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Exhibit 10.A
 
SWAP SETTLEMENT AGREEMENT

This Swap Settlement Agreement (the “Agreement”), dated effective as of August
16, 2004, is entered into by and among El Paso Corporation, a Delaware
corporation (“El Paso”), El Paso Merchant Energy, L.P., a Delaware limited
partnership (“EPME”), East Coast Power Holding Company L.L.C., a Delaware
limited liability company (“ECPH”), and ECTMI Trutta Holdings LP, a Delaware
limited partnership (“Trutta”). El Paso, EPME, ECPH and Trutta may be referred
to herein individually as a “Party” and collectively as the “Parties.” El Paso
and EPME may be referred to herein individually as an “El Paso Party” and
collectively as the “El Paso Parties”. ECPH and Trutta may be referred to herein
individually as an “Enron Party” and collectively as the “Enron Parties”.
 
RECITALS

WHEREAS, EPME and Mesquite Investors, L.L.C., a Delaware limited liability
company (“Mesquite”), entered into two ISDA Master Agreements, two Schedules
thereto, and two separate Confirmations (one set referred to by the Parties as
the “ECPH Swap” and the other set referred to by the Parties as the “Trutta
Swap”), each dated as of February 23, 2001 (collectively, the “Swap
Agreements”);

WHEREAS, Mesquite, pursuant to an Assignment and Assumption Agreement dated
February 23, 2001 (the “ECPH Assignment”), assigned to ECPH, and ECPH assumed,
all of Mesquite’s rights and obligations under the ECPH Swap;

WHEREAS, Mesquite, pursuant to an Assignment and Assumption Agreement dated as
of February 23, 2001 (the “Trutta Assignment”), assigned to Trutta, and Trutta
assumed, all of Mesquite’s rights and obligations under the Trutta Swap;

WHEREAS, El Paso guaranteed (i) EPME’s obligations under the ECPH Swap pursuant
to a Guaranty dated February 23, 2001 (the “ECPH Guaranty”), and (ii) EPME’s
obligations under the Trutta Swap pursuant to a separate Guaranty dated February
23, 2001 (the “Trutta Guaranty”);

WHEREAS, the Parties have agreed to terminate the Swap Agreements, the ECPH
Guaranty and the Trutta Guaranty on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises herein contained and other good
and valuable consideration, the sufficiency of which is hereby acknowledged, the
Parties, intending to be legally bound, agree as follows:
 
AGREEMENT

1.    Notes. In consideration of (i) the termination of the ECPH Swap, the
Trutta Swap, the ECPH Guaranty and the Trutta Guaranty, (ii) the mutual releases
set forth herein, and (iii) the other provisions hereof, El Paso shall,
concurrent with the execution and delivery of this Agreement (subject to the
approval of the Court as set forth in paragraph 7 hereof), execute and deliver
to (a) ECPH, a promissory note in the form of Exhibit A attached hereto, in the
original principal amount of $117,524,163 (the “ECPH Note”), and (b) Trutta, a
promissory note in the form of Exhibit B attached hereto, in the original
principal amount of $95,828,992 (the “Trutta Note”). The ECPH Note and the
Trutta Note are sometimes referred to herein as the “Notes”.

2.    Termination of Swap Agreements, ECPH Guaranty and Trutta Guaranty.
Effective as of the date hereof, but subject to (i) the execution and delivery
of the Notes and (ii) the approval of the Court as set forth in paragraph 7
hereof, each of the ECPH Swap, the Trutta Swap, the ECPH Guaranty and the Trutta
Guaranty are terminated in their entirety and are of no further force or effect.

3.    Mutual Release. Effective as of the date hereof, but subject to (i) the
execution and delivery of the Notes and (ii) the approval of the Court as set
forth in paragraph 7 hereof, each Party hereto does fully, finally, completely,
and absolutely RELEASE, ACQUIT, AND FOREVER DISCHARGE each of the other Parties
hereto and each of their respective current and former officers, directors,
shareholders, employees, agents, attorneys, parent companies, subsidiaries,
affiliates, successors, assigns, and representatives, and all those at interest
therewith, of and from any and all claims, demands, actions, remedies, causes of
action, choses in action, debts, liabilities, contracts, damages, costs
(including, without limitation, attorneys’ fees and all costs of court or other
proceedings), expenses and losses of every kind or nature, whether arising by
contract, tort or other theory, at this time known or unknown, accrued or
unaccrued, direct or indirect, fixed or contingent, in law, by statute, by
regulation, by court order, or in equity, that either of them and all their
representatives, successors, assigns, agents, employees, or representatives, and
all those at interest therewith, ever had, now has, or hereafter can, shall or
may have, for, upon or by reason or arising out of or related to the Swap
Agreements, the ECPH Assignment, the Trutta Assignment, the ECPH Guaranty or the
Trutta Guaranty; provided, however, that the foregoing shall not release any
Party from its obligations under this Agreement or the Notes.

