Date, unless such Letter of Credit expires by its terms on an earlier
date. Each Letter of Credit may, upon the request of the applicable Borrower,
include a provision whereby such Letter of Credit shall be renewed automatically
for additional consecutive periods of 12 months or less (but not beyond the date
that is five Business Days prior to the Maturity Date) unless the Issuing Bank
notifies the beneficiary thereof at least 30 days prior to the then-applicable
expiry date that such Letter of Credit will not be renewed.

(d)    Participation.    By the issuance of a Letter of Credit and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Lender, and each such Lender hereby acquires from the
applicable Issuing Bank, a participation in such Letter of Credit equal to such
Lender’s Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit, effective upon the issuance of such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the Issuing Bank, such Lender’s Applicable Percentage of each L/C
Disbursement made by the Issuing Bank and not reimbursed by the Trustee or
El Paso, as the case may be, forthwith on the date due as provided in
Section 2.02(f). Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or an Event of Default, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever.

(e)    Reimbursement.    If the Issuing Bank shall make any L/C Disbursement in
respect of a Letter of Credit, the Trustee or El Paso, as the case may be, shall
pay to the Administrative Agent an amount equal to such L/C Disbursement not
later than 4:00 p.m., New York City time on the Business Day on which the
Trustee or El Paso, as the case may be, shall have received notice from the
Issuing Bank that payment of such draft will be made, or, if the Trustee or
El Paso, as the case may be, shall have received such notice later than
10:00 a.m., New York City time, on any Business Day, not later than 1:00 p.m.,
New York City time, on the immediately following Business Day. Any failure by
the Trustee or El Paso, as the case may be, to make a payment under this
Section 2.20(e) shall not constitute a Default or an Event of Default if the
Issuing Bank shall have been reimbursed for such L/C Disbursement out of the
proceeds of a deemed Borrowing pursuant to Section 2.02(f).

 

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(f)    Obligations Absolute. The obligations of the Trustee or El Paso, as the
case may be, to reimburse L/C Disbursements as provided in paragraph (e) above
shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement, under any and all
circumstances whatsoever, and irrespective of:

(i)    any lack of validity or enforceability of any Letter of Credit or any
other Loan Document, or any term or provision therein;

(ii)   any amendment or waiver of or any consent to departure from all or any of
the provisions of any Letter of Credit or any other Loan Document;

(iii)  the existence of any claim, setoff, defense or other right that the
Trustee, El Paso or any other party guaranteeing, or otherwise obligated with,
the Trustee or El Paso, as the case may be, any Subsidiary or other Affiliate
thereof or any other person may at any time have against the beneficiary under
any Letter of Credit, the Issuing Bank, the Administrative Agent or any Lender
or any other person, whether in connection with this Agreement, any other Loan
Document or any other related or unrelated agreement or transaction;

(iv)  any draft or other document presented under a Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;

(v)  payment by the Issuing Bank under a Letter of Credit against presentation
of a draft or other document that does not comply with the terms of such Letter
of Credit; and

(vi)  any other act or omission to act or delay of any kind of the Issuing Bank,
the Lenders, the Administrative Agent or any other person or any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section 2.20, constitute a legal or
equitable discharge of the obligations of the Trustee or El Paso, as the case
may be, hereunder.

Without limiting the generality of the foregoing, it is expressly understood and
agreed that the absolute and unconditional obligation of the Trustee or El Paso,
as the case may be, hereunder to reimburse L/C Disbursements will not be excused
by the gross negligence or willful misconduct of the Issuing Bank. However, the
foregoing shall not be construed to excuse the Issuing Bank from liability to
the Trustee or El Paso, as the case may be, to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Trustee or El Paso, as the case may be, to the extent permitted by
applicable law) suffered by the Trustee or El Paso, as the case may be, that are
caused by the Issuing Bank’s gross negligence or willful misconduct in
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof; it is understood that the Issuing Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary and, in making any payment under any Letter of
Credit (i) the Issuing Bank’s exclusive reliance on the documents presented to
it under such Letter of Credit as to any and all matters set forth therein,
including

 

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reliance on the amount of any draft presented under such Letter of Credit,
whether or not the amount due to the beneficiary thereunder equals the amount of
such draft and whether or not any document presented pursuant to such Letter of
Credit proves to be insufficient in any respect, if such document on its face
appears to be in order, and whether or not any other statement or any other
document presented pursuant to such Letter of Credit proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever and (ii) any noncompliance in any immaterial respect of the
documents presented under such Letter of Credit with the terms thereof shall, in
each case, be deemed not to constitute willful misconduct or gross negligence of
the Issuing Bank.

(g)    Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall as promptly as possible
give telephonic notification, confirmed by telecopy, to the Administrative Agent
and the Trustee or El Paso, as the case may be, of such demand for payment and
whether the Issuing Bank has made or will make an L/C Disbursement thereunder;
provided that any failure to give or delay in giving such notice shall not
relieve the Trustee or El Paso, as the case may be, of its obligation to
reimburse the Issuing Bank and the Lenders with respect to any such L/C
Disbursement. The Administrative Agent shall promptly give each Lender notice
thereof.

(h)    Interim Interest. If the Issuing Bank shall make any L/C Disbursement in
respect of a Letter of Credit, then, unless the Trustee or El Paso, as the case
may be, shall reimburse such L/C Disbursement in full on such date, the unpaid
amount thereof shall bear interest for the account of the Issuing Bank, for each
day from and including the date of such L/C Disbursement, to but excluding the
earlier of the date of payment by the Trustee or El Paso, as the case may be, or
the date on which the Issuing Bank is reimbursed by the Lenders pursuant to
Section 2.02(f), at the rate per annum that would apply to such amount if such
amount were an ABR Loan.

(i)    Resignation or Removal of the Issuing Bank.    The Issuing Bank may
resign at any time by giving 180 days’ prior written notice to the
Administrative Agent, the Lenders and the Borrowers, and may be removed at any
time by the Borrowers by notice to the Issuing Bank, the Administrative Agent
and the Lenders. Subject to the next succeeding paragraph, upon the acceptance
of any appointment as the Issuing Bank hereunder by a Lender that shall agree to
serve as successor Issuing Bank, such successor shall succeed to and become
vested with all the interests, rights and obligations of the retiring Issuing
Bank and the retiring Issuing Bank shall be discharged from its obligations to
issue additional Letters of Credit hereunder. At the time such removal or
resignation shall become effective, the Borrowers shall pay all accrued and
unpaid fees pursuant to Section 2.05(c)(ii). The acceptance of any appointment
as the Issuing Bank hereunder by a successor Lender shall be evidenced by an
agreement entered into by such successor, in a form satisfactory to the
Borrowers and the Administrative Agent, and, from and after the effective date
of such agreement, (i) such successor Lender shall have all the rights and
obligations of the previous Issuing Bank under this Agreement and the other Loan
Documents and (ii) references herein and in the other Loan Documents to the term
“Issuing Bank” shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor and all previous Issuing Banks, as the
context shall require. After the resignation or removal of the Issuing Bank
hereunder, the retiring Issuing

 

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Bank shall remain a party hereto and shall continue to have all the rights and
obligations of an Issuing Bank under this Agreement and the other Loan Documents
with respect to Letters of Credit issued by it prior to such resignation or
removal, but shall not be required to issue additional Letters of Credit.

(j)    Cash Collateralization.    If any Event of Default shall occur and be
continuing or, with respect to the Trustee L/C Exposure only, the Trust
Termination Date shall occur, the Trustee or El Paso, as the case may be, shall,
on the Business Day it receives notice from the Administrative Agent or the
Required Lenders thereof and of the amount to be deposited, deposit in an
account with the Administrative Agent, for the benefit of the Lenders, an amount
in cash equal to the Trustee L/C Exposure or the El Paso L/C Exposure, as the
case may be, as of such date. Such deposit shall be held by the Administrative
Agent as collateral for the payment and performance of the Obligations. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits in Permitted Investments, which investments
shall be made at the option and sole discretion of the Administrative Agent,
such deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall
(i) automatically be transferred to the Administrative Agent and be applied by
the Administrative Agent to reimburse the Issuing Bank for L/C Disbursements for
which it has not been reimbursed, (ii) be held for the satisfaction of the
reimbursement obligations of the Trustee or El Paso, as the case may be, for the
Trustee L/C Exposure or the El Paso L/C Exposure, as the case may be, at such
time and (iii) if the maturity of the Loans has been accelerated, be transferred
to the Administrative Agent and be applied to satisfy the Obligations (of both
the Trustee and El Paso). If the Trustee or El Paso, as the case may be, is
required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, (x) such amount (to the extent not applied as
aforesaid) shall be returned to the Trustee or El Paso, as the case may be,
within three Business Days after all Events of Default have been cured or waived
and (y) at any time that the amount of such cash collateral exceeds the Trustee
L/C Exposure or El Paso L/C Exposure, as the case may be, the amount of such
excess shall be promptly returned to the Trustee or El Paso, as the case may be.

SECTION 2.21. Increase of Commitments. (a) El Paso may, by written notice to the
Administrative Agent, request that the Total Commitment be increased by an
aggregate amount not to exceed the Incremental Facility Amount at such time.
Upon the receipt of such request by the Administrative Agent, the Administrative
Agent shall deliver a copy thereof to each Lender. Such notice shall set forth
the amount of the requested increase (which shall be in minimum increments of
$1,000,000 and a minimum amount of $10,000,000 or equal to the remaining
Incremental Facility Amount) and the date on which such increase is requested to
become effective (which shall be not less than 10 days nor more than 60 days
after the date of such notice and which, in any event, must be on or prior to
the Maturity Date), and shall offer each Lender the opportunity to increase its
Commitment by its Applicable Percentage of the proposed increased amount. Each
Lender shall, by notice to El Paso and the Administrative Agent given not more
than 10 days after the date of the Administrative Agent’s notice, either agree
to increase its Commitment by all or a portion of the offered amount (each
Lender so agreeing being an “Increasing Lender”) or decline to increase its
Commitment (and any Lender that does not deliver such a notice within such
period of 10 days shall be deemed to have declined to increase its Commitment).
In the event that, on the 10th day after the Administrative

 

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Agent shall have delivered a notice pursuant to the second sentence of this
paragraph, the Increasing Lenders shall have agreed pursuant to the preceding
sentence to increase their Commitments by an aggregate amount less than the
increase requested by El Paso, El Paso may arrange for one or more banks or
other entities (any such bank or other entity being called an “Augmenting
Lender”), which may include any Lender, to extend Commitments or increase their
existing Commitments in an aggregate amount equal to the unsubscribed amount;
provided, however, that each Augmenting Lender (that is not an existing Lender)
shall be subject to the prior written approval of the Administrative Agent and
the Issuing Bank (which approvals shall not be unreasonably withheld or
delayed), and the Borrowers and each Augmenting Lender shall execute all such
documentation as the Administrative Agent shall reasonably specify to evidence
such Augmenting Lender’s Commitment and/or its status as a Lender hereunder. Any
such increase may be made in an amount that is less than the increase requested
by El Paso if El Paso is unable to arrange for, or chooses not to arrange for,
Augmenting Lenders.

(b)    Each of the parties hereto hereby agrees that the Administrative Agent
may take any and all actions as may be reasonably necessary to ensure that,
after giving effect to any increase pursuant to this Section 2.21, the
outstanding Loans (if any) are held by the Lenders in accordance with their new
Applicable Percentages. This may be accomplished at the discretion of the
Administrative Agent, following consultation with El Paso, (i) by requiring the
outstanding Loans to be prepaid with the proceeds of a new Borrowing, (ii) by
permitting the Borrowings outstanding at the time of any increase in the Total
Commitment pursuant to this Section 2.21 to remain outstanding until the last
day of the respective Interest Periods therefor, even though the Lenders would
hold the Loans comprising such borrowings other than in accordance with their
new Applicable Percentage, (iii) by requiring each Increasing Lender and
Augmenting Lender to purchase by assignment from the other Lenders (in which
case such other Lenders shall assign to the Increasing Lenders and Augmenting
Lenders) such portion of the outstanding Loans, if any, owing to them as shall
be designated by the Administrative Agent such that, after giving effect to all
such purchases and assignments, the outstanding Loans owing to each Lender shall
equal such Lender’s Applicable Percentage of the aggregate amount of Loans owing
to all Lenders or (iv) by any combination of the foregoing. Any prepayment
described in this paragraph (b) shall be subject to Section 2.14, but shall
otherwise be without premium or penalty. In addition, on the effective date of
any such increase in the Total Commitment pursuant to this Section 2.21, each
Increasing Lender and Augmenting Lender shall be deemed to have purchased by
assignment from the other Lenders (and such other Lenders shall be deemed to
have assigned to the Increasing Lenders and Augmenting Lenders) a portion of the
participations (if any) then held by such other Lenders in the outstanding L/C
Exposure, such that, after giving effect to all such deemed purchases and
assignments, each Lender’s L/C Exposure shall equal such Lender’s Applicable
Percentage of the aggregate L/C Exposure at such time.

(c)    Notwithstanding the foregoing, no increase in the Total Commitment shall
become effective under this Section 2.21 unless (i) on the date of such
increase, the conditions set forth in paragraphs (b) and (c) of Section 4.01
shall be satisfied and the Administrative Agent shall have received a
certificate to that effect dated such date and executed by a Financial Officer
of El Paso, (ii) the Borrowers shall have received all consents, approvals and
authorizations of, and shall have made all registrations and filings with, any
Governmental Authority required in connection with such increase, each of which
shall be in full force and effect and not subject to

 

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any appeal or stay, (iii) if requested, the Administrative Agent shall have
received legal opinions, certificates and board resolutions consistent with
those delivered on the Closing Date under paragraphs (a), (b) and (c) of
Section 4.02, and (iv) the Borrowers shall have delivered to the Administrative
Agent such other consents, authorizations, certificates and other documents as
the Administrative Agent may reasonably request in connection with such increase
(including, without limitation, any new or replacement Notes requested by the
applicable Increasing Lenders or Augmenting Lenders pursuant to
Section 2.04(e)).

ARTICLE III

Representations and Warranties

Each of El Paso and, subject to Section 10.19, the Trustee represents and
warrants to the Administrative Agent, the Issuing Bank and each of the Lenders
that as of the Closing Date and thereafter on each date as required by
Section 4.01(b):

SECTION 3.01. Organization; Powers. (a) El Paso and each of the Material
Subsidiaries (i) is duly organized, validly existing and in good standing under
the laws of the state of its organization, (ii) has all requisite power and
authority to own its property and assets and to carry on its business as now
conducted and as proposed to be conducted, (iii) is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required, except where the failure so to qualify would not reasonably be
expected to result in a Material Adverse Effect, and (iv) has the corporate
power and authority to execute, deliver and perform its obligations under each
of the Loan Documents to which it is or will be a party and each other agreement
or instrument contemplated hereby to which it is or will be a party and to
borrow hereunder.

