Document:

EX-10.a

    Exhibit
      10.A

     

    Execution
      Copy

    

    $500,000,000

     

    AMENDED
      AND
      RESTATED

     

    CREDIT
      AGREEMENT

     

    among

     

    EL
      PASO
      PRODUCTION HOLDING COMPANY,

     

    EL
      PASO
      PRODUCTION COMPANY,

     

    EL
      PASO
      ENERGY RATON CORPORATION,

     

    and

     

    EL
      PASO
      PRODUCTION GOM INC.,

     

    as
      Borrowers,

     

    FORTIS
      CAPITAL CORP.,

     

    as
      Administrative Agent, Joint Lead Arranger and Joint
      Bookrunner,

     

    THE
      ROYAL
      BANK OF SCOTLAND plc,

     

    as
      Joint
      Lead Arranger, Joint Bookrunner and Syndication Agent,

     

    THE
      BANK OF
      NOVA SCOTIA,

     

    as
      Joint
      Lead Arranger and Co-Documentation Agent,

     

    SOCIETE
      GENERALE,

     

    as
      Co-Documentation Agent,

     

    WESTLB
      AG,
      NEW YORK BRANCH,

     

    as
      Co-Documentation Agent,

     

    and

     

    The
      Several
      Lenders

     

    from
      Time
      to Time Parties Hereto

     

    Dated
      as of
      October 19, 2005

     

    

    

    

    

    

    TABLE
      OF
      CONTENTS

     

    Page

     

    
      
        	
                SECTION
                  1 DEFINITIONS

              	
                1

              
	
                 

              	
                1.1.

              	
                Defined
                  Terms

              	
                1

              
	
              	
                1.2. 

              	
                Other Definitional Provisions

              	
                18

              
	
              	
                 

              	
                 

              	
                 

              
	
                SECTION 2 AMOUNT AND TERMS OF
                  COMMITMENTS

              	
                19

              
	
              	
                2.1.

              	
                Commitments

              	
                19

              
	
              	
                2.2.

              	
                Procedure for Borrowing

              	
                19

              
	
              	
                2.3. 

              	
                Repayment of Loans

              	
                20

              
	
              	
                2.4. 

              	
                Evidence of Debt

              	
                21

              
	
              	
                 

              	
                 

              	
                 

              
	
                SECTION 3 LETTERS OF CREDIT

              	
                21

              
	
              	
                3.1.

              	
                The L/C Commitment

              	
                21

              
	
              	
                3.2. 

              	
                Procedure for Issuance of Letters
                  of
                  Credit

              	
                21

              
	
              	
                3.3. 

              	
                Fees, Commissions and Other Charges

              	
                22

              
	
              	
                3.4. 

              	
                L/C Participations

              	
                22

              
	
              	
                3.5. 

              	
                Reimbursement Obligation of the
                  Borrowers

              	
                23

              
	
              	
                3.6. 

              	
                Obligations Absolute

              	
                24

              
	
              	
                3.7. 

              	
                Letter of Credit Payments

              	
                24

              
	
              	
                3.8. 

              	
                L/C Applications

              	
                24

              
	
              	
                 

              	
                 

              	
                 

              
	
                SECTION 4 GENERAL PROVISIONS

              	
                25

              
	
              	
                4.1.

              	
                Interest Rates and Payment Dates

              	
                25

              
	
              	
                4.2. 

              	
                Computation of Interest and Fees

              	
                25

              
	
              	
                4.3. 

              	
                Conversion and Continuation Options

              	
                26

              
	
              	
                4.4. 

              	
                Minimum Amounts Maximum Number of
                  Tranches

              	
                26

              
	
              	
                4.5. 

              	
                Optional Prepayments and Commitment
                  Reductions

              	
                26

              
	
              	
                4.6. 

              	
                Commitment Fee; Administrative Agent’s Fee;
                  Other Fees

              	
                28

              
	
              	
                4.7. 

              	
                Inability to Determine Interest Rate

              	
                28

              
	
              	
                4.8. 

              	
                Pro Rata Treatment and Payments

              	
                29

              
	
              	
                4.9. 

              	
                Computation of Borrowing Base

              	
                29

              
	
              	
                4.10. 

              	
                Mandatory Prepayments

              	
                32

              
	
              	
                4.11.

              	
                Illegality

              	
                34

              
	
              	
                4.12. 

              	
                Requirements of Law

              	
                34

              
	
              	
                4.13. 

              	
                Taxes

              	
                35

              
	
              	
                4.14. 

              	
                Indemnity

              	
                36

              
	
              	
                4.15. 

              	
                Change of Lending Office

              	
                37

              
	
              	
                4.16. 

              	
                Collateral Security

              	
                37

              
	
              	
                4.17. 

              	
                Replacement of Lenders

              	
                39

              
	
              	
                 

              	
                 

              	
                 

              
	
                SECTION 5 REPRESENTATIONS AND
                  WARRANTIES

              	
                39

              
	
              	
                5.1.

              	
                Financial Condition

              	
                39

              
	
              	
                5.2. 

              	
                No Change

              	
                40

              
	
              	
                5.3. 

              	
                Corporate Existence; Compliance with
                  Law

              	
                40

              
	
              	
                5.4. 

              	
                Corporate Power; Authorization; Enforceable
                  Obligations

              	
                40

              
	
              	
                5.5. 

              	
                No Legal Bar

              	
                41

              
	
              	
                5.6. 

              	
                No Material Litigation

              	
                41

              
	
              	
                5.7. 

              	
                No Default

              	
                41

              
	
              	
                5.8. 

              	
                Ownership of Property; Liens

              	
                41

              
	
              	
                5.9. 

              	
                Intellectual Property

              	
                41

              
	
              	
                5.10. 

              	
                Taxes

              	
                42

              
	
              	
                5.11. 

              	
                Federal Reserve Regulations

              	
                42

              
	
              	
                5.12. 

              	
                ERISA

              	
                42

              
	
              	
                5.13.

              	
                Investment Company Act; Other
                  Regulations

              	
                43

              
	
              	
                5.14. 

              	
                Subsidiaries

              	
                43

              
	
              	
                5.15. 

              	
                Purpose of Loans

              	
                43

              
	
              	
                5.16. 

              	
                Environmental Matters

              	
                43

              
	
              	
                5.17. 

              	
                No Material Misstatements

              	
                44

              
	
              	
                5.18. 

              	
                Insurance

              	
                44

              
	
              	
                5.19. 

              	
                Future Commitments

              	
                44

              
	
              	
                5.20. 

              	
                Security Documents

              	
                45

              
	
              	
                 

              	
                 

              	
                 

              
	
                SECTION 6 CONDITIONS PRECEDENT

              	
                45

              
	
              	
                6.1.

              	
                Conditions to Closing Date of the
                  Existing
                  Credit Agreement

              	
                45

              
	
              	
                6.2

              	
                Conditions to Effective Date of This
                  Agreement

              	
                48

              
	
              	
                6.3 

              	
                Conditions to Each Extension of
                  Credit

              	
                50

              
	
              	
                6.4 

              	
                Determinations Under Section 6

              	
                50

              
	
              	
                 

              	
                 

              	
                 

              
	
                SECTION 7 AFFIRMATIVE COVENANTS

              	
                50

              
	
              	
                7.1.

              	
                Financial Statements

              	
                50

              
	
              	
                7.2. 

              	
                Certificates; Other Information

              	
                51

              
	
              	
                7.3. 

              	
                Payment of Obligations

              	
                52

              
	
              	
                7.4. 

              	
                Conduct of Business and Maintenance
                  of
                  Existence; Compliance with Law and Contractual Obligations

              	
                52

              
	
              	
                7.5. 

              	
                Maintenance of Properties; Insurance

              	
                52

              
	
              	
                7.6. 

              	
                Inspection of Property; Books and
                  Records;
                  Discussions

              	
                52

              
	
              	
                7.7. 

              	
                Notices

              	
                53

              
	
              	
                7.8. 

              	
                Environmental Laws

              	
                53

              
	
              	
                7.9. 

              	
                Additional Collateral

              	
                54

              
	
              	
                7.10. 

              	
                Maintenance and Operation of
                  Properties

              	
                54

              
	
              	
                7.11. 

              	
                Collateral Coverage

              	
                55

              
	
              	
                7.12. 

              	
                Further Assurances

              	
                55

              
	
              	
                 

              	
                 

              	
                 

              
	
                SECTION 8 NEGATIVE COVENANTS

              	
                55

              
	
              	
                8.1.

              	
                Financial Covenant Conditions

              	
                55

              
	
              	
                8.2. 

              	
                Limitation on Indebtedness

              	
                55

              
	
              	
                8.3. 

              	
                Limitation on Liens

              	
                56

              
	
              	
                8.4.

              	
                Limitation on Guarantee Obligations

              	
                59

              
	
              	
                8.5. 

              	
                Limitation on Fundamental Change

              	
                59

              
	
              	
                8.6. 

              	
                Limitation on Sale of Assets

              	
                60

              
	
              	
                8.7. 

              	
                Limitation on Dividends

              	
                60

              
	
              	
                8.8. 

              	
                Limitation on Investments, Loans
                  and
                  Advances

              	
                61

              
	
              	
                8.9. 

              	
                Limitation on Payments and Modifications
                  of
                  Debt Instruments, Other Documents

              	
                62

              
	
              	
                8.10. 

              	
                Limitation on Transactions with
                  Affiliates

              	
                62

              
	
              	
                8.11. 

              	
                Limitation on Changes in Fiscal Year

              	
                63

              
	
              	
                8.12. 

              	
                Limitation on Negative Pledge
                  Clauses

              	
                63

              
	
              	
                8.13. 

              	
                Limitation on Lines of Business

              	
                63

              
	
              	
                8.14. 

              	
                Forward Sales

              	
                63

              
	
              	
                8.15. 

              	
                Hedging Agreements

              	
                63

              
	
              	
                 

              	
                 

              	
                 

              
	
                SECTION 9 EVENTS OF DEFAULT

              	
                64

              
	
              	
                 

              	
                 

              	
                 

              
	
                SECTION 10 THE ADMINISTRATIVE AGENT

              	
                67

              
	
              	
                10.1. 

              	
                Appointment

              	
                67

              
	
              	
                10.2. 

              	
                Delegation of Duties

              	
                67

              
	
              	
                10.3. 

              	
                Exculpatory Provisions

              	
                67

              
	
              	
                10.4. 

              	
                Reliance by Administrative Agent

              	
                67

              
	
              	
                10.5. 

              	
                Notice of Default

              	
                68

              
	
              	
                10.6. 

              	
                Non-Reliance on Administrative Agent
                  and
                  Other Lenders

              	
                68

              
	
              	
                10.7. 

              	
                Indemnification

              	
                69

              
	
              	
                10.8. 

              	
                Administrative Agent in Its Individual
                  Capacity

              	
                69

              
	
              	
                10.9. 

              	
                Successor Administrative Agent

              	
                69

              
	
              	
                10.10. 

              	
                Issuing Lender

              	
                70

              
	
              	
                10.11. 

              	
                Others

              	
                70

              
	
              	
                10.12. 

              	
                Hedging Arrangements

              	
                70

              
	
              	
                 

              	
                 

              	
                 

              
	
                SECTION 11 MISCELLANEOUS

              	
                70

              
	
              	
                11.1. 

              	
                Amendments and Waivers

              	
                70

              
	
              	
                11.2.

              	
                Notices

              	
                71

              
	
              	
                11.3. 

              	
                No Waiver; Cumulative Remedies

              	
                73

              
	
              	
                11.4. 

              	
                Survival of Representations and
                  Warranties

              	
                73

              
	
              	
                11.5. 

              	
                Payment of Expenses and Taxes

              	
                73

              
	
              	
                11.6. 

              	
                Successors and Assigns; Participations
                  and
                  Assignments

              	
                74

              
	
              	
                11.7. 

              	
                Adjustments; Set-off

              	
                77

              
	
              	
                11.8. 

              	
                Counterparts

              	
                78

              
	
              	
                11.9. 

              	
                Severability

              	
                78

              
	
              	
                11.10. 

              	
                Integration

              	
                78

              
	
              	
                11.11. 

              	
                GOVERNING LAW

              	
                78

              
	
              	
                11.12. 

              	
                Submission To Jurisdiction; Waivers

              	
                78

              
	
              	
                11.13. 

              	
                Acknowledgments

              	
                79

              
	
              	
                11.14. 

              	
                WAIVERS OF JURY TRIAL

              	
                79

              
	
              	
                11.15. 

              	
                Release of Borrowing Base Properties

              	
                79

              
	
              	
                11.16. 

              	
                Limitation on Interest

              	
                79

              
	
              	
                11.17. 

              	
                Joint and Several Obligations of
                  Borrowers

              	
                80

              
	
              	
                11.18

              	
                Amendment and Restatements

              	
                81

              
	
              	
                11.19 

              	
                USA Patriot Act Notice

              	
                81

              

      

       

      
      

      EXHIBITS

    

    

    A Form
      of
      Note

    B Form
      of Guarantee
      Agreement

    C [Reserved]

    D [Reserved]

    E [Reserved]

    F Form
      of Closing
      Certificate

    G Form
      of Assignment
      and Acceptance

    

    ANNEXES

    

    I Borrowing
      Base
      Properties

    

     

    
      
        

      

    

    
 

    AMENDED
      AND
      RESTATED CREDIT AGREEMENT, dated as of October 19, 2005 (this “Agreement”),
      among EL PASO
      PRODUCTION HOLDING COMPANY, a Delaware corporation, EL PASO PRODUCTION COMPANY,
      a Delaware corporation, and EL PASO ENERGY RATON CORPORATION, a Delaware
      corporation, EL PASO PRODUCTION GOM INC., a Delaware corporation (individually,
      a “Borrower”
      and collectively,
      the “Borrowers”),
      Fortis Capital
      Corp. (“Fortis”),
      as
      administrative agent for the Lenders (in such capacity, the “Administrative
      Agent”),
      as joint lead
      arranger (in such capacity, a “Joint
      Lead
      Arranger”)
      and joint
      bookrunner (in such capacity, a “Joint
      Bookrunner”),
      THE ROYAL BANK
      OF SCOTLAND plc (“RBS”),
      as joint lead
      arranger (in such capacity, a “Joint
      Lead
      Arranger”)
      and joint
      bookrunner (in such capacity, a “Joint
      Bookrunner”)
      and syndication
      agent (in such capacity, the “Syndication
      Agent”),
      THE BANK OF
      NOVA SCOTIA (“BNS”),
      as joint lead
      arranger (in such capacity, a “Joint
      Lead
      Arranger”)
      and
      co-documentation agent (in such capacity, a “Documentation
      Agent”),
      SOCIETE
      GENERALE (“SocGen”),
      as
      co-documentation agent (in such capacity, a “Documentation
      Agent”),
      WESTLB AG, NEW
      YORK BRANCH (“WestLB”),
      as
      co-documentation agent (in such capacity, a “Documentation
      Agent”),
      and the several
      banks, financial institutions and other entities from time to time parties
      to
      this Agreement (collectively, the “Lenders”).

     

    WITNESSETH:

     

    WHEREAS,
      the
      Borrowers, Fortis as Administrative Agent, Joint Lead Arranger, Joint Bookrunner
      and a Lender, RBS as Joint Lead Arranger, Joint Bookrunner, Syndication Agent
      and a Lender, and BNS as Joint Lead Arranger, Documentation Agent and a Lender
      (Fortis, RBS and BNS are referred to as the “Existing
      Lenders”),
      are parties to
      the Credit Agreement dated as of August 30, 2005 (the “Existing
      Credit
      Agreement”);

     

    WHEREAS,
      immediately prior to the execution of this Agreement, certain additional Lenders
      (the “New
      Lenders”)
      have purchased
      and assumed certain of the rights and interests of the Existing Lenders (the
      “Lender
      Assignments”);

     

    WHEREAS,
      the
      Borrowers, the Administrative Agent, the Existing Lenders and the New Lenders
      desire to amend and restate the Existing Credit Agreement for the purpose of
      providing financing for the Borrowers’ oil and gas operations; and

     

    WHEREAS,
      after
      giving effect to the Lender Assignments and the amendment and restatement of
      the
      Existing Credit Agreement pursuant to the terms hereof, the Commitment of each
      Lender hereunder will be as set forth on Schedule
      1.1(a);

     

    NOW,
      THEREFORE, in
      consideration of the premises and the mutual agreements hereinafter set forth,
      the parties hereby agree as follows:

     

    SECTION
      1

     

    DEFINITIONS

     

    1.1. Defined
      Terms.
      As used in this Agreement, the following terms shall have the following
      meanings:

     

    “ABR
      Loans”
      - Loans the rate
      of interest applicable to which is based upon the Alternate Base
      Rate.

     

    “Administrative
      Agent”
      - as defined in
      the Preamble to this Agreement.

     

    “Affiliate”
      - as to any
      Person, any other Person (other than a Subsidiary) which, directly or
      indirectly, is in control of, is controlled by, or is under common control
      with,
      such Person. For purposes of this definition, “control” of a Person means the
      power, directly or indirectly, either to (a) vote 10% or more of the securities
      having ordinary voting power for the election of directors of such Person or
      (b)
      direct or cause the direction of the management and policies of such Person,
      whether by contract or otherwise.

     

    “Aggregate
      Credit
      Exposure”
      - as to any
      Lender at any time, an amount equal to the sum of (a) the aggregate principal
      amount of all Loans made by such Lender then outstanding and (b) such Lender’s
      Commitment Percentage of the Letter of Credit Outstandings at such time. For
      purposes of the foregoing, and for the avoidance of doubt, Loans shall not
      include the contingent obligations of the Borrower or any Affiliate thereof
      owed
      to a Lender in connection with Commodity Hedging Agreements.

     

    “Agreement”
      - this Credit
      Agreement, as further amended, supplemented or otherwise modified from time
      to
      time.

     

    “Alternate
      Base
      Rate”
      - for any day, a
      rate per annum equal to the greatest of (a) the Prime Rate in effect on such
      day
      and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of
      1%.
      For purposes hereof: “Prime
      Rate”
      shall mean the
      rate of interest per annum publicly announced from time to time by Fortis as
      its
      prime rate in effect at its principal office in New York City (the Prime Rate
      not being intended to be the lowest rate of interest charged by Fortis in
      connection with extensions of credit to debtors); and “Federal
      Funds
      Effective Rate”
      shall mean, for
      any day, the weighted average of the rates on overnight federal funds
      transactions with members of the Federal Reserve System arranged by federal
      funds brokers, as published on the next succeeding Business Day by the Federal
      Reserve Bank of New York, or, if such rate is not so published for any day
      which
      is a Business Day, the average of the quotations for the day of such
      transactions received by the Administrative Agent from three federal funds
      brokers of recognized standing selected by it. Any change in the Alternate
      Base
      Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
      shall
      be effective as of the opening of business on the effective day of such change
      in the Prime Rate or the Federal Funds Effective Rate,
      respectively.

     

    “Applicable
      Margin”
      - for any day
      with respect to Eurodollar Loans and ABR Loans, the applicable per annum rate
      set forth below opposite the Borrowing Base Usage in effect on any such
      day:

     

    
      	
              Borrowing
                Base Usage

            	
              Eurodollar

              Margin

            	
              Alternate

              Base
                Rate

              Margin

            
	
              Less
                than or
                equal to 50%

            	
              1.25%

            	
              .25%

            
	
              Greater
                than
                50% and less than or equal to 75%

            	
              1.50%

            	
              .50%

            
	
              Greater
                than
                75% and less than or equal to 90%

            	
              1.75%

            	
              .75%

            
	
              Greater
                than
                90%

            	
              1.875%

            	
              .875%

            

    

    

    “Assignee”
      - as defined in
      subsection 11.6(c).

     

    “Available
      Commitment”
      - as to any
      Lender at any time, an amount, if positive, equal to (a) the amount
      of such
      Lender’s Commitment in excess of (b) such Lender’s Aggregate Credit
      Exposure.

     

    “Available
      Distribution Amount”
      - with respect to
      any dividend or other distribution, means (i) $50,000,000 minus (ii) the
      cumulative amount of all dividends and distributions made after the Closing
      Date
      in excess of the amounts described in subsection 8.7(c)(ii) and
      (iii).

     

    “BNS”
      - as defined in
      the preamble of this Agreement.

     

    “Borrower”
      and “Borrowers”
      - as defined in
      the preamble to this Agreement.

     

    “Borrower
      Redetermination Notice”
      - a notice from
      the Borrower’s Representative to the Administrative Agent requesting that the
      Administrative Agent redetermine the Borrowing Base, which notice may be sent
      by
      the Borrower’s Representative at any time, provided that no more than one such
      notice may be delivered by the Borrower’s Representative between Scheduled
      Redetermination Dates.

     

    “Borrowers’
      Representative”
      - EPPHC, which is
      authorized to act on behalf of the Borrowers under this Agreement.

     

    “Borrowing
      Base”
      - at any time of
      determination, the amount then in effect as determined in accordance with
      Section 4.9.

     

    “Borrowing
      Base
      Availability”
      - as to any
      Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s
      Commitment Percentage of the Borrowing Base in effect at such time over (b)
      such
      Lender’s Aggregate Credit Exposure.

     

    “Borrowing
      Base
      Deficiency”
      - the amount by
      which the Aggregate Credit Exposure of the Lenders exceeds the Borrowing Base
      then in effect.

     

    “Borrowing
      Base
      Deficiency Notification Date”
      - the date on
      which any notice of a Borrowing Base Deficiency is received by the Borrowers’
      Representative.

     

    “Borrowing
      Base
      Properties”
      - those
      Hydrocarbon Interests then owned by a Borrower and subject to a Mortgage
      utilized by the Administrative Agent and the Lenders as the basis for
      calculation of the Borrowing Base in the initial Reserve Report prepared by
      Ryder Scott and delivered to the Administrative Agent prior to the Closing
      Date,
      which description will be modified or supplemented from time to time as
      properties are added or deleted in accordance with the provisions of this
      Agreement. The Hydrocarbon Interests described in each preparation of a
      supplemental Reserve Report delivered in connection with a redetermination
      of
      the Borrowing Base pursuant to Section 4.9 hereof and subject to a Mortgage
      shall constitute a restatement of the list of Borrowing Base Properties.
The
      Borrowing Base Properties as of the Closing Date are described on Annex I
      hereto.

     

    “Borrowing
      Base
      Usage”
      on any day means
      the percentage equivalent to the ratio of (i) the sum of the aggregate
      principal amount of the Loans then outstanding and Letter of Credit Outstandings
      on such day to (ii) the Borrowing Base in effect on such day.

     

    “Borrowing
      Date”
      - any Business
      Day specified in a notice pursuant to subsection 2.2 or 3.2 as a date on which
      the Borrower’s Representative requests the Lenders to make Loans or the Issuing
      Lender to issue a Letter of Credit hereunder.

     

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

     

    “Capital
      Lease”
      - any lease of
      property, real or personal, the obligations of the lessee in respect of which
      are required in accordance with GAAP to be capitalized on the balance sheet
      of
      the lessee.

     

    “Capital
      Stock”
      - any and all
      shares, interests, participations or other equivalents (however designated)
      of
      capital stock of a corporation, including, without limitation, any preferred
      stock of a corporation, any and all equivalent ownership interests in a Person
      (other than a corporation) and any and all warrants or options to purchase
      any
      of the foregoing.

     

    “Cash
      Collateral”
      - cash or Cash
      Equivalents subject to a security agreement in form and substance satisfactory
      to the Administrative Agent or letters of credit issued in favor of the
      Administrative Agent by an issuer and on terms and conditions satisfactory
      to
      the Administrative Agent, in an aggregate amount not to exceed
      $25,000,000.

     

    “Cash
      Equivalents”
      - (a) securities
      with maturities of one year or less from the date of acquisition issued or
      fully
      guaranteed or insured by the United States Government or any agency thereof,
      (b)
      certificates of deposit and eurodollar time deposits with maturities of one
      year
      or less from the date of acquisition and overnight bank deposits of any Lender
      or of any commercial bank (i) having capital and surplus in excess of
      $500,000,000 or (ii) which has a short-term commercial paper rating which
      satisfies the requirements set forth in clause (d) below, (c) repurchase
      obligations of any Lender or of any commercial bank satisfying the requirements
      of clause (b) of this definition, having a term of not more than 30 days with
      respect to securities issued, fully guaranteed or insured by the United States
      Government or any agency thereof, (d) commercial paper of a domestic
      issuer
      rated at least A-2 by Standard and Poor’s Ratings Group (“S&P”)
      or P-2 by
      Moody’s Investors Service, Inc. (“Moody’s”),
      (e) securities
      with maturities of one year or less from the date of acquisition issued or
      fully
      guaranteed by any state, commonwealth or territory of the United States, by
      any
      political subdivision or taxing authority of any such state, commonwealth or
      territory or by any foreign government, the securities of which state,
      commonwealth, territory, political subdivision, taxing authority or foreign
      government (as the case may be) are rated at least A by S&P or A by Moody’s,
      (f) securities with maturities of one year or less from the date of acquisition
      backed by standby letters of credit issued by any Lender or any commercial
      bank
      satisfying the requirements of clause (b) of this definition or (g) shares
      of
      money market mutual or similar funds which invest exclusively in assets
      satisfying the requirements of clauses (a) through (f) of this
      definition.

     

    “Cash
      Management
      Program”
      - El Paso
      Corporation’s cash management program applicable to the El Paso Corporation and
      its Subsidiaries, as in effect from time to time.

     

    “Change
      of
      Control”
      - except for the
      transactions contemplated pursuant to a Reorganization Plan consented to by
      the
      Lenders and the transfer of the ownership of EPPHC by El Paso Corporation to
      a
      wholly owned Subsidiary of El Paso Corporation with no material liabilities
      or
      obligations which will own all the outstanding Capital Stock of EPPHC, any
      Person or “group” (within the meaning of Section 13(d) or 14(d) of the
      Securities Exchange Act of 1934, as amended) (i) shall have acquired beneficial
      ownership of 50% or more of any outstanding class of Capital Stock having
      ordinary voting power in the election of directors of any Borrower or (ii)
      shall
      obtain the power (whether or not exercised) to elect a majority of any
      Borrower’s directors.

     

    “Closing
      Date”
      - the date on
      which the conditions precedent to the effectiveness of the Existing Credit
      Agreement set forth in subsection 6.1 were satisfied (August 30,
      2005).

     

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

     

    “Collateral
      Coverage Ratio”
      - the ratio of
      the Collateral Value to the greater of (i) the Borrowing Base then in effect,
      and (ii) the outstanding Loans and Letter of Credit Outstandings.

     

    “Collateral
      Value”
      - (a) the PV-10
      Value of the Borrowing Base Properties as of the most recent Redetermination
      Date, plus (b) the PV-10 Value of Borrowing Base Properties acquired since
      that
      date, plus (c) Cash Collateral, minus (d) the PV-10 Value of Borrowing Base
      Properties subject to a Disposition since that date.

     

    “Collateral
      Value
      Deficiency”
      - if the
      Collateral Coverage Ratio is less than 1.5 to 1.0.

     

    “Commitment”
      - as to any
      Lender, the obligation of such Lender to make Loans to the Borrower 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 1.1(a) (which amount,
      with respect to all Lenders, shall equal $500,000,000 as of the Closing Date),
      as such amount may be reduced from time to time in accordance with the
      provisions of this Agreement.

     

    “Commitment
      Fee
      Rate”
      - for any day, a
      rate per annum equal to 0.375%.

     

    “Commitment
      Percentage”
      - 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 such Lender’s Aggregate
      Credit Exposure then outstanding constitutes of the Aggregate Credit Exposure
      then outstanding for all of the Lenders).

     

    “Commitment
      Period”
      - the period from
      and including the date hereof to but not including the Termination Date or
      such
      earlier date on which the Commitments shall terminate as provided
      herein.

     

    “Commitments”
      - the collective
      reference to the Commitments and the L/C Commitment.

     

    “Commodity
      Hedging Agreement”
      - a commodity
      hedging, basis hedging or purchase agreement or similar arrangement entered
      into
      with the intent of protecting against fluctuations in commodity prices or
      exchanging of notional commodity obligations, either generally or under specific
      contingencies.

     

    “Commonly
      Controlled Entity”
      - an entity,
      whether or not incorporated, which is under common control with the Borrower
      within the meaning of Section 4001 of ERISA or is part of a group which includes
      the Borrower and which is treated as a single employer under Section 414 of
      the
      Code.

     

    “Consolidated
      Interest Expense”
      - with respect to
      EPPHC and its Restricted Subsidiaries on a consolidated basis for any period,
      the sum of (i) gross interest expense (including all cash and accrued interest
      expense but excluding cash fees related to credit facilities) of EPPHC and
      its
      Restricted Subsidiaries for such period on a consolidated basis, including
      to
      the extent included in interest expense in accordance with GAAP (x) the
      amortization of debt discounts and other fees related to credit facilities
      of
      EPPHC and its Restricted Subsidiaries, and (y) the portion of any payments
      or
      accruals with respect to Capital Leases or non-volumetric production payments
      allocable to interest expense and (ii) capitalized interest of EPPHC and its
      Restricted Subsidiaries on a consolidated basis.

     

    “Consolidated
      Net
      Income”
      - for any period,
      net income of EPPHC and its Restricted Subsidiaries determined on a consolidated
      basis in accordance with GAAP. 

     

    “Continuing
      70%
      Test”
      - as defined in
      subsection 4.16(d).

     

    “Contractual
      Obligation”
      - as to any
      Person, any provision of any security issued by such Person or of any agreement,
      instrument or other undertaking to which such Person is a party or by which
      it
      or any of its property is bound.

     

    “Control”
      - the possession,
      directly or indirectly, of the power to direct or cause the direction of the
      management or policies of a Person, whether through the ability to exercise
      voting power, by contract or otherwise.

     

    “Debt
      Leverage
      Ratio”
      - as of any date,
      the ratio of Indebtedness of EPPHC and its Restricted Subsidiaries on a
      consolidated basis as of such date to EBITDA of EPPHC and its Restricted
      Subsidiaries on a consolidated basis for the 12-month period ending on such
      date; provided, however, that for purposes of Section 8.2(j), such ratio shall
      be calculated using EBITDA for the four fiscal quarter period most recently
      ended for which financial statements are available.

     

    “Default”
      - any of the
      events specified in Section 9, whether or not any requirement for the giving
      of
      notice, the lapse of time, or both, or any other condition, has been
      satisfied.

     

    “Disposition”
      - the sale,
      conveyance, transfer, lease or other disposition (including, without limitation,
      through a sale and leaseback transaction or as a result of casualty or
      condemnation) of any Property.

     

    “Documentation
      Agents”
      - BNS, SocGen and
      WestLB.

     

    “Dollars”
      and “$”
      - dollars in
      lawful currency of the United States of America.

     

    “Domestic
      Restricted Subsidiary”
      - a Domestic
      Subsidiary that is a Restricted Subsidiary.

     

    “Domestic
      Subsidiary”
      - any Subsidiary
      organized under the laws of any jurisdiction within the United States of America
      (including territories thereof).

     

    “EBITDA”
      - with respect to
      EPPHC and its Restricted Subsidiaries, for any period, Consolidated Net Income
      for that period, plus,
      without
      duplication and to the extent deducted from revenues in determining Consolidated
      Net Income for that period, the sum of (a) the aggregate amount of Consolidated
      Interest Expense for that period, (b) the aggregate amount of commissions,
      discounts, points and other fees, including letter of credit fees paid during
      that period, (c) the aggregate amount of income tax expense for that period,
      (d)
      all amounts attributable to depreciation, depletion and amortization for that
      period, (e) non-cash charges and non-cash expenses relating to (i) full cost
      ceiling test write-downs and (ii) Hedging Agreements during that period, (f)
      distributions of cash to EPPHC or any of its consolidated Subsidiaries by any
      entity accounted for on the equity method, and minus
      the sum of (y)
      earnings of entities accounted for on the equity method, and (z) to the extent
      added to revenues in determining Consolidated Net Income for that period, all
      non-cash income and unrealized noncash gains in respect of Hedging Agreements
      during that period, in each case determined in accordance with GAAP and without
      duplication of amounts; provided, however, that if any such Person shall have
      consummated any material acquisition or Disposition during such period, EBITDA
      shall be determined on a pro forma basis as if such acquisition or Disposition
      had occurred on the first day of such period. 

     

    “Effective
      Date”
      - the date on
      which the conditions precedent to the effectiveness of this Agreement set forth
      in Section 6.2 shall be satisfied (October 19, 2005).

     

    “Environmental
      Laws”
      - any and all
      laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or
      other
      legally enforceable requirement (including, without limitation, common law)
      of
      any foreign government, the United States, or any state, local, municipal or
      other Governmental Authority with jurisdiction over the operations of any Loan
      Party, regulating, relating to or imposing liability or standards of conduct
      concerning protection of the environment or of human health, as has been, is
      now, or may at any time hereafter be, in effect.

     

    “Environmental
      Permits”
      - any and all
      permits, licenses, registrations, notifications, approvals, exemptions and
      any
      other authorization required under any applicable Environmental
      Law.

     

    “EPPHC”
      - El Paso
      Production Holding Company.

     

    “ERISA”
      - the Employee
      Retirement Income Security Act of 1974, as amended from time to
      time.

     

    “Eurocurrency
      Reserve Requirements”
      - for any day as
      applied to a Eurodollar Loan, the aggregate (without duplication) of the rates
      (expressed as a decimal) of reserve requirements in effect on such day
      (including, without limitation, basic, supplemental, marginal and emergency
      reserves under any regulations of the Board of Governors of the Federal Reserve
      System or other Governmental Authority having jurisdiction with respect thereto)
      dealing with reserve requirements prescribed for eurocurrency funding (currently
      referred to as “Eurocurrency Liabilities” in Regulation D of such Board)
      maintained by a member bank of such System.

     

    “Eurodollar
      Base
      Rate”
      - with respect to
      each day during each Interest Period pertaining to a Eurodollar Loan, the rate
      per annum equal to the rate per annum for Dollar deposits with a maturity
      comparable to such Interest Period which appears on page 3750 of the
      Dow
      Jones Market Service (formerly Telerate) at approximately 11:00 a.m., London
      time, two Business Days prior to the commencement of such Interest Period;
      provided that if there shall no longer exist a page 3750 of the Dow
      Jones
      Market Service (formerly Telerate) Page (or if such page is not available on
      the
      relevant Business Day), the Eurodollar Base Rate shall mean an interest rate
      per
      annum equal to the average (rounded upward, if necessary, to the next 1/100th
      of
      1%) of the respective rates per annum notified to the Administrative Agent
      by
      the Reference Bank as the average of the rates at which Dollar deposits (in
      an
      amount comparable to the amount of the Lenders’ Eurodollar Loan to be
      outstanding during such Interest Period and for a maturity comparable to such
      Interest Period) are offered to the Reference Bank in immediately available
      funds by prime banks in the London interbank market at approximately 11:00
      a.m.,
      London time, two Business Days prior to the commencement of such Interest
      Period. 

     

    “Eurodollar
      Loans”
      - Loans the rate
      of interest applicable to which is based upon the Eurodollar Rate.

     

    “Eurodollar
      Rate”
      - with respect to
      each day during each Interest Period pertaining to a Eurodollar Loan, a rate
      per
      annum determined for such day in accordance with the following formula (rounded
      upward to the nearest 1/100th of 1%):

     

    Eurodollar
      Base
      Rate   

    1.00
      - Eurocurrency
      Reserve Requirements

     

    “Event
      of
      Default”
      - any of the
      events specified in Section 9, provided that any requirement for the giving
      of
      notice, the lapse of time, or both, or any other condition, has been
      satisfied.

     

    “Excess
      Amount”
      - as defined in
      Section 4.5(e).

     

    “Extension
      of
      Credit”
      - as to any
      Lender, the making of, or the issuance of, or participation in, a Loan by such
      Lender, or the issuance of, or participation in, a Letter of Credit by such
      Lender.

     

    “Fee
      Letter”
      - the fee letter
      agreement among the Borrowers, Fortis, RBS and BNS.

     

    “Foreign
      Subsidiary”
      - any Subsidiary
      that is not a Domestic Subsidiary.

     

    “Fortis”
      - as defined in
      the preamble of this Agreement.

     

    “Free
      Cash
      Flow”
      - for any period,
      EBITDA for such period minus the sum of the following: (1) all income tax
      expense of EPPHC and its consolidated Restricted Subsidiaries for such period,
      but only to the extent actually paid in cash during such period, (2)
      Consolidated Interest Expense for such period, but only to the extent actually
      paid in cash during such period, and (3) 105% of, in each case, any
      depreciation, depletion, exploration and amortization expense of EPPHC and
      its
      consolidated Restricted Subsidiaries recorded for such period in accordance
      with
      GAAP. 

     

    “GAAP”
      - generally
      accepted accounting principles in the United States of America in effect from
      time to time, provided that for purposes of determining compliance with the
      covenants contained in Section 8, “GAAP” shall mean generally accepted
      accounting principles in the United States of America as in effect on the date
      hereof and applied on a basis consistent with the application used in the
      financial statements referred to in subsection 5.1.

     

    “Governmental
      Authority”
      - any nation or
      government, any state or other political subdivision thereof and any entity
      exercising executive, legislative, judicial, regulatory or administrative
      functions of government.

     

    “Guarantee
      Agreement”
      - the Guarantee
      Agreement to be executed and delivered by each Guarantor substantially in the
      form of Exhibit B, as the same may be amended, modified or supplemented from
      time to time.

     

    “Guarantee
      Obligation”
      - as to any
      Person (the “guaranteeing
      person”),
      any obligation
      of (a) the guaranteeing person or (b) another Person (including, without
      limitation, any bank under any letter of credit) to induce the creation of
      which
      the guaranteeing person has issued a reimbursement, counterindemnity or similar
      obligation, in either case guaranteeing or in effect guaranteeing any
      Indebtedness, leases, dividends or other obligations (the “primary
      obligations”)
      of any other
      third Person (the “primary
      obligor”)
      in any manner,
      whether directly or indirectly, including, without limitation, any obligation
      of
      the guaranteeing person, whether or not contingent, (i) to purchase any such
      primary obligation or any property constituting direct or indirect security
      therefor, (ii) to advance or supply funds (1) for the purchase or payment of
      any
      such primary obligation or (2) to maintain working capital or equity capital
      of
      the primary obligor or otherwise to maintain the net worth or solvency of the
      primary obligor, (iii) to purchase property, securities or services primarily
      for the purpose of assuring the owner of any such primary obligation of the
      ability of the primary obligor to make payment of such primary obligation or
      (iv) otherwise to assure or hold harmless the owner of any such primary
      obligation against loss in respect thereof; provided, however, that the term
      Guarantee Obligation shall not include endorsements of instruments for deposit
      or collection in the ordinary course of business. The amount of any Guarantee
      Obligation of any guaranteeing person shall be deemed to be the lower of (a)
      an
      amount equal to the stated or determinable amount of the primary obligation
      in
      respect of which such Guarantee Obligation is made and (b) the maximum amount
      for which such guaranteeing person may be liable pursuant to the terms of the
      instrument embodying such Guarantee Obligation, unless such primary obligation
      and the maximum amount for which such guaranteeing person may be liable are
      not
      stated or determinable, in which case the amount of such Guarantee Obligation
      shall be such guaranteeing person’s maximum reasonably anticipated liability in
      respect thereof as determined by the Borrower in good faith. Obligations of
      the
      Borrower or any Subsidiary pursuant to indemnities which (a) are granted in
      the
      ordinary course of business, including, without limitation, (i) such obligations
      in connection with stock purchase agreements or asset purchase and sale
      agreements and (ii) such obligations in connection with the conduct of the
      Oil
      and Gas Business in the ordinary course of business and (b) do not cover
      Indebtedness of the types described in clauses (a) through (f) of the definition
      of Indebtedness, shall not constitute “Guarantee
      Obligations”
      for purposes of
      this Agreement.

     

    “Guarantor”
      - each of EPPHC’s
      Domestic Restricted Subsidiaries that are not Borrowers, and any other
      Subsidiary of EPPHC which incurs a Guarantee Obligation with respect to the
      Indebtedness of the Borrowers.

     

    “Hedge
      Parties”
      - a Lender or an
      Affiliate of a Lender that enters into a Hedging Agreement with the
      Borrowers.

     

    “Hedging
      Agreement”
      - any Interest
      Rate Protection Agreement, Commodity Hedging Agreement, foreign currency
      exchange agreement, commodity price protection agreement or other interest
      or
      currency exchange rate or commodity price hedging arrangement concluded by
      the
      Borrowers.

     

    “Hydrocarbon
      Interests”
      - all rights,
      titles, interests and estates now owned or hereafter acquired in and to oil
      and
      gas leases, oil, gas and mineral leases, or other liquid or gaseous hydrocarbon
      leases, mineral fee or lease interests, farm outs, overriding royalty and
      royalty interests, net profit interests, oil payments, production payment
      interests and similar mineral interests, including any reserved or residual
      interest of whatever nature.

     

    “Hydrocarbons”
      - oil, gas,
      casinghead gas, condensate, distillate, liquid hydrocarbons, gaseous
      hydrocarbons, all products refined, separated, settled and dehydrated therefrom
      and all products refined therefrom, including, without limitation, kerosene,
      liquefied petroleum gas, refined lubricating oils, diesel fuel, drip gasoline,
      natural gasoline, helium and sulfur.

     

    “Indebtedness”
      - of any Person
      at any date, without duplication, (a) the principal amount of indebtedness
      of
      such Person for borrowed money or for the deferred purchase price of property
      or
      services (other than current trade liabilities incurred in the ordinary course
      of business and payable in accordance with customary practices and accrued
      current liabilities incurred in the ordinary course of business), (b) any other
      indebtedness of such Person which is evidenced by a note, bond, debenture or
      similar instrument, (c) all obligations of such Person under Capital Leases
      and
      non-volumetric production payment arrangements, (d) all obligations of such
      Person in respect of letters of credit and acceptances issued or created for
      the
      account of such Person, (e) all net obligations of such Person under Hedging
      Agreements, (f) all obligations of others of the type referred to in
      clauses (a) through (e) above and which are secured by any Lien on any
      property owned by such Person even though such Person has not assumed or
      otherwise become liable for the payment thereof, except that the amount of
      any
      nonrecourse obligation shall be deemed to be the lesser of the value of the
      property securing such obligation and the amount of such obligation so secured,
      (g) all Guarantee Obligations with respect to the items described in
      clauses (a) through (e) above, (h) Guarantee Obligations with respect to
      volumetric production payments, and (i) obligations of such Person to purchase
      or repurchase securities, accounts or other Property arising out of or in
      connection with the sale of the same or substantially similar securities or
      Property; provided, that for the purposes of calculating the Debt Leverage
      Ratio
      under subsection 8.1(b) and subsection 8.2(j), the definition of Indebtedness
      shall not include the obligations described in clause (e) above or production
      payments.

     

    “Indenture”
      - the Indenture
      dated as of May 23, 2003, between EPPHC and Wilmington Trust Company, as
      amended, relating to the issuance of the Senior Notes.

     

    “Independent
      Auditors”
      - means
      PricewaterhouseCooper LLP or other independent certified public accountants
      of
      nationally recognized standing reasonably acceptable to the Required
      Lenders.

     

    “Independent
      Engineer”
      - means Ryder
      Scott or another independent engineering firm selected by EPPHC and reasonably
      acceptable to the Technical Banks.

     

    “Insolvency”
      - with respect to
      any Multiemployer Plan, the condition that such Plan is insolvent within the
      meaning of Section 4245 of ERISA.

     

    “Insolvent”
      - pertaining to a
      condition of Insolvency.

