<PAGE>   1
                                                                    EXHIBIT 10.2
================================================================================




                           EL PASO NATURAL GAS COMPANY

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


                               $750,000,000 5-YEAR
                        REVOLVING CREDIT AND COMPETITIVE
                           ADVANCE FACILITY AGREEMENT


                          DATED AS OF OCTOBER 29, 1997


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



                            THE CHASE MANHATTAN BANK,
                             AS ADMINISTRATIVE AGENT
                              AND CAF ADVANCE AGENT


                                 CITIBANK, N.A.,
                             AS DOCUMENTATION AGENT


                   MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
                              AS SYNDICATION AGENT



================================================================================



<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>           <C>                                                           <C>
                                    ARTICLE I

                         DEFINITIONS AND ACCOUNTING TERMS...................  1
SECTION 1.1   Certain Defined Terms.........................................  1
SECTION 1.2   Computation of Time Periods................................... 18
SECTION 1.3   Accounting Terms.............................................. 18
SECTION 1.4   References.................................................... 18

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES................... 19
SECTION 2.1   The Revolving Credit Advances................................. 19
SECTION 2.2   Making the Revolving Credit Advances.......................... 19
SECTION 2.3   Evidence of Debt.............................................. 21
SECTION 2.4   CAF Advances.................................................. 21
SECTION 2.5   Procedure for CAF Advance Borrowings.......................... 22
SECTION 2.6   CAF Advance Payments.......................................... 25
SECTION 2.7   Evidence of Debt.............................................. 26
SECTION 2.8   Fees.......................................................... 26
SECTION 2.9   Reduction of the Commitments.................................. 27
SECTION 2.10  Repayment of Advances......................................... 27
SECTION 2.11  Interest on Revolving Credit Advances......................... 27
SECTION 2.12  Additional Interest on Eurodollar Rate Advances............... 28
SECTION 2.13  Interest Rate Determination................................... 29
SECTION 2.14  Voluntary Conversion of Advances.............................. 30
SECTION 2.15  Optional and Mandatory Prepayments............................ 31
SECTION 2.16  Increased Costs............................................... 32
SECTION 2.17  Increased Capital............................................. 33
SECTION 2.18  Illegality.................................................... 33
SECTION 2.19  Pro Rata Treatment, Payments and Computations................. 34
SECTION 2.20  Taxes......................................................... 35
SECTION 2.21  Sharing of Payments, Etc...................................... 38
SECTION 2.22  Use of Proceeds............................................... 39
SECTION 2.23  Extension of Stated Termination Date.......................... 39
SECTION 2.24  Commitment Increases.......................................... 40
SECTION 2.25  Replacement of Lenders........................................ 42

                                   ARTICLE III

                      CONDITIONS OF EFFECTIVENESS AND LENDING............... 43
SECTION 3.1   Conditions Precedent to Effectiveness of this Agreement....... 43
SECTION 3.2   Conditions Precedent to Initial Advances...................... 43
SECTION 3.3   Conditions Precedent to Initial Advances to Any Borrowing
                 Subsidiary or Holding...................................... 44
SECTION 3.4   Conditions Precedent to Each Borrowing........................ 45

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES..................... 46
SECTION 4.1   Representations and Warranties of the Borrowers............... 46
</TABLE>


                                      -i-
<PAGE>   3
<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>           <C>                                                           <C>

                                   ARTICLE V

                         COVENANTS OF THE BORROWERS......................... 49
SECTION 5.1   Affirmative Covenants......................................... 49
SECTION 5.2   Negative Covenants............................................ 51
SECTION 5.3   Reporting Requirements........................................ 54
SECTION 5.4   Restrictions on Material Subsidiaries......................... 57

                                   ARTICLE VI

                                    GUARANTEE............................... 58
SECTION 6.1   Guarantees.................................................... 58
SECTION 6.2   No Subrogation................................................ 59
SECTION 6.3   Amendments, etc. with respect to the Obligations; Waiver of
                Rights...................................................... 59
SECTION 6.4   Guarantee Absolute and Unconditional.......................... 60
SECTION 6.5   Reinstatement................................................. 61

                                  ARTICLE VII

                               EVENTS OF DEFAULT............................ 61
SECTION 7.1   Event of Default.............................................. 61

                                  ARTICLE VIII

              THE ADMINISTRATIVE AGENT AND THE CAF ADVANCE AGENT............ 65
SECTION 8.1   Authorization and Action...................................... 65
SECTION 8.2   Administrative Agent's and CAF Advance Agent's Reliance, 
                Etc......................................................... 65
SECTION 8.3   Chase and Affiliates.......................................... 66
SECTION 8.4   Lender Credit Decision........................................ 66
SECTION 8.5   Indemnification............................................... 67
SECTION 8.6   Successor Administrative Agent and CAF Advance Agent.......... 67

                                   ARTICLE IX

                                  MISCELLANEOUS............................. 68
SECTION 9.1   Amendments, Etc............................................... 68
SECTION 9.2   Notices, Etc.................................................. 69
SECTION 9.3   No Waiver; Remedies........................................... 69
SECTION 9.4   Costs and Expenses; Indemnity................................. 69
SECTION 9.5   Right of Set-Off.............................................. 71
SECTION 9.6   Binding Effect................................................ 71
SECTION 9.7   Assignments and Participations................................ 71
SECTION 9.8   Confidentiality............................................... 74
SECTION 9.9   Consent to Jurisdiction....................................... 75
SECTION 9.10  GOVERNING LAW................................................. 76
SECTION 9.11  Rate of Interest.............................................. 76
SECTION 9.12  Effect on Outstanding CAF Advances............................ 76
SECTION 9.13  Execution in Counterparts..................................... 77
</TABLE>


                                    SCHEDULE

Schedule I        Commitments, Addresses, Etc.


                                    EXHIBITS

Exhibit A         Form of Note
Exhibit B         Form of Notice of Borrowing


                                      -ii-
<PAGE>   4

Exhibit C         Form of CAF Advance Request
Exhibit D         Form of CAF Advance Offer
Exhibit E         Form of CAF Advance Confirmation
Exhibit F         Form of Assignment and Acceptance
Exhibit G         Form of Opinion of [Associate] General Counsel
                    of the Company
Exhibit H         Form of Opinion of New York Counsel to the
                    Company
Exhibit I         Form of Process Agent Letter
Exhibit J         Form of Joinder Agreement
Exhibit K         Form of Opinion of [Associate] General Counsel of
                    the Company
Exhibit L         Form of Opinion of New York Counsel to the Company
Exhibit M         Form of Extension Request
Exhibit N         Form of New Lender Supplement
Exhibit O         Form of Commitment Increase Supplement




                                    -iii-

<PAGE>   5

                  $750,000,000 5-YEAR REVOLVING CREDIT AND COMPETITIVE ADVANCE
FACILITY AGREEMENT, dated as of October 29, 1997, among EL PASO NATURAL GAS
COMPANY, a Delaware corporation ("EPNGC"), TENNESSEE GAS PIPELINE COMPANY, a
Delaware corporation ("Tennessee"), the several banks and other financial
institutions from time to time parties to this Agreement (the "Lenders"), THE
CHASE MANHATTAN BANK, a New York banking corporation, as administrative agent
(in such capacity, the "Administrative Agent") and as CAF Advance Agent (in such
capacity, the "CAF Advance Agent") for the Lenders hereunder, CITIBANK, N.A., as
documentation agent (in such capacity, the "Documentation Agent") for the
Lenders, and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as syndication agent (in
such capacity, the "Syndication Agent") for the Lenders.

                  The parties hereto hereby agree as follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

                  SECTION I.1  Certain Defined Terms.  As used in this 
Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):

                  "Administrative Agent" has the meaning assigned to such term
         in the preamble hereof.

                  "Advance" means an advance by a Lender to any Borrower
         pursuant to Article II, and refers to a Base Rate Advance, a Eurodollar
         Rate Advance or a CAF Advance.

                  "Affiliate" means as to any Person, any other Person that,
         directly or indirectly, controls, is controlled by or is under common
         control with such Person or is a director or officer of such Person.
         The term "control" (including the terms "controlled by" or "under
         common control with") means, with respect to any Person, the
         possession, direct or indirect, of the power to vote 20% or more of the
         securities having ordinary voting power for the election of directors
         of such Person or to direct or cause the direction of the management
         and policies of such Person, whether through ownership of voting
         securities or by contract or otherwise.

                  "Agreement" means this $750,000,000 5-Year Revolving Credit
         and Competitive Advance Facility, as amended, supplemented or otherwise
         modified from time to time.

                  "Alternate Program" means any program providing for the sale
         or other disposition of trade or other receivables entered into by the
         Company or a Principal Subsidiary (or for purposes of Section 5.2(a)
         only, any Restricted Affiliate) which is in addition to or in
         replacement of the

<PAGE>   6
                                                                               2


         program evidenced by either Receivables Purchase and Sale Agreement
         (whether or not either Receivables Purchase and Sale Agreement shall
         then be in effect), provided that such program is on terms (a)
         substantially similar to either Receivables Purchase and Sale Agreement
         (as modified to comply with FASB 125 or similar policies or guidelines
         from time to time in effect) or (b) customary for similar transactions
         as reasonably determined by the Administrative Agent.

                  "Applicable LIBO Rate" means in respect of any CAF Advance
         requested pursuant to a LIBO Rate CAF Advance Request, an interest rate
         per annum equal to the rate which appears on Page 3750 of the Telerate
         Service (or any successor or substitute page of such Service, or any
         successor to or substitute for such service providing rate quotations
         comparable to those currently provided on such page 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) as at approximately 11:00 A.M., London
         time, two Business Days prior to the beginning of the period for which
         such CAF Advance is to be outstanding as the rate for Dollar deposits
         with a maturity comparable to such period.

                  "Assignment and Acceptance" means an assignment and acceptance
         entered into by a Lender and an Eligible Assignee, and accepted by the
         Administrative Agent, in substantially the form of Exhibit F.

                  "Base CD Rate" means the sum of (a) the product of (i) the
         Three-Month Secondary CD Rate and (ii) a fraction, the numerator of
         which is one and the denominator of which is one minus the C/D Reserve
         Percentage and (b) the C/D Assessment Rate.

                  "Base Rate" means for any day, a rate per annum (adjusted to
         the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, rounded
         upwards to the next highest 1/16 of 1%) equal to the greatest of (a)
         the Prime Rate in effect on such day, (b) the Base CD Rate in effect on
         such day plus 1/2 of 1% and (c) the Effective Federal Funds Rate in
         effect on such day plus 1/2 of 1%. Any change in the Base Rate due to a
         change in the Prime Rate, the Three-Month Secondary CD Rate or the
         Effective Federal Funds Rate shall be effective as of the opening of
         business on the effective day of such change in the Prime Rate, the
         Three-Month Secondary CD Rate or the Effective Federal Funds Rate,
         respectively.

                  "Base Rate Advance" means an Advance which bears interest as
         provided in Section 2.11(a)(i).

                  "Borrowers" means the collective reference to EPNGC, each
         Borrowing Subsidiary and Holding once Holding executes and delivers a
         Joinder Agreement; each, a "Borrower".


<PAGE>   7
                                                                               3


                  "Borrowing" means a borrowing consisting of Advances of the
         same Type made on the same day by the Lenders, it being understood that
         there may be more than one Borrowing on a particular day.

                  "Borrowing Subsidiary" means Tennessee and each other domestic
         Subsidiary of the Company which has been designated by the Company as a
         "Borrowing Subsidiary" by written notice to the Administrative Agent,
         which designation shall not have been revoked by written notice by the
         Company to the Administrative Agent (provided, that no such designation
         shall be revoked if either (a) any Default or Event of Default shall
         have occurred and be continuing or (b) any Advance to such Borrowing
         Subsidiary, or any interest accrued thereon, shall be outstanding);
         collectively, the "Borrowing Subsidiaries". For avoidance of doubt, (i)
         Tennessee may be undesignated as a Borrowing Subsidiary by written
         notice to the Administrative Agent by the Company and (ii) EPNGC shall
         always be a Borrower hereunder.

                  "Business Day" means a day of the year on which banks are not
         required or authorized to close in New York, New York and, if the
         applicable Business Day relates to any Eurodollar Rate Advances or LIBO
         Rate CAF Advances, on which dealings are carried on in the London
         interbank market.

                  "CAF Advance" means an Advance made pursuant to Sections 2.4
         and 2.5.

                  "CAF Advance Agent" has the meaning assigned to such term in
         the preamble hereof.

                  "CAF Advance Availability Period" means the period from and
         including the Closing Date until the earlier of (a) the date which is 7
         days prior to the Stated Termination Date and (b) the Termination Date.

                  "CAF Advance Confirmation" means each confirmation by the
         applicable Borrower of its acceptance of CAF Advance Offers, which CAF
         Advance Confirmation shall be substantially in the form of Exhibit E
         and shall be delivered to the CAF Advance Agent by telecopy.

                  "CAF Advance Interest Payment Date" means as to each CAF
         Advance, each interest payment date specified by the applicable
         Borrower for such CAF Advance in the related CAF Advance Request.

                  "CAF Advance Lenders" means Lenders from time to time
         designated by the Company, in consultation with the CAF Advance Agent,
         as CAF Advance Lenders as provided in Section 2.4.

                  "CAF Advance Maturity Date" means as to any CAF Advance, the
         date specified by the applicable Borrower

<PAGE>   8
                                                                               4


         pursuant to Section 2.5(d)(ii) in its acceptance of the related CAF
         Advance Offer.

                  "CAF Advance Offer" means each offer by a CAF Advance Lender
         to make CAF Advances pursuant to a CAF Advance Request, which CAF
         Advance Offer shall contain the information specified in Exhibit D and
         shall be delivered to the CAF Advance Agent by telephone, immediately
         confirmed by telecopy.

                  "CAF Advance Request" means each request by the applicable
         Borrower for CAF Advance Lenders to submit bids to make CAF Advances,
         which request shall contain the information in respect of such
         requested CAF Advances specified in Exhibit C and shall be delivered to
         the CAF Advance Agent in writing, by telecopy, or by telephone,
         immediately confirmed by telecopy.

                  "Capitalization" of any Person means the sum (without
         duplication) of (a) consolidated Debt of such Person and its
         consolidated Subsidiaries, plus (b) the aggregate amount of Guaranties
         entered into by such Person and its consolidated Subsidiaries, plus (c)
         the consolidated common and preferred stockholders' equity of such
         Person and its consolidated Subsidiaries.

                  "C/D Assessment Rate" means for any day as applied to any Base
         Rate Advance, the annual assessment rate determined by Chase to be
         payable on such day to the Federal Deposit Insurance Corporation (the
         "FDIC") for the FDIC's (or any successor's) insuring time deposits at
         offices of Chase in the United States.

                  "C/D Reserve Percentage" means for any day as applied to any
         Base Rate Advance, that percentage (expressed as a decimal) which is in
         effect on such day, as prescribed by the Board of Governors of the
         Federal Reserve System (or any successor) (the "Board"), for
         determining the then current reserve requirement for the Administrative
         Agent in respect of new non-personal time deposits in Dollars having a
         maturity of 30 days or more.

                  "Chase" means The Chase Manhattan Bank, a New York banking
         corporation.

                  "Closing Date" has the meaning assigned to such term in
         Section 3.2.

                  "Commitment" means as to any Lender, the obligation of such
         Lender to make Revolving Credit Advances to the Borrowers hereunder in
         an aggregate principal amount at any one time outstanding not to exceed
         the amount set forth opposite such Lender's name on Schedule I (as such
         Schedule I is amended from time to time pursuant to Section 9.7(c)), as
         such amount may be reduced from time to time in accordance with the
         provisions of this Agreement.


<PAGE>   9
                                                                               5



                  "Commitment Expiration Date" has the meaning assigned to such
         term in Section 2.23(a).

                  "Commitment Percentage" means as to any Lender at any time,
         the percentage which such Lender's Commitment then constitutes of the
         aggregate Commitments (or, at any time after the Commitments shall have
         expired or terminated, the percentage which the aggregate principal
         amount of such Lender's Advances then outstanding constitutes of the
         aggregate principal amount of the Advances then outstanding).

                  "Commitment Increase Notice" has the meaning assigned to such
         term in Section 2.24(a).

                  "Commitment Increase Supplement" has the meaning assigned to
         such term in Section 2.24(c).

                  "Company" means (a) at all times prior to Holding becoming a
         Borrower, EPNGC, and (b) thereafter, Holding.

                  "Contingent Guaranty" has the meaning assigned to such term in
         the definition of the term "Guaranty" contained in this Section 1.1.

                  "Convert", "Conversion" and "Converted" each refers to a
         conversion of Advances of one Type into Advances of another Type
         pursuant to Section 2.13, 2.14 or 2.18.

                  "Debt" means, as to any Person, all Indebtedness of such
         Person other than (a) any Project Financing of such Person, (b) in the
         case of the Company or a Principal Subsidiary, any liabilities of the
         Company or such Principal Subsidiary, as the case may be, under any
         Alternate Program, or any document executed by the Company or such
         Principal Subsidiary, as the case may be, in connection therewith and
         (c) any obligations of the Company or a Principal Subsidiary with
         respect to lease payments for the headquarters building of EPNGC
         located in Houston, Texas; provided, however, that for purposes of
         Article V, "Debt" shall not include up to an aggregate amount
         (determined without duplication of amount) of $200,000,000 of (i) the
         amount of optional payments in lieu of asset repurchase or other
         payments to similar effect, including extension or renewal payments, on
         off balance sheet leases and (ii) the amount of the purchase price for
         optional acquisition of such asset (in either case, calculated at the
         lower amount payable in respect of such asset under clause (i) or (ii)
         above).

                  "Default" means any event that would constitute an Event of
         Default but for the requirement that notice be given or time elapse or
         both.

                  "Documentation Agent" has the meaning assigned to such term in
         the preamble hereof.


<PAGE>   10
                                                                               6



                  "Dollars" and "$" means dollars in lawful currency of the
         United States of America.

                  "Effective Date" means the date on which the conditions
         precedent set forth in Section 3.1 have been satisfied (or compliance
         therewith shall have been waived by the Lenders).

                  "Effective Federal Funds Rate" means, 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 for such day (or, if such day is not a Business
         Day, for the next preceding Business Day) by the Federal Reserve Bank
         of New York, or, if such rate is not so published for any day which is
         a Business Day, the average of the quotations for such day on such
         transactions received by the Administrative Agent from three Federal
         funds brokers of recognized standing selected by it.

                  "Eligible Assignee" means, with respect to any particular
         assignment under Section 9.7, any bank or other financial institution
         approved in writing by the Company expressly with respect to such
         assignment and, except as to such an assignment by Chase so long as
         Chase is the Administrative Agent hereunder, the Administrative Agent
         as an Eligible Assignee for purposes of this Agreement, provided that
         (i) neither the Administrative Agent's nor the Company's approval shall
         be unreasonably withheld and (ii) neither the Administrative Agent's
         nor the Company's approval shall be required if the assignee is another
         Lender or an Affiliate of the assigning Lender.

                  "EPNGC" has the meaning assigned to such term in the preamble
         hereof.

                  "EPTPC" means El Paso Tennessee Pipeline Co., a Delaware
         corporation.

                  "EPTPC Facility" means the $3,000,000,000 Revolving Credit and
         Competitive Advance Facility Agreement, dated as of November 4, 1996,
         among EPTPC, the several financial institutions from time to time
         parties thereto, and The Chase Manhattan Bank, as administrative agent
         and CAF advance agent thereunder, as the same may be amended, modified
         or supplemented from time to time.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended from time to time, and the regulations promulgated and
         rulings issued from time to time thereunder.

                  "ERISA Affiliate" means any Person who is a member of the
         Company's controlled group within the meaning of Section 4001(a)(14)(A)
         of ERISA.



<PAGE>   11
                                                                               7


                  "Eurocurrency Liabilities" has the meaning assigned to that
         term in Regulation D of the Board of Governors of the Federal Reserve
         System, as in effect from time to time.

                  "Eurodollar Rate" means, for any Interest Period for each
         Eurodollar Rate Advance comprising part of the same Borrowing, an
         interest rate per annum equal to the rate which appears on Page 3750 of
         the Telerate Service (or on any successor or substitute page of such
         service, or any successor to or substitute for such service providing
         rate quotations comparable to those currently provided on such page 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) as at approximately
         11:00 A.M. (London, England time) two Business Days before the first
         day of such Interest Period as the rate for Dollar deposits with a
         maturity comparable to such Interest Period; provided that if such rate
         is not available at such time for any reason, the Eurodollar Rate for
         such Borrowing for such Interest Period shall be the interest rate per
         annum equal to the average (rounded upward to the nearest whole
         multiple of 1/16 of 1% per annum, if such average is not such a
         multiple) of the rate per annum at which deposits in Dollars are
         offered by the principal office of each of the Reference Lenders in
         London, England, to prime banks in the London interbank market as at
         approximately 11:00 A.M. (London, England time) two Business Days
         before the first day of such Interest Period, in an approximate amount
         of each such Reference Lender's share of the relevant Borrowing for the
         applicable Interest Period. The Eurodollar Rate for the Interest Period
         for each Eurodollar Rate Advance comprising part of the same Borrowing,
         when being determined pursuant to the foregoing proviso clause, shall
         be determined by the Administrative Agent on the basis of applicable
         rates furnished to and received by the Administrative Agent from the
         Reference Lenders two Business Days before the first day of such
         Interest Period, subject, however, to the provisions of Section 2.13.

                  "Eurodollar Rate Advance" means an Advance which bears
         interest determined by reference to the Eurodollar Rate, as provided in
         Section 2.11(a)(ii).

                  "Eurodollar Rate Margin" means for any day the rate per annum
         set forth below opposite the applicable S&P Bond Rating and Moody's
         Bond Rating in effect on such day:



<PAGE>   12
                                                                               8


<TABLE>
<CAPTION>
           Bond Rating                                       Eurodollar
          (S&P/Moody's)                  Level               Rate Margin
          -------------                  -----               -----------
<S>                                      <C>                 <C>  
         A/A2 or higher                     I                   .125%
         A-/A3                             II                   .155%
         BBB+/Baa1                        III                   .185%
         BBB/Baa2                          IV                   .215%
         BBB-/Baa3                          V                   .275%
         BB+/Ba1 or lower                  VI                   .450%;
</TABLE>

         provided that if the ratings of such rating agencies do not fall within
         the same Level, the Eurodollar Rate Margin applicable to such day will
         be the lower Eurodollar Rate Margin and provided, further, that in the
         event a rating is not available from a rating agency, such rating
         agency will be deemed to have assigned its lowest rating.

                  "Eurodollar Reserve Percentage" for any Lender for any
         Interest Period for any Eurodollar Rate Advance means the reserve
         percentage applicable during such Interest Period under regulations
         issued from time to time by the Board of Governors of the Federal
         Reserve System (or if more than one such percentage shall be so
         applicable, the daily average of such percentages for those days in
         such Interest Period during which any such percentage shall be so
         applicable) for determining the maximum reserve requirement (including,
         but not limited to, any emergency, supplemental or other marginal
         reserve requirement) for such Lender with respect to liabilities or
         assets consisting of or including Eurocurrency Liabilities having a
         term equal to such Interest Period.

                  "Events of Default" has the meaning assigned to such term in
         Section 7.1.

                  "Excluded Acquisition Debt" means (a) Debt, Guaranties or
         reimbursement obligations of any corporation acquired by the Company or
         any of its Subsidiaries and which Debt, Guaranties or reimbursement
         obligations exist immediately prior to such acquisition (provided that
         (i) such Debt, Guaranties or reimbursement obligations are not incurred
         solely in anticipation of such acquisition and (ii) immediately prior
         to such acquisition such corporation is not a Subsidiary of the
         Company), (b) Debt, Guaranties or reimbursement obligations of EPTPC
         and its Subsidiaries in existence on the date of the merger of EPTPC
         with El Paso Merger Company or (c) Debt, Guaranties or reimbursement
         obligations in respect of any asset acquired by the Company or any of
         its Subsidiaries and which Debt, Guaranties or reimbursement
         obligations exists immediately prior to such acquisition (provided that
         (i) such Debt, Guaranties or reimbursement obligations are not incurred
         solely in anticipation of such acquisition and (ii) immediately prior
         to such acquisition such asset is not an asset of the Company or any of
         its Subsidiaries).