(b)    BONY is a national banking association duly incorporated, validly
existing and in good standing under the laws of the United States of America,
and in its capacity as Trustee, (i) has all requisite power and authority to own
its property and assets and to carry on its business as now conducted and as
proposed to be conducted and (ii) has all requisite power and authority to
execute, deliver and perform its obligations under each of the Loan Documents
and each other agreement or instrument contemplated hereby to which it is or
will be a party and to borrow hereunder.

SECTION 3.02. Authorization. (a) The execution, delivery and performance by it
and each of its Material Subsidiaries (as applicable) of each of the Loan
Documents, the Trust Agreement and the Purchase Contract to which it is or will
be a party and (b) the Borrowings by it hereunder, the request for the issuance
of Letters of Credit and the use by it of the proceeds of the Loans and the
Letters of Credit (collectively, the “Transactions”), (x) have been duly
authorized by all requisite corporate, trust and, if required, stockholder
action and (y) will not (i) violate (A) any provision of law, statute, rule or
regulation, or of the articles of incorporation or other constitutive documents
or by-laws of El Paso or any of its Material Subsidiaries or of the Trust
Agreement, as applicable, (B) any order of any Governmental Authority or (C) any
provision of any indenture, agreement or other instrument to which it is a party
or by which it or any of its property is or may be bound, (ii) be in conflict
with, result in a breach of or constitute (alone or with notice or lapse of time
or both) a default under, or give rise to any right to

 

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accelerate or to require the prepayment, repurchase or redemption of any
obligation under any such indenture, agreement or other instrument or
(iii) result in the creation or imposition of any Lien upon or with respect to
any property or assets now owned or hereafter acquired by it.

SECTION 3.03. Enforceability. Each of the Loan Documents has been duly executed
and delivered by it and constitutes its legal, valid and binding obligation
enforceable against it in accordance with such document’s terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

SECTION 3.04. Governmental Approvals. Except as set forth on Schedule 3.04, no
action, consent or approval of, registration or filing with or any other action
by, any Governmental Authority is or will be required in connection with the
Transactions, except for such as have been made or obtained, are in full force
and effect and are not subject to any appeal or stay.

SECTION 3.05. Financial Statements. El Paso has heretofore furnished to the
Lenders its consolidated balance sheets and related statements of operations,
shareholders’ equity and cash flows (a) as of and for the fiscal year ended
December 31, 2009, audited by and accompanied by the opinion of KPMG LLP,
independent public accountants, and (b) as of and for the fiscal quarter and the
portion of the fiscal year ended June 30, 2010, certified by a Financial
Officer. Such financial statements present fairly the financial condition and
results of operations and cash flows of El Paso and its consolidated
Subsidiaries as of such dates and for such periods. Such balance sheets and the
notes thereto disclose all material liabilities, direct or contingent, of
El Paso and its consolidated Subsidiaries as of the dates thereof. Such
financial statements were prepared in accordance with GAAP applied on a
consistent basis (except as approved by such accountants or officer, as the case
may be, and disclosed therein).

SECTION 3.06. No Material Adverse Change. There has been no material adverse
change in the business, assets, operations or financial condition of El Paso and
the Subsidiaries, taken as a whole, since December 31, 2009.

SECTION 3.07. Subsidiaries. As of the Closing Date, El Paso has no Material
Subsidiaries and, except as set forth on Schedule 3.07, no other Subsidiaries.

SECTION 3.08. Litigation; Compliance with Laws. (a) Except as set forth on
Schedule 3.08, there are no actions, suits or proceedings at law or in equity or
by or before any Governmental Authority now pending or, to its knowledge,
threatened against or affecting it or, in the case of El Paso, the Subsidiaries
or any business, property or rights of any such person (i) that in any manner
draws into question the validity or enforceability of this Agreement or any
other Loan Document or (ii) that would reasonably be expected, individually or
in the aggregate, to result in a Material Adverse Effect.

(b)    Except as set forth on Schedule 3.08, neither it nor, in the case of
El Paso, any of the Subsidiaries or any of their respective material properties
or assets, is in violation of, nor will the continued operation of their
material properties and assets as currently conducted

 

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violate, any law, rule or regulation, or is in default with respect to any
judgment, writ, injunction, decree or order of any Governmental Authority, where
such violation or default would reasonably be expected to result in a Material
Adverse Effect.

SECTION 3.09. Federal Reserve Regulations. (a)  Neither it nor, in the case of
El Paso, any of the Subsidiaries, is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.

(b)    No part of the proceeds of any Loan made to it or any Letter of Credit
issued for its benefit will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, for any purpose that entails a
violation of, or that is inconsistent with, the provisions of the Regulations of
the Board, including Regulation T, Regulation U or Regulation X.

SECTION 3.10. Investment Company Act. It is not an “investment company as
defined in, or subject to regulation under, the Investment Company Act of 1940,
as amended.

SECTION 3.11. Use of Proceeds. It will use the proceeds of the Loans and will
request the issuance of Letters of Credit only for the purposes specified in the
preamble to this Agreement.

SECTION 3.12. Tax Returns. Each of El Paso and the Subsidiaries has filed or
caused to be filed all Federal, state, local and foreign tax returns or
materials required to have been filed by it and has paid or caused to be paid
all taxes due and payable by it and all assessments received by it, except taxes
that are being contested in good faith by appropriate proceedings and for which
El Paso or such Subsidiary, as applicable, shall have set aside on its books
adequate reserves.

SECTION 3.13. No Material Misstatements. The Confidential Information
Memorandum, together with (i) the Annual Report on Form 10-K filed by El Paso
with the SEC for the fiscal year ended December 31, 2009, (ii) the Quarterly
Report on Form 10-Q filed by El Paso with the SEC for the fiscal quarter ended
June 30, 2010 and (iii) any Current Reports on Form 8-K filed by El Paso with
the SEC prior to the Closing Date, taken as a whole, do not contain any material
misstatement of fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they are made, not
materially misleading; provided that to the extent any part of such information
was based upon or constitutes a forecast or projection, El Paso represents only
that it acted in good faith and utilized reasonable assumptions and due care in
the preparation of such information.

SECTION 3.14. Employee Benefit Plans. El Paso and its ERISA Affiliates are in
compliance in all material respects with the applicable provisions of ERISA and
the Code and the regulations and published interpretations thereunder. No ERISA
Event has occurred or is reasonably expected to occur that, when taken together
with all other such ERISA Events, would reasonably be expected to result in a
Material Adverse Effect. Schedule SB to the most recent annual report filed with
the United States Internal Revenue Service with respect to each Plan is complete
and accurate in all material respects. Since the date of the Schedule SB in
effect on the Closing Date, there has been no material adverse change in the
funded status of any Plan. None

 

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of El Paso or any of its ERISA Affiliates has incurred any liability as a result
of a Plan termination which remains outstanding which would subject El Paso or
any of its ERISA Affiliates to a liability in excess of $7,500,000.

SECTION 3.15.  Environmental Matters. Except as set forth in Schedule 3.15:

(a)    The properties owned or operated by El Paso and the Subsidiaries (the
“Properties”) do not contain any Hazardous Materials in amounts or
concentrations which (i) constitute or constituted a violation of, or (ii) could
reasonably be expected to give rise to liability under, Environmental Laws,
which violations and liabilities, in the aggregate, would reasonably be expected
to result in a Material Adverse Effect;

(b)    All Environmental Permits have been obtained and are in effect with
respect to the Properties and operations of El Paso and the Subsidiaries, and
the Properties and all operations of El Paso and the Subsidiaries are in
compliance with all Environmental Laws and all necessary Environmental Permits,
except to the extent that such non-compliance or failure to obtain any necessary
permits, in the aggregate, would not reasonably be expected to result in a
Material Adverse Effect;

(c)    There have been no Releases or threatened Releases at, from, under or
proximate to the Properties or otherwise in connection with the operations of
El Paso or the Subsidiaries, which Releases or threatened Releases, in the
aggregate, would reasonably be expected to result in a Material Adverse Effect;

(d)    None of El Paso and the Subsidiaries has received any notice of an
Environmental Claim or request for information under any Environmental Law in
connection with the Properties or the operations of El Paso or the Subsidiaries
or with regard to any person whose liabilities for environmental matters El Paso
or any Subsidiary has retained or assumed, in whole or in part, contractually,
by operation of law or otherwise, which, in the aggregate, would reasonably be
expected to result in a Material Adverse Effect, nor do El Paso or the
Subsidiaries have reason to believe that any such notice will be received or is
being threatened; and

(e)    Hazardous Materials have not been transported from the Properties, nor
have Hazardous Materials been generated, treated, stored or disposed of at, on
or under any of the Properties in a manner that could reasonably be expected to
give rise to liability under any Environmental Law, which in either case would
reasonably be expected to result in a Material Adverse Effect, nor have El Paso
or the Subsidiaries retained or assumed any liability, contractually, by
operation of law or otherwise, with respect to the generation, treatment,
storage or disposal of Hazardous Materials, which transportation, generation,
treatment, storage or disposal, or retained or assumed liabilities, in the
aggregate, would reasonably be expected to result in a Material Adverse Effect.

SECTION 3.16. Insurance.  El Paso and the Subsidiaries have insurance in such
amounts and covering such risks and liabilities as are in accordance with normal
industry practice. All such insurance is in full force and effect and all
premiums have been duly paid.

SECTION 3.17. Anti-Terrorism Laws, etc.    (a)    Such Borrower’s use of the
proceeds of the Loans will not violate the Trading with the Enemy Act, as
amended, or any of

 

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the foreign assets control regulations of the United States Treasury Department
(31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto.

(b)    Neither such Borrower nor any Subsidiary thereof (i) is a Person
described or designated in the Specially Designated Nationals and Blocked
Persons List of the Office of Foreign Assets Control or in Section 1 of the
Anti-Terrorism Order or (ii) to such Borrower’s knowledge, engages in any
dealings or transactions with any such person. Each Borrower and the
Subsidiaries are in compliance, in all material respects, with the USA Patriot
Act.

ARTICLE IV

Conditions of Lending

The obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit hereunder are subject to the satisfaction of the following
conditions:

SECTION 4.01. All Credit Events.    On the date of each Borrowing and on the
date of each issuance, amendment, renewal or extension of a Letter of Credit
(each such event being called a “Credit Event”):

(a)    The Administrative Agent shall have received a notice of such Borrowing
as required by Section 2.03 (or such notice shall have been deemed given in
accordance with Section 2.03) or, in the case of the issuance, amendment,
renewal or extension of a Letter of Credit, the Issuing Bank and the
Administrative Agent shall have received a notice requesting the issuance,
amendment, renewal or extension of such Letter of Credit as required by
Section 2.20(b).

(b)    Except in the case of a Borrowing that does not increase the aggregate
principal amount of Loans outstanding of any Lender, the representations and
warranties set forth herein (other than, with respect to any Credit Event after
the Closing Date, the representations and warranties set forth in Sections 3.06
and 3.08(a)) and in the other Loan Documents shall be true and correct in all
material respects on and as of the date of such Credit Event with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties shall have been true and correct in all
material respects as of such earlier date).

(c)    At the time of and immediately after such Credit Event, no Event of
Default or Default shall have occurred and be continuing.

Each Credit Event shall be deemed to constitute a representation and warranty by
each Borrower on the date of such Credit Event as to the matters specified in
paragraphs (b) (except as aforesaid) and (c) of this Section 4.01.

SECTION 4.02. Closing Date. On the Closing Date:

(a)    The Administrative Agent shall have received, on behalf of itself, the
Lenders, the Syndication Agent and the Issuing Bank, favorable written opinions
of (i) Davis

 

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Polk & Wardwell LLP, counsel for El Paso, (ii) Andrews Kurth LLP, counsel for
the Trustee, (iii) each local regulatory counsel listed on Schedule 4.02(a), and
(iv) the General Counsel of El Paso, in each case (A) dated the Closing Date,
(B) addressed to the Issuing Bank, the Administrative Agent, the Syndication
Agent and the Lenders, (C) covering such customary matters relating to the Loan
Documents and the Transactions as the Administrative Agent shall reasonably
request and (D) otherwise in form and substance reasonably satisfactory to the
Administrative Agent, and the Borrowers hereby request such counsel to deliver
such opinions.

(b)    The Administrative Agent shall have received (i) a certificate of the
Secretary or Assistant Secretary of El Paso dated the Closing Date and
certifying (A) that attached thereto is a true and complete copy of the
certificate or articles of incorporation of El Paso filed with the Secretary of
State of Texas on or prior to the Closing Date and as in effect on the Closing
Date, (B) that attached thereto is a true and complete copy of the by-laws of
El Paso as in effect on the Closing Date and at all times since a date prior to
the date of the resolutions described in clause (C) below, (C) that attached
thereto is a true and complete copy of resolutions duly adopted by the Board of
Directors of El Paso authorizing the execution, delivery and performance of the
Loan Documents to which El Paso is or is to be a party and the borrowings
hereunder, and that such resolutions have not been modified, rescinded or
amended and are in full force and effect, (D) that the Trust Agreement has not
been modified, rescinded or amended and is in full force and effect, and (E) as
to the incumbency and specimen signature of each officer executing this
Agreement or any other document delivered in connection herewith on behalf of
El Paso; (ii) a certificate of another officer of El Paso as to the incumbency
and specimen signature of the Secretary or Assistant Secretary executing the
certificate pursuant to clause (i) above; (iii) a certificate of the Secretary
or Assistant Secretary of BONY dated the Closing Date and certifying as to the
incumbency and specimen signature of each Person executing this Agreement or any
other document delivered in connection herewith on behalf of the Trustee; and
(iv) such other customary closing documents as the Lenders, the Issuing Bank,
the Syndication Agent or the Administrative Agent may reasonably request.

(c)    The Administrative Agent shall have received good standing certificates
with respect to each Borrower (with respect to El Paso, from the Secretary of
State of Texas and the Secretary of State of New Mexico, and with respect to
BONY, from the Comptroller of the Currency), in each case issued as of a recent
date.

(d)    The Administrative Agent shall have received a certificate, dated the
Closing Date and signed by a Financial Officer of El Paso, confirming compliance
with the conditions precedent set forth in paragraphs (b) and (c) of
Section 4.01.

(e)    (i)  The loans, accrued interest, fees and other amounts outstanding or
payable under the Existing Credit Agreement shall have been paid in full and the
Existing Credit Agreement shall have been terminated; (ii) the Administrative
Agent shall have received all Fees and other amounts due and payable on or prior
to the Closing Date, including, to the extent invoiced, reimbursement or payment
of all out-of-pocket fees and expenses required to be reimbursed or paid by the
Borrowers hereunder or under any other Loan Document or under the Commitment
Letter, dated September 3, 2010, between the Administrative Agent and El Paso;
and (iii) the Syndication Agent shall have received all fees payable by El Paso
pursuant to the commitment letter, dated August 30, 2010, between the
Syndication Agent and El Paso, together

 

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with, to the extent invoiced, reimbursement or payment of all reasonable fees
and out-of-pocket disbursements of counsel to the Syndication Agent and other
out-of-pocket expenses of the Syndication Agent required to be reimbursed or
paid by El Paso pursuant to such commitment letter.