     

    “Intellectual
      Property”
      - as defined in
      Section 5.9 of this Agreement.

     

    “Interest
      Coverage Ratio”
      - as of any date,
      the ratio of EBITDA of EPPHC and its Restricted Subsidiaries for the 12-month
      period ending on such date to Consolidated Interest Expense of EPPHC and its
      Restricted Subsidiaries for such 12-month period.

     

    “Interest
      Payment
      Date”
      - (a) as to any
      ABR Loan, the last day of each March, June, September and December, commencing
      September 30, 2005, the date of any conversion from an ABR Loan to a Eurodollar
      Loan and the Termination Date, (b) as to any Eurodollar Loan having an Interest
      Period of three months or less, the last day of such Interest Period, and (c)
      as
      to any Eurodollar Loan having an Interest Period longer than three months,
      each
      day which is three months, or a whole multiple thereof, after the first day
      of
      such Interest Period and the last day of such Interest Period.

     

    “Interest
      Period”
      - with respect to
      any Eurodollar Loan:

     

    (i) initially,
      the
      period commencing on the borrowing or conversion date, as the case may be,
      with
      respect to such Eurodollar Loan and ending one, two, three or six (or, to the
      extent available to all of the Lenders, nine or twelve) months thereafter,
      as
      selected by the Borrowers’ Representative in its notice of borrowing or notice
      of conversion, as the case may be, given with respect thereto; and

     

    (ii) thereafter,
      each
      period commencing on the last day of the next preceding Interest Period
      applicable to such Eurodollar Loan and ending one, two, three or six (or, to
      the
      extent available to all of the Lenders, nine or twelve) months thereafter,
      as
      selected by the Borrowers’ Representative by irrevocable notice to the
      Administrative Agent not less than three Business Days prior to the last day
      of
      the then current Interest Period with respect thereto;

     

    (iii) provided
      that, all
      of the foregoing provisions relating to Interest Periods are subject to the
      following:

     

    (1) if
      any Interest
      Period pertaining to a Eurodollar Loan would otherwise end on a day that is
      not
      a Business Day, such Interest Period shall be extended to the next succeeding
      Business Day unless the result of such extension would be to carry such Interest
      Period into another calendar month in which event such Interest Period shall
      end
      on the immediately preceding Business Day;

     

    (2) any
      Interest Period
      pertaining to a Eurodollar Loan that begins on the last Business Day of a
      calendar month (or on a day for which there is no numerically corresponding
      day
      in the calendar month at the end of such Interest Period) shall end on the
      last
      Business Day of a calendar month;

     

    (3) the
      Borrowers’
      Representative shall select Interest Periods so as not to require a payment
      or
      prepayment of any Eurodollar Loan during an Interest Period for such Loan;
      and

     

    (4) any
      Interest Period
      that would otherwise extend beyond the Termination Date shall end on the
      Termination Date.

     

    “Interest
      Rate
      Protection Agreement”
      - an interest
      rate swap, cap or collar agreement or similar arrangement entered into with
      the
      intent of protecting against fluctuations in interest rates or the exchange
      of
      notional interest obligations, either generally or under specific
      contingencies.

     

    “Investments”
      - as defined in
      subsection 8.8.

     

    “ISP”
      - International
      Standby Practices, as the same may be amended from time to time.

     

    “Issuing
      Lender”
      - the
      Administrative Agent or any of its respective Affiliates, in its capacity as
      issuer of a Letter of Credit, and any other Lender to whom the Administrative
      Agent or any of its respective Affiliates assigns (with the prior written
      consent of the Required Lenders) all or a portion of its obligations to issue
      Letters of Credit hereunder.

     

    “Joint
      Bookrunners”
      - Fortis and
      RBS.

     

    “Joint
      Lead
      Arrangers”
      - Fortis, RBS and
      BNS.

     

    “L/C
      Application”
      - as defined in
      subsection 3.2.

     

    “L/C
      Commitment”
      - collectively,
      the Issuing Lender’s obligation to issue Letters of Credit and the obligation of
      Participating Lenders to acquire L/C Participating Interests therein pursuant
      to
      Section 3.

     

    “L/C
      Participating Interest”
      - with respect to
      any Letter of Credit (a) in the case of the Issuing Lender with respect thereto,
      its interest in such Letter of Credit and any L/C Application relating thereto
      after giving effect to the granting of participating interests therein, if
      any,
      pursuant hereto and (b) in the case of each Participating Lender, its undivided
      participating interest in such Letter of Credit and any L/C Application relating
      thereto.

     

    “Lender
      Redetermination Notice”
      - a notice from
      the Required Lenders to the Borrower’s Representative giving notice of their
      election to redetermine the Borrowing Base, which notice may be sent by the
      Required Lenders at any time they so elect, provided that such an election
      (excluding any mandatory redetermination of the Borrowing Base made in
      connection with the issuance of Subordinated Indebtedness pursuant to subsection
      4.9(d)(iii), any Disposition of Borrowing Base Properties described in
      subsection 8.6(c) or (d), the failure of the Borrowers to comply with the
      Continuing 70% Test, the substitution as Collateral of Oil and Gas Properties
      having a value in excess of 10% of the PV-10 Value of the Borrowing Base
      Properties at such time, and the prepayment or purchase of the Senior Notes
      in
      accordance with subsection 8.9(w)) can be made by the Required Lenders no more
      than once between Scheduled Redetermination Dates.

     

    “Letters
      of
      Credit”
      - as defined in
      subsection 3.1(a).

     

    “Letter
      of Credit
      Outstandings”
      - at any time,
      the sum of (a) the aggregate amount available for drawing under Letters of
      Credit then outstanding and (b) the aggregate amount of drawings under Letters
      of Credit which have not then been reimbursed pursuant to subsection
      3.5.

     

    “Lien”
      - any mortgage,
      pledge, hypothecation, assignment for security purposes, deposit arrangement,
      encumbrance, lien (statutory or other), charge or other security interest of
      any
      kind or nature whatsoever (including, without limitation, any conditional sale
      or other title retention agreement and any Capital Lease having substantially
      the same economic effect as any of the foregoing), but excluding set-off
      arrangements.

     

    “Loans”
      - as defined in
      subsection 2.1(a).

     

    “Loan
      Documents”
      - the collective
      reference to this Agreement, any Notes, the L/C Applications, the Fee Letter,
      the Guarantee Agreements, the Security Documents and any Hedging Agreement
      between a Borrower and any Hedge Party (including, any Hedging Agreement between
      a Borrower and any commercial bank or other financial institution that was
      at
      the time such Hedging Agreement was entered into a Lender or an Affiliate of
      a
      Lender).

     

    “Loan
      Parties”
      - the collective
      reference to the Borrowers, each Guarantor and any other Subsidiary that at
      the
      time of determination is a party to any Loan Document.

     

    “Material
      Adverse
      Effect”
      - a material
      adverse effect on (a) the business, assets, liabilities, property, or financial
      condition of a Borrower and its Subsidiaries taken as a whole, (b) the ability
      of a Borrower or any of the other Loan Parties to perform their respective
      obligations under the Loan Documents, or (c) the validity or enforceability
      of
      this or any of the other Loan Documents or the rights and remedies of the
      Administrative Agent or the Lenders hereunder or thereunder.

     

    “Materials
      of
      Environmental Concern”
      - any petroleum
      products or any hazardous or toxic substances, materials, or wastes, defined
      or
      regulated as such in or under any Environmental Law, including, without
      limitation, asbestos or asbestos containing material, polychlorinated biphenyls,
      urea-formaldehyde insulation, and any other substance that is regulated under
      any Environmental Law.

     

    “Monthly
      Date”
      - the last
      Business Day of each calendar month.

     

    “Mortgage”
      - each mortgage,
      deed of trust, assignment or security agreement executed by the Borrowers in
      form and substance reasonably satisfactory to the Administrative Agent which
      purports to create a Lien in favor of the Administrative Agent, in each case
      as
      amended, supplemented or otherwise modified from time to time.

     

    “Multiemployer
      Plan”
      - a Plan which is
      a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

     

    “Net
      Proceeds”
      - with respect to
      any Disposition by the Borrowers or any Subsidiary, an amount equal to the
      gross
      proceeds in cash (including cash equivalents and any cash payments received
      by
      way of deferred payment of principal pursuant to a note or installment
      receivable or purchase price adjustment receivable or otherwise, but only as
      and
      when received) of such Disposition, net of taxes, attorneys’ fees, accountants’
      fees, brokerage, consultant and other fees and expenses actually incurred in
      connection with such Disposition, including any sums retained in escrow at
      such
      closing.

     

    “Non-Excluded
      Taxes”
      - as defined in
      subsection 4.13(a).

     

    “Non-U.S.
      Lender”
      - as defined in
      subsection 4.13(b).

     

    “Note”
      - as defined in
      subsection 2.4.

     

    “Obligations”
      - the collective
      reference to the unpaid principal of and interest on the Loans and the
      Reimbursement Obligations and all other obligations and liabilities of the
      Borrowers (including, without limitation, amounts owing under any Loan Document,
      including any Hedging Agreement, and interest accruing at the then applicable
      rate provided in this Agreement after the maturity of the Loans 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 the Borrowers, whether or not
      a
      claim for post-filing or post-petition interest is allowed in such proceeding)
      to the Administrative Agent or any of the Lenders or their Affiliates under
      the
      Loan Documents.

     

    “Oil
      and Gas
      Business”
      - (a) the
      acquisition, exploration, exploitation, development, operation and disposition
      of interests in Oil and Gas Properties and Hydrocarbons, (b) the gathering,
      marketing, treating, processing, storage, selling and transporting of any
      production from such interests or Oil and Gas Properties, including, without
      limitation, the marketing of Hydrocarbons obtained from unrelated Persons,
      (c)
      any business relating to or arising from exploration for or development,
      production, treatment, processing, storage, transportation or marketing of
      Hydrocarbons, (d) any business relating to oilfield sales and service, and
      (e)
      any activity that is ancillary or necessary or desirable to facilitate the
      activities described in clauses (a) through (d) of this definition.

     

    “Oil
      and Gas
      Properties”
      - Hydrocarbon
      Interests; the Properties now or hereafter pooled or unitized with Hydrocarbon
      Interests; all presently existing or future unitization, pooling agreements
      and
      declarations of pooled units and the units created thereby (including without
      limitation all units created under orders, regulations and rules of any
      Governmental Authority having jurisdiction) which may affect all or any portion
      of the Hydrocarbon Interests; all pipelines, gathering lines, compression
      facilities, tanks and processing plants; all interests held in royalty trusts
      whether presently existing or hereafter created; all Hydrocarbons in and under
      and which may be produced, saved, processed or attributable to the Hydrocarbon
      Interests, the lands covered thereby and all Hydrocarbons in pipelines,
      gathering lines, tanks and processing plants and all rents, issues, profits,
      proceeds, products, revenues and other incomes from or attributable to the
      Hydrocarbon Interests; all tenements, hereditaments, appurtenances and
      Properties in any way appertaining, belonging, affixed or incidental to the
      Hydrocarbon Interests, and all rights, titles, interests and estates described
      or referred to above, including any and all real property, now owned or
      hereafter acquired, used or held for use in connection with the operating,
      working or development of any of such Hydrocarbon Interests or Property and
      including any and all surface leases, rights-of-way, easements and servitudes
      together with all additions, substitutions, replacements, accessions and
      attachments to any and all of the foregoing; in each case whether now owned
      or
      hereafter acquired directly or indirectly.

     

    “Participants”
      - as defined in
      subsection 11.6(b).

     

    “Participating
      Lender”
      - with respect to
      any Letter of Credit, any Lender (other than the Issuing Lender with respect
      to
      such Letter of Credit) with respect to its L/C Participating Interest in such
      Letter of Credit.

     

    “PBGC”
      - the Pension
      Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV
      of
      ERISA.

     

    “Permitted
      Liens”
      - as defined in
      Section 8.3.

     

    “Person”
      - an individual,
      partnership, corporation, business trust, joint stock company, trust,
      unincorporated association, joint venture, limited liability company,
      Governmental Authority or other entity of whatever nature.

     

    “Plan”
      - at a particular
      time, any employee benefit plan which is subject to Title IV of ERISA and in
      respect of which a Borrower or a Commonly Controlled Entity is (or, if such
      plan
      were terminated at such time, would under Section 4069 of ERISA be deemed to
      be)
      an “employer” as defined in Section 3(5) of ERISA.

     

    “Price
      Criteria”
      - certain price
      assumptions determined by the Technical Banks in their sole discretion utilized
      in the determination of future revenues from oil and gas
      production.

     

    “Properties”
      - any kind of
      facility, fixture, property or asset, whether real, personal or mixed, or
      tangible or intangible owned, leased or operated by the Borrowers or a
      Guarantor.

     

    “Proved
      Reserves”
      - the estimated
      quantities of crude oil, condensate, natural gas and natural gas liquids that
      geological and engineering data demonstrate with reasonable certainty to be
      recoverable in future years from known reservoirs under existing economic and
      operating conditions (i.e., prices and costs as of the date the estimate is
      made), as determined in accordance with Rule 4-10 of Regulation S-X
      promulgated by, and other applicable requirements of, the United States
      Securities and Exchange Commission.

     

    “PV
      10 Value”
      -
      with respect to any Oil and Gas Properties, the
      then present
      value of such Properties agreed to by the Technical Banks utilizing a 10%
      discount rate and the Price Criteria furnished by the Administrative Agent
      to
      EPPHC thirty (30) days prior to the delivery of the then relevant Reserve Report
      under Section 4.9.

     

    “RBS”
      - as defined in
      the preamble to this Agreement.

     

    “Redetermination
      Date”
      - each date that
      the redetermined Borrowing Base becomes effective subject to the notice
      requirements specified in subsection 4.9.

     

    “Reference
      Bank”
      - Fortis Bank
      S.A./N.V.

     

    “Register”
      - as defined in
      subsection 11.6(d).

     

    “Regulation
      U”
      - Regulation U of the Board of Governors of the Federal Reserve System as in
      effect from time to time.

     

    “Regulations
      T
      and X”
      - the
      corresponding regulation of the Board of Governors of the Federal Reserve System
      as from time to time in effect and any successor or other regulation or official
      interpretation of said Board of Governors, and all official rulings and
      interpretations thereunder or thereof.

     

    “Reimbursement
      Obligations”
      - the obligation
      of the Borrowers to reimburse the Issuing Lender pursuant to subsection 3.5
      for
      amounts drawn under Letters of Credit issued by the Issuing Lender in accordance
      with the terms of this Agreement and the related L/C Applications.

     

    “Reorganization”
      - with respect to
      any Multiemployer Plan, the condition that such plan is in reorganization within
      the meaning of Section 4241 of ERISA.

     

    “Reorganization
      Plan”
      - a plan for the
      corporate restructuring of El Paso Corporation and its Subsidiaries, including
      the Borrowers and the Guarantor.

     

    “Reportable
      Event”
      - any of the
      events set forth in Section 4043(b) of ERISA, other than those events as to
      which the thirty-day notice period is waived under 29 C.F.R. Part
      4043.

     

    “Required
      Lenders”
      - at any time
      while no Loans are outstanding, Lenders having at least sixty-six and two-thirds
      percent (66-2/3%) of the aggregate Commitments, and, at any time while Loans
      are
      outstanding, Lenders holding at least sixty-six and two-thirds percent (66-2/3%)
      of the outstanding aggregate principal amount of the Loans (without regard
      to
      any sale by a Lender of a participation in any Loan under Section
      11.6(b)).

     

    “Requirement
      of
      Law”
      - as to any
      Person, the certificate or articles of incorporation and by-laws or other
      organizational or governing documents of such Person, and any law, treaty,
      rule
      or regulation or determination of an arbitrator or a court or other Governmental
      Authority, in each case applicable to or binding upon such Person or any of
      its
      Property or to which such Person or any of its Property is subject.

     

    “Reserve
      Report”
      - a report in
      form and substance satisfactory to the Technical Banks, separately stated with
      respect to (i) all Oil and Gas Properties owned directly or indirectly by the
      Loan Parties valued in accordance with Rule 4-10 of Regulation S-X promulgated
      by, and other applicable requirements of, the United States Securities and
      Exchange Commission, (ii) all Borrowing Base Properties owned directly or
      indirectly by the Borrowers valued using the Price Criteria furnished by the
      Administrative Agent to the Borrowers’ Representative, and (iii) all Oil and Gas
      Properties owned directly or indirectly by the Borrowers valued using the Price
      Criteria furnished by the Administrative Agent to the Borrowers’ Representative,
      setting forth, among other things, (a) the PV-10 Value of such Properties,
      (b) the Proved Reserves attributable to such Properties, and (c) a projection
      of
      the rate of production and net income of the Proved Reserves attributable to
      such Properties as of the date of such Reserve Report.

     

    “Responsible
      Officer”
      - of any Loan
      Party, the president, the chief financial officer, treasurer or controller
      of
      such Loan Party.

     

    “Restricted
      Subsidiary”
      - each Subsidiary
      of EPPHC that is not a Borrower or an Unrestricted Subsidiary. As of the date
      of
      this Agreement, the following Subsidiaries of EPPHC are Restricted Subsidiaries:
      Medicine Bow Energy Corporation, Medicine Bow Operating Company and MBOW Four
      Star Corporation. Each such Restricted Subsidiary is a Domestic Restricted
      Subsidiary and thus a Guarantor.

     

    “Ryder
      Scott”
      - Ryder Scott
      Company, L.P.

     

    “Scheduled
      Redetermination Dates”
      - April 30 and
      October 31 of each year.

     

    “Secured
      Parties”
      - the Lenders
      under this Agreement and a Lender or any Affiliate of a Lender party to a
      Hedging Agreement with any Borrower. The term Secured Parties shall also include
      a former Lender or an Affiliate of a former Lender that is party to a Hedging
      Agreement with any Borrower, provided that such former Lender or Affiliate
      was a
      Lender hereunder or an Affiliate of a Lender hereunder at the time it entered
      into such Hedging Agreement.

     

    “Security
      Documents”
      - the collective
      reference to the Mortgages and all other security documents hereafter delivered
      to the Administrative Agent granting a Lien on any asset or assets of any Person
      to secure the obligations and liabilities of the Borrowers hereunder and under
      any of the other Loan Documents or to secure any guarantee of any such
      obligations and liabilities.

     

    “Senior
      Notes”
      - the 73⁄4% Senior
      Notes due 2013 issued by EPPHC pursuant to the Indenture.

     

    “Single
      Employer
      Plan”
      - any Plan which
      is covered by Title IV of ERISA, but which is not a Multiemployer
      Plan.

     

    “SocGen”
      - as defined in
      the preamble to this Agreement.

     

    “Subordinated
      Indebtedness”
      - any
      Indebtedness of the Borrowers contractually subordinated to the prior payment
      in
      full of the Loans, Reimbursement Obligations and any other obligations hereunder
      in a manner acceptable to the Required Lenders as evidenced by their written
      approval.

     

    “Subsidiary”
      - as to any
      Person, a corporation, partnership or other entity of which more than 50% of
      the
      total voting power of shares of stock or other equity ownership interests having
      ordinary voting power (other than stock or such other ownership interests having
      such power only by reason of the happening of a contingency) to vote in the
      election of directors, a managing general partner, or majority of general
      partners or other managers or trustees thereof, is at the time owned or
      controlled, directly or indirectly by such Person or one or more of the other
      Subsidiaries of such Person (or a combination thereof). Unless otherwise
      qualified, all references to a “Subsidiary” or to “Subsidiaries” in this
      Agreement shall refer to any direct or indirect Subsidiary
      or Subsidiaries
      of
      EPPHC.

     

    “Syndication
      Agent”
      -
      RBS.

     

    “Technical
      Banks”
      - Fortis, RBS and
      BNS.

     

    “Termination
      Date”
      - August 30,
      2010.

     

    “Tranche”
      - the collective
      reference to Eurodollar Loans the then current Interest Periods with respect
      to
      all of which begin on the same date and end on the same later date (whether
      or
      not such Loans shall originally have been made on the same day); Tranches may
      be
      identified as “Eurodollar Tranches”

     

    “Transferee”
      - as defined in
      subsection 11.6(f).

     

    “Type”
      - as to any Loan,
      its nature as an ABR Loan or a Eurodollar Loan.

     

    “Uniform
      Customs”
      - the Uniform
      Customs and Practice for Documentary Credits (1993 Revision), International
      Chamber of Commerce Publication No. 500, as the same may be amended from time
      to
      time.

     

    “Unrestricted
      Subsidiary”
      - any Subsidiary
      of EPPHC other than a Loan Party which is designated in writing by EPPHC to
      the
      Administrative Agent as an Unrestricted Subsidiary, provided that no Subsidiary
      may be so designated by EPPHC if it is a Restricted Subsidiary under the
      Indenture.

     

    “WestLB”
      - as defined in
      the preamble to this Agreement.

     

    1.2. Other
      Definitional
      Provisions.
      (a) Unless
      otherwise specified therein, all terms defined in this Agreement shall have
      the
      defined meanings when used in any Loan Document or any certificate or other
      document made or delivered pursuant hereto or thereto.

     

    (a) As
      used herein and
      in any Loan Document, and any certificate or other document made or delivered
      pursuant hereto or thereto, accounting terms relating to the Borrower or any
      Subsidiary of the Borrower not defined in subsection 1.1 and accounting terms
      partly defined in subsection 1.1, to the extent not defined, shall have the
      respective meanings given to them under GAAP. References in any Loan Document
      to
      financial statements shall be deemed to include all related schedules and notes
      thereto.

     

    (b) 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 Section, subsection, Schedule and Exhibit
      references are to this Agreement unless otherwise specified.

     

    (c) The
      meanings given
      to terms defined herein shall be equally applicable to both the singular and
      plural forms of such terms.

     

    (d) References
      in any
      Loan Document to knowledge of any Loan Party of events or circumstances shall
      be
      deemed to refer to events or circumstances of which an officer of such Loan
      Party has actual knowledge.

     

    (e) Any
      determinations
      as to EPPHC and its Restricted Subsidiaries on a consolidated basis shall be
      made by excluding the assets, liabilities and results of operations of
      Unrestricted Subsidiaries (but including any investment in such Unrestricted
      Subsidiaries) and including the effects of any transactions between EPPHC and
      Restricted Subsidiaries, on the one hand, and such Unrestricted Subsidiaries,
      on
      the other hand.

     

    SECTION
      2

     

    AMOUNT
      AND
      TERMS OF COMMITMENTS

     

    2.1. Commitments.
      (a) Subject to
      the terms and conditions hereof, including, without limitation, the satisfaction
      of the conditions precedent set forth in Section 6 hereof, each Lender severally
      agrees to make Loans (“Loans”)
      to the Borrowers
      from time to time during the Commitment Period in an aggregate principal amount
      at any one time outstanding not to exceed the amount of such Lender’s
      Commitment, provided that no Lender shall make any Loans if, after giving effect
      thereto, the sum of such Lender’s Loans and Commitment Percentage of Letter of
      Credit Outstandings (in each case, after giving effect to the Loans requested
      to
      be made and the Letters of Credit requested to be issued on such date) exceeds
      the lesser of (i) such Lender’s Commitment and (ii) such Lender’s Commitment
      Percentage of the Borrowing Base then in effect. During the Commitment Period,
      the Borrowers may use the Commitments by borrowing, prepaying the Loans in
      whole
      or in part, and reborrowing, all in accordance with the terms and conditions
      hereof.

     

    (a) The
      Loans may from
      time to time be (i) Eurodollar Loans, (ii) ABR Loans or (iii) a combination
      thereof, as determined by the Borrower’s Representative and notified to the
      Administrative Agent in accordance with subsections 2.2 and 4.3, provided that
      no Loan shall be made as a Eurodollar Loan after the day that is one month
      prior
      to the Termination Date.

     

    2.2. Procedure
      for
      Borrowing.
      The Borrowers may
      borrow under the Commitments during the Commitment Period on any Business Day,
      provided that the Borrower’s Representative shall give the Administrative Agent
      irrevocable notice (which notice must be received by the Administrative Agent
      prior to 12:00 noon, New York City time, (a) three Business Days prior
      to
      the requested Borrowing Date, if all or any part of the requested Loans
      initially are to be Eurodollar Loans or (b) on the requested Borrowing Date
      if
      the requested Loans are ABR Loans), specifying (i) the amount to be borrowed,
      (ii) the requested Borrowing Date, (iii) whether the borrowing is to be of
      Eurodollar Loans, ABR Loans or a combination thereof and (iv) if the borrowing
      is to be entirely or partly of Eurodollar Loans, the respective amounts of
      each
      such Type of Loan and the respective lengths of the initial Interest Periods
      therefor. Each borrowing under the Commitments shall be in an amount equal
      to
      (x) in the case of ABR Loans, $5,000,000 or a whole multiple of $1,000,000
      in
      excess thereof (or, if the then Available Commitments, or the amount of
      outstanding Eurodollar Loans after any repayment of any Eurodollar Loans, are
      less than $5,000,000, such lesser amount) and (y) in the case of Eurodollar
      Loans, $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon
      receipt of any such notice from the Borrower’s Representative, the
      Administrative Agent shall promptly notify each Lender thereof. Each Lender
      will
      make the amount of its pro rata share of each borrowing available to the
      Administrative Agent for the account of the Borrower at the office of the
      Administrative Agent specified in subsection 11.2 prior to 11:00 A.M., New
      York
      City time, on the Borrowing Date requested by the Borrower’s Representative in
      funds immediately available to the Administrative Agent. Such borrowing will
      then be made available to the Borrowers by the Administrative Agent crediting
      the account of the Borrowers specified in the borrowing notice with the
      aggregate of the amounts made available to the Administrative Agent by the
      Lenders and in like funds as received by the Administrative Agent.

     

    2.3. Repayment
      of
      Loans.
      (a) The Borrowers hereby unconditionally promise to pay to the Administrative
      Agent for the account of each Lender the then unpaid principal amount of each
      Loan of such Lender on the Termination Date (or such earlier date on which
      the
      Loans become due and payable pursuant to Section 9). The Borrowers hereby
      further agree to pay interest on the unpaid principal amount of the Loans from
      time to time outstanding from the date hereof to but not including the date
      the
      Loans are paid in full at the rates per annum, and on the dates, set forth
      in
      subsection 4.1.

     

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

     

    (b) The
      Administrative
      Agent shall maintain the Register pursuant to subsection 11.6(d), and a
      subaccount therein for each Lender, in which shall be recorded (i) the amount
      of
      each Loan 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 the Borrowers to each Lender hereunder and (iii)
      both the amount of any sum received by the Administrative Agent hereunder from
      the Borrowers and each Lender’s share thereof.

     

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

     

    2.4. Evidence
      of
      Debt.
      Upon the request of any Lender, the Borrowers will execute and deliver to such
      Lender a promissory note of the Borrowers evidencing the Loans of such Lender,
      substantially in the form of Exhibit A with appropriate insertions as to date
      and principal amount (a “Note”).

     

    SECTION
      3

     

    LETTERS
      OF
      CREDIT

     

    3.1. The
      L/C
      Commitment.
      (a) Subject to
      the terms and conditions hereof, including, without limitation, the satisfaction
      of the conditions precedent set forth in Section 6 hereof, the Issuing Lender,
      in reliance on the agreements of the other Lenders set forth in subsection
      3.4(a), agrees to issue letters of credit (the “Letters
      of
      Credit”)
      for the account
      of any Borrower or any Subsidiary or Affiliate of a Borrower in which EPPHC
      has
      a direct or indirect investment, on any Business Day during the Commitment
      Period in such form as may be approved from time to time by the Issuing Lender;
      provided that the Issuing Lender shall not issue any Letter of Credit if, after
      giving effect to such issuance and after giving effect to any Loans requested
      to
      be made or Letters of Credit requested to be issued on such date the sum of
      the
      Loans and Letter of Credit Outstandings would exceed the lesser of (x) the
      Commitments and (y) the Borrowing Base then in effect. Each Letter of Credit
      shall (i) be issued to support obligations of any Borrower or any Subsidiary
      or
      Affiliate of a Borrower in which EPPHC has a direct or indirect investment,
      contingent or otherwise, which finance the working capital and business needs
      of
      such Borrower or Subsidiary or Affiliate in which EPPHC has a direct or indirect
      investment, and (ii) shall expire no later than the earlier of (x) one year
      (or
      such later date agreed to by the Issuing Lender) after the date of issuance
      and
      (y) five Business Days prior to the Termination Date, provided that any Letter
      of Credit with a one-year tenor may provide for the extension thereof for
      additional one-year periods (which shall in no event extend beyond the date
      referred to in clause (y) above). Each Letter of Credit shall be denominated
      in
      Dollars.

     

    (a) Each
      Letter of
      Credit shall be subject to the Uniform Customs or, at the option of the Issuing
      Lender, the ISP, and, to the extent not inconsistent therewith, the laws of
      the
      State of New York.

     

    (b) The
      Issuing Lender
      shall not at any time be obligated to issue any Letter of Credit hereunder
      if
      such issuance would conflict with, or cause the Issuing Lender or any
      Participating Lender to exceed any limits imposed by, any applicable Requirement
      of Law.

     

    3.2. Procedure
      for
      Issuance of Letters of Credit.
      The Borrowers’
      Representative may from time to time request that the Issuing Lender issue
      a
      Letter of Credit by delivering to the Issuing Lender and the Administrative
      Agent at their respective addresses for notices specified herein a letter of
      credit application in the Issuing Lender’s then customary form (an “L/C
      Application”)
      completed to the
      satisfaction of the Issuing Lender, and such other certificates, documents
      and
      other papers and information as may be customary and as the Issuing Lender
      may
      reasonably request. Upon receipt of any L/C Application, the Issuing Lender
      will
      process such L/C Application and the certificates, documents and other papers
      and information delivered to it in connection therewith in accordance with
      its
      customary procedures. Upon receipt by the Issuing Lender of confirmation from
      the Administrative Agent that issuance of such Letter of Credit will not
      contravene subsection 3.1, the Issuing Lender shall promptly issue the Letter
      of
      Credit requested thereby (but in no event shall the Issuing Lender be required
      to issue any Letter of Credit earlier than one Business Day after its receipt
      of
      the L/C Application therefor and all such other certificates, documents and
      other papers and information relating thereto) by issuing the original of such
      Letter of Credit to the beneficiary thereof or as otherwise may be agreed by
      the
      Issuing Lender and the Borrowers’ Representative. The Issuing Lender shall
      furnish a copy of such Letter of Credit to the Borrower’s Representative and the
      Administrative Agent promptly following the issuance thereof, and, thereafter,
      the Administrative Agent shall promptly furnish a copy thereof to the
      Lenders.

     

    3.3. Fees,
      Commissions
      and Other Charges.
      (a) The Borrowers
      shall pay to the Administrative Agent, for the account of (i) the Issuing Lender
      and the Participating Lenders, a letter of credit commission with respect to
      each Letter of Credit, computed for the period from the date such Letter of
      Credit is issued to the date upon which the next payment is due under this
      subsection (and, thereafter, from the date of payment under this subsection
      to
      the date upon which the next payment is due under this subsection) at the rate
      per annum equal to the Applicable Margin in effect from time to time for
      Eurodollar Loans of the daily aggregate amount available to be drawn under
      such
      Letter of Credit during such period, and (ii) the Issuing Lender, a letter
      of
      credit commission with respect to each Letter of Credit in an amount equal
      to
      .125% per annum of the daily aggregate amount available to be drawn under such
      Letter of Credit. The letter of credit commissions payable pursuant to clause
      (i) and (ii) above shall be payable quarterly in arrears on the last day of
      each
      March, June, September and December, commencing September 30, 2005, and on
      the
      Termination Date.

     

    (a) In
      addition to the
      foregoing fees and commissions, the Borrowers shall pay to the Issuing Lender
      (i) a fee of $750 for issuing each Letter of Credit, and (ii) a fee of $250
      for
      amending any Letter of Credit.

     

    (b) The
      Administrative
      Agent shall, promptly following its receipt thereof, distribute to the Issuing
      Lender and the Participating Lenders all fees and commissions received by the
      Administrative Agent for their respective accounts pursuant to this
      subsection.

     

    3.4. L/C
      Participations.
      (a) Effective on
      the date of issuance of each Letter of Credit issued after the Closing Date,
      the
      Issuing Lender irrevocably agrees to grant and hereby grants to each
      Participating Lender, and each Participating Lender irrevocably agrees to accept
      and purchase and hereby accepts and purchases from the Issuing Lender, on the
      terms and conditions hereinafter stated, for such Participating Lender’s own
      account and risk an undivided interest equal to such Participating Lender’s
      Commitment Percentage in the Issuing Lender’s obligations and rights under each
      Letter of Credit issued by the Issuing Lender and the amount of each draft
      paid
      by the Issuing Lender thereunder. Each Participating Lender unconditionally
      and
      irrevocably agrees with the Issuing Lender that, if a draft is paid under any
      Letter of Credit for which such Issuing Lender is not reimbursed in full by
      the
      Borrowers in accordance with the terms of this Agreement, such Participating
      Lender shall pay to the Administrative Agent, for the account of the Issuing
      Lender, upon demand at the Administrative Agent’s address specified in
      subsection 11.2, an amount equal to such Participating Lender’s Commitment
      Percentage of the amount of such draft, or any part thereof, which is not so
      reimbursed. On the date that any Assignee becomes a Lender party to this
      Agreement in accordance with subsection 11.6, participating interests in any
      outstanding Letters of Credit held by the transferor Lender from which such
      Assignee acquired its interest hereunder shall be proportionately reallotted
      between such Assignee and such transferor Lender. Each Participating Lender
      hereby agrees that its obligation to participate in each Letter of Credit,
      and
      to pay or to reimburse the Issuing Lender for its participating share of the
      drafts drawn or amounts otherwise paid thereunder, is absolute, irrevocable
      and
      unconditional and shall not be affected by any circumstances whatsoever
      (including, without limitation, the occurrence or continuance of any Default
      or
      Event of Default), and that each such payment shall be made without offset,
      abatement, withholding or other reduction whatsoever.

     

    (a) If
      any amount
      required to be paid by any Participating Lender to the Issuing Lender pursuant
      to subsection 3.4(a) in respect of any unreimbursed portion of any draft paid
      by
      the Issuing Lender under any Letter of Credit is paid to the Issuing Lender
      within three Business Days after the date such payment is due, such
      Participating Lender shall pay to the Administrative Agent, for the account
      of
      the Issuing Lender, on demand, an amount equal to the product of (i) such
      amount, times (ii) the daily average Federal Funds Effective Rate during the
      period from and including the date such draft is paid to the date on which
      such
      payment is immediately available to the Issuing Lender, times (iii) a fraction
      the numerator of which is the number of days that elapse during such period
      and
      the denominator of which is 360. If any such amount required to be paid by
      any
      Participating Lender pursuant to subsection 3.4(a) is not in fact made available
      to the Administrative Agent, for the account of the Issuing Lender, by such
      Participating Lender within three Business Days after the date such payment
      is
      due, the Issuing Lender shall be entitled to recover from such Participating
      Lender, on demand, such amount with interest thereon calculated from such due
      date at the rate per annum applicable to ABR Loans hereunder. A certificate
      of
      the Issuing Lender submitted to any Participating Lender with respect to any
      amounts owing under this subsection shall be conclusive in the absence of
      manifest error.

     

    (b) Whenever,
      at any
      time after the Issuing Lender has paid a draft under any Letter of Credit and
      has received from any Participating Lender its pro rata share of such payment
      in
      accordance with subsection 3.4(a), the Issuing Lender receives any reimbursement
      on account of such unreimbursed portion, or any payment of interest on account
      thereof, the Issuing Lender will pay to the Administrative Agent, for the
      account of such Participating Lender, its pro rata share thereof; provided,
      however, that in the event that any such payment received by the Issuing Lender
      shall be required to be returned by the Issuing Lender, such Participating
      Lender shall return to the Administrative Agent for the account of the Issuing
      Lender, the portion thereof previously distributed to it.

     

    3.5. Reimbursement
      Obligation of the Borrowers.
      If any draft
      shall be presented for payment under any Letter of Credit, the Issuing Lender
      shall notify the Borrowers and the Administrative Agent of the date and the
      amount thereof. The Borrowers agree to reimburse the Issuing Lender (whether
      with their own funds or with proceeds of the Loans) on each date on which the
      Issuing Lender pays a draft so presented under any Letter of Credit for the
      amount of (i) such draft so paid and (ii) any taxes, fees, charges or other
      costs or expenses incurred by the Issuing Lender in connection with such
      payment. Each such payment shall be made to the Issuing Lender at its address
      for notices specified herein in lawful money of the United States of America
      and
      in immediately available funds. Each
      unreimbursed drawing under any Letter of Credit shall constitute a request
      by
      the Borrowers, subject to the provisions of Section 2.1, to the Administrative
      Agent for ABR Loans in the amount of such drawing. The borrowing date with
      respect to any such ABR Loans shall be the date of the remittance by the Issuing
      Bank of the proceeds of such drawing. If ABR Loans are not available on the
      date
      when the Issuing Lender pays a draft, interest
      shall be
      payable on any and all amounts remaining unpaid by the Borrowers under this
      subsection from the date of payment of the applicable draft to but excluding
      the
      date of payment in full thereof, (x) for the period commencing on the date
      of
      payment of the applicable draft to the date which is 3 days thereafter, at
      the
      rate which would be payable on ABR Loans at such time and (y) thereafter, at
      the
      rate which would be payable on ABR Loans at such time plus 2%.

     

    3.6. Obligations
      Absolute.
      The Borrowers’
      obligations under this Section 3 shall be absolute and unconditional under
      any
      and all circumstances and irrespective of any set-off, counterclaim or defense
      to payment which the Borrowers or any other Person may have or have had against
      the Issuing Lender or any other Lender or any beneficiary of a Letter of Credit.
      The Borrowers also agree with the Issuing Lender that the Issuing Lender shall
      not be responsible for, and the Borrowers’ obligations under subsection 3.5
      shall not be affected by, among other things, the validity or genuineness of
      documents or of any endorsements thereon, even though such documents shall
      in
      fact prove to be invalid, fraudulent or forged, or any dispute between or among
      the Borrowers and any beneficiary of any Letter of Credit or any other party
      to
      which such Letter of Credit may be transferred or any claims whatsoever of
      the
      Borrowers against any beneficiary of such Letter of Credit or any such
      transferee. The Issuing Lender shall not be liable for any error, omission,
      interruption or delay in transmission, dispatch or delivery of any message
      or
      advice, however transmitted, in connection with any Letter of Credit, except
      for
      errors or omissions caused by the Issuing Lender’s gross negligence or willful
      misconduct. The Borrowers agree that any action taken or omitted by the Issuing
      Lender under or in connection with any Letter of Credit or the related drafts
      or
      documents, if done in the absence of gross negligence or willful misconduct
      and
      in accordance with the standards of care specified in the Uniform Commercial
      Code of the State of New York, including, without limitation, Article 5 thereof,
      shall be binding on the Borrowers and shall not result in any liability of
      such
      Issuing Lender to the Borrowers.

     

    3.7. Letter
      of Credit
      Payments.
      Without
      limitation of subsection 3.6, the responsibility of the Issuing Lender to the
      Borrower in connection with any draft presented for payment under any Letter
      of
      Credit shall, in addition to any payment obligation expressly provided for
      in
      such Letter of Credit, be limited to determining that the documents (including
      each draft) delivered under such Letter of Credit in connection with such
      presentment are in conformity with such Letter of Credit.

     

    3.8. L/C
      Applications.
      To the extent
      that any provision of any L/C Application, including any reimbursement
      provisions contained therein, related to any Letter of Credit is inconsistent
      with the provisions of this Section 3, the provisions of this Section 3 shall
      prevail.

     

    SECTION
      4

     

    GENERAL
      PROVISIONS

     

    4.1. Interest
      Rates and
      Payment Dates.
      (a) Each
      Eurodollar Loan shall bear interest for each day during each Interest Period
      with respect thereto at a rate per annum equal to the Eurodollar Rate determined
      for such Interest Period plus the Applicable Margin in effect on such
      day.

     

    (a) Each
      ABR Loan shall
      bear interest for each day at a rate per annum equal to the Alternate Base
      Rate
      in effect on such day plus the Applicable Margin in effect on such
      date.

     

    (b) If
      all or a portion
      of (i) any principal of any Loan, (ii) any interest payable thereon, (iii)
      any
      commitment fee or (iv) any other amount payable hereunder shall not be paid
      when
      due (whether at the stated maturity, by acceleration or otherwise), the
      principal of the Loans and any such overdue interest, commitment fee or other
      amount shall bear interest at a rate per annum which is (x) in the case of
      principal, the rate that would otherwise be applicable thereto pursuant to
      the
      foregoing provisions of this subsection plus 2% or (y) in the case of any such
      overdue interest, commitment fee or other amount, the Alternate Base Rate plus
      the Applicable Margin in effect on such date plus 2%, in each case from the
      date
      of such non-payment to but excluding the date such overdue principal, interest,
      commitment fee or other amount is paid in full (as well after as before
      judgment).

     

    (c) Interest
      shall be
      payable in arrears on each Interest Payment Date, provided that interest
      accruing pursuant to subsection 4.1(c) shall be payable from time to time on
      demand.

     

    4.2. Computation
      of
      Interest and Fees.
      (a) Whenever, in
      the case of ABR Loans, it is calculated on the basis of the Prime Rate, interest
      shall be calculated on the basis of a 365- (or 366-, as the case may be) day
      year for the actual days elapsed; and, otherwise, interest and fees shall be
      calculated on the basis of a 360-day year for the actual days elapsed (including
      the first day and excluding the last day). The Administrative Agent shall as
      soon as practicable notify the Borrowers’ Representative and the Lenders of each
      determination of a Eurodollar Rate. Any change in the interest rate on a Loan
      resulting from a change in the Alternate Base Rate or the Eurocurrency Reserve
      Requirements shall become effective as of the opening of business on the day
      on
      which such change becomes effective. The Administrative Agent shall as soon
      as
      practicable notify the Borrowers’ Representative and the Lenders of the
      effective date and the amount of each such change in interest rate.

     

    (a) Each
      determination
      of an interest rate by the Administrative Agent pursuant to any provision of
      this Agreement shall be conclusive and binding on the Borrowers and the Lenders
      in the absence of manifest error. The Administrative Agent shall, at the request
      of the Borrowers’ Representative, deliver to the Borrowers a statement showing
      the quotations and calculations used by the Administrative Agent in determining
      any interest rate pursuant to subsection 4.1(a), (b) and (c).

     

    4.3. Conversion
      and
      Continuation Options.
      (a) The Borrowers
      may elect from time to time to convert Eurodollar Loans to ABR Loans by having
      the Borrowers’ Representative give the Administrative Agent at least one
      Business Day’s prior irrevocable notice of such election, provided that any such
      conversion of Eurodollar Loans may only be made on the last day of an Interest
      Period with respect thereto. The Borrowers’ Representative may elect from time
      to time to convert ABR Loans to Eurodollar Loans by giving the Administrative
      Agent at least three Business Days’ prior irrevocable notice of such election.
      Any such notice of conversion to Eurodollar Loans shall specify the length
      of
      the initial Interest Period or Interest Periods therefor. Upon receipt of any
      such notice the Administrative Agent shall promptly notify each Lender thereof.
      All or any part of outstanding Eurodollar Loans and ABR Loans may be converted
      as provided herein, provided that (i) no Loan may be converted into a Eurodollar
      Loan when any Event of Default has occurred and is continuing and the
      Administrative Agent has or the Required Lenders have determined that such
      a
      conversion is not appropriate and (ii) no Loan may be converted into a
      Eurodollar Loan after the date that is one month prior to the Termination
      Date.