4.    El Paso’s Representations and Warranties. Subject only to the approval of
the Court as set forth in paragraph 7 hereof El Paso hereby represents and
warrants to the other Parties hereto as follows:

(a) El Paso is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its organization, and has all
requisite powers, licenses, consents, authorizations, and approvals required to
carry on its business as currently conducted.

(b) El Paso has the corporate power and authority to execute and deliver this
Agreement and the Notes, and to perform and consummate the transactions
contemplated hereby. El Paso has taken all actions necessary to authorize the
execution and delivery of this Agreement and the Notes, and the performance of
its obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereby. This Agreement and the Notes have been duly
authorized, executed, and delivered by, and are enforceable against, El Paso,
except as the enforceability hereof and thereof may be limited by the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting creditors’ rights generally and by general principles of equity.

(c) The execution and the delivery of this Agreement and the Notes by El Paso
and the performance and consummation of the transactions contemplated hereby by
El Paso will not (i) breach any law or order to which El Paso is subject or any
provision of its organizational documents, (ii) breach any contract, order, or
permit to which El Paso is a party or by which El Paso is bound or to which any
of El Paso’s assets is subject, or (iii) require any consent or authorization
from any third party.

(d) In connection with the transactions contemplated by this Agreement, El Paso
has been represented by competent legal counsel and such transactions, as
evidenced hereby, are the result of good faith, arms-length negotiations among
the Parties hereto.

5.    EPME’s Representations and Warranties. Subject only to the approval of the
Court as set forth in paragraph 7 hereof, EPME hereby represents and warrants to
the other Parties hereto as follows:

(a) EPME is a limited partnership duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its organization, and has all
requisite powers, licenses, consents, authorizations, and approvals required to
carry on its business as currently conducted.

(b) EPME has the organizational power and authority to execute and deliver this
Agreement, and to perform and consummate the transactions contemplated hereby.
EPME has taken all actions necessary to authorize the execution and delivery of
this Agreement, and the performance of its obligations hereunder, and the
consummation of the transactions contemplated hereby. This Agreement has been
duly authorized, executed, and delivered by, and is enforceable against, EPME,
except as the enforceability hereof may be limited by the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting creditors’ rights generally and by general principles of equity.

(c) The execution and the delivery of this Agreement by EPME and the performance
and consummation of the transactions contemplated hereby by EPME will not (i)
breach any law or order to which EPME is subject or any provision of its
organizational documents, (ii) breach any contract, order, or permit to which
EPME is a party or by which EPME is bound or to which any of EPME’s assets is
subject, or (iii) require any consent or authorization from any third party.

(d) In connection with the transactions contemplated by this Agreement, EPME has
been represented by competent legal counsel and such transactions, as evidenced
hereby, are the result of good faith, arms-length negotiations among the Parties
hereto.

6.    Representations and Warranties of the Enron Parties. Subject only to the
approval of the Court as set forth in paragraph 7 hereof, the Enron Parties
hereby severally represent and warrant to the other Parties hereto as follows:

(a) Each Enron Party is duly formed, validly existing, and in good standing
under the laws of the jurisdiction of its organization, and has all requisite
powers, licenses, consents, authorizations, and approvals required to carry on
its business as currently conducted.

(b) Each Enron Party has the organizational power and authority to execute and
deliver this Agreement, and to perform and consummate the transactions
contemplated hereby. Each Enron Party has taken all actions necessary to
authorize the execution and delivery of this Agreement, the performance of its
obligations hereunder, and the consummation of the transactions contemplated
hereby, including obtaining Bankruptcy Court Approval. This Agreement has been
duly authorized, executed, and delivered by, and is enforceable against each
Enron Party.