(f)    All requisite Governmental Authorities shall have approved or consented
to the Transactions to the extent required (and such approvals shall be in full
force and effect) and there shall be no action, actual or threatened, before any
Governmental Authority or arbitrator that (a) has a reasonable likelihood of
restraining, preventing or imposing burdensome conditions on the Transactions or
(b) would reasonably be expected to result in a Material Adverse Effect.

(g)    The Lenders shall have received, to the extent requested, all
documentation and other information required by regulatory authorities under
applicable “know your customer” and anti-money laundering rules and regulations,
including the USA Patriot Act.

ARTICLE V

Affirmative Covenants

Each of El Paso and, subject to Section 10.19, the Trustee covenants and agrees
with each Lender that so long as this Agreement shall remain in effect and until
the Commitments have been terminated and the principal of and interest on each
Loan, all Fees and all other expenses or amounts payable under any Loan Document
shall have been paid in full and all Letters of Credit have been canceled or
have expired and all amounts drawn thereunder have been reimbursed in full (or
sufficient cash collateral has been deposited with the Administrative Agent in
an amount equal to the then outstanding L/C Exposure), unless the Required
Lenders shall otherwise consent in writing, each of the Borrowers will, and
El Paso will cause each of the Material Subsidiaries to:

SECTION 5.01. Existence; Businesses and Properties.    (a)   Do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence.

(b)    Do or cause to be done all things necessary to obtain, preserve, renew,
extend and keep in full force and effect the rights, licenses, permits
(including Environmental Permits), franchises and authorizations material to the
conduct of its business; comply in all material respects with all applicable
laws, rules, regulations and decrees and orders of any Governmental Authority
(including, without limitation, ERISA and Environmental Laws and Environmental
Permits), whether now in effect or hereafter enacted; conduct any Remedial
Action in substantial compliance with Environmental Laws; and at all times
maintain and preserve all property material to the conduct of such business and
keep such property in good repair, working order and condition, ordinary wear
and tear excepted; except in each case where the failure to do so would not
reasonably be expected to result in a Material Adverse Effect.

SECTION 5.02. Insurance.    With respect to El Paso, keep its insurable
properties, the insurable properties of the Material Subsidiaries and the
insurable properties of the Trustee adequately insured at all times by
financially sound and reputable insurers; maintain

 

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such other insurance, to such extent and against such risks, including nuclear
hazard, fire and other risks insured against by extended coverage, as is
customary with companies in the same or similar businesses operating in the same
or similar locations; and maintain such other insurance as may be required by
law.

SECTION 5.03. Obligations and Taxes.    Pay its Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all material taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or in respect of its
property, before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise that, if unpaid,
might give rise to a Lien upon such properties or any part thereof; provided,
however, that such payment and discharge shall not be required with respect to
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings and
the applicable Borrower shall have set aside on its books adequate reserves with
respect thereto in accordance with GAAP and such contest operates to suspend
collection of the contested obligation, tax, assessment or charge and
enforcement of a Lien.

SECTION 5.04. Financial Statements, Reports, etc.    Furnish to the
Administrative Agent (and the Administrative Agent shall promptly after receipt
thereof make available to each Lender):

(a)    with respect to El Paso, within 120 days after the end of each fiscal
year, its consolidated balance sheet and related statements of operations,
stockholders’ equity and cash flows showing its financial condition as of the
close of such fiscal year and the results of its operations during such year,
all audited by KPMG LLP or other independent public accountants of recognized
national standing and accompanied by an opinion of such accountants (which shall
not be qualified in any material respect) to the effect that such consolidated
financial statements fairly present its financial condition and results of
operations in accordance with GAAP consistently applied;

(b)    with respect to El Paso, within 60 days after the end of each of the
first three fiscal quarters of each fiscal year, its consolidated balance sheet
and related statements of operations, stockholders’ equity, and cash flows
showing its financial condition as of the close of such fiscal quarter and the
results of its operations during such fiscal quarter and the then elapsed
portion of the fiscal year, all certified by one of its Financial Officers, as
fairly presenting its financial condition and results of operations on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments;

(c)    with respect to El Paso, concurrently with any delivery of financial
statements under sub-paragraph (a) or (b) above, a certificate of a Financial
Officer certifying that no Event of Default or Default has occurred or, if such
an Event of Default or Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken with respect
thereto;

(d)    with respect to El Paso, promptly after the same become publicly
available, copies of all periodic and other reports and definitive proxy
statements (other than any

 

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registration statement on Form S-8 or its equivalent) filed by it or any
Subsidiary with the SEC, or distributed to its shareholders generally;

(e)    with respect to the Trustee, concurrently with the delivery thereof to
El Paso, copies of its periodic trust reports;

(f)    with respect to El Paso, promptly after El Paso shall have received
notice thereof, notice of any change in the debt rating of the Index Debt, or
any notice that El Paso or any Index Debt shall be placed on “CreditWatch” or
“WatchList” or any similar list maintained by either Rating Agency, in each case
with negative implications;

(g)    promptly after the request by any Lender, all documentation and other
information that such Lender reasonably requests in order to comply with its
ongoing obligations under applicable “know your customer” and anti-money
laundering rules and regulations, including the USA Patriot Act; and

(h)    promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of such Borrower or any
Subsidiary, or compliance with the terms of any Loan Document, as the
Administrative Agent or any Lender may reasonably request.

SECTION 5.05. Litigation and Other Notices.    Furnish to the Administrative
Agent written notice of the following promptly after any Responsible Officer of
such Borrower obtains actual knowledge thereof:

(a)    any Event of Default or Default, specifying the nature and extent thereof
and the corrective action (if any) taken or proposed to be taken with respect
thereto; and

(b)    the filing or commencement of any action, suit or proceeding, whether at
law or in equity or by or before any Governmental Authority, against it or, in
the case of El Paso, any Material Subsidiary that would reasonably be expected
to result in a Material Adverse Effect.

SECTION 5.06. Employee Benefits.    With respect to El Paso, furnish to the
Administrative Agent as soon as possible, and in any event within 10 days, after
any Responsible Officer of El Paso or any ERISA Affiliate knows or has reason to
know that any ERISA Event has occurred that, alone or together with any other
ERISA Event, would reasonably be expected to result in liability of El Paso in
an aggregate amount exceeding $7,500,000 or requiring payments exceeding
$2,500,000 in any year, a statement of a Financial Officer of El Paso setting
forth details as to such ERISA Event and the action, if any, that El Paso
proposes to take with respect thereto.

SECTION 5.07. Maintaining Records; Access to Properties and Inspections. (a)
Keep adequate records and books of account, in which full and correct entries
shall be made of all of its financial transactions and its assets and business
so as to permit El Paso and its Subsidiaries to present financial statements in
accordance with GAAP.

 

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(b)    Permit any representatives designated by the Administrative Agent or any
Lender to visit and inspect the financial records and the properties of such
Borrower or such Material Subsidiary upon reasonable notice and at reasonable
times and as often as reasonably requested and to make extracts from and copies
of such financial records, and permit any representatives designated by the
Administrative Agent or any Lender to discuss the affairs, finances and
condition of such Borrower or such Material Subsidiary with the officers thereof
and independent accountants therefor (subject to reasonable requirements of
confidentiality, including requirements imposed by law or by contract); provided
that the costs and expenses incurred by any such Lender in connection with any
such visitation, inspection, extracts, copies or discussions shall be, upon the
occurrence and during the continuation of a Default or an Event of Default, for
the account of El Paso, and, in all other circumstances, for the account of such
Lender. It is understood and agreed that the costs and expenses incurred by the
Administrative Agent in connection with any such visitation, inspection,
extracts, copies or discussions shall be for the account of El Paso.

SECTION 5.08. Use of Proceeds.  Use the proceeds of the Loans made to it and
request the issuance of Letters of Credit only for the purposes set forth in the
preamble to this Agreement.

SECTION 5.09. Subsidiary Guarantors.    El Paso shall promptly (and in any event
within thirty (30) days (or such longer period not to exceed forty-five
(45) days as the Administrative Agent may agree in its reasonable discretion)
after the creation, acquisition or existence of any Material Subsidiary) cause
each Material Subsidiary to execute a guarantee of all the El Paso Obligations
pursuant to a Subsidiary Guarantee Agreement. In furtherance of the foregoing,
El Paso shall give prompt notice to the Administrative Agent of the creation,
acquisition or existence of any such Material Subsidiary.

SECTION 5.10. Maintenance of Ratings.  Use commercially reasonable efforts to
cause at all times Applicable Ratings to be in effect.

ARTICLE VI

Negative Covenants

Each of El Paso and, subject to Section 10.19, the Trustee covenants and agrees
with each Lender that, so long as this Agreement shall remain in effect and
until the Commitments have been terminated and the principal of and interest on
each Loan, all Fees and all other expenses or amounts payable under any Loan
Document have been paid in full and all Letters of Credit have been canceled or
have expired and all amounts drawn thereunder have been reimbursed in full (or
sufficient cash collateral has been deposited with the Administrative Agent in
an amount equal to the then outstanding L/C Exposure), unless the Required
Lenders shall otherwise consent in writing:

SECTION 6.01. Subsidiary Indebtedness. El Paso will not permit any Subsidiary
that is not a Subsidiary Guarantor to incur, create, assume or permit to exist
(collectively, “incur”) any Indebtedness, except:

 

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(a)    Indebtedness of any such Subsidiary owed to El Paso or any Subsidiary
Guarantor;

(b)    Indebtedness of any Receivables Subsidiary incurred pursuant to the
Receivables Facility Documents in an aggregate principal amount not in excess of
$100,000,000 outstanding at any time; and

(c)    Indebtedness of Subsidiaries not otherwise permitted by the foregoing
paragraphs of this Section 6.01; provided that the aggregate principal amount of
all Indebtedness of all such Subsidiaries outstanding under this paragraph (c)
and Indebtedness secured by Liens permitted by Section 6.02(o) shall not exceed
15% of Total Consolidated Capital.

SECTION 6.02. Liens.    Neither Borrower will, nor will El Paso permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or assets (including stock or other securities of any person, including any
Subsidiary) now owned or hereafter acquired by it or on any income or revenues
or rights in respect of any thereof, except:

(a)    Liens on property or assets of El Paso existing on the date hereof and
set forth in Schedule 6.02; provided that such Liens shall secure only those
obligations which they secure on the date hereof;

(b)    Liens to secure the Obligations;

(c)    any Lien existing on any Operating Property prior to the acquisition
thereof by El Paso or any Subsidiary to secure Indebtedness assumed by El Paso
or any Subsidiary; provided that (i) such Lien is not created in contemplation
of or in connection with such acquisition and (ii) such Lien does not apply to
any other property or assets of either Borrower or any Subsidiary;

(d)    Liens for taxes or assessments by any Governmental Authority not yet due
or which are being contested in compliance with Section 5.03;

(e)    carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s,
landlords’, licensors’ or other like Liens arising in the ordinary course of
business and securing obligations that are not due and payable or which are
being contested in compliance with Section 5.03;

(f)    pledges and deposits made in the ordinary course of El Paso’s business in
compliance with workmen’s compensation, unemployment insurance and other social
security laws or regulations;

(g)    deposits by El Paso to secure the performance of bids, trade contracts
(other than for Indebtedness), leases (other than Capital Lease Obligations),
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;

(h)    zoning restrictions, easements, rights-of-way, restrictions on use of
real property or permit or license requirements and other similar encumbrances
incurred in the

 

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ordinary course of business which, in the aggregate, are not substantial in
amount and do not materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the businesses of the
Borrowers or any Material Subsidiary;

(i)    Liens to secure Indebtedness incurred by El Paso in connection with the
acquisition or lease by El Paso in the ordinary course of business, after the
date hereof, of furniture, fixtures, equipment and other assets not owned by El
Paso on the date hereof; provided that (i) such Indebtedness shall not be
secured by any Operating Property of El Paso other than the Operating Property
with respect to which such Indebtedness is incurred and (ii) the Lien securing
such Indebtedness shall be created within 90 days of the incurrence of such
Indebtedness;

(j)    Liens of a Mortgage Indenture to secure First Mortgage Bonds in an
aggregate principal amount not to exceed $550,000,000 issued to repurchase,
repay or otherwise refinance the Indebtedness of El Paso under the Senior
Unsecured Notes;

(k)    Liens to secure Indebtedness of any person existing at the time such
person is merged into or consolidated with, or such person disposes of all or
substantially all its properties (or those of a division) to, El Paso or any
Material Subsidiary;

(l)    Liens to secure Indebtedness incurred by El Paso to acquire, construct,
develop or substantially repair, alter or improve Operating Property or to
provide funds for any such purpose or for reimbursement of funds previously
expended for any such purpose; provided that such Indebtedness is incurred
contemporaneously with, or within 24 months after, such acquisition or the
completion of construction, development or substantial repair, alteration or
improvement;

(m)    Liens to secure, directly or indirectly, El Paso’s obligations with
respect to debt issued by any Governmental Authority, including debt represented
by securities issued by any such Governmental Authority (or providers of credit
enhancement with respect to such securities), including, without limitation, El
Paso’s obligations with respect to industrial development, pollution control or
similar revenue bonds incurred for the purpose of financing all or any part of
the purchase price or the cost of substantially repairing or altering,
constructing, developing or substantially improving El Paso’s Operating
Property;

(n)    Liens on the property of any Receivables Subsidiary incurred pursuant to
the Receivables Facility Documents and Liens in favor of any Receivables
Subsidiary granted by El Paso or any other Subsidiary with respect to
Receivables purportedly sold to any Receivables Subsidiary by El Paso or such
other Subsidiary pursuant to a Receivables Facility;

(o)    Liens created by a Mortgage Indenture and securing the payment of the
fees and expenses of the trustee in respect of such Mortgage Indenture;

(p)    one or more attachments or other similar Liens on assets of El Paso or
any Subsidiary arising in connection with court proceedings (i) in an aggregate
principal amount not in excess of $10,000,000 (so long as El Paso or such
Subsidiary has set aside adequate reserves therefor) or (ii) the execution of
which has been stayed or which has been appealed and secured,

 

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if necessary, by an appeal bond; provided that in each case no Event of Default
shall result therefrom;

(q)    any Lien arising by operation of law on the assets of El Paso or any
Subsidiary in favor of any Governmental Authority with respect to any franchise,
grant, license, permit or contract; and

(r)    Liens that are not otherwise permitted by any of the foregoing paragraphs
of this Section 6.02; provided that, at the time that any such Lien is granted
(and after giving effect thereto), the aggregate outstanding principal amount of
all Indebtedness outstanding under Section 6.01(c) and Indebtedness secured by
Liens permitted by this Section 6.02(r) shall not exceed 15% of Total
Consolidated Capital.

SECTION 6.03. Sale and Lease-Back Transactions.   Neither Borrower will, nor
will El Paso permit any Material Subsidiary to, enter into any arrangement,
directly or indirectly, with any person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
which it intends to use for substantially the same purpose or purposes as the
property being sold or transferred (a “Sale Lease-Back Transaction”), except for
(i) any Sale Lease-Back Transaction that constitutes a Capital Lease Obligation
otherwise permitted to be incurred under this Agreement, and (ii) Sale
Lease-Back Transactions of real property and tangible personal property with an
aggregate fair market value not to exceed $50,000,000 at any time.