     

    (a) Any
      Eurodollar
      Loans may be continued as such upon the expiration of the then current Interest
      Period with respect thereto by the Borrowers’ Representative giving notice to
      the Administrative Agent, in accordance with the applicable provisions of the
      term “Interest Period” set forth in subsection 1.1, of the length of the next
      Interest Period to be applicable to such Loans, provided that no Eurodollar
      Loan
      may be continued as such (i) when any Event of Default has occurred and is
      continuing and the Administrative Agent has or the Required Lenders have
      determined that such a continuation is not appropriate or (ii) after the date
      that is one month prior to the Termination Date and provided, further, that
      if
      the Borrowers’ Representative shall fail to give such notice or if such
      continuation is not permitted such Loans shall be automatically converted to
      ABR
      Loans on the last day of such then expiring Interest Period.

     

    4.4. Minimum
      Amounts
      Maximum Number of Tranches.
      All borrowings,
      conversions and continuations of Loans hereunder and all selections of Interest
      Periods hereunder shall be in such amounts and be made pursuant to such
      elections so that, after giving effect thereto, the aggregate principal amount
      of the Loans comprising each Eurodollar Tranche shall be equal to $5,000,000
      or
      a whole multiple of $1,000,000 in excess thereof. In no event shall there be
      more than six (6) Eurodollar Tranches outstanding at any time.

     

    4.5. Optional
      Prepayments and Commitment Reductions.
      (a) The Borrowers
      may, on the last day of any Interest Period with respect thereto, in the case
      of
      Eurodollar Loans, or at any time and from time to time, in the case of ABR
      Loans, prepay the Loans, in whole or in part, without premium or penalty, upon
      at least one Business Day’s irrevocable notice to the Administrative Agent in
      the case of ABR Loans, and upon at least three Business Days’ irrevocable notice
      to the Administrative Agent in the case of Eurodollar Loans, in each case
      specifying the date and amount of prepayment and whether the prepayment is
      of
      Eurodollar Loans, ABR Loans or a combination thereof, and, in each case if
      of a
      combination thereof, the amount allocable to each. Upon receipt of any such
      notice the Administrative Agent shall promptly notify each Lender thereof.
      If
      any such notice is given, the amount specified in such notice shall be due
      and
      payable on the date specified therein, together with any amounts payable
      pursuant to subsection 4.14. Partial prepayments of Eurodollar Loans shall
      be in
      an aggregate principal amount of $5,000,000 or a whole multiple of $1,000,000
      in
      excess thereof.

     

    (a) Subject
      to
      subsection 4.5(c), the Borrowers shall have the right, upon not less than three
      Business Days’ notice to the Administrative Agent, to terminate the Commitments
      or, from time to time, to reduce the amount of the Commitments. Any such
      reduction shall be in an amount equal to $5,000,000 or a whole multiple of
      $1,000,000 in excess thereof and shall reduce permanently the Commitments then
      in effect. Termination of the Commitments shall also terminate the obligation
      of
      the Issuing Lender to issue Letters of Credit.

     

    (b) In
      the event of the
      termination by the Borrowers of all Commitments, the Borrowers shall on the
      date
      of such termination repay or prepay all of its outstanding Loans (together
      with
      accrued and unpaid interest on the Loans and any amounts payable pursuant to
      subsection 4.14 and any other amounts payable hereunder), reduce the Letter
      of
      Credit Outstandings to zero and cause all Letters of Credit to be canceled
      and
      returned to the Issuing Lender (or shall cash collateralize the Letter of Credit
      Outstandings (or provide supporting letters of credit from an institution
      reasonably acceptable to the Administrative Agent) on terms and pursuant to
      documentation reasonably satisfactory to the Issuing Lender and the
      Administrative Agent). In the event of any partial reduction of the Commitments,
      then (i) at or prior to the effective date of such reduction, the Administrative
      Agent shall notify the Borrowers’ Representative and the Lenders of the
      Aggregate Credit Exposure of all the Lenders and (ii) if the Aggregate Credit
      Exposure of all the Lenders would exceed the aggregate Commitments after giving
      effect to such reduction, then, prior to giving effect to such reduction, the
      Borrowers shall, on the date of such reduction, then, repay or prepay Loans
      and,
      second, reduce the Letter of Credit Outstandings (or cash collateralize the
      Letter of Credit Outstandings (or provide supporting letters of credit from
      an
      institution reasonably acceptable to the Administrative Agent) on terms and
      pursuant to documentation reasonably satisfactory to the Issuing Lender and
      the
      Administrative Agent), in an aggregate amount sufficient to eliminate such
      excess.

     

    (c) The
      Loans shall be
      repaid, and the Letter of Credit Outstandings shall be reduced or cash
      collateralized, to the extent required by subsection 4.10. All such prepayments
      and cash collateralization shall be made in accordance with this subsection
      4.5.

     

    (d) In
      the event the
      amount of any prepayment of the Loans required to be made above shall exceed
      the
      aggregate principal amount of the outstanding ABR Loans (the amount of any
      such
      excess being called the “Excess
      Amount”),
      the Borrowers
      shall have the right, in lieu of making such prepayment in full, to prepay
      all
      the outstanding applicable ABR Loans and to deposit an amount equal to the
      Excess Amount with, and in the event that Letter of Credit Outstandings are
      required to be cash collateralized, the Borrowers shall deposit an amount equal
      to the aggregate amount of Letter of Credit Outstandings to be cash
      collateralized with, the Administrative Agent in a cash collateral account
      maintained (pursuant to documentation reasonably satisfactory to the
      Administrative Agent) by and in the sole dominion and control of the
      Administrative Agent. Any amounts so deposited shall be held by the
      Administrative Agent as collateral for the obligations of the Borrowers under
      this Agreement and applied to the prepayment of the applicable Eurodollar Loans
      at the end of the current Interest Periods applicable thereto or Letter of
      Credit Outstandings, as the case may be, or, during an Event of Default, to
      payment of any obligations under this Agreement (including obligations in
      respect of the Letters of Credit). On any Business Day on which (i) collected
      amounts remain on deposit in or to the credit of such cash collateral account
      after giving effect to the payments made on such day pursuant to this subsection
      4.5(e) and (ii) the Borrowers’ Representative shall have delivered to the
      Administrative Agent a written request or a telephonic request (which shall
      be
      promptly confirmed in writing) that such remaining collected amounts be invested
      in the Cash Equivalent specified in such request, the Administrative Agent
      shall
      use its reasonable efforts to invest such remaining collected amounts in such
      Cash Equivalent, provided, however, that the Administrative Agent shall have
      continuous dominion and full control over any such investments (and over any
      interest that accrues thereon) to the same extent that it has dominion and
      control over such cash collateral account and no Cash Equivalent shall mature
      after the end of the Interest Period for which it is to be applied. The
      Borrowers shall not have the right to withdraw any amount from such cash
      collateral account until the applicable Eurodollar Loans and accrued interest
      thereon and Letter of Credit Outstandings are paid in full or if a Default
      or
      Event of Default then exists or would result. Any prepayment or
      collateralization pursuant to this subsection 4.5(e) shall be applied in the
      order set forth in clause (ii) of the second sentence of subsection
      4.5(c).

     

    4.6. Commitment
      Fee;
      Administrative Agent’s Fee; Other Fees.
      (a) The Borrowers
      agree to pay to the Administrative Agent for the account of each Lender a
      commitment fee for the period from and including, for each Lender, the Closing
      Date to but not including the Termination Date, computed at the Commitment
      Fee
      Rate on the average daily amount of the lesser of (i) the Available Commitment
      of such Lender and (ii) the Borrowing Base Availability with respect to such
      Lender, during the period for which payment is made, payable quarterly in
      arrears on the last day of each March, June, September and December (subject
      to
      Section 4.8) (commencing on September 30, 2005) and on the Termination
      Date
      or such earlier date as the Commitments shall terminate as provided herein,
      commencing on the first of such dates to occur after the date hereof. Commitment
      fees shall be nonrefundable when paid unless payment was made in
      error.

     

    (a) The
      Borrowers shall
      pay to the Administrative Agent the fees set forth in the Fee
      Letter.

     

    (b) The
      Borrowers shall
      pay to the Lenders such additional fees as may be agreed to by the Borrowers
      and
      the Lenders.

     

    4.7. Inability
      to
      Determine Interest Rate.
      If prior to the
      first day of any Interest Period:

     

    (a) the
      Administrative
      Agent shall have determined (which determination shall be conclusive and binding
      upon the Borrowers) that, by reason of circumstances affecting the relevant
      market, adequate and reasonable means do not exist for ascertaining the
      Eurodollar Rate for such Interest Period, or

     

    (b) the
      Administrative
      Agent shall have received notice from the Required Lenders that the Eurodollar
      Rate determined or to be determined for such Interest Period will not adequately
      and fairly reflect the cost to such Lenders (as conclusively certified by such
      Lenders) of making or maintaining their affected Loans during such Interest
      Period,

     

    the
      Administrative
      Agent shall give telecopy or telephonic notice thereof to the Borrowers and
      the
      Lenders as soon as practicable thereafter. If such notice is given (x) any
      Eurodollar Loans requested to be made on the first day of such Interest Period
      shall be made as ABR Loans, (y) any Loans that were to have been converted
      on
      the first day of such Interest Period to Eurodollar Loans shall be continued
      as
      ABR Loans and (z) any outstanding Eurodollar Loans shall be converted, on the
      first day of such Interest Period, to ABR Loans. Until such notice has been
      withdrawn by the Administrative Agent, no further Eurodollar Loans shall be
      made
      or continued as such, nor shall the Borrowers have the right to convert Loans
      to
      Eurodollar Loans.

     

    4.8. Pro
      Rata Treatment
      and Payments.
      (a) Each
      borrowing by the Borrowers from the Lenders hereunder, each payment by the
      Borrowers on account of any commitment fee hereunder and any reduction of the
      Commitments of the Lenders shall be made pro rata according to the respective
      Commitment Percentages of the Lenders. Each payment (including each prepayment)
      by the Borrowers on account of principal of and interest on the Loans shall
      be
      made pro rata according to the respective outstanding principal amounts of
      the
      Loans then held by the Lenders. All payments (including prepayments) to be
      made
      by the Borrowers hereunder, whether on account of principal, interest, fees
      or
      otherwise, shall be made without set off or counterclaim and shall be made
      prior
      to 12:00 Noon, New York City time, on the due date thereof to the Administrative
      Agent, for the account of the Lenders, at the Administrative Agent’s office
      specified in subsection 11.2, in Dollars and in immediately available funds.
      The
      Administrative Agent shall distribute such payments to the Lenders promptly
      upon
      receipt in like funds as received. If any payment hereunder becomes due and
      payable on a day other than a Business Day, such payment shall be extended
      to
      the next succeeding Business Day, and, with respect to payments of principal,
      interest thereon shall be payable at the then applicable rate during such
      extension.

     

    (a) Unless
      the
      Administrative Agent shall have been notified in writing by any Lender prior
      to
      a borrowing that such Lender will not make the amount that would constitute
      its
      Commitment Percentage of such borrowing available to the Administrative Agent,
      the Administrative Agent may assume that such Lender is making such amount
      available to the Administrative Agent, and the Administrative Agent may, in
      reliance upon such assumption, make available to the Borrowers a corresponding
      amount. If such amount is not made available to the Administrative Agent by
      the
      required time on the Borrowing Date therefor, such Lender shall pay to the
      Administrative Agent, on demand, such amount with interest thereon at a rate
      equal to the daily average Federal Funds Effective Rate for the period until
      such Lender makes such amount immediately available to the Administrative Agent.
      A certificate of the Administrative Agent submitted to any Lender with respect
      to any amounts owing under this subsection shall be conclusive in the absence
      of
      manifest error. If such Lender’s Commitment Percentage of such borrowing is not
      made available to the Administrative Agent by such Lender within three Business
      Days after such Borrowing Date, the Administrative Agent shall also be entitled
      to recover such amount with interest thereon at the rate per annum applicable
      to
      ABR Loans hereunder, on demand, from the Borrowers.

     

    4.9. Computation
      of
      Borrowing Base.
      (a) Borrowing
      Base.
      The Borrowing
      Base in effect from time to time shall represent the maximum principal amount
      (subject to the aggregate amount of the Commitments) of Loans and Letter of
      Credit Outstandings that the Lenders will allow to remain outstanding during
      the
      Commitment Period. The Borrowing Base will be determined by the Technical Banks
      in their sole discretion based upon the total assets, cashflow and liabilities
      of the Borrowers and upon the value of Proved Reserves attributable to the
      Borrowing Base Properties of the Borrowers determined by the Technical Banks
      in
      their sole discretion, and will be determined by the Technical Banks in
      accordance with paragraph (d) of this subsection 4.9, subject to approval by
      Required Lenders or all of the Lenders, as the case may be. Until the
      Commitments are no longer in effect, all Letters of Credit have terminated
      and
      all of the Loans and all other obligations under this Agreement are paid in
      full, this Agreement shall be subject to the then effective Borrowing
      Base.

     

    (a) Reserve
      Reports.
      The Borrowers’
      Representative shall, at its own expense, furnish to the Administrative Agent
      and each Lender (i) prior to March 31 of each year, a Reserve
      Report
      prepared by the Independent Engineer, dated no earlier than the immediately
      preceding December 31, (ii) prior to September 30 of each year,
      a
      Reserve Report prepared by the engineers employed by the Borrowers dated no
      earlier than the immediately preceding June 30 and (iii) within 30 days
      following the delivery of a Borrower Redetermination Notice or a Lender
      Redetermination Notice, a Reserve Report prepared by the engineers employed
      by
      the Borrowers and, if requested by the Required Lenders or the Administrative
      Agent, within 90 days following the delivery of such notice a Reserve Report
      prepared by the engineers employed by the Borrowers and audited by the
      Independent Engineer, in each case certified by a Responsible Officer of the
      Borrower’s Representative. If the Borrowers fail to deliver a Reserve Report
      within the time period provided for, then the Administrative Agent and the
      Lenders shall have the right to rely on the last Reserve Report previously
      delivered by the Borrowers with any such adjustments and taking into account
      any
      additional information as the Technical Banks may deem appropriate in their
      sole
      discretion. Concurrently with the delivery of the Reserve Reports, the Borrowers
      shall furnish to the Administrative Agent and each Lender a certificate of
      a
      Responsible Officer showing any material additions to or material deletions
      from
      the Oil and Gas Properties and the Borrowing Base Properties listed in the
      Reserve Report, which additions or deletions were made by the Borrowers since
      the date of the previous Reserve Report.

     

    (b) Redetermination
      of the Borrowing Base.
      The Technical
      Banks shall redetermine the Borrowing Base in their sole discretion, and the
      Administrative Agent shall notify the Borrowers’ Representative and the Lenders
      of the Technical Banks’ redetermination of the Borrowing Base (i) with respect
      to regularly scheduled Reserve Reports, (A) on or before April 30 (in the case
      of Reserve Reports due on March 31) and (B) on or before October 31 (in the
      case
      of Reserve Reports due on September 30), and (ii) with respect to a Lender
      Redetermination Notice or a Borrower Redetermination Notice as promptly as
      practicable following delivery to the Administrative Agent of all information
      (including Reserve Reports) requested from the Borrowers, or if no such
      information is delivered by Borrowers following such request, then at such
      time
      as the Administrative Agent determines is practicable but, in any case, no
      later
      than 30 days after delivery of such information or, if such information is
      not
      timely delivered, 30 days after the date such information was required to be
      delivered. Within 15 days after receipt from the Administrative Agent of the
      amount of a redetermination of the Borrowing Base, each Lender shall notify
      the
      Administrative Agent in writing stating whether or not such Lender agrees with
      that redetermination. Failure of any Lender to give such notice within such
      period of time shall not be deemed to constitute an acceptance of such
      redetermination. The Borrowing Base may be decreased from the then effective
      Borrowing Base with the consent of Required Lenders but may only be increased
      from the then effective Borrowing Base with the consent of all of the Lenders.
      If Required Lenders or all of the Lenders, as the case may be, agree with that
      redetermination, then the Administrative Agent promptly shall notify the
      Borrowers’ Representative of the Borrowing Base as so redetermined.
      Redeterminations made in connection with regularly scheduled Reserve Reports
      shall become effective (and shall remain effective until the Borrowing Base
      is
      again redetermined as provided in this subsection (c)) on May 15 (in
      the
      case of Reserve Reports due on March 31) and November 15 (in the case
      of
      Reserve Reports due on September 30), and other redeterminations shall become
      effective upon written notice from the Adminstrative Agent to the Borrowers’
      Representative and the Lenders of the redetermined Borrowing Base. If Required
      Lenders or all of the Lenders, as the case may be, have not approved in writing
      the Borrowing Base within the 15 day period following their receipt of the
      proposed amount from the Administrative Agent, the Borrowing Base shall be
      set
      at the amount of the then current Borrowing Base and the Borrowing Base shall
      remain at such level until Required Lenders or all of the Lenders, as the case
      may be, utilizing the procedure outlined herein, agree on a new Borrowing Base
      and the Administrative Agent shall give notice thereof to the Borrowers. Each
      redetermination provided for by this subsection 4.9(c) shall be made in
      accordance with the provisions of subsection 4.9(d).

     

    (c) Criteria.
      All
      determinations and redeterminations by the Technical Banks provided for in
      this
      subsection 4.9 (and any determinations and decisions by either or both of the
      Technical Banks and Required Lenders or all of the Lenders, as the case may
      be,
      in connection therewith, including effecting any redetermination of the value
      of
      any component contained in a Reserve Report) shall be made by the Technical
      Banks and the Lenders in their sole discretion based upon the application by
      the
      Technical Banks and the Lenders of their respective oil and gas lending criteria
      as they customarily used at the time of determination in assigning collateral
      value to oil and gas properties for similarly situated customers of the
      Technical Banks and the Lenders.

     

    (d) Subordinated
      Indebtedness.
      At least thirty
      (30) days prior to the incurrence of Subordinated Indebtedness, the Borrower
      which proposes to incur such Subordinated Indebtedness shall so notify the
      Administrative Agent. Following the receipt of such notice the Required Banks
      shall have the right to serve a Lender Redetermination Notice on the Borrowers’
      Representative, which Lender Redetermination Notice shall not count towards
      the
      maximum number of such Notices which the Required Lenders may otherwise serve
      between Scheduled Redetermination Dates.

     

    (e) Mandatory
      Reductions.
      If, following the
      Disposition of any Borrowing Base Property pursuant to Section 8.6(d), the
      Collateral Coverage Ratio is less than 1.5 to 1.0, the Borrowing Base shall
      automatically be reduced by the amount of the PV-10 Value of such Properties,
      unless such Borrowing Base Property is contemporaneously replaced by a Borrower
      with substitute Borrowing Base Property of at least equal PV-10 Value or,
      pending delivery of such Borrowing Base Property, with Cash Collateral equal
      to
      or greater than such PV-10 Value.

     

    (f) Initial
      Borrowing Base.
      The initial
      Borrowing Base hereunder shall be $500,000,000.00.

     

    4.10. Mandatory
      Prepayments.(a) Borrowing
      Base
      Deficiency.
      Upon the
      occurrence of a Borrowing Base Deficiency, the Administrative Agent shall notify
      the Borrowers’ Representative of such Borrowing Base Deficiency. Within ten (10)
      days from and after the Borrowing Base Deficiency Notification Date, the
      Borrowers’ Representative shall notify the Administrative Agent that the
      Borrowers elect to take one of the following actions:

     

    (i) Execute
      and deliver
      to the Administrative Agent supplemental or additional Security Documents,
      in
      form and substance reasonably satisfactory to the Administrative Agent and
      its
      counsel, securing payment of the Notes and the other Obligations and covering
      additional Hydrocarbon Interests directly owned by any Borrower which are not
      then designated as Borrowing Base Properties and which are of a type and nature,
      and having a value (determined by the Administrative Agent in its sole
      discretion using the standards applicable to a Borrowing Base Redetermination),
      in addition to other Borrowing Base Properties reasonably satisfactory to the
      Administrative Agent and the Required Lenders, sufficient to eliminate the
      Borrowing Base Deficiency;

     

    (ii) Make
      a payment with
      respect to the Obligations (which shall be applied, or held for application,
      as
      the case may be, by the Administrative Agent to the payment of the aggregate
      unpaid principal amount of those Loans then outstanding and then Letter of
      Credit Outstandings) in an aggregate principal amount sufficient to eliminate
      such Borrowing Base Deficiency within thirty (30) days after the Borrowing
      Base
      Deficiency Notification Date;

     

    (iii) Execute
      and deliver
      additional Security Documents, as provided in clause (i) above, sufficient
      to
      eliminate a portion of the Borrowing Base Deficiency and make a payment as
      provided in clause (ii) above in an aggregate principal amount sufficient to
      eliminate the balance of the Borrowing Base Deficiency; or

     

    (iv) Make
      six (6)
      consecutive prepayments of principal of the outstanding Loans, each of which
      shall be in an amount equal to 1/6th of the amount of the Borrowing Base
      Deficiency, commencing on the first Monthly Date following delivery of the
      notice of Borrower’s election, and continuing on each Monthly Date thereafter
      until such Deficiency has been eliminated by such prepayments, addition of
      properties to the Borrowing Base Properties or a combination of the foregoing.
      

     

    (b) Security
      Documents.
      If the Borrowers
      elect to execute and deliver supplemental or additional Security Documents
      to
      the Administrative Agent pursuant to Section 4.10(a)(i) or (a)(iii)
      above,
      it shall provide the Administrative Agent and each Lender with descriptions
      of
      the additional assets to be collaterally assigned (together with current
      valuations satisfactory to the Technical Banks or engineering reports as to
      the
      new Properties, Security Documents, and, if necessary to comply with the
      Continuing 70% Test, title evidence applicable thereto, each of which shall
      be
      in form and substance reasonably satisfactory to the Administrative Agent),
      within twenty (20) days after the Borrowing Base Deficiency Notification Date,
      except that title evidence may be furnished within ninety (90) days after such
      Date. If the Borrower’s Representative fails to take any of the actions
      described above within the relevant period, then without any necessity for
      notice to the Borrowers or any other person, the Borrowers shall become
      obligated to pay Obligations in an aggregate principal amount equal to the
      applicable Borrowing Base Deficiency within three (3) days after the end of
      the
      relevant period.

     

    (c) Collateral
      Value
      Deficiency.
      If at any time
      the Collateral Coverage Ratio is less than 1.5 to 1.0 (the “Collateral
      Deficiency Date”),
      the Borrowers’
      Representative shall either:

     

    (i) Give
      notice to the
      Administrative Agent that the Borrowers elect to make a payment with respect
      to
      the Obligations (which shall be applied, or held for application, as the case
      may be, by the Administrative Agent to the payment of the aggregate unpaid
      principal amount of those Loans then outstanding and then Letter of Credit
      Outstandings) in an aggregate principal amount necessary to comply with the
      Collateral Coverage Ratio at such time whereupon the Commitments shall be so
      reduced with immediate effect and the Borrowers shall make such prepayment
      on or
      before the date that is thirty (30) days after the related Collateral Deficiency
      Date;

     

    (ii) Certify
      to the
      Administrative Agent that the Borrowers have good and defensible title, free
      of
      any Liens other than Permitted Liens, to Proved Reserves in an amount which,
      if
      subject to one or more Mortgages, would result in the Borrowers being in
      compliance with such Collateral Coverage Ratio. Within ten (10) days after
      such
      certification, the Technical Banks shall either (x) determine that such
      properties, if subject to a Mortgage, would result in the Borrowers being in
      compliance with such Collateral Coverage Ratio, in which case, the Borrowers
      shall within twenty (20) days of such certification, and in any event, no later
      than within thirty (30) days of the Collateral Deficiency Date, deliver a
      Mortgage (or a satisfactory amendment to an existing Mortgage) to the
      Administrative Agent with respect to each of such properties, executed and
      delivered by a duly authorized officer of each party thereto and accompanied
      by
      such other documentation as the Administrative Agent shall reasonably request
      (including, without limitation, legal opinions in form and substance
      satisfactory to the Administrative Agent relating thereto), or (y) determine
      that such properties, if subject to a Mortgage, would not result in the
      Borrowers being in compliance with such Collateral Coverage Ratio, in which
      case, the Borrowers shall make the prepayments specified in subsection (i)
      of
      this Section 4.10(c) within thirty (30) days of the Collateral Deficiency
      Date;

     

    (iii) Effect
      a reduction
      of the Commitments pursuant to Section 4.5;

     

    (iv) Pending
      delivery of
      the Mortgages, provide Cash Collateral if sufficient to eliminate the Collateral
      Value Deficiency; or

     

    (v) Any
      combination of
      the actions referred to in clauses (i) - (iv) the effect of which in combination
      is to restore the Collateral Coverage Ratio to not less than 1.5 to
      1.0.

     

    4.11. Illegality.
      Notwithstanding
      any other provision herein, if the adoption of or any change in any Requirement
      of Law or in the interpretation or application thereof after the date hereof
      shall make it unlawful for any Lender to make or maintain Eurodollar Loans
      as
      contemplated by this Agreement (a) the commitment of such Lender hereunder
      to
      make Eurodollar Loans, continue Eurodollar Loans as such and convert ABR Loans
      to Eurodollar Loans shall forthwith be canceled and (b) such Lender’s Loans then
      outstanding as Eurodollar Loans, if any, shall be converted automatically to
      ABR
      Loans on the respective last days of the then current Interest Periods with
      respect to such Loans or within such earlier period as required by law. If
      any
      such conversion of a Eurodollar Loan occurs on a day which is not the last
      day
      of the then current Interest Period with respect thereto, the Borrower shall
      pay
      to such Lender such amounts, if any, as may be required pursuant to subsection
      4.14.

     

    4.12. Requirements
      of
      Law.
      (a) If the adoption of or any change in any Requirement of Law or in the
      interpretation or application thereof after the date hereof or compliance by
      any
      Lender with any request or directive (whether or not having the force of law)
      from any central bank or other Governmental Authority made subsequent to the
      date hereof:

     

    (i) shall
      subject any
      Lender to any tax of any kind whatsoever with respect to this Agreement, any
      Note, any Letter of Credit, any L/C Application or any Eurodollar Loan made
      by
      it, or change the basis of taxation of payments to such Lender in respect
      thereof (except for Non-Excluded Taxes covered by subsection 4.13, changes
      in
      the rate or computation of tax on the overall net income of such Lender,
      franchise taxes imposed in lieu of net income taxes and doing business
      taxes);

     

    (ii) shall
      impose,
      modify or hold applicable any reserve, special deposit, compulsory loan or
      similar requirement against assets held by, deposits or other liabilities in
      or
      for the account of, advances, loans or other extensions of credit by, or any
      other acquisition of funds by, any office of such Lender which is not otherwise
      included in the determination of the Eurodollar Rate hereunder, or

     

    (iii) shall
      impose on
      such Lender any other condition;

     

    and
      the result of
      any of the foregoing is to increase the cost to such Lender, by an amount which
      such Lender deems to be material, of making, converting into, continuing or
      maintaining Eurodollar Loans or issuing or participating in Letters of Credit
      or
      to reduce any amount receivable hereunder in respect thereof, then, in any
      such
      case, the Borrowers shall promptly pay such Lender such additional amount or
      amounts as will compensate such Lender for such increased cost or reduced amount
      receivable.

     

    (b) If
      any Lender shall
      have determined that the adoption of or any change in any Requirement of Law
      regarding capital adequacy or in the interpretation or application thereof
      or
      compliance by such Lender or any corporation controlling such Lender with any
      request or directive regarding capital adequacy (whether or not having the
      force
      of law) from any Governmental Authority made subsequent to the date hereof
      shall
      have the effect of reducing the rate of return on such Lender’s or such
      corporation’s capital as a consequence of its obligations hereunder or under any
      Letter of Credit to a level below that which such Lender or such corporation
      could have achieved but for such adoption, change or compliance (taking into
      consideration such Lender’s or such corporation’s policies with respect to
      capital adequacy) by an amount deemed by such Lender to be material, then from
      time to time, the Borrowers shall promptly pay to such Lender such additional
      amount or amounts as will compensate such Lender for such
      reduction.

     

    (c) If
      any Lender
      becomes entitled to claim any additional amounts pursuant to this subsection,
      it
      shall promptly notify the Borrowers’ Representative (with a copy to the
      Administrative Agent) of the event by reason of which it has become so entitled.
      A certificate as to any additional amounts payable pursuant to this subsection
      submitted by such Lender to the Borrowers’ Representative (with a copy to the
      Administrative Agent) shall be conclusive in the absence of manifest error.
      The
      agreements in this subsection shall survive the termination of this Agreement
      and the payment of the Loans and all other amounts payable
      hereunder.

     

    4.13. Taxes.
      (a) All payments
      made by the Borrowers under this Agreement and any Notes shall be made free
      and
      clear of, and without deduction or withholding for or on account of, any present
      or future income, stamp or other taxes, levies, imposts, duties, charges, fees,
      deductions or withholdings, now or hereafter imposed, levied, collected,
      withheld or assessed by any Governmental Authority, excluding net income taxes,
      franchise taxes (imposed in lieu of net income taxes) and doing business taxes
      imposed on the Administrative Agent or any Lender as a result of a present
      or
      former connection between the Administrative Agent or such Lender and the
      jurisdiction of the Governmental Authority imposing such tax or any political
      subdivision or taxing authority thereof or therein (other than any such
      connection arising solely from the Administrative Agent or such Lender having
      executed, delivered or performed its obligations or received a payment under,
      or
      enforced, this Agreement or any Note). If any such non-excluded taxes, levies,
      imposts, duties, charges, fees, deductions or withholdings (“Non-Excluded
      Taxes”)
      are required to
      be withheld from any amounts payable to the Administrative Agent or any Lender
      hereunder or under any Note, the amounts so payable to the Administrative Agent
      or such Lender shall be increased to the extent necessary to yield to the
      Administrative Agent or such Lender (after payment of all Non-Excluded Taxes)
      interest or any such other amounts payable hereunder at the rates or in the
      amounts specified in this Agreement, provided, however, that the Borrowers
      shall
      not be required to increase any such amounts payable to any Non-U.S. Lender
      if
      such Non-U.S. Lender fails to comply with the requirements of paragraph (b)
      of
      this subsection. Whenever any Non-Excluded Taxes are payable by the Borrowers,
      as promptly as possible thereafter the Borrowers shall send to the
      Administrative Agent for their own account or for the account of such Lender,
      as
      the case may be, a certified copy of an original official receipt received
      by
      the Borrowers showing payment thereof. If, when the Borrowers are required
      by
      this subsection 4.13(a) to pay any Non-Excluded Taxes, the Borrowers fail to
      pay
      any Non-Excluded Taxes when due to the appropriate taxing authority or fail
      to
      remit to the Administrative Agent the required receipts or other required
      documentary evidence, the Borrowers shall indemnify the Administrative Agent
      and
      the Lenders for any incremental taxes, interest or penalties that may become
      payable by the Administrative Agent or any Lender as a result of any such
      failure. The agreements in this subsection shall survive the termination of
      this
      Agreement and the payment of the Loans and all other amounts payable
      hereunder.

     

        (a) Each
      Lender (or
      Transferee) that is not a citizen or resident of the United States of America,
      a
      corporation, partnership or other entity created or organized in or under the
      laws of the United States of America, or any estate or trust that is subject
      to
      federal income taxation regardless of the source of its income (a “Non-U.S.
      Lender”)
      shall deliver to
      the Borrowers’ Representative and the Administrative Agent (or, in the case of a
      Participant, to the Lender from which the related participation shall have
      been
      purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN,
      Form
      W-8ECI or successors forms, and is otherwise exempt from IRS interest
      withholding obligations, or, in the case of a Non-U.S. Lender claiming exemption
      from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code
      with respect to payments of “portfolio interest,” a Form W-8, or any subsequent
      versions thereof or successors thereto (and, if such Non-U.S. Lender delivers
      a
      Form W-8, an annual certificate representing that such Non-U.S. Lender (i)
      is
      not a “bank” for purposes of Section 881(c) of the Code (and is not subject to
      regulatory or other legal requirements as a bank in any jurisdiction, and has
      not been treated as a bank in any filing with or submission made to any
      Governmental Authority or rating agency), (ii) is not a 10% shareholder (within
      the meaning of Section 871(h)(3)(B) of the Code) of the Borrowers and (iii)
      is
      not a controlled foreign corporation related to the Borrowers (within the
      meaning of Section 864(d)(4) of the Code)), properly completed and duly executed
      by such Non-U.S. Lender claiming complete exemption from U.S. federal
      withholding tax on all payments by the Borrowers under this Agreement and the
      other Loan Documents, along with such other additional forms as the Borrowers,
      the Administrative Agent (or, in the case of a Participant, the Lender from
      which the related participation shall have been purchased) may reasonably
      request to establish the availability of such exemption. Such forms shall be
      delivered by each Non-U.S. Lender on or before the date it becomes a party
      to
      this Agreement (or, in the case of any Participant, on or before the date such
      Participant purchases the related participation), and if a Person cannot deliver
      such forms because such Person is not exempt from U.S. federal withholding
      tax
      under the Code as described above, then such Person shall not become a Lender
      or
      Transferee hereunder or a party hereto.

     

    4.14. Indemnity.
      The Borrowers
      agree to indemnify each Lender and to hold each Lender harmless from any loss
      or
      expense which such Lender may sustain or incur (other than through such Lender’s
      gross negligence or willful misconduct) as a consequence of (a) default by
      the
      Borrowers in making a borrowing of, conversion into or continuation of
      Eurodollar Loans after the Borrowers’ Representative has given a notice
      requesting the same in accordance with the provisions of this Agreement, (b)
      default by the Borrowers in making any prepayment of a Eurodollar Loan after
      the
      Borrowers’ Representative has given a notice thereof in accordance with the
      provisions of this Agreement or (c) the making of a prepayment of or a
      conversion of Eurodollar Loans on a day which is not the last day of an Interest
      Period with respect thereto. Such indemnification may include an amount equal
      to
      the excess, if any, of (i) the amount of interest which would have accrued
      on
      the amount so prepaid, or converted, or not so borrowed, converted or continued,
      for the period from the date of such prepayment or conversion or of such failure
      to borrow, convert or continue to the last day of the applicable Interest Period
      (or, in the case of a failure to borrow, convert or continue, the Interest
      Period that would have commenced on the date of such failure) in each case
      at
      the applicable rate of interest for such Eurodollar Loans provided for herein
      (excluding, however, the percentage added to the Eurodollar Rate pursuant to
      subsection 4.1 (a) to the extent included therein) over (ii) the amount of
      interest (as reasonably determined by such Lender) which would have accrued
      to
      such Lender on such amount by placing such amount on deposit for a comparable
      period with leading banks in the interbank eurodollar market. This covenant
      shall survive the termination of this Agreement and the payment of the Loans
      and
      all other amounts payable hereunder.

     

    4.15. Change
      of Lending
      Office.
      Each Lender
      agrees that if it makes any demand for payment under subsection 4.12 or 4.13(a),
      or if any adoption or change of the type described in subsection 4.11 shall
      occur with respect to it, it will use reasonable efforts (consistent with its
      internal policy and legal and regulatory restrictions and so long as such
      efforts would not be disadvantageous to it, as determined in its sole
      discretion) to designate a different lending office if the making of such a
      designation would reduce or obviate the need for the Borrowers to make payments
      under subsection 4.12 or 4.13(a), or would eliminate or reduce the effect of
      any
      adoption or change described in subsection 4.11.

     

    4.16. Collateral
      Security.    

     

        (a) Closing
      Date.
      To secure the
      performance by the Borrowers of the Obligations hereunder and under the Notes,
      the Security Documents and any Hedging Agreement, whether now or hereafter
      incurred, matured or unmatured, direct or contingent, including extensions,
      modifications, renewals and increases thereof, and substitutions therefore,
      the
      Borrowers shall, as of the Closing Date, have, pursuant to the Mortgages granted
      and assigned to the Administrative Agent, for the ratable benefit of the Secured
      Parties, a first priority Lien, subject only to Permitted Liens, on Borrowing
      Base Properties.

     

    (b) Subsequently
      Acquired Property.
      If the Borrowers
      shall, following the Closing Date, acquire additional Oil and Gas Properties
      that are proposed to be Borrowing Base Properties, the Borrowers shall grant
      security interests and mortgage Liens to the Administrative Agent, for the
      ratable benefit of the Secured Parties, in and on any such property to the
      extent provided in Section 7.10 hereof.

     

    (c) Form
      of Security
      Documents.
      The granting and
      assigning of such security interests and Liens by the Borrowers shall be
      pursuant to the Security Documents in form and substance reasonably satisfactory
      to the Administrative Agent.

     

    (d) Title
      Work.
      As of the Closing
      Date, the Borrowers shall have furnished to the Administrative Agent title
      documents reasonably satisfactory to the Administrative Agent with respect
      to
      the title and Lien status of at least 50% of the PV-10 Value of the Borrowing
      Base Properties, and within 120 days after the Closing Date, 70% of the PV-10
      Value of the Borrowing Base Properties. The Borrowers shall furnish to the
      Administrative Agent title documents reasonably satisfactory to the
      Administrative Agent with respect to the title and Lien status of a sufficient
      number of Properties so that the Administrative Agent shall at all times have
      title documents with respect to at least 70% of the PV-10 Value of the Borrowing
      Base Properties of the Borrowers (the “Continuing
      70%
      Test”).
      If at any time
      after the Closing Date, the Borrowers fail to provide title documents reasonably
      satisfactory to the Administrative Agent for a sufficient number of Borrowing
      Base Properties to meet the Continuing 70% Test, such failure shall not
      constitute an Event of Default, but the Technical Banks may redetermine the
      Borrowing Base by written notice to the Borrowers’ Representative as required to
      bring the Borrowers into compliance with the Continuing 70% Test until such
      title documents are provided. Without regard to whether the Borrowers provide
      satisfactory title documents with respect to a particular Oil and Gas Property
      owned by such Person, such Oil and Gas Property shall, if necessary to meet
      the
      requirements of Section 7.10 hereof, be encumbered by a Mortgage in favor of
      the
      Administrative Agent for the ratable behalf of the Secured Parties, and shall
      be
      included in the collateral.

     

    (e) Security
      for
      Hedge Parties.
      The
      Administrative Agent and the Lenders agree that upon execution and delivery
      of a
      Hedging Agreement by a Hedge Party, such Hedge Party shall possess a pari passu
      Lien in the collateral provided in the Security Documents and the cash proceeds
      therefrom as security for the obligations of the Borrowers under such Hedging
      Agreement.

     

    (f) Substitution
      of
      Collateral.
      The Borrowers
      shall have the right, subject to the consent of the Technical Banks, such
      consent not to be unreasonably withheld, to substitute Oil and Gas Properties
      of
      a Borrower for Oil and Gas Properties subject to a Mortgage, or, pending
      delivery of the Mortgage on such Properties, to substitute Cash Collateral
      for
      such Properties, provided that:

     

    (i) The
      Borrower’s
      Representative provides notice of substitution to the Administrative Agent
      fifteen (15) days prior to the proposed substitution date;

     

    (ii) Neither
      an Event of
      Default nor a Borrowing Base Deficiency exists on the proposed substitution
      date;

     

    (iii) The
      Oil and Gas
      Properties proposed to be substituted for the Oil and Gas Properties subject
      to
      a Mortgage are of a type and nature similar to the Oil and Gas Properties
      subject to a Mortgage;

     

    (iv) The
      substitution of
      the Oil and Gas Properties will not result in a decrease in the Borrowing Base
      as determined by the Technical Banks in their sole discretion;

     

    (v) The
      substitution of
      the Oil and Gas Properties will not result in the Collateral Coverage Ratio
      being less than 1.5 to 1; and

     

    (vi) The
      Borrower
      provides the supplemental or additional Security Documents referred to in
      Section 4.10(b) hereof.

     

    If
      the Oil and Gas
      Properties being substituted have a value in excess of 10% of the PV-10 Value
      of
      the Borrowing Base Properties at such time, the Borrowing Base shall be
      redetermined prior to the date of such substitution in accordance with the
      procedures set forth in subsection 4.9 which would have applied had a Borrower
      Redetermination Notice or a Lender Redetermination Notice been
      delivered.

     

    (g) If
      the conditions
      set forth in Section 4.16(f) have been satisfied, then upon request by EPPHC,
      the Administrative Agent will release its lien on any Borrowing Base Property
      being exchanged for other Borrowing Base Property pursuant to
      Section 4.16(f).

     

    4.17. Replacement
      of
      Lenders.
      If (i) any Lender
      requests compensation under Section 4.12, or (ii) 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 4.13, or (iii) if any Lender defaults
      in its obligation to fund Loans hereunder or (iv) any Lender refuses to grant
      its approval with respect to any matter requiring the approval of all Lenders
      and such matter shall have been approved by Lenders having Commitments in excess
      of 66-2/3% of the aggregate Commitments, then the Borrowers’ Representative 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 11.6), all its interests, rights and obligations under this Agreement
      to
      an assignee identified by the Borrowers’ Representative that shall assume such
      obligations (which assignee may be another Lender, if a Lender accepts such
      assignment); provided that (1) the Borrowers’ Representative shall have received
      the prior written consent of the Administrative Agent, which consent shall
      not
      unreasonably be withheld, (2) such Lender shall have received payment of an
      amount equal to the outstanding principal of its Loans, 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 (3) in the case
      of
      any such assignment resulting from a claim for compensation under Section 4.12
      or payments required to be made pursuant to Section 4.13, 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
      Borrowers’ Representative to require such assignment and delegation cease to
      apply.

     

    SECTION
      5

     

    REPRESENTATIONS
      AND WARRANTIES

     

    To
      induce the
      Administrative Agent and the Lenders to enter into this Agreement and to make
      the Loans and issue or participate in the Letters of Credit, each Borrower
      hereby represents and warrants to the Administrative Agent and each Lender
      that:

     

    5.1. Financial
      Condition.
      (a) (i) The
      audited consolidated balance sheet of EPPHC and its consolidated Subsidiaries
      at
      December 31, 2004 and the related audited consolidated statements of income,
      cash flows and stockholder’s equity for the fiscal year ended on such date,
      together with the related notes and schedules thereto, reported on by
      Pricewaterhouse Coopers LLP, and (ii) the unaudited consolidated balance sheet
      of EPPHC and its consolidated Subsidiaries as at March 31, 2005, and
      June 30, 2005, in each case, together with the related unaudited
      consolidated statements of income, cash flows, and stockholder’s equity for each
      of the fiscal quarters then ended, in each case copies of which have heretofore
      been furnished or made available to each Lender, present fairly in all material
      respects the consolidated financial position of EPPHC and its consolidated
      Subsidiaries as at such dates, and the consolidated results of their operations
      and their consolidated cash flows for the respective periods then ended, in
      conformity with GAAP (subject, in the case of clause (ii), to customary
      year-end audit adjustments and reduced footnote disclosure).

     

    (a) All
      such financial
      statements referred to in subsection 5.1(a), including the related schedules
      and
      notes thereto, have been prepared in accordance with GAAP applied consistently
      throughout the periods involved (except as approved by such accountants or
      Responsible Officer, as the case may be, and as disclosed therein). On the
      Closing Date, neither EPPHC nor any of its consolidated Subsidiaries have any
      material Guarantee Obligation, contingent liability or liability for taxes,
      or
      any long-term lease, outstanding debt or Lien other than Permitted Liens or
      unusual forward or long-term commitment, including, without limitation, any
      interest rate or foreign currency swap or exchange transaction, which is not
      disclosed in the financial statements referred to in subsection 5.1(a) or in
      the
      notes thereto to the extent required by GAAP.