(c) The execution and the delivery of this Agreement by each Enron Party and the
performance and consummation of the transactions contemplated hereby by each
Enron Party will not (i) breach any law or order to which any Enron Party is
subject or any provision of any Enron Party’s organizational documents, (ii)
breach any contract, order, or permit to which any Enron Party is a party or by
which any Enron Party is bound or to which any Enron Party’s assets is subject,
or (iii) except for Bankruptcy Court Approval, require any consent or
authorization from any third party.

(d) In connection with the transactions contemplated by this Agreement, each of
the Enron Parties has been represented by competent legal counsel and such
transactions, as evidenced hereby, are the result of good faith, arms-length
negotiations among the Parties hereto.

(e) Each Enron Party (i) understands that the Notes are not and will not be
registered under the Securities Act of 1933 (the “Securities Act”), or under any
state securities laws, are being offered and sold in reliance upon certain
federal and state exemptions, and may not be sold or transferred by the holder
of such Note in the absence of an effective registration statement under the
Securities Act, the availability of an exemption from registration thereunder as
reasonably determined by El Paso, or as otherwise expressly provided for herein,
(ii) is sophisticated with knowledge and experience in business and financial
matters as to be capable of evaluating the merits and risks of investment in the
Notes, (iii) is able to bear the economic risk and lack of liquidity inherent in
holding the Notes, (iv) is an “accredited investor” as defined in Regulation D
promulgated under the Securities Act, and (v) acknowledges and understands, in
light of the pending restatement of El Paso’s financial statements, that it
cannot rely on El Paso’s previously filed periodic reports; has had access to
and reviewed El Paso’s other filings with the Securities and Exchange
Commission; has had the opportunity to ask questions of El Paso and obtain
additional information as desired to evaluate the merits and risks inherent in
holding the Notes and all such questions have been answered to each Enron
Party’s full satisfaction and has received (or been provided access to) all
requested additional information concerning its investment in the Notes; and
does not desire any further information or data concerning El Paso.

(f) Trutta is acquiring the Trutta Note for its own account and not with a view
to the sale or distribution thereof within the meanings of the Securities Act.

7. Bankruptcy Court Approval. Notwithstanding anything to the contrary herein,
it is a condition precedent to the effectiveness of this Agreement and the
Notes, that this Agreement and the Notes shall have been approved by the United
States Bankruptcy Court of the Southern District of New York (“Court”), pursuant
to the entry of a final, non-appealable order by the Court in the matter of In
re: Enron Corp., et al., Case No. 01-16034, in a form acceptable to the Parties
(“Order”), and such Order has not been stayed, amended, vacated, reversed or
rescinded, and from which no appeal may be taken or for which the time to appeal
has expired.

8.   Sale or Transfer of the Notes.

(a) If either Enron Party desires to sell or transfer (a “Transfer”) either of
the Notes, such Enron Party shall notify El Paso in writing of the proposed
Transfer, including the identity of the proposed transferee (a “Transferee”) and
the nature of the transaction, and prior to any such Transfer, deliver to El
Paso, at such Enron Party’s sole expense such evidence (including an opinion of
counsel) as El Paso may reasonably request in order to evaluate such proposed
Transfer’s compliance with any applicable securities laws, including the
Securities Act.

(b) Solely in connection with a Transfer of the ECPH Note, upon request of ECPH,
the original ECPH Note shall be cancelled and El Paso shall issue two (but not
more than two) new notes in an aggregate principal amount equal to the principal
amount of the original ECPH Note. One of the new notes shall be issued to
CalPERS, subject to CalPERS execution and delivery of a certificate in the form
attached hereto as Exhibit C (the “CalPERS Certificate”), and any remaining
balance under the original ECPH Note shall be issued to ECPH under the other new
note. The Note issued to CalPERS shall be in the form attached hereto as Exhibit
D (the “CalPERS Note”). The CalPERS Note shall be transferable, in whole but not
in part, by CalPERS either (i) as provided in paragraph 8(a) hereof or (ii) in
the United States to a person that CalPERS or a Transferee reasonably believes
is a qualified institutional buyer (as defined in Rule 144A under the Securities
Act) in a transaction meeting the requirements of Rule 144A, provided that prior
to such Transfer such Transferee shall deliver to El Paso a certificate in
substantially the form of the CalPERS Certificate. Upon satisfaction of such
requirements, El Paso shall deliver a new note in the aggregate principal amount
of the CalPERS Note to the Transferee.