SECTION 6.04. Investments, Loans and Advances.    Neither Borrower will, nor
will El Paso permit any Material Subsidiary to, purchase, hold or acquire any
capital stock, evidences of indebtedness or other securities of, make or permit
to exist any loans or advances to, or make or permit to exist any investment or
any other interest in, any other person in excess of $5,000,000 at any time
outstanding (without giving effect to any write-offs or write-downs thereof),
except:

(a)    investments by El Paso or any Material Subsidiary in the capital stock of
a Subsidiary; provided however, that the aggregate cumulative amount of
El Paso’s and the Material Subsidiaries’ investments in, and loans and advances
to, such Subsidiaries that are not Loan Parties shall not exceed $20,000,000;

(b)    Permitted Investments;

(c)    Investments of El Paso existing on the Closing Date and set forth on
Schedule 6.04;

(d)    Investments received in connection with the bankruptcy or reorganization
of customers and suppliers and in settlement of delinquent obligations of, and
other disputes with, customers and suppliers arising in the ordinary course of
business;

(e)     Investments in intercompany loans between and among El Paso and any
Subsidiary Guarantor; and

 

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(f)    Investments made in connection with and to facilitate the Receivables
Facilities.

SECTION 6.05. Mergers, Consolidations and Sales of Assets and Acquisitions.
Neither Borrower will, nor will El Paso permit any Material Subsidiary to, merge
into or consolidate with any other person, or permit any other person to merge
into or consolidate with it, or sell, transfer, lease or otherwise dispose of
(in one transaction or in a series of transactions) all or any substantial part
of its assets (whether now owned or hereafter acquired) or any capital stock of
any Material Subsidiary, or purchase, lease or otherwise acquire (in one
transaction or a series of transactions) all or any substantial part of the
assets of any other person except that (a) the Trustee may purchase and sell
Nuclear Fuel in accordance with the provisions of the Purchase Contract,
(b) El Paso and any Material Subsidiary may sell Receivables pursuant to a
Receivables Facility, (c) El Paso may sell or contribute transmission assets to
the extent that FERC orders such assets to be sold in connection with joining a
Regional Transmission Organization, (d) El Paso or any Material Subsidiary may
merge with another person if (x) El Paso or such Material Subsidiary, as the
case may be, is the surviving corporation (subject to clause (e) below) and
(y) no Default shall have occurred and be continuing after giving effect to such
merger, and (e) any Material Subsidiary may merge with El Paso if El Paso is the
surviving corporation.

SECTION 6.06. Transactions with Affiliates.    Neither Borrower will, nor will
El Paso permit any Subsidiary to, sell or transfer any property or assets to, or
purchase or acquire any property or assets from, or otherwise engage in any
other transactions with, any of its Affiliates (other than its Wholly Owned
Subsidiaries), except that (a) El Paso or any Subsidiary may engage in any of
the foregoing transactions in the ordinary course of business at prices and on
terms and conditions not less favorable to El Paso or such Subsidiary than could
be obtained on an arm’s-length basis from unrelated third parties and
(b) El Paso and any Subsidiary may sell Receivables pursuant to a Receivables
Facility.

SECTION 6.07. Businesses of Borrowers and Material Subsidiaries.    Neither
Borrower will, nor will El Paso permit any Material Subsidiary to, engage at any
time in any business or business activity other than (a) with respect to El Paso
and the Material Subsidiaries, the business conducted by them on the Closing
Date and business activities reasonably incidental thereto, and (b) with respect
to the Trustee, purchasing, holding title to, making payments with respect to
and selling Nuclear Fuel pursuant to, and on the terms set forth in, the Trust
Agreement and the Purchase Contract.

SECTION 6.08. Other Agreements.    Neither Borrower will, nor will El Paso
permit any Subsidiary to, permit any waiver, supplement, modification,
amendment, termination or release of (i) the Trust Agreement or the Purchase
Contract or (ii) the Receivables Facility Documents, in each case to the extent
that any such waiver, supplement, modification, amendment, termination or
release would be adverse to the Lenders in any material respect.

SECTION 6.09. Debt to Capitalization Ratio.    El Paso will not permit the ratio
of (i) Total Consolidated Debt to (ii) Total Consolidated Capital as of the last
day of any fiscal quarter to be in excess of 0.65 to 1.00.

 

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SECTION 6.10. Fiscal Year. Neither Borrower will, nor will El Paso permit any
Subsidiary to, change the end of its fiscal year from December 31 to any other
date.

ARTICLE VII

Events of Default

In case of the happening of any of the following events (“Events of Default”):

(a)    any representation or warranty made or deemed made in or in connection
with any Loan Document or the borrowings or issuances of Letters of Credit
hereunder, or any representation, warranty, statement or information contained
in any report, certificate, financial statement or other instrument furnished
pursuant to any Loan Document, shall prove to have been false or misleading in
any material respect when so made, deemed made or furnished; or

(b)    default shall be made in the payment of any principal of any Loan or,
subject to Section 2.20(e), the reimbursement with respect to any L/C
Disbursement when and as the same shall become due and payable, whether at the
due date thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise; or

(c)    default shall be made in the payment of any interest on any Loan or any
Fee or L/C Disbursement or any other amount (other than an amount referred to in
(b) above) due under any Loan Document, when and as the same shall become due
and payable, and such default shall continue unremedied for a period of five
Business Days; or

(d)    default in any material manner shall be made in the due observance or
performance by either Borrower or any Subsidiary of any covenant, condition or
agreement contained in Section 5.01(a) or 5.05 or in Article VI; or

(e)    default shall be made in the due observance or performance by either
Borrower or any Subsidiary of any covenant, condition or agreement contained in
any Loan Document (other than those specified in (b), (c) or (d) above) and such
default shall continue unremedied for a period of 30 days after notice thereof
from the Administrative Agent or any Lender to the Borrowers; or

(f)    either Borrower or any Subsidiary shall (i) fail to pay any principal or
interest, regardless of amount, due in respect of any Indebtedness in a
principal amount in excess of $10,000,000, when and as the same shall become due
and payable, or (ii) fail to observe or perform any other term, covenant,
condition or agreement contained in any agreement or instrument evidencing or
governing any such Indebtedness if the effect of any failure referred to in this
clause (ii) is to cause, or to permit the holder or holders of such Indebtedness
or a trustee on its or their behalf (with or without the giving of notice, the
lapse of time or both) to cause, such Indebtedness to become due prior to its
stated maturity; or

(g)    an involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking (i) relief in
respect of either Borrower or any Material Subsidiary or of a substantial part
of the property or assets of either Borrower or any such Material Subsidiary,
under Title 11 of the United States Code, as now constituted or

 

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hereafter amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for either
Borrower or any Material Subsidiary or for a substantial part of the property or
assets of either Borrower or any such Material Subsidiary or (iii) the
winding-up or liquidation of either Borrower or any Material Subsidiary; and
such proceeding or petition shall continue undismissed for 60 days or an order
or decree approving or ordering any of the foregoing shall be entered; or

(h)    either Borrower or any Material Subsidiary shall (i) voluntarily commence
any proceeding or file any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or similar law,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described in
(g) above, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for either Borrower or
any such Material Subsidiary or for a substantial part of the property or assets
of either Borrower or any such Material Subsidiary, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally to pay its
debts as they become due or (vii) take any action for the purpose of effecting
any of the foregoing; or

(i)    one or more judgments for the payment of money in an aggregate amount in
excess of $10,000,000 shall be rendered against either Borrower or any
Subsidiary and the same shall remain undischarged for a period of 30 consecutive
days during which execution shall not be effectively stayed, or any action shall
be legally taken by a judgment creditor to levy upon assets or properties of
either Borrower or any Subsidiary to enforce any such judgment; or

(j)    an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other such ERISA Events, would reasonably
be expected to result in liability of El Paso and its ERISA Affiliates in an
aggregate amount exceeding $10,000,000 or requires payments exceeding $5,000,000
in any year; or

(k)    there shall have occurred a Change in Control; or

(l)    a Purchase Contract Default shall have occurred and be continuing;

then, and in every such event (other than an event with respect to either
Borrower described in paragraph (g) or (h) above), and at any time thereafter
during the continuance of such event, the Administrative Agent shall at the
request, or may with the consent, of the Required Lenders, by notice to the
Borrowers, take either or both of the following actions, at the same or
different times: (i) terminate forthwith the Commitments and (ii) declare the
Loans then outstanding to be forthwith due and payable in whole or in part,
whereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of each Borrower accrued hereunder and under any other Loan
Document, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by each Borrower, anything contained herein or in any other Loan Document
to the contrary notwithstanding; and in any

 

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event with respect to either Borrower described in paragraph (g) or (h) above,
the Commitments shall automatically terminate and the principal of the Loans
then outstanding, together with accrued interest thereon and any unpaid accrued
Fees and all other liabilities of each Borrower accrued hereunder and under any
other Loan Document, shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by each Borrower, anything contained herein or in any
other Loan Document to the contrary notwithstanding.

ARTICLE VIII

The Administrative Agent

In order to expedite the transactions contemplated by this Agreement, JPMorgan
is hereby appointed to act as Administrative Agent on behalf of the Lenders and
the Issuing Bank. Each of the Lenders and each assignee of any such Lender
hereby irrevocably authorizes the Administrative Agent to take such actions on
behalf of such Lender or assignee or the Issuing Bank and to exercise such
powers as are specifically delegated to the Administrative Agent by the terms
and provisions hereof and of the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto. The Administrative
Agent is hereby expressly authorized by the Lenders and the Issuing Bank,
without hereby limiting any implied authority, (a) to receive on behalf of the
Lenders and the Issuing Bank all payments of principal of and interest on the
Loans, all payments in respect of L/C Disbursements and all other amounts due to
the Lenders hereunder, and promptly to distribute to each Lender or the Issuing
Bank its proper share of each payment so received; (b) to give notice on behalf
of each of the Lenders to the Borrowers of any Event of Default specified in
this Agreement of which the Administrative Agent has actual knowledge acquired
in connection with its agency hereunder; and (c) to distribute to each Lender
copies of all notices, financial statements and other materials delivered by
either Borrower pursuant to this Agreement or the other Loan Documents as
received by the Administrative Agent.

Neither the Administrative Agent nor any of its directors, officers, employees
or agents shall be liable as such for any action taken or omitted by any of them
except for its or his own gross negligence or willful misconduct, or be
responsible for any statement, warranty or representation herein or the contents
of any document delivered in connection herewith, or be required to ascertain or
to make any inquiry concerning the performance or observance by each Borrower or
any other Loan Party of any of the terms, conditions, covenants or agreements
contained in any Loan Document. The Administrative Agent shall not be
responsible to the Lenders for the due execution, genuineness, validity,
enforceability or effectiveness of this Agreement, any other Loan Document, or
any other document, instrument or agreement. The Administrative Agent shall in
all cases be fully protected in acting, or refraining from acting, in accordance
with written instructions signed by the Required Lenders and, except as
otherwise specifically provided herein, such instructions and any action or
inaction pursuant thereto shall be binding on all the Lenders. The
Administrative Agent shall, in the absence of knowledge to the contrary, be
entitled to rely on any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by the proper person or
persons. Neither the Administrative Agent nor any of its directors, officers,
employees or agents shall have any responsibility to either Borrower on account
of the failure of or delay in performance or breach

 

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by any Lender or the Issuing Bank of any of its obligations hereunder or to any
Lender or the Issuing Bank on account of the failure of or delay in performance
or breach by any other Lender or the Issuing Bank or either Borrower of any of
their respective obligations hereunder or under any other Loan Document or in
connection herewith or therewith. The Administrative Agent may execute any and
all duties hereunder by or through agents or employees and shall be entitled to
rely upon the advice of legal counsel selected by it with respect to all matters
arising hereunder and shall not be liable for any action taken or suffered in
good faith by it in accordance with the advice of such counsel.

The Lenders hereby acknowledge that (a) the Administrative Agent shall not be
subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing and (b) the Administrative Agent shall
not be under any duty to take any discretionary action permitted to be taken by
it pursuant to the provisions of this Agreement unless it shall be requested in
writing to do so by the Required Lenders.

Subject to the appointment and acceptance of a successor Administrative Agent as
provided below, the Administrative Agent may resign at any time by notifying the
Lenders and the Borrowers. Upon any such resignation, the Required Lenders shall
have the right to appoint a successor reasonably satisfactory to Borrower. If no
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent which shall be a
bank with an office in New York, New York, having a combined capital and surplus
of at least $500,000,000 or an Affiliate of any such bank. Upon the acceptance
of any appointment as Administrative Agent hereunder by a successor bank, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After the Administrative Agent’s resignation hereunder, the
provisions of this Article and Section 10.05 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Administrative Agent.

With respect to the Loans made by it hereunder, the Administrative Agent in its
individual capacity and not as Administrative Agent shall have the same rights
and powers as any other Lender and may exercise the same as though it were not
an Administrative Agent, and the Administrative Agent and its Affiliates may
accept deposits from, lend money to and generally engage in any kind of business
with either Borrower or any Subsidiary or other Affiliates thereof as if it were
not an Administrative Agent.

Each Lender agrees (a) to reimburse the Administrative Agent, on demand, in the
amount of its Applicable Percentage of any expenses incurred for the benefit of
the Lenders by the Administrative Agent, including counsel fees and compensation
of agents and employees paid for services rendered on behalf of the Lenders,
that shall not have been reimbursed by the Borrowers and (b) to indemnify and
hold harmless the Administrative Agent and any of its directors, officers,
employees or agents, on demand, in the amount of such pro rata share, from and
against any and all liabilities, taxes, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by or asserted against it in
its capacity as Administrative Agent or any of

 

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them in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by it or any of them under this
Agreement or any other Loan Document, to the extent the same shall not have been
reimbursed by the Borrowers, provided that no Lender shall be liable to the
Administrative Agent or any such other indemnified person for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements that are determined by a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the Administrative Agent or any of its directors, officers,
employees or agents.

Each Lender acknowledges that it has, independently and without reliance upon
the Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement or any other Loan Document, any
related agreement or any document furnished hereunder or thereunder.

ARTICLE IX

Guarantee

As a result of the arrangements contemplated by the Trust Agreement and the
Purchase Contract for the financing by the Trustee of Nuclear Fuel, El Paso
acknowledges that it will derive substantial benefit from the commitments of the
Lenders to make Loans to the Trustee and the commitment of the Issuing Bank to
issue Letters of Credit for the account of the Trustee. To induce the Lenders to
make the Loans and the Issuing Bank to issue Letters of Credit and to enter into
this Agreement, El Paso agrees with each Lender, the Issuing Bank, the
Syndication Agent and the Administrative Agent (each such person, together with
its successors and assigns, a “Guaranteed Party”) as follows:

SECTION 9.01. Guarantee.    El Paso unconditionally guarantees, as a primary
obligor and not merely as a surety, (a) the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans made to the Trustee, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (ii) each
payment required to be made by the Trustee under this Agreement in respect of
any Letter of Credit, when and as due, including payments in respect of
reimbursement of disbursements, interest thereon and obligations to provide cash
collateral and (iii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of the Trustee to the
Guaranteed Parties under this Agreement and the other Loan Documents and (b) the
due and punctual performance of all covenants, agreements, obligations and
liabilities of the Trustee under or pursuant to this Agreement and the other
Loan Documents (all the monetary and other obligations referred to in the
preceding clauses (a) and

 

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(b) being collectively called the “Trust Obligations”). El Paso further agrees
that the Trust Obligations may be extended or renewed, in whole or in part,
without notice to or further assent from it, and that it will remain bound upon
its guarantee notwithstanding any extension or renewal of any Trust Obligation.