     

    5.2. No
      Change.
      Since the date of
      EPPHC’s most recent audited annual consolidated financial statements, there has
      been no development, circumstance or event which has had or could reasonably
      be
      expected to have a Material Adverse Effect.

     

    5.3. Corporate
      Existence; Compliance with Law.
      Each of the
      Borrowers (a) is duly organized, validly existing and in good standing under
      the
      laws of the jurisdiction of its organization, (b) has the corporate power and
      authority, and the legal right, to own and operate its Property, to lease the
      Property it operates as lessee and to conduct the business in which it is
      currently engaged, (c) is duly qualified as a foreign corporation and in good
      standing under the laws of each jurisdiction where its ownership, lease or
      operation of Property or the conduct of its business requires such qualification
      except to the extent that the failure to be so qualified and in good standing
      could not reasonably be expected to have, in the aggregate, a Material Adverse
      Effect and (d) is in compliance with all applicable Requirements of Law
      (including, without limitation, Environmental Laws) except to the extent that
      the failure to comply therewith could not reasonably be expected to have, in
      the
      aggregate, a Material Adverse Effect.

     

    5.4. Corporate
      Power;
      Authorization; Enforceable Obligations.
      Each Borrower has
      the corporate power and authority, and the legal right, to make, deliver and
      perform the Loan Documents to which it is a party and to borrow hereunder and
      has taken all necessary corporate action to authorize the execution, delivery
      and performance of the Loan Documents to which it is a party. No consent or
      authorization of, filing with, notice to or other act by or in respect of,
      any
      Governmental Authority or any other Person is required in connection with the
      borrowings hereunder or the delivery, performance, validity or enforceability
      of
      the Loan Documents to which any Borrower is a party other than the filings
      of
      the Mortgages and UCC-1 financing statements and those which have been obtained
      and are in full force and effect. This Agreement has been, and each other Loan
      Document to which the Borrower is a party will be, duly executed and delivered
      on behalf of any Borrower. This Agreement constitutes, and each other Loan
      Document to which any Borrower is a party when executed and delivered will
      constitute, a legal, valid and binding obligation of any Borrower enforceable
      against such Borrower in accordance with its terms, subject to the effects
      of
      bankruptcy, insolvency, fraudulent transfer or conveyance, reorganization,
      moratorium and other similar laws relating to or affecting creditors’ rights
      generally, general equitable principles (whether considered in a proceeding
      in
      equity or at law) and an implied covenant of good faith and fair
      dealing.

     

    5.5. No
      Legal
      Bar.
      The execution, delivery and performance of the Loan Documents, the granting
      of
      the Liens under the Security Documents, the borrowings hereunder and the use
      of
      the proceeds thereof will not violate any applicable Requirement of Law or
      Contractual Obligation of the Borrower, including but not limited to Sections
      4.03 and 4.10 of the Indenture, and will not result in, or require, the creation
      or imposition of any Lien on any of its or their respective Properties or
      revenues pursuant to any such Requirement of Law or Contractual Obligation,
      other than any Lien created pursuant to the Security Documents.

     

    5.6. No
      Material
      Litigation.
      No litigation,
      investigation or proceeding of or before any arbitrator or Governmental
      Authority is pending or, to the knowledge of any Borrower, threatened by or
      against any Borrower or against any of its respective Properties or revenues
      (a)
      with respect to any of the Loan Documents or any of the transactions
      contemplated hereby or thereby, or (b) which could reasonably be expected to
      have a Material Adverse Effect.

     

    5.7. No
      Default.
      No Borrower is in
      default under or with respect to any of its Contractual Obligations in any
      respect which could reasonably be expected to have a Material Adverse Effect.
      Each Borrower is in compliance in all material respects with each covenant
      applicable to it under the Loan Documents, and no Default or Event of Default
      has occurred and is continuing or would occur as a result of the execution
      and
      delivery of the Agreement and the Loan Documents.

     

    5.8. Ownership
      of
      Property; Liens.
      Each Loan Party
      has good and defensible title to all of its Oil and Gas Properties which are
      not
      personal property and good title to all such Oil and Gas Properties which are
      personal property and material to the Loan Parties taken as a whole, except
      for
      (i) such imperfections of title as do not in the aggregate materially detract
      from the value thereof to, or the use thereof in, the business of the Loan
      Parties, or, in the case of Oil and Gas Properties which are not Borrowing
      Base
      Properties, such imperfections do not have a Material Adverse Effect on such
      Loan Party, (ii) Oil and Gas Properties and interests therein disposed of since
      the date of the most recent Reserve Report as permitted by subsection 8.6
      hereof, and (iii) Permitted Liens. The Borrower specified in the Reserve Report
      is entitled to receive a decimal share of all Hydrocarbons produced from, or
      allocated to, each Borrowing Base Property equal to not less than the net
      revenue interest set forth in the most recent Reserve Report with respect to
      such Borrowing Base Property. There are no “back-in” or “reversionary” interests
      held by third parties which could materially reduce the interest of the
      Borrowers in such Borrowing Base Properties except as expressly set forth in
      such Reserve Report. The ownership of the Borrowing Base Properties by the
      Borrowers shall not in any material respect obligate any Borrower to bear the
      costs and expenses relating to the maintenance, development or operations of
      each such Borrowing Base Property in an amount in excess of the working interest
      of such Borrower in each Borrowing Base Property set forth in the most recent
      Reserve Report unless there is a corresponding increase in net revenue
      interest.

     

    5.9. Intellectual
      Property.
      Each Borrower
      owns, or is licensed to use, all trademarks, tradenames, copyrights, technology,
      know-how and processes necessary for the conduct of its business as currently
      conducted except for those the failure to own or license which could not
      reasonably be expected to have a Material Adverse Effect (the “Intellectual
      Property”).
      No claim has
      been asserted and is pending by any Person challenging or questioning the use
      of
      any such Intellectual Property or the validity or effectiveness of any such
      Intellectual Property, nor does any Borrower know of any valid basis for any
      such claim which could reasonably be expected to have a Material Adverse Effect.
      The use of such Intellectual Property by each Borrower and its Subsidiaries
      does
      not infringe on the rights of any Person, except for such claims and
      infringements that, in the aggregate, could not reasonably be expected to have
      a
      Material Adverse Effect.

     

    5.10. Taxes.
      Each Borrower has
      filed all material tax returns which, to the knowledge of such Borrower, are
      required to be filed by it and has paid or caused to be paid all taxes shown
      on
      said returns and all assessments, fees and other governmental charges levied
      upon it or upon any of its Property or income which are due and payable, other
      than such taxes, assessments, fees and other governmental charges, if any,
      as
      are being diligently contested in good faith and by appropriate proceedings
      and
      with respect to which there have been established adequate reserves on the
      books
      of the Borrower in accordance with GAAP. To the knowledge of the Borrower,
      no
      material tax lien has been filed, and no material claim is being asserted,
      with
      respect to any such taxes or assessments, fees or other governmental
      charges.

     

    5.11. Federal
      Reserve
      Regulations.
      No part of the
      proceeds of any Loans will be used for “purchasing” or “carrying” any “margin
      stock” within the respective meanings of each of the quoted terms under
      Regulation U of the Board of Governors of the Federal Reserve System as now
      and
      from time to time hereafter in effect. If requested by the Administrative Agent,
      the Borrowers will furnish to the Administrative Agent a statement to the
      foregoing effect in conformity with the requirements of FR Form U-1 referred
      to
      in said Regulation U. The Loans and other transactions contemplated hereunder
      will not violate the provisions of Regulations T and X.

     

    5.12. ERISA.
      Neither a
      Reportable Event nor an “accumulated funding deficiency” (within the meaning of
      Section 412 of the Code or Section 302 of ERISA) has occurred during the
      five-year period prior to the date on which this representation is made or
      deemed made with respect to any Single Employer Plan, and each Single Employer
      Plan has complied with the applicable provisions of ERISA and the Code, except
      for noncompliance which could not reasonably be expected to result in any
      material liability to the Borrowers or any Commonly Controlled Entity. No
      distress termination within the meaning of Section 4041(c) of ERISA or
      termination instituted by the PBGC (within the meaning of Section 4042 of
      ERISA), of a Single Employer Plan has occurred, and no Lien in favor of the
      PBGC
      or a Plan has arisen, during such five-year period. The present value of all
      accrued benefits under each Single Employer Plan (based on those assumptions
      used to fund such Plans) did not, as of the last annual valuation date prior
      to
      the date on which this representation is made or deemed made, exceed the value
      of the assets of such Plan allocable to such accrued benefits by an amount
      that
      could reasonably be expected to result in a Material Adverse Effect. Except
      as
      set forth in Schedule 5.12, neither the Borrower nor any Commonly Controlled
      Entity has had a complete or partial withdrawal from any Multiemployer Plan,
      and
      neither the Borrower nor any Commonly Controlled Entity would become subject
      to
      any liability under ERISA if the Borrower or any such Commonly Controlled Entity
      were to withdraw completely from all Multiemployer Plans as of the valuation
      date most closely preceding the date on which this representation is made or
      deemed made. No such Multiemployer Plan is in Reorganization or is Insolvent
      that could reasonably be expected to result in a Material Adverse
      Effect.

     

    5.13. Investment
      Company
      Act; Other Regulations.
      No Borrower is
      (a) an “investment company,” or a company “controlled” by an “investment
      company,” within the meaning of the Investment Company Act of 1940, as amended,
      or (b) a “holding company” as defined in, or subject to regulation under, the
      Public Utility Holding Company Act of 1935. No Borrower is subject to regulation
      under any Federal or State statute or regulation (other than Regulation X of
      the
      Board of Governors of the Federal Reserve System) which limits its ability
      to
      incur Indebtedness.

     

    5.14. Subsidiaries.
      The Persons
      listed on Schedule 5.14 constitute all the Subsidiaries of the Borrowers at
      the
      date hereof. Such Schedule shall indicate which Subsidiaries are considered
      Restricted Subsidiaries and Domestic Restricted Subsidiaries.

     

    5.15. Purpose
      of
      Loans.
      The proceeds of the Loans and the Letters of Credit will be used for
      (a) working capital and for the general corporate purposes of the
      Borrowers, (b) the conduct by Borrowers of their Oil and Gas Business, including
      (without limiting the generality of the foregoing) the exploration,
      exploitation, development and acquisition of Oil and Gas Properties,
      (c) the acquisition of the Capital Stock of Medicine Bow Energy
      Corporation, and (d)  the payment of transaction expenses.

     

    5.16. Environmental
      Matters.
      Except as set
      forth on Schedule 5.16, and other than exceptions to any of the following that
      could not, in the aggregate, reasonably be expected to give rise to a Material
      Adverse Effect or materially adversely affect the value of the Borrowing Base
      Properties taken as a whole:

     

    (a) each
      Borrower: (i)
      is, and within the period of all applicable statutes of limitation has been
      in
      compliance with all applicable Environmental Laws; (ii) holds all Environmental
      Permits (each of which is in full force and effect) required for any of its
      current or planned operations or for any Property owned, leased, or otherwise
      operated by it; and (iii) is, and within the period of all applicable statutes
      of limitation has been, in compliance with all of its Environmental Permits;
      and
      no officer of such Borrower has knowledge of any reason why its Environmental
      Permits will not timely be renewed or any new Environmental Permits will not
      timely be obtained subject to the conditions and terms that may be applied
      to
      them by the relevant Governmental Authorities.

     

    (b) Materials
      of
      Environmental Concern have not been transported, disposed of, emitted,
      discharged, or otherwise released or threatened to be released, to or at any
      real Property presently or formerly owned, leased or operated by any Borrower
      or
      at any other location, which could reasonably be expected to (i) give rise
      to
      liability of any Borrower under any applicable Environmental Law or (ii)
      interfere with any Borrower’s continued operations.

     

    (c) no
      judicial,
      administrative, or arbitral proceeding (including any notice of violation or
      alleged violation) under or relating to any Environmental Law to which any
      Borrower is, or to the knowledge of the Borrowers will be, named as a party
      is
      pending or, to the knowledge of the Borrowers threatened.

     

    (d) no
      Borrower has
      received any written request for information, or been notified that it is a
      potentially responsible party under the federal Comprehensive Environmental
      Response, Compensation, and Liability Act or any similar Environmental Law,
      or
      with respect to any Materials of Environmental Concern.

     

    (e) no
      Borrower has
      entered into or agreed to any consent decree, order, or settlement, nor is
      subject to any judgment, decree, or order, in any judicial, administrative,
      arbitral, or other forum, relating to compliance with or liability under any
      Environmental Law.

     

    (f) no
      Borrower has
      assumed or retained, by contract or operation of law, any liabilities of any
      kind, fixed, contingent or otherwise, under any Environmental Law other than
      in
      conformity with standard industry practice.

     

    5.17. No
      Material
      Misstatements.
      (a) All written
      information, reports, financial statements, exhibits and schedules (including,
      without limitation, EPPHC’s report on Form 10-K for the year ended December 31,
      2004, as filed with the Securities and Exchange Commission) furnished to the
      Administrative Agent or any Lender by or on behalf of the Borrowers in
      connection with the negotiation of any Loan Document or included therein or
      delivered pursuant thereto, when taken as a whole, did not contain, and as
      they
      may be amended, supplemented or modified from time to time, will not contain,
      as
      of the date such statements were made, any untrue statements of a material
      fact
      and as of such date did not omit, and as they may be amended, supplemented
      or
      modified from time to time, will not omit, to state as of the date such
      statements were made, any material fact necessary in order to make the
      statements contained therein, in the light of the circumstances under which
      they
      were, are or will be made, not materially misleading.

     

    (a) All
      projections and
      estimates concerning the Borrowers that are or have been made available to
      the
      Administrative Agent or any Lender by or on behalf of the Borrowers have been
      or
      will be prepared based on good faith estimates and based upon assumptions
      believed by the Borrowers to be reasonable in all material respects at the
      time
      of such preparation.

     

    (b) The
      leases
      contributing to the Borrowers’ interests in those wells listed on Schedule
      5.17(c) hereto (which wells are further identified under the same identifying
      name in Borrowers’ Reserve Report dated as of June 30, 2005) are described on
      Exhibit “A” to one or more of the instruments constituting or otherwise covered
      by the Mortgages. Further, those title materials referenced on Schedule 5.17(c)
      as relating to any particular well listed thereon relate to such
      well.

     

    5.18. Insurance.
      Each Borrower
      carries and maintains with respect to its insurable properties insurance
      (including, to the extent consistent with past practices, self-insurance) with
      financially sound and reputable insurers of the types, to such extent and
      against such risks as is customary with companies in the same or similar
      businesses.

     

    5.19. Future
      Commitments.
      As of the Closing
      Date, except as set forth on Schedule 5.19, on a net basis there are no material
      gas imbalances, material take-or-pay or other prepayments with respect to the
      Oil and Gas Properties of any Loan Party (or, in the case of Oil and Gas
      Properties operated by operators other than a Borrower, to the Borrowers’
      knowledge after reasonable investigation) which would require such Loan Party
      to
      deliver Hydrocarbons produced from Oil and Gas Properties at some future time
      without then or thereafter receiving full payment therefor.

     

    5.20. Security
      Documents.
      (a) The
      provisions of the Mortgages will be effective to grant to the Administrative
      Agent, for the ratable benefit of the Secured Parties, legal, valid and
      enforceable mortgage liens on all of the right, title and interest of the
      Borrowers in the Borrowing Base Property described therein. When such Mortgages
      have been recorded in the appropriate recording office they will constitute
      perfected first liens on, and security interest in, such property, subject
      only
      to Permitted Liens.

     

    (a) The
      provisions of
      the Mortgages will be effective to create in favor of the Administrative Agent,
      for the ratable benefit of the Secured Parties, a legal, valid and enforceable
      security interest in the personal property collateral described therein and
      proceeds thereof and, upon the filing of UCC-1 Financing Statements with the
      secretary of state of each jurisdiction of formation for each of the Borrowers,
      the Mortgages shall constitute a fully perfected first priority lien on, and
      security interest in, all right, title and interest of the applicable Borrower
      in such collateral and the proceeds thereof, in each case prior and superior
      in
      right to any other Person, subject only to Permitted Liens.

     

    SECTION
      6

     

    CONDITIONS
      PRECEDENT

     

    6.1. Conditions
      to
      Closing Date of the Existing Credit Agreement.
      The Closing Date
      of the Existing Credit Agreement occurred upon, and the obligations of the
      Lenders to make Extensions of Credit hereunder were subject to, the satisfaction
      of the following conditions precedent:

     

    (a) Loan
      Documents.
      The
      Administrative Agent shall have received (with the number of original
      counterparts requested by the Administrative Agent) (i) this Agreement, executed
      and delivered by a Responsible Officer of the Borrowers, (ii) the Guarantee
      Agreement (if applicable), executed and delivered by a Responsible Officer
      of
      each Guarantor thereto and (iii) a Note payable to the order of each Lender
      requesting a Note in the amount of its Commitment.

     

    (b) Security
      Documents.
      The
      Administrative Agent shall have received (with the number of original
      counterparts requested by the Administrative Agent) (i) Mortgages, executed
      and
      delivered by the Borrowers, covering the Borrowing Base Properties, together
      with the title work referred to in Section 4.16(d) above, and (ii)
      acknowledgment copies or other evidence of the proper filing of financing
      statements (Form UCC-1) under the Uniform Commercial Code of all jurisdictions
      to the extent necessary or desirable or required, in the reasonable judgment
      of
      the Administrative Agent, to perfect the security interests created or purported
      to be created by the Mortgages.

     

    (c) Closing
      Certificate.
      The
      Administrative Agent shall have received (with the number of original
      counterparts requested by the Administrative Agent), a certificate of the
      Borrowers, dated the Closing Date, substantially in the form of Exhibit F,
      with
      appropriate insertions and attachments, satisfactory in form and substance
      to
      the Administrative Agent, executed by a Responsible Officer of the
      Borrowers.

     

    (d) Corporate
      Proceedings of the Loan Parties.
      The
      Administrative Agent shall have received (with the number of original
      counterparts requested by the Administrative Agent), a copy of the resolutions,
      in form and substance satisfactory to the Administrative Agent, of the Board
      of
      Directors of each Loan Party authorizing (i) the execution, delivery and
      performance of this Agreement and the Loan Documents to which it is a party,
      (ii) the borrowings contemplated hereunder and (iii) the granting by it of
      the
      Liens created pursuant to the Loan Documents, certified by the Secretary or
      an
      Assistant Secretary of each Loan Party as of the Closing Date, which certificate
      shall be in form and substance reasonably satisfactory to the Administrative
      Agent and shall state that the resolutions thereby certified have not been
      amended, modified, revoked or rescinded.

     

    (e) Loan
      Party
      Incumbency Certificates.
      The
      Administrative Agent shall have received (with the number of original
      counterparts requested by the Administrative Agent), a certificate of each
      Loan
      Party, dated the Closing Date, as to the incumbency and signature of the
      officers of such Loan Party executing any Loan Document reasonably satisfactory
      in form and substance to the Administrative Agent, executed by the President
      or
      any Vice President and the Secretary or any Assistant Secretary of such
      Borrower.

     

    (f) Corporate
      Documents.
      The
      Administrative Agent shall have received (with the number of original
      counterparts requested by the Administrative Agent), true and complete copies
      of
      the certificate of incorporation and by-laws of each Loan Party, certified
      as of
      the Closing Date as complete and correct copies thereof by the Secretary or
      an
      Assistant Secretary of such Loan Party. The Administrative Agent shall have
      received certificates from the appropriate Governmental Authority certifying
      as
      to the good standing, existence and authority of each of the Loan Parties in
      all
      jurisdictions where required by the Administrative Agent.

     

    (g) Legal
      Opinions.

     

    (i) The
      Administrative
      Agent shall have received the executed legal opinion of Andrews Kurth LLP,
      counsel to the Borrowers, in form and substance reasonably acceptable to the
      Administrative Agent.

     

    (ii) The
      Administrative
      Agent shall have received such legal opinions as shall cover such other matters
      incident to the transactions contemplated by this Agreement and the other Loan
      Documents as the Administrative Agent may reasonably require.

     

    (h) Consents,
      Licenses and Approvals.
      All governmental
      and third party approvals (including consents) necessary or, in the discretion
      of the Administrative Agent, advisable in connection with continuing operations
      of the Borrowers and the execution, delivery and performance of the Loan
      Documents shall have been obtained and be in full force and effect, and all
      applicable waiting periods shall have expired without any action being taken
      or
      threatened by any competent authority which would restrain, prevent or otherwise
      impose adverse conditions on this Agreement and the other Loan Documents and
      the
      transactions contemplated hereby and thereby. The Administrative Agent shall
      have received, with a counterpart for each Lender, a certificate of the Loan
      Parties as to the foregoing.

     

    (i) Due
      Diligence.
      The
      Administrative Agent and the Lenders shall have completed satisfactory due
      diligence review of the assets, liabilities, business, operations and condition
      (financial or otherwise) of the Borrowers, including, but not limited, to a
      review of their Oil and Gas Properties, and all legal, financial, accounting,
      governmental, environmental, tax and regulatory matters, and fiduciary aspects
      of the proposed financing.

     

    (j) Legal
      Structure
      and Capitalization.
      The
      Administrative Agent and the Lenders shall be satisfied with the organization,
      corporate and legal structure and capitalization of the Borrowers and their
      Subsidiaries.

     

    (k) Projections;
      Financial Statements.
      The
      Administrative Agent and the Lenders shall have received true and correct copies
      of the business and financial plan of EPPHC and its Subsidiaries for the fiscal
      year ending December 31, 2006 (the “Projections”),
      in form and
      substance satisfactory to the Administrative Agent. The Administrative Agent
      and
      the Lenders shall have received true and correct copies of the financial
      statements referred to in Section 5.1(a).

     

    (l) Fees.
      The Technical
      Banks and the Lenders shall have received all fees and expenses required to
      be
      paid on or before the Closing Date pursuant to the Fee Letter and other
      arrangements and for which invoices have been presented.

     

    (m) Representations
      and Warranties.
      Each of the
      representations and warranties made by each Borrower in or pursuant to the
      Loan
      Documents shall be true and correct on and as of such date as if made on and
      as
      of such date (unless such representations and warranties are stated to relate
      to
      a specific earlier date, in which case such representations and warranties
      shall
      be true and correct as of such earlier date).

     

    (n) No
      Default.
      No Default or
      Event of Default shall have occurred and be continuing on such
      date.

     

    (o) No
      Material
      Adverse Effect.
      No event or
      events which, individually or in the aggregate, has had or is reasonably likely
      to have a Material Adverse Effect shall have occurred since December 31,
      2004.

     

    (p) Insurance
      Certificates.
      Certificate(s) of
      insurance naming the Administrative Agent as loss payee to the extent of the
      Borrowing Base Properties or additional insured evidencing insurance which
      meets
      the requirements of this Agreement and the Security Documents and which is
      in
      amount, form and substance and from an issuer satisfactory to the Administrative
      Agent.

     

    (q) Lien
      Searches.
      Results of lien,
      tax and judgment searches of the UCC Records of the Secretary of State and
      applicable counties of the States of Delaware and Texas from a source acceptable
      to the Administrative Agent and reflecting no Liens against any of the Borrowing
      Base Properties as to which perfection of a Lien is accomplished by the filing
      of a financing statement other than in favor of the Administrative Agent, other
      than Permitted Liens.

     

    (r) Additional
      Matters.
      All corporate and
      other proceedings, and all documents, instruments and other legal matters in
      connection with the transactions contemplated by this Agreement and the other
      Loan Documents shall be reasonably satisfactory in form and substance to the
      Administrative Agent, and the Administrative Agent shall have received such
      other documents and legal opinions in respect of any aspect or consequence
      of
      the transactions contemplated hereby or thereby as it shall reasonably
      request.

     

    6.2. Conditions
      to
      Effective Date of This Agreement.
      The Effective
      Date of this Agreement shall occur upon, and the Indebtedness of the Borrowers
      under the Existing Credit Agreement shall be deemed to be Indebtedness of the
      Borrowers outstanding under this Agreement upon, the satisfaction of the
      following conditions precedent:

     

    (a) Loan
      Documents.
      The
      Administrative Agent shall have received (with the number of original
      counterparts requested by the Administrative Agent) (i) this Agreement, executed
      and delivered by a Responsible Officer of the Borrowers, (ii) a confirmation
      of
      Guarantee Agreements, executed and delivered by a Responsible Officer of each
      Guarantor thereto and (iii) a Note payable to the order of each Lender
      requesting a Note in the amount of its Commitment.

     

    (b) Security
      Documents.
      The
      Administrative Agent shall have received (with the number of original
      counterparts requested by the Administrative Agent) (i) (a) Mortgage, executed
      and delivered by the Borrowers, covering the Borrowing Base Properties located
      in Rusk County, Texas (the Minden Field), together with the title work referred
      to in Section 4.16(d) above, and (ii) acknowledgment copies or other evidence
      of
      the proper filing of financing statements (Form UCC-1) under the Uniform
      Commercial Code of all jurisdictions to the extent necessary or desirable or
      required, in the reasonable judgment of the Administrative Agent, to perfect
      the
      security interests created or purported to be created by the
      Mortgage.

     

    (c) Closing
      Certificate.
      The
      Administrative Agent shall have received (with the number of original
      counterparts requested by the Administrative Agent), a certificate of the
      Borrowers, dated the Closing Date, substantially in the form of Exhibit F,
      with
      appropriate insertions and attachments, satisfactory in form and substance
      to
      the Administrative Agent, executed by a Responsible Officer of the
      Borrowers.

     

    (d) Corporate
      Proceedings of the Loan Parties.
      The
      Administrative Agent shall have received (with the number of original
      counterparts requested by the Administrative Agent), a copy of the resolutions,
      in form and substance satisfactory to the Administrative Agent, of the Board
      of
      Directors of each Loan Party authorizing (i) the execution, delivery and
      performance of this Agreement and the Loan Documents to which it is a party,
      (ii) the borrowings contemplated hereunder and (iii) the granting by it of
      the
      Liens created pursuant to the Loan Documents, certified by the Secretary or
      an
      Assistant Secretary of each Loan Party as of the Closing Date, which certificate
      shall be in form and substance reasonably satisfactory to the Administrative
      Agent and shall state that the resolutions thereby certified have not been
      amended, modified, revoked or rescinded.

     

    (e) Loan
      Party
      Incumbency Certificates.
      The
      Administrative Agent shall have received (with the number of original
      counterparts requested by the Administrative Agent), a certificate of each
      Loan
      Party, dated the Closing Date, as to the incumbency and signature of the
      officers of such Loan Party executing any Loan Document reasonably satisfactory
      in form and substance to the Administrative Agent, executed by the President
      or
      any Vice President and the Secretary or any Assistant Secretary of such
      Borrower.

     

    (f) Legal
      Opinions.

     

    (i) The
      Administrative
      Agent shall have received the executed legal opinion of Andrews Kurth LLP,
      counsel to the Borrowers, in form and substance reasonably acceptable to the
      Administrative Agent.

     

    (ii) The
      Administrative
      Agent shall have received such legal opinions as shall cover such other matters
      incident to the transactions contemplated by this Agreement and the other Loan
      Documents as the Administrative Agent may reasonably require.

     

    (g) Due
      Diligence.
      The
      Administrative Agent and the Lenders shall have completed satisfactory due
      diligence review of the assets, liabilities, business, operations and condition
      (financial or otherwise) of the Borrowers, including, but not limited, to a
      review of their Oil and Gas Properties, and all legal, financial, accounting,
      governmental, environmental, tax and regulatory matters, and fiduciary aspects
      of the proposed financing.

     

    (h) Fees.
      The Technical
      Banks and the Lenders shall have received all fees and expenses required to
      be
      paid on or before the Closing Date pursuant to the Fee Letter and other
      arrangements and for which invoices have been presented.

     

    (i) Representations
      and Warranties.
      Each of the
      representations and warranties made by each Borrower in or pursuant to the
      Loan
      Documents shall be true and correct on and as of such date as if made on and
      as
      of such date (unless such representations and warranties are stated to relate
      to
      a specific earlier date, in which case such representations and warranties
      shall
      be true and correct as of such earlier date).

     

    (j) No
      Default.
      No Default or
      Event of Default shall have occurred and be continuing on such
      date.

     

    (k) No
      Material
      Adverse Effect.
      No event or
      events which, individually or in the aggregate, has had or is reasonably likely
      to have a Material Adverse Effect shall have occurred since August 30,
      2005.

     

    (l) Additional
      Matters.
      All corporate and
      other proceedings, and all documents, instruments and other legal matters in
      connection with the transactions contemplated by this Agreement and the other
      Loan Documents shall be reasonably satisfactory in form and substance to the
      Administrative Agent, and the Administrative Agent shall have received such
      other documents and legal opinions in respect of any aspect or consequence
      of
      the transactions contemplated hereby or thereby as it shall reasonably
      request.

     

    6.3. Conditions
      to Each
      Extension of Credit.
      The agreement of
      each Lender to make any Extension of Credit requested to be made by it on any
      date (including, without limitation, its initial Loans) is subject to the
      satisfaction of the following conditions precedent:

     

    (a) Representations
      and Warranties.
      Each of the
      representations and warranties made by each Loan Party in or pursuant to the
      Loan Documents shall be true and correct on and as of such date as if made
      on
      and as of such date (unless such representations and warranties are stated
      to
      relate to a specific earlier date, in which case such representations and
      warranties shall be true and correct as of such earlier date).

     

    (b) No
      Default.
      No Default or
      Event of Default shall have occurred and be continuing on such date or after
      giving effect to the Extensions of Credit requested to be made on such
      date.

     

    (c) Maintenance
      of
      Borrowing Base.
      After giving
      effect to the Extensions of Credit requested to be made on any date, the
      Aggregate Credit Exposure of the Lenders shall not exceed the Borrowing Base
      then in effect.

     

    (d) Maintenance
      of
      Collateral Coverage Ratio.
      The Collateral
      Coverage Ratio shall be at least 1.5 to 1.0.

     

    (e) Material
      Adverse
      Effect.
      No event or
      events which, individually or in the aggregate, has had or is reasonably likely
      to have a Material Adverse Effect shall have occurred and is continuing since
      the date of the previous Extension of Credit. 

     

    Each
      request for a
      Loan by, and Letter of Credit issued on behalf of, the Borrowers hereunder
      shall
      constitute a representation and warranty by the Borrowers as of the date thereof
      that the conditions contained in (a), (b), (c), (d) and (e) of this subsection
      have been satisfied.

     

    6.4. Determinations
      Under Section 6.
      For purposes of
      determining compliance with the conditions specified in Section 6.1, each Lender
      shall be deemed to have consented to, approved or accepted or to be satisfied
      with each document or other matter required thereunder to be consented to or
      approved by or acceptable or satisfactory to the Lenders if such Lender has
      executed and delivered its signature page to this Agreement to the
      Administrative Agent.

     

    SECTION
      7

     

    AFFIRMATIVE
      COVENANTS

     

    Each
      Borrower
      hereby agrees that, so long as the Commitments remain in effect, any Loan,
      or
      Letter of Credit or Note remains outstanding and unpaid or any amount is owing
      to any Lender or the Administrative Agent hereunder or under any other Loan
      Document, such Borrower shall and (except in the case of delivery of financial
      information, reports and notices) shall cause each Guarantor to:

     

    7.1. Financial
      Statements.
      Furnish to the
      Administrative Agent and to each of the Lenders:

     

    (a) as
      soon as
      available, but in any event within ninety (90) days after the end of each fiscal
      year of EPPHC, a copy of EPPHC’s Form 10-K, as filed;

     

    (b) as
      soon as
      available, but in any event not later than forty-five (45) days after the end
      of
      each of the first three quarterly fiscal periods of each fiscal year of EPPHC,
      a
      copy of EPPHC’s Form 10-Q, as filed;

     

    all
      financial
      statements in such reports shall be complete and correct in all material
      respects and shall be prepared in accordance with GAAP applied consistently
      throughout the periods reflected therein and with prior periods (except for
      such
      changes in GAAP as approved by the Independent Auditors or a Responsible
      Officer, as the case may be, and disclosed therein).

     

    (c) The
      electronic
      posting of any financial reports, notices or other items required to be
      furnished pursuant to Sections 7.1 or 7.2 on a website
      (www.elpaso.com)
      established by El
      Paso and accessible by the Lenders shall constitute delivery for all purposes
      of
      Sections 7.1 or 7.2 provided that EPPHC shall provide each Lender with
      notice that a financial report has been posted on such website.

     

    7.2. Certificates;
      Other
      Information.
      Furnish to the
      Administrative Agent and to each of the Lenders:

     

    (a) concurrently
      with
      the delivery of the financial statements referred to in subsections 7.1(a)
      and
      (b), (i) a certificate of a Responsible Officer of EPPHC stating that, to the
      best of such officer’s knowledge, during such period the Borrowers have observed
      or performed all of their covenants (and setting forth the calculations used
      to
      determine compliance with the covenants set forth in subsection 8.1) and other
      agreements, and satisfied every condition, contained in this Agreement and
      the
      other Loan Documents to be observed, performed or satisfied by it, and that
      such
      officer has obtained no knowledge of any Default or Event of Default except
      as
      specified in such certificate, and (ii) if there are any Unrestricted
      Subsidiaries, such financial statements restated to show the financial condition
      and results of EPPHC and its Restricted Subsidiaries;

     

    (b) within
      five days
      after the same are filed, copies of all financial statements and reports on
      Form
      8-K, if any, and all definitive proxy statements which EPPHC may make to, or
      file with, the Securities and Exchange Commission or any successor or analogous
      Governmental Authority;

     

    (c) promptly
      upon
      receipt thereof, copies of all final reports and management letters submitted
      to
      EPPHC by the Independent Auditors in connection with any interim or special
      audit of the books or operations of EPPHC made by such Auditors;

     

    (d) together
      with any
      Reserve Report delivered pursuant to Section 4.9(b), (i) a schedule
      identifying as of June 30 or December 31, as applicable, each
      Hedging
      Agreement as to which the Borrowers are bound, and setting forth the names
      of
      the parties thereto and of any guarantees thereof, and (ii) a schedule
      demonstrating that the Collateral Coverage Ratio is at least 1.5 to 1.0, such
      schedule to set forth the location and filing information of the recorded
      Mortgages and the PV-10 Value of the Borrowing Base Properties;

     

    (e) within
      30 days
      following the end of each fiscal year, annual cash flow projections for the
      subsequent fiscal year of EPPHC and its Restricted Subsidiaries, including
      quarterly production volumes, revenues, expenses, taxes and budgeted capital
      expenditures; and

     

    (f) promptly,
      such
      additional financial and other information concerning the Borrowers as any
      Lender (acting through the Administrative Agent) may from time to time
      reasonably request.

     

    7.3. Payment
      of
      Obligations.
      Pay, discharge or
      otherwise satisfy at or before maturity or before they become delinquent
      (following the lapse of any applicable cure period), as the case may be, all
      of
      its obligations of whatever nature, including, without limitation, taxes,
      assessments, fees and other governmental charges, except where (x) the amount
      or
      validity thereof is currently being contested in good faith by appropriate
      proceedings and reserves in conformity with GAAP with respect thereto have
      been
      provided on the books of the applicable Loan Party, or (y) the failure to pay,
      discharge or otherwise satisfy such obligations, in the aggregate, could not
      reasonably be expected to have a Material Adverse Effect.

     

    7.4. Conduct
      of Business
      and Maintenance of Existence; Compliance with Law and Contractual
      Obligations.
      Continue to
      engage in business of the same general type as now conducted by it and preserve,
      renew and keep in full force and effect its corporate existence; take all
      reasonable action to maintain all rights, privileges and franchises necessary
      or
      desirable in the normal conduct of its business, except as otherwise permitted
      by subsection 8.5 and comply with all Contractual Obligations and Requirements
      of Law, in each case except to the extent that failure to comply therewith
      could
      not reasonably be expected to have, in the aggregate, a Material Adverse
      Effect.

     

    7.5. Maintenance
      of
      Properties; Insurance.
      Maintain all
      Properties useful and necessary in its business in accordance with past
      practices and customary industry norms, (x) ordinary wear and tear and (y)
      casualty events which could not reasonably be expected to have a Material
      Adverse Effect excepted; maintain or cause to maintain with financially sound
      and reputable insurance companies (or through self-insurance), property damage
      and liability insurance of such types, in such amounts and against such risks
      as
      is customary to be maintained by companies engaged in the same or a similar
      business in the same general area; and furnish to the Administrative Agent,
      upon
      written request, full information as to the insurance carried.

     

    7.6. Inspection
      of
      Property; Books and Records; Discussions.
      Keep proper books
      of records and account in which full, true and correct entries in conformity
      with GAAP and all Requirements of Law shall be made of all dealings and
      transactions in relation to its business and activities; and permit
      representatives of any Lender to visit and inspect any Borrowing Base Properties
      operated by it (provided the Lender’s representatives shall comply with all
      safety procedures and precautions required by the Borrowers while on any Oil
      and
      Gas Properties of any Borrower), and examine and make abstracts from any of
      its
      books and records at any reasonable time and as often as may reasonably be
      requested through the Administrative Agent and to discuss the business,
      operations, properties and financial and other condition of the Borrowers with
      officers of the Borrowers and with their Independent Auditors, in the presence
      of a Responsible Officer of the Borrowers.

     

    7.7. Notices.
      Promptly give
      notice to the Administrative Agent of:

     

    (a) an
      officer of the
      Borrower obtaining knowledge of the occurrence of any Event of Default that
      is
      continuing;

     

    (b) an
      officer of the
      Borrower obtaining knowledge of any (i) material default or event of default
      under any material Contractual Obligation of any Loan Party or (ii) material
      litigation, investigation or proceeding which may exist at any time between
      any
      Loan Party and any Governmental Authority;

     

    (c) an
      officer of the
      Borrower obtaining knowledge of any litigation or proceeding affecting any
      of
      Borrowers involving in the aggregate a liability (to the extent not paid or
      covered by insurance) of $25,000,000.00 or more which could reasonably be
      expected to result in an adverse judgment not covered by insurance or in which
      injunctive or similar relief is sought;

     

    (d) the
      following
      events, as soon as possible and in any event within 30 days after a Borrower
      knows thereof: (i) the occurrence or expected occurrence of any Reportable
      Event
      with respect to any Plan, a failure to make any required contribution to a
      Plan,
      the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from,
      or the termination, Reorganization or Insolvency of, any Multiemployer Plan
      or
      (ii) the institution of proceedings or the taking of any other action by the
      PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer
      Plan
      with respect to the withdrawal from, or the terminating, Reorganization or
      Insolvency of, any Plan;

     

    (e) the
      acquisition or
      creation of any Subsidiary, including whether EPPHC designates such Subsidiary
      as an Unrestricted Subsidiary; and

     

    (f) an
      officer of the
      Borrower obtaining knowledge of any event or circumstance which has had or
      may
      reasonably be expected to have a Material Adverse Effect.

     

    Each
      notice
      pursuant to this subsection shall be accompanied by a statement of the officer
      setting forth details of the occurrence referred to therein and stating what
      action the Borrower has taken or proposes to take with respect
      thereto.

     

    7.8. Environmental
      Laws.
      (a) Except as set forth in Schedule 5.17 or as, individually or in the
      aggregate, could not reasonably be expected to have a Material Adverse Effect,
      (i) comply with all Environmental Laws, and obtain, comply with and maintain
      any
      and all Environmental Permits necessary for its operations as conducted and
      as
      planned; and (ii) take all reasonable efforts to ensure that all of its tenants,
      subtenants, contractors, subcontractors, and invitees comply with all
      Environmental Laws, and obtain, comply with and maintain any and all
      Environmental Permits, applicable to any of them.

     

    (a) Except
      as set forth
      in Schedule 5.17 or to the extent that the failure to comply could not
      reasonably be expected to give rise to a Material Adverse Effect, comply with
      all orders and directives of all Governmental Authorities regarding
      Environmental Laws, other than such orders and directives as to which an appeal
      or other appropriate action to contest such order or directive has been timely
      and properly taken in good faith.

     

    (b) Prior
      to acquiring
      any ownership or leasehold interest in real property or other interest in any
      real property that could give rise to the Borrower being subject to potential
      significant liability under or violations of any Environmental Law, which
      potential liabilities or violations, if incurred, could reasonably be expected
      to have a Material Adverse Effect: (i) notify the Administrative Agent; and
      (ii)
      if requested by the Administrative Agent, provide to the Administrative Agent
      a
      written report by an environmental consultant reasonably acceptable to the
      Administrative Agent assessing the presence or potential presence of significant
      levels of any Materials of Environmental Concern on, under, in, or about the
      property, or of other conditions that could give rise to potentially significant
      liability or violations of any Environmental Law.

     

    7.9. Additional
      Collateral.
      (a) With respect
      to any Person that, subsequent to the Closing Date, becomes a Domestic
      Restricted Subsidiary, promptly (i) cause such Person to become a party to
      a
      Guarantee Agreement and (ii) if requested by the Administrative Agent, deliver
      to the Administrative Agent legal opinions as to the validity and enforceability
      of such Subsidiary’s guarantee, which opinions shall be in form and substance,
      and from counsel, reasonably satisfactory to the Administrative
      Agent.

     

    (a) With
      respect to a
      Borrower that, subsequent to the Closing Date, acquires any Properties that
      are
      proposed to be Borrowing Base Properties, promptly execute and deliver to the
      Administrative Agent Mortgages or amendments to Mortgages presently in force
      granting security interests and Liens to the Administrative Agent, for the
      ratable benefit of the Secured Parties, in such Properties.

     

    7.10. Maintenance
      and
      Operation of Properties.
      Except to the
      extent that the failure to comply could not reasonably be expected to have
      a
      Material Adverse Effect and consistent with the standards of a reasonably
      prudent operator under the same circumstances:

     

    (a) Maintain,
      develop,
      and operate the Oil and Gas Properties that are operated by any Loan Party
      in a
      good and workmanlike manner, and observe and comply with all of the terms and
      provisions, express or implied, of all oil and gas leases relating to such
      Properties so long as the oil and gas leases are capable of producing
      Hydrocarbons in quantities and at prices providing for continued efficient
      and
      profitable operation of business;

     

    (b) Comply
      in all
      material respects with all contracts and agreements applicable to or relating
      to
      Oil and Gas Properties of any Loan Party or the production and sale of
      Hydrocarbons therefrom;

     

    (c) At
      all times,
      maintain, preserve, and keep all operating equipment used with respect to the
      Oil and Gas Properties that are operated by any Loan Party in proper repair,
      working order and condition, and make all necessary or appropriate repairs,
      renewals, replacements, additions and improvements thereto so that the
      efficiency of the operating equipment shall at all times be properly preserved
      and maintained, provided that no item of operating equipment need be so
      repaired, renewed, replaced, added to or improved, if such Loan Party shall
      in
      good faith determine that the action is not necessary for such Person’s
      continued efficient and profitable operation of business.

     

    (d) With
      respect to Oil
      and Gas Properties which are operated by operators other than a Loan Party,
      seek
      to enforce the operators’ contractual obligations to maintain, develop, and
      operate such Properties subject to the applicable operating agreements to the
      extent it is commercially reasonable to do so.

     

    (e) If
      and when any of
      the wells located on the Oil and Gas Properties of any Loan Party ceases
      producing Hydrocarbons in paying quantities and is of no further use and a
      Loan
      Party is required to do so under any agreement or law, said Loan Party will
      plug
      and abandon, or cause to be plugged and abandoned, any and all such wells in
      accordance in all material respects with applicable local, state and/or federal
      laws and regulations then in force and regulating the plugging of Hydrocarbon
      wells.