(c) The ECPH Note (except as expressly provided for in paragraph 8(b) hereof),
the Trutta Note, and any subsequent notes (other than the CalPERS Note) issued
in exchange for such notes shall be transferable in whole, but not in part,
subject to any applicable restrictions on transfer set forth in paragraph 8(a)
hereof. The CalPERS Note, and any subsequent notes issued in exchange for such
note, shall be transferable in whole, but not in part, subject to any applicable
restrictions on transfer set forth in paragraph 8(b) hereof.

9. Miscellaneous.

(a)    Entire Agreement. This Agreement, together with the Notes and the
Exhibits hereto, constitutes the entire agreement and understanding of the
Parties in respect of its subject matter and supersedes all prior
understandings, agreements, or representations by or among the Parties, written
or oral, to the extent they relate in any way to the subject matter hereof
including, without limitation, the Swap Agreements.

(b)    Successors. All of the terms, agreements, covenants, representations,
warranties, and conditions of this Agreement are binding upon, and inure to the
benefit of and are enforceable by, the Parties and their respective successors
and assigns. This Agreement may not be assigned by any of the Parties, and any
attempted assignment shall be void ab initio.

(c)    Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same instrument.

(d)    Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

(e)    Governing Law. This Agreement and the performance of the obligations of
the parties hereunder will be governed by and construed in accordance with the
laws of the State of New York.

(f)    Notices. All notices, requests, and other communications hereunder shall
be in writing and sent by registered or certified mail, return receipt
requested, postage prepaid, or overnight express mail, and addressed to the
intended recipient as set forth below:

If to any of the El Paso Parties:
 
El Paso Corporation
El Paso Building
1001 Louisiana Street
Houston, Texas 77002
Attn:   John J. Hopper
Tel:     (713) 420-2600
F ax:   (713) 420-2708
 
If to any of the Enron Parties:
 
Enron North America Corp.
Four Houston Center
1221 Lamar, Suite 1600
Houston, Texas 77010
Attn: Charles Ward
Tel:    (713) 345-8957
Fax:   (713) 646-3253

Any Party may send any notice, request, or other communication hereunder to the
intended recipient at the address set forth above using any other means
(including personal delivery, expedited courier, messenger service, telecopy,
telex, ordinary mail, or electronic mail), but no such notice, request, demand,
claim, or other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any Party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.

(g)    Amendments and Waivers. No amendment, modification, replacement,
termination or cancellation of any provision of this Agreement will be valid
unless the same shall be in writing and signed by each of the Parties. No waiver
by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, may be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising because of any prior
or subsequent such occurrence.

(h)    Severability. The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof, provided that any
provision of this Agreement that is invalid or unenforceable in any situation or
in any jurisdiction will not affect the enforceability of the remaining terms
and provisions hereof or the enforceability of the offending term or provision
in any other situation or in any other jurisdiction.

(i)    Submission to Jurisdiction. Each Party submits to the jurisdiction of any
state or federal court sitting in Houston, Texas in any action arising out of or
relating to this Agreement and agrees that all claims in respect of the action
may be heard and determined in any such court. Each Party also agrees not to
bring any action arising out of or relating to this Agreement in any other
court.

[Signature Page Follows]

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

 
EL PASO CORPORATION
             
By:

 /s/ John J. Hopper

 
Name:

 John J. Hopper

 
Title:

 Vice President and Treasury

 
 
 

 
EL PASO MERCHANT ENERGY, L.P.
             
By:

 /s/ D. Mark Leland

 
Name:

 D. Mark Leland

 
Title:

 Executive Vice President and Chief Financial Officer

 
 
 

 
EAST COAST POWER HOLDING COMPANY L.L.C.
             
By:
Joint Energy Development Investments II, Limited Partnership, its sole member  
    By: Enron Capital Management II Limited Partnership, its general partner    
    By: Enron Capital II Corp., its general partner      

 
By:

 /s/ Joseph M. Deffner

 
Name:

 Joseph M. Deffner

 
Title:

 President and Chief Financial Officer

 
 
 

 
ECTMI TRUTTA HOLDINGS LP
               By:      Brook I LLC, its general partner      

 
By:

 /s/ Joseph M. Deffner

 
Name:

 Joseph M. Deffner

 
Title:

 President and Chief Financial Officer