SECTION 9.02. Obligations Not Waived.    To the fullest extent permitted by
applicable law, El Paso waives presentment to, demand of payment from and
protest to the Trustee of any of the Trust Obligations, and also waives notice
of acceptance of its guarantee and notice of protest for nonpayment. To the
fullest extent permitted by applicable law, the obligations of El Paso hereunder
shall not be affected by (a) the failure of the Administrative Agent or any
other Guaranteed Party to assert any claim or demand or to enforce or exercise
any right or remedy against the Trustee, (b) any rescission, waiver, amendment
or modification of, or any release from any of the terms or provisions of this
Agreement, any other Loan Document, any Guarantee or any other agreement,
including with respect to any other guarantor of the Trust Obligations or
(c) any release or substitution of any one or more endorsers, other guarantors
or other obligors of all or any portion of the Trust Obligations.

SECTION 9.03. Guarantee of Payment.    El Paso further agrees that its guarantee
constitutes a guarantee of payment when due and not of collection, and waives
any right to require that any resort be had by the Administrative Agent or any
other Guaranteed Party to any of the security held for payment of the Trust
Obligations or to any balance of any deposit account or credit on the books of
the Administrative Agent or any other Guaranteed Party in favor of the Trustee
or any other person.

SECTION 9.04. No Discharge or Diminishment of Guarantee.    The obligations of
El Paso hereunder shall not be subject to any reduction, limitation, impairment
or termination for any reason (other than the payment in full in cash of the
Trust Obligations), including any claim of waiver, release, surrender,
alteration or compromise of any of the Trust Obligations, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Trust Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of El Paso hereunder shall not be discharged or
impaired or otherwise affected by the failure of the Administrative Agent or any
other Guaranteed Party to assert any claim or demand or to enforce any remedy
under this Agreement, any other Loan Document or any other agreement, by any
waiver or modification of any provision of any thereof, by any default, failure
or delay, willful or otherwise, in the performance of the Trust Obligations, or
by any other act or omission that may or might in any manner or to any extent
vary the risk of El Paso or that would otherwise operate as a discharge of
El Paso as a matter of law or equity (other than the payment in full in cash of
all the Trust Obligations).

SECTION 9.05. Defenses of the Trustee Waived.    To the fullest extent permitted
by applicable law, El Paso waives any defense based on or arising out of any
defense of the Trustee or the unenforceability of the Trust Obligations or any
part thereof from any cause, or the cessation from any cause of the liability of
the Trustee, other than the payment in full in cash of the Trust Obligations.
The Administrative Agent and the other Guaranteed Parties may, at their
election, foreclose on any security held by one or more of them by one or more
judicial or nonjudicial sales, accept an assignment of any such security in lieu
of foreclosure, compromise

 

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or adjust any part of the Trust Obligations, make any other accommodation with
the Trustee or any other guarantor or exercise any other right or remedy
available to them against the Trustee or any other guarantor, without affecting
or impairing in any way the liability of El Paso hereunder except to the extent
the Trust Obligations have been fully, finally paid in cash. To the fullest
extent permitted by applicable law, El Paso waives any defense arising out of
any such election even though such election operates, pursuant to applicable
law, to impair or to extinguish any right of reimbursement or subrogation or
other right or remedy of El Paso against the Trustee or any other guarantor, as
the case may be, or any security.

SECTION 9.06. Agreement to Pay; Subrogation. In furtherance of the foregoing and
not in limitation of any other right that the Administrative Agent or any other
Guaranteed Party has at law or in equity against El Paso by virtue hereof, upon
the failure of the Trustee to pay any Trust Obligation when and as the same
shall become due, whether at maturity, by acceleration, after notice of
prepayment or otherwise, El Paso hereby promises to and will forthwith pay, or
cause to be paid, to the Administrative Agent or such other Guaranteed Party as
designated thereby in cash the amount of such unpaid Trust Obligations. Upon
payment by El Paso of any sums to the Administrative Agent or any Guaranteed
Party as provided above, all rights of El Paso against the Trustee arising as a
result thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subordinate and junior in right
of payment to the prior payment in full in cash of all the Trust Obligations. In
addition, any indebtedness of the Trustee now or hereafter held by El Paso is
hereby subordinated in right of payment to the prior payment in full of the
Trust Obligations. If any amount shall erroneously be paid to El Paso on account
of (i) such subrogation, contribution, reimbursement, indemnity or similar right
or (ii) any such indebtedness of the Trustee, such amount shall be held in trust
for the benefit of the Guaranteed Parties and shall forthwith be paid to the
Administrative Agent to be credited against the payment of the Trust
Obligations, whether matured or unmatured, in accordance with the terms of the
Loan Documents.

SECTION 9.07. Information. El Paso assumes all responsibility for being and
keeping itself informed of the Trustee’s financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Trust
Obligations and the nature, scope and extent of the risks that El Paso assumes
and incurs hereunder, and agrees that none of the Administrative Agent or the
other Guaranteed Parties will have any duty to advise El Paso of information
known to it or any of them regarding such circumstances or risks.

SECTION 9.08. Termination. The guarantee made hereunder (a) shall terminate when
all the Trust Obligations have been indefeasibly paid in full and the Lenders
have no further commitment to lend to the Trustee under this Agreement, the
Trustee L/C Exposure has been reduced to zero and the Issuing Bank has no
further obligation to issue Letters of Credit under this Agreement and (b) shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Trust Obligation is rescinded or must
otherwise be restored by any Guaranteed Party or El Paso upon the bankruptcy or
reorganization of the Trustee, El Paso or otherwise.

 

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ARTICLE X

Miscellaneous

SECTION 10.01. Notices.

(a)    Notices Generally. Except as provided in paragraph (b) below, all notices
and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopier as follows:

(i)  if to either Borrower, to it in care of El Paso Electric Company, Stanton
Tower, 100 N. Stanton, El Paso, Texas 79901, Attention of: General Counsel
(Telecopier No. (915) 521-4729);

(ii)  if to the Administrative Agent or the Issuing Bank, to JPMorgan Chase
Bank, N.A., Loan and Agency Services Group, 1111 Fannin Street, 10th Floor,
Houston, TX 77002, Attention of: Maria Arredondo (Telecopier No.
(713) 750-2358), with a copy to JPMorgan Chase Bank, N.A., at 201 E. Main, 3rd
Floor, El Paso, TX 79901, Attention of: Paul S. Condie (Telecopier No.
(915) 546-6575); and

(iii)  if to a Lender, to it at its address (or telecopier number) set forth on
Schedule 2.01, in the Assignment and Acceptance pursuant to which such Lender
shall have become a party hereto (or in its Administrative Questionnaire, as the
case may be) or, in the case of an Augmenting Lender, in the documentation
executed by such Augmenting Lender pursuant to Section 2.21(a).

Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent
provided in paragraph (b) below shall be effective as provided in said
paragraph (b).

(b)    Electronic Communications.  Notices and other communications to the
Lenders and the Issuing Bank hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agent, provided that the
foregoing shall not apply to notices to any Lender or the Issuing Bank pursuant
to Article II if such Lender or the Issuing Bank, as applicable, has notified
the Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication. The Administrative Agent or either Borrower
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it,
provided that approval of such procedures may be limited to particular notices
or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
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an acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement), provided that if such notice or other communication is not
sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

(c) Change of Address, Etc.    Any party hereto may change its address or
telecopier number for notices and other communications hereunder by notice to
the other parties hereto.

SECTION 10.02. Survival of Agreement.    All covenants, agreements,
representations and warranties made by each Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and the Issuing Bank and shall survive the
making by the Lenders of the Loans and the issuance of Letters of Credit by the
Issuing Bank, regardless of any investigation made by the Lenders or the Issuing
Bank or on their behalf, and shall continue in full force and effect as long as
the principal of or any accrued interest on any Loan or any Fee or any other
amount payable under this Agreement or any other Loan Document is outstanding
and unpaid or any Letter of Credit is outstanding (for which sufficient cash
collateral has not been deposited with the Administrative Agent) and so long as
the Commitments have not been terminated. The provisions of Sections 2.12
(except as expressly limited therein), 2.14, 2.18 and 10.05 shall remain
operative and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the expiration
of any Letter of Credit, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Administrative Agent, any Lender or the Issuing
Bank.

SECTION 10.03. Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrowers and the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto.

SECTION 10.04. Successors and Assigns. (a) Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
permitted successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of each Borrower, the Administrative Agent, the
Issuing Bank or the Lenders that are contained in this Agreement shall bind and
inure to the benefit of their respective successors and assigns.

(b)    Each Lender may assign to one or more assignees all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided,
however, that (i) except in the case of an assignment to a Lender or an
Affiliate of a Lender, (x) El Paso must give its prior written consent to such
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(y) the amount of the Commitment of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent) shall not be less
than $5,000,000 (or, if less, the entire remaining amount of such Lender’s
Commitment), provided further that during the continuation of an Event of
Default, the consent of El Paso shall not be required for such assignment,
(ii) all assignments shall require the prior written consent of the
Administrative Agent and the Issuing Bank (which consents shall not be
unreasonably withheld), (iii) each such assignment shall be of a constant, and
not a varying, percentage of all the assigning Lender’s rights and obligations
under this Agreement, (iv) the parties to each such assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance, together with
a processing and recordation fee of $3,500, and (v) the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire. Upon acceptance and recording pursuant to paragraph (e) of this
Section 10.04, from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least five Business Days after
the execution thereof, (A) the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement and (B) the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender’s rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 2.12 (except as expressly limited therein),
2.14, 2.18 and 10.05, as well as to any Fees accrued for its account and not yet
paid).

(c)    By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim and that its
Commitment, and the outstanding balance of its Loans, in each case without
giving effect to assignments thereof which have not become effective, are as set
forth in such Assignment and Acceptance, (ii) except as set forth in (i) above,
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrowers or the performance or
observance by either Borrower of any of its obligations under this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; (iv) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the most recent financial statements referred to in Section 3.05 or delivered
pursuant to Section 5.04 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (v) such assignee will independently and without
reliance upon the Administrative Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise

 

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such powers under this Agreement as are delegated to the Administrative Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in accordance with
their terms all the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.

(d)    Notwithstanding Section 2.04, the Administrative Agent, acting for this
purpose as an agent of the Borrowers, shall maintain at one of its offices in
The City of New York a copy of each Assignment and Acceptance delivered to it
and a register for the recordation of the names and addresses of the Lenders,
and the Commitment of, and principal amount of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive and the Borrowers, the Administrative Agent,
the Issuing Bank and the Lenders may treat each person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by each Borrower, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

(e)    Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in
paragraph (b) above and, if required, the written consent of each Borrower, the
Issuing Bank and the Administrative Agent to such assignment, the Administrative
Agent shall (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Lenders and the Issuing Bank. No assignment shall be effective
unless it has been recorded in the Register as provided in this paragraph (e).

(f)    Each Lender may without the consent of the Borrowers, the Issuing Bank or
the Administrative Agent sell participation interests to one or more banks or
other entities in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to
it); provided, however, that (i) such Lender’s obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
participating banks or other entities shall be entitled to the benefit of the
cost protection provisions contained in Sections 2.12, 2.14 and 2.18 (subject to
the requirements and limitations therein, including the requirements under
Section 2.18(f) (it being understood that the documentation required under
Section 2.18(f) shall be delivered to the participating Lender)) to the same
extent as if they were Lenders, provided, however, that the holder of a
participation agrees to be subject to the provisions of Sections 2.15, 2.16,
2.17, 2.18(g) and 2.19 as if it were an assignee and the right of each holder of
a participation to receive payment under Sections 2.12, 2.14 and 2.18 shall be
limited to the lesser of (a) the amounts actually incurred by such holder for
which payment is provided under said sections and (b) the amounts that would
have been payable under said sections by the applicable Borrower to the Lender
granting the participation to such holder had such participation not been
granted, (iv) the Borrowers, the Administrative Agent, the Issuing Bank and the
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement, and
such Lender shall retain the sole right to enforce the obligations of the
Borrowers relating to the Loans or L/C Disbursements

 

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and to approve any amendment, modification or waiver of any provision of this
Agreement (other than amendments, modifications or waivers decreasing any fees
payable hereunder or the amount of principal of or the rate at which interest is
payable on the Loans, extending any scheduled principal payment date or date
fixed for the payment of interest on the Loans or increasing or extending the
Commitments) and (v) without the prior written consent of the Administrative
Agent, no participation shall be sold to a prospective participant that bears a
relationship to either Borrower described in Section 108(e)(4) of the Code. Each
Lender that sells a participation shall, acting solely for this purpose as an
non-fiduciary agent of the Borrowers, maintain at one of its offices in the
United States a register on which it enters the name and address of each of its
participants and the principal amounts (and stated interest) of each such
participant’s interest in the Loans or other obligations under this Agreement
and the other Loan Documents (the “Participant Register”). The entries in the
Participant Register shall be conclusive absent manifest error, and such Lender
shall treat each person whose name is recorded in the Participant Register as
the owner of such participation for all purposes of this Agreement
notwithstanding any notice to the contrary

(g)    Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 10.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers furnished to such Lender
by or on behalf of the Borrowers; provided that, prior to any such disclosure of
information designated by the Borrowers as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information on
terms no less restrictive than those applicable to the Lenders pursuant to
Section 10.16.

(h)    Any Lender may at any time assign all or any portion of its rights under
this Agreement to a Federal Reserve Bank to secure extensions of credit by such
Federal Reserve Bank to such Lender; provided that no such assignment shall
release a Lender from any of its obligations hereunder or substitute any such
Bank for such Lender as a party hereto. In order to facilitate such an
assignment to a Federal Reserve Bank, each Borrower shall, at the request of the
assigning Lender, duly execute and deliver to the assigning Lender a promissory
note or notes evidencing the Loans made to such Borrower by the assigning Lender
hereunder.

(i)    Neither Borrower shall assign or delegate any of its rights or duties
hereunder without the prior written consent of the Administrative Agent, the
Issuing Bank and each Lender, and any attempted assignment without such consent
shall be null and void.