     

    7.11. Collateral
      Coverage.
      At all times the
      Borrower will maintain a Collateral Coverage Ratio of at least 1.5 to 1.0.
      Failure to maintain a Collateral Coverage Ratio of at least 1.5 to 1.0 shall
      not
      be considered a Default or an Event of Default provided the Borrower complies
      with Section 4.10(c) on a timely basis.

     

    7.12. Further
      Assurances.
      Upon the request
      of the Administrative Agent, promptly perform or cause to be performed any
      and
      all acts and execute or cause to be executed any and all documents (including,
      without limitation, financing statements and continuation statements) for filing
      under the provisions of the Uniform Commercial Code or any other Requirement
      of
      Law which are necessary or advisable to maintain in favor of the Administrative
      Agent, for the benefit of the Lenders, Liens on the Oil and Gas Properties
      subject to the Mortgages that are duly perfected in accordance with all
      applicable Requirements of Law.

     

    SECTION
      8

     

    NEGATIVE
      COVENANTS

     

    Each
      Borrower
      hereby agrees that, so long as the Commitments remain in effect, any Loan,
      Letter of Credit or any Note remains outstanding and unpaid or any amount is
      owing to any Lender or the Administrative Agent hereunder or under any other
      Loan Document, such Borrower shall not, and shall not (except with respect
      to
      subsection 8.1) permit any Guarantor, to:

     

    8.1. Financial
      Covenant
      Conditions

     

    (a) Interest
      Coverage Ratio.
      Permit the
      Interest Coverage Ratio as of the last day of any fiscal quarter of EPPHC to
      be
      less than 2.0 to 1.0.

     

    (b) Debt
      Leverage
      Ratio.
      Permit the Debt
      Leverage Ratio as of the last day of any fiscal quarter of EPPHC to be greater
      than 4.50 to 1.0, for the period of the first four consecutive fiscal quarters
      ended following the Closing Date, and 4.0 to 1.0 with respect to each fiscal
      quarter ending thereafter.

     

    8.2. Limitation
      on
      Indebtedness.
      Create, incur,
      assume or suffer to exist any Indebtedness, except:

     

    (a) Indebtedness
      of the
      Borrower or any Guarantor under any Loan Document;

     

    (b) Indebtedness
      outstanding on the date hereof and listed on Schedule 8.2 (including, without
      limitation, the Senior Notes) and any refinancings, refundings, renewals or
      extensions thereof on terms and conditions not more restrictive than the
      original Indebtedness;

     

    (c) Indebtedness
      of any
      Borrower under Hedging Agreements entered into in the ordinary course of
      business of such Borrower and not for speculative purposes, including Commodity
      Hedging Agreements permitted under subsection 8.15;

     

    (d) Indebtedness
      of any
      Loan Party issued or owed to any other Loan Party, provided that no Default,
      Event of Default, Borrowing Base Deficiency, or Collateral Value Deficiency
      exists on the date that such Indebtedness is created;

     

    (e) [Reserved]

     

    (f) Obligations
      in
      respect of completion bonds, performance bonds, bid bonds, appeal bonds, surety
      bonds, insurance obligations or bonds and similar bonds and obligations incurred
      by any Loan Party in the ordinary course of business and any guarantees or
      letters of credit functioning as or supporting any of the foregoing bonds or
      obligations;

     

    (g) Subordinated
      Indebtedness that is issued on terms which are satisfactory to the
      Administrative Agent and the Required Lenders with respect to provisions
      regarding maturity, covenants, events of default and subordination language,
      provided that after giving effect to the issuance of such Subordinated
      Indebtedness, the Borrower is in compliance with the covenants contained in
      subsection 8.1 hereof;

     

    (h) Guarantee
      Obligations permitted by subsection 8.4;

     

    (i) Indebtedness
      incurred to finance the acquisition of equipment, provided that the amount
      of
      such Indebtedness does not exceed the purchase price of such equipment as
      applicable; and

     

    (j) Indebtedness
      of any
      Loan Party created, incurred or assumed after the date hereof not otherwise
      permitted pursuant to this subsection 8.2, provided that (i) after taking into
      account the aggregate principal amount of such Indebtedness, the Debt Leverage
      Ratio on the day such Indebtedness is incurred shall not be greater than 3.5
      to
      1.0, and (ii) on the day such Indebtedness is incurred no Default, Event of
      Default, Borrowing Base Deficiency, or Collateral Value Deficiency shall have
      occurred and be continuing.

     

    8.3. Limitation
      on
      Liens.
      Create, incur, assume or suffer to exist any Lien upon any of their property,
      assets or revenues, whether now owned or hereafter acquired, except for the
      following (and each of the following are collectively referred to herein as
      “Permitted
      Liens”):

     

    (a) Liens
      for taxes,
      assessments or other governmental charges or levies not yet due or which are
      being contested in good faith by appropriate proceedings, provided that adequate
      reserves with respect thereto are maintained on the books of the Borrower or
      any
      Loan Parties, in conformity with GAAP;

     

    (b) carriers’,
      warehousemen’s, mechanics’, materialmen’s, landlords’, repairmen’s or other like
      Liens arising in the ordinary course of business securing obligations which
      are
      not overdue for a period of more than 60 days or which are being contested
      in
      good faith by appropriate proceedings, which proceedings would have the effect
      of preventing the forfeiture or sale of the property or assets subject to any
      such Lien;

     

    (c) pledges
      or deposits
      made in the ordinary course of business in connection with workers’
      compensation, unemployment insurance and other social security
      legislation;

     

    (d) deposits
      and
      letters of credit made to secure the performance of bids, tenders, trade
      contracts (other than for borrowed money), leases, statutory obligations, surety
      and appeal bonds, performance and return-of-money bonds and other obligations
      of
      a like nature incurred in the ordinary course of business;

     

    (e) easements,
      rights-of-way, servitudes, permits, reservations, exceptions, covenants and
      other restrictions as to the use of real property and other similar encumbrances
      incurred in the ordinary course of business which, with respect to all of the
      foregoing, do not secure the payment of Indebtedness of the type described
      in
      clauses (a)-(d) of the definition thereof and which do not materially detract
      from the value of the Property subject thereto or materially interfere with
      the
      ordinary conduct of the business of any Loan Party;

     

    (f) Liens
      in existence
      on the date hereof listed on Schedule 8.3, provided that no such Lien encumbers
      Borrowing Base Property and is amended after the date of this Agreement to
      cover
      any additional Property or to secure additional Indebtedness and that the amount
      of Indebtedness secured thereby is not increased;

     

    (g) Liens
      created
      pursuant to the Security Documents and other Liens created after the date hereof
      and securing Indebtedness hereunder or under any other Loan
      Document;

     

    (h) Liens
      reserved in
      customary oil, gas and/or mineral leases for royalties, bonus or rental payments
      and for compliance with the terms of such leases and Liens reserved in customary
      operating agreements, farm-out and farm-in agreements, exploration agreements,
      development agreements and other similar agreements for compliance with the
      terms of such agreements, to the extent that (x) any such Lien referred to
      in
      this clause (h) does not materially impair the use or value of the property
      subject to such Lien for the purposes for which such property is held, and
      (y)
      in the case of customary operating agreements, farm-out and farm-in agreements,
      exploration agreements, development agreements and other similar agreements,
      the
      amount of any obligations secured thereby that are delinquent, that are not
      diligently contested in good faith and for which adequate reserves are not
      maintained by the Borrower or any Guarantor, as the case may be, do not exceed,
      at any time outstanding, the amount owing by the Borrower or any Guarantor,
      as
      applicable, for ninety (90) days’ billed operating expenses or other
      expenditures attributable to such entity’s interest in the Property covered
      thereby;

     

    (i) defects,
      irregularities and deficiencies in the title of any rights of way or other
      Property of any Loan Party which in the aggregate do not materially impair
      the
      use of such rights of way or other property for the purposes for which such
      rights of way and other Property are held by such Loan Party, and defects,
      irregularities and deficiencies in title to any property of any Loan Party
      of
      the Borrower, which defects, irregularities or deficiencies have been cured
      by
      possession under applicable statutes of limitation;

     

    (j) royalties,
      overriding royalties, revenue interests, net revenue interests, production
      payments and advance payment obligations (other than obligations in respect
      of
      advance payments received in connection with the incurrence of Indebtedness),
      provided that the value of the Oil and Gas Properties shown on the Borrower’s
      Reserve Reports is net of such Liens;

     

    (k) any
      Lien securing
      Indebtedness, neither assumed nor guaranteed by any Loan Party nor on which
      it
      customarily pays interest, existing upon real estate or rights in or relating
      to
      real estate acquired by any Loan Party for substation, metering station, pump
      station, storage gathering line, transmission line, transportation line,
      distribution line or for right-of-way purposes, and any Liens reserved in leases
      for rent and for compliance with the terms of the leases in the case of
      leasehold estates, to the extent that any such Lien referred to in this
      paragraph (k) does not materially impair the use or value of the property
      subject to such Lien for the purposes for which such property is
      held;

     

    (l) judgment
      and other
      similar Liens arising in connection with court proceedings, provided that the
      judgment relating thereto shall have been stayed or bonded pending appeal,
      provided that no such Lien shall encumber any Borrowing Base
      Property;

     

    (m) Liens
      arising out
      of all presently existing and future division and transfer orders, advance
      payment agreements, processing contracts, gas processing plant agreements,
      operating agreements, gas balancing or deferred production agreements, pooling,
      unitization or communitization agreements, pipeline, gathering or transportation
      agreements, platform agreements, drilling contracts, injection or repressuring
      agreements, cycling agreements, construction agreements, salt water or other
      disposal agreements, leases or rental agreements, farm-out and farm-in
      agreements, exploration and development agreements, and any and all other
      contracts or agreements covering, arising out of, used or useful in connection
      with or pertaining to the exploration, development, operation, production,
      sale,
      use, purchase, exchange, storage, separation, dehydration, treatment,
      compression, gathering, transportation, processing, improvement, marketing,
      disposal or handling of any property of any Loan Party, provided that such
      agreements are entered into in the ordinary course of business and when entered
      into contain terms customary for such agreements in the industry and provided
      further that no Liens described in this paragraph (m) shall be granted or
      created in connection with the incurrence of Indebtedness;

     

    (n) customary
      preferential rights to purchase and calls on productions by sellers relating
      to
      any of the Borrowing Base Properties;

     

    (o) any
      Liens existing
      on any Oil and Gas Properties prior to the acquisition thereof by any Loan
      Party
      or existing on any Property of any Person that becomes a Loan Party prior to
      the
      time such Person becomes a Loan Party; provided that (i) such Liens are not
      created in contemplation of or in connection with such acquisition or such
      Person becoming a Loan Party, as the case may be, (ii) such Liens shall not
      encumber any other Oil and Gas Properties of the Loan Party making such
      acquisition, (iii) such Liens shall not encumber any Borrowing Base Properties,
      and (iv) the Indebtedness secured by such Liens may remain outstanding pursuant
      to Section 8.2(j);

     

    (p) any
      Liens securing
      Indebtedness of any Loan Party incurred pursuant to Section 8.2(j) to finance
      the acquisition of any Oil and Gas Properties or any Person owning Oil and
      Gas
      Properties, provided that (i) such Liens are created substantially
      simultaneously with such acquisition or within 180 days thereafter, (ii) such
      Liens shall not at any time encumber any other Oil and Gas Properties other
      than
      the Oil and Gas Properties so acquired or the Oil and Gas Properties of the
      Person so acquired, as the case may be, (iii) such Liens shall not encumber
      any
      Borrowing Base Properties, and (iv) the Indebtedness secured by such Liens,
      together with any existing Liens encumbering such Oil and Gas Properties does
      not exceed 60% of the purchase price (plus assumed debt) of acquiring such
      Oil
      and Gas Properties or such Person, as the case may be;

     

    (q) [Reserved]

     

    (r) Liens
      not expressly
      permitted by this subsection 8.3 securing any Indebtedness permitted by
      subsection 8.2(c), (i) or (j) provided that (i) no such Lien shall encumber
      any
      Borrowing Base Properties, and (ii) at the time of incurrence, the outstanding
      principal amount of the Indebtedness secured by such Liens may not exceed 10%
      of
      the PV-10 Value of the Loan Parties’ Oil and Gas Properties.

     

    8.4. Limitation
      on
      Guarantee Obligations.
      Create, incur,
      assume or suffer to exist any Guarantee Obligation except (a) Guarantee
      Obligations in existence on the date hereof and listed on Schedule 8.4, (b)
      Guarantee Obligations arising under the Loan Documents, (c) Guarantee
      Obligations with respect to Indebtedness permitted by subsection 8.2 (other
      than
      subsection (h) thereof), (d) Guarantee Obligations incurred by any Loan Party
      with respect to any obligations or liabilities of a Loan Party, so long as
      the
      incurring of such obligations or liabilities is not prohibited by Section 8.2
      hereof, and (e) Guarantee Obligations issued by any Loan Party in the ordinary
      course of business of obligations of other Persons (other than in respect of
      Indebtedness) in connection with current oil and gas drilling, oil and gas
      production, oil and gas transportation, crude oil purchasing, oil and gas
      exploration or other similar programs or operations, and (f) Guarantee
      Obligations of a Person existing at the time such Person becomes a Subsidiary
      that were not created in contemplation of such event, so long as the incurrence
      of such obligations or liabilities is not prohibited by Section 8.2
      hereof.

     

    8.5. Limitation
      on
      Fundamental Change.
      Enter into any
      merger, consolidation or amalgamation as a constituent party, or liquidate,
      wind
      up or dissolve itself (or suffer any liquidation or dissolution), or convey,
      sell, lease, assign, transfer or otherwise dispose of, all or substantially
      all
      of its property, business or assets, or make any material change in its present
      method of conducting business except:

     

    (a) any
      Subsidiary of
      EPPHC (including a Foreign Subsidiary) may be merged or consolidated with or
      into a Loan Party (provided that such Loan Party shall be the continuing or
      surviving corporation);

     

    (b) any
      Subsidiary of
      EPPHC may sell, lease, transfer or otherwise dispose of any or all of its assets
      (upon voluntary liquidation or otherwise) to a Loan Party;

     

    (c) any
      Guarantor may
      merge into any other Loan Party or may dissolve and transfer all of its assets
      and liabilities to another Loan Party;

     

    (d) any
      Borrower may
      merge into any other Borrower; or

     

    (e) transactions
      contemplated pursuant to a Reorganization Plan consented to by the
      Lenders.

     

    8.6. Limitation
      on Sale
      of Assets.
      Convey, sell,
      lease, assign, transfer or otherwise dispose of any of their Oil and Gas
      Properties (including, without limitation, receivables and leasehold interests),
      whether now owned or hereafter acquired, except:

     

    (a) the
      sale of
      inventory (including Hydrocarbons or other mineral products or surplus) in
      the
      ordinary course of business;

     

    (b) Dispositions
      of Oil
      and Gas Properties not constituting Proved Reserves pursuant to farm-ins and
      farm-outs and transfers of royalty interests, overriding royalty interests,
      net
      revenue interests and other similar transfers, all pursuant to exploration
      and
      development activity in the ordinary course of business of the Borrowers and
      their Subsidiaries;

     

    (c) the
      Disposition of
      Oil and Gas Properties not constituting Borrowing Base Properties, provided
      that
      if the aggregate PV-10 Value (determined by reference to the most recent Reserve
      Report) of such Disposition and other Dispositions since the most recent
      Redetermination Date minus the PV-10 Value of all Oil and Gas Properties not
      constituting Borrowing Base Properties acquired by the Loan Parties since such
      Redetermination Date exceeds an amount equal to 10% of the PV-10 Value of the
      Loan Parties’ Oil and Gas Properties, the Technical Banks may elect to
      redetermine the Borrowing Base in accordance with the procedures set forth
      in
      subsection 4.9 as if a Borrower Redetermination Notice had been provided prior
      to such Disposition;

     

    (d) the
      Disposition of
      any Borrowing Base Properties, provided that if the aggregate PV-10 Value
      (determined by reference to the most recent Reserve Report) of such Dispositions
      between Borrowing Base Redeterminations exceeds $25,000,000.00, the Borrowing
      Base shall automatically be redetermined prior to such Disposition in accordance
      with the procedures set forth in subsection 4.9 as if a Borrower Redetermination
      Notice had been provided prior to such Disposition. In any event, the
      Disposition of Borrowing Base Property may result in a mandatory reduction
      in
      the Borrowing Base pursuant to subsection 4.9(f).

     

    8.7. Limitation
      on
      Dividends.
      Declare or pay
      any dividend on (other than dividends payable solely in common stock of any
      Borrower), or make any payment on account of, or set apart assets for a sinking
      or other analogous fund for, the purchase, redemption, defeasance, retirement
      or
      other acquisition of any shares of any class of Capital Stock of any Loan Party
      or any warrants or options to purchase any such Capital Stock, whether now
      or
      hereafter outstanding, or make any other distribution in respect thereof, either
      directly or indirectly, whether in cash or property or in obligations of such
      Loan Party, except that:

     

    (a) a
      Loan Party may
      declare and pay dividends to or make other distributions to another Loan
      Party;

     

    (b) EPPHC
      may declare
      and pay dividends or make other distributions of property from the net proceeds
      received by EPPHC from the issuance or sale of its Capital Stock;

     

    (c) provided
      no
      Default, Event of Default, Borrowing Base Deficiency or Collateral Value
      Deficiency shall have occurred and be continuing, EPPHC may declare and pay
      dividends or make other distributions of property with respect to any fiscal
      year (but no later than 120 days after the end of such fiscal year) in an amount
      that does not exceed the sum of (i) the Available Distribution Amount, plus
      (ii)
      the net proceeds of any equity offering or contribution of equity, in each
      case
      received by a Loan Party during such fiscal year, plus (iii) 100% of Free Cash
      Flow of the Loan Parties accrued during such fiscal year, minus (iv) Free Cash
      Flow and capital contributions used to repay Indebtedness pursuant to Section
      8.9(z).

     

    8.8. Limitation
      on
      Investments, Loans and Advances.
      Make any advance,
      loan, extension of credit or capital contribution to, or incur any Guarantee
      Obligation on behalf or for the benefit of, or purchase any stock, bonds, notes,
      debentures or other securities of or any assets constituting a business unit
      of,
      or make any other investment (including by the issuance of letters of credit)
      in
      (collectively, “Investments”),
      any Person,
      except:

     

    (a) extensions
      of trade
      credit in the ordinary course of business;

     

    (b) investments
      in Cash
      Equivalents;

     

    (c) loans
      and advances
      to officers and employees of the Borrowers and their Subsidiaries for travel,
      entertainment and relocation expenses in the ordinary course of business in
      an
      aggregate amount for the Borrowers and their Subsidiaries not to exceed
      $1,000,000 at any one time outstanding;

     

    (d) investments,
      loans
      or advances, the material details of which have been set forth on Schedule
      8.8;

     

    (e) so
      long as no
      Default or Event of Default shall have occurred and be continuing, Investments
      by any Loan Party, Subsidiary or Affiliate in which EPPHC has a direct or
      indirect investment in any other Loan Party, Subsidiary or Affiliate in which
      EPPHC has a direct or indirect investment;

     

    (f) acquisitions
      and
      investments made or entered into in connection with the Oil and Gas
      Business;

     

    (g) transactions
      expressly permitted or contemplated under subsection 8.2 (provided, that no
      loans may be made by any Borrower pursuant to subsection 8.2(g) at any time
      when
      a Default, Event of Default, Borrowing Base Deficiency or Collateral Value
      Deficiency shall have occurred and be continuing);

     

    (h) provided
      no
      Default, Event of Default, Borrowing Base Deficiency, or Collateral Value
      Deficiency shall have occurred and is continuing, additional loans or advances
      made on a revolving basis to El Paso Corporation under the Cash Management
      Program up to a maximum outstanding amount of $125,000,000; and

     

    (i) Investments
      not
      otherwise permitted hereunder in an amount at any time not in excess of
      $10,000,000.

     

    8.9. Limitation
      on
      Payments and Modifications of Debt Instruments, Other Documents.
      (a) Make any
      voluntary payment or prepayment on or redemption, defeasance or purchase of
      (i)
      any Indebtedness (other than Indebtedness under this Agreement) which has an
      aggregate principal amount in excess of $5,000,000 or (ii) any Subordinated
      Indebtedness other than, provided that no Event of Default, Borrowing Base
      Deficiency, or Collateral Value Deficiency has occurred and is continuing,
      principal with respect thereto and interest thereon, or (b) amend, modify or
      change, or consent or agree to any material amendment, modification or change
      to
      any of the payment, redemption, prepayment or similar economic terms (including
      the subordination provisions) of any such Indebtedness described in clauses
      (i)
      or (ii) immediately preceding (other than any such amendment, modification
      or
      change which would extend the maturity or reduce the amount of any payment
      of
      principal thereof or which would reduce the rate or extend the date for payment
      of interest thereon). Notwithstanding any contrary provision in this Section
      8.9, EPPHC may:

     

    (w) prepay
      or purchase
      any outstanding Senior Notes provided that prior to the date of such prepayment
      or purchase the Borrowing Base shall be redetermined in accordance with the
      procedures set forth in subsection 4.9 which would have applied had a Borrower
      Redetermination Notice or a Lender Redetermination Notice;

     

    (x) prepay
      or purchase
      any outstanding Senior Notes in connection with an otherwise permitted
      refinancing of such Senior Notes;

     

    (y) provided
      no
      Default, Event of Default, Borrowing Base Deficiency or Collateral Value
      Deficiency shall have occurred and be continuing, pay principal with respect
      to
      and interest on Indebtedness owed to El Paso Corporation; provided, however,
      that such Indebtedness was incurred on a revolving basis and the amount of
      such
      revolving Indebtedness outstanding at any time does not exceed $125,000,000;
      and

     

    (z) provided
      no
      Default, Event of Default, Borrowing Base Deficiency or Collateral Value
      Deficiency shall have occurred and be continuing, pay principal with respect
      to
      and interest on Indebtedness owed to El Paso Corporation (other than
      Indebtedness described in clause (y) above) in an amount that does not exceed
      the sum of (i) 100% of Free Cash Flow for the fiscal year in which such payment
      is made, and (ii) capital contributions made to EPPHC for the fiscal year in
      which such payment is made.

     

    8.10. Limitation
      on
      Transactions with Affiliates.
      Enter into any
      transaction, including, without limitation, any purchase, sale, lease or
      exchange of Property or the rendering of any service, with any Affiliate (other
      than transactions between or among the Borrower and its Guarantors) unless
      such
      transaction is (a) otherwise permitted under this Agreement, (b) in the ordinary
      course of the Borrower’s or the Guarantor’s business and (c) upon fair and
      reasonable terms no less favorable to the Borrower or the Guarantor, as the
      case
      may be, than it would obtain in a comparable arm’s length transaction with a
      Person which is not an Affiliate or, in the event no comparable transaction
      with
      an unaffiliated Person is available, on terms that are fair from a financial
      point of view to the Borrower or Guarantor provided, however, this subsection
      8.10 shall not apply to (i) the payment of reasonable and customary fees to
      directors of the Borrower who are not employees of the Borrower; (ii) loans
      or
      advances made pursuant to subsection 8.8(c); (iii) any other transaction with
      any employee, officer or director of the Borrower pursuant to drilling
      arrangements, exploration and production arrangements, Plans, compensation
      or
      other similar arrangements entered into the ordinary course of business and
      approved by a majority of the disinterested members of the Board of Directors
      of
      the Borrower; or (iv) transactions in effect on the Closing Date including
      material transactions involving the production, sale or transportation of
      Hydrocarbons which have been disclosed to the Lenders and which do not have
      a
      Material Adverse Effect.

     

    8.11. Limitation
      on
      Changes in Fiscal Year.
      Permit the fiscal
      year of EPPHC to end on a day other than December 31.

     

    8.12. Limitation
      on
      Negative Pledge Clauses.
      Enter into with
      any Person any agreement, other than this Agreement or the Indenture (including
      any new indenture which results from an otherwise permitted refinancing of
      the
      Senior Notes), which prohibits or limits the ability of any Loan Party to
      create, incur, assume or suffer to exist any Lien upon any of its property,
      assets or revenues, whether now owned or hereafter acquired.

     

    8.13. Limitation
      on Lines
      of Business.
      Enter into any
      business, either directly or through any Subsidiary, except for those businesses
      in which the Loan Parties are engaged on the date of this Agreement or which
      are
      directly related thereto or to the Oil and Gas Business.

     

    8.14. Forward
      Sales.
      Except in accordance with ordinary practice in the Oil and Gas Business, enter
      into or permit to exist any advance payment agreement or other arrangement
      pursuant to which the Borrower or any of its Subsidiaries, having received
      full
      or substantial payment of the purchase price for a specified quantity of
      Hydrocarbons from any of the Borrowing Base Properties upon entering such
      agreement or arrangement, is required to deliver, in one or more installments
      subsequent to the date of such agreement or arrangement, such quantity of
      Hydrocarbons pursuant to and during the terms of such agreement or
      arrangement.

     

    8.15. Hedging
      Agreements.
      Enter into any
      Hedging Agreement after the Closing Date, other than Hedging Agreements entered
      into in the ordinary course of business to hedge or mitigate risks to which
      any
      Loan Party is exposed in the conduct of its business or the management of its
      liabilities, and provided that with respect to all Commodity Hedging Agreements
      (without duplication) (i) for oil, the total volumes to be hedged shall not
      exceed 85% of expected oil production of the Loan Parties for the twenty-four
      month period commencing at the time of such hedging, and 60% for any subsequent
      twelve month period (determined by reference to the most recent Reserve Report)
      and (ii) for gas, the total volumes to be hedged for any twenty-four month
      period shall not exceed 85% of expected gas production of the Loan Parties
      for
      the twenty-four month period commencing at the time of such hedging and 60%
      for
      any subsequent twelve month period (determined by reference to the most recent
      Reserve Report).

     

    SECTION
      9

     

    EVENTS
      OF
      DEFAULT

     

    If
      any of the
      following events shall occur and be continuing:

     

    (a) The
      Borrowers shall
      fail to pay any principal of any Loan when due in accordance with the terms
      thereof or hereof; or the Borrowers shall fail to pay any interest on any Loan,
      or any other fee, Reimbursement Obligation or other amount payable hereunder,
      within three (3) Business Days after any such amount becomes due in accordance
      with the terms thereof or hereof; or

     

    (b) Any
      representation
      or warranty made or deemed made by any Loan Party herein or in any other Loan
      Document or which is contained in any certificate, document or financial or
      other statement furnished by it at any time under or in connection with this
      Agreement or any such other Loan Document shall prove to have been incorrect
      in
      any material respect on or as of the date made or deemed made; or

     

    (c) Any
      Borrower shall
      default in the observance or performance of any agreement applicable to it
      contained in subsections 4.10, 7.7(a) or 7.9 or Section 8 of this Agreement;
      or

     

    (d) Any
      Borrower shall
      default in the observance or performance of any other agreement applicable
      to it
      contained in this Agreement or any other Loan Document (other than as provided
      in paragraphs (a) through (c) of this Section), and such default shall continue
      unremedied for a period of 30 consecutive days; or

     

    (e) Any
      Borrower shall
      (i) default in any payment of principal of or interest on any Indebtedness,
      including without limitation the Senior Notes (excluding the Loans or any
      guarantee thereof), or in the payment of any Guarantee Obligation, which default
      shall continue after the applicable grace period, if any, provided in the
      instrument or agreement under which such Indebtedness or Guarantee Obligation
      was created; provided that the aggregate principal amount of such Indebtedness
      and Guarantee Obligations equals or exceeds $25,000,000; or (ii) default in
      the
      observance or performance of any other agreement or condition relating to any
      such Indebtedness (including without limitation the Indenture) or Guarantee
      Obligation or contained in any instrument or agreement evidencing, securing
      or
      relating thereto, which default shall continue after the applicable grace
      period, if any, or any other event shall occur or condition exist, the effect
      of
      which default or other event or condition is to cause, or to permit the holder
      or holders of such Indebtedness or beneficiary or beneficiaries of such
      Guarantee Obligation (or a trustee or agent on behalf of such holder or holders
      or beneficiary or beneficiaries) to cause, with the giving of notice if
      required, such Indebtedness to become due prior to its stated maturity or such
      Guarantee Obligation to become payable, provided that the aggregate principal
      amount of all such Indebtedness and Guarantee Obligations which would then
      become due and payable would equal or exceed $25,000,000; or

     

    (f) (i)
      Any Borrower
      shall commence any case, proceeding or other action (A) under any existing
      or
      future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
      insolvency, reorganization or relief of debtors, seeking to have an order for
      relief entered with respect to it, or seeking to adjudicate it a bankrupt or
      insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
      liquidation, dissolution, composition or other relief with respect to it or
      its
      debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator
      or other similar official for it or for all or any substantial part of its
      assets, or such Borrower shall make a general assignment for the benefit of
      its
      creditors; or (ii) there shall be commenced against such Borrower any case,
      proceeding or other action of a nature referred to in clause (i) above which
      (A)
      results in the entry of an order for relief or any such adjudication or
      appointment or (B) remains undismissed, undischarged or unbonded for a period
      of
      60 days; or (iii) there shall be commenced against such Borrower any case,
      proceeding or other action seeking issuance of a warrant of attachment,
      execution, restraint or similar process against all or any substantial part
      of
      its assets which results in the entry of an order for any such relief which
      shall not have been vacated, discharged, or stayed or bonded pending appeal
      within 60 days from the entry thereof; or (iv) such Borrower shall take any
      action in furtherance of, or indicating its consent to, approval of, or
      acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;
      or (v) such Borrower shall generally not, or shall be unable to, or shall admit
      in writing its inability to, pay its debts as they become due; or

     

    (g) (i)
      Any Person
      shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA
      or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding
      deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall
      exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall
      arise on the assets of the Borrower or any Commonly Controlled Entity, (iii)
      a
      Reportable Event shall occur with respect to, or proceedings shall commence
      to
      have a trustee appointed, or a trustee shall be appointed, to administer or
      to
      terminate, any Single Employer Plan, which Reportable Event or commencement
      of
      proceedings or appointment of a trustee is, in the reasonable opinion of the
      Required Lenders, likely to result in the termination of such Plan for purposes
      of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes
      of Title IV of ERISA, (v) any Borrower or any Commonly Controlled Entity
      shall, or in the reasonable opinion of the Required Lenders is likely to, incur
      any liability in connection with a withdrawal from, or the Insolvency or
      Reorganization of, a Multiemployer Plan or (vi) any other event or condition
      shall occur or exist with respect to a Plan; and in each case in clauses (i)
      through (vi) above, such event or condition, together with all other such events
      or conditions, if any, could reasonably be expected to have a Material Adverse
      Effect; or

     

    (h) One
      or more
      judgments or decrees shall be entered against any Borrower involving in the
      aggregate a liability (to the extent not paid or covered by insurance) of
      $25,000,000 or more, and all such judgments or decrees shall not have been
      vacated, discharged, stayed or bonded pending appeal (or otherwise paid or
      satisfied in full) within 90 days after the entry thereof; or

     

    (i) A
      material
      provision of any Loan Document or the guarantee of any of the Guarantors under
      a
      Guarantee Agreement shall cease, for any reason, to be in full force and effect,
      or any Loan Party, any of their Affiliates, or any officer or employee of any
      of
      the foregoing, shall so assert; or

     

    (j) The
      subordination
      provisions contained in any Subordinated Indebtedness shall cease, for any
      reason, to be in full force and effect, or any Loan Party that is a party
      thereto or holders of at least 25% of the aggregate principal amount of such
      Subordinated Indebtedness shall so assert in writing; or

     

    (k) Any
      Lien created by
      any Security Document shall cease to be enforceable and of the same effect
      and
      priority purported to be created thereby other than because of a release
      permitted hereunder signed by the Administrative Agent; or

     

    (l) A
      Change of Control
      shall occur; or

     

    (m) Any
      court,
      government or governmental agency shall condemn, seize or otherwise appropriate,
      or take custody or control of, all or any material portion (such materiality
      determined by reference to the Borrower and its Subsidiaries taken as a whole)
      of the Property of the Borrower or any Guarantor;

     

    then,
      and in any
      such event, (A) if such event is an Event of Default specified in clause (i)
      or
      (ii) of paragraph (f) of this Section, automatically the Commitments shall
      immediately terminate and the Loans hereunder (with accrued and unpaid interest
      thereon) and all other amounts owing under this Agreement (including, without
      limitation, all Letter of Credit Outstandings, whether or not the beneficiaries
      of the then outstanding Letters of Credit shall have presented the documents
      required thereunder) and the other Loan Documents shall immediately become
      due
      and payable, and (B) if such event is any other Event of Default, either or
      both
      of the following actions may be taken: (i) with the consent of the Required
      Lenders, the Administrative Agent may, or upon the request of the Required
      Lenders, the Administrative Agent shall, by written notice to the Borrowers,
      declare the Commitments to be terminated forthwith, whereupon the Commitments
      shall immediately terminate; and (ii) with the consent of the Required Lenders,
      the Administrative Agent may, or upon the request of the Required Lenders,
      the
      Administrative Agent shall, by written notice to the Borrowers, declare the
      Loans hereunder (with accrued and unpaid interest thereon) and all other amounts
      owing under this Agreement (including, without limitation, all Letter of Credit
      Outstandings, whether or not the beneficiaries of the then outstanding Letters
      of Credit shall have presented the documents required thereunder) and the other
      Loan Documents to be due and payable forthwith, whereupon the same shall
      immediately become due and payable.

     

    With
      respect to all
      Letters of Credit with respect to which presentment for honor shall not have
      occurred at the time of an acceleration pursuant to the preceding paragraph,
      the
      Borrowers shall at such time deposit in a cash collateral account opened by
      the
      Administrative Agent an amount equal to the aggregate then unexpired amount
      that
      is available to be drawn under such Letters of Credit. The Borrowers hereby
      grant to the Administrative Agent, for the benefit of the Issuing Lender and
      the
      L/C Participants, a security interest in such cash collateral to secure all
      obligations of the Borrowers under this Agreement and the other Loan Documents.
      Amounts held in such cash collateral account shall be applied by the
      Administrative Agent to the payment of drafts drawn under such Letters of
      Credit, and the unused portion thereof after all such Letters of Credit shall
      have expired, been cancelled or been fully drawn upon, if any, shall be applied
      to repay other obligations of the Borrowers hereunder and under the Notes.
      After
      all such Letters of Credit shall have expired, been cancelled or been fully
      drawn upon, all Reimbursement Obligations shall have been satisfied and all
      other obligations of the Borrowers hereunder and under the other Loan Documents
      shall have been paid in full, the balance, if any, in such cash collateral
      account shall be returned to the Borrowers. The Borrowers shall execute and
      deliver to the Administrative Agent, for the account of the Issuing Lender
      and
      the L/C Participants, such further documents and instruments as the
      Administrative Agent may reasonably request to evidence the creation and
      perfection of the within security interest in such cash collateral account.
      Except as expressly provided above in this Section, presentment, demand, protest
      and all other notices of any kind are hereby expressly waived.

     

    SECTION
      10

     

    THE
      ADMINISTRATIVE AGENT

     

    10.1. Appointment.
      Each Lender
      hereby irrevocably designates and appoints Fortis as Administrative Agent of
      such Lender under this Agreement and the other Loan Documents, and each such
      Lender irrevocably authorizes the Administrative Agent, in such capacity, to
      take such action on its behalf under the provisions of this Agreement and the
      other Loan Documents and to exercise such powers and perform such duties as
      are
      expressly delegated to the Administrative Agent by the terms of this Agreement
      and the other Loan Documents, together with such other powers as are reasonably
      incidental thereto. Notwithstanding any provision to the contrary contained
      elsewhere in this Agreement, the Administrative Agent shall not have any duties
      or responsibilities, except those expressly set forth herein, or any fiduciary
      relationship with any Lender, and no implied covenants, functions,
      responsibilities, duties, obligations or liabilities shall be read into this
      Agreement or any other Loan Document or otherwise exist against the
      Administrative Agent.

     

    10.2. Delegation
      of
      Duties

     

    .
      The
      Administrative Agent may execute any of its duties under this Agreement and
      the
      other Loan Documents by or through agents or attorneys-in-fact and shall be
      entitled to advice of counsel concerning all matters pertaining to such duties.
      The Administrative Agent shall not be responsible for the negligence or
      misconduct of any agents or attorneys-in-fact selected by it with reasonable
      care.

     

    10.3. Exculpatory
      Provisions.
      None of the
      Technical Banks nor any of their respective officers, directors, employees,
      agents, attorneys-in-fact or Affiliates shall be (i) liable for any action
      lawfully taken or omitted to be taken by it or such Person under or in
      connection with this Agreement or any other Loan Document (except for its or
      such Person’s own gross negligence or willful misconduct) or (ii) responsible in
      any manner to any of the Lenders for any recitals, statements, representations
      or warranties made by any Loan Party or any officer thereof contained in this
      Agreement or any other Loan Document or in any certificate, report, statement
      or
      other document referred to or provided for in, or received by the Administrative
      Agent under or in connection with, this Agreement or any other Loan Document
      or
      for the value, validity, effectiveness, genuineness, enforceability or
      sufficiency of this Agreement or any other Loan Document or for any failure
      of
      any Loan Party to perform its obligations hereunder or thereunder. The
      Administrative Agent shall not be under any obligation to any Lender to
      ascertain or to inquire as to the observance or performance of any of the
      agreements contained in, or conditions of, this Agreement or any other Loan
      Document, or to inspect the properties, books or records of any Loan
      Party.

     

    10.4. Reliance
      by
      Administrative Agent

     

    .
      The
      Administrative Agent shall be entitled to rely, and shall be fully protected
      in
      relying, upon any Note, writing, resolution, notice, consent, certificate,
      affidavit, letter, telecopy, telex or teletype message, statement, order or
      other document or conversation believed by it to be genuine and correct and
      to
      have been signed, sent or made by the proper Person or Persons and upon advice
      and statements of legal counsel (including, without limitation, counsel to
      the
      Loan Parties), independent accountants and other experts selected by the
      Administrative Agent. The Administrative Agent may deem and treat the payee
      of
      any Note as the owner thereof for all purposes unless a written notice of
      assignment, negotiation or transfer thereof shall have been filed with the
      Administrative Agent. The Administrative Agent shall be fully justified in
      failing or refusing to take any action under this Agreement or any other Loan
      Document unless it shall first receive such advice or concurrence of the
      Required Lenders (or, where unanimous consent of the Lenders is expressly
      required hereunder, such Lenders) as it deems appropriate or it shall first
      be
      indemnified to its satisfaction by the Lenders against any and all liability
      and
      expense which may be incurred by it by reason of taking or continuing to take
      any such action. The Administrative Agent shall in all cases be fully protected
      in acting, or in refraining from acting, under this Agreement and the other
      Loan
      Documents in accordance with a request of the Required Lenders (or, where
      unanimous consent of the Lenders or the Required Lenders is expressly required
      hereunder, such Lenders or Required Lenders, as applicable), and such request
      and any action taken or failure to act pursuant thereto shall be binding upon
      all the Lenders and all future holders of the Loans.

     

    10.5. Notice
      of
      Default.
      The
      Administrative Agent shall not be deemed to have knowledge or notice of the
      occurrence of any Default or Event of Default hereunder unless the
      Administrative Agent has received notice from a Lender or the Borrower referring
      to this Agreement, describing such Default or Event of Default and stating
      that
      such notice is a “notice of default.” In the event that the Administrative Agent
      receives such a notice, the Administrative Agent shall give notice thereof
      to
      the Lenders. The Administrative Agent shall take such action with respect to
      such Default or Event of Default as shall be reasonably directed by the Required
      Lenders; provided that unless and until the Administrative Agent shall have
      received such directions, the Administrative Agent may (but shall not be
      obligated to) take such action, or refrain from taking such action, with respect
      to such Default or Event of Default as it shall deem advisable in the best
      interests of the Lenders.

     

    10.6. Non-Reliance
      on
      Administrative Agent and Other Lenders.
      Each Lender
      expressly acknowledges that neither the Administrative Agent nor any of its
      officers, directors, employees, agents, attorneys-in-fact or Affiliates has
      made
      any representations or warranties to it and that no act by the Administrative
      Agent hereafter taken, including any review of the affairs of any Loan Party,
      shall be deemed to constitute any representation or warranty by the
      Administrative Agent to any Lender. Each Lender represents to the Administrative
      Agent that it has, independently and without reliance upon the Administrative
      Agent or any other Lender, and based on such documents and information as it
      has
      deemed appropriate, made its own appraisal of and investigation into the
      business, operations, property, financial and other condition and
      creditworthiness of each Loan Party and made its own decision to make its
      Extensions of Credit hereunder and enter into this Agreement. Each Lender also
      represents that it will, independently and without reliance upon the
      Administrative Agent or any other Lender, and based on such documents and
      information as it shall deem appropriate at the time, continue to make its
      own
      credit analysis, appraisals and decisions in taking or not taking action under
      this Agreement and the other Loan Documents, and to make such investigation
      as
      it deems necessary to inform itself as to the business, operations, property,
      financial and other condition and creditworthiness of each Loan Party. Except
      for notices, reports and other documents expressly required to be furnished
      to
      the Lenders by the Administrative Agent hereunder, the Administrative Agent
      shall not have any duty or responsibility to provide any Lender with any credit
      or other information concerning the business, operations, property, condition
      (financial or otherwise), prospects or creditworthiness of any Loan Party which
      may come into the possession of the Administrative Agent or any of its officers,
      directors, employees, agents, attorneys-in-fact or Affiliates.

     

    10.7. Indemnification.
      The Lenders agree
      to indemnify the Administrative Agent in its capacity as such (to the extent
      not
      reimbursed by the Borrower and without limiting the obligation the Borrower
      to
      do so), ratably according to their respective Commitment Percentages in effect
      on the date on which indemnification is sought, from and against any and all
      liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
      costs, expenses or disbursements of any kind whatsoever which may at any time
      (including, without limitation, at any time following the payment of the
      obligations under this Agreement) be imposed on, incurred by or asserted against
      the Administrative Agent in any way relating to or arising out of, the
      Commitments, this Agreement, any of the other Loan Documents or any documents
      contemplated by or referred to herein or therein or the transactions
      contemplated hereby or thereby or any action taken or omitted by the
      Administrative Agent under or in connection with any of the foregoing; provided
      that no Lender shall be liable for the payment of any portion of such
      liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
      costs, expenses or disbursements resulting solely from the Administrative
      Agent’s gross negligence or willful misconduct. The agreements in this
      subsection shall survive the payment of all obligations under this Agreement
      and
      all other amounts payable hereunder.

     

    10.8. Administrative
      Agent in Its Individual Capacity.
      The
      Administrative Agent and its Affiliates may make loans to, accept deposits
      from
      and generally engage in any kind of business with any Loan Party as though
      the
      Administrative Agent were not the Administrative Agent hereunder and under
      the
      other Loan Documents. With respect to the Extensions of Credit made by it,
      the
      Administrative Agent shall have the same rights and powers under this Agreement
      and the other Loan Documents as any Lender and may exercise the same as though
      it were not the Administrative Agent, and the terms “Lender” and “Lenders” shall
      include the Administrative Agent in its individual capacity.