<PAGE>   13
                                                                               9


                  "Existing Facilities" means the collective reference to (a)
         the $750,000,000 Revolving Credit and Competitive Advance Facility
         Agreement and the $250,000,000 Revolving Credit and Competitive Advance
         Facility Agreement, each dated November 4, 1996, among EPNGC, the
         several financial institutions from time to time parties thereto and
         Chase, as Administrative Agent and CAF Advance Agent and (b) the EPTPC
         Facility.

                  "Exposure" means (a) with respect to an Objecting Lender at
         any time, the aggregate outstanding principal amount of its Revolving
         Credit Advances and (b) with respect to any other Lender at any time,
         the maximum amount of the Commitment of such Lender.

                  "Extension Request" means each request by the Borrowers made
         pursuant to Section 2.23 for the Lenders to extend the Stated
         Termination Date, which shall contain the information in respect of
         such extension specified in Exhibit M and shall be delivered to the
         Administrative Agent in writing.

                  "Facility Fee Commencement Date" means the date hereof.

                  "FERC" means the Federal Energy Regulatory Commission, or any
         agency or authority of the United States from time to time succeeding
         to its function.

                  "Fixed Rate CAF Advance" means any CAF Advance made pursuant
         to a Fixed Rate CAF Advance Request.

                  "Fixed Rate CAF Advance Request" means any CAF Advance Request
         requesting the CAF Advance Lenders to offer to make CAF Advances at a
         fixed rate (as opposed to a rate composed of the Applicable LIBO Rate
         plus (or minus) a margin).

                  "Guaranty", "Guaranteed" and "Guaranteeing" each means any act
         by which any Person assumes, guarantees, endorses or otherwise incurs
         direct or contingent liability in connection with, or agrees to
         purchase or otherwise acquire or otherwise assures a creditor against
         loss in respect of, any Debt or Project Financing of any Person other
         than the Company or any of its consolidated Subsidiaries (excluding (a)
         any liability by endorsement of negotiable instruments for deposit or
         collection or similar transactions in the ordinary course of business,
         (b) any liability in connection with obligations of the Company, any of
         its consolidated Subsidiaries or any Restricted Affiliate, including,
         without limitation, obligations under any conditional sales agreement,
         equipment trust financing or equipment lease and any liability of any
         Restricted Affiliate in respect of obligations of EPNGC or its
         consolidated Subsidiaries and (c) any such act in connection with a
         Project Financing that either (i) guarantees performance of the
         completion of the project which is financed by such Project Financing,
         until such time, if any, that such guaranty becomes a guaranty of
         payment of such Project Financing (other than a guaranty of

<PAGE>   14
                                                                              10


         payment of the type referred to in subclause (ii) below) or (ii) is
         contingent upon, or the obligation to pay or perform under which is
         contingent upon, the occurrence of any event other than or in addition
         to the passage of time or any Project Financing becoming due (any such
         act referred to in this clause (c) being a "Contingent Guaranty");
         provided, however, that for purposes of this definition the liability
         of the Company or any of its Subsidiaries with respect to any
         obligation as to which a third party or parties are jointly, or jointly
         and severally, liable as a guarantor or otherwise as contemplated
         hereby and have not defaulted on its or their portions thereof, shall
         be only its pro rata portion of such obligation.

                  "Holding" means any domestic parent holding company of both
         EPNGC and EPTPC which directly or indirectly owns 100% of the common
         stock of EPNGC and 100% of the common stock of EPTPC; provided,
         however, that immediately after Holding becomes EPNGC's and EPTPC's
         parent holding company, not less than 80% of the shareholders of common
         stock of Holding are the same shareholders of common stock of EPNGC
         immediately prior to Holding becoming EPNGC's and EPTPC's parent
         holding company.

                  "Holding Guarantee" has the meaning assigned to such term in
         Section 5.1(g).

                  "Indebtedness" of any Person means, without duplication (a)
         indebtedness of such Person for borrowed money, (b) obligations of such
         Person (other than any portion of any trade payable obligation of such
         Person which shall not have remained unpaid for 91 days or more from
         the original due date of such portion) to pay the deferred purchase
         price of property or services, and (c) obligations of such Person as
         lessee under leases which shall have been or should be, in accordance
         with generally accepted accounting principles, recorded as capital
         leases, except that where such indebtedness or obligation of such
         Person is made jointly, or jointly and severally, with any third party
         or parties other than any consolidated Subsidiary of such Person, the
         amount thereof for the purposes of this definition only shall be the
         pro rata portion thereof payable by such Person, so long as such third
         party or parties have not defaulted on its or their joint and several
         portions thereof.

                  "Indemnified Party" means any or all of the Lenders, the
         Administrative Agent and the CAF Advance Agent.

                  "Interest Period" means, for each Eurodollar Rate Advance
         comprising part of the same Borrowing, the period beginning on the date
         of such Advance or the date of the Conversion of any Advance into such
         an Advance and ending on the last day of the period selected by the
         applicable Borrower pursuant to the provisions below and, thereafter,
         each subsequent period commencing on the last day of the

<PAGE>   15
                                                                              11


         immediately preceding Interest Period and ending on the last day of the
         period selected by the applicable Borrower pursuant to the provisions
         below. The duration of each such Interest Period shall be one, two,
         three or six months, or, subject to availability to each Lender, nine
         or twelve months, in each case as the applicable Borrower may, upon
         notice received by the Administrative Agent not later than 12:00 noon
         (New York City time) on the third Business Day prior to the first day
         of such Interest Period with respect to Eurodollar Rate Advances,
         select; provided, however, that:

                             (a)     the duration of any Interest Period which
                  commences before the Termination Date and would otherwise end
                  after the Termination Date shall end on the Termination Date;

                             (b)     if the last day of such Interest Period
                  would otherwise occur on a day which is not a Business Day,
                  such last day shall be extended to the next succeeding
                  Business Day, except if such extension would cause such last
                  day to occur in a new calendar month, then such last day shall
                  occur on the next preceding Business Day;

                             (c)     Interest Periods commencing on the same
                  date for Advances comprising the same Borrowing shall be of
                  the same duration; and

                             (d)     with respect to Advances made by an
                  Objecting Lender, no Interest Period with respect to such
                  Advances shall end after such Objecting Lender's Commitment
                  Expiration Date.

                  "Joinder Agreement" means a Joinder Agreement, substantially
         in the form of Exhibit J hereto, duly executed and delivered by the
         Company and the Borrowing Subsidiary party thereto or Holding, as the
         case may be.

                  "Lenders" has the meaning assigned to such term in the
         preamble hereof.

                  "LIBO Rate CAF Advance" means any CAF Advance made pursuant to
         a LIBO Rate CAF Advance Request.

                  "LIBO Rate CAF Advance Request" means any CAF Advance Request
         requesting the CAF Advance Lenders to offer to make CAF Advances at an
         interest rate equal to the Applicable LIBO Rate plus (or minus) a
         margin.

                  "Lien" means any lien, security interest or other charge or
         encumbrance, or any assignment of the right to receive income, or any
         other type of preferential arrangement, in each case to secure any
         Indebtedness or any Guaranty of any Person.



<PAGE>   16
                                                                              12


                  "Majority Lenders" means Lenders the Commitment Percentages of
         which aggregate at least 51%, provided, that at any time after the
         Commitment Expiration Date with respect to any Objecting Lender (but
         prior to the termination of all the Commitments), "Majority Lenders"
         shall mean Lenders whose Exposure aggregates at least 51% of the
         aggregate Exposure of all the Lenders.

                  "Margin Stock" means "margin stock" as defined in Regulation U
         of the Board of Governors of the Federal Reserve System, as in effect
         from time to time.

                  "Material Adverse Effect" means a material adverse effect on
         the financial condition or operations of the Company and its
         consolidated Subsidiaries on a consolidated basis.

                  "Material Subsidiary" means any Subsidiary of Holding (other
         than a Project Financing Subsidiary) that itself (on an unconsolidated,
         stand-alone basis) owns in excess of 10% of the consolidated net
         property, plant and equipment of Holding and its consolidated
         Subsidiaries.

                  "Mojave" means Mojave Pipeline Company.

                  "Moody's Bond Rating" means, subject to Section 2.11(a)(ii),
         (a) for any day prior to the Ratings Change Date, the rating of EPNGC's
         senior long-term unsecured debt by Moody's Investors Service, Inc. in
         effect at 11:00 A.M., New York City time, on such day and (b) for any
         day that is on or after the Ratings Change Date, the rating of
         Holding's senior long-term unsecured debt by Moody's Investors Service,
         Inc. in effect at 11:00 A.M., New York City time, on such day.

                  "Multiemployer Plan" means a "multiemployer plan" as defined
         in Section 4001(a)(3) of ERISA to which the Company or any ERISA
         Affiliate is making or accruing an obligation to make contributions, or
         has within any of the preceding five plan years made or accrued an
         obligation to make contributions and in respect of which the Company or
         an ERISA Affiliate has any liability (contingent or otherwise), such
         plan being maintained pursuant to one or more collective bargaining
         agreements.

                  "Multiple Employer Plan" means a single employer plan, as
         defined in Section 4001(a)(15) of ERISA, which (a) is maintained for
         employees of the Company or an ERISA Affiliate and at least one Person
         other than the Company and its ERISA Affiliates or (b) was so
         maintained and in respect of which the Company or an ERISA Affiliate
         could have liability under Section 4064 or 4069 of ERISA in the event
         such plan has been or were to be terminated.

                  "Net Worth" means with respect to the Company, as of any date
         of determination, the sum of the preferred stock

<PAGE>   17
                                                                              13


         and stockholders' equity of the Company as shown on the most recent
         consolidated balance sheet of the Company delivered pursuant to Section
         5.3.

                  "New Lender" has the meaning assigned to such term in Section
         2.24(b).

                  "New Lender Supplement" has the meaning assigned to such term
         in Section 2.24(b).

                  "Note" has the meaning assigned to such term in Section
         2.3(d).

                  "Notice of Borrowing" has the meaning specified in Section
         2.2(a).

                  "Obligations" means the collective reference to the unpaid
         principal of and interest on the Advances and the Notes and all other
         financial liabilities of the Borrowers to the Administrative Agent, the
         CAF Advance Agent and the Lenders (including, without limitation,
         interest accruing at the then applicable rate provided in this
         Agreement after the maturity of the Advances and interest accruing at
         the then applicable rate provided in this Agreement after the filing of
         any petition in bankruptcy, or the commencement of any insolvency,
         reorganization or like proceeding, relating to any Borrower whether or
         not a claim for post-filing or post-petition interest is allowed in
         such proceeding), whether direct or indirect, absolute or contingent,
         due or to become due, or now existing or hereafter incurred, which may
         arise under, out of, or in connection with, this Agreement or the
         Notes, in each case whether on account of principal, interest,
         reimbursement obligations, fees, indemnities, costs, expenses or
         otherwise (including, without limitation, all fees and disbursements of
         counsel to the Administrative Agent, the CAF Advance Agent or to the
         Lenders that are required to be paid by any Borrower pursuant to this
         Agreement).

                  "Objecting Lenders" has the meaning assigned to such term in
         Section 2.23(a).

                  "Offered Increase Amount" has the meaning assigned to such
         term in Section 2.24(a).

                  "Other Taxes" has the meaning assigned to such term in Section
         2.20(b).

                  "Party" has the meaning assigned to such term in Section 9.8.

                  "PBGC" means the Pension Benefit Guaranty Corporation (or any
         successor).

                  "Permitted Claims" has the meaning assigned to such term in
         Section 9.9(a).


<PAGE>   18
                                                                              14



                  "Person" means an individual, partnership, corporation
         (including a business trust), joint stock company, trust,
         unincorporated association, joint venture or other entity, or a country
         or any political subdivision thereof or any agency or instrumentality
         of such country or subdivision.

                  "Plan" means a Single Employer Plan or a Multiple Employer
         Plan.

                  "Prime Rate" means the rate of interest per annum publicly
         announced from time to time by Chase as its prime rate in effect at its
         principal office in New York City. The Prime Rate is not intended to be
         the lowest rate of interest charged by Chase in connection with
         extensions of credit to debtors.

                  "Principal Subsidiary" means, at any time, any Subsidiary of
         the Company (other than a Project Financing Subsidiary) either (a)
         having assets that are, or owning Subsidiaries with assets that
         together with its assets are, at such time greater than or equal to 5%
         of the consolidated assets of the Company and its consolidated
         Subsidiaries at such time or (b) constituting a Borrowing Subsidiary.

                  "Process Agent" has the meaning specified in Section 9.9(a).

                  "Project Financing" means any Indebtedness incurred to finance
         a project, other than any portion of such Indebtedness permitting or
         providing for recourse against the Company or any of its Subsidiaries
         (or for purposes of Section 5.2(a) only, any Restricted Affiliate)
         other than (a) recourse to the stock or assets of the Project Financing
         Subsidiary, if any, incurring or Guaranteeing such Indebtedness, and
         (b) such recourse as exists under any Contingent Guaranty.

                  "Project Financing Subsidiary" means any Subsidiary of the
         Company (or for purposes of Section 5.2(a) only, any Restricted
         Affiliate) whose principal purpose is to incur Project Financing, or to
         become a partner, member or other equity participant in a partnership,
         limited liability company or other entity so created, and substantially
         all the assets of which Subsidiary, partnership limited liability
         company or other entity are limited to those assets being financed (or
         to be financed) in whole or in part by a Project Financing.

                  "Ratings Change Date" means the earliest to occur of (a) the
         date on which Holding becomes a Borrower hereunder and (b) the date on
         which Holding becomes a "Borrower" under the $750,000,000 364-Day
         Revolving Credit and Competitive Advance Facility Agreement, dated as
         of the date hereof, among EPNGC, the lenders parties thereto and Chase,
         as administrative agent and CAF advance agent.


<PAGE>   19
                                                                              15



                  "Re-Allocation Date" has the meaning assigned to such term in
         Section 2.24(e).

                  "Receivables Purchase and Sale Agreement" means the collective
         reference to (a) the Receivables Purchase and Sale Agreement dated as
         of January 14, 1992 among EPNGC, CIESCO L.P., a New York limited
         partnership, Corporate Asset Funding Company, a Delaware corporation
         and Citicorp North America, Inc., as agent, as amended as of the date
         hereof, and (b) the Amended and Restated Receivables Sale Agreement
         dated as of December 31, 1996 among El Paso Energy Credit Corporation,
         Asset Securitization Cooperative Corporation and Canadian Imperial Bank
         of Commerce, as administrative agent, as such Agreement may be amended,
         supplemented, restated or otherwise modified from time to time,
         provided that no such amendment, supplement, restatement or
         modification shall change the scope of such Agreement from that of a
         receivables securitization transaction.

                  "Reference Lenders" means Chase, Morgan Guaranty Trust Company
         of New York and Citibank, N.A..

                  "Register" has the meaning specified in Section 9.7(c).

                  "Required Lenders" means Lenders (a) which are not Objecting
         Lenders with respect to any previous Extension Request and (b) which
         have Commitment Percentages aggregating at least 66-2/3% of the
         aggregate Commitment Percentages of such non-Objecting Lenders.

                  "Restricted Affiliate" means any Affiliate of EPNGC (other
         than a Subsidiary of EPNGC) designated by EPNGC as a "Restricted
         Affiliate" by written notice to the Administrative Agent; provided that
         such Affiliate shall not become a Restricted Affiliate until such time
         that (a) such Affiliate executes and delivers a guaranty (in form and
         substance reasonably satisfactory to the Administrative Agent) (each a
         "Restricted Affiliate Guaranty") in favor of the Administrative Agent,
         for the ratable benefit of the Lenders, guaranteeing the prompt and
         complete payment by each Borrower when due (whether at the stated
         maturity, by acceleration or otherwise) of the Obligations owing by
         such Borrower and (b) the Administrative Agent receives legal opinions
         from the General Counsel or Associate General Counsel of Holding and
         from New York counsel to Holding reasonably acceptable to the
         Administrative Agent, which legal opinions shall be in form and
         substance satisfactory to the Administrative Agent; provided, further,
         that after such time as such Affiliate becomes a Restricted Affiliate,
         EPNGC may terminate the designation of such Affiliate as a Restricted
         Affiliate by written notice to the Administrative Agent at which time
         the aforementioned guaranty of such Affiliate shall also terminate.

                  "Restricted Affiliate Guaranty" has the meaning

<PAGE>   20
                                                                              16


         assigned to such term in the definition of Restricted Affiliate.

                  "Revolving Credit Advances" has the meaning assigned to such
         term in Section 2.1.

                  "S&P Bond Rating" means, subject to Section 2.11(a)(ii), (a)
         for any day prior to the Ratings Change Date, the rating of EPNGC's
         senior long-term unsecured debt by Standard & Poor's Ratings Group in
         effect at 11:00 A.M., New York City time, on such day and (b) for any
         day that is on or after the Ratings Change Date, the rating of
         Holding's senior long-term unsecured debt by Standard & Poor's Ratings
         Group in effect at 11:00 A.M., New York City time, on such day.

                  "Single Employer Plan" means a single employer plan, as
         defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
         employees of the Company or an ERISA Affiliate and no Person other than
         the Company and its ERISA Affiliates or (b) was so maintained and in
         respect of which the Company or an ERISA Affiliate could have liability
         under Section 4069 of ERISA in the event such plan has been or were to
         be terminated.

                  "Stated Termination Date" means October 28, 2002 or such later
         date as shall be determined pursuant to the provisions of Section 2.23
         with respect to non-Objecting Lenders.

                  "Subsidiary" means, as to any Person, any corporation of which
         at least a majority of the outstanding stock having by the terms
         thereof ordinary voting power to elect a majority of the board of
         directors of such corporation (irrespective of whether or not at the
         time stock of any other class or classes of such corporation shall or
         might have voting power by reason of the happening of any contingency)
         is at the time directly or indirectly beneficially owned or controlled
         by such Person or one or more of its Subsidiaries or such Person and
         one or more of the Subsidiaries of such Person.

                  "Syndication Agent" has the meaning assigned to such term in
         the preamble hereof.

                  "Taxes" has the meaning assigned to such term in Section
         2.20(a).

                  "Tennessee" has the meaning assigned to such term in the
         preamble hereof, and its successors.

                  "Termination Date" means the earlier of (a) the Stated
         Termination Date and (b) the date of termination in whole of the
         Commitments pursuant to Section 2.9 or 7.1.

                  "Termination Event" means (a) a "reportable event," as

<PAGE>   21
                                                                              17


         such term is described in Section 4043 of ERISA (other than a
         "reportable event" not subject to the provision for 30-day notice to
         the PBGC under subsection .11, .12, .13, .14, .16, .18, .19 or .20 of
         PBGC Reg. ss. 2615), or an event described in Section 4062(e) of ERISA,
         or (b) the withdrawal of the Company or any ERISA Affiliate from a
         Multiple Employer Plan during a plan year in which it was a
         "substantial employer," as such term is defined in Section 4001(a)(2)
         of ERISA or the incurrence of liability by the Company or any ERISA
         Affiliate under Section 4064 of ERISA upon the termination of a
         Multiple Employer Plan, or (c) the filing of a notice of intent to
         terminate a Plan or the treatment of a Plan amendment as a termination
         under Section 4041 of ERISA, or (d) the institution of proceedings to
         terminate a Plan by the PBGC under Section 4042 of ERISA, or (e) the
         conditions set forth in Section 302(f)(1)(A) and (B) of ERISA to the
         creation of a lien upon property or rights to property of the Company
         or any ERISA Affiliate for failure to make a required payment to a Plan
         are satisfied, or (f) the adoption of an amendment to a Plan requiring
         the provision of security to such Plan, pursuant to Section 307 of
         ERISA, or (g) the occurrence of any other event or the existence of any
         other condition which would reasonably be expected to result in the
         termination of, or the appointment of a trustee to administer, any Plan
         under Section 4042 of ERISA.

                  "Three-Month Secondary CD Rate" means, for any day, the
         secondary market rate (adjusted to the basis of a year of 365 or 366
         days, as the case may be) for three-month certificates of deposit
         reported as being in effect on such day (or, if such day shall not be a
         Business Day, the next preceding Business Day) by the Board of
         Governors of the Federal Reserve System (the "Board") through the
         public information telephone line of the Federal Reserve Bank of New
         York (which rate will, under the current practices of the Board, be
         published in Federal Reserve Statistical Release H.15(519) during the
         week following such day), or, if such rate shall not be so reported on
         such day or such next preceding Business Day, the average of the
         secondary market quotations for three-month certificates of deposit of
         major money center banks in New York City received at approximately
         10:00 A.M., New York City time, on such day (or, if such day shall not
         be a Business Day, on the next preceding Business Day) by the
         Administrative Agent from three New York City negotiable certificate of
         deposit dealers of recognized standing selected by it.

                  "Type" means (a) as to any Revolving Credit Advance, its
         nature as a Base Rate Advance or a Eurodollar Rate Advance and (b) as
         to any CAF Advance, its nature as a Fixed Rate CAF Advance or a LIBO
         Rate CAF Advance.

                  "Withdrawal Liability" has the meaning given such term under
         Part 1 of Subtitle E of Title IV of ERISA.

                  SECTION I.2 Computation of Time Periods. Unless 
<PAGE>   22
                                                                              18


otherwise stated in this Agreement, in the computation of a period of time from
a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding."

                  SECTION I.3 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles either (a) consistent with those principles
applied in the preparation of the financial statements referred to in Section
4.1(e) or (b) not materially inconsistent with such principles (so that no
covenant contained in Section 5.1 or 5.2 would be calculated or construed in a
materially different manner or with materially different results than if such
covenant were calculated or construed in accordance with clause (a) of this
Section 1.3).

                  SECTION I.4 References. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.


                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES

                  SECTION II.1 The Revolving Credit Advances. Each Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
revolving credit advances ("Revolving Credit Advances") to the Borrowers or any
one or more of them from time to time on any Business Day during the period from
the date hereof to and including the Termination Date in an aggregate amount not
to exceed at any time outstanding the amount of such Lender's Commitment;
provided that the aggregate amount of the Advances (other than Advances of
Objecting Lenders) outstanding shall not at any time exceed the aggregate amount
of the Commitments. Each Borrowing shall be in an aggregate amount of $5,000,000
in the case of a Borrowing comprised of Base Rate Advances and $20,000,000 in
the case of a Borrowing comprised of Eurodollar Rate Advances, or, in each case,
an integral multiple of $1,000,000 in excess thereof (or, in the case of a
Borrowing of Base Rate Advances, the aggregate unused Commitments, if less) and
shall consist of Revolving Credit Advances of the same Type made on the same day
by the Lenders ratably according to their respective Commitments. Within the
limits of each Lender's Commitment, any Borrower may make more than one
Borrowing on any Business Day and may borrow, repay pursuant to Section 2.10 or
prepay pursuant to Section 2.15, and reborrow under this Section 2.1.

                  SECTION II.2 Making the Revolving Credit Advances. (a) Each
Borrowing of Revolving Credit Advances shall be made on notice by the Company to
the Administrative Agent (a "Notice of Borrowing") received by the
Administrative Agent, (i) in the case

<PAGE>   23
                                                                              19


of a proposed Borrowing comprised of Base Rate Advances, not later than 10:00
A.M. (New York City time) on the Business Day of such proposed Borrowing and
(ii) in the case of a proposed Borrowing comprised of Eurodollar Rate Advances,
not later than 12:00 noon (New York City time) on the third Business Day prior
to the date of such proposed Borrowing. Each Notice of Borrowing shall be by
telecopy or telephone (and if by telephone, confirmed promptly by telecopier),
in substantially the form of Exhibit B, specifying therein the requested (A)
Borrower, (B) date of such Borrowing, (C) Type of Revolving Credit Advances
comprising such Borrowing, (D) aggregate amount of such Borrowing, and (E) in
the case of a Borrowing comprised of Eurodollar Rate Advances, the initial
Interest Period for each such Advance. Each Lender shall, before 1:00 P.M. (New
York City time) on the date of such Borrowing, make available to the
Administrative Agent at its address at 270 Park Avenue, New York, New York,
10017, Reference: El Paso Natural Gas Company, or at such other address
designated by notice from the Administrative Agent to the Lenders pursuant to
Section 9.2, in same day funds, such Lender's ratable portion of such Borrowing.
Immediately after the Administrative Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article III, the
Administrative Agent will make such funds available to the applicable Borrower
at Chase, 270 Park Avenue, New York, New York, 10017, Account No. 323291503,
Reference: El Paso Natural Gas Company, or at such other account of the
applicable Borrower maintained by the Administrative Agent (or any successor
Administrative Agent) designated by the applicable Borrower and agreed to by the
Administrative Agent (or such successor Administrative Agent), in same day
funds.