(j)    In the event that S&P, Moody’s and Thompson’s BankWatch (or
InsuranceWatch Ratings Service, in the case of Lenders that are insurance
companies (or Best’s Insurance Reports, if such insurance company is not rated
by Insurance Watch Ratings Service)) shall, after the date that any Lender
becomes a Lender, downgrade the long-term certificate of deposit ratings of such
Lender, and the resulting ratings shall be below BBB-, Baa3 and C (or BB, in the
case of a Lender that is an insurance company (or B, in the case of an insurance
company not rated by InsuranceWatch Ratings Service)), respectively, then the
Issuing Bank shall have the right, but not the obligation, at its own expense,
upon notice to such Lender and the Administrative Agent, to replace (or to
request the Borrowers to use their reasonable efforts

 

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to replace) such Lender with an assignee (in accordance with and subject to the
restrictions contained in paragraph (b) above), and such Lender hereby agrees to
transfer and assign without recourse (in accordance with and subject to the
restrictions contained in paragraph (b) above) all its interests, rights and
obligations in respect of its Commitment to such assignee; provided, however,
that (i) no such assignment shall conflict with any law, rule and regulation or
order of any Governmental Authority and (ii) the Issuing Bank or such assignee,
as the case may be, shall pay to such Lender in immediately available funds on
the date of such assignment the principal of and interest accrued to the date of
payment on the Loans made by such Lender hereunder and all other amounts accrued
for such Lender’s account or owed to it hereunder.

SECTION 10.05. Expenses; Indemnity. (a) Each Borrower jointly and severally
agrees to pay all reasonable out-of-pocket expenses incurred by the
Administrative Agent, the Syndication Agent and the Issuing Bank in connection
with the syndication of the credit facilities provided for herein and the
preparation and administration of this Agreement and the other Loan Documents or
in connection with any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions hereby or thereby
contemplated shall be consummated) or incurred by the Administrative Agent, the
Syndication Agent or any Lender in connection with the enforcement or protection
of its rights in connection with this Agreement and the other Loan Documents or
in connection with the Loans made or Letters of Credit issued hereunder,
including the reasonable fees, charges and disbursements of (i) Cravath,
Swaine & Moore LLP, counsel for the Administrative Agent, (ii) Hughes Hubbard &
Reed LLP, counsel for the Syndication Agent, (iii) one local counsel to the
Administrative Agent per material jurisdiction deemed necessary by the
Administrative Agent and (iv) if necessary, one special counsel to the
Administrative Agent per regulatory regime, and, in connection with any such
enforcement or protection, the reasonable fees, charges and disbursements of any
other counsel for the Administrative Agent, the Syndication Agent or any Lender.

(b)    Each Borrower jointly and severally agrees to indemnify the
Administrative Agent, the Syndication Agent, each Lender and the Issuing Bank,
each Affiliate of any of the foregoing persons and each of their respective
directors, officers, employees and agents (each such person being called an
“Indemnitee”) against, and to hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including reasonable
counsel fees, charges and disbursements, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as a result of (i) the
execution or delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated thereby, the performance by the parties
thereto of their respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby, (ii) the use of
the proceeds of the Loans or issuance of Letters of Credit, (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, (iv) any actual or alleged
presence or Release of Hazardous Materials on any property owned or operated by
either Borrower or any Subsidiary, or any Environmental Claim related in any way
to either Borrower or any Subsidiary or (v) any strict liability or liability
without fault or other liability of an owner or vendor relating in any way to
the Nuclear Fuel, whether arising out of statute, judicial decision or
otherwise; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such Indemnitee.

 

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(c)    The provisions of this Section 10.05 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Commitments, the expiration of any Letter of
Credit, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Administrative Agent, any Lender or the Issuing Bank. All amounts due
under this Section 10.05 shall be payable on written demand therefor.

SECTION 10.06. Right of Setoff.    If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time to
time, to the extent not prohibited by applicable law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender to or for
the credit or the account of either Borrower against any of and all the
Obligations now or hereafter existing under this Agreement and the other Loan
Documents held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement or such other Loan Document and
although such obligations may be unmatured. The rights of each Lender under this
Section 10.06 are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.

SECTION 10.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(OTHER THAN LETTERS OF CREDIT) SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL
BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES
DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED,
THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS MOST RECENTLY PUBLISHED
AND IN EFFECT, ON THE DATE SUCH LETTER OF CREDIT WAS ISSUED, BY THE
INTERNATIONAL CHAMBER OF COMMERCE (THE “UNIFORM CUSTOMS”) AND, AS TO MATTERS NOT
GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.

SECTION 10.08. Waivers; Amendment.    (a)    No failure or delay of the
Administrative Agent, any Lender or the Issuing Bank in exercising any power or
right hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the Issuing
Bank and the Lenders hereunder and under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or any other Loan Document or
consent to any departure by either Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice or demand on the Borrowers in any case
shall entitle either Borrower to any other or further notice or demand in
similar or other circumstances.

 

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(b)    Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Borrowers and the Required Lenders; provided, however, that no such
agreement shall (i) decrease the principal amount of, or extend the maturity of
or any scheduled principal payment date or date for the payment of any interest
on any Loan or any date for reimbursement of an L/C Disbursement, or waive or
excuse any such payment or any part thereof, or decrease the rate of interest on
any Loan or L/C Disbursement, without the prior written consent of each Lender
directly and adversely affected thereby, (ii) increase or extend the Commitment
of any Lender without the prior written consent of such Lender, (iii) decrease
the Commitment Fees or L/C Participation Fees of any Lender, or extend the date
of payment of such fees, without the prior written consent of such Lender,
(iv) amend or modify the pro rata sharing requirements of Section 2.15 without
the prior written consent of each Lender (it being understood and agreed that
“amend and extend” transactions which provide for different interest rates and
fees for extending Lenders shall only require the consent of the extending
Lenders and the Required Lenders), (v) amend or modify the provisions of this
Section 10.08 or Section 10.04(i) or the definition of the term “Required
Lenders” without the prior written consent of each Lender, or (vi) release
El Paso from its guarantee hereunder or release any Subsidiary from any
guarantee of the El Paso Obligations, without the prior written consent of each
Lender; provided further, however, that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent, the
Syndication Agent or the Issuing Bank hereunder or under any other Loan Document
without the prior written consent of the Administrative Agent, the Syndication
Agent or the Issuing Bank, respectively.

SECTION 10.09. Interest Rate Limitation.    Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan or L/C
Disbursement, together with all fees, charges and other amounts which are
treated as interest on such Loan or L/C Disbursement under applicable law
(collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum
Rate”) which may be contracted for, charged, taken, received or reserved by the
Lender holding such Loan or the Issuing Bank in accordance with applicable law,
the rate of interest payable in respect of such Loan or L/C Disbursement
hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan or L/C Disbursement but
were not payable as a result of the operation of this Section 10.09 shall be
cumulated and the interest and Charges payable to such Lender in respect of
other Loans or L/C Disbursements or periods shall be increased (but not above
the Maximum Rate therefor) until such cumulated amount, together with interest
thereon at the Federal Funds Effective Rate to the date of repayment, shall have
been received by such Lender; provided that at any time Texas law shall
establish the Maximum Rate, the Maximum Rate shall be the “weekly ceiling”
(formerly known as the indicated (weekly) rate ceiling in Article 1.04,
Subtitle 1, Title 79, of the Revised Civil Statutes of Texas, as amended)
described in and computed in accordance with Chapter 303 of the Texas Finance
Code, as amended; provided further that, to the extent permitted by such
Article, the Administrative Agent may from time to time by notice to each
Borrower revise the election of such interest rate ceiling as such ceiling
affects then current or future balances of the Loans.

SECTION 10.10. Entire Agreement.    THIS AGREEMENT, THE FEE LETTER AND THE OTHER
LOAN DOCUMENTS CONSTITUTE THE ENTIRE

 

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CONTRACT BETWEEN THE PARTIES RELATIVE TO THE SUBJECT MATTER HEREOF. ANY OTHER
PREVIOUS AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF
IS SUPERSEDED BY THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. NOTHING IN THIS
AGREEMENT OR IN THE OTHER LOAN DOCUMENTS, EXPRESSED OR IMPLIED, IS INTENDED TO
CONFER UPON ANY PARTY OTHER THAN THE PARTIES HERETO AND THERETO ANY RIGHTS,
REMEDIES, OBLIGATIONS OR LIABILITIES UNDER OR BY REASON OF THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS.

SECTION 10.11. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.11.

SECTION 10.12. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

SECTION 10.13. Counterparts.    This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute a
single contract, and shall become effective as provided in Section 10.03.
Delivery of an executed signature page to this Agreement by facsimile or other
electronic transmission (including, without limitation, by Adobe portable
document format file (also known as a “PDF” file)) shall be as effective as
delivery of a manually signed counterpart of this Agreement.

SECTION 10.14. Headings.    Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

 

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SECTION 10.15. Jurisdiction; Consent to Service of Process.    (a)    Each
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the exclusive jurisdiction of any New York State court or Federal
court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement or the other Loan Documents
against either Borrower or its respective properties in the courts of any
jurisdiction.

(b)    Each Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

(c)    Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 10.01. Nothing in this Agreement
or any other Loan Document will affect the right of any party to this Agreement
to serve process in any other manner permitted by law.

SECTION 10.16. Confidentiality.    The Administrative Agent, the Issuing Bank
and each of the Lenders agrees to keep confidential (and to use its best efforts
to cause its respective agents and representatives to keep confidential) the
Information (as defined below) and all copies thereof, extracts therefrom and
analyses or other materials based thereon, except that the Administrative Agent,
the Issuing Bank or any Lender shall be permitted to disclose Information (a) to
such of its respective officers, directors, employees, agents, affiliates and
representatives as need to know such Information, (b) to the extent requested by
any regulatory authority, (c) to the extent otherwise required by applicable
laws and regulations or by any subpoena or similar legal process, (d) in
connection with any suit, action or proceeding relating to the enforcement of
its rights hereunder or under the other Loan Documents, (e) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section 10.16 or (ii) becomes available to the Administrative Agent, the
Issuing Bank or any Lender on a nonconfidential basis from a source other than
the Borrowers, or (f) to the extent permitted by Section 10.04(g). For the
purposes of this Section 10.16, “Information” shall mean all financial
statements, certificates, reports, agreements and information (including all
analyses, compilations and studies prepared by the Administrative Agent, the
Issuing Bank or any Lender based on any of the foregoing) that are received from
the Borrowers and related to the Borrowers, any shareholder of El Paso or any
employee, customer or supplier of either

 

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Borrower, other than any of the foregoing that were available to the
Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis
prior to its disclosure thereto by either Borrower, and which are in the case of
Information provided after the date hereof, clearly identified at the time of
delivery as confidential. The provisions of this Section 10.16 shall remain
operative and in full force and effect regardless of the expiration and term of
this Agreement.

SECTION 10.17. Texas Revolving Credit Statute.    If, notwithstanding the
provisions of Section 10.07, Texas law shall be applied by any Governmental
Authority to this Agreement, the other Loan Documents or the obligations of
either Borrower hereunder or thereunder, each Borrower hereby agrees that the
provisions of Chapter 346 of the Texas Finance Code, as amended (formerly found
in Chapter 15 of Subtitle 3, Title 79, of the Revised Civil Statutes of Texas,
1925, as amended), shall not govern or in any manner apply to its obligations
hereunder or thereunder.

SECTION 10.18. No Recourse; Multiple Capacities.    (a)    Wherever in this
Agreement or the other Loan Documents BONY has undertaken any obligations in its
capacity as Trustee, it has done so solely in such capacity and not in its
individual capacity. Notwithstanding any other provision of this Agreement, BONY
shall not be personally liable for the obligations or liabilities of the Trustee
hereunder or under any other Loan Document, except to the extent such
obligations or liabilities result from BONY’s gross negligence or willful
misconduct.

(b)    Each party to this Agreement acknowledges that Section 6.1 of the Trust
Agreement imposes limitations on the liability of BONY in its capacity as
Trustee.

SECTION 10.19. Limited Representations, Warranties and Covenants of Trustee.
With respect to representations and warranties contained in Article III, the
affirmative covenants contained in Article V and the negative covenants
contained in Article VI, it is understood and agreed that (a) the Trustee has
made no independent inquiry as to (i) the assets placed in trust into the
Rio Grande Resources Trust II or (ii) any facts concerning El Paso and the
Subsidiaries or as to the status or condition of any of their assets or any
disclosures made by them and (b) the Trustee’s representations, warranties and
covenants are limited to itself and those matters within its control. The
Trustee has no actual knowledge of any facts that would indicate that any such
representations or warranties by El Paso or the Subsidiaries are untrue.

SECTION 10.20. USA Patriot Act Notice.    Each Lender and each Agent (for itself
and not on behalf of any Lender) hereby notifies the Borrowers that pursuant to
the requirements of the USA Patriot Act, it is required to obtain, verify and
record information that identifies the Borrowers, which information includes the
name and address of the Borrowers and other information that will allow such
Lender or such Agent, as applicable, to identify the Borrowers in accordance
with the USA Patriot Act.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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

 

 

EL PASO ELECTRIC COMPANY By:  

/s/ David G. Carpenter

  Name:   David G. Carpenter   Title:   SVP & CFO

THE BANK OF NEW YORK MELLON TRUST

COMPANY, N.A., not in its individual capacity,

but solely in its capacity as Trustee

By:

 

/s/ Rafael Martinez

 

Name:

 

Rafael Martinez

  Title:   Senior Associate    

JPMORGAN CHASE BANK, N.A., as

Administrative Agent, Issuing Bank and a Lender

By:

 

/s/ Paul Condie

 

Name:

 

Paul Condie

       

Title:

 

Senior Vice President

     

UNION BANK, N.A., as Syndication Agent and a

Lender

By:

 

/s/ Tawny Palovchik

 

Name:

 

Tawny Palovchik

  Title:   V. P.

 

S-1

--------------------------------------------------------------------------------

 

BANK OF AMERICA, N.A., as a Lender By:  

/s/ Gary L. Mingle

  Name:   Gary L. Mingle   Title:   Senior Vice President

U.S. BANK NATIONAL ASSOCIATION, as a

Lender

By:

 

/s/ Eric Cosgrove

 

Name:

 

Eric Cosgrove

  Title:   Vice President     U.S. Bank, N.A. BANK HAPOALIM B.M., as a Lender

By:

 

/s/ James P. Surless

     

/s/ Frederic S. Becker

 

Name:

 

James P. Surless

     

Frederic S. Becker

 

Title:

 

Vice President

     

Senior Vice President

BANK OF COMMUNICATIONS CO., LTD., as a

Lender

By:

 

/s/ Shelley He

 

Name:

 

Shelley He

  Title:   Deputy General Manager

 

S-2

--------------------------------------------------------------------------------

 

SCHEDULE 2.01

Commitments

 

Lender

   Commitment

JPMorgan Chase Bank, N.A.

   $50,000,000

Union Bank, N.A.

   $50,000,000

Bank of America, N.A.

   $37,500,000

U.S. Bank National Association

   $37,500,000

Bank Hapoalim B.M.

   $15,000,000

Bank of Communications Co., Ltd.