     

    10.9. Successor
      Administrative Agent.
      The
      Administrative Agent may resign as Administrative Agent upon 30 days’ notice to
      the Lenders. If the Administrative Agent shall resign as Administrative Agent
      under this Agreement and the other Loan Documents, then the Required Lenders
      shall appoint from among the Lenders a successor agent for the Lenders, which
      successor agent, with the consent of the Borrowers (such consent not to be
      unreasonably withheld or delayed), shall succeed to the rights, powers and
      duties of the Administrative Agent hereunder. Effective upon such appointment
      and approval, the term “Administrative Agent” shall mean such successor agent,
      and the former Administrative Agent’s rights, powers and duties as
      Administrative Agent shall be terminated, without any other or further act
      or
      deed on the part of such former Administrative Agent or any of the parties
      to
      this Agreement or any holders of the Loans. After any retiring Administrative
      Agent’s resignation as Administrative Agent, the provisions of this Section 10
      shall inure to its benefit as to any actions taken or omitted to be taken by
      it
      while it was Administrative Agent under this Agreement and the other Loan
      Documents. The Administrative Agent may be removed at any time with or without
      cause by the Required Lenders (which for this purpose, shall not include the
      Loans or Commitments of the Administrative Agent), provided that
      on the
      effectiveness of such removal the Obligations owing to such Administrative
      Agent
      as a Lender are repaid in full and as an Issuing Lender are cash collateralized
      or otherwise secured. If the Administrative Agent is removed, the procedures
      set
      forth in this Section 10.9 shall apply in appointing a successor Administrative
      Agent.

     

    10.10. Issuing
      Lender.
      The provisions of
      this Section 10 applicable to the Administrative Agent shall apply to the
      Issuing Lender in the performance of its duties under the Loan Documents,
mutatis mutandis.

     

    10.11. Others.
      None of the Joint
      Lead Arrangers, the Joint Bookrunners, the Syndication Agent, nor the
      Documentation Agents, in such respective capacities, shall have any duties
      or
      responsibilities, or incur any liabilities, under this Agreement or the other
      Loan Documents.

     

    10.12. Hedging
      Arrangements.
      To the extent any
      Affiliate of a Lender is a party to a Hedging Agreement with the Borrowers
      and
      thereby becomes a beneficiary of the Liens described in Section 4.16 hereof
      pursuant to the Security Documents, such Affiliate of a Lender shall be deemed
      to appoint the Administrative Agent its nominee and agent, to act for and on
      behalf of such Affiliate in connection with the Security Documents and to be
      bound by the terms of this Section 10.

     

    SECTION
      11

     

    MISCELLANEOUS

     

    11.1. Amendments
      and
      Waivers.
      Neither this
      Agreement nor any other Loan Document, nor any terms hereof or thereof may
      be
      amended, supplemented or modified except in accordance with the provisions
      of
      this subsection. The Required Lenders may, or, with the written consent of
      the
      Required Lenders, the Administrative Agent may, from time to time, (a) enter
      into with the applicable Loan Parties written amendments, supplements or
      modifications hereto and to the other Loan Documents for the purpose of adding
      any provisions to this Agreement or the other Loan Documents or changing in
      any
      manner the rights of the Lenders or of the applicable Loan Parties hereunder
      or
      thereunder or (b) waive, on such terms and conditions as the Required Lenders
      or
      the Administrative Agent, as the case may be, may specify in such instrument,
      any of the requirements of this Agreement or the other Loan Documents or any
      Default or Event of Default and its consequences; provided, however, that no
      such waiver and no such amendment, supplement or modification shall (i) reduce
      the principal amount, or extend the scheduled date of final maturity, of any
      Loan, or reduce the stated rate of any interest or fee payable hereunder or
      extend the scheduled date of any payment thereof or increase the principal
      amount or extend the expiration date of any Lender’s Commitments, or change the
      limits on Letter of Credit Outstandings as set forth in subsection 3.1(a)(i),
      in
      each case without the consent of each Lender affected thereby, (ii) amend,
      modify or waive the definition of Technical Lenders, any provision of Section
      4.9, Section 4.10, Section 4.16, or Section 7.11 without the written consent
      of
      each Lender, (iii) amend, modify or waive any provision of this subsection
      or
      reduce the percentage specified in the definition of Required Lenders (or modify
      any provision of this Agreement or any other Loan Document to provide that
      an
      action currently requiring the approval of or consent by the Required Lenders
      may be taken with the consent or approval by a lower percentage of Lenders),
      or
      consent to the assignment or transfer by any Loan Party of any of its rights
      and
      obligations under this Agreement and the other Loan Documents other than in
      accordance with the terms of the applicable Loan Documents, in each case without
      the written consent of all the Lenders, (iv) release, or subordinate the
      interest of the Administrative Agent in, any of the collateral for the
      Obligations hereunder (except as specifically provided herein) or release any
      of
      the Guarantors from their respective obligations under the Guarantee Agreement
      without the written consent of each Lender, (v) change subsection 4.8(a) or
      subsection 11.7(a) in a manner that would alter the pro rata sharing of payments
      required thereby, without the written consent of each Lender, (vi) amend, modify
      or waive any provision of Section 10 without the written consent of the then
      Administrative Agent and Issuing Lender, or (vii) amend, modify or waive any
      provision of this Agreement or any other Loan Document prior to the initial
      Borrowing Date without the written consent of each Lender. Any such waiver
      and
      any such amendment, supplement or modification shall apply equally to each
      of
      the Lenders and shall be binding upon the Loan Parties, the Lenders, the
      Administrative Agent and all future holders of the Loans. In the case of any
      waiver, the Loan Parties, the Lenders and the Administrative Agent shall be
      restored to their former positions and rights hereunder and under the other
      Loan
      Documents, and any Default or Event of Default waived shall be deemed to be
      cured and not continuing; no such waiver shall extend to any subsequent or
      other
      Default or Event of Default or impair any right consequent thereon.

     

    11.2. Notices.
      All notices,
      requests and demands to or upon the respective parties hereto to be effective
      shall be in writing (including by facsimile transmission) and, unless otherwise
      expressly provided herein, shall be deemed to have been duly given or made
      (a)
      in the case of delivery by hand or by courier service, when delivered, (b)
      in
      the case of delivery by mail, three Business Days after being deposited in
      the
      mails, postage prepaid, or (c) in the case of delivery by facsimile
      transmission, when sent and receipt has been confirmed, addressed as follows
      in
      the case of the Borrowers, the Administrative Agent, and the other Technical
      Banks or to such other address as may be hereafter notified by the respective
      parties hereto:

     

    The
      Borrower: El
      Paso Production
      Holding Company

    1001
      Louisiana
      Street

    Houston,
      TX
      77002

    Attention:
      John J.
      Hopper

    Fax:
      (713)
      420-2708

    Email:
      john.hopper@elpaso.com

    

    El
      Paso Production
      Company

    1001
      Louisiana
      Street

    Houston,
      TX
      77002

    Attention:
      John J.
      Hopper

    Fax:
      (713)
      420-2708

    Email:
      john.hopper@elpaso.com

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    El
      Paso Energy
      Raton 

    Corporation1001
      Louisiana
      Street

         
      Houston, TX
      77002

    Attention:
      John J.
      Hopper

    Fax:
      (713)
      420-2708

    Email:
      john.hopper@elpaso.com

    

    El
      Paso Production
      GOM Inc.

    1001
      Louisiana
      Street

    Houston,
      TX
      77002

    Attention:
      John J.
      Hopper

    Fax:
      (713)
      420-2708

    Email:
      john.hopper@elpaso.com

    

    With
      a copy
      to:

    

    Andrews
      Kurth
      LLP

    600
      Travis Street,
      Suite 4200

    Houston,
      Texas
      77002

    Attention:
      Randy
      Bryant

    Fax:
      (713)
      220-4285

    Email:
      randybryant@akllp.com

    

    The
      Administrative
      Agent: Fortis
      Capital
      Corp.

    Millennium
      I

    15455
      N. Dallas
      Parkway, Suite 1400

    Addison,
      Texas
      75001

    Attention:
      Deirdre
      Sanborn

    Fax:
      (214)
      754-5982

    Email:
      deirdre.sanborn@fortiscapitalusa.com

    

    With
      a copy
      to:

    

    Patton
      Boggs
      LLP

    2001
      Ross Avenue,
      Suite 3000

    Dallas,
      Texas
      75201

    Attention:
      Robert
      S. Rendell

    Fax:
      (214)
      758-1550

    Email:
      rrendell@pattonboggs.com

    

    The
      Other Technical
      Banks: The
      Royal Bank of
      Scotland plc

    101
      Park Avenue,
      12th
      Floor

    New
      York, New York
      10178

    Attention:
      Caroline
      Cancel

    Fax:
      (212)
      401-1407

    Email:
      caroline.cancel@rbos.com

    

    With
      a copy
      to:

    600
      Travis Street,
      Suite 6500

    Houston,
      Texas
      77002

    Attention:
      Scott
      Joyce

    Fax:
      (713)
      221-2430

    Email:
      scott.joyce@rbos.com

    

    The
      Bank of Nova
      Scotia

    1100
      Louisiana,
      Suite 3000

    Houston,
      TX
      77002

    Attention:
      Joseph
      P. Lattanzi

    Fax:
      (713)
      752-2425

    Email:
      joe_lattanzi@scotiacapital.com

    

    provided
      that any
      notice, request or demand to or upon the Administrative Agent or the Lenders
      pursuant to subsection 2.2, 4.3, 4.5 or 4.8 shall not be effective until
      received.

     

    11.3. No
      Waiver;
      Cumulative Remedies.
      No failure to
      exercise and no delay in exercising, on the part of the Administrative Agent,
      the Issuing Lender or any Lender, any right, remedy, power or privilege
      hereunder or under the other Loan Documents shall operate as a waiver thereof;
      nor shall any single or partial exercise of any right, remedy, power or
      privilege hereunder preclude any other or further exercise thereof or the
      exercise of any other right, remedy, power or privilege. The rights, remedies,
      powers and privileges herein provided are cumulative and not exclusive of any
      rights, remedies, powers and privileges provided by law.

     

    11.4. Survival
      of
      Representations and Warranties.
      All
      representations and warranties made hereunder, in the other Loan Documents
      and
      in any document, certificate or statement delivered pursuant hereto or in
      connection herewith shall survive the execution and delivery of this Agreement
      and the making of the Extensions of Credit hereunder.

     

    11.5. Payment
      of Expenses
      and Taxes.
      The Borrowers
      agree (a) to pay or reimburse the Administrative Agent and the other Technical
      Banks and their Affiliates for all their reasonable and documented out-of-pocket
      costs and expenses incurred in connection with the development, syndication,
      preparation and execution of, and any amendment, supplement or modification
      to,
      this Agreement and the other Loan Documents and any other documents prepared
      in
      connection herewith or therewith, and the consummation and administration of
      the
      transactions contemplated hereby and thereby, including, without limitation,
      the
      reasonable fees and disbursements of (i) counsel to the Administrative Agent
      and
      (ii) the Administrative Agent customarily charged by it in connection with
      syndicated credits, (b) to pay or reimburse each Lender and the Administrative
      Agent for all its reasonable and documented costs and expenses incurred in
      connection with the enforcement or preservation of any rights under this
      Agreement, the other Loan Documents and any such other documents, including,
      without limitation, the reasonable fees and disbursements of counsel to the
      Administrative Agent and to the several Lenders, (c) to pay, indemnify, and
      hold
      each Lender, the Administrative Agent, the Joint Lead Arrangers, the Joint
      Bookrunners and the Documentation Agents (and their respective Affiliates and
      their respective directors, officers, employees and agents) harmless from,
      any
      and all recording and filing fees and any and all liabilities with respect
      to,
      or resulting from any delay in paying, stamp, excise and other taxes, if any,
      which may be payable or determined to be payable in connection with the
      execution and delivery of, or consummation or administration of any of the
      transactions contemplated by, or any amendment, supplement or modification
      of,
      or any waiver or consent under or in respect of, this Agreement, the other
      Loan
      Documents and any such other documents, and (d) to pay, indemnify, and hold
      each
      Lender, the Administrative Agent, the Joint Lead Arrangers, the Joint
      Bookrunners and the Documentation Agents (and their respective directors,
      officers, employees, agents and affiliates) harmless from and against any and
      all other liabilities, obligations, losses, damages, penalties, actions,
      judgments, suits, costs, expenses or disbursements of any kind or nature
      whatsoever with respect to the execution, delivery, enforcement, performance
      and
      administration of this Agreement, the other Loan Documents or the use or the
      proposed use of proceeds contemplated by this Agreement, including, without
      limitation, any of the foregoing relating to the violation of, noncompliance
      with or liability under, any Environmental Law applicable to any Loan Party
      or
      any of the Properties (all the foregoing in this clause (d), collectively,
      the
“Indemnified
      Liabilities”),
      provided that
      the Borrowers shall have no obligation under this clause (d) to any
      Administrative Agent, the Joint Lead Arrangers, the Joint Bookrunners and the
      Documentation Agents or any Lender (or any of their respective directors,
      officers, employers, agents or affiliates), with respect to indemnified
      liabilities to the extent such liabilities are determined by a court of
      competent jurisdiction by final and nonappealable judgment to have resulted
      from
      the gross negligence or willful misconduct of such Person. Without limiting
      the
      foregoing, and to the extent permitted by applicable law, the Borrowers agree
      not to assert, and hereby waives, and agrees to cause each of its Subsidiaries
      not to assert and to so waive, all rights for contribution or any other rights
      of recovery with respect to all claims, demands, penalties, fines, liabilities,
      settlements, damages, costs and expenses of whatever kind or nature, under
      or
      related to Environmental Laws, that any of them might have by statute or
      otherwise against any Person entitled to indemnification under this subsection
      11.5. The agreements in this subsection shall survive repayment of the Loans
      and
      all other amounts payable hereunder and the termination of this
      Agreement.

     

    11.6. Successors
      and
      Assigns; Participations and Assignments.
      (a) This
      Agreement shall be binding upon and inure to the benefit of the Borrowers,
      the
      Lenders, the Administrative Agent, all future holders of the Loans and any
      Notes
      hereunder and their respective successors and assigns, except that the Borrowers
      may not assign or transfer any of its rights or obligations under this Agreement
      without the prior written consent of each Lender.

     

    (a) Any
      Lender may, in
      the ordinary course of its commercial banking or lending business and in
      accordance with applicable law and at no cost or expense to the Borrowers,
      at
      any time sell to one or more banks or other entities (“Participants”)
      participating
      interests in any Loan owing to such Lender, any Commitment of such Lender or
      any
      other interest of such Lender hereunder and under the other Loan Documents.
      In
      the event of any such sale by a Lender of a participating interest to a
      Participant, (i) such Lender’s obligations under this Agreement to the other
      parties to this Agreement shall remain unchanged, (ii) such Lender shall remain
      solely responsible for the performance thereof, (iii) such Lender shall remain
      the holder of any such Loan (and any Note evidencing such Loan) for all purposes
      under this Agreement and the other Loan Documents, (iv) the Borrowers and the
      Administrative Agent shall continue to deal solely and directly with such Lender
      in connection with such Lender’s rights and obligations under this Agreement and
      the other Loan Documents, and (v) in any proceeding under the Bankruptcy Code
      the Lender shall be, to the extent permitted by law, the sole representative
      with respect to the obligations held in the name of such Lender, whether for
      its
      own account or for the account of any Participant. No Lender shall be entitled
      to create in favor of any Participant, in the participation agreement pursuant
      to which such Participant’s participating interest shall be created or
      otherwise, any right to vote on, consent to or approve any matter relating
      to
      this Agreement or any other Loan Document except for those specified in clauses
      (i) and (ii) of the proviso to subsection 11.1. The Borrowers agree that each
      Participant shall be entitled to the benefits of subsections 4.13 and 4.14
      with
      respect to its participation in the Commitments and the Loans and Letters of
      Credit outstanding from time to time as if it was a Lender; provided that,
      in
      the case of subsection 4.13, such Participant shall have complied with the
      requirements of said subsection and provided, further, that no Participant
      shall
      be entitled to receive any greater amount pursuant to any such subsection than
      the transferor Lender would have been entitled to receive in respect of the
      amount of the participation transferred by such transferor Lender to such
      Participant had no such transfer occurred.

     

    (b) Any
      Lender may, in
      the ordinary course of its commercial banking or lending business and in
      accordance with applicable law, at any time and from time to time assign to
      any
      Lender or any Affiliate thereof or, with the prior written consent of the
      Administrative Agent and the Borrowers (which in each case shall not be
      unreasonably withheld), to an additional bank or financial institution or other
      entity (an “Assignee”)
      all or any part
      of its rights and obligations under this Agreement and the other Loan Documents
      including, without limitation, its Commitments, L/C Commitments, Loans and
      L/C
      Participating Interests, pursuant to an Assignment and Acceptance, substantially
      in the form of Exhibit G, executed by such Assignee, such assigning Lender
      (and,
      in the case of an Assignee that is not then a Lender, by the Borrowers, the
      Administrative Agent and each Issuing Lender) and delivered to the
      Administrative Agent for its acceptance and recording in the Register, provided
      that (i) (unless the Borrower and the Administrative Agent otherwise consent
      in
      writing) no such transfer to an Assignee (other, than a Lender or any Affiliate
      thereof) shall be in an aggregate principal amount less than $1,000,000 in
      the
      aggregate (or, if less, the full amount of such assigning Lender’s Loans, L/C
      Participating Interests and Commitments), and (ii) if any Lender assigns all
      or
      any part of its rights and obligations under this Agreement to one of its
      Affiliates in connection with or in contemplation of the sale or other
      disposition of its interest in such Affiliate, the Borrowers’ prior written
      consent shall be required for such assignment (which shall not be unreasonably
      withheld). Upon such execution, delivery, acceptance and recording, from and
      after the effective date determined pursuant to such Assignment and Acceptance,
      (x) the Assignee thereunder shall be a party hereto and, to the extent provided
      in such Assignment and Acceptance, have the rights and obligations of a Lender
      hereunder with a Commitment and L/C Commitment as set forth therein, and (y)
      the
      assigning Lender thereunder shall, to the extent provided in such Assignment
      and
      Acceptance, be released from its obligations under this Agreement (and, in
      the
      case of an Assignment and Acceptance covering all or the remaining portion
      of an
      assigning Lender’s rights and obligations under this Agreement, such assigning
      Lender shall cease to be a party hereto). Notwithstanding any provision of
      this
      paragraph (c) and paragraph (e) of this subsection, the consent of the Borrowers
      shall not be required, and, unless requested by the Assignee and/or the
      assigning Lender, new Notes shall not be required to be executed and delivered
      by the Borrowers, for any assignment which occurs at any time when any of the
      events described in Section 9 shall have occurred and be
      continuing.

     

    (c) The
      Administrative
      Agent, on behalf of the Borrowers, shall maintain at the address of the
      Administrative Agent referred to in subsection 11.2 a copy of each Assignment
      and Acceptance delivered to it and a register (the “Register”)
      for the
      recordation of the names and addresses of the Lenders and the Commitments of,
      and principal amounts of the Loans owing to, each Lender from time to time.
      The
      entries in the Register shall be conclusive, in the absence of manifest error,
      and the Borrowers, the Administrative Agent and the Lenders may (and, in the
      case of any Loan or other obligation hereunder not evidenced by a Note, shall)
      treat each Person whose name is recorded in the Register as the owner of a
      Loan
      or other obligation hereunder as the owner thereof for all purposes of this
      Agreement and the other Loan Documents, notwithstanding any notice to the
      contrary. Any assignment of any Loan or other obligation hereunder not evidenced
      by a Note shall be effective only upon appropriate entries with respect thereto
      being made in the Register. The Register shall be available for inspection
      by
      the Borrowers or any Lender at any reasonable time and from time to time upon
      reasonable prior notice.

     

    (d) Notwithstanding
      anything in this Agreement to the contrary, no assignment under subsection
      11.6(c) of any rights or obligations under or in respect of the Loans, the
      Notes
      or the Letters of Credit shall be effective unless and until the Administrative
      Agent shall have recorded the assignment pursuant to subsection 11.6(d). Upon
      its receipt of an Assignment and Acceptance executed by an assigning Lender
      and
      an Assignee (and, in the case of an Assignee that is not then a Lender or an
      affiliate thereof, by the Borrowers and the Administrative Agent) together
      with
      payment to the Administrative Agent of a registration and processing fee of
      $3,500 (other than in the case of an assignment by a Lender to an affiliate
      of
      such Lender), the Administrative Agent shall (i) promptly accept such Assignment
      and Acceptance and (ii) on the effective date determined pursuant thereto record
      the information contained therein in the Register and give notice of such
      acceptance and recordation to the Lenders and the Borrowers. On or prior to
      such
      effective date, the assigning Lender shall surrender any outstanding Notes
      held
      by it all or a portion of which are being assigned, and the Borrowers, at their
      own expense, shall, upon the request to the Administrative Agent by the
      assigning Lender or the Assignee, as applicable, execute and deliver to the
      Administrative Agent (in exchange for the outstanding Notes of the assigning
      Lender) a new Note to the order of such Assignee in an amount equal to the
      lesser of (A) the amount of such Assignee’s Commitment and (B) the aggregate
      principal amount of all Loans made by such Assignee, after giving effect to
      such
      Assignment and Acceptance and, if the assigning Lender has retained a Commitment
      hereunder, a new Note to the order of the assigning Lender in an amount equal
      to
      the lesser of (A) the amount of such Lender’s Commitment and (B) the aggregate
      principal amount of all Loans made by such Lender, after giving effect to such
      Assignment and Acceptance. Any such new Notes shall be dated the Closing Date
      and shall otherwise be in the form of the Note replaced thereby. Any Notes
      surrendered by the assigning Lender shall be returned by the Administrative
      Agent to the Borrowers marked “canceled.”

     

    (e) The
      Borrowers
      authorize each Lender to disclose to any Participant or Assignee (each, a
“Transferee”)
      and any
      prospective Transferee, any and all financial information in such Lender’s
      possession concerning the Loan Parties and their Affiliates which has been
      delivered to such Lender by or on behalf of the Borrowers pursuant to this
      Agreement or which has been delivered to such Lender by or on behalf of the
      Borrowers in connection with such Lender’s credit evaluation of the Loan Parties
      and their Affiliates prior to becoming a party to this Agreement.

     

    (f) For
      avoidance of
      doubt, the parties to this Agreement acknowledge that the provisions of this
      subsection concerning assignments of Loans and Notes relate only to absolute
      assignments and that such provisions do not prohibit assignments creating
      security interests, including, without limitation, any pledge or assignment
      by a
      Lender of any Loan or Note to any Federal Reserve Bank in accordance with
      applicable law.

     

    11.7. Adjustments;
      Set-off.
      (a) If any Lender
      (a “Benefitted
      Lender”)
      shall at any
      time receive any payment of all or part of its Loans or Reimbursement
      Obligations, or interest thereon, or receive any collateral in respect thereof
      (whether voluntarily or involuntarily, by set-off, pursuant to events or
      proceedings of the nature referred to in subsection 9(f), or otherwise), in
      a
      greater proportion than any such payment to or collateral received by any other
      Lender, if any, in respect of such other Lender’s Loans or Reimbursement
      Obligations, or interest thereon, such Benefitted Lender shall purchase for
      cash
      from the other Lenders a participating interest in such portion of each such
      other Lender’s Loans or Reimbursement Obligations, or shall provide such other
      Lenders with the benefits of any such collateral, or the proceeds thereof,
      as
      shall be necessary to cause such Benefitted Lender to share the excess payment
      or benefits of such collateral or proceeds ratably with each of the Lenders;
      provided, however, that if all or any portion of such excess payment or benefits
      is thereafter recovered from such Benefitted Lender, such purchase shall be
      rescinded, and the purchase price and benefits returned, to the extent of such
      recovery, but without interest.

     

    (a) In
      addition to any
      rights and remedies of the Lenders provided by law, each Lender shall have
      the
      right, without prior notice to the Borrowers, any such notice being expressly
      waived by the Borrowers to the extent permitted by applicable law, upon any
      amount becoming due and payable by the Borrowers hereunder (whether at the
      stated maturity, by acceleration or otherwise) to set-off and appropriate and
      apply against such amount any and all deposits (general or special, time or
      demand, provisional or final), in any currency, and any other credits,
      indebtedness or claims, in any currency, in each case whether direct or
      indirect, absolute or contingent, matured or unmatured, at any time held or
      owing by such Lender or any branch or agency thereof to or for the credit or
      the
      account of the Borrowers, as the case may be. Each Lender agrees promptly to
      notify the Borrowers and the Administrative Agent after any such set-off and
      application made by such Lender, provided that, to the extent permitted by
      applicable law, the failure to give such notice shall not affect the validity
      of
      such set-off and application.

     

    11.8. Counterparts.
      This Agreement
      may be executed by one or more of the parties to this Agreement on any number
      of
      separate counterparts (including by facsimile transmission), and all of said
      counterparts taken together shall be deemed to constitute one and the same
      instrument. A set of the copies of this Agreement signed by all the parties
      shall be lodged with the Borrowers and the Administrative Agent.

     

    11.9. Severability.
      Any provision of
      this Agreement which is prohibited or unenforceable in any jurisdiction shall,
      as to such jurisdiction, be ineffective to the extent of such prohibition or
      unenforceability without invalidating the remaining provisions hereof, and
      any
      such prohibition or unenforceability in any jurisdiction shall not invalidate
      or
      render unenforceable such provision in any other jurisdiction.

     

    11.10. Integration.
      This Agreement
      and the other Loan Documents represent the agreement of the Borrowers, the
      other
      Loan Parties, the Administrative Agent and the Lenders with respect to the
      subject matter hereof, and there are no promises, undertakings, representations
      or warranties by the Administrative Agent or any Lender relative to subject
      matter hereof not expressly set forth or referred to herein or in the other
      Loan
      Documents.

     

    11.11. GOVERNING
      LAW.
      THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
      BE
      GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
      STATE OF NEW YORK. 

     

    11.12. Submission
      To
      Jurisdiction; Waivers.
      Each Borrower
      hereby irrevocably and unconditionally:

     

    (a) submits
      for itself
      and its property in any legal action or proceeding relating to this Agreement
      and the other Loan Documents to which it is a party, or for recognition and
      enforcement of any judgment in respect thereof, to the non-exclusive general
      jurisdiction of the Supreme Court of the State of New York sitting in New York
      County and of the United States District Court of the Southern District of
      New
      York, and appellate courts from any thereof;

     

    (b) consents
      that any
      such action or proceeding may be brought in such courts and waives any objection
      that it may now or hereafter have to the venue of any such action or proceeding
      in any such court or that such action or proceeding was brought in an
      inconvenient court and agrees not to plead or claim the same;

     

    (c) agrees
      that service
      of process in any such action or proceeding may be effected by mailing a copy
      thereof by registered or certified mail (or any substantially similar form
      of
      mail), postage prepaid, to the Borrowers at their address set forth in
      subsection 11.2 or at such other address of which the Administrative Agent
      shall
      have been notified pursuant thereto;

     

    (d) agrees
      that nothing
      herein shall affect the right to effect service of process in any other manner
      permitted by law or shall limit the right to sue in any other jurisdiction;
      and

     

    (e) waives,
      to the
      maximum extent not prohibited by law, any right it may have to claim or recover
      in any legal action or proceeding referred to in this subsection any special,
      exemplary, punitive or consequential damages.

     

    11.13. Acknowledgments.
      The Borrowers
      hereby acknowledge that:

     

    (a) they
      have been
      advised by counsel in the negotiation, execution and delivery of this Agreement
      and the other Loan Documents;

     

    (b) neither
      the
      Administrative Agent nor any Lender has any fiduciary relationship with or
      duty
      to the Borrowers arising out of or in connection with this Agreement or any
      of
      the other Loan Documents, and the relationship between Administrative Agent
      and
      Lenders, on one hand, and the Borrower, on the other hand, in connection
      herewith or therewith is solely that of debtor and creditor; and

     

    (c) no
      joint venture is
      created hereby or by the other Loan Documents or otherwise exists by virtue
      of
      the transactions contemplated hereby among the Lenders or among the Borrower
      and
      the Lenders.

     

    11.14. WAIVERS
      OF JURY
      TRIAL.
      THE BORROWERS, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY KNOWINGLY AND
      INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
      ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
      AND
      FOR ANY COUNTERCLAIM THEREIN.

     

    11.15. Release
      of
      Borrowing Base Properties.
      The
      Administrative Agent is hereby authorized by the Lenders to execute, at the
      cost
      and expense of the Borrowers and pursuant to documentation reasonably acceptable
      to the Administrative Agent, partial releases of the Borrowing Base Properties
      to the extent such Borrowing Base Properties are substituted in accordance
      with
      Section 4.16(f) or sold in accordance with the terms of the Mortgage and
      subsection 8.6.

     

    11.16. Limitation
      on
      Interest.
      The Borrowers,
      the Loan Parties, the Administrative Agent and the Lenders intend to contract
      in
      strict compliance with applicable usury law from time to time in effect. In
      furtherance thereof such persons stipulate and agree that none of the terms
      and
      provisions contained in the Loan Documents shall ever be construed to provide
      for interest in excess of the maximum amount of interest permitted to be charged
      by applicable law from time to time in effect. Neither any Loan Party nor any
      present or future guarantors, endorsers, or other Persons hereafter becoming
      liable for payment of any Obligation shall ever be liable for unearned interest
      thereon or shall ever be required to pay interest thereon in excess of the
      maximum amount that may be lawfully charged under applicable law from time
      to
      time in effect, and the provisions of this section shall control over all other
      provisions of the Loan Documents which may be in conflict or apparent conflict
      herewith. The Administrative Agent and the Lenders expressly disavow any
      intention to charge or collect excessive unearned interest or finance charges
      in
      the event the maturity of any Obligation is accelerated. If (a) the maturity
      of
      any Obligation is accelerated for any reason, (b) any Obligation is prepaid
      and
      as a result any amounts held to constitute interest are determined to be in
      excess of the legal maximum, or (c) any Lender or may other holder of any or
      all
      of the Obligations shall otherwise collect moneys which are determined to
      constitute interest which would otherwise increase the interest on any or all
      of
      the Obligations to an amount in excess of that permitted to be charged by
      applicable law then in effect, then all sums determined to constitute interest
      in excess of such legal limit shall, without penalty, be promptly applied to
      reduce the then outstanding principal of the related Obligations or, at such
      Lender’s or holder’s option, promptly returned to Borrower or the other payor
      thereof upon such determination. In determining whether or not the interest
      paid
      or payable, under any specific circumstance, exceeds the maximum amount
      permitted under applicable law, Lenders, the Administrative Agent and the Loan
      Parties (and any other payers thereof) shall to the greatest extent permitted
      under applicable law, (i) characterize any non-principal payment as an expense,
      fee or premium rather than as interest, (ii) exclude voluntary prepayments
      and
      the effects thereof, and (iii) amortize, prorate, allocate, and spread the
      total
      amount of interest throughout the entire contemplated term of the instruments
      evidencing the Obligations in accordance with the amounts outstanding from
      time
      to time thereunder and the maximum legal rate of interest from time to time
      in
      effect under applicable law in order to lawfully charge the maximum amount
      of
      interest permitted under applicable law. To the extent that the interest rate
      laws of the State of Texas are applicable to this Agreement, any Note or any
      other Loan Document, the applicable interest rate ceiling is the indicated
      (weekly) ceiling determined in accordance with Chapter 303 of the Texas Finance
      Code, as amended, and, to the extent that any Obligation under this Agreement,
      any Note or any other Loan Document is deemed an open end account as such term
      is defined in Chapter 302 of the Texas Finance Code, as amended, Administrative
      Agent retains the right to modify the interest rate in accordance with
      applicable law.

     

    11.17. Joint
      and Several
      Obligations of Borrowers.

     

    (a) The
      Borrowers state
      and acknowledge that: (a) pursuant to this Agreement, the Borrowers desire
      to
      utilize their borrowing potential on a consolidated basis to the same extent
      possible if they were merged into a single entity and that this Agreement
      reflects the establishment of credit facilities which would not otherwise be
      available to such entity if each Borrower were not jointly and severally liable
      for payment of the Indebtedness; (b) each Borrower has determined that it will
      benefit specifically and materially from the advances of credit contemplated
      by
      this Agreement; (c) it is both a condition precedent to the obligations of
      the
      Lenders hereunder and a desire of the Borrowers that each Borrower execute
      and
      deliver this Agreement; and (d) each Borrower has requested and bargained for
      the structure and terms of and security for the advances contemplated by this
      Agreement.

     

    (b) Each
      Borrower
      hereby irrevocably and unconditionally: (a) agrees that it is jointly and
      severally liable to Lenders for the full and prompt payment of the Indebtedness
      and the performance by each Borrower of its obligations hereunder in accordance
      with the terms hereof; (b) agrees to fully and promptly perform all of its
      Obligations hereunder with respect to each advance of credit hereunder as if
      such advance had been made directly to it; and (c) agrees as a primary
      obligation to indemnify Lenders on demand for and against any loss incurred
      by a
      Lender as result of any of the obligations of any one or more of the Borrowers
      being or becoming void, voidable, unenforceable or ineffective for any reason
      whatsoever, whether or not known to a Lender or any Person, the amount of such
      loss being the amount which each Lender would otherwise have been entitled
      to
      recover from any one or more of the Borrowers whose obligation becomes void,
      voidable, unenforceable or ineffective.

     

    It
      is the intent of
      each Borrower that the Indebtedness, obligations and liability hereunder of
      no
      one of them be subject to challenge on any basis, including, without limitation,
      pursuant to any applicable fraudulent conveyance or fraudulent transfer laws.
      Accordingly, as of the date hereof, the liability of each Borrower under this
      Section 11.17, together with all of its other liabilities to all Persons as
      of
      the date hereof and as of any other date on which a transfer or conveyance
      is
      deemed to occur by virtue of this Agreement, calculated in amount sufficient
      to
      pay its probable net liabilities on its existing Indebtedness as the same become
      absolute and matured (“Dated
      Liabilities”)
      is, and is to
      be, less than the amount of the aggregate of a fair valuation of its property
      as
      of such corresponding date (“Dated
      Assets”).
      To this end,
      each Borrower under this Section 11.17, (a) grants to and recognizes in each
      other Borrower, ratably, rights of subrogation and contribution in the amount,
      if any, by which the Dated Assets of such Borrower, but for the aggregate of
      subrogation and contribution in its favor recognized herein, would exceed the
      Dated Liabilities of such Borrower or, as the case may be, and (b) acknowledges
      receipt of and recognizes its right to subrogation and contribution ratably
      from
      each of the other Borrowers in the amount, if any, by which the Dated
      Liabilities of such Borrower, but for the aggregate of subrogation and
      contribution in its favor recognized herein, would exceed the Dated Assets
      of
      such Borrower under this Section 11.17. In recognizing the value of the Dated
      Assets and the Dated Liabilities, it is understood that Borrowers will
      recognize, to at least the same extent of their aggregate recognition of
      liabilities hereunder, their rights to subrogation and contribution hereunder.
      It is a material objective of this Section 11.17 that each Borrower recognizes
      rights to subrogation and contribution rather than be deemed to be insolvent
      (or
      in contemplation thereof) by reason of an arbitrary interpretation of its joint
      and several obligations hereunder. In addition to and not in limitation of
      the
      foregoing provisions of this Section 11.17, the Borrowers and Lenders hereby
      agree and acknowledge that it is the intent of each Borrower and of each Lender
      that the obligations of each Borrower hereunder be in all respects in compliance
      with, and not be voidable pursuant to, applicable fraudulent conveyance and
      fraudulent transfer laws.

     

    11.18. Amendment
      and
      Restatement.
      The Borrowers,
      the Administrative Agent and the Lenders agree that this Agreement is an
      amendment and restatement of the Existing Credit Agreement in its entirety,
      and
      the terms and provisions hereof supersede the terms and provisions thereof.
      The
      parties further agree that this Agreement is not a new or substitute credit
      agreement or a novation of the Existing Credit Agreement, and that (a) the
      Indebtedness of the Borrowers under the Existing Credit Agreement shall be
      deemed to be Indebtedness of the Borrowers outstanding under and governed by
      this Agreement, and (b) all Liens securing the Obligations of the Borrowers
      under the Existing Credit Agreement and Loan Documents shall continue in full
      force and effect to secure the Obligations under this Agreement and the Loan
      Documents.

     

    11.19. USA
      Patriot Act
      Notice.
      Each Lender and
      the Administrative Agent (for itself and not on behalf of any Lender) hereby
      notifies the Borrowers that pursuant to the requirements of the USA Patriot
      Act
      (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the
“Act”),
      it is required
      to obtain, verify and record information that identifies the Borrowers, which
      information includes the name and address of the Borrowers and other information
      that will allow such Lender or the Administrative Agent, as applicable, to
      identify the Lender in accordance with the Act.

     

    [Remainder
      of Page
      Intentionally Left Blank]

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    EL
      PASO PRODUCTION HOLDING COMPANY

    

    

    By: /s/
      GENE T.
      WAGUESPACK

    Name: Gene
      T.
      Waguespack

    Title:
 Senior
      Vice
      President, Treasurer

    and
      Controller

    

    

    EL
      PASO PRODUCTION COMPANY

    

    

    By: /s/
      GENE T.
      WAGUESPACK

    Name: Gene
      T.
      Waguespack

    Title:
 Senior
      Vice
      President, Treasurer

    and
      Controller

    

    

    EL
      PASO ENERGY RATON CORPORATION

    

    

    By: /s/
      GENE T.
      WAGUESPACK

    Name: Gene
      T.
      Waguespack

    Title:
 Senior
      Vice
      President, Treasurer

    and
      Controller

    

    EL
      PASO PRODUCTION GOM INC.

    

    

    By: /s/
      GENE T.
      WAGUESPACK

    Name: Gene
      T.
      Waguespack

    Title:
 Senior
      Vice
      President, Treasurer

    and
      Controller

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    FORTIS
      CAPITAL
      CORP.,

    as
      Administrative Agent, Joint Lead Arranger, Joint Bookrunner, Issuing Lender
      and
      as a Lender

    

    

    By: /s/
      TROND
      ROKHOLT

    Name: Trond
      Rokholt

    Title: Managing
      Director

    

    

    By: /s/
      DOUGLAS
      RIAHI

    Name: Douglas
      Riahi

    Title: Managing
      Director

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    THE
      ROYAL BANK OF
      SCOTLAND plc,

    as
      Joint Lead Arranger, Joint Bookrunner, Syndication Agent and as a
      Lender

    

    

    By: /s/
      PATRICIA J.
      DUNDEE

    Name: Patricia
      J.
      Dundee

    Title: Managing
      Director

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    THE
      BANK OF NOVA
      SCOTIA,

    as
      Joint Lead Arranger, Co-Documentation Agent and as a Lender

    

    

    By: /s/
      N.
      BELL

    Name: N.
      Bell

    Title: Senior
      Manager

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SOCIETE
      GENERALE,

    as
      Co-Documentation Agent and as a Lender

    

    

    By: /s/
      STEPHEN W.
      WARFEL

    Name: Stephen
      W.
      Warfel

    Title: Vice
      President

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    WESTLB
      AG, NEW YORK
      BRANCH,

    as
      Co-Documentation Agent and as a Lender

    

    

    By: /s/
      EVA
      STEINHAUS

    Name: Eva
      Steinhaus

    Title: Manager

    

    

    By: /s/
      VINOD
      JENVEJA

    Name: Vinod
      Jenveja

    Title: Director

    

    

    ABN
      AMRO BANK
      N.V.,

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    as
      a Lender

    

    

    By: /s/
      JOSHUA
      WOLF

    Name: Joshua
      Wolf

    Title: Vice
      President

    

    

    By: /s/
      TODD D.
      VAUBEL

    Name: Todd
      Vaubel

    Title: Assistant
      Vice
      President

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ALLIED
      IRISH BANKS,
      plc,

    as
      a Lender

    

    

    By: /s/
      MARK K.
      CONNELLY

    Name: Mark
      K.
      Connelly

    Title: Vice
      President

    

    By: /s/
      VAUGHN
      BUCK

    Name: Vaughn
      Buck

    Title: Senior
      Vice
      President

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    BANK
      OF
      SCOTLAND

    as
      a Lender

    

    

    By: /s/
      KAREN
      WEICH

    Name: Karen
      Weich

    Title: Assistant
      Vice
      President

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    BAYERISCHE
      LANDESBANK,

    as
      a Lender

    

    

    By: /s/
      JAMES
      KING

    Name: James
      King

    Title: First
      Vice
      President

    

    

    By: /s/
      NORMAN
      MCCLAVE

    Name: Norman
      McClave

    Title: First
      Vice
      President

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    GENERAL
      ELECTRIC
      CAPITAL CORPORATION,

    as
      a Lender

    

    

    By: /s/
      SIMON
      DUNCAN

    Name: Simon
      Duncan

    Title: Authorized
      Signatory

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    HSH
      NORDBANK AG,
      NEW YORK BRANCH,

    as
      a Lender

    

    

    By: /s/
      THOMAS K.
      EMMONS

    Name: Thomas
      K.
      Emmons

    Title: Senior
      Vice
      President

    

    

    By: /s/
      ROHAN
      SINGH

    Name: Rohan
      Singh

    Title: Assistant
      Vice
      President

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    BAYERISCHE
      HYPO-UND
      VEREINSBANK AG - NEW YORK BRANCH,

    as
      a Lender

    

    

    By: /s/
      ROGER G.
      EUSTANCE

    Name: Roger
      G.
      Eustance

    Title: Director
      Project
      Finance

    

    

    By: /s/
      MICHAEL E.
      TERRY

    Name: Michael
      E.
      Terry

    Title: Director
      Global
      Project Finance

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    MORGAN
      STANLEY
      SENIOR FUNDING, INC.,

    as
      a Lender

    

    

    By: /s/
      EUGENE F.
      MARTIN

    Name: Eugene
      F.
      Martin

    Title: Vice
      President

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    NATEXIS
      BANQUES
      POPULAIRES,

    as
      a Lender

    

    

    By: /s/
      DONOVAN C.
      BROUSSARD

    Name: Donovan
      C.
      Broussard

    Title: Vice
      President and
      Manager

    

    

    By: /s/
      TIMOTHY L.
      POLVADO

    Name: Timothy
      L.
      Polvado

    Title: Vice
      President and
      Group Manager

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    RZB
      FINANCE
      LLC,

    as
      a Lender

    

    

    By: /s/
      JOHN A.
      VALISKA

    Name: John
      A.
      Valiska

    Title: First
      Vice
      President

    

    

    By: /s/
      ASTRID
      WILKE

    Name: Astrid
      Wilke

    Title: Vice
      President

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    U.S.
      BANK NATIONAL
      ASSOCIATION,

    as
      a Lender

    

    

    By: /s/
      MARK E.
      THOMPSON

    Name: Mark
      E.
      Thompson

    Title: Vice
      President

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    AMEGY
      BANK NATIONAL
      ASSOCIATION,

    as
      a Lender

    

    

    By: /s/
      W. BRYAN
      CHAPMAN

    Name: W.
      Bryan
      Chapman

    Title: Senior
      Vice
      President

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    BANK
      OF AMERICA,
      N.A.,

    as
      a Lender

    

    

    By: /s/
      WILLIAM E.
      LIVINGSTONE, IV

    Name: William
      E.
      Livingstone, IV

    Title: Senior
      Vice
      President

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    COMERICA
      BANK,

    as
      a Lender

    

    

    By: /s/
      JULI
      BIESER

    Name: Juli
      Bieser

    Title: Vice
      President

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    COMPASS
      BANK,

    as
      a Lender

    

    

    By: /s/
      MURRAY
      BRASSEUX

    Name: Murray
      Brasseux

    Title: Executive
      Vice
      President

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    DEUTSCHE
      BANK TRUST
      COMPANY AMERICAS,

    as
      a Lender

    

    

    By: /s/
      LANA
      GIFAS

    Name: Lana
      Gifas

    Title: Vice
      President

    

    

    By: /s/
      PAUL
      O’LEARY

    Name: Paul
      Oleary

    Title: Vice
      President

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    MERRILL
      LYNCH
      CAPITAL CORPORATION,

    as
      a Lender

    

    

    By: /s/
      CAROL J.E.
      FEELEY

    Name: Carol
      J.E.
      Feeley

    Title: Vice
      President

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    STERLING
      BANK,

    as
      a Lender

    

    

    By: /s/
      DAVID W.
      PHILLIPS

    Name: David
      W.
      Phillips

    Title: Senior
      Vice
      President

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    UNION
      BANK OF
      CALIFORNIA, N.A.,

    as
      a Lender

    

    

    By: /s/
      DUSTIN
      GASPARI

    Name: Dustin
      Gaspari

    Title: Vice
      President

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    GOLDMAN
      SACHS
      CREDIT PARTNERS L.P.,

    as
      a Lender

    

    

    By: /s/
      WILLIAM W.
      ARCHER

    Name: William
      W.
      Archer

    Title: Managing
      Director

    

    

    

    

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      A

     

    NOTE

     

    $_______________October
      ___,
      2005

     

    FOR
      VALUE RECEIVED,
      the undersigned, EL PASO PRODUCTION HOLDING COMPANY, a Delaware corporation,
      EL
      PASO PRODUCTION COMPANY, a Delaware corporation, EL PASO ENERGY RATON
      CORPORATION, a Delaware corporation, and EL PASO PRODUCTION GOM INC., a Delaware
      corporation (the “Borrowers”),
      hereby
      unconditionally promise to pay, on a joint and several basis, to the order
      of
      _______________________ (the “Lender”)
      at the offices
      of Fortis Capital Corp., located at Millennium I, 15455 North Dallas Parkway,
      Suite 1400, Addison, Texas 75001, in lawful money of the United States of
      America and in immediately available funds, on the Termination Date, the
      principal amount of (a) ___________________________________ ($__________),
      or,
      if less, (b) the aggregate unpaid principal amount of all Loans made by the
      Lender to the Borrowers pursuant to subsection 2.1 of the Credit Agreement,
      as
      hereinafter defined. The Borrowers further agree 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 subsections 4.1 through
      4.3 of such Credit Agreement.