                  (b) Each Notice of Borrowing shall be irrevocable and binding
on the applicable Borrower. In the case of any Borrowing which the related
Notice of Borrowing specified is to be comprised of Eurodollar Rate Advances, if
such Advances are not made as a result of any failure to fulfill on or before
the date specified for such Borrowing the applicable conditions set forth in
Article III, the applicable Borrower shall indemnify each Lender against any
loss, cost or expense incurred by such Lender as a result of such failure,
including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Advance to be made by such Lender as part of such Borrowing.

                  (c) 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 ratable 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 subsection (a) of this Section 2.2 and the Administrative Agent
may, in reliance upon such assumption, make available to the applicable Borrower
on such date a corresponding amount. If and to the extent such Lender shall not
have so made such ratable portion available to the
<PAGE>   24
                                                                              20


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 the Effective Federal Funds Rate for such day. If such
Lender shall repay to the Administrative Agent such corresponding amount, such
amount so repaid shall constitute such Lender's Advance to the applicable
Borrower as part of such Borrowing for purposes of this Agreement.

                  (d) The failure of any Lender to make the Advance to be made
by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Advance to be made by such other Lender on the date of any Borrowing.

                  SECTION II.3 Evidence of Debt. (a) Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing
indebtedness of each Borrower to such Lender resulting from each Revolving
Credit Advance of such Lender to such Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time in respect of such Revolving Credit Advance.

                  (b) The Administrative Agent shall maintain the Register
pursuant to Section 9.7(c), and a subaccount therein for each Lender, in which
shall be recorded (i) the amount of each Revolving Credit Advance made
hereunder, the Type thereof and each Interest Period applicable thereto, (ii)
the amount of any principal or interest due and payable or to become due and
payable from each Borrower on account of such Revolving Credit Advance to each
Lender hereunder and (iii) both the amount of any sum received by the
Administrative Agent hereunder from each Borrower and each Lender's share
thereof.

                  (c) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.3(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of each Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of each Borrower to repay (with applicable interest) the Revolving
Credit Advances made to each such Borrower by such Lender in accordance with the
terms of this Agreement.

                  (d) Each Borrower agrees that, upon the request to the
Administrative Agent by any Lender, such Borrower will execute and deliver to
such Lender a promissory note of such Borrower evidencing the Revolving Credit
Advances of such Lender to such Borrower, substantially in the form of Exhibit A
with appropriate insertions as to date and principal amount (a "Note").

<PAGE>   25
                                                                              21


                  SECTION II.4 CAF Advances. Subject to the terms and conditions
of this Agreement, the Borrowers or any one or more of them may borrow CAF
Advances from time to time during the CAF Advance Availability Period on any
Business Day. The Company shall, in consultation with the CAF Advance Agent,
designate Lenders from time to time as CAF Advance Lenders by written notice to
the CAF Advance Agent. The CAF Advance Agent shall transmit each such notice of
designation promptly to each designated CAF Advance Lender. CAF Advances shall
be borrowed in amounts such that the aggregate amount of Advances outstanding at
any time shall not exceed the aggregate amount of the Commitments at such time.
Any CAF Advance Lender may make CAF Advances in amounts which, individually and
together with the aggregate amount of other Advances of such CAF Advance Lender,
exceed such CAF Advance Lender's Commitment, and such CAF Advance Lender's CAF
Advances shall not be deemed to utilize such CAF Advance Lender's Commitment.
Within the limits and on the conditions hereinafter set forth with respect to
CAF Advances, the Borrowers from time to time may borrow, repay and reborrow CAF
Advances.

                  SECTION II.5 Procedure for CAF Advance Borrowings. (a) A
Borrower, or the Company on behalf of a Borrower, shall request CAF Advances by
delivering a CAF Advance Request to the CAF Advance Agent, not later than 12:00
Noon (New York City time) four Business Days prior to the date of the proposed
Borrowing (in the case of a LIBO Rate CAF Advance Request), and not later than
10:00 A.M. (New York City time) one Business Day prior to the date of the
proposed Borrowing (in the case of a Fixed Rate CAF Advance Request). Each CAF
Advance Request may solicit bids for CAF Advances in an aggregate principal
amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof
and having not more than five alternative maturity dates. The maturity date for
each CAF Advance shall be not less than 7 days nor more than 360 days after the
date of the Borrowing therefor (and in any event shall be not later than the
Stated Termination Date); provided that each LIBO Rate CAF Advance shall mature
one, two, three or six months or, if available, nine [or twelve] months after
the date of the Borrowing therefor. The CAF Advance Agent shall notify each CAF
Advance Lender promptly by telecopy of the contents of each CAF Advance Request
received by the CAF Advance Agent.

                  (b) In the case of a LIBO Rate CAF Advance Request, upon
receipt of notice from the CAF Advance Agent of the contents of such CAF Advance
Request, each CAF Advance Lender may elect, in its sole discretion, to offer
irrevocably to make one or more CAF Advances at the Applicable LIBO Rate plus
(or minus) a margin determined by such CAF Advance Lender in its sole discretion
for each such CAF Advance. Any such irrevocable offer shall be made by
delivering a CAF Advance Offer to the CAF Advance Agent, before 10:30 A.M. (New
York City time) on the day that is three Business Days before the date of the
proposed Borrowing, setting forth:

<PAGE>   26
                                                                              22


                  (i) the maximum amount of CAF Advances for each maturity date
         and the aggregate maximum amount of CAF Advances for all maturity dates
         which such CAF Advance Lender would be willing to make (which amounts
         may, subject to Section 2.4, exceed such CAF Advance Lender's
         Commitment); and

                  (ii) the margin above or below the Applicable LIBO Rate at
         which such CAF Advance Lender is willing to make each such CAF Advance.

The CAF Advance Agent shall advise the Company and the applicable Borrower
before 11:00 A.M. (New York City time) on the date which is three Business Days
before the proposed date of the Borrowing of the contents of each such CAF
Advance Offer received by it. If the CAF Advance Agent, in its capacity as a CAF
Advance Lender, shall elect, in its sole discretion, to make any such CAF
Advance Offer, it shall advise the Company and the applicable Borrower of the
contents of its CAF Advance Offer before 10:15 A.M. (New York City time) on the
date which is three Business Days before the proposed date of the Borrowing.

                  (c) In the case of a Fixed Rate CAF Advance Request, upon
receipt of notice from the CAF Advance Agent of the contents of such CAF Advance
Request, each CAF Advance Lender may elect, in its sole discretion, to offer
irrevocably to make one or more CAF Advances at a rate of interest determined by
such CAF Advance Lender in its sole discretion for each such CAF Advance. Any
such irrevocable offer shall be made by delivering a CAF Advance Offer to the
CAF Advance Agent before 9:30 A.M. (New York City time) on the proposed date of
the Borrowing, setting forth:

                  (i) the maximum amount of CAF Advances for each maturity date,
         and the aggregate maximum amount for all maturity dates, which such CAF
         Advance Lender would be willing to make (which amounts may, subject to
         Section 2.4, exceed such CAF Advance Lender's Commitment); and

                  (ii) the rate of interest at which such CAF Advance Lender is
         willing to make each such CAF Advance.

The CAF Advance Agent shall advise the Company and the applicable Borrower
before 10:00 A.M. (New York City time) on the proposed date of the Borrowing of
the contents of each such CAF Advance Offer received by it. If the CAF Advance
Agent, in its capacity as a CAF Advance Lender, shall elect, in its sole
discretion, to make any such CAF Advance Offer, it shall advise the Company and
the applicable Borrower of the contents of its CAF Advance Offer before 9:15
A.M. (New York City time) on the proposed date of the Borrowing.

                  (d) Before 11:30 A.M. (New York City time) three Business Days
before the proposed date of the Borrowing (in the case of CAF Advances requested
by a LIBO Rate CAF Advance Request) and before 10:30 A.M. (New York City time)
on the proposed date of the Borrowing (in the case of CAF Advances requested by
a Fixed Rate CAF Advance Request), the Company, in its absolute discretion,
shall:

<PAGE>   27
                                                                              23


                  (i) cancel such CAF Advance Request by giving the CAF Advance
         Agent telephone notice to that effect, or

                  (ii) by giving telephone notice to the CAF Advance Agent
         (immediately confirmed by delivery to the CAF Advance Agent of a CAF
         Advance Confirmation in writing or by telecopy) (A) subject to the
         provisions of Section 2.5(e), accept one or more of the offers made by
         any CAF Advance Lender or CAF Advance Lenders pursuant to Section
         2.5(b) or Section 2.5(c), as the case may be, of the amount of CAF
         Advances for each relevant maturity date and (B) reject any remaining
         offers made by CAF Advance Lenders pursuant to Section 2.5(b) or
         Section 2.5(c), as the case may be.

                  (e) The Company's acceptance of CAF Advances in response to
any CAF Advance Request shall be subject to the following limitations:

                  (i) the amount of CAF Advances accepted for each maturity date
         specified by any CAF Advance Lender in its CAF Advance Offer shall not
         exceed the maximum amount for such maturity date specified in such CAF
         Advance Offer;

                  (ii) the aggregate amount of CAF Advances accepted for all
         maturity dates specified by any CAF Advance Lender in its CAF Advance
         Offer shall not exceed the aggregate maximum amount specified in such
         CAF Advance Offer for all such maturity dates;

                  (iii) the Company may not accept offers for CAF Advances for
         any maturity date in an aggregate principal amount in excess of the
         maximum principal amount requested in the related CAF Advance Request;
         and

                  (iv) if the Company accepts any of such offers, it must accept
         offers based solely upon pricing for such relevant maturity date and
         upon no other criteria whatsoever and if two or more CAF Advance
         Lenders submit offers for any maturity date at identical pricing and
         the Company accepts any of such offers but does not wish to (or by
         reason of the limitations set forth in Section 2.4 or in Section
         2.5(e)(iii), cannot) borrow the total amount offered by such CAF
         Advance Lenders with such identical pricing, the Company shall accept
         offers from all of such CAF Advance Lenders in amounts allocated among
         them pro rata according to the amounts offered by such CAF Advance
         Lenders (or as nearly pro rata as shall be practicable after giving
         effect to the requirement that CAF Advances made by a CAF Advance
         Lender on a date of the Borrowing for each relevant maturity date shall
         be in a principal amount of $5,000,000 or an integral multiple of
         $1,000,000 in excess thereof; provided that if the number of CAF
         Advance Lenders that submit offers for any maturity date at identical
         pricing is such that, after the Company accepts such offers pro rata in
         accordance with the

<PAGE>   28
                                                                              24


         foregoing, the CAF Advance to be made by such CAF Advance Lenders would
         be less than $5,000,000 principal amount, the number of such CAF
         Advance Lenders shall be reduced by the CAF Advance Agent by lot until
         the CAF Advances to be made by such remaining CAF Advance Lenders would
         be in a principal amount of $5,000,000 or an integral multiple of
         $1,000,000 in excess thereof).

                  (f) If the Company notifies the CAF Advance Agent that a CAF
Advance Request is cancelled pursuant to Section 2.5(d)(i), the CAF Advance
Agent shall give prompt telephone notice thereof to the CAF Advance Lenders.

                  (g) If the Company accepts pursuant to Section 2.5(d)(ii) one
or more of the offers made by any CAF Advance Lender or CAF Advance Lenders, the
CAF Advance Agent promptly shall notify each CAF Advance Lender which has made
such a CAF Advance Offer of (i) the aggregate amount of such CAF Advances to be
made on such Borrowing Date for each maturity date and (ii) the acceptance or
rejection of any offers to make such CAF Advances made by such CAF Advance
Lender. Before 1:00 P.M. (New York City time) on the date of the Borrowing
specified in the applicable CAF Advance Request, each CAF Advance Lender whose
CAF Advance Offer has been accepted shall make available to the Administrative
Agent at its office set forth in Section 9.2 the amount of CAF Advances to be
made by such CAF Advance Lender, in same day funds. The Administrative Agent
will make such funds available to the applicable Borrower as soon as practicable
on such date at the Administrative Agent's aforesaid address. As soon as
practicable after each Borrowing Date, the CAF Advance Agent shall notify each
Lender of the aggregate amount of CAF Advances advanced on such Borrowing Date
and the respective maturity dates thereof.

                  (h) The failure of any CAF Advance Lender to make the CAF
Advance to be made by it as part of any Borrowing shall not relieve any other
Lender of its obligation, if any, hereunder to make its CAF Advance on the date
of such Borrowing, but no CAF Lender shall be responsible for the failure of any
other CAF Advance Lender to make the CAF Advance to be made by such CAF Advance
Lender on the date of any Borrowing.

                  (i) A CAF Advance Request may request offers for CAF Advances
to be made on not more than one Borrowing Date and to mature on not more than
five CAF Advance Maturity Dates. No CAF Advance Request may be submitted earlier
than five Business Days after submission of any other CAF Advance Request.

                  SECTION II.6 CAF Advance Payments. (a) The applicable Borrower
shall repay to the Administrative Agent, for the account of each CAF Advance
Lender which has made a CAF Advance to it, on the applicable CAF Advance
Maturity Date the then unpaid principal amount of such CAF Advance. The
Borrowers shall not have the right to prepay any principal amount of any CAF
Advance.
<PAGE>   29
                                                                              25


                  (b) The applicable Borrower shall pay interest on the unpaid
principal amount of each CAF Advance to it from the date of the Borrowing to the
applicable CAF Advance Maturity Date at the rate of interest specified in the
CAF Advance Offer accepted by the applicable Borrower in connection with such
CAF Advance (calculated on the basis of a 360-day year for actual days elapsed),
payable on each applicable CAF Advance Interest Payment Date.

                  (c) If all or a portion of the principal amount of any CAF
Advance shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue principal amount shall, without
limiting any rights of any Lender under this Agreement, bear interest from the
date on which such payment was due at a rate per annum which is 1% above the
rate which would otherwise be applicable pursuant to such CAF Advance until the
stated maturity date of such CAF Advance, and for each day thereafter at a rate
per annum which is 2% above the Base Rate, in each case until paid in full (as
well after as before judgment). Interest accruing pursuant to this paragraph (c)
shall be payable from time to time on demand.

                  SECTION II.7 Evidence of Debt. Each Lender shall maintain in
accordance with its usual practice appropriate records evidencing indebtedness
of each Borrower to such Lender resulting from each CAF Advance of such Lender
to such Borrower from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time in respect of such
CAF Advance. The Administrative Agent shall maintain the Register pursuant to
Section 9.7(c) and a record therein for each Lender, in which shall be recorded
(i) the amount of each CAF Advance made by such Lender to each Borrower, the CAF
Advance Maturity Date thereof, the interest rate applicable thereto and each CAF
Advance Interest Payment Date applicable thereto, and (ii) the amount of any sum
received by the Administrative Agent hereunder from a Borrower on account of
such CAF Advance. The entries made in the Register and the records of each
Lender maintained pursuant to this Section 2.7 shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of each Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such record, or any error therein, shall not in any manner affect the
obligation of each Borrower to repay (with applicable interest) the CAF Advances
made by such Lender in accordance with the terms of this Agreement.

                  SECTION II.8 Fees. (a) The Company agrees to pay to the
Administrative Agent for the account of each Lender a facility fee for the
period from and including the Facility Fee Commencement Date until all Advances
have been paid in full and all Commitments have been terminated, computed at a
variable rate per annum on the average daily amount of the greater of (i) the
Commitment of such Lender and (ii) the outstanding principal amount of Revolving
Credit Advances of such Lender during the period for which payment is made,
which rate will vary according to the S&P Bond Rating and the Moody's Bond
Rating as follows:

<PAGE>   30
                                                                              26


<TABLE>
<CAPTION>
           Bond Rating                                         Facility
          (S&P/Moody's)                  Level                 Fee Rate
          -------------                  -----                 --------
<S>                                      <C>                   <C>  
         A/A2 or higher                     I                   .060%
         A-/A3                             II                   .070%
         BBB+/Baa1                        III                   .090%
         BBB/Baa2                          IV                   .110%
         BBB-/Baa3                          V                   .125%
         BB+/Ba1 or lower                  VI                   .200%;
</TABLE>

provided that if the ratings of such rating agencies do not fall within the same
Level, the rate applicable to such day will be the lower facility fee rate and
provided, further, that in the event a rating is not available from either
rating agency, such rating agency will be deemed to have assigned its lowest
rating. Such facility fees shall be payable quarterly in arrears on the last day
of each March, June, September and December and on the Termination Date or such
earlier date on which the Commitments shall terminate as provided herein, and,
if the Lender is an Objecting Lender, on the Commitment Expiration Date
applicable to such Lender or such earlier date on which the Advances are repaid
in full, commencing on the first of such dates to occur after the date hereof.

                  (b) The Company agrees to pay to Chase Securities Inc., the
Administrative Agent and the CAF Advance Agent the fees set forth in the letter,
dated October 6, 1997, from Chase Securities Inc. and Chase to EPNGC.

                  SECTION II.9 Reduction of the Commitments. The Company shall
have the right, upon at least three Business Days' notice to the Administrative
Agent, to terminate in whole or reduce ratably in part the unused portions of
the respective Commitments of the Lenders, provided that each partial reduction
shall be in the aggregate amount of $10,000,000 or any whole multiple of
$1,000,000 in excess thereof.

                  SECTION II.10 Repayment of Advances. The Borrowers shall repay
to each Lender on the Termination Date the aggregate principal amount of the
Advances then owing to such Lender; provided that the Revolving Credit Advances
made by Objecting Lenders shall be repaid as provided in Section 2.23.

                  SECTION II.11 Interest on Revolving Credit Advances. (a)
Ordinary Interest. The Borrowers shall pay interest on the unpaid principal
amount of each Revolving Credit Advance owing to each Lender from the date of
such Advance until such principal amount is due (whether at stated maturity, by
acceleration or otherwise), at the following rates:

                        (i) Base Rate Advances. During such periods as such
         Advance is a Base Rate Advance, a rate per annum equal at all times to
         the Base Rate in effect from time to time, payable quarterly in arrears
         on the last day of each March, 
<PAGE>   31
                                                                              27


         June, September and December during such periods and on the date such
         Base Rate Advance shall be Converted or due (whether at stated
         maturity, by acceleration or otherwise).

                       (ii) Eurodollar Rate Advances. During such periods as
         such Advance is a Eurodollar Rate Advance, at a rate per annum equal at
         all times during each Interest Period for such Advance to the sum of
         the Eurodollar Rate for such Interest Period plus the Eurodollar Rate
         Margin (provided that notwithstanding the definitions of Moody's Bond
         Rating and S&P Bond Rating, in the case of Eurodollar Rate Advances to
         EPNGC and its Subsidiaries, whether before, on or after the Ratings
         Change Date, the Eurodollar Rate Margin shall be based on the Moody's
         Bond Rating and S&P Bond Rating of EPNGC, and, in the case of all other
         Borrowers, shall be based on the Moody's Bond Rating and S&P Bond
         Rating of Holding) in effect from time to time, payable on the last day
         of each such Interest Period and, if any such Interest Period has a
         duration of more than three months, on each day which occurs during
         such Interest Period every three months from the first day of such
         Interest Period, and on the date such Advance shall be Converted or due
         (whether at stated maturity, by acceleration or otherwise).

                  (b) Default Interest. The applicable Borrower shall pay
interest on the unpaid principal amount of each Revolving Credit Advance to it
that is not paid when due (whether at stated maturity, by acceleration or
otherwise) from the date on which such amount is due until such amount is paid
in full, payable on demand, at a rate per annum equal at all times (i) from such
due date to the last day of the then existing Interest Period in the case of
each Eurodollar Rate Advance, to 1% per annum above the interest rate per annum
required to be paid on such Advance immediately prior to the date on which such
amount became due, and (ii) from and after the last day of the then existing
Interest Period, and at all times in the case of any Base Rate Advance, to 1%
per annum above the Base Rate in effect from time to time.

                  SECTION II.12 Additional Interest on Eurodollar Rate Advances.
If any Lender shall determine in good faith that reserves under regulations of
the Board of Governors of the Federal Reserve System are required to be
maintained by it in respect of, or a portion of its costs of maintaining
reserves under such regulations is properly attributable to, one or more of its
Eurodollar Rate Advances, the applicable Borrower shall pay to such Lender
additional interest on the unpaid principal amount of each such Eurodollar Rate
Advance to it (other than any such additional interest accruing to a particular
Lender in respect of periods prior to the 30th day preceding the date notice of
such interest is given by such Lender as provided in this Section 2.12), payable
on the same day or days on which interest is payable on such Advance, at an
interest rate per annum equal at all times during each Interest Period for such
Advance to the excess of (i) the rate obtained by dividing the
<PAGE>   32
                                                                              28


Eurodollar Rate for such Interest Period by a percentage equal to 100% minus the
Eurodollar Reserve Percentage, if any, for such Lender for such Interest Period
over (ii) the Eurodollar Rate for such Interest Period. The amount of such
additional interest (if any) shall be determined by each Lender, and such Lender
shall furnish written notice of the amount of such additional interest to the
Company and the Administrative Agent, which notice shall be conclusive and
binding for all purposes, absent manifest error.

                  SECTION II.13 Interest Rate Determination. (a) Each Reference
Lender agrees to furnish to the Administrative Agent timely information for the
purpose of determining the Eurodollar Rate. If any one or more of the Reference
Lenders shall not furnish such timely information to the Administrative Agent
for the purpose of determining any such interest rate, the Administrative Agent
shall determine such interest rate on the basis of timely information furnished
by the remaining Reference Lenders.

                  (b) The Administrative Agent shall give prompt notice to the
Company and the Lenders of the applicable interest rate determined by the
Administrative Agent for purposes of Section 2.11(a)(i) or (ii), and the
applicable rate, if any, furnished by each Reference Lender for the purpose of
determining the applicable interest rate under Section 2.11(a)(ii).

                  (c) If fewer than two Reference Lenders furnish timely
information to the Administrative Agent for determining the Eurodollar Rate for
any Eurodollar Rate Advances,

                        (i) the Administrative Agent shall give the Company and
         each Lender prompt notice thereof by telephone (confirmed in writing)
         that the interest rate cannot be determined for such Eurodollar Rate
         Advances,

                       (ii) each such Advance will automatically, on the last
         day of the then existing Interest Period therefor, Convert into a Base
         Rate Advance (or if such Advance is then a Base Rate Advance, will
         continue as a Base Rate Advance), and

                      (iii) the obligations of the Lenders to make, or to
         Convert Advances into, Eurodollar Rate Advances shall be suspended
         until the Administrative Agent shall notify the Company and the Lenders
         that the circumstances causing such suspension no longer exist.

                  (d) If, with respect to any Eurodollar Rate Advances, the
Majority Lenders determine and give notice to the Administrative Agent that, as
a result of conditions in or generally affecting the London interbank eurodollar
market, the rates of interest determined on the basis of the Eurodollar Rate for
any Interest Period for such Advances will not adequately reflect the cost to
such Majority Lenders of making, funding or maintaining their respective
Eurodollar Rate Advances for such 

<PAGE>   33
                                                                              29


Interest Period, the Administrative Agent shall forthwith so notify the Company
and the Lenders, whereupon,

                        (i) each such Advance will automatically, on the last
         day of the then existing Interest Period therefor, Convert into a Base
         Rate Advance, and

                       (ii) the obligation of the Lenders to make, or to Convert
         Advances into, Eurodollar Rate Advances shall be suspended until the
         Administrative Agent shall notify the Company and the Lenders that the
         circumstances causing such suspension no longer exist.

                  (e) If the applicable Borrower shall fail to select the
duration of any Interest Period for any Eurodollar Rate Advances in accordance
with the provisions contained in the definition of "Interest Period" in Section
1.1, the Administrative Agent will forthwith so notify the applicable Borrower
and the Lenders and such Advances will automatically, on the last day of the
then existing Interest Period therefor, Convert into Base Rate Advances.