   $10,000,000       

Total

   $200,000,000

--------------------------------------------------------------------------------

 

SCHEDULE 3.04

Governmental Approvals

FERC

On May 19, 2010, El Paso Electric Company (the “Company”) filed with the Federal
Energy Regulatory Commission (“FERC”) an application seeking authority pursuant
to Section 204 of the Federal Power Act to enter into the Credit Agreement and
to engage in transactions related thereto. The FERC Order approving the
Company’s application (Docket ES10-43-000) was issued on June 29, 2010.

New Mexico Public Regulation Commission

On May 19, 2010, the Company filed with the New Mexico Public Regulation
Commission (“NMPRC”) an application seeking authority pursuant to NMSA 1978
§62-6-6 to enter into the Credit Agreement and to engage in transactions related
thereto. The Hearing Examiner’s Recommended Decision was issued on June 14,
2010, recommending the approval of the Company’s application. The NMPRC Order
adopting the Hearing Examiner’s Recommended Decision and approving the Company’s
application (Case No. 10-00145-UT) was issued on June 22, 2010.

--------------------------------------------------------------------------------

 

SCHEDULE 3.07

Subsidiaries

 

Name of Subsidiary

  State of Incorporation   % Owned by El Paso

Mirasol Energy Service, Inc.

  Delaware   100%

--------------------------------------------------------------------------------

 

SCHEDULE 3.08

Litigation and Compliance with Laws

Schedule 3.15 is incorporated herein by reference.

--------------------------------------------------------------------------------

 

SCHEDULE 3.15

Environmental Matters

(c) Releases

The Company experiences sporadic, limited quantity releases of electric
insulating oil (mineral oil) within its electric distribution and transmission
system consistent with the operation of these systems. These releases are
commonly cleaned and removed within regulatory accepted timeframes and are
overseen by the respective environmental enforcement agencies.

In a similar manner, the generation of electricity at power plants owned and
operated by the Company, may experience sporadic and limited quantity releases
of chemicals common to the processes of the generation of electricity within the
power plant property. These releases are commonly cleaned and removed within
regulatory accepted timeframes and are overseen by the respective environmental
enforcement agencies.

(d) Environmental Claims.

Along with many other companies, the Company received from the Texas Commission
on Environmental Quality (“TCEQ”) a request for information in 2003 in
connection with environmental conditions at a facility in San Angelo, Texas that
was operated by the San Angelo Electric Service Company (“SESCO”). In November
2005, TCEQ proposed the SESCO site for listing on the registry of Texas state
superfund sites and mailed notice to more than five hundred entities, including
the Company, indicating that TCEQ considers each of them to be a “potentially
responsible party” at the SESCO site. The Company received from the SESCO
working group of potentially responsible parties a settlement offer in May 2006
for remediation and other expenses expected to be incurred in connection with
the SESCO site. The Company’s position is that any liability it may have related
to the SESCO site was discharged in the Company’s bankruptcy. In September 2010,
the Company made a revised offer to the SESCO working group to settle this
matter. At this time, the Company has not agreed to a settlement or to otherwise
participate in the cleanup of the SESCO site and is unable to predict the
outcome of this matter. While the Company has no reason at present to believe
that it will incur material liabilities in connection with the SESCO site, it
had accrued $0.3 million for potential costs related to this matter.

The EPA has investigated releases or potential releases of hazardous substances,
pollutants or contaminants at the Gila River Boundary Site, on the Gila River
Indian Community (“GRIC”) reservation in Arizona and designated it as a
Superfund Site. The Company currently owns 16.29% of the site and will share in
the cost of cleanup of this site. The Company has a tentative agreement with the
former property owner and the EPA to settle this matter for less than
$0.1 million and the Company has accrued $0.2 million for potential costs
related to this matter.

--------------------------------------------------------------------------------

 

In 2006, the Company experienced an oil discharge at the Rio Grande Power
Station. The Company remediated the site by removing the contaminated soil and
installing monitoring wells to monitor for the presence of hydrocarbons in the
ground water. A monitoring well showed signs of contamination at levels
exceeding New Mexico ground water standards. The Company notified the New Mexico
Environment Department (“NMED”) of its findings and submitted an abatement plan
to the NMED addressing the soil and ground water impacts. The abatement plan was
approved by the NMED, and the Company further assessed and remediated the site
in accordance to the plan in 2010. The Company has incurred $0.3 million in
costs related to this matter. Four of the five oil tanks at the Rio Grande Power
Station have recently been dismantled and removed. The Company does not expect
any significant additional costs to be incurred related to the 2006 discharge.

In May 2007, the EPA finalized a new federal implementation plan which addresses
emissions at the Four Corners Station in northwestern New Mexico of which the
Company owns a 7% interest in Units 4 and 5. Arizona Public Service Company
(“APS”), the Four Corners operating agent, has filed suit against the EPA
relating to this new federal implementation plan in order to resolve issues
involving operating flexibility for emission opacity standards. The Company
cannot predict the outcome of the suit filed against the EPA or whether
compliance with the new requirements could have an adverse effect on its capital
and operating costs.

On April 6, 2009, APS received a request from the EPA under Section 114 of the
Clean Air Act (“CAA”) seeking detailed information regarding projects and
operations at Four Corners. APS has responded to this request. The Company is
unable to predict the timing or content of EPA’s response or any resulting
actions.

On February 16, 2010, a group of environmental organizations filed a petition
with the United States Departments of Interior and Agriculture requesting that
the agencies certify to the EPA that emissions from Four Corners are causing
“reasonably attributable visibility impairment” under the CAA. APS is currently
reviewing the petition and has indicated that it will likely file a response in
opposition to the petition. The Company cannot predict the outcome of the
petition or whether any resulting actions could have an adverse effect on its
capital or operating costs.

(e) Hazardous Materials Handling.

The Company handles, stores, transports and arranges for the proper disposal of
limited and specific hazardous materials. Other waste streams including but not
limited to regulated wastes, non-regulated wastes, hazardous wastes,
non-hazardous wastes, and industrial wastes are handled, stored, transported and
properly disposed as necessary to the operation(s) of its business.

--------------------------------------------------------------------------------

 

SCHEUDLE 4.02(a)

Local Regulatory Counsel

 

Jurisdiction

  

Counsel

Arizona

   Perkins Coie Brown & Bain P.A.

New Mexico

   Law Offices of Randall W. Childress, P.C.

Texas

   Clark Thomas & Winters, a Professional Corporation

FERC

   General Counsel of the Company

--------------------------------------------------------------------------------

 

SCHEDULE 6.02

Liens

 

Minor miscellaneous liens existing on the Closing Date, incurred in the ordinary
course of business, none of which cover property that is material to the
business, operations or financial position of the Company.

--------------------------------------------------------------------------------

 

SCHEDULE 6.04

Certain Investments

 

 

  1.

Contributions to and interests of the Company in decommissioning trusts relating
to the Palo Verde Nuclear Generating Station (“PVNG”) (to the extent such
contributions and interest constitute investments) as contemplated by the ANPP
Participation Agreement dated as of August 23, 1973, as amended.

 

  2.

Contributions to and interests of the Company in spent nuclear fuel trust
relating to the PVNG (to the extent such contributions and interests constitute
investments).

 

  3.

Investments of $4.0 million in debt securities collateralized by student loans
re-insured by the Department of Education as part of the Federal Family
Education Loan Program, consisting of two $2.0 million investments in auction
rate securities maturing in 2042 and 2044.

 

  4.

Other minor investments which were obtained in the ordinary course of business
and, in the aggregate, have a book value of less than $200,000.

--------------------------------------------------------------------------------

 

LOGO [g104597g21k88.jpg]

ADMINISTRATIVE QUESTIONNAIRE

EL PASO ELECTRIC COMPANY

 

Agent Address:

  

    JPMorgan Chase Bank, N.A.    

     

Return form to:

  

    Medy Hernandez            

  

    JPMorgan Loan Services          

     

Telephone:

  

    312-385-7037                     

  

    10 South Dearborn., 7th Floor    

     

Facsimile:

  

    877-242-0998                     

  

    Chicago, Illinois 60603-2003     

     

E-mail:

  

syndications.closing.unit@jpmchase.com

 

 

 

It is very important that all of the requested information be completed
accurately and that this questionnaire be returned promptly. If your institution
is sub-allocating its allocation, please fill out an administrative
questionnaire for each legal entity.

 

 

Legal Name of Lender to appear in Documentation:

 

 

Signature Block Information:

    

 

 

•   Signing Credit Agreement

              Yes
                 No
                                    

 

•   Coming in via Assignment

              Yes
                 No
                                    

 

Type of Lender:

 

 

 

(Bank, Asset Manager, Broker/Dealer, CLO/CDO, Finance Company, Hedge Fund,
Insurance, Mutual Fund, Pension Fund, Other Regulated Investment Fund, Special
Purpose Vehicle, Other-please specify)

 

 

Lender Parent:

 

 

 

Domestic Address

    Eurodollar Address    

                                                           
                          

   

                                                           
                          

                                                           
                          

   

                                                           
                          

                                                           
                          

   

                                                           
                          

 

LOGO [g104597g11n22.jpg]

 

A-1

--------------------------------------------------------------------------------

 

Contacts/Notification Methods: Borrowings, Paydowns, Interest, Fees, etc.

 

 

  

 

           Primary Credit Contact            Secondary Credit Contact

Syndicate-level information (which may contain material non-public information
about the Borrower and its related parties or their respective securities) will
be made available to the Credit Contact(s). The Credit Contacts identified must
be able to receive such information in accordance with his/her institution’s
compliance procedures and applicable laws, including Federal and state
securities laws.

Name:

  

 

  

 

Company:

  

 

  

 

Title:

  

 

  

 

Address:

  

 

  

 

  

 

  

 

Telephone:

  

 

  

 

Facsimile:

  

 

  

 

E-Mail Address:

  

 

  

 

           Primary Operations Contact            Secondary Operations Contact

Name:

  

 

  

 

Company:

  

 

  

 

Title:

  

 

  

 

Address:

  

 

  

 

  

 

  

 

Telephone:

  

 

  

 

Facsimile:

  

 

  

 

E-Mail Address:

  

 

  

 

           Bid Contact            L/C Contact

Name:

  

 

  

        TBD

Company:

  

 

  

 

Title:

  

 

  

 

Address:

  

 

  

 

  

 

  

 

Telephone:

  

 

  

 

Facsimile:

  

 

  

 

E-Mail Address:

  

 

  

 

 

A-2

--------------------------------------------------------------------------------

 

 

Lender’s Domestic Wire Instructions

 

 

  

Bank Name:

 

 

ABA/Routing No.:

 

 

Account Name:

 

 

Account No.:

 

 

FFC Account Name:

 

 

FFC Account No.:

 

 

Attention:

 

 

Reference:

 

 

 

 

Lender’s Foreign Wire Instructions

 

 

  

Currency:

 

 

Bank Name:

 

 

Swift/Routing No.:

 

 

Account Name:

 

 

Account No.:

 

 

FFC Account Name:

 

 

FFC Account No.:

 

 

Attention:

 

 

Reference:

 

 

 

 

Agent’s Wire Instructions

 

 

  

Bank Name:   

  JP Morgan Chase Bank, N.A.

ABA/Routing No.:   

  021000021

Account Name:   

  Loan Processing DP

Account No.:   

  9008109962C2087

Reference:   

  El Paso Electric Co.

 

A-3

--------------------------------------------------------------------------------

 

 

Tax Documents

 

     

NON-U.S. LENDER INSTITUTIONS:

I. Corporations:

If your institution is incorporated outside of the United States for U.S.
federal income tax purposes, and is the beneficial owner of the interest and
other income it receives, you must complete one of the following three tax
forms, as applicable to your institution: a.) Form W-8BEN (Certificate of
Foreign Status of Beneficial Owner), b.) Form W-8ECI (Income Effectively
Connected to a U.S. Trade or Business), or c.) Form W-8EXP (Certificate of
Foreign Government or Governmental Agency).

A U.S. taxpayer identification number is required for any institution submitting
Form W-8ECI. It is also required on Form W-8BEN for certain institutions
claiming the benefits of a tax treaty with the U.S. Please refer to the
instructions when completing the form applicable to your institution. In
addition, please be advised that U.S. tax regulations do not permit the
acceptance of faxed forms. An original tax form must be submitted.

II. Flow-Through Entities:

If your institution is organized outside the U.S., and is classified for U.S.
federal income tax purposes as either a Partnership, Trust, Qualified or
Non-Qualified Intermediary, or other non-U.S. flow-through entity, an original
Form W-8IMY (Certificate of Foreign Intermediary, Foreign Flow-Through Entity,
or Certain U.S. Branches for United States Tax Withholding) must be completed by
the intermediary together with a withholding statement. Flow-through entities
other than Qualified Intermediaries are required to include tax forms for each
of the underlying beneficial owners.

Please refer to the instructions when completing this form. In addition, please
be advised that U.S. tax regulations do not permit the acceptance of faxed
forms. Original tax form(s) must be submitted.

U.S. LENDER INSTITUTIONS:

If your institution is incorporated or organized within the United States, you
must complete and return Form W-9 (Request for Taxpayer Identification Number
and Certification). Please be advised that we request that you submit an
original Form W-9.

Pursuant to the language contained in the tax section of the Credit Agreement,
the applicable tax form for your institution must be completed and returned
prior to the first payment of income. Failure to provide the proper tax form
when requested may subject your institution to U.S. tax withholding.

 

A-4

--------------------------------------------------------------------------------

 

EXHIBIT B

[Form of]

ASSIGNMENT AND ACCEPTANCE

 

Reference is made to the Credit Agreement dated as of September 23, 2010 (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among El Paso Electric Company (“El Paso”), The Bank of New York
Mellon Trust Company, N.A., not in its individual capacity, but solely in its
capacity as trustee of the Rio Grande Resources Trust II (the “Trustee”), the
lenders party thereto (the “Lenders”), JPMorgan Chase Bank, N.A., as issuing
bank (in such capacity, the “Issuing Bank”) and as administrative agent (in such
capacity, the “Administrative Agent”) for the Lenders, and Union Bank, N.A., as
syndication agent. Terms defined in the Credit Agreement are used herein with
the same meanings.

1.      The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth below (but not prior
to the recordation of the information contained herein in the Register pursuant
to Section 10.04(e) of the Credit Agreement), the interests set forth below (the
“Assigned Interest”) in the Assignor’s rights and obligations under the Credit
Agreement and the other Loan Documents, including, without limitation, the
amounts and percentages set forth below of (i) the Commitments of the Assignor
on the Effective Date, (ii) the Loans owing to the Assignor which are
outstanding on the Effective Date and (iii) participations in Letters of Credit
which are outstanding on the Effective Date. Each of the Assignor and the
Assignee hereby makes and agrees to be bound by all the representations,
warranties and agreements set forth in Section 10.04(c) of the Credit Agreement,
a copy of which has been received by each such party. From and after the
Effective Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the interests assigned
by this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the Loan Documents and (ii) the Assignor shall, to the
extent of the interests assigned by this Assignment and Acceptance, relinquish
its rights and be released from its obligations under the Credit Agreement.