     

    The
      holder of this
      Note is authorized to endorse on the schedules annexed 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 Loan made pursuant to the Credit
      Agreement and the date and amount of each payment or prepayment of principal
      and, in the case of Eurodollar Loans, 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
      Loan.

     

    This
      Note (a) is
      one of the Notes referred to in the Amended and Restated Credit Agreement,
      dated
      as of October 19, 2005 (as amended, supplemented or otherwise modified from
      time
      to time, the “Credit
      Agreement”),
      among the
      Borrowers, Fortis Capital Corp. as Administrative Agent, the Lender and the
      other banks and financial institutions from time to time parties thereto, (b)
      is
      subject to the 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. This Note is secured and guaranteed as provided in the Loan
      Documents. Reference is hereby made to the Loan Documents for a description
      of
      the security and the guarantees, the terms of and conditions upon which the
      security interests and each guarantee were granted and the rights of the holder
      of this Note in respect thereof.

     

    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.

     

    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.

     

    EL
      PASO PRODUCTION HOLDING COMPANY

    

    

    By: 

    Name: 

    Title:
 

    

    

    EL
      PASO PRODUCTION COMPANY

    

    

    By: 

    Name: 

    Title:
 

    

    

    EL
      PASO ENERGY RATON CORPORATION

    

    

    By: 

    Name: 

    Title:
 

    

    

    EL
      PASO PRODUCTION GOM INC.

    

    

    By: 

    Name: 

    Title:
 

    

    

    

    
      
        
          Exhibit
            A-

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      B

     

    FORM
      OF

     

    GUARANTEE
      AGREEMENT

     

    THIS
      GUARANTEE
      AGREEMENT (this “Guaranty”)
      is made as of
      __________, 2005, by ____________________________, a __________ corporation
      (“Guarantor”),
      in favor of
      FORTIS CAPITAL CORP., a Connecticut corporation (“Agent”),
      as agent for
      the Creditors (as hereinafter defined).

     

    RECITALS:

     

    WHEREAS,
      Guarantor
      is a direct or indirect wholly owned subsidiary of EL PASO PRODUCTION HOLDING
      COMPANY, a Borrower under the Credit Agreement (as hereinafter defined), an
      Affiliate of EL PASO PRODUCTION COMPANY, a Delaware corporation, EL PASO ENERGY
      RATON CORPORATION, a Delaware corporation, and EL PASO PRODUCTION GOM INC.,
      a
      Delaware corporation, each a Borrower under the Credit Agreement (collectively,
      the “Borrowers”);

     

    WHEREAS,
      Borrowers,
      the Agent and the Lenders party thereto have entered into an Amended and
      Restated Credit Agreement dated as of October 19, 2005 (as amended, supplemented
      or restated, the “Credit Agreement”);

     

    WHEREAS,
      certain
      Lenders and their Affiliates are prepared to enter into Hedging Agreements
      with
      the Borrowers;

     

    WHEREAS,
      it is a
      requirement of the Credit Agreement and the creation or acquisition of any
      Subsidiary that Guarantor execute this Guaranty to secure the obligations of
      the
      Borrowers under the Credit Agreement, Hedging Agreements and the other Loan
      Documents;

     

    WHEREAS,
      Guarantor
      has agreed to execute this Guaranty in favor of the Agent for the benefit of
      the
      Agent and the Creditors; and

     

    WHEREAS,
      the board
      of directors of Guarantor has determined that Guarantor's execution, delivery
      and performance of this Guaranty may reasonably be expected to benefit
      Guarantor, directly or indirectly, are in the best interests of Guarantor,
      and
      are necessary for the promotion, conduct and attainment of the Guarantor’s
      business.

     

    NOW,
      THEREFORE, in
      consideration of the premises, of the benefits which will inure to Guarantor
      from Lenders’ advances of funds to the Borrowers under the Credit Agreement, and
      the Lenders and their Affiliates entering into Hedging Agreements with the
      Borrowers, and other good and valuable consideration, the receipt and
      sufficiency of all of which are hereby acknowledged, and in order to induce
      Lenders to enter into the Credit Agreement and Lenders and their Affiliates
      to
      enter into Hedging Agreements with the Borrowers, Guarantor hereby agrees for
      the benefit of the Agent and the Creditors as follows:

     

    AGREEMENTS

     

    Section
      1. Definitions.
      Reference is
      hereby made to the Credit Agreement for all purposes. All terms used in this
      Guaranty which are defined in the Credit Agreement and not otherwise defined
      herein shall have the same meanings when used herein. All references herein
      to
      any Obligation Document, Loan Document, or other document or instrument refer
      to
      the same as from time to time amended, supplemented or restated. As used herein
      the following terms shall have the following meanings:

     

    “Agent”
      means Fortis
      Capital Corp., and any other Person who, at the time in question, is the
“Administrative Agent” under the Credit Agreement.

     

    “Creditors”
      means the Lenders
      under the Credit Agreement and a Lender or any Affiliate of a Lender party
      to a
      Hedging Agreement with any Borrower. The term Creditors shall also include
      a
      former Lender or an Affiliate of a former Lender that is party to a Hedging
      Agreement with any Borrower, provided that such former Lender or Affiliate
      was a
      Lender hereunder or an Affiliate of a Lender hereunder at the time it entered
      into such Hedging Agreement.

     

    “Lenders”
      means all Persons
      who at any time are "Lenders" under the Credit Agreement.

     

    “Obligations”
      means
      collectively all of the indebtedness, obligations, and undertakings which are
      guaranteed by Guarantor and described in Section
      2.

     

    “Obligation
      Documents”
      means this
      Guaranty, the Notes, the Credit Agreement, the Hedging Agreements, the Loan
      Documents, all other documents and instruments under, by reason of which, or
      pursuant to which any or all of the Obligations are evidenced, governed,
      secured, or otherwise dealt with, and all other documents, instruments,
      agreements, certificates, legal opinions and other writings heretofore or
      hereafter delivered in connection herewith or therewith.

     

    “Obligors”
      means the
      Borrowers, Guarantor and any other endorsers, guarantors or obligors, primary
      or
      secondary, of any or all of the Obligations.

     

    “Security”
      means any rights,
      properties, or interests of Agent or Creditors, under the Obligation Documents
      or otherwise, which provide recourse or other benefits to Agent or Creditors
      in
      connection with the Obligations or the nonpayment or nonperformance thereof,
      including collateral (whether real or personal, tangible or intangible) in
      which
      Agent or any Creditor has rights under or pursuant to any Obligation Documents,
      guaranties of the payment or performance of any Obligation, bonds, surety
      agreements, keep well agreements, letters of credit, rights of subrogation,
      rights of offset, and rights pursuant to which other claims are subordinated
      to
      the Obligations.

     

    Section
      2. Guaranty.

     

    (a) Guarantor
      hereby
      irrevocably, absolutely, and unconditionally guarantees to Agent for itself
      and
      the ratable benefit of the Creditors the prompt, complete, and full payment
      when
      due, and no matter how the same shall become due, of:

     

    (i) the
      Notes,
      including all principal, all interest thereon and all other sums payable
      thereunder; and

     

    (ii) the
      Loans made by
      the Lenders under the Credit Agreement, including the Loans, together with
      interest thereon; and

     

    (iii) the
      Hedging
      Agreements concluded by the Lenders and their Affiliates with the Borrowers;
      and

     

    (iv) All
      other sums
      payable to Agent or Creditors under any other Obligation Document, whether
      for
      principal, interest, fees or otherwise.

     

    Without
      limiting
      the generality of the foregoing, Guarantor's liability hereunder shall extend
      to
      and include all post-petition interest, expenses, and other duties and
      liabilities of the Borrowers described above in this subsection (a), or below
      in
      the following subsection (b), which would be owed by the Borrowers but for
      the
      fact that they are unenforceable or not allowable due to the existence of a
      bankruptcy, reorganization, or similar proceeding involving the
      Borrowers.

     

    (b) Guarantor
      hereby
      irrevocably, absolutely, and unconditionally guarantees to Agent and each
      Creditor the prompt, complete and full performance, when due, and no matter
      how
      the same shall become due, of all obligations and undertakings of the Borrowers
      to Agent or such Creditor under, by reason of, or pursuant to any of the
      Obligation Documents.

     

    (c) If
      the Borrowers
      shall for any reason fail to pay any Obligation, as and when such Obligation
      shall become due and payable, whether at its stated maturity, as a result of
      the
      exercise of any power to accelerate, or otherwise, Guarantor will, forthwith
      upon demand by Agent, pay such Obligation in full to Agent for the benefit
      of
      Agent and the Creditor to whom such Obligation is owed. If the Borrowers shall
      for any reason fail to perform promptly any Obligation, Guarantor will,
      forthwith upon demand by Agent, cause such Obligation to be performed or, if
      specified by Agent, provide sufficient funds, in such amount and manner as
      Agent
      shall in good faith determine, for the prompt, full and faithful performance
      of
      such Obligation by Agent or such other Person as Agent shall
      designate.

     

    (d) If
      the Borrowers or
      Guarantor fail to pay or perform any Obligation as described in the immediately
      preceding subsections (a), (b), or (c) Guarantor will incur the additional
      obligation to pay to Agent, and Guarantor will forthwith upon demand by Agent
      pay to Agent, the amount of any and all expenses, including fees and
      disbursements of Agent's counsel and of any experts or agents retained by such
      Agent, which such Agent may incur as a result of such failure.

     

    (e) It
      is the intention
      of the Guarantor and Creditors that this Guaranty not constitute a fraudulent
      transfer or fraudulent conveyance under any state or federal law that may be
      applied hereto. Guarantor and, by its acceptance hereof, each Creditor, hereby
      acknowledge and agree that, notwithstanding any other provision of this
      Guaranty, the indebtedness guaranteed hereby shall be limited to the maximum
      amount of indebtedness that can be incurred or guaranteed by Guarantor without
      rendering this Guaranty subject to avoidance under Section 548 of the United
      States Bankruptcy Code or any comparable provisions of any applicable state
      or
      federal law.

     

    Section
      3. Unconditional
      Guaranty.

     

    (a) No
      action which
      Agent or any Creditor may take or omit to take in connection with any of the
      Obligation Documents, any of the Obligations (or any other indebtedness owing
      by
      the Borrowers to Agent or any Creditor), or any Security, and no course of
      dealing of Agent or any Creditor with any Obligor or any other Person, shall
      release or diminish Guarantor's obligations, liabilities, agreements or duties
      hereunder, affect this Guaranty in any way, or afford Guarantor any recourse
      against Agent or any Creditor, regardless of whether any such action or inaction
      may increase any risks to or liabilities of Agent or any Creditor or any Obligor
      or increase any risk to or diminish any safeguard of any Security. Without
      limiting the foregoing, Guarantor hereby expressly agrees that Agent and
      Creditors may, from time to time, without notice to or the consent of Guarantor,
      do any or all of the following:

     

    (i) Amend,
      change or
      modify, in whole or in part, any one or more of the Obligation Documents and
      give or refuse to give any waivers or other indulgences with respect
      thereto.

     

    (ii) Neglect,
      delay,
      fail, or refuse to take or prosecute any action for the collection or
      enforcement of any of the Obligations, to foreclose or take or prosecute any
      action in connection with any Security or Obligation Document, to bring suit
      against any Obligor or any other Person, or to take any other action concerning
      the Obligations or the Obligation Documents.

     

    (iii) Accelerate,
      change,
      rearrange, extend, or renew the time, rate, terms, or manner for payment or
      performance of any one or more of the Obligations (whether for principal,
      interest, fees, expenses, indemnifications, affirmative or negative covenants,
      or otherwise).

     

    (iv) Compromise
      or
      settle any unpaid or unperformed Obligation or any other obligation or amount
      due or owing, or claimed to be due or owing, under any one or more of the
      Obligation Documents.

     

    (v) Take,
      exchange,
      amend, eliminate, surrender, release, or subordinate any or all Security for
      any
      or all of the Obligations, accept additional or substituted Security therefor,
      and perfect or fail to perfect Agent's or Creditors’ rights in any or all
      Security.

     

    (vi) Discharge,
      release,
      substitute or add Obligors.

     

    (vii) Apply
      all monies
      received from Obligors or others, or from any Security for any of the
      Obligations, as Agent or Creditors may determine to be in their best interest,
      without in any way being required to marshal Security or assets or to apply
      all
      or any part of such monies upon any particular Obligations.

     

    (b) No
      action or
      inaction of any Obligor or any other Person, and no change of law or
      circumstances, shall release or diminish Guarantor's obligations, liabilities,
      agreements, or duties hereunder, affect this Guaranty in any way, or afford
      Guarantor any recourse against Agent or any Creditor. Without limiting the
      foregoing, the obligations, liabilities, agreements, and duties of Guarantor
      under this Guaranty shall not be released, diminished, impaired, reduced, or
      affected by the occurrence of any or all of the following from time to time,
      even if occurring without notice to or without the consent of
      Guarantor:

     

    (i) Any
      voluntary or
      involuntary liquidation, dissolution, sale of all or substantially all assets,
      marshalling of assets or liabilities, receivership, conservatorship, assignment
      for the benefit of creditors, insolvency, bankruptcy, reorganization,
      arrangement, or composition of any Obligor or any other proceedings involving
      any Obligor or any of the assets of any Obligor under laws for the protection
      of
      debtors, or any discharge, impairment, modification, release, or limitation
      of
      the liability of, or stay of actions or lien enforcement proceedings against,
      any Obligor, any properties of any Obligor, or the estate in bankruptcy of
      any
      Obligor in the course of or resulting from any such proceedings.

     

    (ii) The
      failure by
      Agent or any Creditor to file or enforce a claim in any proceeding described
      in
      the immediately preceding subsection (i) or to take any other action in any
      proceeding to which any Obligor is a party.

     

    (iii) The
      release by
      operation of law of any Obligor from any of the Obligations or any other
      obligations to Agent or any Creditor.

     

    (iv) The
      invalidity,
      deficiency, illegality, or unenforceability of any of the Obligations or the
      Obligation Documents, in whole or in part, any bar by any statute of limitations
      or other law of recovery on any of the Obligations, or any defense or excuse
      for
      failure to perform on account of force majeure, act of God, casualty,
      impossibility, impracticability, or other defense or excuse
      whatsoever.

     

    (v) The
      failure of any
      Obligor or any other Person to sign any guaranty or other instrument or
      agreement within the contemplation of any Obligor, Agent or any
      Creditor.

     

    (vi) The
      fact that
      Guarantor may have incurred directly part of the Obligations or is otherwise
      primarily liable therefor.

     

    (vii) Without
      limiting
      any of the foregoing, any fact or event (whether or not similar to any of the
      foregoing) which in the absence of this provision would or might constitute
      or
      afford a legal or equitable discharge or release of or defense to a guarantor
      or
      surety other than the actual payment and performance by Guarantor under this
      Guaranty.

     

    (c) Agent
      and Creditors
      may invoke the benefits of this Guaranty before pursuing any remedies against
      any Obligor or any other Person and before proceeding against any Security
      now
      or hereafter existing for the payment or performance of any of the Obligations.
      Agent and Creditors may maintain an action against Guarantor on this Guaranty
      without joining any other Obligor therein and without bringing a separate action
      against any other Obligor.

     

    (d) If
      any payment to
      Agent or any Creditor by any Obligor is held to constitute a preference or
      a
      voidable transfer under applicable state or federal laws, or if for any other
      reason Agent or any Creditor is required to refund such payment to the payor
      thereof or to pay the amount thereof to any other Person, such payment to Agent
      or such Creditor shall not constitute a release of Guarantor from any liability
      hereunder, and Guarantor agrees to pay such amount to Agent or such Creditor
      on
      demand and agrees and acknowledges that this Guaranty shall continue to be
      effective or shall be reinstated, as the case may be, to the extent of any
      such
      payment or payments. Any transfer by subrogation which is made as contemplated
      in Section 6 prior to any such payment or payments shall (regardless of the
      terms of such transfer) be automatically voided upon the making of any such
      payment or payments, and all rights so transferred shall thereupon revert to
      and
      be vested in Agent and Creditors.

     

    (e) This
      is a
      continuing guaranty and shall apply to and cover all Obligations and renewals
      and extensions thereof and substitutions therefor from time to
      time.

     

    Section
      4. Waiver.
      Guarantor hereby
      waives, with respect to the Obligations, this Guaranty, and the other Obligation
      Documents:

     

    (a) notice
      of the
      incurrence of any Obligation by the Borrowers, and notice of any kind concerning
      the assets, liabilities, financial condition, creditworthiness, businesses,
      prospects, or other affairs of the Borrowers (it being understood and agreed
      that: (i) Guarantor shall take full responsibility for informing itself of
      such
      matters, (ii) neither Agent nor any Creditor shall have any responsibility
      of
      any kind to inform Guarantor of such matters, and (iii) Agent and Creditors
      are
      hereby authorized to assume that Guarantor, by virtue of its relationships
      with
      the Borrowers which are independent of this Guaranty, has full and complete
      knowledge of such matters at each time when Creditors extend credit to the
      Borrowers or take any other action which may change or increase Guarantor's
      liabilities or losses hereunder).

     

    (b) notice
      that Agent,
      any Creditor, any Obligor, or any other Person has taken or omitted to take
      any
      action under any Obligation Document or any other agreement or instrument
      relating thereto or relating to any Obligation.

     

    (c) demand,
      presentment
      for payment, and notice of demand, dishonor, nonpayment, or
      nonperformance.

     

    (d) notice
      of intention
      to accelerate, notice of acceleration, protest, notice of protest, notice of
      any
      exercise of remedies (as described in the following Section 5 or otherwise),
      and
      all other notices of any kind whatsoever.

     

    Section
      5. Exercise
      of
      Remedies.
      Agent and each
      Creditor shall have the right to enforce, from time to time, in any order and
      at
      Agent's or such Creditor’s sole discretion, any rights, powers and remedies
      which Agent or such Creditor may have under the Obligation Documents or
      otherwise, including judicial foreclosure, the exercise of rights of power
      of
      sale, the taking of a deed or assignment in lieu of foreclosure, the appointment
      of a receiver to collect rents, issues and profits, the exercise of remedies
      against personal property, or the enforcement of any assignment of leases,
      rentals, oil or gas production, or other properties or rights, whether real
      or
      personal, tangible or intangible; and Guarantor shall be liable to Agent and
      each Creditor hereunder for any deficiency resulting from the exercise by Agent
      or any Creditor of any such right or remedy even though any rights which
      Guarantor may have against the Borrowers or others may be destroyed or
      diminished by exercise of any such right or remedy. No failure on the part
      of
      Agent or any Creditor to exercise, and no delay in exercising, any right
      hereunder or under any other Obligation Document shall operate as a waiver
      thereof; nor shall any single or partial exercise of any right preclude any
      other or further exercise thereof or the exercise of any other right. The
      rights, powers and remedies of Agent and each Creditor provided herein and
      in
      the other Obligation Documents are cumulative and are in addition to, and not
      exclusive of, any other rights, powers or remedies provided in any Loan Document
      or by law or in equity. The rights of Agent and each Creditor hereunder are
      not
      conditional or contingent on any attempt by Agent or any Creditor to exercise
      any of its rights under any other Obligation Document against any Obligor or
      any
      other Person.

     

    Section
      6. Limited
      Subrogation.
      Until all of the
      Obligations have been paid and performed in full Guarantor shall have no right
      to exercise any right of subrogation, reimbursement, indemnity, exoneration,
      contribution or any other claim which it may now or hereafter have against
      or to
      any Obligor or any Security in connection with this Guaranty, and Guarantor
      hereby waives any rights to enforce any remedy which Guarantor may have against
      the Borrowers and any right to participate in any Security until such time.
      If
      any amount shall be paid to Guarantor on account of any such subrogation or
      other rights, any such other remedy, or any Security at any time when all of
      the
      Obligations and all other expenses guaranteed pursuant hereto shall not have
      been paid in full, such amount shall be held in trust for the benefit of Agent,
      shall be segregated from the other funds of Guarantor and shall forthwith be
      paid over to Agent to be held by Agent as collateral for, or then or at any
      time
      thereafter applied in whole or in part by Agent against, all or any portion
      of
      the Obligations, whether matured or unmatured, in such order as Agent shall
      elect. If Guarantor shall make payment to Agent of all or any portion of the
      Obligations and if all of the Obligations shall be finally paid in full, Agent
      will, at Guarantor's request and expense, execute and deliver to Guarantor
      (without recourse, representation or warranty) appropriate documents necessary
      to evidence the transfer by subrogation to Guarantor of an interest in the
      Obligations resulting from such payment by Guarantor; provided that such
      transfer shall be subject to Section 3(d) above and that without the consent
      of
      Agent (which Agent may withhold in its discretion) Guarantor shall not have
      the
      right to be subrogated to any claim or right against any Obligor which has
      become owned by Agent or any Creditor, whose ownership has otherwise changed
      in
      the course of enforcement of the Obligation Documents, or which Agent otherwise
      has released or wishes to release from its Obligations.

     

    Section
      7. Successors
      and
      Assigns.
      Guarantor's
      rights or obligations hereunder may not be assigned or delegated, but this
      Guaranty and such obligations shall pass to and be fully binding upon the
      successors of Guarantor, as well as Guarantor. This Guaranty shall apply to
      and
      inure to the benefit of Agent, Creditors and their respective successors or
      assigns. Without limiting the generality of the immediately preceding sentence,
      Agent and each Creditor may assign, grant a participation in, or otherwise
      transfer any Obligation held by it or any portion thereof, and Agent and each
      Creditor may assign or otherwise transfer its rights or any portion thereof
      under any Obligation Document, to any other Person, and such other Person shall
      thereupon become vested with all of the benefits in respect thereof granted
      to
      Agent or such Creditor hereunder unless otherwise expressly provided by Agent
      or
      such Creditor in connection with such assignment or transfer.

     

    Section
      8. Subordination
      and Offset.
      Guarantor hereby
      subordinates and makes inferior to the Obligations any and all indebtedness
      now
      or at any time hereafter owed by the Borrowers to Guarantor. Guarantor agrees
      that after the occurrence of any Default or Event of Default it will neither
      permit the Borrowers to repay such indebtedness or any part thereof nor accept
      payment from the Borrowers of such indebtedness or any part thereof without
      the
      prior written consent of Agent and Creditors. If Guarantor receives any such
      payment without the prior written consent of Agent and Creditors, the amount
      so
      paid shall be held in trust for the benefit of Creditors, shall be segregated
      from the other funds of Guarantor, and shall forthwith be paid over to Agent
      to
      be held by Agent as collateral for, or then or at any time thereafter applied
      in
      whole or in part by Agent against, all or any portions of the Obligations,
      whether matured or unmatured, in such order as Agent shall elect. Guarantor
      hereby grants to Agent and Creditors a right of offset to secure the payment
      of
      the Obligations and Guarantor's obligations and liabilities hereunder, which
      right of offset shall be upon any and all monies, securities and other property
      (and the proceeds therefrom) of Guarantor now or hereafter held or received
      by
      or in transit to Agent or any Creditor from or for the account of Guarantor,
      whether for safekeeping, custody, pledge, transmission, collection or otherwise,
      and also upon any and all deposits (general or special), credits and claims
      of
      Guarantor at any time existing against Agent or such Creditor. Upon the
      occurrence of any Default or Event of Default Agent and each Creditor is hereby
      authorized at any time and from time to time, without notice to Guarantor,
      to
      offset, appropriate and apply any and all items hereinabove referred to against
      the Obligations and Guarantor's obligations and liabilities hereunder
      irrespective of whether or not Agent or any Creditor shall have made any demand
      under this Guaranty and although such obligations and liabilities may be
      contingent or unmatured. Agent and each Creditor agrees promptly to notify
      Guarantor after any such offset and application made by Agent or such Creditor,
      provided that the failure to give such notice shall not affect the validity
      of
      such offset and application. The rights of Agent and Creditors under this
      section are in addition to, and shall not be limited by, any other rights and
      remedies (including other rights of offset) which Agent and Creditors may
      have.

     

    Section
      9. Representations
      and Warranties.
      Guarantor hereby
      represents and warrants to Agent and each Creditor as follows:

     

    (a) The
      Recitals at the
      beginning of this Guaranty are true and correct in all respects.

     

    (b) The
      direct or
      indirect value of the consideration received and to be received by Guarantor
      in
      connection herewith is reasonably worth at least as much as the liability and
      obligations of Guarantor hereunder, and the incurrence of such liability and
      obligations in return for such consideration may reasonably be expected to
      benefit Guarantor, directly or indirectly.

     

    (c) Guarantor
      is a
      corporation duly organized, validly existing and in good standing under the
      laws
      of the state of its incorporation as set forth in the Recitals to this Guaranty;
      and Guarantor has all requisite power and authority to execute, deliver and
      perform this Guaranty.

     

    (d) Guarantor
      is not
      "insolvent" on the date hereof (that is, the sum of Guarantor's absolute and
      contingent liabilities, including the Obligations, does not exceed the fair
      market value of Guarantor's assets). Guarantor's capital is adequate for the
      businesses in which Guarantor is engaged and intends to be engaged. Guarantor
      has not incurred (whether hereby or otherwise), nor does Guarantor intend to
      incur or believe that it will incur, debts which will be beyond its ability
      to
      pay as such debts mature.

     

    (e) The
      execution,
      delivery and performance by Guarantor of this Guaranty have been duly authorized
      by all necessary corporate action and do not and will not contravene its
      certificate or articles of incorporation or bylaws.

     

    (f) The
      execution,
      delivery and performance by Guarantor of this Guaranty do not and will not
      contravene any law or governmental regulation or any contractual restriction
      binding on or affecting Guarantor or any of its Affiliates or properties, and
      do
      not and will not result in or require the creation of any lien, security
      interest or other charge or encumbrance upon or with respect to any of its
      properties.

     

    (g) No
      authorization or
      approval or other action by, and no notice to or filing with, any governmental
      authority or other regulatory body or third party is required for the due
      execution, delivery and performance by Guarantor of this Guaranty.

     

    (h) This
      Guaranty is a
      legal, valid and binding obligation of Guarantor, enforceable against Guarantor
      in accordance with its terms except as limited by bankruptcy, insolvency or
      similar laws of general application relating to the enforcement of creditors'
      rights.

     

    (i) The
      representations
      and warranties made in Article V of the Credit Agreement, to the extent that
      they relate to Guarantor, Guarantor's business, assets, liabilities, properties
      or operations are true, complete and correct.

     

    Section
      10. No
      Oral
      Change.
      No amendment of
      any provision of this Guaranty shall be effective unless it is in writing and
      signed by Guarantor and Agent, and no waiver of any provision of this Guaranty,
      and no consent to any departure by Guarantor therefrom, shall be effective
      unless it is in writing and signed by Agent, and then such waiver or consent
      shall be effective only in the specific instance and for the specific purpose
      for which given. In addition, all such amendments and waivers shall be effective
      only if given with the necessary approvals of Creditors as required in the
      Credit Agreement.

     

    Section
      11. Invalidity
      of
      Particular Provisions.
      If any term or
      provision of this Guaranty shall be determined to be illegal or unenforceable
      all other terms and provisions hereof shall nevertheless remain effective and
      shall be enforced to the fullest extent permitted by applicable
      law.

     

    Section
      12. Headings
      and
      References.
      The headings used
      herein are for purposes of convenience only and shall not be used in construing
      the provisions hereof. The words “this Guaranty”' “this
      instrument,”“herein”“hereof”“hereby” and words of similar import refer to this
      Guaranty as a whole and not to any particular subdivision unless expressly
      so
      limited. The phrases “this section” and “this subsection” and similar phrases
      refer only to the subdivisions hereof in which such phrases occur. The word
“or”
      is not exclusive, and the word “including” (in its various forms) means
“including without limitation”. Pronouns in masculine, feminine and neuter
      genders shall be construed to include any other gender, and words in the
      singular form shall be construed to include the plural and vice versa, unless
      the context otherwise requires.

     

    Section
      13. Term.
      This Guaranty
      shall be irrevocable until all of the Obligations have been completely and
      finally paid and performed, Lenders have no obligation to make any loans or
      other advances to the Borrowers, and all obligations and undertakings of the
      Borrowers under, by reason of, or pursuant to the Obligation Documents have
      been
      completely performed, and this Guaranty is thereafter subject to reinstatement
      as provided in Section 3(d). All extensions of credit and financial
      accommodations heretofore or hereafter made by Agent or Creditors to the
      Borrowers shall be conclusively presumed to have been made in acceptance hereof
      and in reliance hereon.

     

    Section
      14. Delivery
      of
      Corporate Documents.
      Upon execution of
      this Guaranty, Guarantor shall deliver the following to the Agent:

     

    (a) An
“Omnibus
      Certificate” of the Secretary or of any Vice President of the Guarantor, which
      shall contain the names and signatures of the officers of the Guarantor,
      authorized to execute the Guaranty and which shall certify to the truth,
      correctness and completeness of the following exhibits attached thereto: (1)
      a
      copy of resolutions duly adopted by the Board of Directors of the Guarantor
      and
      in full force and effect at the time this Guaranty is entered into, authorizing
      the execution of this Guaranty delivered or to be delivered in connection
      herewith and the consummation of the transactions contemplated herein and
      therein, (2) a copy of the charter documents of the Guarantor and all amendments
      thereto, certified by the appropriate official of the Guarantor's state of
      organization, and (3) a copy of any bylaws of the Guarantor; and

     

    (b) A
      certificate (or
      certificates) of the due formation, valid existence and good standing of the
      Guarantor in its state of organization, issued by the appropriate authorities
      of
      such jurisdiction, and certificates of the Guarantor's good standing and due
      qualification to do business, issued by appropriate officials in any states
      in
      which the Guarantor conducts a material portion of its business.

     

    Section
      15. Notices.
      Any notice or
      communication required or permitted hereunder shall be given in writing, sent
      by
      personal delivery, by telecopy, by delivery service with proof of delivery,
      or
      by registered or certified United States mail, postage prepaid, addressed to
      the
      appropriate party as follows:

     

    To
      Guarantor: __________________________

    1001
      Louisiana
      Street

    Houston,
      TX
      77002

    Attention:
      John J.
      Hopper

    Tel.
      _____________

    Fax:
      (713)
      420-2708

    

    To
      Agent: Fortis
      Capital
      Corp.

    15455
      N. Dallas
      Parkway, Suite 1400

    Addison,
      Texas
      75001

    Attention:
      Deirdre
      Sanborn

    Tel.
      (214)
      953-9304

    Fax
      (214)
      754-5982

    

    or
      to such other
      address or to the attention of such other individual as hereafter shall be
      designated in writing by the applicable party sent in accordance herewith.
      Any
      such notice or communication shall be deemed to have been given (i) in the
      case
      of personal delivery or delivery service, as of the date of first attempted
      delivery at the address or in the manner provided herein, (ii) in the case
      of
      telecopy, upon receipt, or (iii) in the case of registered or certified United
      States mail, three days after deposit in the mail.

     

    Section
      16. Limitation
      on
      Interest.
      Agent, Creditors,
      and Guarantor intend to contract in strict compliance with applicable usury
      law
      from time to time in effect, and the provisions of the Credit Agreement limiting
      the interest for which Guarantor is obligated are expressly incorporated
      herein.

     

    Section
      17. Loan
      Document.
      This Guaranty is
      a Loan Document and is subject to the provisions of the Credit Agreement
      governing Loan Documents. For the avoidance of doubt, Guarantor is considered
      a
“Domestic Restricted Person” for purposes of the Credit Agreement and other Loan
      Documents.

     

    Section
      18. Counterparts.
      This Guaranty may
      be executed in any number of counterparts, each of which when so executed shall
      be deemed to constitute one and the same Guaranty.

     

    Section
      19. GOVERNING
      LAW.
      THIS GUARANTY IS
      TO BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED
      AND ENFORCED IN ACCORDANCE WITH THE LAWS OF SUCH STATE.

     

    Section
      20. FINAL
      AGREEMENT.
      THIS WRITTEN
      AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
      THE
      PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
      CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE
      ARE
      NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.

     

    IN
      WITNESS WHEREOF,
      the Guarantor has executed and delivered this Guaranty as of the date first
      written above.

     

    _____________________________________

    

    

    

    By: 

    Name: 

    Title: 

    

    

    
      
        
          Exhibit
            B-

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      F

     

    FORM
      OF
      CLOSING CERTIFICATE

     

    Pursuant
      to
      subsection 6.1(d) of the Amended and Restated Credit Agreement, dated as of
      October 19, 2005 (the “Agreement;”
      terms defined
      therein being used herein as therein defined), among EL PASO PRODUCTION HOLDING
      COMPANY, a Delaware corporation, EL PASO PRODUCTION COMPANY, a Delaware
      corporation, and EL PASO ENERGY RATON CORPORATION, a Delaware corporation,
      and
      EL PASO PRODUCTION GOM INC., a Delaware corporation (the “Borrowers”),
      the several
      banks and financial institutions and other entities from time to time parties
      to
      the Agreement (collectively, the “Lenders”)
      and Fortis
      Capital Corp., as Administrative Agent for the Lenders, the undersigned
      Responsible Officer of each of the Borrowers hereby certifies, in its capacities
      as such, as follows:

     

    1. Each
      of the
      representations and warranties made by each Loan Party in or pursuant to the
      Loan Documents is true and correct on and as of the date hereof as if made
      on
      and as of such date (unless such representation or warranty is stated to relate
      to a specific earlier date, in which case such representation or warranty is
      true and correct as of such earlier date);

     

    2. No
      Default or Event
      of Default has occurred and is continuing as of the date hereof or after giving
      effect to any Extensions of Credit requested to be made on the date
      hereof;

     

    3. No
      events or events
      which, individually or in the aggregate, have had or is reasonably likely to
      have a Material Adverse Effect has occurred;

     

    
      
        
          Exhibit
            F-

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the undersigned has hereunto executed this certificate on behalf of each
      Borrower and not individually.

     

    EL
      PASO PRODUCTION HOLDING COMPANY

    

    

    By: 

    Name: 

    Title:
 

    

    

    EL
      PASO PRODUCTION COMPANY

    

    

    By: 

    Name: 

    Title:
 

    

    

    EL
      PASO ENERGY RATON CORPORATION

    

    

    By: 

    Name: 

    Title:
 

    

    

    EL
      PASO PRODUCTION GOM INC.

    

    

    By: 

    Name: 

    Title:
 

    

    Date: _________________________

     

    

    

    

    
      
        
          Exhibit
            F-

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      G

     

    FORM
      OF
      ASSIGNMENT AND ACCEPTANCE

     

    Reference
      is made
      to the Amended and Restated Credit Agreement, dated as of October 19, 2005
      (as
      amended and in effect on the date hereof, the “Credit
      Agreement”),
      among EL PASO
      PRODUCTION HOLDING COMPANY, a Delaware corporation, EL PASO PRODUCTION COMPANY,
      a Delaware corporation, EL PASO ENERGY RATON CORPORATION, a Delaware
      corporation, and EL PASO PRODUCTION GOM INC., a Delaware corporation (the
“Borrowers”),
      the several
      banks, financial institutions, and other entities from time to time parties
      to
      the Credit Agreement (collectively, the “Lenders”)
      named therein,
      Fortis Capital Corp. as Administrative Agent for the Lenders. Terms defined
      in
      the Credit Agreement are used herein with the same meanings.

     

    The
      Assignor named
      below hereby sells and assigns, without recourse, to the Assignee named below,
      and the Assignee hereby purchases and assumes, without recourse, from the
      Assignor, effective as of the Assignment Date set forth below, the interests
      set
      forth below (the “Assigned
      Interest”)
      in the
      Assignor’s rights and obligations under the Credit Agreement including, without
      limitation, the interests set forth below in the Commitment of the Assignor
      of
      the Assignment Date and Loans owing to the Assignor which are outstanding on
      the
      Assignment Date, but excluding accrued interest and fees to and excluding the
      Assignment Date. The Assignee hereby acknowledges receipt of a copy of the
      Credit Agreement. From and after the Assignment Date (i) the Assignee shall
      be a
      party to and be bound by the provisions of the Credit Agreement and, to the
      extent of the Assigned Interest, have the rights and obligations of a Lender
      thereunder, and (ii) the Assignor shall, to the extent of the Assigned Interest,
      relinquish its rights and be released from its obligations under the Credit
      Agreement.

     

    This
      Assignment and
      Acceptance is being delivered to the Administrative Agent together with (i)
      if
      the Assignee is a Non-U.S. Lender, any documentation required to be delivered
      by
      the Assignee pursuant to subsection 4.13(b) of the Credit Agreement, duly
      completed and executed by the Assignee, and (ii) if the Assignee is not already
      a Lender under the Credit Agreement, an Administrative Questionnaire in the
      form
      supplied by the Administrative Agent, duly completed by the Assignee. The
      [Assignee/Assignor] shall pay any fee payable to the Administrative Agent
      pursuant to subsection 11.6(e) of the Credit Agreement.

     

    This
      Assignment and
      Acceptance shall be governed by and construed in accordance with the laws of
      the
      State of New York.

     

    Date
      of
      Assignment:

    Legal
      Name of
      Assignor:

    

    Legal
      Name of
      Assignee:

    

    Assignee’s
      Address
      for Notices:

    

    Effective
      Date of
      Assignment

    (“Assignment
      Date”)

    
      
        
          Exhibit
            G-

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Percentage
      of

    Principal
      Amount Assigned Commitment
      Assigned

    

    Commitment
      Assigned: $_______________ $_______________*

    

    The
      terms set forth
      above are hereby agreed to:

     

    [Name
      of Assignor],
      as Assignor

    

    By: _________________________________

    Name: _________________________________

    Title: _________________________________

    

    

    [Name
      of Assignee],
      as Assignee

    

    By: _________________________________

    Name: _________________________________

    Title: _________________________________

    

    The
      undersigned
      hereby consent to the within assignment:

     

    El
      Paso Production
      Holding Company Fortis
      Capital
      Corp., as Administrative Agent

    

    By: ____________________________ By: ____________________________

    Name: ____________________________ Name: ____________________________

    Title: ____________________________ Title: ____________________________

    

    

    El
      Paso Production
      Company

    

    By: ____________________________

    Name: ____________________________

    Title: ____________________________

    

    

    El
      Paso Energy
      Raton Corporation

    

    By: ____________________________

    Name: ____________________________

    Title: ____________________________

    

    El
      Paso Production
      GOM Inc.

    

    By: ____________________________

    Name: ____________________________

    Title: ____________________________Dated: October 12, 2005

         NEITHER THIS DEBENTURE NOR THE SECURITIES  INTO WHICH THIS DEBENTURE IS
         CONVERTIBLE  HAVE BEEN  REGISTERED  WITH THE  SECURITIES  AND  EXCHANGE
         COMMISSION OR THE  SECURITIES  COMMISSION OF ANY STATE IN RELIANCE UPON
         AN EXEMPTION  FROM  REGISTRATION  UNDER THE  SECURITIES ACT OF 1933, AS
         AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
         SOLD EXCEPT PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT UNDER THE
         SECURITIES  ACT OR PURSUANT TO AN  AVAILABLE  EXEMPTION  FROM,  OR IN A
         TRANSACTION  NOT  SUBJECT  TO,  THE  REGISTRATION  REQUIREMENTS  OF THE
         SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

No. CCP-3                                                             $1,475,000

              GREENSHIFT CORPORATION (F/K/A GREENWORKS CORPORATION)

                          Secured Convertible Debenture

                              Due October 12, 2007

         This  Secured  Convertible  Debenture  (the  "Debenture")  is issued by
GREENSHIFT  CORPORATION (F/K/A GREENWORKS  CORPORATION),  a Delaware corporation
(the "Obligor"),  to CORNELL CAPITAL  PARTNERS,  LP (the "Holder"),  pursuant to
that certain Securities Purchase Agreement (the "Securities Purchase Agreement")
of even date herewith.

         FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or
its  successors  and assigns the  principal  sum of  $1,475,000,  together  with
accrued but unpaid interest on the following terms:

         Payments. Interest on the outstanding principal balance hereof shall be
due and payable  monthly,  in arrears,  commencing on December 1, 2005 and shall
continue on the first day of each  calendar  month  thereafter  that any amounts
under this Debenture are due and payable  (each,  an "Interest  Payment  Date").
Principal  shall be due and payable in full on or before (the "Maturity  Date").
All payments in respect of the  indebtedness  evidenced  hereby shall be made in
collected funds, and shall be applied to principal, accrued interest and charges
and expenses  owing under or in connection  with this Debenture in such order as
the Holder  elects,  except that payments  shall be applied to accrued  interest
before principal. Notwithstanding the foregoing, this Debenture shall become due
and immediately  payable,  including all accrued but unpaid  interest,  upon the
closing of a Funding  Event (as  defined in Section 4 hereof) or  pursuant to an
Event of Default (as defined in Section 2 hereof).

         Interest.  Interest shall accrue on the outstanding  principal  balance
hereof at an annual rate equal to 5%.  Interest shall be calculated on the basis
of a 360-day year and the actual number of days elapsed, to the extent permitted
by applicable law. Interest hereunder will be paid to the Holder or its assignee
(as  defined in Section 4) in whose name this  Debenture  is  registered  on the

                                        1
<PAGE>

records of the Obligor  regarding  registration and transfers of Debentures (the
"Debenture Register").

         Right of  Redemption.  The Company at its option  shall have the right,
with three (3) business days advance written notice,  to redeem a portion or all
amounts outstanding under this Debenture prior to the Maturity Date.