                  (f)  On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than $10,000,000, such
Eurodollar Rate Advances shall automatically Convert into Base Rate Advances,
and on and after such date the right of the applicable Borrower to Convert such
Advances into Eurodollar Rate Advances shall terminate; provided, however, that
if and so long as each such Eurodollar Rate Advance shall have the same Interest
Period as Eurodollar Rate Advances comprising another Borrowing or other
Borrowings, and the aggregate unpaid principal amount of all such Eurodollar
Rate Advances shall equal or exceed $20,000,000, the applicable Borrower shall
have the right to continue all such Advances as, or to Convert all such Advances
into Eurodollar Rate Advances having the same Interest Period.

                  (g) If any Reference Lender shall for any reason no longer
have a Commitment or any Revolving Credit Advances, such Reference Lender shall
thereupon cease to be a Reference Lender, and if, as a result, there shall only
be one Reference Lender remaining, the Administrative Agent (after consultation
with the Company and the Lenders) shall, by notice to the Company and the
Lenders, designate another Lender as a Reference Lender so that there shall at
all times be at least two Reference Lenders.

                  SECTION II.14 Voluntary Conversion of Advances. Any Borrower
may on any Business Day, upon notice given to the Administrative Agent, not
later than 10:00 A.M. (New York City time) on the Business Day of the proposed
Conversion of Eurodollar Rate Advances to Base Rate Advances and not later than
12:00 noon (New York City time) on the third Business Day prior to the date of
the proposed Conversion in the case of a Conversion of Base Rate Advances to
Eurodollar Rate Advances, and subject to the provisions of Sections 2.13, 2.16
and 2.18, 

<PAGE>   34
                                                                              30


Convert all Advances of one Type comprising the same Borrowing into Advances of
another Type; provided, however, that any Conversion of any Eurodollar Rate
Advances into Base Rate Advances made on any day other than the last day of an
Interest Period for such Eurodollar Rate Advances shall be subject to the
provisions of Section 9.4(b); and provided, further, that no Revolving Credit
Advance may be converted into a Eurodollar Rate Advance after the date that is
one month prior to (a) in the case of a Revolving Credit Advance made by an
Objecting Lender, such Objecting Lender's Commitment Expiration Date, and (b) in
the case of all Revolving Credit Advances, the Termination Date and provided,
still further, that no Revolving Credit Advance may be converted into a
Eurodollar Rate Advance if an Event of Default has occurred and is continuing.
Each such notice of a Conversion shall, within the restrictions specified above,
specify (a) the date of such Conversion, (b) the Advances to be Converted, and
(c) if such Conversion is into Eurodollar Rate Advances, the duration of the
Interest Period for each such Advance.

                  SECTION II.15 Optional and Mandatory Prepayments. (a) Optional
Prepayments. Any Borrower may upon (i) in the case of Eurodollar Rate Advances,
at least two Business Days' notice and (ii) in the case of Base Rate Advances,
telephonic notice not later than 12:00 noon (New York City time) on the date of
prepayment, to the Administrative Agent which specifies the proposed date and
aggregate principal amount of the prepayment and the Type of Advances to be
prepaid, and if such notice is given such Borrower shall, prepay the outstanding
principal amounts of the Revolving Credit Advances comprising the same Borrowing
in whole or ratably in part, together with accrued interest to the date of such
prepayment on the amount prepaid; provided, however, that (A) each partial
prepayment shall be in an aggregate principal amount not less than $10,000,000
or an integral multiple of $1,000,000 in excess thereof and (B) in the event of
any such prepayment of Eurodollar Rate Advances on any day other than the last
day of an Interest Period for such Eurodollar Rate Advances, such Borrower shall
be obligated to reimburse the Lenders in respect thereof pursuant to, and to the
extent required by, Section 9.4(b); provided, further, however, that such
Borrower will use its best efforts to give notice to the Administrative Agent of
the proposed prepayment of Base Rate Advances on the Business Day prior to the
date of such proposed prepayment.

                  (b) Mandatory Prepayments. If, at any time and from time to
time, the aggregate principal amount of Advances (other than Advances of
Objecting Lenders) then outstanding exceeds the Commitments of all the Lenders
after giving effect to any reduction of the Commitments pursuant to Section 2.9,
the Borrowers shall immediately prepay the Revolving Credit Advances of Lenders
(other than Objecting Lenders) (to the extent there are such outstanding
Revolving Credit Advances) by an amount equal to such excess.

                  SECTION II.16 Increased Costs. (a) If, due to either (i) the
introduction after the date of this Agreement of or any 

<PAGE>   35
                                                                              31


change after the date of this Agreement (including any change by way of
imposition or increase of reserve requirements or assessments other than those
referred to in the definition of "Eurodollar Reserve Percentage," "C/D Reserve
Percentage" or "C/D Assessment Rate" contained in Section 1.1) in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request issued or made after the date of this Agreement from or by
any central bank or other governmental authority (whether or not having the
force of law), in each case above other than those referred to in Section 2.17,
there shall be any increase in the cost to any Lender of agreeing to make, fund
or maintain, or of making, funding or maintaining, Eurodollar Rate Advances
funded in the interbank Eurodollar market, then the Borrowers shall from time to
time, upon demand by such Lender (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account of such
Lender additional amounts sufficient to reimburse such Lender for all such
increased costs (except those costs incurred more than 60 days prior to the date
of such demand; for the purposes hereof any cost or expense allocable to a
period prior to the publication or effective date of such an introduction,
change, guideline or request shall be deemed to be incurred on the later of such
publication or effective date). Each Lender agrees to use its best efforts
promptly to notify the Company of any event referred to in clause (i) or (ii)
above, provided that the failure to give such notice shall not affect the rights
of any Lender under this Section 2.16(a) (except as otherwise expressly provided
above in this Section 2.16(a)). A certificate as to the amount of such increased
cost, submitted to the Company and the Administrative Agent by such Lender,
shall be conclusive and binding for all purposes, absent manifest error. After
one or more Lenders have notified the Company of any increased costs pursuant to
this Section 2.16, the Company may specify by notice to the Administrative Agent
and the affected Lenders that, after the date of such notice whenever the
election of Eurodollar Rate Advances by the applicable Borrower for an Interest
Period or portion thereof would give rise to such increased costs, such election
shall not apply to the Revolving Credit Advances of such Lenders during such
Interest Period or portion thereof, and, in lieu thereof, such Revolving Credit
Advances shall during such Interest Period or portion thereof be Base Rate
Advances. Each Lender agrees to use its best efforts (including, without
limitation, a reasonable effort to change its lending office or to transfer its
affected Advances to an affiliate of such Lender) to avoid, or minimize the
amount of, any demand for payment from the Borrowers under this Section 2.16.

                  (b) In the event that any Lender shall change its lending
office and such change results (at the time of such change) in increased costs
to such Lender, the Borrowers shall not be liable to such Lender for such
increased costs incurred by such Lender to the extent, but only to the extent,
that such increased costs shall exceed the increased costs which such Lender
would have incurred if the lending office of such Lender had not been so
changed, but, subject to subsection (a) above and to Section 2.18, nothing
herein shall require any Lender to change its lending office for any reason.


<PAGE>   36
                                                                              32


                  SECTION II.17 Increased Capital. If either (a) the
introduction of or any change in or in the interpretation of any law or
regulation or (b) compliance by any Lender with any guideline or request from
any central bank or other governmental authority (whether or not having the
force of law) affects or would affect the amount of capital required or expected
to be maintained by such Lender or any corporation controlling such Lender and
such Lender determines that the amount of such capital is increased by or based
upon the existence of such Lender's commitment to lend hereunder and other
commitments of this type, then, within ten days after demand, and delivery to
the Company of the certificate referred to in the last sentence of this Section
2.17 by such Lender (with a copy of such demand to the Administrative Agent),
the applicable Borrowers shall pay to the Administrative Agent for the account
of such Lender, from time to time as specified by such Lender, additional
amounts sufficient to compensate such Lender or such corporation in the light of
such circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's commitment
to lend hereunder (except any such increase in capital incurred more than, or
compensation attributable to the period before, 90 days prior to the date of
such demand; for the purposes hereof any increase in capital allocable to, or
compensation attributable to, a period prior to the publication or effective
date of such an introduction, change, guideline or request shall be deemed to be
incurred on the later of such publication or effective date). Each Lender agrees
to use its best efforts promptly to notify the Company of any event referred to
in clause (a) or (b) above, provided that the failure to give such notice shall
not affect the rights of any Lender under this Section 2.17 (except as otherwise
expressly provided above in this Section 2.17). A certificate in reasonable
detail as to the basis for, and the amount of, such compensation submitted to
the Company by such Lender shall, in the absence of manifest error, be
conclusive and binding for all purposes.

                  SECTION II.18 Illegality. Notwithstanding any other provision
of this Agreement, if the introduction of or any change in or in the
interpretation of any law or regulation shall make it unlawful, or any central
bank or other governmental authority shall assert that it is unlawful, for any
Lender or its lending office to perform its obligations hereunder to make
Eurodollar Rate Advances or to continue to fund or maintain such Advances
hereunder, such Lender may, by notice to the Company and the Administrative
Agent, suspend the right of the Borrowers to elect Eurodollar Rate Advances from
such Lender and, if necessary in the reasonable opinion of such Lender to comply
with such law or regulation, Convert all such Eurodollar Rate Advances of such
Lender to Base Rate Advances at the latest time permitted by the applicable law
or regulation, and such suspension and, if applicable, such Conversion shall
continue until such Lender notifies the Company and the Administrative Agent
that the circumstances making it unlawful for such Lender to perform such

<PAGE>   37
                                                                              33


obligations no longer exist (which such Lender shall promptly do when such
circumstances no longer exist). So long as the obligation of any Lender to make
Eurodollar Rate Advances has been suspended under this Section 2.18, all Notices
of Borrowing specifying Advances of such Type shall be deemed, as to such
Lender, to be requests for Base Rate Advances. Each Lender agrees to use its
best efforts (including, without limitation, a reasonable effort to change its
lending office or to transfer its affected Advances to an affiliate) to avoid
any such illegality.

                  SECTION II.19 Pro Rata Treatment, Payments and Computations.
(a) Each Borrowing by any Borrower in respect of Revolving Credit Advances
(subject to the provisions of Section 2.24(e)) shall be made pro rata according
to the respective Commitment Percentages of the Lenders. The Borrowers shall
make each payment hereunder (including, without limitation, under Section 2.6,
2.8, 2.10 or 2.11) and under the Notes, whether the amount so paid is owing to
any or all of the Lenders or to the Administrative Agent, not later than 12:00
noon (New York City time) without setoff, counterclaim, or any other deduction
whatsoever, on the day when due in Dollars to the Administrative Agent at its
address at 270 Park Avenue, New York, New York 10017, Reference: El Paso Natural
Gas Company, or at such other location designated by notice to the Company from
the Administrative Agent and agreed to by the Company, in same day funds. The
Administrative Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest or facility fees ratably (other
than amounts payable pursuant to Section 2.12, 2.16, 2.17, 2.18 or 2.20)
according to the respective amounts of such principal, interest or facility fees
then due and owing to the Lenders, and like funds relating to the payment of any
other amount payable to any Lender to such Lender, in each case to be applied in
accordance with the terms of this Agreement. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 9.7(d), from and after the effective date
specified in such Assignment and Acceptance, the Administrative Agent shall make
all payments hereunder and under the Notes in respect of the interest assigned
thereby to the Lender assignee thereunder, and the parties to such Assignment
and Acceptance shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.

                  (b) All computations of interest based on the Prime Rate and
of facility fees shall be made by the Administrative Agent on the basis of a
year of 365 or 366 days, as the case may be, and all computations of interest
based on the Eurodollar Rate, the Base CD Rate or the Effective Federal Funds
Rate shall be made by the Administrative Agent, and all computations of interest
pursuant to Section 2.12 shall be made by each Lender with respect to its own
Advances, on the basis of a year of 360 days, in each case for the actual number
of days (including the first day but excluding the last day) occurring in the
period for which such interest or fees are payable. Each determination by the
Administrative Agent (or, in the case of Section 2.12, 2.16, 

<PAGE>   38
                                                                              34


2.17, 2.18 or 2.20, by each Lender with respect to its own Advances) of an
interest rate or an increased cost or increased capital or of illegality
hereunder shall be conclusive and binding for all purposes if made reasonably
and in good faith.

                  (c) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest; provided, however,
if such extension would cause payment of interest on or principal of Eurodollar
Rate Advances to be made in the next following calendar month, such payment
shall be made on the next preceding Business Day.

                  (d) Unless the Administrative Agent shall have received notice
from the Company or any other applicable Borrower prior to the date on which any
payment is due to the Lenders hereunder that the applicable Borrower will not
make such payment in full, the Administrative Agent may assume that the
applicable Borrower has made such payment in full to the Administrative Agent on
such date and the Administrative Agent may, in reliance upon such assumption,
cause to be distributed to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the applicable Borrower shall
not have so made such payment in full to the Administrative Agent, each Lender
shall repay to the Administrative Agent forthwith on demand such amount
distributed to such Lender together with interest thereon, for each day from the
date such amount is distributed to such Lender until the date such Lender repays
such amount to the Administrative Agent, at a rate equal to the Effective
Federal Funds Rate for such day.

                  SECTION II.20 Taxes. (a) Any and all payments by the Borrowers
hereunder or under the Notes to each Indemnified Party shall be made, in
accordance with Section 2.19, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding all taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, imposed by the jurisdiction under the laws of which such
Indemnified Party is organized, domiciled, resident or doing business, or any
political subdivision thereof or by any jurisdiction in which such Indemnified
Party holds any interest in connection with this Agreement or any Note
(including, without limitation, in the case of each Lender, the jurisdiction of
such Lender's lending office) or any political subdivision thereof, other than
by any jurisdiction with which the Indemnified Party's connection arises solely
from having executed, delivered or performed obligations or received a payment
under, or enforced, this Agreement or any Note (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If any Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Indemnified Party, (i) the sum payable 

<PAGE>   39
                                                                              35


shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.20) such Indemnified Party receives an amount equal to the sum it
would have received had no such deductions been made, (ii) such Borrower shall
make or cause to be made such deductions and (iii) such Borrower shall pay or
cause to be paid the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law, provided that the Borrowers
shall not be required to pay any additional amount (and shall be relieved of any
liability with respect thereto) pursuant to this subsection (a) to any
Indemnified Party that either (A) on the date such Lender became an Indemnified
Party hereunder, (I) was not entitled to submit a U.S. Internal Revenue Service
form 1001 (relating to such Indemnified Party, and entitling it to a complete
exemption from United States withholding taxes on all amounts to be received by
such Indemnified Party pursuant to this Agreement) and a U.S. Internal Revenue
Service form 4224 (relating to all amounts to be received by such Indemnified
Party pursuant to this Agreement) and (II) was not a United States person (as
such term is defined in Section 7701(a)(30) of the Internal Revenue Code) or (B)
has failed to submit any form or certificate that it was required to file or
provide pursuant to subsection (d) of this Section 2.20 and is entitled to file
or give, as applicable, under applicable law, provided, further, that should an
Indemnified Party become subject to Taxes because of its failure to deliver a
form required hereunder, the Borrowers shall take such steps as such Indemnified
Party shall reasonably request to assist such Indemnified Party to recover such
Taxes, and provided, further, that each Indemnified Party, with respect to
itself, agrees to indemnify and hold harmless the Borrowers from any taxes,
penalties, interest and other expenses, costs and losses incurred or payable by
the Borrowers as a result of the failure of any of the Borrowers to comply with
its obligations under clause (ii) or (iii) above in reliance on any form or
certificate provided to it by such Indemnified Party pursuant to this Section
2.20. If any Indemnified Party receives a net credit or refund in respect of
such Taxes or amounts so paid by the Borrowers, it shall promptly notify the
Company of such net credit or refund and shall promptly pay such net credit or
refund to the applicable Borrower, provided that the applicable Borrower agrees
to return such net credit or refund if the Indemnified Party to which such net
credit or refund is applicable is required to repay it.

                  (b) In addition, each Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made by such Borrower hereunder
or under the Notes or from the execution, delivery or performance of, or
otherwise with respect to, this Agreement or the Notes (hereinafter referred to
as "Other Taxes").

                  (c) Each Borrower will indemnify each Indemnified Party and
the Administrative Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other 

<PAGE>   40
                                                                              36


Taxes imposed by any jurisdiction on amounts payable under this Section 2.20)
paid by such Indemnified Party and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto except as a result of
the gross negligence (which shall in any event include the failure of such
Indemnified Party to provide to the Borrowers any form or certificate that it
was required to provide pursuant to subsection (d) below) or willful misconduct
of such Indemnified Party, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within 30 days
from the date such Indemnified Party makes written demand therefor.

                  (d) On or prior to the date on which each Indemnified Party
organized under the laws of a jurisdiction outside the United States becomes an
Indemnified Party hereunder, such Indemnified Party shall provide the Company
with U.S. Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the U.S. Internal Revenue Service, certifying that
such Indemnified Party is fully exempt from United States withholding taxes with
respect to all payments to be made to such Indemnified Party hereunder, or other
documents satisfactory to the Company indicating that all payments to be made to
such Indemnified Party hereunder are fully exempt from such taxes. Thereafter
and from time to time (but only so long as such Indemnified Party remains
lawfully able to do so), each such Indemnified Party shall submit to the Company
such additional duly completed and signed copies of one or the other of such
Forms (or such successor Forms as shall be adopted from time to time by the
relevant United States taxing authorities) as may be (i) notified by any
Borrower to such Indemnified Party and (ii) required under then-current United
States law or regulations to avoid United States withholding taxes on payments
in respect of all amounts to be received by such Indemnified Party pursuant to
this Agreement or the Notes. Upon the request of any Borrower from time to time,
each Indemnified Party that is a United States person (as such term is defined
in Section 7701(a)(30) of the Internal Revenue Code) shall submit to the Company
a certificate to the effect that it is such a United States person. If any
Indemnified Party determines, as a result of any change in applicable law,
regulation or treaty, or in any official application or interpretation thereof,
that it is unable to submit to the Company any form or certificate that such
Indemnified Party is obligated to submit pursuant to this subsection (d), or
that such Indemnified Party is required to withdraw or cancel any such form or
certificate previously submitted, such Indemnified Party shall promptly notify
the Company of such fact.

                  (e) Any Indemnified Party claiming any additional amounts
payable pursuant to this Section 2.20 shall use its best efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its lending office if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts which may
thereafter accrue and would not, in the reasonable judgment of such Indemnified
Party, be otherwise disadvantageous to such Indemnified Party.
<PAGE>   41
                                                                              37


                  (f) Without prejudice to the survival of any other agreement
of the Borrowers hereunder, the agreements and obligations of the Borrowers and
each Indemnified Party contained in this Section 2.20 shall survive the payment
in full of principal and interest hereunder and under the Notes.

                  (g) Any other provision of this Agreement to the contrary
notwithstanding, any amounts which are payable by any Borrower under this
Section 2.20 shall not be payable under Section 2.16.

                  SECTION II.21 Sharing of Payments, Etc. If any Lender shall
obtain any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) on account of the Advances made by it (other
than pursuant to Section 2.12, 2.16, 2.17, 2.18 or 2.20) in excess of its
ratable share of payments on account of the Advances obtained by all the
Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Advances made by them as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them,
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and each Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of (a) the amount of
such Lender's required repayment to (b) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. Each Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section may, to the fullest extent permitted by law, exercise
all its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of such
Borrower in the amount of such participation.

                  SECTION II.22 Use of Proceeds. Proceeds of the Advances may be
used for general corporate purposes of the Borrowers and their respective
Subsidiaries, including, without limitation, for acquisitions and for payment of
commercial paper issued by the Borrowers and to refinance the loans under the
Existing Facilities.

                  SECTION II.23 Extension of Stated Termination Date. (a) Not
less than 45 days prior to the Stated Termination Date then in effect, provided
that no Event of Default shall have occurred and be continuing, the Company may
request an extension of such Stated Termination Date by submitting to the
Administrative Agent an Extension Request containing the information in respect
of such extension specified in Exhibit M, which the Administrative Agent shall
promptly furnish to each Lender. Each Lender shall, no later than 30 days after
receiving from the Administrative Agent the applicable Extension Request, 

<PAGE>   42
                                                                              38


notify the Company and the Administrative Agent of its election to extend or not
extend the Stated Termination Date as requested in such Extension Request. If
the Required Lenders shall approve in writing the extension of the Stated
Termination Date requested in such Extension Request, the Stated Termination
Date shall automatically and without any further action by any Person be
extended for the period specified in such Extension Request; provided that (i)
each extension pursuant to this Section 2.23 shall be for a maximum of one year,
(ii) the Commitment of any Lender that does not consent in writing within 30
days after receiving from the Administrative Agent the applicable Extension
Request (an "Objecting Lender") shall, unless earlier terminated in accordance
with this Agreement, expire on the Stated Termination Date in effect on the date
of such Extension Request (such Stated Termination Date, if any, referred to as
the "Commitment Expiration Date" with respect to such Objecting Lender) and
(iii) the Company may exercise no more than two extensions pursuant to this
Section 2.23, so that the Stated Termination Date shall not in any event extend
beyond seven years from the Closing Date. If, within 30 days after receiving
from the Administrative Agent the applicable Extension Request, the Required
Lenders shall not approve in writing the extension of the Stated Termination
Date requested in an Extension Request, the Stated Termination Date shall not be
extended pursuant to such Extension Request. The Administrative Agent shall
promptly notify (y) the Lenders and the Company of any extension of the Stated
Termination Date pursuant to this Section 2.23 and (z) the Company and the
Lenders of any Lender which becomes an Objecting Lender.

                  (b) Revolving Credit Advances owing to any Objecting Lender on
the Commitment Expiration Date with respect to such Lender shall be repaid in
full on or before the Commitment Expiration Date.

                  (c) The Borrowers shall have the right, so long as no Event of
Default has occurred and is then continuing, upon giving notice to the
Administrative Agent and the Objecting Lenders in accordance with Section 2.15,
to prepay in full the Revolving Credit Advances of the Objecting Lenders,
together with accrued interest thereon, any amounts payable pursuant to Sections
2.11, 2.12, 2.16, 2.17, 2.18, 2.20 and 9.4(b) and any accrued and unpaid
facility fee or other amounts payable to the Objecting Lenders hereunder and/or,
upon giving not less than three Business Days' notice to the Objecting Lenders
and the Administrative Agent, to cancel the whole or part of the Commitments of
the Objecting Lenders.

                  (d) Notwithstanding the foregoing, if any Lender becomes an
Objecting Lender, the Borrower may, at its own expense and in its sole
discretion and prior to the then Stated Termination Date, require such Lender to
transfer or assign, in whole or in part, without recourse (in accordance with
Section 9.7), all or part of its interests, rights and obligations under this
Agreement to an Eligible Assignee (provided that the Borrower, with the full
cooperation of such Lender, can identify 


<PAGE>   43
                                                                              39


an Eligible Assignee that is ready, willing and able to be an assignee with
respect thereto) which shall assume such assigned obligations (which assignee
may be another Lender, if such assignee Lender accepts such assignment);
provided that (A) the assignee or the Borrower, as the case may be, shall have
paid to such Lender in immediately available funds the principal of and interest
accrued to the date of such payment on the Advances made by it hereunder and all
other amounts owed to it hereunder, including, without limitation, any amounts
owing pursuant to Section 9.4(b) and any amounts that would be owing under said
Section if such Advances were prepaid on the date of such assignment, and (B)
such assignment does not conflict with any law, rule or regulation or order of
any governmental authority. Any assignee which becomes a Lender as a result of
such an assignment made pursuant to this paragraph (d) shall be deemed to have
consented to the applicable Extension Request and, therefore, shall not be an
Objecting Lender.