2.      This Assignment and Acceptance is being delivered to the Administrative
Agent together with (i) the forms specified in Section 2.18(f) of the Credit
Agreement, duly completed and executed by such Assignee, (ii) if the Assignee is
not already a Lender under the Credit Agreement, an Administrative Questionnaire
in the form of Exhibit A to the Credit Agreement and (iii) unless otherwise
agreed to by the Administrative Agent, a processing and recordation fee of
$3,500 pursuant to Section 10.04(b) of the Credit Agreement.

3.      THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

B-1

--------------------------------------------------------------------------------

 

Date of Assignment:                                          
                                         
                                                           

Legal Name of Assignor:                                          
                                         
                                                   

Legal Name of Assignee:                                          
                                         
                                                   

Assignee’s Address for Notices:                                          
                                                                                

 

Effective Date of Assignment:                                          
                                         
                                           

Principal Amount of Commitment Assigned:
                                         
                                                            

Percentage of Commitment Assigned1:                                          
                                                                    

 

 

The terms set forth above are

hereby agreed to:

   Accepted2:

[Name of Assignor],

as Assignor,

  

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent and Issuing Bank,

By:

 

 

   By:  

 

 

Name:

    

Name:

 

Title:

    

Title:

[Name of Assignee],

as Assignee,

  

EL PASO ELECTRIC COMPANY

By:

 

 

  

By:

 

 

 

Name:

    

Name:

 

Title:

    

Title:

    

THE BANK OF NEW YORK MELLON

TRUST COMPANY, N.A.,

not in its individual capacity, but

solely in its capacity as trustee of the

Rio Grande Resources Trust II

    

By:

 

 

      

Name:

      

Title:

 

 

 

 

1. Set forth, to at least 8 decimals, as a percentage of the Total Commitment of
all Lenders.

 

2. To be completed to the extent consents are required under Section 10.04(b) of
the Credit Agreement.

 

B-2

--------------------------------------------------------------------------------

 

EXHIBIT C

[Form of]

BORROWING REQUEST

 

JPMorgan Chase Bank, N.A., as Administrative Agent

for the Lenders referred to below

1111 Fannin Street, 10th Floor

Houston, TX 77002

Attention of [    ]

 

Ladies and Gentlemen:      [Date ] 

The undersigned, [EL PASO ELECTRIC COMPANY] [THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., not in its individual capacity, but solely in its capacity as
trustee of the Rio Grande Resources Trust II] (the “Borrower”), refers to the
Credit Agreement dated as of September 23, 2010, as amended, supplemented or
otherwise modified from time to time (the “Credit Agreement”), among El Paso
Electric Company, The Bank of New York Mellon Trust Company, N.A., not in its
individual capacity, but solely in its capacity as trustee of the Rio Grande
Resources Trust II, the lenders from time to time party thereto (the “Lenders”),
JPMorgan Chase Bank, N.A., as issuing bank and as administrative agent for the
Lenders, and Union Bank, N.A., as syndication agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement. The Borrower hereby gives you notice pursuant to
Section 2.03 of the Credit Agreement that it requests a Borrowing under the
Credit Agreement, and in that connection sets forth below the terms on which
such Borrowing is requested to be made:

 

(A) Date of Borrowing (which is a Business
Day)                                        
                                                       

(B) Principal Amount of Borrowing3       
                                         
                                                                     

(C) Interest rate basis4                                 
                                         
                                                               

(D) Interest Period and the last day thereof5        
                                         
                                                        

(E) Funds are requested to be disbursed to the Borrower’s account with

     [JPMorgan Chase Bank] (Account No. [    ]).

 

 

 

3.

With respect to any Eurodollar Borrowing, not less than $5,000,000 and in an
integral multiple of $1,000,000, and with respect to any ABR Borrowing, not less
than $100,000 and in an integral multiple of $1,000, but in any event not
exceeding the available Total Commitment available to the Borrowers.

 

4.

Specify Eurodollar Borrowing or ABR Borrowing.

 

5.

Which shall be subject to the definition of “Interest Period” and end not later
than the Maturity Date (applicable only for Eurodollar Borrowings only).

 

C-1

--------------------------------------------------------------------------------

 

Upon acceptance of any or all of the Loans offered by the Lenders in response to
this request, the Borrower shall be deemed to have represented and warranted
that the conditions to lending specified in Sections 4.01(b) and (c) of the
Credit Agreement have been satisfied.

 

 

[APPLICABLE BORROWER], by:       Name:   Title: [Responsible Officer]

 

C-2

--------------------------------------------------------------------------------

 

EXHIBIT D

 

SUBSIDIARY GUARANTEE AGREEMENT (as supplemented from time to time, this
“Agreement”) dated as of [    ], between [    ], a [    ] [corporation] (the
“Guarantor”) and JPMORGAN CHASE BANK, N.A. (“JPMorgan”), as Administrative Agent
(as defined below).

Reference is made to the Credit Agreement dated as of September 23, 2010 (and as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among El Paso Electric Company, a Texas corporation (“El Paso”),
The Bank of New York Mellon Trust Company, N.A., not in its individual capacity,
but solely in its capacity as trustee of the Rio Grande Resources Trust II (the
“Trustee”; each of El Paso and the Trustee is referred to individually herein as
a “Borrower” and collectively as the “Borrowers”), the Lenders (as defined in
the Credit Agreement), JPMorgan, as issuing bank and as administrative agent (in
such capacity, the “Administrative Agent”) for the Lenders, and Union Bank,
N.A., as syndication agent. Capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in the Credit Agreement.

Pursuant to Section 5.10 of the Credit Agreement, El Paso has agreed, among
other things, to cause any Material Subsidiary to execute a guarantee of all the
Obligations (as defined below). The Guarantor is a Material Subsidiary and
acknowledges that it will derive substantial benefit from the commitments of the
Lenders to make Loans to the Borrowers and the commitment of the Issuing Bank to
issue Letters of Credit for the account of the Borrowers. Accordingly, the
Guarantor agrees with each Lender, the Issuing Bank, the Syndication Agent and
the Administrative Agent (each such person, together with its successors and
assigns, a “Guaranteed Party”) as follows:

SECTION 1. Guarantee.    The Guarantor unconditionally guarantees, as a primary
obligor and not merely as a surety, (a) the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by a Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral, and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Borrowers to the Guaranteed
Parties under the Credit Agreement and the other Loan Documents and (b) the due
and punctual performance of all covenants, agreements, obligations and
liabilities of the Borrowers under or pursuant to the Credit Agreement and the
other Loan Documents (all the monetary and other obligations referred to in the
preceding clauses (a) and (b) being collectively called the “Obligations”). The
Guarantor further agrees that the Obligations may be extended or renewed, in
whole or in part, without

 

D-1

--------------------------------------------------------------------------------

notice to or further assent from it, and that it will remain bound upon its
guarantee notwithstanding any extension or renewal of any Obligation.

SECTION 2.    Obligations Not Waived.    To the fullest extent permitted by
applicable law, the Guarantor waives presentment to, demand of payment from and
protest to the Borrowers of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. To the fullest
extent permitted by applicable law, the obligations of the Guarantor hereunder
shall not be affected by (a) the failure of the Administrative Agent or any
other Guaranteed Party to assert any claim or demand or to enforce or exercise
any right or remedy against the Borrowers, (b) any rescission, waiver, amendment
or modification of, or any release from any of the terms or provisions of the
Credit Agreement, any other Loan Document, any Guarantee or any other agreement,
including with respect to any other guarantor of the Obligations or (c) any
release or substitution of any one or more endorsers, other guarantors or other
obligors of all or any portion of the Obligations.

SECTION 3.    Guarantee of Payment.    The Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Administrative Agent
or any other Guaranteed Party to any of the security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
the Administrative Agent or any other Guaranteed Party in favor of the Borrowers
or any other person.

SECTION 4.    No Discharge or Diminishment of Guarantee.    The obligations of
the Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the payment in full in cash
of the Obligations), including any claim of waiver, release, surrender,
alteration or compromise of any of the Obligations, and shall not be subject to
any defense or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
the Guarantor hereunder shall not be discharged or impaired or otherwise
affected by the failure of the Administrative Agent or any other Guaranteed
Party to assert any claim or demand or to enforce any remedy under the Credit
Agreement, any other Loan Document or any other agreement, by any waiver or
modification of any provision of any thereof, by any default, failure or delay,
willful or otherwise, in the performance of the Obligations, or by any other act
or omission that may or might in any manner or to any extent vary the risk of
the Guarantor or that would otherwise operate as a discharge of the Guarantor as
a matter of law or equity (other than the payment in full in cash of all the
Obligations).

SECTION 5.    Defenses of Borrowers Waived.    To the fullest extent permitted
by applicable law, the Guarantor waives any defense based on or arising out of
any defense of a Borrower or the unenforceability of the Obligations or any part
thereof from any cause, or the cessation from any cause of the liability of a
Borrower, other than the payment in full in cash of the Obligations. The
Administrative Agent and the other Guaranteed Parties may, at their election,
compromise or adjust any part of the Obligations, make any other accommodation
with the Borrowers or any other guarantor or exercise any other right or remedy
available to them against the Borrowers or any other guarantor, without
affecting or impairing in any way the liability of the Guarantor hereunder
except to the extent the Obligations have been fully, finally

 

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paid in cash. To the fullest extent permitted by applicable law, the Guarantor
waives any defense arising out of any such election even though such election
operates, pursuant to applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of Guarantor against a
Borrower or any other guarantor, as the case may be.

SECTION 6.  Agreement to Pay.    In furtherance of the foregoing and not in
limitation of any other right that the Administrative Agent or any other
Guaranteed Party has at law or in equity against the Guarantor by virtue hereof,
upon the failure of a Borrower to pay any Obligation when and as the same shall
become due, whether at maturity, by acceleration, after notice of prepayment or
otherwise, the Guarantor hereby promises to and will forthwith pay, or cause to
be paid, to the Administrative Agent or such other Guaranteed Party as
designated thereby in cash the amount of such unpaid Obligations. Upon payment
by the Guarantor of any sums to the Administrative Agent or any Guaranteed Party
as provided above, all rights of the Guarantor against the Borrowers arising as
a result thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subordinate and junior in right
of payment to the prior payment in full in cash of all the Obligations. In
addition, any indebtedness of a Borrower now or hereafter held by the Guarantor
is hereby subordinated in right of payment to the prior payment in full of the
Obligations. If any amount shall erroneously be paid to the Guarantor on account
of (i) such subrogation, contribution, reimbursement, indemnity or similar right
or (ii) any such indebtedness of a Borrower, such amount shall be held in trust
for the benefit of the Guaranteed Parties and shall forthwith be paid to the
Administrative Agent to be credited against the payment of the Obligations,
whether matured or unmatured, in accordance with the terms of the Loan
Documents.

SECTION 7.  Information.    The Guarantor assumes all responsibility for being
and keeping itself informed of each Borrower’s financial condition and assets,
and of all other circumstances bearing upon the risk of nonpayment of the
Obligations and the nature, scope and extent of the risks that the Guarantor
assumes and incurs hereunder, and agrees that none of the Administrative Agent
or the other Guaranteed Parties will have any duty to advise the Guarantor of
information known to it or any of them regarding such circumstances or risks.

SECTION 8.  Representations and Warranties.    The Guarantor represents and
warrants that all representations and warranties relating to it contained in the
Credit Agreement are true and correct.

SECTION 9.  Termination.    The guarantee made hereunder (a) shall terminate
when all the Obligations have been indefeasibly paid in full and the Lenders
have no further commitment to lend under the Credit Agreement, the L/C Exposure
has been reduced to zero and the Issuing Bank has no further obligation to issue
Letters of Credit under the Credit Agreement and (b) shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Obligation is rescinded or must otherwise be restored by
any Guaranteed Party or the Guarantor upon the bankruptcy or reorganization of
either Borrower or otherwise.

SECTION 10.  Binding Effect; Assignments.    Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of the Guarantor that are contained in this Agreement shall bind
and inure to the benefit of each party hereto and their

 

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respective successors and assigns. This Agreement shall become effective when it
shall have been executed on behalf of the Guarantor and the Administrative
Agent, and thereafter shall be binding upon the Guarantor and the Administrative
Agent and their respective successors and assigns, and shall inure to the
benefit of the Guarantor, the Administrative Agent and the other Guaranteed
Parties, and their respective successors and assigns, except that the Guarantor
shall not have the right to assign its rights or obligations hereunder or any
interest herein (and any such attempted assignment shall be void). If all of the
capital stock of the Guarantor is sold, transferred or otherwise disposed of
(other than to an Affiliate of a Borrower) pursuant to a transaction permitted
by the Credit Agreement, the Guarantor shall be released from its obligations
under this Agreement without further action.

SECTION 11. Waivers; Amendment. (a) No failure or delay of the Administrative
Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent hereunder
and of the other Guaranteed Parties under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by the Guarantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on the Guarantor in any case shall entitle the
Guarantor to any other or further notice or demand in similar or other
circumstances.

(b)     Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Guarantor and the Administrative Agent, with the prior written consent of the
Required Lenders (except as otherwise provided in the Credit Agreement).

SECTION 12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 13. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 10.01 of the Credit Agreement. All
communications and notices hereunder to the Guarantor shall be given to it at
its address set forth below its name on the signature page hereto, with a copy
to El Paso.

SECTION 14. Survival of Agreement; Severability. (a) All covenants, agreements,
representations and warranties made by the Guarantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Administrative Agent and the other Guaranteed
Parties and shall survive the making by the Lenders of Loans and the issuance of
the Letters of Credit by the Issuing Bank regardless of any investigation made
by the Guaranteed Parties or on their behalf, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any other fee or amount payable by a

 

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Borrower under the Credit Agreement or any other Loan Document is outstanding
and unpaid or the L/C Exposure does not equal zero and as long as the
Commitments have not been terminated.

(b)     In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

SECTION 15. Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 10. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.

SECTION 16. Rules of Interpretation. The rules of interpretation specified in
Section 1.02 of the Credit Agreement shall be applicable to this Agreement.

SECTION 17. Jurisdiction; Consent to Service of Process.     (a) The Guarantor
hereby irrevocably and unconditionally submits, for itself and its property, to
the exclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent
or any other Guaranteed Party may otherwise have to bring any action or
proceeding relating to this Agreement or the other Loan Documents against the
Guarantor or its properties in the courts of any jurisdiction.

(b)     The Guarantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

(c)     Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 13. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.

 

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SECTION 18. WAIVER OF JURY TRIAL.   EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 18.

SECTION 19. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Guaranteed Party is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other Indebtedness at any time owing by such Guaranteed Party to
or for the credit or the account of the Guarantor against any or all the
obligations of the Guarantor now or hereafter existing under this Agreement and
the other Loan Documents held by such Guaranteed Party, irrespective of whether
or not such Guaranteed Party shall have made any demand under this Agreement or
any other Loan Document and although such obligations may be unmatured. The
rights of each Guaranteed Party under this Section 19 are in addition to other
rights and remedies (including other rights of setoff) which such Guaranteed
Party may have.

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

 

[MATERIAL SUBSIDIARY],

by:

 

 

 

Name:

 

Title:

 

Address for Notices:

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent,

by:

 

 

 

Name:

 

Title:

 

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