         Security  Agreement.  This  Debenture  is  secured  by an  Amended  and
Restated  Security  Agreement (the  "Security  Agreement") of even date herewith
between the Obligor and the Holder, as amended from time to time. This Debenture
is also secured by an Amended and Restated  Stock Pledge  Agreement of even date
herewith (the "Pledge Agreement"), as amended from time to time.

         Consent of Holder to Sell Capital  Stock or Grant  Security  Interests.
Except  for the  capital  stock to be  issued  pursuant  to the  Standby  Equity
Distribution  Agreement of even date herewith  between the Obligator and Cornell
Capital Partners, LP, so long as any of the principal amount or interest on this
Debenture  remains unpaid and  unconverted,  the Obligor shall not,  without the
prior  consent of the Holder,  (i) issue or sell any common  stock or  preferred
stock with or without  consideration,  (ii) issue or sell any  preferred  stock,
warrant, option, right, contract, call, or other security or instrument granting
the  holder   thereof  the  right  to  acquire  common  stock  with  or  without
consideration,  (iii) enter into any security  instrument  granting the holder a
security  interest  in any of the  assets  of the  Obligor,  or  (iv)  file  any
registration statements on Form S-8.

         This Debenture is subject to the following additional provisions:

         Section 1.   This  Debenture  is  exchangeable  for an equal  aggregate
principal  amount  of  Debentures  of  different  authorized  denominations,  as
requested by the Holder  surrendering  the same. No service  charge will be made
for such registration of transfer or exchange.

         Section 2.   Events of Default.

         (a)      An "Event of Default",  wherever used herein, means any one of
the following  events  (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment,  decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

                  (i)      Any  default  in the  payment  of the  principal  of,
interest on or other charges in respect of this Debenture,  free of any claim of
subordination,  as and when the same shall become due and payable (whether on an
installment,  a Principal  Payment Date, an Interest  Payment Date, a Conversion
Date or the Maturity Date or by acceleration or otherwise);

                  (ii)     The  Obligor  shall fail to  observe  or perform  any
other  covenant,  agreement or warranty  contained  in, or otherwise  commit any
breach or default of any provision of this  Debenture  (except as may be covered
by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 4)
which is not cured with in the time prescribed;

                                       2
<PAGE>

                  (iii)    The Obligor or any  subsidiary  of the Obligor  shall
commence,  or there shall be commenced  against the Obligor or any subsidiary of
the  Obligor  under  any  applicable  bankruptcy  or  insolvency  laws as now or
hereafter in effect or any successor  thereto,  or the Obligor or any subsidiary
of  the  Obligor  commences  any  other  proceeding  under  any  reorganization,
arrangement,  adjustment of debt, relief of debtors, dissolution,  insolvency or
liquidation  or similar  law of any  jurisdiction  whether now or  hereafter  in
effect  relating  to the  Obligor or any  subsidiary  of the Obligor or there is
commenced  against  the  Obligor  or any  subsidiary  of the  Obligor  any  such
bankruptcy,  insolvency  or other  proceeding  which remains  undismissed  for a
period  of 61  days;  or  the  Obligor  or any  subsidiary  of  the  Obligor  is
adjudicated  insolvent  or  bankrupt;  or any  order of  relief  or other  order
approving  any  such  case or  proceeding  is  entered;  or the  Obligor  or any
subsidiary of the Obligor suffers any  appointment of any custodian,  private or
court  appointed  receiver  or the  like for it or any  substantial  part of its
property which continues undischarged or unstayed for a period of sixty one (61)
days; or the Obligor or any subsidiary of the Obligor makes a general assignment
for the benefit of  creditors;  or the Obligor or any  subsidiary of the Obligor
shall fail to pay,  or shall  state that it is unable to pay, or shall be unable
to pay, its debts generally as they become due; or the Obligor or any subsidiary
of the Obligor shall call a meeting of its creditors  with a view to arranging a
composition,  adjustment or  restructuring  of its debts;  or the Obligor or any
subsidiary of the Obligor shall by any act or failure to act expressly  indicate
its consent to,  approval of or  acquiescence  in any of the  foregoing;  or any
corporate  or other  action is taken by the  Obligor  or any  subsidiary  of the
Obligor for the purpose of effecting any of the foregoing;

                  (iv)     The Obligor or any  subsidiary  of the Obligor  shall
default in any of its  obligations  under any other  Debenture or any  mortgage,
credit agreement or other facility, indenture agreement,  factoring agreement or
other  instrument  under  which  there may be issued,  or by which  there may be
secured or evidenced any  indebtedness for borrowed money or money due under any
long term leasing or factoring  arrangement  of the Obligor or any subsidiary of
the Obligor in an amount  exceeding  $100,000,  whether  such  indebtedness  now
exists or shall  hereafter  be created  and such  default  shall  result in such
indebtedness  becoming or being  declared  due and payable  prior to the date on
which it would otherwise become due and payable;

                  (v)      The Common Stock shall cease to be quoted for trading
or listed for trading on the Nasdaq OTC Bulletin Board ("OTC"),  Nasdaq SmallCap
Market, New York Stock Exchange,  American Stock Exchange or the Nasdaq National
Market (each, a "Subsequent Market") and shall not again be quoted or listed for
trading thereon within five (5) Trading Days of such delisting;

                  (vi)     The Obligor or any subsidiary of the Obligor shall be
a party to any Change of Control Transaction (as defined in Section 4);

                  (vii)    The Obligor shall fail to file the Underlying  Shares
Registration Statement (as defined in Section 4) with the Commission (as defined
in Section 4), or the Underlying  Shares  Registration  Statement shall not have
been declared effective by the Commission,  in each case within the time periods
set forth in the Investor  Registration  Rights  Agreement of even date herewith
between the Obligor and the Holder;

                                       3
<PAGE>

                  (viii)   If  the   effectiveness  of  the  Underlying   Shares
Registration  Statement  lapses  for  any  reason  or the  Holder  shall  not be
permitted to resell the shares of Common Stock  underlying  this Debenture under
the Underlying Shares Registration Statement, in either case, for more than five
(5)  consecutive  Trading Days or an aggregate of eight Trading Days (which need
not be consecutive Trading Days);

                  (ix)     The  Obligor  shall  fail for any  reason to  deliver
Common Stock certificates to a Holder prior to the fifth (5th) Trading Day after
a Conversion  Date or the Obligor shall provide notice to the Holder,  including
by way of public announcement,  at any time, of its intention not to comply with
requests for conversions of this Debenture in accordance with the terms hereof;

                  (x)      The Obligor  shall fail for any reason to deliver the
payment in cash pursuant to a Buy-In (as defined  herein)  within three (3) days
after notice is claimed delivered hereunder; or

                  (xi)     Any Event of  Default on the  Convertible  Debentures
(the  "Original  Debenture")  dated as of April 1, 2005 and July 15, 2005 in the
original principal amounts of $2,535,611 and 565,000, respectively.  Further, an
Event of Default on this Debenture  shall  constitute an Event of Default on the
Original Debenture.

         (b)      During  the  time  that  any  portion  of  this  Debenture  is
outstanding,  if any Event of Default has occurred, the full principal amount of
this  Debenture,  together  with  interest  and other  amounts  owing in respect
thereof,  to the date of  acceleration  shall become at the  Holder's  election,
immediately due and payable in cash,  provided  however,  the Holder may request
(but shall have no  obligation  to  request)  payment of such  amounts in Common
Stock of the Obligor.  In addition to any other remedies,  the Holder shall have
the right (but not the  obligation)  to convert this Debenture at any time after
(x) an Event of Default or (y) the Maturity  Date at the  Conversion  Price then
in-effect.  The  Holder  need not  provide  and the  Obligor  hereby  waives any
presentment,  demand,  protest or other  notice of any kind,  and the Holder may
immediately  and without  expiration of any grace period  enforce any and all of
its rights and remedies  hereunder and all other remedies  available to it under
applicable law. Such  declaration may be rescinded and annulled by Holder at any
time prior to payment  hereunder.  No such  rescission or annulment shall affect
any subsequent Event of Default or impair any right consequent thereon.  Upon an
Event of Default,  notwithstanding  any other provision of this Debenture or any
Transaction  Document,  the Holder  shall have no  obligation  to comply with or
adhere to any  limitations,  if any, on the  conversion of this Debenture or the
sale of the Underlying Shares.

         Section 3.   Conversion.

         (a)      (i)      Conversion at Option of Holder.

                  (A)      This Debenture  shall be  convertible  into shares of
Common  Stock at the option of the  Holder,  in whole or in part at any time and
from time to time,  after the  Original  Issue  Date (as  defined  in Section 4)
(subject to the limitations on conversion set forth in Section 3(a)(ii) hereof).
The number of shares of Common Stock issuable upon a conversion hereunder equals
the sum of (i) the quotient  obtained by dividing (x) the outstanding  amount of

                                       4
<PAGE>

this  Debenture  to be  converted  by (y) the  Conversion  Price (as  defined in
Section  3(c)(i)).  The Obligor shall deliver Common Stock  certificates  to the
Holder prior to the Fifth (5th) Trading Day after a Conversion Date.

                  (B)      Notwithstanding  anything to the  contrary  contained
herein,  if on any Conversion  Date: (1) the number of shares of Common Stock at
the time  authorized,  unissued  and  unreserved  for all  purposes,  or held as
treasury  stock,  is  insufficient  to pay principal  and interest  hereunder in
shares of Common Stock; (2) the Common Stock is not listed or quoted for trading
on the OTC or on a  Subsequent  Market;  (3) the  Obligor  has  failed to timely
satisfy its conversion; or (4) the issuance of such shares of Common Stock would
result in a violation of Section  3(a)(ii),  then,  at the option of the Holder,
the Obligor,  in lieu of delivering  shares of Common Stock  pursuant to Section
3(a)(i)(A),  shall  deliver,  within three (3) Trading  Days of each  applicable
Conversion  Date,  an amount in cash  equal to the  product  of the  outstanding
principal  amount to be converted  plus any interest due therein  divided by the
Conversion  Price and multiplied by the highest  closing price of the stock from
date of the conversion notice till the date that such cash payment is made.

         Further,  if the  Obligor  shall  not  have  delivered  any cash due in
respect of conversion of this Debenture or as payment of interest thereon by the
fifth (5th) Trading Day after the Conversion  Date, the Holder may, by notice to
the Obligor,  require the Obligor to issue  shares of Common  Stock  pursuant to
Section  3(c),  except that for such  purpose the  Conversion  Price  applicable
thereto shall be the lesser of the Conversion  Price on the Conversion  Date and
the Conversion Price on the date of such Holder demand.  Any such shares will be
subject to the provisions of this Section.

                  (C)      The Holder shall effect  conversions by delivering to
the  Obligor a  completed  notice in the form  attached  hereto as  Exhibit A (a
"Conversion Notice").  The date on which a Conversion Notice is delivered is the
"Conversion  Date." Unless the Holder is converting the entire  principal amount
outstanding  under this  Debenture,  the Holder is not  required  to  physically
surrender  this  Debenture  to the  Obligor  in  order  to  effect  conversions.
Conversions  hereunder  shall  have  the  effect  of  lowering  the  outstanding
principal  amount of this Debenture plus all accrued and unpaid interest thereon
in an amount  equal to the  applicable  conversion.  The Holder and the  Obligor
shall maintain  records showing the principal  amount  converted and the date of
such conversions. In the event of any dispute or discrepancy, the records of the
Holder shall be controlling and  determinative in the absence of manifest error.

                  (ii)     Certain Conversion Restrictions.

                           (A)      A Holder may not convert  this  Debenture or
receive  shares of Common  Stock as payment of interest  hereunder to the extent
such conversion or receipt of such interest  payment would result in the Holder,
together  with any  affiliate  thereof,  beneficially  owning (as  determined in
accordance  with Section  13(d) of the  Exchange  Act and the rules  promulgated
thereunder)  in  excess of 4.9% of the then  issued  and  outstanding  shares of
Common  Stock,  including  shares  issuable upon  conversion  of, and payment of
interest  on, this  Debenture  held by such  Holder  after  application  of this
Section.  Since the Holder  will not be  obligated  to report to the Obligor the
number  of  shares  of  Common  Stock it may  hold at the  time of a  conversion
hereunder, unless the conversion at issue would result in the issuance of shares

                                       5
<PAGE>

of Common Stock in excess of 4.9% of the then outstanding shares of Common Stock
without regard to any other shares which may be beneficially owned by the Holder
or an affiliate  thereof,  the Holder shall have the authority and obligation to
determine  whether the  restriction  contained  in this  Section  will limit any
particular  conversion  hereunder  and to the extent that the Holder  determines
that the limitation  contained in this Section  applies,  the  determination  of
which portion of the principal amount of this Debenture is convertible  shall be
the  responsibility  and obligation of the Holder. If the Holder has delivered a
Conversion Notice for a principal amount of this Debenture that,  without regard
to any other  shares that the Holder or its  affiliates  may  beneficially  own,
would result in the issuance in excess of the permitted  amount  hereunder,  the
Obligor shall notify the Holder of this fact and shall honor the  conversion for
the maximum  principal  amount permitted to be converted on such Conversion Date
in  accordance  with the periods  described  in Section  3(a)(i)(A)  and, at the
option of the Holder, either retain any principal amount tendered for conversion
in excess of the permitted  amount  hereunder for future  conversions  or return
such excess principal  amount to the Holder.  The provisions of this Section may
be waived by a Holder (but only as to itself and not to any other  Holder)  upon
not less  than 65 days  prior  notice to the  Obligor.  Other  Holders  shall be
unaffected by any such waiver.

         (b)      (i)       Nothing   herein  shall  limit a  Holder's  right to
pursue  actual  damages or declare  an Event of  Default  pursuant  to Section 2
herein for the Obligor 's failure to deliver certificates representing shares of
Common Stock upon conversion  within the period specified herein and such Holder
shall have the right to pursue all remedies  available to it at law or in equity
including,   without  limitation,   a  decree  of  specific  performance  and/or
injunctive relief, in each case without the need to post a bond or provide other
security.  The  exercise of any such rights  shall not  prohibit the Holder from
seeking  to  enforce  damages  pursuant  to any  other  Section  hereof or under
applicable law.

                  (ii)     In  addition  to any other  rights  available  to the
Holder,  if the  Obligor  fails to  deliver to the Holder  such  certificate  or
certificates  pursuant to Section  3(a)(i)(A) by the fifth Trading Day after the
Conversion  Date, and if after such fifth (5th) Trading Day the Holder purchases
(in an open  market  transaction  or  otherwise)  Common  Stock  to  deliver  in
satisfaction of a sale by such Holder of the Underlying  Shares which the Holder
anticipated receiving upon such conversion (a "Buy-In"),  then the Obligor shall
(A) pay in cash to the Holder  (in  addition  to any  remedies  available  to or
elected by the Holder) the amount by which (x) the Holder's total purchase price
(including  brokerage  commissions,  if any) for the Common  Stock so  purchased
exceeds (y) the product of (1) the  aggregate  number of shares of Common  Stock
that such Holder  anticipated  receiving from the conversion at issue multiplied
by (2) the market  price of the Common Stock at the time of the sale giving rise
to such purchase obligation and (B) at the option of the Holder,  either reissue
a  Debenture  in the  principal  amount  equal to the  principal  amount  of the
attempted  conversion  or  deliver  to the Holder the number of shares of Common
Stock that  would have been  issued had the  Obligor  timely  complied  with its
delivery  requirements  under  Section  3(a)(i)(A).  For example,  if the Holder
purchases  Common  Stock  having a total  purchase  price of  $11,000 to cover a
Buy-In with respect to an attempted  conversion  of  Debentures  with respect to
which the market price of the Underlying  Shares on the date of conversion was a
total of $10,000 under clause (A) of the  immediately  preceding  sentence,  the
Obligor shall be required to pay the Holder $1,000. The Holder shall provide the
Obligor  written notice  indicating the amounts payable to the Holder in respect
of the Buy-In.

                                       6
<PAGE>

         (c)      (i)      The  conversion  price  (the  "Conversion Price")  in
effect on any Conversion  Date shall be equal to the average of the three lowest
closing  market  prices  of the  Company's  common  stock  for the  thirty  days
preceding conversion,  which may be adjusted pursuant to the other terms of this
Debenture.

                  (ii)     If the Obligor,  at any time while this  Debenture is
outstanding,  shall (a) pay a stock dividend or otherwise make a distribution or
distributions  on  shares  of its  Common  Stock or any  other  equity or equity
equivalent   securities  payable  in  shares  of  Common  Stock,  (b)  subdivide
outstanding  shares of Common Stock into a larger number of shares,  (c) combine
(including  by way of reverse  stock split)  outstanding  shares of Common Stock
into a smaller number of shares, or (d) issue by  reclassification  of shares of
the Common Stock any shares of capital stock of the Obligor, then the Conversion
Price  shall be  multiplied  by a fraction of which the  numerator  shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding
before such event and of which the denominator  shall be the number of shares of
Common Stock  outstanding after such event. Any adjustment made pursuant to this
Section  shall  become  effective  immediately  after  the  record  date for the
determination of stockholders  entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.

                  (iii)    If the Obligor,  at any time while this  Debenture is
outstanding,  shall issue  rights,  options or warrants to all holders of Common
Stock (and not to the Holder) entitling them to subscribe for or purchase shares
of  Common  Stock at a price per share  less than the  Closing  Bid Price at the
record date mentioned below,  then the Conversion Price shall be multiplied by a
fraction,  of which the denominator  shall be the number of shares of the Common
Stock (excluding treasury shares, if any) outstanding on the date of issuance of
such rights or warrants  (plus the number of  additional  shares of Common Stock
offered for  subscription or purchase),  and of which the numerator shall be the
number  of  shares of the  Common  Stock  (excluding  treasury  shares,  if any)
outstanding on the date of issuance of such rights or warrants,  plus the number
of shares which the  aggregate  offering  price of the total number of shares so
offered would purchase at such Closing Bid Price.  Such adjustment shall be made
whenever  such  rights  or  warrants  are  issued,  and shall  become  effective
immediately after the record date for the determination of stockholders entitled
to receive such rights, options or warrants. However, upon the expiration of any
such  right,  option or  warrant  to  purchase  shares of the  Common  Stock the
issuance of which resulted in an adjustment in the Conversion  Price pursuant to
this  Section,  if any such right,  option or warrant shall expire and shall not
have been exercised, the Conversion Price shall immediately upon such expiration
be recomputed and effective immediately upon such expiration be increased to the
price  which it would have been (but  reflecting  any other  adjustments  in the
Conversion  Price made  pursuant to the  provisions  of this  Section  after the
issuance of such rights or warrants) had the adjustment of the Conversion  Price
made upon the  issuance of such  rights,  options or  warrants  been made on the
basis of offering for subscription or purchase only that number of shares of the
Common Stock  actually  purchased  upon the exercise of such rights,  options or
warrants actually exercised.

                  (iv)     If  the  Obligor  or  any  subsidiary   thereof,   as
applicable,  with respect to Common Stock Equivalents (as defined below), at any
time while this Debenture is outstanding,  shall issue shares of Common Stock or
rights, warrants,  options or other securities or debt that are convertible into
or  exchangeable  for  shares  of  Common  Stock  ("Common  Stock  Equivalents")

                                       7
<PAGE>

entitling  any Person to acquire  shares of Common  Stock,  at a price per share
less than the  Conversion  Price (if the  holder of the  Common  Stock or Common
Stock  Equivalent so issued shall at any time,  whether by operation of purchase
price adjustments, reset provisions,  floating conversion,  exercise or exchange
prices or  otherwise,  or due to warrants,  options or rights per share which is
issued in connection with such issuance, be entitled to receive shares of Common
Stock at a price  per  share  which  is less  than the  Conversion  Price,  such
issuance shall be deemed to have occurred for less than the  Conversion  Price),
then, at the sole option of the Holder,  the Conversion  Price shall be adjusted
to mirror the  conversion,  exchange or purchase  price for such Common Stock or
Common Stock Equivalents (including any reset provisions thereof) at issue. Such
adjustment shall be made whenever such Common Stock or Common Stock  Equivalents
are issued.  The Obligor  shall notify the Holder in writing,  no later than one
(1)  business  day  following  the  issuance of any Common Stock or Common Stock
Equivalent subject to this Section,  indicating therein the applicable  issuance
price, or of applicable reset price, exchange price,  conversion price and other
pricing  terms.  No  adjustment  under this Section shall be made as a result of
issuances and exercises of options to purchase shares of Common Stock issued for
compensatory  purposes  pursuant to any of the  Obligor's  stock option or stock
purchase plans.

                  (v)      If the Obligor,  at any time while this  Debenture is
outstanding,  shall  distribute  to all holders of Common  Stock (and not to the
Holder)  evidences  of its  indebtedness  or assets or  rights  or  warrants  to
subscribe  for or purchase any security,  then in each such case the  Conversion
Price  at  which  this  Debenture  shall  thereafter  be  convertible  shall  be
determined by multiplying the Conversion  Price in effect  immediately  prior to
the record date fixed for determination of stockholders entitled to receive such
distribution  by a fraction  of which the  denominator  shall be the Closing Bid
Price  determined  as of the  record  date  mentioned  above,  and of which  the
numerator shall be such Closing Bid Price on such record date less the then fair
market  value at such  record  date of the portion of such assets or evidence of
indebtedness so distributed  applicable to one  outstanding  share of the Common
Stock as determined by the Board of Directors in good faith.  In either case the
adjustments  shall be  described  in a  statement  provided to the Holder of the
portion  of  assets  or  evidences  of   indebtedness  so  distributed  or  such
subscription  rights  applicable to one share of Common Stock.  Such  adjustment
shall be made whenever any such  distribution is made and shall become effective
immediately after the record date mentioned above.

                  (vi)     In case of any  reclassification  of the Common Stock
or any compulsory share exchange pursuant to which the Common Stock is converted
into  other  securities,  cash or  property,  the  Holder  shall  have the right
thereafter to, at its option, (A) convert the then outstanding principal amount,
together  with all accrued but unpaid  interest and any other amounts then owing
hereunder  in  respect  of this  Debenture  into the  shares  of stock and other
securities, cash and property receivable upon or deemed to be held by holders of
the Common Stock  following such  reclassification  or share  exchange,  and the
Holder of this  Debenture  shall be  entitled  upon such event to  receive  such
amount of securities,  cash or property as the shares of the Common Stock of the
Obligor into which the then  outstanding  principal  amount,  together  with all
accrued  but unpaid  interest  and any other  amounts  then owing  hereunder  in
respect of this Debenture  could have been converted  immediately  prior to such
reclassification or share exchange would have been entitled,  or (B) require the
Obligor to prepay the outstanding  principal amount of this Debenture,  plus all
interest and other amounts due and payable thereon.  The entire prepayment price

                                       8
<PAGE>

shall  be paid in cash.  This  provision  shall  similarly  apply to  successive
reclassifications or share exchanges.

                  (vii)    The  Obligor  shall  maintain a share  reserve of not
less than 50% of the shares of Common Stock  issuable  upon  conversion  of this
Debenture;  and within  three (3)  Business  Days  following  the receipt by the
Obligor of a Holder's  notice that such minimum  number of Underlying  Shares is
not so reserved,  the Obligor  shall  promptly  reserve a  sufficient  number of
shares of Common Stock to comply with such requirement.

                  (viii)   All  calculations  under  this  Section  3  shall  be
rounded up to the nearest $0.001 of a share.

                  (ix)     Whenever  the  Conversion  is  adjusted  pursuant  to
Section 3 hereof, the Obligor shall promptly mail to the Holder a notice setting
forth the  Conversion  Price after such  adjustment  and  setting  forth a brief
statement of the facts requiring such adjustment.

                  (x)      If (A) the Obligor  shall  declare a dividend (or any
other distribution) on the Common Stock; (B) the Obligor shall declare a special
nonrecurring  cash  dividend on or a  redemption  of the Common  Stock;  (C) the
Obligor  shall  authorize the granting to all holders of the Common Stock rights
or warrants to  subscribe  for or  purchase  any shares of capital  stock of any
class or of any  rights;  (D) the  approval of any  stockholders  of the Obligor
shall be required in connection with any  reclassification  of the Common Stock,
any  consolidation  or  merger  to which  the  Obligor  is a party,  any sale or
transfer  of all or  substantially  all of the  assets  of the  Obligor,  of any
compulsory  share  exchange  whereby the Common  Stock is  converted  into other
securities,  cash or property;  or (E) the Obligor shall authorize the voluntary
or  involuntary  dissolution,  liquidation  or winding up of the  affairs of the
Obligor;  then, in each case, the Obligor shall cause to be filed at each office
or agency maintained for the purpose of conversion of this Debenture,  and shall
cause to be mailed to the Holder at its last address as it shall appear upon the
stock books of the  Obligor,  at least  twenty (20)  calendar  days prior to the
applicable record or effective date hereinafter  specified, a notice stating (x)
the date on which a record  is to be taken  for the  purpose  of such  dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such  dividend,  distributions,   redemption,  rights  or  warrants  are  to  be
determined  or (y)  the  date on  which  such  reclassification,  consolidation,
merger,  sale,  transfer or share  exchange is expected to become  effective  or
close,  and the date as of which it is expected that holders of the Common Stock
of record  shall be entitled to exchange  their  shares of the Common  Stock for
securities,  cash or other  property  deliverable  upon  such  reclassification,
consolidation,  merger,  sale,  transfer or share exchange,  provided,  that the
failure to mail such  notice or any defect  therein  or in the  mailing  thereof
shall not affect the validity of the corporate  action  required to be specified
in such  notice.  The Holder is entitled to convert  this  Debenture  during the
20-day calendar period  commencing the date of such notice to the effective date
of the event triggering such notice.

                  (xi)     In case of any (1)  merger  or  consolidation  of the
Obligor or any  subsidiary  of the Obligor with or into another  Person,  or (2)
sale by the Obligor or any  subsidiary  of the Obligor of more than  one-half of
the assets of the Obligor in one or a series of related  transactions,  a Holder
shall have the right to (A) exercise any rights under Section 2(b),  (B) convert

                                       9
<PAGE>

the aggregate amount of this Debenture then outstanding into the shares of stock
and other securities,  cash and property receivable upon or deemed to be held by
holders of Common Stock following such merger,  consolidation  or sale, and such
Holder shall be entitled upon such event or series of related  events to receive
such amount of securities,  cash and property as the shares of Common Stock into
which  such  aggregate  principal  amount  of this  Debenture  could  have  been
converted  immediately  prior to such merger,  consolidation or sales would have
been  entitled,  or (C) in the case of a merger or  consolidation,  require  the
surviving entity to issue to the Holder a convertible Debenture with a principal
amount equal to the aggregate  principal  amount of this  Debenture then held by
such  Holder,  plus all  accrued and unpaid  interest  and other  amounts  owing
thereon,  which  such  newly  issued  convertible  Debenture  shall  have  terms
identical (including with respect to conversion) to the terms of this Debenture,
and shall be entitled to all of the rights and  privileges of the Holder of this
Debenture set forth herein and the agreements  pursuant to which this Debentures
were issued.  In the case of clause (C), the conversion price applicable for the
newly issued shares of convertible  preferred  stock or  convertible  Debentures
shall be based upon the amount of securities,  cash and property that each share
of Common Stock would receive in such  transaction  and the Conversion  Price in
effect  immediately  prior  to  the  effectiveness  or  closing  date  for  such
transaction.  The terms of any such merger,  sale or consolidation shall include
such  terms so as to  continue  to give the  Holder  the  right to  receive  the
securities,  cash and property set forth in this Section upon any  conversion or
redemption  following  such  event.  This  provision  shall  similarly  apply to
successive such events.

         (d)      The Obligor  covenants  that it will at all times  reserve and
keep available out of its authorized and unissued  shares of Common Stock solely
for the purpose of issuance  upon  conversion  of this  Debenture and payment of
interest on this Debenture, each as herein provided, free from preemptive rights
or any other actual contingent purchase rights of persons other than the Holder,
not less than such number of shares of the Common Stock as shall (subject to any
additional  requirements  of the  Obligor as to  reservation  of such shares set
forth in this  Debenture) be issuable  (taking into account the  adjustments and
restrictions  of Sections 2(b) and 3(c)) upon the conversion of the  outstanding
principal  amount of this  Debenture  and  payment of  interest  hereunder.  The
Obligor  covenants  that all shares of Common  Stock  that shall be so  issuable
shall,  upon  issue,  be duly and  validly  authorized,  issued and fully  paid,
nonassessable  and, if the  Underlying  Shares  Registration  Statement has been
declared  effective  under the  Securities  Act,  registered  for public sale in
accordance with such Underlying Shares Registration Statement.

         (e)     Upon a  conversion  hereunder  the  Obligor  shall  not be
required to issue stock  certificates  representing  fractions  of shares of the
Common Stock, but may if otherwise permitted,  make a cash payment in respect of
any final  fraction of a share  based on the Closing Bid Price at such time.  If
the Obligor  elects not, or is unable,  to make such a cash payment,  the Holder
shall be  entitled  to receive,  in lieu of the final  fraction of a share,  one
whole share of Common Stock.

         (f)      The issuance of certificates for shares of the Common Stock on
conversion of this Debenture  shall be made without charge to the Holder thereof
for any documentary stamp or similar taxes that may be payable in respect of the
issue or delivery of such  certificate,  provided  that the Obligor shall not be
required to pay any tax that may be payable in respect of any transfer  involved
in the issuance and delivery of any such  certificate  upon conversion in a name

                                       10
<PAGE>

other than that of the Holder of such  Debenture  so  converted  and the Obligor
shall not be required to issue or deliver such certificates  unless or until the
person or persons requesting the issuance thereof shall have paid to the Obligor
the  amount of such tax or shall have  established  to the  satisfaction  of the
Obligor that such tax has been paid.

         (g)      Any  notices,   consents,   waivers  or  other  communications
required or  permitted to be given under the terms hereof must be in writing and
will be  deemed  to have  been  delivered:  (i)  upon  receipt,  when  delivered
personally;  (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending  party);  or (iii) one (1) trading day after  deposit  with a nationally
recognized  overnight  delivery service,  in each case properly addressed to the
party to  receive  the  same.  The  addresses  and  facsimile  numbers  for such
communications shall be:

          If to the Holder:           Cornell Capital Partners, LP
                                      101 Hudson Street -Suite 3700
                                      Jersey City, NJ 07302
                                      Attention:        Mark Angelo
                                                        Portfolio Manager
                                      Telephone:        (201) 985-8300
                                      Facsimile:        (201) 985-8266

            With a copy to:           Cornell Capital Partners, LP
                                      101 Hudson Street -Suite 3700
                                      Jersey City, NJ 07302
                                      Attention:        Troy J. Rillo, Esq.
                                                        Managing Director
                                      Telephone:        (201) 985-8300
                                      Facsimile:        (201) 985-8266

         If to the Obligor:           GreenShift Corporation.
                                      111 Howard Street, Suite 108
                                      Mount Arlington, New Jersey 07856
                                      Attention:        Kevin Kreisler,
                                                        Chief Executive Officer
                                      Telephone:        973-398-8183
                                      Facsimile:        973-398-8037

            With a copy to:           Sonageri & Fallon
                                      411 Hackensack Ave
                                      Hackensack, New Jersey
                                      Attention:          James Sonageri, Esq.
                                      Telephone:       201-646-1000
                                      Facsimile:        201-646-1084

or at such other address and/or facsimile number and/or to the attention of such
other person as the  recipient  party has  specified by written  notice given to
each other  party three (3)  business  days prior to the  effectiveness  of such
change.  Written  confirmation  of receipt  (i) given by the  recipient  of such
notice,   consent,   waiver  or  other   communication,   (ii)  mechanically  or
electronically  generated by the sender's facsimile machine containing the time,

                                       11
<PAGE>

date,  recipient  facsimile  number  and an  image  of the  first  page  of such
transmission  or (iii) provided by a nationally  recognized  overnight  delivery
service, shall be rebuttable evidence of personal service,  receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

         Section 4.   Definitions. For the purposes  hereof, the following terms
shall have the following meanings:

         "Business Day" means any day except Saturday,  Sunday and any day which
shall be a federal  legal holiday in the United States or a day on which banking
institutions  are  authorized or required by law or other  government  action to
close.

         "Change  of  Control  Transaction"  means  the  occurrence  of  (a)  an
acquisition  after the date hereof by an  individual  or legal entity or "group"
(as  described  in Rule  13d-5(b)(1)  promulgated  under  the  Exchange  Act) of
effective  control  (whether  through legal or  beneficial  ownership of capital
stock of the Obligor,  by contract or  otherwise)  of in excess of fifty percent
(50%) of the voting  securities of the Obligor  (except that the  acquisition of
voting  securities  by the  Holder  shall not  constitute  a Change  of  Control
Transaction for purposes hereof),  (b) a replacement at one time or over time of
more than one-half of the members of the board of directors of the Obligor which
is not approved by a majority of those  individuals who are members of the board
of  directors  on the date  hereof (or by those  individuals  who are serving as
members of the board of directors on any date whose  nomination  to the board of
directors  was  approved by a majority of the members of the board of  directors
who are members on the date hereof),  (c) the merger,  consolidation  or sale of
fifty  percent  (50%) or more of the assets of the Obligor or any  subsidiary of
the  Obligor in one or a series of  related  transactions  with or into  another
entity, or (d) the execution by the Obligor of an agreement to which the Obligor
is a party or by which it is bound,  providing  for any of the  events set forth
above in (a), (b) or (c).

         "Commission" means the Securities and Exchange Commission.

         "Common Stock" means the common stock, par value $0.001, of the Obligor
and stock of any other class into which such shares may  hereafter be changed or
reclassified.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Funding Event" means any transaction or series of transactions  closed
after the Original  Issue Date in which the Obligor  raises  $7,000,000  or more
through  the  sale of their  equity  securities  or  securities  exercisable  or
convertible into equity securities.

         "Original Issue Date" shall mean the date of the first issuance of this
Debenture  regardless of the number of transfers and regardless of the number of
instruments, which may be issued to evidence such Debenture.

         "Closing  Bid  Price"  means the  price per share in the last  reported
trade of the Common Stock on the OTC or on the  exchange  which the Common Stock
is then listed as quoted by Bloomberg, LP.

                                       12
<PAGE>

         "Person"  means  a   corporation,   an   association,   a  partnership,
organization,  a business, an individual,  a government or political subdivision
thereof or a governmental agency.

         "Securities Act" means the Securities Act of 1933, as amended,  and the
rules and regulations promulgated thereunder.

         "Trading  Day"  means a day on which the  shares  of  Common  Stock are
quoted on the OTC or quoted  or  traded on such  Subsequent  Market on which the
shares of Common  Stock are then quoted or listed;  provided,  that in the event
that the shares of Common Stock are not listed or quoted, then Trading Day shall
mean a Business Day.

         "Transaction Documents" means the Securities Purchase Agreement of even
date  herewith  between  the  Obligor  and the  Holder  and any other  agreement
delivered in  connection  with this  Agreement  or existing  between the parties
hereto prior to the date hereof, including,  without limitation, the Convertible
Debenture  dated  April 1,  2005 in the  principal  amount  of  $2,535,611,  the
Convertible  Debenture dated July 15, 2005 in the principal  amount of $565,000,
this  Debenture,  the Amended and Restated  Stock Pledge  Agreement of even date
herewith, the Amended and Restated Security Agreement of even date herewith, the
Amended and Restated  Registration  Rights Agreement of even date herewith,  the
Escrow  Agreement  of  even  date  herewith,   the  Irrevocable  Transfer  Agent
Instructions  of even  date  herewith,  and any  other  instrument  or  contract
existing between the parties on or before the date hereof.

         "Underlying  Shares"  means the shares of Common  Stock  issuable  upon
conversion of this  Debenture or as payment of interest in  accordance  with the
terms hereof.

         "Underlying  Shares   Registration   Statement"  means  a  registration
statement  meeting  the  requirements  set  forth  in  the  Registration  Rights
Agreement,  covering among other things the resale of the Underlying  Shares and
naming the Holder as a "selling stockholder" thereunder.

         Section 5.   Except as expressly  provided herein, no provision of this
Debenture  shall  alter or impair  the  obligations  of the  Obligor,  which are
absolute and unconditional,  to pay the principal of, interest and other charges
(if any) on, this  Debenture at the time,  place,  and rate,  and in the coin or
currency,  herein  prescribed.  This  Debenture  is a direct  obligation  of the
Obligor.  This  Debenture  ranks  pari passu  with all other  Debentures  now or
hereafter issued under the terms set forth herein.  As long as this Debenture is
outstanding,  the Obligor shall not and shall cause their  subsidiaries  not to,
without the consent of the Holder,  (i) amend its certificate of  incorporation,
bylaws or other  charter  documents so as to adversely  affect any rights of the
Holder;  (ii)  repay,  repurchase  or offer to repay,  repurchase  or  otherwise
acquire shares of its Common Stock or other equity  securities  other than as to
the Underlying  Shares to the extent permitted or required under the Transaction
Documents;  or  (iii)  enter  into  any  agreement  with  respect  to any of the
foregoing.

         Section 6.   This Debenture  shall not entitle the Holder to any of the
rights of a stockholder of the Obligor,  including without limitation, the right
to vote, to receive dividends and other distributions,  or to receive any notice
of, or to attend,  meetings  of  stockholders  or any other  proceedings  of the
Obligor,  unless  and to the extent  converted  into  shares of Common  Stock in
accordance with the terms hereof.

                                       13
<PAGE>

         Section 7.   If this Debenture is mutilated, lost, stolen or destroyed,
the Obligor shall execute and deliver, in exchange and substitution for and upon
cancellation of the mutilated Debenture,  or in lieu of or in substitution for a
lost, stolen or destroyed Debenture, a new Debenture for the principal amount of
this Debenture so mutilated,  lost, stolen or destroyed but only upon receipt of
evidence  of such  loss,  theft or  destruction  of such  Debenture,  and of the
ownership hereof, and indemnity,  if requested,  all reasonably  satisfactory to
the Obligor.

         Section 8.   No indebtedness of the Obligor is senior to this Debenture
in  right  of  payment,  whether  with  respect  to  interest,  damages  or upon
liquidation  or  dissolution  or otherwise.  Without the Holder's  consent,  the
Obligor will not and will not permit any of their  subsidiaries  to, directly or
indirectly,   enter  into,  create,   incur,  assume  or  suffer  to  exist  any
indebtedness  of any kind,  on or with  respect to any of its property or assets
now owned or hereafter acquired or any interest therein or any income or profits
there from that is senior in any respect to the obligations of the Obligor under
this Debenture.

         Section 9.   This  Debenture  shall be  governed  by  and  construed in
accordance  with the laws of the State of New Jersey,  without  giving effect to
conflicts of laws thereof.  Each of the parties  consents to the jurisdiction of
the Superior  Courts of the State of New Jersey  sitting in Hudson  County,  New
Jersey and the U.S.  District  Court for the  District of New Jersey  sitting in
Newark,  New Jersey in connection  with any dispute arising under this Debenture
and hereby  waives,  to the maximum  extent  permitted  by law,  any  objection,
including  any  objection  based on forum non  conveniens to the bringing of any
such proceeding in such jurisdictions.

         Section 10.  If the Obligor fails to strictly  comply with the terms of
this  Debenture,  then the Obligor shall  reimburse the Holder  promptly for all
fees, costs and expenses,  including,  without  limitation,  attorneys' fees and
expenses incurred by the Holder in any action in connection with this Debenture,
including, without limitation, those incurred: (i) during any workout, attempted
workout,  and/or in  connection  with the  rendering  of legal  advice as to the
Holder's rights, remedies and obligations, (ii) collecting any sums which become
due  to the  Holder,  (iii)  defending  or  prosecuting  any  proceeding  or any
counterclaim to any proceeding or appeal;  or (iv) the protection,  preservation
or enforcement of any rights or remedies of the Holder.

         Section  11. Any  waiver  by the  Holder  of a breach  of any provision
of this  Debenture  shall not operate as or be  construed  to be a waiver of any
other breach of such  provision or of any breach of any other  provision of this
Debenture. The failure of the Holder to insist upon strict adherence to any term
of this Debenture on one or more  occasions  shall not be considered a waiver or
deprive that party of the right  thereafter  to insist upon strict  adherence to
that term or any other term of this Debenture. Any waiver must be in writing.

         Section 12.  If any  provision  of this  Debenture  is invalid, illegal
or unenforceable,  the balance of this Debenture shall remain in effect,  and if
any  provision  is  inapplicable  to  any  person  or  circumstance,   it  shall
nevertheless  remain  applicable to all other persons and  circumstances.  If it
shall be found that any interest or other amount  deemed  interest due hereunder
shall violate  applicable laws governing  usury, the applicable rate of interest
due hereunder shall automatically be lowered to equal the maximum permitted rate
of interest.  The Obligor  covenants  (to the extent that it may lawfully do so)
that it shall not at any time insist upon,  plead,  or in any manner  whatsoever

                                       14
<PAGE>

claim or take the benefit or advantage  of, any stay,  extension or usury law or
other law which would  prohibit  or forgive  the Obligor  from paying all or any
portion of the  principal  of or  interest  on this  Debenture  as  contemplated
herein,  wherever  enacted,  now or at any time hereafter in force, or which may
affect the covenants or the performance of this  indenture,  and the Obligor (to
the extent it may  lawfully  do so) hereby  expressly  waives  all  benefits  or
advantage of any such law, and covenants that it will not, by resort to any such
law,  hinder,  delay or impeded the execution of any power herein granted to the
Holder, but will suffer and permit the execution of every such as though no such
law has been enacted.

         Section 13.  Whenever any payment or other obligation  hereunder  shall
be due on a day other than a Business  Day,  such  payment  shall be made on the
next succeeding Business Day.

         Section 14.  THE    PARTIES    HEREBY    KNOWINGLY,   VOLUNTARILY   AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY  LITIGATION  BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION  WITH
THIS AGREEMENT OR ANY TRANSACTION  DOCUMENT OR ANY COURSE OF CONDUCT,  COURSE OF
DEALING,  STATEMENTS  (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS
PROVISION  IS  A  MATERIAL  INDUCEMENT  FOR  THE  PARTIES'  ACCEPTANCE  OF  THIS
AGREEMENT.

IN WITNESS WHEREOF, the Obligor has caused this Secured Convertible Debenture to
be duly executed by a duly authorized officer as of the date set forth above.

                                                COMPANY:
                                                GREENSHIFT CORPORATION (F/K/A
                                                GREENWORKS CORPORATION)

                                                By: /s/ Kevin Kreisler
                                                Name:    Kevin Kreisler
                                                Title:   Chairman and
                                                         Chief Executive Officer

                                       15
<PAGE>

                                   EXHIBIT "A"
                                   -----------

                              NOTICE OF CONVERSION
                              --------------------

TO:

         The undersigned hereby irrevocably elects to convert $ ________________
of the principal  amount of the above  Debenture  into Shares of Common Stock of
GreenShift  Corporation,  according to the conditions stated therein,  as of the
Conversion Date written below.

Conversion Date:                    ____________________________________________

Applicable Conversion Price:        ____________________________________________

Signature:                          ____________________________________________

Name:

Address:                            ____________________________________________

Amount to be converted:            $____________________________________________

Amount of Debenture unconverted:   $____________________________________________

Conversion Price per share:        $____________________________________________

Number of  shares of Common
Stock to be issued:                 ____________________________________________

Please  issue the shares of
Common Stock in  the following
name and to the following
address:                            ____________________________________________

Issue to:                           ____________________________________________

Authorized Signature:               ____________________________________________

Name:                               ____________________________________________

Title:                              ____________________________________________

Phone Number:                       ____________________________________________

Broker DTC Participant Code:        ____________________________________________

Account Number:                     ____________________________________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}]]