                  SECTION II.24 Commitment Increases. (a) At any time after the
Closing Date, provided that no Event of Default shall have occurred and be
continuing, the Company may request an increase of the aggregate Commitments by
notice to the Administrative Agent in writing of the amount (the "Offered
Increase Amount") of such proposed increase (such notice, a "Commitment Increase
Notice"), provided that the first such increase shall be in an amount equal to
at least $93,750,000 and the second such increase shall be in an amount equal to
$187,500,000 less the amount of the first such increase. Any such Commitment
Increase Notice must offer each Lender the opportunity to subscribe for its pro
rata share of the increased Commitments. If any portion of the increased
Commitments is not subscribed for by the Lenders, the Company may, with the
consent of the Administrative Agent as to any Person that is not at such time a
Lender (which consent shall not be unreasonably withheld), offer to any existing
Lender or to one or more additional banks or financial institutions the
opportunity to participate in all or a portion of such unsubscribed portion of
the increased Commitments pursuant to paragraph (b) below.

                  (b) Any additional bank or financial institution that the
Company selects to offer participation in the increased Commitments, and that
elects to become a party to this Agreement and obtain a Commitment shall execute
a New Lender Supplement with the Company and the Administrative Agent,
substantially in the form of Exhibit N (a "New Lender Supplement"), whereupon
such bank or financial institution (a "New Lender") shall become a Lender for
all purposes and to the same extent as if originally a party hereto and shall be
bound by and entitled to the benefits of this Agreement, and Schedule I shall be
deemed to be amended to add the name and Commitment of such New Lender, provided
that the Commitment of any such New Lender shall be in an amount not less than
$10,000,000.

                  (c) Any Lender that accepts an offer to it by the Company to
increase its Commitment pursuant to this Section 2.24 shall, in each case,
execute a Commitment Increase Supplement 

<PAGE>   44
                                                                              40


with the Company and the Administrative Agent, substantially in the form of
Exhibit O (a "Commitment Increase Supplement"), whereupon such Lender shall be
bound by and entitled to the benefits of this Agreement with respect to the full
amount of its Commitment as so increased, and Schedule I shall be deemed to be
amended to so increase the Commitment of such Lender.

                  (d) The effectiveness of any New Lender Supplement or
Commitment Increase Supplement shall be contingent upon receipt by the
Administrative Agent of such corporate resolutions of the Borrowers and legal
opinions of counsel to the Borrowers as the Administrative Agent shall
reasonably request with respect thereto, in each case, in form and substance
satisfactory to the Administrative Agent.

                  (e) If any bank or financial institution becomes a New Lender
pursuant to Section 2.24(b) or any Lender's Commitment is increased pursuant to
Section 2.24(c), additional Revolving Credit Advances made on or after the
effectiveness thereof (the "Re-Allocation Date") shall be made pro rata based on
the Commitment Percentages in effect on and after such Re-Allocation Date
(except to the extent that any such pro rata borrowings would result in any
Lender making an aggregate principal amount of Revolving Credit Advances in
excess of its Commitment, in which case such excess amount will be allocated to,
and made by, such new Lender and/or Lenders with such increased Commitments to
the extent of, and pro rata based on, their respective Commitments), and
continuations of Eurodollar Rate Advances outstanding on such Re-Allocation Date
shall be effected by repayment of such Eurodollar Rate Advances on the last day
of the Interest Period applicable thereto and the making of new Eurodollar Rate
Advances pro rata based on such new Commitment Percentages. In the event that on
any such Re-Allocation Date there is an unpaid principal amount of Base Rate
Advances, the Borrower shall make prepayments thereof and borrowings of Base
Rate Advances so that, after giving effect thereto, the Base Rate Advances
outstanding are held pro rata based on such new Commitment Percentages. In the
event that on any such Re-Allocation Date there is an unpaid principal amount of
Eurodollar Rate Advances, such Eurodollar Rate Advances shall remain outstanding
with the respective holders thereof until the expiration of their respective
Interest Periods (unless the applicable Borrower elects to prepay any thereof in
accordance with the applicable provisions of this Agreement), and interest on
and repayments of such Eurodollar Rate Advances will be paid thereon to the
respective Lenders holding such Eurodollar Rate Advances pro rata based on the
respective principal amounts thereof outstanding.

                  (f) Notwithstanding anything to the contrary in this Section
2.24, (i) in no event shall any transaction effected pursuant to this Section
2.24 cause the aggregate Commitments to exceed $937,500,000, (ii) no increase
pursuant to this Section 2.24 shall be effective without the consent of the
Required Lenders and (iii) no Lender shall have any obligation to increase its
Commitment unless it agrees to do so in its sole discretion.
<PAGE>   45
                                                                              41


                  (g) The Borrowers, at their own expense, shall execute and
deliver to the Administrative Agent in exchange for the surrendered Notes of any
Lender, if any, new Notes to the order of such Lender, if requested, in an
amount equal to the Commitment of such Lender after giving effect to any
increase in such Lender's Commitment.

                  SECTION II.25 Replacement of Lenders. If any Lender requests
compensation under Sections 2.12, 2.16 or 2.17 or if any Borrower is required to
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.20, or if any Lender defaults in its
obligation to fund Advances hereunder, then the Company may, at its sole expense
and effort, upon notice to such Lender and the Administrative Agent, require
such Lender to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in Section 9.7), all its interests, rights
and obligations under this Agreement (other than any outstanding CAF Advances
held by it) to an assignee that shall assume such obligations (which assignee
may be another Lender, if a Lender accepts such assignment); provided that (i)
the Company shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Advances (other than CAF Advances), accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrowers (in
the case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Sections 2.12 , 2.16 or 2.17 or
payments required to be made pursuant to Section 2.20, such assignment will
result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Company to require such assignment and delegation cease to apply.
<PAGE>   46
                                                                              42


                                   ARTICLE III

                     CONDITIONS OF EFFECTIVENESS AND LENDING

                  SECTION III.1 Conditions Precedent to Effectiveness of this
Agreement. This Agreement shall become effective (the "Effective Date") when (i)
it shall have been executed by EPNGC, Tennessee, the Administrative Agent, the
CAF Advance Agent, the Documentation Agent and the Syndication Agent and (ii)
the Administrative Agent and EPNGC either shall have been notified by each
Lender that such Lender has executed it or shall have received a counterpart of
this Agreement executed by such Lender. Anything in this Agreement to the
contrary notwithstanding, if all of the conditions to effectiveness of this
Agreement specified in this Section 3.1 shall not have been fulfilled on or
before December 31, 1997, (i) the Company shall on such date pay all accrued and
unpaid facility fees pursuant to Section 2.8 and (ii) this Agreement, and all of
the obligations of EPNGC, the Lenders, the Administrative Agent and the CAF
Advance Agent hereunder, shall be terminated on and as of 5:00 P.M. (New York
City time) on December 31, 1997; provided, however, that as soon as the
Administrative Agent determines that all of the conditions to effectiveness of
this Agreement specified in this Section 3.1 shall have been fulfilled on or
before December 31, 1997, the Administrative Agent shall furnish written notice
to EPNGC and the Lenders to the effect that it has so determined, and such
notice by the Administrative Agent shall constitute conclusive evidence that
this Agreement shall have become effective for all purposes. Notwithstanding the
foregoing, the obligations of the Company to pay fees pursuant to Section 2.8 as
well as all obligations of the Borrowers pursuant to Section 9.4 shall survive
the termination of this Agreement.

                  SECTION III.2 Conditions Precedent to Initial Advances. The
agreement of each Lender to make the initial Advances to be made by it to the
Borrowers hereunder is subject to (the date upon which all conditions listed in
Section 3.2(a) and 3.2(b) are satisfied, the "Closing Date") (a) the occurrence
of the Effective Date hereunder and (b) the receipt by the Administrative Agent
of the following in form and substance satisfactory to the Administrative Agent
and in sufficient copies for each Lender:

                  (i) Certified copies of the resolutions of the Board of
         Directors of each of EPNGC and Tennessee approving the borrowings
         contemplated hereby and authorizing the execution of this Agreement and
         the Notes, and of all documents evidencing other necessary corporate
         action of each of EPNGC and Tennessee and governmental approvals to
         each of EPNGC and Tennessee, if any, with respect to this Agreement and
         the Notes.

                  (ii) A certificate of the Secretary or an Assistant Secretary
         of each of EPNGC and Tennessee certifying the names and true signatures
         of the officers of each of EPNGC and Tennessee authorized to sign this
         Agreement and the other documents to be delivered by it hereunder.
<PAGE>   47
                                                                              43


                  (iii) A favorable opinion of the General Counsel of EPNGC, or
         the Associate General Counsel of EPNGC, in substantially the form of
         Exhibit G.

                  (iv) A favorable opinion of Jones, Day, Reavis & Pogue, New
         York counsel to EPNGC and Tennessee, in substantially the form of
         Exhibit H.

                  (v) A letter from the Process Agent, in substantially the form
         of Exhibit I, agreeing to act as Process Agent for each of EPNGC and
         Tennessee and to forward forthwith all process received by it to EPNGC
         and Tennessee, as applicable.

                  (vi) Evidence satisfactory to the Administrative Agent that
         all advances, accrued interest and other fees and any other amounts
         (except as provided under Section 9.12) owing to the lenders and the
         agents under the Existing Facilities shall have been, or simultaneously
         with the initial Advances are being, paid in full, and the commitments
         to make advances thereunder shall have been cancelled.

                  SECTION III.3 Conditions Precedent to Initial Advances to Any
Borrowing Subsidiary or Holding. The agreement of each Lender to make the
initial Advances to be made by it to any Borrowing Subsidiary (other than
Tennessee) or Holding is further subject to the Administrative Agent receiving
the following, in form and substance satisfactory to the Administrative Agent
and (except for the Notes) in sufficient copies for each Lender (provided that
no Subsidiary of Holding which is not a Subsidiary of EPNGC may become a
Borrower hereunder unless Holding is a Borrower hereunder):

                  (a) A Joinder Agreement executed and delivered by such
         Borrowing Subsidiary or Holding, as the case may be, conforming to the
         requirements hereof.

                  (b) Notes, dated the date such Borrowing Subsidiary or
         Holding, as the case may be, executes and delivers its Joinder
         Agreement, made by such Borrowing Subsidiary or Holding, as the case
         may be, to the order of each Lender requesting a Note, respectively.

                  (c) A certificate of the Secretary or an Assistant Secretary
         of such Borrowing Subsidiary or Holding, as the case may be, certifying
         the names and true signature of the officers of such Borrowing
         Subsidiary or Holding, as the case may be, authorized to sign the
         Joinder Agreement and the other documents to be delivered by it
         hereunder.

                  (d) A favorable opinion of the General Counsel or Associate
         General Counsel of the Company, given upon the express instructions of
         the Company, in substantially the form of Exhibit K, and as to such
         other matters as any 

<PAGE>   48
                                                                              44


         Lender through the Administrative Agent may reasonably request, with
         such assumptions, qualifications and exceptions as the Administrative
         Agent may approve.

                  (e) A favorable opinion of Jones, Day, Reavis & Pogue or other
         New York counsel to the Company reasonably satisfactory to the
         Administrative Agent, in substantially the form of Exhibit L, and as to
         such other matters as any Lender through the Administrative Agent may
         reasonably request, with such assumptions, qualifications and
         exceptions as the Administrative Agent may approve.

                  (f) A letter from the Process Agent, in substantially the form
         of Exhibit I, agreeing to act as Process Agent for such Borrowing
         Subsidiary or Holding, as the case may be, and to forward forthwith all
         process received by it to such Borrowing Subsidiary or Holding, as the
         case may be.

                  SECTION III.4 Conditions Precedent to Each Borrowing. The
obligation of each Lender to make an Advance (including the initial Advance, but
excluding any continuation or Conversion of an Advance) on the occasion of any
Borrowing shall be subject to the conditions precedent that on the date of such
Borrowing this Agreement shall have become effective pursuant to Section 3.1
and, before and immediately after giving effect to such Borrowing and to the
application of the proceeds therefrom, the following statements shall be true
and correct, and the giving by the applicable Borrower or the Company on such
Borrower's behalf of the applicable Notice of Borrowing and the acceptance by
the applicable Borrower of the proceeds of such Borrowing shall constitute its
representation and warranty that on and as of the date of such Borrowing, before
and immediately after giving effect thereto and to the application of the
proceeds therefrom, the following statements are true and correct:

                  (i) each representation and warranty contained in Section 4.1
         is correct in all material respects as though made on and as of such
         date; and

                  (ii) no event has occurred and is continuing, or would result
         from such Borrowing, which constitutes an Event of Default or a
         Default.
<PAGE>   49
                                                                              45


                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  SECTION IV.1 Representations and Warranties of the Borrowers.
Each Borrower represents and warrants as follows:

                  (a) The Company is a corporation duly incorporated, validly
         existing and in good standing under the laws of the State of Delaware.
         Each Principal Subsidiary and each Restricted Affiliate is duly
         incorporated, validly existing and in good standing in the jurisdiction
         of its incorporation. The Company, each Principal Subsidiary and each
         Restricted Affiliate possess all corporate powers and all other
         authorizations and licenses necessary to engage in its business and
         operations as now conducted, the failure to obtain or maintain which
         would have a Material Adverse Effect.

                  (b) The execution, delivery and performance by (i) each
         Borrower of this Agreement, each Joinder Agreement, if any, to which it
         is a party and its Notes (as applicable) and (ii) each Restricted
         Affiliate of its Restricted Affiliate Guaranty are within such
         Borrower's or Restricted Affiliate's, as the case may be, corporate
         powers, have been duly authorized by all necessary corporate action,
         and do not contravene (A) such Borrower's or Restricted Affiliate's, as
         the case may be, charter or by-laws or (B) any law or any material
         contractual restriction binding on or affecting such Borrower or
         Restricted Affiliate, as the case may be.

                  (c) No authorization or approval or other action by, and no
         notice to or filing with, any governmental authority or regulatory body
         is required for the due execution, delivery and performance by (i) such
         Borrower of this Agreement, each Joinder Agreement, if any, to which it
         is a party or its Notes (as applicable) or (ii) any Restricted
         Affiliate of its Restricted Affiliate Guaranty, except filings
         necessary to comply with laws, rules, regulations and orders required
         in the ordinary course to comply with ongoing obligations of such
         Borrower under Section 5.1(a) and (b).

                  (d) This Agreement constitutes, its Notes and each Joinder
         Agreement, if any, to which it is a party (as applicable) when
         delivered hereunder shall constitute and its Restricted Affiliate
         Guaranty when delivered hereunder shall constitute, the legal, valid
         and binding obligations of each Borrower or Restricted Affiliate, as
         the case may be, enforceable against such Borrower or Restricted
         Affiliate, as the case may be, in accordance with their respective
         terms, except as may be limited by any applicable bankruptcy,
         insolvency, reorganization, moratorium or similar laws affecting
         creditors' rights generally or by general principles of equity.
<PAGE>   50
                                                                              46


                  (e) The consolidated balance sheet of EPNGC and its
         consolidated Subsidiaries as at December 31, 1996, and the related
         consolidated statements of income and cash flows of EPNGC and its
         consolidated Subsidiaries for the fiscal year then ended, reported on
         by Coopers & Lybrand LLP, independent public accountants, copies of
         which have been furnished to the Administrative Agent and the Lenders
         prior to the date hereof, fairly present the consolidated financial
         condition of EPNGC and its consolidated Subsidiaries as at such date
         and the consolidated results of the operations of EPNGC and its
         consolidated Subsidiaries for the period ended on such date, all in
         accordance with generally accepted accounting principles consistently
         applied, and since December 31, 1996, there has been no material
         adverse change in such condition or operations. The unaudited
         consolidated balance sheet of EPNGC and its consolidated Subsidiaries
         as of June 30, 1997, and the related consolidated statements of income
         and cash flows of EPNGC and its consolidated Subsidiaries for the six
         months then ended, certified by the chief financial officer of EPNGC,
         copies of which have been furnished to the Administrative Agent and the
         Lenders prior to the date hereof, fairly present the consolidated
         results of operations of EPNGC and its consolidated Subsidiaries for
         the three months then ended, all in accordance with generally accepted
         accounting principles consistently applied (except as approved by the
         chief financial officer of EPNGC and as disclosed therein) and subject
         to normal year-end audit adjustments.

                  (f) Each of the Company and its Subsidiaries is in compliance
         with all laws, rules, regulations and orders of any governmental
         authority applicable to it or its property except where the failure to
         comply, individually or in the aggregate, would not in the reasonable
         judgment of the Company be expected to result in a Material Adverse
         Effect.

                  (g) There is no action, suit or proceeding pending, or to the
         knowledge of any Borrower threatened, against or involving the Company,
         any Principal Subsidiary or any Restricted Affiliate in any court, or
         before any arbitrator of any kind, or before or by any governmental
         body, which in the reasonable judgment of the Company (taking into
         account the exhaustion of all appeals) would have a Material Adverse
         Effect, or which purports to affect the legality, validity, binding
         effect or enforceability of this Agreement or the Notes.

                  (h) The Company, each Principal Subsidiary and each Restricted
         Affiliate have duly filed all tax returns required to be filed, and
         have duly paid and discharged all taxes, assessments and governmental
         charges upon it or against its properties now due and payable, the
         failure to pay which would have a Material Adverse Effect, unless and
         to the extent only that the same are being contested in good 

<PAGE>   51
                                                                              47


         faith and by appropriate proceedings by the Company, the appropriate
         Subsidiary or the appropriate Restricted Affiliate.

                  (i) The Company, each Principal Subsidiary and each Restricted
         Affiliate have good title to their respective properties and assets,
         free and clear of all mortgages, liens and encumbrances, except for
         mortgages, liens and encumbrances (including covenants, restrictions,
         rights, easements and minor irregularities in title) which do not
         materially interfere with the business or operations of the Company,
         such Subsidiary or such Restricted Affiliate as presently conducted or
         which are permitted by Section 5.2(a), and except that no
         representation or warranty is being made with respect to Margin Stock.

                  (j) No Termination Event has occurred or is reasonably
         expected to occur with respect to any Plan which, with the giving of
         notice or lapse of time, or both, would constitute an Event of Default
         under Section 7.1(g).

                  (k) Each Plan has complied with the applicable provisions of
         ERISA and the Code where the failure to so comply would reasonably be
         expected to result in an aggregate liability that would exceed 10% of
         the Net Worth of the Company.

                  (l) The statement of assets and liabilities of each Plan and
         the statements of changes in fund balance and in financial position, or
         the statement of changes in net assets available for plan benefits, for
         the most recent plan year for which an accountant's report with respect
         to such Plan has been prepared, copies of which report have been
         furnished to the Administrative Agent, fairly present the financial
         condition of such Plan as at such date and the results of operations of
         such Plan for the plan year ended on such date.

                  (m) Neither the Company nor any ERISA Affiliate has incurred,
         or is reasonably expected to incur, any Withdrawal Liability to any
         Multiemployer Plan which, when aggregated with all other amounts
         required to be paid to Multiemployer Plans in connection with
         Withdrawal Liability (as of the date of determination), would exceed
         10% of the Net Worth of the Company.

                  (n) Neither the Company nor any ERISA Affiliate has received
         any notification that any Multiemployer Plan is in reorganization,
         insolvent or has been terminated, within the meaning of Title IV of
         ERISA, and no Multiemployer Plan is reasonably expected to be in
         reorganization, insolvent or to be terminated within the meaning of
         Title IV of ERISA the effect of which reorganization, insolvency or
         termination would be the occurrence of an Event of Default under
         Section 7.1(i).
<PAGE>   52
                                                                              48


                  (o) The Borrowers are not engaged in the business of extending
         credit for the purpose of purchasing or carrying Margin Stock, and no
         proceeds of any Advance will be used to extend credit to others (other
         than to any Subsidiary of the Company) for the purpose of purchasing or
         carrying Margin Stock.

                  (p) No Borrower is an "investment company" or a "company"
         controlled by an "investment company" within the meaning of the
         Investment Company Act of 1940, as amended.

                  (q) No Borrower is a "holding company" or a "subsidiary
         company" of a "holding company" within the meaning of the Public
         Utility Holding Company Act of 1935, as amended.

                  (r) The borrowings by the Borrowers under this Agreement and
         the Notes and the applications of the proceeds thereof as provided
         herein will not violate Regulation G, T, U or X of the Board of
         Governors of the Federal Reserve System.

All representations and warranties made by the Borrowers herein or made in any
certificate delivered pursuant hereto shall survive the making of the Advances
and the execution and delivery to the Lenders of this Agreement and the Notes.


                                    ARTICLE V

                           COVENANTS OF THE BORROWERS

                  SECTION V.1 Affirmative Covenants. So long as any amount
payable by any Borrower hereunder or under any Note shall remain unpaid or any
Lender shall have any Commitment hereunder, each Borrower will, unless the
Majority Lenders shall otherwise consent in writing:

                  (a) Preservation of Corporate Existence, Etc. Preserve and
         maintain, and, in the case of the Company, cause each Principal
         Subsidiary and each Restricted Affiliate to preserve and maintain, its
         corporate existence, rights (charter and statutory) and material
         franchises, except as otherwise permitted by Section 5.2(d) or 5.2(e).

                  (b) Compliance with Laws, Etc. Comply, and, in the case of the
         Company, cause each Principal Subsidiary and each Restricted Affiliate
         to comply, in all material respects with all applicable laws, rules,
         regulations and orders (including, without limitation, all
         environmental laws and laws requiring payment of all taxes, assessments
         and governmental charges imposed upon it or upon its property except to
         the extent contested in good faith by appropriate proceedings) the
         failure to comply with which would have a Material Adverse Effect.
<PAGE>   53

                                                                              49


                  (c) Visitation Rights. At any reasonable time and from time to
         time, permit the Administrative Agent or any of the Lenders or any
         agents or representatives thereof, to examine and make copies of and
         abstracts from the records and books of account of, and visit the
         properties of, the Company, any of its Subsidiaries and any Restricted
         Affiliate, and to discuss the affairs, finances and accounts of the
         Company, any of its Subsidiaries and any Restricted Affiliate with any
         of their officers and with their independent certified public
         accountants.

                  (d) Books and Records. Keep, and, in the case of the Company,
         cause each of its Subsidiaries and each Restricted Affiliate to keep,
         proper books of record and account, in which full and correct entries
         shall be made of all its respective financial transactions and the
         assets and business of the Company, each of its Subsidiaries and each
         Restricted Affiliate, as applicable, in accordance with generally
         accepted accounting principles either (i) consistently applied or (ii)
         applied in a changed manner provided such change shall have been
         disclosed to the Administrative Agent and shall have been consented to
         by the accountants which (as required by Section 5.3(b)) report on the
         financial statements of the Company and its consolidated Subsidiaries
         for the fiscal year in which such change shall have occurred.

                  (e) Maintenance of Properties, Etc. Maintain and preserve,
         and, in the case of the Company, cause each Principal Subsidiary and
         each Restricted Affiliate to maintain and preserve, all of its
         properties which are used in the conduct of its business in good
         working order and condition, ordinary wear and tear excepted, to the
         extent that any failure to do so would have a Material Adverse Effect.

                  (f) Maintenance of Insurance. Maintain, and, in the case of
         the Company, cause each Principal Subsidiary and each Restricted
         Affiliate to maintain, insurance with responsible and reputable
         insurance companies or associations in such amounts and covering such
         risks as is usually carried by companies engaged in similar businesses
         and owning similar properties in the same general areas in which the
         Company, such Subsidiary or such Restricted Affiliate operates.

                  (g) Holding. Once Holding is formed, cause (i) Holding to
         execute and deliver a guaranty (in form and substance reasonably
         satisfactory to the Administrative Agent) (the "Holding Guarantee") in
         favor of the Administrative Agent, for the ratable benefit of the
         Lenders, guaranteeing the prompt and complete payment by each Borrower
         when due (whether at the stated maturity, by acceleration or otherwise)
         of the Obligations owing by such Borrower and (ii) the delivery to the
         Administrative Agent of legal opinions from the General Counsel or the
         Associate 

<PAGE>   54
                                                                              50


         General Counsel of Holding and from New York counsel to Holding
         reasonably acceptable to the Administrative Agent, which legal opinions
         shall be in form and substance reasonably satisfactory to the
         Administrative Agent.

                  SECTION V.2 Negative Covenants. So long as any amount payable
by any Borrower hereunder or under any Note shall remain unpaid or any Lender
shall have any Commitment hereunder, each Borrower will not, unless the Majority
Lenders shall otherwise consent in writing:

                  (a) Liens, Etc. (i) Create, assume or suffer to exist, or, in
         the case of the Company, permit any Principal Subsidiary to create,
         assume or suffer to exist, any Liens upon or with respect to any of the
         capital stock of any Principal Subsidiary, whether now owned or
         hereafter acquired, or (ii) create or assume, or, in the case of the
         Company, permit any Principal Subsidiary or any Restricted Affiliate to
         create or assume, any Liens upon or with respect to any other assets
         material to the consolidated operations of the Company and its
         consolidated Subsidiaries taken as a whole securing the payment of
         Indebtedness and Guaranties in an aggregate amount (determined without
         duplication of amount (so that the amount of a Guarantee will be
         excluded to the extent the Indebtedness Guaranteed thereby is included
         in computing such aggregate amount)) exceeding $100,000,000; provided,
         however, that this subsection (a) shall not apply to:

                           (A) Liens on the stock or assets of any Project
                  Financing Subsidiary or any Restricted Affiliate (or any
                  partnership, member or other equity interest in or assets of
                  any partnership, limited liability company or other entity of
                  which the Project Financing Subsidiary is a partner, member or
                  other equity participant) securing the payment of a Project
                  Financing and related obligations;

                           (B) Liens on assets acquired by the Company, any of
                  its Subsidiaries or any Restricted Affiliate after February
                  11, 1992 to the extent that such Liens existed at the time of
                  such acquisition and were not placed thereon by or with the
                  consent of the Company in contemplation of such acquisition;

                           (C) Liens created by any Alternate Program or any
                  document executed by any Borrower or any Restricted
                  Affiliate in connection therewith;

                           (D)      Liens on Margin Stock; and

                           (E) Liens for taxes, assessments or governmental
                  charges or levies not yet overdue.

                  (b) Consolidated Debt and Guarantees to Capitalization. (i)
         Permit the ratio of (A) the sum of (1) 

<PAGE>   55
                                                                              51


         the aggregate amount of consolidated Debt of EPNGC and its consolidated
         Subsidiaries and all Restricted Affiliates and their consolidated
         Subsidiaries (without duplication of amount under this clause (A) and
         determined as to all of the foregoing entities on a consolidated basis)
         plus (2) the aggregate amount of consolidated Guaranties of EPNGC and
         its consolidated Subsidiaries and all Restricted Affiliates and their
         consolidated Subsidiaries (without duplication of amount under this
         clause (A) and determined as to all of the foregoing entities on a
         consolidated basis) to (B) Capitalization of EPNGC and all Restricted
         Affiliates (without duplication and determined as to all of the
         foregoing entities on a consolidated basis) to exceed .7 to 1; and (ii)
         from and after the date that Holding becomes a Borrower hereunder,
         permit the ratio of (A) the sum of (1) the aggregate amount of
         consolidated Debt of Holding and its consolidated Subsidiaries plus (2)
         the aggregate amount of consolidated Guaranties of Holding and its
         consolidated Subsidiaries to (B) Capitalization of Holding to exceed .7
         to 1.

                  (c) Debt, Etc. In the case of the Company, permit any of its
         consolidated Subsidiaries to create or suffer to exist any Debt, any
         Guaranty or any reimbursement obligation with respect to any letter of
         credit (other than any Project Financing), if, immediately after giving
         effect to such Debt, Guaranty or reimbursement obligation and the
         receipt and application of any proceeds thereof or value received in
         connection therewith, the aggregate amount (determined without
         duplication of amount) of Debt, Guaranties and letter of credit
         reimbursement obligations of the Company's consolidated Subsidiaries
         (other than any Project Financing) determined on a consolidated basis
         would exceed $300,000,000; provided, however, that the following Debt,
         Guaranties or reimbursement obligations shall be excluded from the
         application of, and calculation set forth in, this paragraph (c): (A)
         Debt, Guaranties or reimbursement obligations incurred by (x) Mojave or
         (y) so long as it is a Borrower, EPNGC, (B) Debt, Guaranties or
         reimbursement obligations arising under (x) the EPTPC Facility and
         permanently repaid in full on the Closing Date or (y) this Agreement or
         the $750,000,000 364-Day Revolving Credit and Competitive Advance
         Facility Agreement, dated as of the date hereof, among EPNGC, the
         lenders parties thereto and Chase, as Administrative Agent and CAF
         Advance Agent, (C) Debt, Guaranties or reimbursement obligations
         incurred by El Paso Field Services Company up to an amount not to
         exceed at any time outstanding the tangible net worth of El Paso Field
         Services Company, provided that such Debt may be guaranteed by the
         Company, (D) Excluded Acquisition Debt and (E) successive extensions,
         refinancings or replacements (at the same Subsidiary or at any other
         consolidated Subsidiary of the Company) of Debt, Guaranties or
         reimbursement obligations (or commitments in respect thereof) referred
         to in clauses (A), (B) and (D) above and in an amount not in excess of
         the amounts so extended, refinanced or replaced (or the amount of
         commitments in respect thereof).
<PAGE>   56
                                                                              52


                  (d) Sale, Etc. of Assets. Sell, lease or otherwise transfer,
         or, in the case of the Company, permit any Principal Subsidiary to
         sell, lease or otherwise transfer, (in either case, whether in one
         transaction or in a series of transactions) assets constituting a
         material portion of the consolidated assets of the Company and its
         Principal Subsidiaries taken as a whole, provided that provisions of
         this subsection (d) shall not apply to:

                                 (i) any sale of receivables and related rights
                  pursuant to any Alternate Program;

                                (ii) any Project Financing Subsidiary and the 
                  assets thereof;

                               (iii) sales, leases or other transfers of assets
                  or capital stock of any Subsidiary of the Company other than
                  any Principal Subsidiary;

                                (iv) any sale of Margin Stock;

                                 (v) any sale of up to 20% of the equity of El
                  Paso Field Services Company in an initial public offering of
                  such corporation's equity securities;

                                (vi) any sale, lease or other transfer to the
                  Company or any Principal Subsidiary, or to any corporation
                  which after giving effect to such transfer will become and be
                  either (A) a Principal Subsidiary in which the Company's
                  direct or indirect equity interest will be at least as great
                  as its direct or indirect equity interest in the transferor
                  immediately prior thereto or (B) a directly or indirectly
                  wholly-owned Principal Subsidiary;

                               (vii) any transfer permitted by Section 5.2(e); 
                  and

                              (viii) any transfer to Holding or any of its
                  Subsidiaries of any stock or assets other than FERC regulated
                  assets (or stock or any other equity interest in an entity
                  owning FERC regulated assets) used in the mainline gas
                  transmission business; provided that (A) no Event of Default,
                  or event that with the giving of notice or lapse of time or
                  both would constitute an Event of Default, shall have occurred
                  and be continuing before and after giving effect to such
                  transfer and (B) no Borrower may be so transferred unless
                  Holding is also a Borrower.

                  (e) Mergers, Etc. Merge or consolidate with any person, or
         permit any of its Principal Subsidiaries to merge or consolidate with
         any Person, except that (i) any Principal Subsidiary may merge or
         consolidate with (or 

<PAGE>   57
                                                                              53


         liquidate into) any other Subsidiary (other than a Project Financing
         Subsidiary, unless the successor corporation is not treated as a
         Project Financing Subsidiary under this Agreement) or may merge or
         consolidate with (or liquidate into) the Company, provided that (A) if
         such Principal Subsidiary merges or consolidates with (or liquidates
         into) the Company, the Company shall be the continuing or surviving
         corporation and (B) if any such Principal Subsidiary merges or
         consolidates with (or liquidates into) any other Subsidiary of the
         Company, one of such Subsidiaries is the surviving corporation and, if
         either such Subsidiary is not wholly-owned by the Company, such merger
         or consolidation is on an arm's length basis, and (ii) the Company or
         any Principal Subsidiary may merge or consolidate with any other
         corporation (that is, in addition to the Company or any Principal
         Subsidiary of the Company), provided that (A) if the Company merges or
         consolidates with any such other corporation, the Company is the
         surviving corporation, (B) if any Principal Subsidiary merges or
         consolidates with any such other corporation, the surviving corporation
         is a wholly-owned Principal Subsidiary of the Company, and (C) if
         either the Company or any Principal Subsidiary merges or consolidates
         with any such other corporation, after giving effect to such merger or
         consolidation no Event of Default, and no event which with lapse of
         time or the giving of notice, or both, would constitute an Event of
         Default, shall have occurred and be continuing.

                  SECTION V.3 Reporting Requirements. So long as any amount
payable by any Borrower hereunder or under any Note shall remain unpaid or any
Lender shall have any Commitment hereunder, the Company will furnish to each
Lender in such reasonable quantities as shall from time to time be requested by
such Lender:

                  (a) as soon as publicly available and in any event within 60
         days after the end of each of the first three fiscal quarters of each
         fiscal year of each of EPNGC and, following its formation, Holding, a
         consolidated balance sheet of each of EPNGC and, following its
         formation, Holding and its respective consolidated subsidiaries as of
         the end of such quarter, and consolidated statements of income and cash
         flows of each of EPNGC and, following its formation, Holding and its
         respective consolidated subsidiaries each for the period commencing at
         the end of the previous fiscal year and ending with the end of such
         quarter, certified (subject to normal year-end adjustments) as being
         fairly stated in all material respects by the chief financial officer,
         controller or treasurer of the Company and accompanied by a certificate
         of such officer stating (i) whether or not such officer has knowledge
         of the occurrence of any Event of Default which is continuing hereunder
         or of any event not theretofore remedied which with notice or lapse of
         time or both would constitute such an Event of Default and, if so,
         stating in reasonable detail the facts 


<PAGE>   58
                                                                              54


         with respect thereto, (ii) all relevant facts in reasonable detail to
         evidence, and the computations as to, whether or not the Company is in
         compliance with the requirements set forth in subsections (b) and (c)
         of Section 5.2, and (iii) a listing of all Principal Subsidiaries and
         consolidated Subsidiaries of the Company showing the extent of its
         direct and indirect holdings of their stocks;

                  (b) as soon as publicly available and in any event within 120
         days after the end of each fiscal year of each of EPNGC and, following
         its formation, Holding, a copy of the annual report for such year for
         each of EPNGC and, following its formation, Holding and its respective
         consolidated Subsidiaries containing financial statements for such year
         reported by nationally recognized independent public accountants
         acceptable to the Lenders, accompanied by (i) a report signed by said
         accountants stating that such financial statements have been prepared
         in accordance with generally accepted accounting principles and (ii) a
         letter from such accountants stating that in making the investigations
         necessary for such report they obtained no knowledge, except as
         specifically stated therein, of any Event of Default which is
         continuing hereunder or of any event not theretofore remedied which
         with notice or lapse of time or both would constitute such an Event of
         Default;

                  (c) within 120 days after the close of each of the Company's
         fiscal years, a certificate of the chief financial officer, controller
         or treasurer of the Company stating (i) whether or not he has knowledge
         of the occurrence of any Event of Default which is continuing hereunder
         or of any event not theretofore remedied which with notice or lapse of
         time or both would constitute such an Event of Default and, if so,
         stating in reasonable detail the facts with respect thereto, (ii) all
         relevant facts in reasonable detail to evidence, and the computations
         as to, whether or not the Company is in compliance with the
         requirements set forth in subsections (b) and (c) of Section 5.2 and
         (iii) a listing of all Principal Subsidiaries and consolidated
         Subsidiaries of the Company showing the extent of its direct and
         indirect holdings of their stocks;

                  (d) promptly after the sending or filing thereof, copies of
         all publicly available reports which the Company, any Principal
         Subsidiary or any Restricted Affiliate sends to any of its security
         holders and copies of all publicly available reports and registration
         statements which the Company, any Principal Subsidiary or any
         Restricted Affiliate files with the Securities and Exchange Commission
         or any national securities exchange other than registration statements
         relating to employee benefit plans and to registrations of securities
         for selling security holders;

                  (e) within 10 days after sending or filing thereof, a copy of
         FERC Form No. 2: Annual Report of Major Natural Gas Companies, sent or
         filed by the Company to or with the FERC 

<PAGE>   59
                                                                              55


         with respect to each fiscal year of the Company;

                  (f) promptly in writing, notice of all litigation and of all
         proceedings before any governmental or regulatory agencies against or
         involving the Company, any Principal Subsidiary or any Restricted
         Affiliate, except any litigation or proceeding which in the reasonable
         judgment of the Company (taking into account the exhaustion of all
         appeals) is not likely to have a material adverse effect on the
         consolidated financial condition of the Company and its consolidated
         Subsidiaries taken as a whole;

                  (g) within three Business Days after an executive officer of
         the Company obtains knowledge of the occurrence of any Event of Default
         which is continuing or of any event not theretofore remedied which with
         notice or lapse of time, or both, would constitute an Event of Default,
         notice of such occurrence together with a detailed statement by a
         responsible officer of the Company of the steps being taken by the
         Company or the appropriate Subsidiary to cure the effect of such event;

                  (h) as soon as practicable and in any event (i) within 30 days
         after the Company or any ERISA Affiliate knows or has reason to know
         that any Termination Event described in clause (a) of the definition of
         Termination Event with respect to any Plan has occurred and (ii) within
         10 days after the Company or any ERISA Affiliate knows or has reason to
         know that any other Termination Event has occurred, a statement of the
         chief financial officer or treasurer of the Company describing such
         Termination Event and the action, if any, which the Company or such
         ERISA Affiliate proposes to take with respect thereto;

                  (i) promptly and in any event within two Business Days after
         receipt thereof by the Company or any ERISA Affiliate, copies of each
         notice received by the Company or any ERISA Affiliate from the PBGC
         stating its intention to terminate any Plan or to have a trustee
         appointed to administer any Plan;

                  (j) promptly and in any event within 30 days after the filing
         thereof with the Internal Revenue Service, copies of each Schedule B
         (Actuarial Information) to the annual report (Form 5500 Series) with
         respect to each Single Employer Plan;

                  (k) promptly and in any event within five Business Days after
         receipt thereof by the Company or any ERISA Affiliate from the sponsor
         of a Multiemployer Plan, a copy of each notice received by the Company
         or any ERISA Affiliate concerning (i) the imposition of Withdrawal
         Liability by a Multiemployer Plan, (ii) the determination that a
         Multiemployer Plan is, or is expected to be, in reorganization or
         insolvent within the meaning of Title IV of ERISA, (iii) the 
         termination of a Multiemployer Plan 

<PAGE>   60
                                                                              56


         within the meaning of Title IV of ERISA, or (iv) the amount of
         liability incurred, or expected to be incurred, by the Company or any
         ERISA Affiliate in connection with any event described in clause (i),
         (ii) or (iii) above; and

                  (l) as soon as practicable but in any event within 60 days of
         any notice of request therefor, such other information respecting the
         financial condition and results of operations of the Company or any
         Subsidiary of the Company as any Lender through the Administrative
         Agent may from time to time reasonably request.

                  Each balance sheet and other financial statement furnished
pursuant to subsections (a) and (b) of this Section 5.3 shall contain
comparative financial information which conforms to the presentation required in
Form 10-Q and 10-K, as appropriate, under the Securities Exchange Act of 1934,
as amended.

                  SECTION V.4 Restrictions on Material Subsidiaries. Upon
Holding becoming a Borrower hereunder, Holding will not, and will not permit any
Material Subsidiary, to enter into any agreement or understanding pursuant to
which (a) any non-equity interest claim Holding may have against any Material
Subsidiary would be subordinate in any manner to the payment of any other
obligation of such Material Subsidiary (other than waivers or subordination of
subrogation, contribution or similar rights under Guaranties and similar
agreements) or (b) by its terms limits or restricts the ability of such Material
Subsidiary to make funds available to Holding (whether by dividend or other
distribution, by replacement of any inter-company advance or otherwise) if, in
any such case referred to in this Section 5.4, there is, at the time any such
agreement is entered into, a reasonable likelihood that all such agreements and
understandings, considered together, would materially and adversely affect the
ability of Holding to meet its obligations as they become due.

                                   ARTICLE VI

                                   GUARANTEES

                  SECTION VI.1 Guarantees. (a) Subject to the provisions of
Section 6.1(b), each Borrower hereby unconditionally and irrevocably guarantees
to the Administrative Agent, for the ratable benefit of the Lenders and their
respective successors, indorsees, transferees and assigns, the prompt and
complete payment by each other Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations owing by such other
Borrower.

                  (b) Anything in this Article VI to the contrary
notwithstanding, the maximum liability of each Borrower (other than a Borrower
which is guaranteeing the Obligations of its Subsidiaries) under this Article VI
shall in no event exceed the amount which can be guaranteed by such Borrowing
Subsidiary under 

<PAGE>   61
                                                                              57


applicable federal and state laws relating to the insolvency of debtors.

                  (c) Each Borrower agrees that the Obligations owing by any
other Borrower may at any time and from time to time exceed the amount of the
liability of such other Borrower under this Article VI without impairing the
guarantee of such Borrower under this Article VI or affecting the rights and
remedies of the Administrative Agent or any Lender under this Article VI.

                  (d) No payment or payments made by any Borrower or any other
Person or received or collected by the Administrative Agent or any Lender from
any Borrower or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application, at any time or from time to time, in
reduction of or in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of the Borrowers under this Article VI
which shall, notwithstanding any such payment or payments, continue until the
Obligations are paid in full and the Commitments are terminated.

                  (e) Each Borrower agrees that whenever, at any time, or from
time to time, it shall make any payment to the Administrative Agent or any
Lender on account of its liability under this Article VI, it will notify the
Administrative Agent in writing that such payment is made under this Article VI
for such purpose.

                  SECTION VI.2 No Subrogation. Notwithstanding any payment or
payments made by any Borrower under this Article VI or any set-off or
application of funds of such Borrower by the Administrative Agent or any Lender,
such Borrower shall not be entitled to be subrogated to any of the rights of the
Administrative Agent or any Lender against any other Borrower or against any
collateral security or guarantee or right of offset held by the Administrative
Agent or any Lender for the payment of the Obligations, nor shall such Borrower
seek or be entitled to seek any contribution or reimbursement from any other
Borrower in respect of payments made by such Borrower hereunder, until all
amounts owing to the Administrative Agent and the Lenders by the other Borrowers
on account of the Obligations are paid in full and the Commitments are
terminated. If any amount shall be paid to any Borrower on account of such
subrogation rights at any time when all of the Obligations shall not have been
paid in full, such amount shall be held by such Borrower in trust for the
Administrative Agent and the Lenders, segregated from other funds of such
Borrower, and shall, forthwith upon receipt by such Borrower, be turned over to
the Administrative Agent in the exact form received by such Borrower (duly
indorsed by such Borrower to the Administrative Agent, if required), to be
applied against the Obligations, whether matured or unmatured, in such order as
the Administrative Agent may determine.

                  SECTION VI.3 Amendments, etc. with respect to the Obligations;
Waiver of Rights. Each Borrower shall remain obligated under this Article VI
notwithstanding that, without any 

<PAGE>   62
                                                                              58


reservation of rights against such Borrower, and without notice to or further
assent by such Borrower, any demand for payment of any of the Obligations made
by the Administrative Agent or any Lender may be rescinded by the Administrative
Agent or such Lender, and any of the Obligations continued, and the Obligations,
or the liability of any other party upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Administrative Agent or any Lender, and this Agreement, any Notes and any
other documents executed and delivered in connection herewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Administrative
Agent (or the Majority Lenders, as the case may be) may deem advisable from time
to time, and any collateral security, guarantee or right of offset at any time
held by the Administrative Agent or any Lender for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Obligations or for this Agreement or any property subject thereto. When making
any demand hereunder against any Borrower, the Administrative Agent or any
Lender may, but shall be under no obligation to, make a similar demand on the
applicable Borrowing Subsidiaries or any other guarantor, and any failure by the
Administrative Agent or any Lender to make any such demand or to collect any
payments from the other Borrowers or any such other guarantor or any release of
the other Borrowers or such other guarantor shall not relieve such Borrower of
its obligations or liabilities hereunder, and shall not impair or affect the
rights and remedies, express or implied, or as a matter of law, of the
Administrative Agent or any Lender against such Borrower for the purposes hereof
"demand" shall include the commencement and continuance of any legal 
proceedings.

                  SECTION VI.4 Guarantee Absolute and Unconditional. Each
Borrower waives any and all notice of the creation, renewal, extension or
accrual of any of the Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon this Agreement or acceptance of this
Agreement; the Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon this Agreement; and all dealings between any Borrower,
on the one hand, and the Administrative Agent and the Lenders, on the other,
shall likewise be conclusively presumed to have been had or consummated in
reliance upon this Agreement. Each Borrower waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
other Borrowers with respect to the Obligations. The guarantee contained in this
Article VI shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity, regularity or
enforceability of this Agreement, any Note, any of the Obligations or any other
collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the 

<PAGE>   63
                                                                              59


Administrative Agent or any Lender, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) which may at any time be
available to or be asserted by any Borrower against the Administrative Agent or
any Lender, or (c) any other circumstance whatsoever (with or without notice to
or knowledge of any Borrower) which constitutes, or might be construed to
constitute, an equitable or legal discharge of any Borrower for the Obligations,
or of the Borrowers under this Agreement, in bankruptcy or in any other
instance. When pursuing its rights and remedies hereunder against any Borrower,
the Administrative Agent and any Lender may, but shall be under no obligation
to, pursue such rights and remedies as it may have against any other Borrower or
any other Person or against any collateral security or guarantee for the
Obligations or any right of offset with respect thereto, and any failure by the
Administrative Agent or any Lender to pursue such other rights or remedies or to
collect any payments from other Borrowers or any such other Person or to realize
upon any such collateral security or guarantee or to exercise any such right of
offset, or any release of any other Borrower or any such other Person or of any
such collateral security, guarantee or right of offset, shall not relieve any
Borrower of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Administrative Agent or any Lender against such Borrower. The guarantees
contained in this Article VI shall remain in full force and effect and be
binding in accordance with and to the extent of its terms upon each Borrower and
its successors and assigns thereof, and shall inure to the benefit of the
Administrative Agent and the Lenders, and their respective successors,
indorsees, transferees and assigns, until all the Obligations and the
obligations of the Borrowers under this Agreement shall have been satisfied by
payment in full and the Commitments shall be terminated, notwithstanding that
from time to time during the term of this Agreement the Borrowers may be free
from any Obligations.

                  SECTION VI.5 Reinstatement. The provisions of this Article VI
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
any Borrower or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, any Borrower or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
<PAGE>   64
                                                                              60


                                   ARTICLE VII

                                EVENTS OF DEFAULT

                  SECTION VII.1 Event of Default. If any of the following events
("Events of Default") shall occur and be continuing:

                  (a) Any Borrower shall fail to pay any installment of
         principal of any of its Advances or Notes when due, or any interest on
         any of its Advances or Notes or any other amount payable by it
         hereunder within five Business Days after the same shall be due; or

                  (b) Any representation or warranty made or deemed made by any
         Borrower herein or by any Borrower (or any of its officers) in
         connection with this Agreement shall prove to have been incorrect in
         any material respect when made or deemed made; or

                  (c) Any Borrower shall fail to perform or observe any other
         term, covenant or agreement contained in this Agreement on its part to
         be performed or observed and any such failure shall remain unremedied
         for 30 days after written notice thereof shall have been given to such
         Borrower by the Administrative Agent or by any Lender with a copy to
         the Administrative Agent; or

                  (d) The Company, any Principal Subsidiary or any Restricted
         Affiliate shall fail to pay any Debt or Guaranty (excluding Debt
         incurred pursuant hereto) of the Company, such Principal Subsidiary or
         such Restricted Affiliate (as the case may be) in an aggregate
         principal amount of $100,000,000 or more, or any installment of
         principal thereof or interest or premium thereon, when due (whether by
         scheduled maturity, required prepayment, acceleration, demand or
         otherwise) and such failure shall continue after the applicable grace
         period, if any, specified in the agreement or instrument relating to
         such Debt or Guaranty; or any other default under any agreement or
         instrument relating to any such Debt, or any other event, shall occur
         and shall continue after the applicable grace period, if any, specified
         in such agreement or instrument, if the effect of such default or event
         is to accelerate, or to permit the acceleration of, the maturity of
         such Debt; or any such Debt shall be required to be prepaid (other than
         by a regularly scheduled required prepayment), prior to the stated
         maturity thereof, as a result of either (i) any default under any
         agreement or instrument relating to any such Debt or (ii) the
         occurrence of any other event (other than an issuance, sale or other
         disposition of stock or other assets, or an incurrence or issuance of
         Indebtedness or other obligations, giving rise to a repayment or
         prepayment obligation in respect of such Debt) the effect of which
         would otherwise be to accelerate or to permit the 

<PAGE>   65
                                                                              61


         acceleration of the maturity of such Debt; provided that,
         notwithstanding any provision contained in this subsection (d) to the
         contrary, to the extent that pursuant to the terms of any agreement or
         instrument relating to any Debt or Guaranty referred to in this
         subsection (d) (or in the case of any such Guaranty, relating to any
         obligations Guaranteed thereby), any sale, pledge or disposal of Margin
         Stock, or utilization of the proceeds of such sale, pledge or disposal,
         would result in a breach of any covenant contained therein or otherwise
         give rise to a default or event of default thereunder and/or
         acceleration of the maturity of the Debt or obligations extended
         pursuant thereto, or payment pursuant to any Guaranty, and as a result
         of such terms or of such sale, pledge, disposal, utilization, breach,
         default, event of default or acceleration or nonpayment under such
         Guaranty, or the provisions thereof relating thereto, this Agreement or
         any Advance hereunder would otherwise be subject to the margin
         requirements or any other restriction under Regulation U issued by the
         Board of Governors of the Federal Reserve System, then such breach,
         default, event of default or acceleration, or nonpayment under any
         Guaranty, shall not constitute a default or Event of Default under this
         subsection (d); or

                  (e)(i) The Company, any Principal Subsidiary or any Restricted
         Affiliate shall (A) generally not pay its debts as such debts become
         due; or (B) admit in writing its inability to pay its debts generally;
         or (C) make a general assignment for the benefit of creditors; or (ii)
         any proceeding shall be instituted or consented to by the Company, any
         Principal Subsidiary or any Restricted Affiliate seeking to adjudicate
         it a bankrupt or insolvent, or seeking liquidation, winding up,
         reorganization, arrangement, adjustment, protection, relief, or
         composition of it or its debts under any law relating to bankruptcy,
         insolvency or reorganization or relief of debtors, or seeking the entry
         of an order for relief or the appointment of a receiver, trustee, or
         other similar official for it or for any substantial part of its
         property; or (iii) any such proceeding shall have been instituted
         against the Company, any Principal Subsidiary or any Restricted
         Affiliate and either such proceeding shall not be stayed or dismissed
         for 60 consecutive days or any of the actions sought in such proceeding
         (including, without limitation, the entry of an order for relief
         against it or the appointment of a receiver, trustee, custodian or
         other similar official for it or any substantial part of its property)
         shall occur; or (iv) the Company, any Principal Subsidiary or any
         Restricted Affiliate shall take any corporate action to authorize any
         of the actions set forth above in this subsection (e); or

                  (f) Any judgment or order of any court for the payment of
         money in excess of $50,000,000 shall be rendered against the Company,
         any Principal Subsidiary or any Restricted Affiliate and either (i)
         enforcement proceedings shall have been commenced by any creditor upon
         such judgment or order 

<PAGE>   66
                                                                              62


         (other than any enforcement proceedings consisting of the mere
         obtaining and filing of a judgment lien or obtaining of a garnishment
         or similar order so long as no foreclosure, levy or similar process in
         respect of such lien, or payment over in respect of such garnishment or
         similar order, has commenced) or (ii) there shall be any period of 30
         consecutive days during which a stay of execution or of enforcement
         proceedings (other than those referred to in the parenthesis in clause
         (i) above) in respect of such judgment or order, by reason of a pending
         appeal, bonding or otherwise, shall not be in effect; or

                  (g) (i) Any Termination Event with respect to a Plan shall
         have occurred and, 30 days after notice thereof shall have been given
         to the Company by the Administrative Agent, such Termination Event
         shall still exist; or (ii) the Company or any ERISA Affiliate shall
         have been notified by the sponsor of a Multiemployer Plan that it has
         incurred Withdrawal Liability to such Multiemployer Plan; or (iii) the
         Company or any ERISA Affiliate shall have been notified by the sponsor
         of a Multiemployer Plan that such Multiemployer Plan is in
         reorganization, or is insolvent or is being terminated, within the
         meaning of Title IV of ERISA; or (iv) any Person shall engage in a
         "prohibited transaction" (as defined in Section 406 of ERISA or Section
         4975 of the Code) involving any Plan; and in each case in clauses (i)
         through (iv) above, such event or condition, together with all other
         such events or conditions, if any, would result in an aggregate
         liability of the Company or any ERISA Affiliate that would exceed 10%
         of the Net Worth of the Company.

                  (h) Upon completion of, and pursuant to, a transaction, or a
         series of transactions (which may include prior acquisitions of capital
         stock of EPNGC or Holding in the open market or otherwise), involving a
         tender offer (i) a "person" (within the meaning of Section 13(d) of the
         Securities Exchange Act of 1934) other than EPNGC or Holding, a
         Subsidiary of EPNGC or Holding or any employee benefit plan maintained
         for employees of EPNGC or Holding and/or any of their respective
         Subsidiaries or the trustee therefor, shall have acquired direct or
         indirect ownership of and paid for in excess of 50% of the outstanding
         capital stock of EPNGC or Holding entitled to vote in elections for
         directors of EPNGC or Holding and (ii) at any time before the later of
         (A) six months after the completion of such tender offer and (B) the
         next annual meeting of the shareholders of EPNGC or Holding following
         the completion of such tender offer more than half of the directors of
         EPNGC or Holding consists of individuals who (1) were not directors
         before the completion of such tender offer and (2) were not appointed,
         elected or nominated by the Board of Directors in office prior to the
         completion of such tender offer (other than any such appointment,
         election or nomination required or agreed to in connection with, or as
         a result of, the completion of such tender offer); or


<PAGE>   67
                                                                              63


                  (i) Any event of default shall occur under any agreement or
         instrument relating to or evidencing any Debt now or hereafter existing
         of the Company or any Principal Subsidiary or Restricted Affiliate as
         the result of any change of control of the Company; or

                  (j) Any of (i) the guarantees contained in Article VI, (ii)
         the Restricted Affiliate Guarantees or (iii) the Holding Guarantee
         shall cease, for any reason, to be in full force and effect or any
         Borrower, any Restricted Affiliate or Holding shall so assert;

then, and in any such event, the Administrative Agent shall at the request, or
may with the consent, of the Majority Lenders, by notice to the Company, (i)
declare the obligation of each Lender to make Advances to be terminated,
whereupon the same shall forthwith terminate, and (ii) declare the Advances and
the Notes, all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Advances and the Notes,
all such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrowers; provided, however, that
if an Event of Default under subsection (e) of this Section 7.1 (except under
clause (i)(A) thereof) shall occur, (A) the obligation of each Lender to make
Advances shall automatically be terminated and (B) the Advances and the Notes,
all interest thereon and all other amounts payable under this Agreement shall
automatically become and be forthwith due and payable, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly
waived by the Borrowers.
<PAGE>   68
                                                                              64


                                  ARTICLE VIII

               THE ADMINISTRATIVE AGENT AND THE CAF ADVANCE AGENT

                  SECTION VIII.1 Authorization and Action. Each Lender hereby
appoints and authorizes the Administrative Agent and the CAF Advance Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Administrative Agent and the CAF Advance Agent
by the terms hereof, together with such powers as are reasonably incidental
thereto. As to any matters not expressly provided for by this Agreement
(including, without limitation, enforcement of this Agreement or collection of
the Notes), the Administrative Agent and the CAF Advance Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Administrative Agent and the CAF Advance Agent shall
not be required to take any action which exposes the Administrative Agent or the
CAF Advance Agent to personal liability or which is contrary to this Agreement
or applicable law. The Administrative Agent and the CAF Advance Agent agree to
give to each Lender prompt notice of each notice given to it by any Borrower
pursuant to the terms of this Agreement. Notwithstanding anything to the
contrary contained in this Agreement, the parties hereto hereby agree that
neither the Documentation Agent nor the Syndication Agent shall have any rights,
duties or responsibilities in its capacity as Documentation Agent or Syndication
Agent, as applicable, hereunder and neither the Documentation Agent nor the
Syndication Agent shall have the authority to take any action hereunder in its
capacity as such.

                  SECTION VIII.2 Administrative Agent's and CAF Advance Agent's
Reliance, Etc. None of the Administrative Agent, the CAF Advance Agent or any of
its respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the
Administrative Agent and the CAF Advance Agent: (i) may treat the payee of any
Note as the holder thereof until the Administrative Agent receives and accepts
an Assignment and Acceptance entered into by the Lender which is the payee of
such Note, as assignor, and an Eligible Assignee, as assignee, as provided in
Section 9.7; (ii) may consult with legal counsel (including counsel for the
Company), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (iii)
makes no warranty or representation to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations (whether written
or oral) made in or in connection with this Agreement; (iv) shall not have any
duty to ascertain or to inquire as to the 

<PAGE>   69
                                                                              65


performance or observance of any of the terms, covenants or conditions of this
Agreement on the part of the Borrowers or to inspect the property (including the
books and records) of the Borrowers; (v) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; and (vi) shall incur no liability under or in respect
of this Agreement by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, telecopier, cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties.

                  SECTION VIII.3 Chase and Affiliates. With respect to its
Commitment, the Advances made by it and the Note issued to it, Chase shall have
the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Administrative Agent or the CAF
Advance Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include Chase in its individual capacity. Chase and its
affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, the Company,
any of its Subsidiaries and any Person who may do business with or own
securities of the Company or any of its Subsidiaries, all as if Chase were not
the Administrative Agent or the CAF Advance Agent and without any duty to
account therefor to the other Lenders.

                  SECTION VIII.4 Lender Credit Decision. Each Lender
acknowledges that it has, independently and without reliance upon the
Administrative Agent, the CAF Advance Agent or any other Lender and based on the
financial statements referred to in Section 4.1 and such other 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, the CAF
Advance Agent 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.

                  SECTION VIII.5 Indemnification. The Lenders agree to indemnify
the Administrative Agent and the CAF Advance Agent (to the extent not reimbursed
by the Borrowers), ratably according to the respective principal amounts of the
Advances then outstanding by each of them (or if no Advances are at the time
outstanding or if any Notes are held by Persons which are not Lenders, ratably
according to the respective amounts of their aggregate Commitments), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Administrative Agent or the CAF Advance Agent in any way relating to or arising
out of this Agreement or any action taken or omitted by the Administrative Agent
or the CAF Advance Agent under this Agreement, provided that no Lender shall be

<PAGE>   70
                                                                              66


liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's or the CAF Advance Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Administrative Agent and the CAF Advance Agent promptly upon
demand for its ratable share of any out-of-pocket expenses (including reasonable
counsel fees) incurred by the Administrative Agent or the CAF Advance Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings, in bankruptcy or insolvency proceedings, or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, to the
extent that the Administrative Agent or the CAF Advance Agent is not reimbursed
for such expenses by the Borrowers.



<PAGE>   71
                                                                              67


                  SECTION VIII.6 Successor Administrative Agent and CAF Advance
Agent. The Administrative Agent and the CAF Advance Agent may resign at any time
by giving written notice thereof to the Lenders and the Company and may be
removed at any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Administrative Agent or the CAF Advance Agent. If no successor
Administrative Agent or CAF Advance Agent shall have been so appointed by the
Majority Lenders, and shall have accepted such appointment, within 30 days after
the retiring Administrative Agent's or the CAF Advance Agent giving of notice of
resignation or the Majority Lenders' removal of the retiring Administrative
Agent or CAF Advance Agent, then such retiring Administrative Agent or CAF
Advance Agent may, on behalf of the Lenders, appoint a successor Administrative
Agent or CAF Advance Agent, which shall be a Lender and a commercial bank
organized, or authorized to conduct a banking business, under the laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $500,000,000. Upon the acceptance of any appointment as
Administrative Agent or CAF Advance Agent hereunder by a successor
Administrative Agent or CAF Advance Agent, such successor Administrative Agent
or CAF Advance Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent or
CAF Advance Agent, and the retiring Administrative Agent or CAF Advance Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Administrative Agent's or CAF Advance Agent's resignation or
removal hereunder as Administrative Agent or CAF Advance Agent, the provisions
of this Article VII shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent or CAF Advance Agent
under this Agreement.



<PAGE>   72
                                                                              68


                                   ARTICLE IX

                                  MISCELLANEOUS


                  SECTION IX.1 Amendments, Etc. An amendment or waiver of any
provision of this Agreement or the Notes, or a consent to any departure by any
Borrower therefrom, shall be effective against the Lenders and all holders of
the Notes if, but only if, it shall be in writing and signed by the Majority
Lenders, and then such a waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such amendment, waiver or consent shall, unless in writing and
signed by all the Lenders, be effective to: (a) waive any of the conditions
specified in Article III, (b) increase or extend the Commitments of the Lenders
or subject the Lenders to any additional obligations, (c) reduce the principal
of, or interest on, any Advance or the Notes or any facility fees hereunder, (d)
postpone any date fixed for any payment of principal of, or interest on, any
Advance or the Notes or any facility fees hereunder, (e) change the percentage
of the Commitments or of the aggregate unpaid principal amount of any Advance or
the Notes, or the number of Lenders, which shall be required for the Lenders or
any of them to take any action under this Agreement, (f) amend this Section 9.1,
(g) amend, waive or consent to any departure of any provision in Article VI or
(h) except as provided below, release any Borrower or Holding or any Restricted
Affiliate from its guarantee in Article VI, the Holding Guarantee or any
Restricted Affiliate Guarantee, as the case may be; provided, further, that no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent and the CAF Advance Agent in addition to the Lenders
required hereinabove to take such action, affect the rights or duties of the
Administrative Agent or the CAF Advance Agent under this Agreement or any Note;
provided, still further, that the guarantee of a Borrower under Article VI and
of a Restricted Affiliate under its Restricted Affiliate Guarantee shall be
released automatically upon (i) the sale by the Company of such Borrower or
Restricted Affiliate, provided that such sale is permitted under this Agreement,
or (ii) such Borrower or Restricted Affiliate ceasing to be a Borrower or a
Restricted Affiliate hereunder.

                  SECTION IX.2 Notices, Etc. Except as otherwise provided in
Section 2.2(a), 2.5(d) or 2.15(b), all notices and other communications provided
for hereunder shall be in writing (including telecopier and other readable
communication) and mailed by certified mail, return receipt requested,
telecopied or otherwise transmitted or delivered, if to any Borrower, c/o the
Company at El Paso Energy Building, 1001 Louisiana Street, Houston, Texas 77002,
Attention: Executive Vice President and Chief Financial Officer, Telecopier:
(713) 757-4975; if to any Lender, at its address set forth under its name on
Schedule I; if to the Administrative Agent, at 270 Park Avenue, 32nd floor, New
York, New York 10017, Attention: Peter Ling, Telecopier: (212) 383-0361; and if
to the CAF Advance Agent, at One Chase Manhattan Plaza, Third Floor, New York,
New York 10081, Attention: Sandra Miklave, Telecopier: (212) 552-5700,
Telephone: (212) 552-7953; or, as to each party and each Borrowing Subsidiary,
at such other address as shall be designated by such party in a written notice
to the other parties. All such notices and communications shall, 

<PAGE>   73
                                                                              69


if so mailed, telecopied or otherwise transmitted, be effective when received,
if mailed, or when the appropriate answerback or other evidence of receipt is
given, if telecopied or otherwise transmitted, respectively. A notice received
by the Administrative Agent, the CAF Advance Agent or a Lender by telephone
pursuant to Section 2.2(a), 2.5(d) or 2.15(b) shall be effective if the
Administrative Agent or Lender believes in good faith that it was given by an
authorized representative of the applicable Borrower and acts pursuant thereto,
notwithstanding the absence of written confirmation or any contradictory
provision thereof.

                  SECTION IX.3 No Waiver; Remedies. No failure on the part of
any Lender, the Administrative Agent or the CAF Advance Agent to exercise, and
no delay in exercising, any right hereunder or under any Note shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
or under any Note preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

                  SECTION IX.4 Costs and Expenses; Indemnity. (a) Each Borrower
agrees to pay on demand (to the extent not reimbursed by any other Borrower) (i)
all reasonable fees and out-of-pocket expenses of counsel for the Administrative
Agent in connection with the preparation, execution and delivery of this
Agreement, the Notes and the other documents to be delivered hereunder and the
fulfillment or attempted fulfillment of conditions precedent hereunder, (ii) all
reasonable costs and expenses incurred by the Administrative Agent and its
Affiliates in initially syndicating all or any portion of the Commitments
hereunder, including, without limitation, the related reasonable fees and
out-of-pocket expenses of counsel for the Administrative Agent or its
Affiliates, travel expenses, duplication and printing costs and courier and
postage fees, and excluding any syndication fees paid to other parties joining
the syndicate and (iii) all out-of-pocket costs and expenses, if any, incurred
by the Administrative Agent, the CAF Advance Agent and the Lenders in connection
with the enforcement (whether through negotiations, legal proceedings in
bankruptcy or insolvency proceedings, or otherwise) of this Agreement, the Notes
and the other documents to be delivered hereunder and thereunder, including the
reasonable fees and out-of-pocket expenses of counsel.

                  (b) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance or CAF Advance is made by any Borrower to or for the
account of a Lender on any day other than the last day of the Interest Period
for such Advance, as a result of a prepayment pursuant to Section 2.15 or a
Conversion pursuant to Section 2.13(f) or Section 2.14 or due to acceleration of
the maturity of the Advances and the Notes pursuant to Section 7.1 or due to any
other reason attributable to such Borrower, or if any Borrower shall fail to
make a borrowing of Eurodollar Rate Advances or CAF Advances after such Borrower
has given a notice requesting the same in accordance with the provisions of this
Agreement, such Borrower shall, upon demand by such Lender (with 

<PAGE>   74
                                                                              70


a copy of such demand to the Administrative Agent), pay to the Administrative
Agent for the account of such Lender any amounts required to compensate such
Lender for any additional losses, costs or expenses which it may reasonably
incur as a result of such payment, Conversion or failure to borrow, including,
without limitation, any loss (excluding loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender to fund or maintain such Advance.

                  (c) Each Borrower agrees to indemnify and hold harmless the
Administrative Agent, the CAF Advance Agent and each Lender (to the extent not
reimbursed by any other Borrower) from and against any and all claims, damages,
liabilities and expenses (including, without limitation, fees and disbursements
of counsel) which may be incurred by or asserted against the Administrative
Agent, the CAF Advance Agent or such Lender in connection with or arising out of
any investigation, litigation, or proceeding (whether or not the Administrative
Agent, the CAF Advance Agent or such Lender is party thereto) related to any
acquisition or proposed acquisition by the Company, or by any Subsidiary of the
Company, of all or any portion of the stock or substantially all the assets of
any Person or any use or proposed use of the Advances by any Borrower (excluding
any claims, damages, liabilities or expenses incurred by reason of the gross
negligence or willful misconduct of the party to be indemnified or its employees
or agents, or by reason of any use or disclosure of information relating to any
such acquisition or use or proposed use of the proceeds by the party to be
indemnified or its employees or agents).

                  SECTION IX.5 Right of Set-Off. Upon the declaration of the
Advances and the Notes as due and payable pursuant to the provisions of Section
7.1, each Lender 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 Lender to or for the credit or the
account of the applicable Borrower against any and all of the obligations of
such Borrower now or hereafter existing under this Agreement and the Notes of
such Borrower held by such Lender, irrespective of whether or not such Lender
shall have made any demand under this Agreement or such Notes and although such
obligations may be unmatured. Each Lender agrees promptly to notify the Company
after any such set-off and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section 9.5 are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which such Lender may have.

                  SECTION IX.6 Binding Effect. This Agreement shall become
effective in accordance with the provisions of Section 3.1, and thereafter shall
be binding upon and inure to the benefit of the Borrowers, the Administrative
Agent, the CAF 

<PAGE>   75
                                                                              71


Advance Agent and each Lender and their respective successors and assigns,
except that no Borrower shall have the right to assign its rights or obligations
hereunder or any interest herein without the prior written consent of all of the
Lenders.

                  SECTION IX.7 Assignments and Participations. (a) Each Lender
may assign to one or more banks or other financial institutions all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Advances owing to it and the
Notes held by it); provided, however, that (i) each such assignment shall be of
a constant, and not a varying, percentage of all rights and obligations under
this Agreement, (ii) the amount of the Commitment of the assigning Lender being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than $15,000,000 (or, if less, the entire Commitment of the assigning
Lender) and shall be an integral multiple of $1,000,000, (iii) each such
assignment shall be to an Eligible Assignee, and (iv) the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with any Notes subject to such assignment and a processing and recordation fee
of $2,500, and shall send to the Company an executed counterpart of such
Assignment and Acceptance. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, (A) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and (B) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and 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).

                  (b) By executing and delivering an Assignment and Acceptance,
each Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, 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 or any other instrument or document
furnished pursuant hereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of each Borrower or the performance or observance by each Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms 

<PAGE>   76
                                                                              72


that it has received a copy of this Agreement, together with copies of the
financial statements referred to in Section 4.1 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; (iv) such assignee will,
independently and without reliance upon the Administrative Agent, the CAF
Advance 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; (v) such assignee confirms that it is an Eligible Assignee; (vi) such
assignee appoints and authorizes the Administrative Agent and the CAF Advance
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Administrative Agent and the CAF
Advance 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 of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.

                  (c) The Administrative Agent shall maintain at its address
referred to in Section 9.2 a copy of each Assignment and Acceptance delivered to
and accepted by it and a register for the recordation of the names and addresses
of the Lenders and the Commitment of, and principal amount of the Advances owing
to, each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and
each Borrower, the Administrative Agent, the CAF Advance Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by any Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice. Upon the acceptance of any Assignment
and Acceptance for recordation in the Register, Schedule I hereto shall be
deemed to be amended to reflect the revised Commitments of the Lenders parties
to such Assignment and Acceptance as well as administrative information with
respect to any new Lender as such information is recorded in the Register.

                  (d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and as assignee representing that it is an Eligible
Assignee, together with any Notes subject to such assignment, the Administrative
Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit G hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Company; within five Business Days after
its receipt of such notice and its receipt of an executed counterpart of such
Assignment and Acceptance, the Borrowers, at their own expense, shall execute
and deliver to the Administrative Agent in exchange for the surrendered Notes,
if any, new Notes to the order of such Eligible Assignee, if requested, in an
amount equal to the Commitment assumed by it pursuant to such Assignment and

<PAGE>   77
                                                                              73


Acceptance and, if the assigning Lender has retained a Commitment hereunder, new
Notes, if requested, to the order of the assigning Lender in an amount equal to
the Commitment retained by it hereunder. Such new Notes, if any, shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Notes, if any, shall be dated (A) in the case of Notes made by
EPNGC, the Closing Date and (B) in the case of Notes made by any other Borrower,
the date such other Borrower executes and delivers its Joinder Agreement, and
shall otherwise be in substantially the form of Exhibit A.

                  (e) Each Lender may sell participations to one or more banks
or other entities in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment, and the Advances owing to it and the Notes held by it); provided,
however, that (i) such Lender's obligations under this Agreement (including,
without limitation, its Commitment to the Borrowers hereunder) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Lender shall remain
the holder of any such Notes for all purposes of this Agreement, (iv) the
Borrowers, the Administrative Agent, the CAF Advance Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement, (v) such Lender shall
continue to be able to agree to any modification or amendment of this Agreement
or any waiver hereunder without the consent, approval or vote of any such
participant or group of participants, other than modifications, amendments and
waivers which (A) postpone any date fixed for any payment of, or reduce any
payment of, principal of or interest on such Lender's Advances or Notes or any
facility fees payable under this Agreement, or (B) increase the amount of such
Lender's Commitment in a manner which would have the effect of increasing the
amount of a participant's participation, or (C) reduce the interest rate payable
under this Agreement and such Lender's Notes, or (D) consent to the assignment
or the transfer by any Borrower of any of its rights and obligations under the
Agreement, and (vi) except as contemplated by the immediately preceding clause
(v), no participant shall be deemed to be or to have any of the rights or
obligations of a "Lender" hereunder.

                  (f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.7, 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,
the assignee or participant or proposed assignee or participant shall agree in
writing for the benefit of the Borrowers to preserve the confidentiality of any
confidential information relating to the Borrowers received by it from such
Lender in a manner consistent with Section 9.8.


<PAGE>   78
                                                                              74


                  (g) Anything in this Agreement to the contrary
notwithstanding, any Lender may at any time create a security interest in all or
any portion of its rights under this Agreement (including, without limitation,
the Advances owing to it) and the Notes issued to it hereunder in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System (or any successor regulation) and the applicable
operating circular of such Federal Reserve Bank.

                  SECTION IX.8 Confidentiality. Each Lender, the Administrative
Agent and the CAF Advance Agent (each, a "Party") agrees that it will use its
best efforts not to disclose, without the prior consent of the Company (other
than to its, or its Affiliate's, employees, auditors, accountants, counsel or
other representatives, whether existing at the date of this Agreement or any
subsequent time), any information with respect to the Borrowers which is
furnished pursuant to this Agreement, provided that any Party may disclose any
such information (i) as has become generally available to the public, (ii) as
may be required or appropriate in any report, statement or testimony submitted
to any municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such party or to the Board of Governors of the Federal Reserve
System or the Federal Deposit Insurance Corporation or similar organizations
(whether in the United States or elsewhere) or their successors, (iii) as may be
required or appropriate in response to any summons or subpoena or in connection
with any litigation or regulatory proceeding, (iv) in order to comply with any
law, order, regulation or ruling applicable to such party, or (v) to any
prospective assignee or participant in connection with any contemplated
assignment of any rights or obligations hereunder, or any sale of any
participation therein, by such Party pursuant to Section 9.7, if such
prospective assignee or participant, as the case may be, executes an agreement
with the Company containing provisions substantially similar to those contained
in this Section 9.8; provided, however, that the Company acknowledges that the
Administrative Agent has disclosed and may continue to disclose such information
as the Administrative Agent in its sole discretion determines is appropriate to
the Lenders from time to time.

                  SECTION IX.9 Consent to Jurisdiction. (a) Each Borrower hereby
irrevocably submits to the jurisdiction of any New York State or Federal court
sitting in New York City and any appellate court from any thereof in any action
or proceeding by the Administrative Agent, the CAF Advance Agent, any Lender or
the holder of any Note in respect of, but only in respect of, any claims or
causes of action arising out of or relating to this Agreement or the Notes (such
claims and causes of action, collectively, being "Permitted Claims"), and each
Borrower hereby irrevocably agrees that all Permitted Claims may be heard and
determined in such New York State court or in such Federal court. Each Borrower
hereby irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any aforementioned court in respect of Permitted Claims. Each Borrower hereby
irrevocably appoints CT Corporation System (the "Process Agent"), with an office
on the date hereof at 1633 

<PAGE>   79
                                                                              75


Broadway, New York, New York 10019, as its agent to receive on behalf of such
Borrower and its property service of copies of the summons and complaint and any
other process which may be served by the Administrative Agent, any Lender or the
holder of any Note in any such action or proceeding in any aforementioned court
in respect of Permitted Claims. Such service may be made by delivering a copy of
such process to the Company by courier and by certified mail (return receipt
requested), fees and postage prepaid, both (i) in care of the Process Agent at
the Process Agent's above address and (ii) at the Company's address specified
pursuant to Section 9.2, and each Borrower hereby irrevocably authorizes and
directs the Process Agent to accept such service on its behalf. Each Borrower
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.

                  (b) Nothing in this Section 9.9 (i) shall affect the right of
any Lender, the holder of any Note or the Administrative Agent or the CAF
Advance Agent to serve legal process in any other manner permitted by law or
affect any right otherwise existing of any Lender, the holder of any Note or the
Administrative Agent or the CAF Advance Agent to bring any action or proceeding
against any Borrower or its property in the courts of other jurisdictions or
(ii) shall be deemed to be a general consent to jurisdiction in any particular
court or a general waiver of any defense or a consent to jurisdiction of the
courts expressly referred to in subsection (a) above in any action or proceeding
in respect of any claim or cause of action other than Permitted Claims.

                  SECTION IX.10 GOVERNING LAW. THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.

                  SECTION IX.11 Rate of Interest. It is the intention of the
parties hereto that each Lender shall each conform strictly to usury laws
applicable to it. Accordingly, if the transactions contemplated hereby would be
usurious as to any Lender under laws applicable to it, then, in that event,
notwithstanding anything to the contrary in this Agreement or in the Notes to
the order of such Lender, it is agreed as follows: (a) the aggregate of all
consideration which constitutes interest under law applicable to such Lender
that is contracted for, taken, reserved, charged or received by such Lender
hereunder, or under such Notes or otherwise, shall under no circumstances exceed
the maximum amount allowed by such applicable law, and any excess shall be
credited by such Lender on the principal amount of the sums owed to such Lender
(or, if all amounts owing to such Lender shall have been paid in full, refunded
by such Lender to the applicable Borrower); or (b) in the event that a
prepayment of any Advances owed to any Lender is required, then such
consideration that constitutes interest under law applicable to such Lender may
never include more than the maximum amount allowed by such applicable law, and
excess interest, if any, provided for shall be cancelled automatically by such
Lender as 

<PAGE>   80
                                                                              76


of the date of such prepayment and, if theretofore paid, shall be credited by
such Lender on the principal amount of such prepayment obligation (or, if the
principal amount of such prepayment obligation shall have been paid in full,
refunded by such Lender to the applicable Borrower). To the extent that Article
5069-1.04 of the Texas Revised Civil Statutes is relevant to any Lender for the
purpose of determining the maximum amount of interest allowed by applicable law,
such Lender hereby elects to determine the applicable rate ceiling under such
Article by the indicated (weekly) rate ceiling from time to time in effect,
subject to such Lender's right subsequently to change such method in accordance
with applicable law. In no event, however, shall Article 5069, Chapter 15, of
the Texas Revised Civil Statutes apply to this Agreement or the Notes or the
transactions contemplated hereby.

                  SECTION IX.12 Effect on Outstanding CAF Advances. The parties
hereto acknowledge and agree that upon the effectiveness of this Agreement all
"CAF Advances" under the Existing Facilities immediately before the
effectiveness of this Agreement will be converted to CAF Advances hereunder on
terms and conditions set forth in this Agreement.

                  SECTION IX.13 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery to the Administrative Agent of a counterpart executed by a
Lender shall constitute delivery of such counterpart to all of the Lenders. This
Agreement may be delivered by facsimile transmission of the relevant signature
pages hereof.


<PAGE>   81
                                                                              77


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


                                       EL PASO NATURAL GAS COMPANY



                                       By:
                                          Title:


                                       TENNESSEE GAS PIPELINE COMPANY



                                       By:
                                          Title:


                                       THE CHASE MANHATTAN BANK, as
                                         Administrative Agent, CAF Advance
                                         Agent and a Lender



                                       By:
                                          Title:


                                       CITIBANK, N.A., as Documentation       
                                         Agent and as a Lender



                                       By:
                                          Title:


                                       MORGAN GUARANTY TRUST COMPANY OF       
                                         NEW YORK, as Syndication Agent       
                                           and as a Lender



                                       By:
                                          Title:


<PAGE>   82
                                                                              78


                                       ABN-AMRO BANK, N.V.



                                       By:
                                          Title:



                                       By:
                                          Title:


                                       AUSTRALIA AND NEW ZEALAND BANKING
                                         GROUP LIMITED



                                       By:
                                          Title:


                                       BANK OF AMERICA NT & SA



                                       By:
                                          Title:


                                       BANKBOSTON, N.A.



                                       By:
                                          Title:


                                       BANK OF MONTREAL IRELAND PLC



                                       By:
                                          Title:


                                       THE BANK OF NEW YORK



                                       By:
                                          Title:


<PAGE>   83
                                                                              79


                                       THE BANK OF NOVA SCOTIA



                                       By:
                                          Title:


                                       THE BANK OF TOKYO-MITSUBISHI, LTD.



                                       By:
                                          Title:


                                       BANQUE NATIONALE DE PARIS, HOUSTON
                                         AGENCY



                                       By:
                                          Title:


                                       BARCLAYS BANK PLC



                                       By:
                                          Title:


                                       BAYERISCHE VEREINSBANK AG,
                                         LOS ANGELES AGENCY



                                       By:
                                          Title:



                                       By:
                                          Title:


                                       CAISSE NATIONALE DE CREDIT AGRICOLE



                                       By:
                                          Title:


<PAGE>   84
                                                                              80


                                       CIBC INC.



                                       By:
                                          Title:


                                       CREDIT LYONNAIS NEW YORK BRANCH



                                       By:
                                          Title:


                                       THE DAI-ICHI KANGYO BANK, LIMITED



                                       By:
                                          Title:


                                       DEUTSCHE BANK AG NEW YORK BRANCH
                                         AND/OR CAYMAN ISLANDS BRANCH



                                       By:
                                          Title:



                                       By:
                                          Title:


                                       DRESDNER BANK AG, NEW YORK AND
                                         GRAND CAYMAN BRANCHES



                                       By:
                                          Title:



                                       By:
                                          Title:



<PAGE>   85
                                                                              81


                                       THE FUJI BANK, LIMITED-HOUSTON
                                         AGENCY



                                       By:
                                          Title:


                                       THE INDUSTRIAL BANK OF JAPAN TRUST
                                         COMPANY



                                       By:
                                          Title:


                                       KREDIETBANK N.V., GRAND CAYMAN
                                         BRANCH



                                       By:
                                          Title:



                                       By:
                                          Title:


                                       THE LONG-TERM CREDIT BANK OF JAPAN,
                                         LTD.



                                       By:
                                          Title:


                                       MELLON BANK, N.A.



                                       By:
                                          Title:



                                       By:
                                          Title:


<PAGE>   86
                                                                              82


                                       NATIONAL WESTMINSTER BANK PLC NEW
                                         YORK BRANCH



                                       By:
                                          Title:


                                       NATIONAL WESTMINSTER BANK PLC
                                         NASSAU BRANCH



                                       By:
                                          Title:


                                       NATIONSBANK OF TEXAS, N.A.



                                       By:
                                          Title:


                                       NORINCHUKIN BANK, NEW YORK BRANCH



                                       By:
                                          Title:


                                       PNC BANK, NATIONAL ASSOCIATION



                                       By:
                                          Title:


                                       ROYAL BANK OF CANADA



                                       By:
                                          Title:


<PAGE>   87
                                                                              83


                                       THE SAKURA BANK, LIMITED - NEW YORK
                                         BRANCH



                                       By:
                                          Title:


                                       SOCIETE GENERALE, SOUTHWEST AGENCY



                                       By:
                                          Title:


                                       THE SUMITOMO BANK, LIMITED



                                       By:
                                          Title:


                                       TORONTO DOMINION (TEXAS), INC.



                                       By:
                                          Title:


                                       UNION BANK OF SWITZERLAND, HOUSTON
                                         AGENCY



                                       By:
                                          Title:



                                       By:
                                          Title:


                                       THE YASUDA TRUST & BANKING, CO.,
                                         LTD.


                                       By:
                                          Title:


<PAGE>   88


                                                                      SCHEDULE I


                          COMMITMENTS, ADDRESSES, ETC.



<TABLE>
<CAPTION>
Name and Address of Lender                                 Amount of Commitment
--------------------------                                 --------------------
<S>                                                        <C>        
The Chase Manhattan Bank                                      $42,500,000
Global Oil & Gas
270 Park Avenue, 32nd Floor
New York, New York  10017
Attention:   Peter Ling
Telephone:   212-270-4676
Telecopier:  212-270-3897

ABN AMRO Bank, N.V.                                           $27,500,000
135 South LaSalle, Suite 625
Chicago, Illinois  60603
Attention:  Loan Administration
Telephone:  312-904-8865
Telecopier: 312-904-6893

Australia and New Zealand Banking                             $12,500,000
Group Limited
1177 Avenue of the Americas
New York, New York  10036
Attention:  Kyle Loughlin
Telephone:  212-801-9853
Telecopier: 212-801-9131

Bank of America NT & SA                                       $27,500,000
231 South LaSalle
Chicago, Illinois  60697
Attention:  Debbie Aguilar
Telephone:  312-828-3793
Telecopier: 312-974-9626

with a copy to

Bank of America NT & SA
333 Clay Street
Suite 4550
Houston, Texas  77000
Attention:  Paula Veazey
Telephone:  713-651-4877
Telecopier: 713-651-4807
</TABLE>


<PAGE>   89
                                                                               2


<TABLE>
<CAPTION>
Name and Address of Lender                                 Amount of Commitment
--------------------------                                 --------------------
<S>                                                        <C>        
BankBoston, N.A.                                              $12,500,000
100 Federal Street
Mailstop 01-08-02
Boston, Massachusetts  02110
Attention:  Debora Williams
Telephone:  617-434-9623
Telecopier: 617-434-9820

Bank of Montreal Ireland Plc                                  $12,500,000
4th Floor, Segrave House
19/20 Earlsfort Terrace
Dublin 2, Ireland
Attention:  Eric Lindstrom
Telephone:  353-1-662-9300
Telecopier: 353-1-662-9301

with a copy to:

Bank of Montreal
Suite 4400
700 Louisiana Street
Houston, Texas  77002
Attention:  Natasha Gilossop
Telephone:  (713) 546-9752
Telecopier: (713) 223-4007

The Bank of New York                                          $20,000,000
One Wall Street, 19th Floor
New York, New York  10286
Attention:  Terri Foran
Telephone:  212-635-7921
Telecopier: 212-635-7923

The Bank of Nova Scotia                                       $20,000,000
Atlanta Agency
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia  30308
Attention:  F.C.H. Ashby
Telephone:  404-877-1500
Telecopier: 404-888-8998

with a copy to:

The Bank of Nova Scotia
Houston Representative Office
1100 Louisiana, Suite 3000
Houston, Texas  77002
Attention:  Jamie Conn
Telephone:  713-752-0900
Telecopier: 713-752-2425
</TABLE>



<PAGE>   90
                                                                               3


<TABLE>
<CAPTION>
Name and Address of Lender                                 Amount of Commitment
--------------------------                                 --------------------
<S>                                                        <C>        
The Bank of Tokyo-Mitsubishi, Ltd.                            $27,500,000
1100 Louisiana, Suite 2800
Houston, Texas  77002-5216
Attention:  J.M. McIntyre
Telephone:  713-655-3845
Telecopier: 713-655-3855

Banque Nationale de Paris,
Houston Agency                                                $12,500,000
333 Clay Street, Suite 3400
Houston, Texas  77002
Attention:  Mike Shryock
Telephone:  713-951-1224
Telecopier: 713-659-1414

Barclays Bank PLC                                             $20,000,000
222 Broadway
New York, New York  10038
Attention:  Sal Esposito
Telephone:  212-412-1516
Telecopier: 212-412-7585

Bayerische Vereinsbank AG,
Los Angeles Agency                                            $12,500,000
800 Wilshire Blvd., Suite 1600
Los Angeles, California  90017
Attention:  John Carlson/Jarunee                      
              Hanpachern
Telephone:  213-629-1821
Telecopier: 213-622-6341

Caisse Nationale de Credit Agricole                           $12,500,000
55 East Monroe Street, Suite 4700
Chicago, Illinois  60303
Attention:  Karen Bergstrom
Telephone:  312-917-7420
Telecopier: 312-372-2628

CIBC Inc.                                                     $27,500,000
909 Fannin Street, Suite 1200
Houston, Texas  77010
Attention:  Mark Wolf
Telephone:  713-655-5226
Telecopier: 713-650-3727

Citibank, N.A.                                                $35,000,000
One Court Square
Long Island City, New York  11120
Attention:  Leena Caligiure
Telephone:  718-248-5762
Telecopier: 718-248-4844/4845
</TABLE>

<PAGE>   91
                                                                               4



<TABLE>
<CAPTION>
Name and Address of Lender                                 Amount of Commitment
--------------------------                                 --------------------
<S>                                                        <C>        
Credit Lyonnais New York Branch                               $27,500,000
1000 Louisiana Street, Suite 5360
Houston, Texas  77002
Attention:  Bernadette Archie
Telephone:  713-753-8723
Telecopier: 713-751-0307

The Dai-Ichi Kangyo Bank, Ltd.                                $12,500,000
One World Trade Center, Suite 4911
New York, New York  10048
Attention:  Christine Dell'Aira
Telephone:  212-432-8841
Telecopier: 212-432-0194

Deutsche Bank AG New York and/
or Cayman Islands Branches                                    $27,500,000
31 West 52nd Street
New York, New York  10019
Attention:  Stephan A. Wiedemann
Telephone:  212-469-8663
Telecopier: 212-469-8212

Dresdner Bank AG, New York and Grand                          $12,500,000
Cayman Branches          
75 Wall Street
New York, New York  10005
Attention:  Mike Terry
Telephone:  212-429-2224
Telecopier: 212-429-2129

The Fuji Bank, Limited-Houston Agency                         $20,000,000
One Houston Center, Suite 4100
1221 McKinney Street
Houston, Texas  77010
Attention:  Charles van Ravenswaay
Telephone:  713-650-7829
Telecopier: 713-759-0048

The Industrial Bank of Japan                                  $12,500,000
Trust Company
Allen Three Center
333 Clay, Suite 4850
Houston, Texas  77002
Attention:  W. Lynn Williford
Telephone:  713-651-9444
Telecopier: 713-651-9209
</TABLE>



<PAGE>   92
                                                                               5



<TABLE>
<CAPTION>
Name and Address of Lender                                 Amount of Commitment
--------------------------                                 --------------------
<S>                                                        <C>        
Kredietbank N.V., New York Branch                             $27,500,000
125 West 55th Street
New York, New York  10019
Attention:  Lynda Resuma/
            Loan Administration
Telephone:  212-541-0657
Telecopier: 212-956-5581

The Long-Term Credit Bank of Japan, Ltd.                      $12,500,000
165 Broadway
New York, New York  10006
Attention:  Bob Pacifici
Telephone:  212-335-4801
Telecopier: 212-608-3452

with a copy to:

2200 Ross Avenue, Suite 4700 West
Dallas, Texas  75201
Attention:  Doug Whiddon
Telephone:  214-969-5352
Telecopier: 214-969-5357

Mellon Bank, N.A.                                             $20,000,000
1100 Louisiana, Suite 3600
Houston, Texas  77002
Attention:  Janet Jenkins
Telephone:  713-759-3040
Telecopier: 713-650-3409

Morgan Guaranty Trust Company of
New York                                                      $35,000,000
60 Wall Street
22nd Floor
New York, New York  10260
Attention:  John Kowalczuk
Telephone:  212-648-7612
Telecopier: 212-648-5014

National Westminster Bank Plc                                 $12,500,000
New York Branch
175 Water Street, 19th Floor
New York, New York  10038
Attention:  Commercial Lending Unit
Telephone:  212-602-4180
Telecopier: 212-602-4118
</TABLE>



<PAGE>   93
                                                                               6



<TABLE>
<CAPTION>
Name and Address of Lender                                 Amount of Commitment
--------------------------                                 --------------------
<S>                                                        <C>        
NationsBank of Texas, N.A.                                    $27,500,000
700 Louisiana, 8th Floor
Houston, Texas  77002
Attention:  Patrick M. Delaney
Telephone:  713-247-7373
Telecopier: 713-247-6568
Norinchukin Bank, New York Branch                             $20,000,000
245 Park Avenue, 29th Floor
New York, New York  10167
Attention:  Tsuneo Tsukagaki
Telephone:  212-697-1717
Telecopier: 212-697-5754

PNC Bank, National Association                                $20,000,000
One PNC Bank Plaza
249 Fifth Avenue, 3rd Floor
Pittsburgh, Pennsylvania  15222-2707
Attention:  Thomas K. Grundman
Telephone:  412-762-3025
Telecopier: 412-762-2571

Royal Bank of Canada                                          $27,500,000
Financial Square
23rd Floor
New York, New York  10005-2531
Attention:  Assistant Manager,
            Loan Processing
Telephone:  212-428-6321
Telecopier: 212-428-2372

with copies to:

Royal Bank of Canada
12450 Greenspoint Drive
Suite 1450
Houston, Texas  77060
Attention:  Doug Frost
Telephone:  281-874-5664
Telecopier: 281-874-0081
</TABLE>



<PAGE>   94
                                                                               7



<TABLE>
<CAPTION>
Name and Address of Lender                                 Amount of Commitment
--------------------------                                 --------------------
<S>                                                        <C>        
The Sakura Bank, Limited -
New York Branch                                               $12,500,000
277 Park Avenue, 45th Floor
New York, New York  10172
Attention:  David Speir
Telephone:  212-756-6778
Telecopier: 212-888-7651

Societe Generale,
Southwest Agency                                              $20,000,000
Suite 4800
2001 Ross Avenue, Suite 4800
Dallas, Texas  75201
Attention:  Lia Grerra
Telephone:  214-979-2769
Telecopier: 214-754-0171

The Sumitomo Bank, Limited                                    $20,000,000
277 Park Avenue
New York,New York  10172
Attention:  Jessica Cueto
Telephone:  212-224-4132
Telecopier: 212-224-4537

with a copy to:

The Sumitomo Bank, Limited
700 Louisiana Street
Suite 1750
Houston, Texas  77002
Attention:  Energy Group

Toronto Dominion (Texas), Inc.                                $27,500,000
909 Fannin Street, Suite 1700
Houston, Texas  77010
Attention:  Frederic Hawley
Telephone:  713-653-8281
Telecopier: 713-951-9921

Union Bank of Switzerland,
Houston Agency                                                $20,000,000
1100 Louisiana, Suite 4500
Houston, Texas  77002
Attention:  Evans Swann
Telephone:  713-655-6500
Telecopier: 713-655-6555

The Yasuda Trust & Banking, Co., Ltd.                         $12,500,000
666 Fifth Avenue, Suite 801
New York, New York  10103
Attention:  Andrew Orsen
Telephone:  212-373-5879
Telecopier: 212-373-5796
</TABLE>


<PAGE>   95
                                                                       EXHIBIT A


                                     FORM OF
                                      NOTE



$______________                                               New York, New York
                                                                October 29, 1997


         FOR VALUE RECEIVED, the undersigned, ___________________, a ________
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of       (the "Lender") at the office of The Chase Manhattan Bank,
located at 270 Park Avenue, New York, New York 10017, in lawful money of the
United States of America and in same day funds, on the Termination Date (or if
the Lender is an Objecting Lender, the Commitment Expiration Date applicable to
the Lender) the principal amount of (a)       DOLLARS ($       ), or, if less,
(b) the aggregate unpaid principal amount of all Revolving Credit Advances made
by the Lender to the Borrower pursuant to subsection 2.1 of the Credit
Agreement, as hereinafter defined. The Borrower further agrees to pay interest
in like money at such office on the unpaid principal amount hereof from time to
time outstanding at the rates and on the dates specified in the Credit
Agreement.

         The holder of this Note is authorized to, and prior to any transfer
hereof shall, endorse on the schedules attached hereto and made a part hereof or
on a continuation thereof which shall be attached hereto and made a part hereof
the date, Type and amount of each Revolving Credit Advance made pursuant to
subsection 2.1 of the Credit Agreement and the date and amount of each payment
or prepayment of principal thereof, each continuation thereof, each conversion
of all or a portion thereof to another Type and, in the case of Eurodollar Rate
Advances, the length of each Interest Period with respect thereto. Each such
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement shall not affect
the obligations of the Borrower in respect of such Revolving Credit Advance.

         This Note (a) is one of the Notes referred to in the $750,000,000
5-Year Revolving Credit and Competitive Advance Facility Agreement, dated as of
October 29, 1997 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among El Paso Natural Gas Company, Tennessee Gas
Pipeline Company, the Lender, the other banks and financial institutions from
time to time parties thereto, The Chase Manhattan Bank, as Administrative Agent
and CAF Advance Agent, Citibank, N.A., as Documentation Agent, and Morgan
Guaranty Trust Company of New York, as Syndication Agent (b) is subject to the

<PAGE>   96
                                                                             A-2


provisions of the Credit Agreement and (c) is subject to optional and mandatory
prepayment in whole or in part as provided in the Credit Agreement.

         Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.

         All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind except those
expressly required under the Credit Agreement.

         Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.

         THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

                                       [BORROWER]



                                       By____________________________________
                                         Title: