Document:

<PAGE>
                                                                   EXHIBIT 10.BB

                  AMENDED AND RESTATED PARTICIPATION AGREEMENT

                                      AMONG

                               EL PASO CORPORATION
                            (A DELAWARE CORPORATION)

                            LIMESTONE ELECTRON TRUST
                           (A DELAWARE BUSINESS TRUST)

                            LIMESTONE ELECTRON, INC.
                            (A DELAWARE CORPORATION)

                     CREDIT SUISSE FIRST BOSTON (USA), INC.
                            (A DELAWARE CORPORATION)

                        EL PASO CHAPARRAL HOLDING COMPANY
                            (A DELAWARE CORPORATION)

                      EL PASO CHAPARRAL HOLDING II COMPANY
                            (A DELAWARE CORPORATION)

                       EL PASO CHAPARRAL INVESTOR, L.L.C.
                     (A DELAWARE LIMITED LIABILITY COMPANY)

                       EL PASO CHAPARRAL MANAGEMENT, L.P.
                        (A DELAWARE LIMITED PARTNERSHIP)

                           CHAPARRAL INVESTORS, L.L.C.
                     (A DELAWARE LIMITED LIABILITY COMPANY)

                           MESQUITE INVESTORS, L.L.C.
                     (A DELAWARE LIMITED LIABILITY COMPANY)

                         EL PASO ELECTRON OVERFUND TRUST
                           (A DELAWARE BUSINESS TRUST)

                          EL PASO ELECTRON SHARE TRUST
                           (A DELAWARE BUSINESS TRUST)

                                 ELECTRON TRUST
                           (A DELAWARE BUSINESS TRUST)

                            WILMINGTON TRUST COMPANY,

                                       AND

                              THE BANK OF NEW YORK

                           DATED AS OF APRIL 12, 2002

<PAGE>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                               Page
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<S>                                                                                                           <C>
ARTICLE I  DEFINITIONS AND CERTAIN UNDERSTANDINGS................................................................1
         Section 1.1       Definitions...........................................................................1
         Section 1.2       Rules of Construction.................................................................2

ARTICLE II  CLOSING; AGREEMENTS TO PURCHASE AND SELL.............................................................2
         Section 2.1       Time and Place of Closing.............................................................2
         Section 2.2       Agreements............................................................................2
         Section 2.3       Closing...............................................................................2
         Section 2.4       Consent...............................................................................7

ARTICLE III  CONDITIONS PRECEDENT................................................................................7
         Section 3.1       Conditions to the Occurrence of the Closing Date......................................7
         Section 3.2       Reserved.............................................................................10

ARTICLE IV  REPRESENTATIONS AND WARRANTIES......................................................................10
         Section 4.1       Representations and Warranties of El Paso............................................10
         Section 4.2       Representations and Warranties of El Paso with Respect to Limestone, the
                           Co-Issuer, Chaparral, Mesquite, the Overfund Trust and the Share Trust...............14
         Section 4.3       Representations and Warranties of El Paso with Respect to the New Assets.............19
         Section 4.4       Representations and Warranties of El Paso with Respect to the Specified New
                           Assets...............................................................................23
         Section 4.5       Representations and Warranties of the Indenture Trustee..............................23
         Section 4.6       Representations and Warranties of Wilmington Trust Company...........................24

ARTICLE V  COVENANTS; ACKNOWLEDGEMENTS..........................................................................24
         Section 5.1       Covenants of El Paso.................................................................24
         Section 5.2       Guaranty.............................................................................28
         Section 5.3       Covenant of Chaparral................................................................28
         Section 5.4       Agreement of Parties.................................................................28
         Section 5.5       Covenants of Overfund Trust..........................................................29
         Section 5.6       Covenants of Indenture Trustee.......................................................30
         Section 5.7       Withdrawal of DLJ Inc................................................................30

ARTICLE VI  INDEMNIFICATION.....................................................................................30
         Section 6.1       General Indemnification..............................................................30
         Section 6.2       Tax Indemnification..................................................................38
         Section 6.3       Agreements...........................................................................38

ARTICLE VII  MISCELLANEOUS......................................................................................38
         Section 7.1       Survival.............................................................................38
         Section 7.2       Notices..............................................................................39
         Section 7.3       Severability of Provisions...........................................................41
         Section 7.4       Governing Law; Waiver of Jury Trial; Consent to Jurisdiction.........................41
         Section 7.5       Amendments, Waivers, Etc.............................................................43
         Section 7.6       Entire Agreement.....................................................................43
</Table>

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<Table>
<S>                                                                                                           <C>
         Section 7.7       Benefit of Agreement.................................................................43
         Section 7.8       Expenses.............................................................................44
         Section 7.9       No Bankruptcy Petitions..............................................................44
         Section 7.10      Limitation of Liability..............................................................45
         Section 7.11      General Limitation of Liability......................................................45
         Section 7.12      Counterparts.........................................................................45
         Section 7.13      Effectiveness........................................................................46
</Table>

ANNEXES AND SCHEDULES

Annex A         Definitions and Rules of Construction
Annex B         El Paso Energy Presentation to Investors
Annex C         Due Diligence Presentation Materials

Schedule I      Section 4.1(r) - Disclosure
Schedule II     Schedule of Existing Liabilities of Chaparral
Schedule III    Schedule of Existing Liens

                                       ii
<PAGE>

                  This AMENDED AND RESTATED PARTICIPATION AGREEMENT, dated as of
April 12, 2002 (this "Agreement") is by and among (i) EL PASO CORPORATION
(formerly El Paso Energy Corporation), a Delaware corporation, (ii) LIMESTONE
ELECTRON TRUST, a Delaware business trust, (iii) LIMESTONE ELECTRON, INC., a
Delaware corporation, (iv) Credit Suisse First Boston (USA), Inc., a Delaware
corporation, as successor to Donaldson, Lufkin & Jenrette, Inc., (v) EL PASO
CHAPARRAL HOLDING COMPANY, a Delaware corporation, (vi) EL PASO CHAPARRAL
HOLDING II COMPANY, a Delaware corporation, (vii) EL PASO CHAPARRAL INVESTOR,
L.L.C., a Delaware limited liability company, (viii) EL PASO CHAPARRAL
MANAGEMENT, L.P., a Delaware limited partnership, (ix) CHAPARRAL INVESTORS,
L.L.C., a Delaware limited liability company, (x) MESQUITE INVESTORS, L.L.C., a
Delaware limited liability company, (xi) EL PASO ELECTRON OVERFUND TRUST, a
Delaware business trust, (xii) EL PASO ELECTRON SHARE TRUST, a Delaware business
trust, (xiii) ELECTRON TRUST, a Delaware business trust, as sole
Certificateholder, (xiv) WILMINGTON TRUST COMPANY and (xv) THE BANK OF NEW YORK,
a New York banking corporation, as successor to United States Trust Company of
New York (and together with the other parties hereto (other than Credit Suisse
First Boston (USA), Inc., as successor to Donaldson, Lufkin & Jenrette, Inc.),
each a "Party") (defined terms used herein shall have the meanings assigned
thereto in Section 1.1 hereof).

                  WHEREAS, as of March 15, 2000, DLJ Inc. and each of the
Parties (or its predecessor) entered into a Participation Agreement (the
"Original Participation Agreement") pursuant to which DLJ Inc. and each Party
assumed the duties ascribed to it thereunder and under the other Transaction
Documents on the terms and conditions expressly set forth therein;

                  WHEREAS, DLJ Inc. and each of the Parties hereto desires to
amend and restate the Original Participation Agreement in its entirety on and as
of the Signing Date to become effective on and as of the Effective Date pursuant
to Section 7.13;

                  NOW, THEREFORE, in consideration of the mutual agreements
herein contained and other good and valuable consideration, receipt of which is
acknowledged, the parties hereto agree as follows:

                                    ARTICLE I

                                 DEFINITIONS AND
                             CERTAIN UNDERSTANDINGS

                  Section 1.1 Definitions.

                  Each capitalized term used herein and not otherwise defined
herein shall have the definition assigned to that term in Annex A ("Annex A").

<PAGE>

                  Section 1.2 Rules of Construction.

                  This Agreement and the definitions referred to in Section 1.1
shall be governed by, and construed in accordance with, the rules of
construction set forth in Section 1.02 of Annex A.

                                   ARTICLE II

                    CLOSING; AGREEMENTS TO PURCHASE AND SELL

                  Section 2.1 Time and Place of Closing.

                  The closing of the transactions described in Section 2.3
hereof shall commence at 9:00 a.m., New York City time, on the Closing Date at
the offices of Milbank, Tweed, Hadley & McCloy LLP, 1 Chase Manhattan Plaza, New
York, New York 10005, or at such other time and at such other location as shall
be agreed by the parties hereto.

                  Section 2.2 Agreements.

                  Pursuant to the Original Participation Agreement, each party
thereto acknowledged and consented to the transactions described in Section 2.3
thereof, subject to the terms and conditions of the Original Participation
Agreement and on the basis of the representations and warranties set forth
therein, in consideration for the agreement of each other party as set forth
therein.

                  Section 2.3 Closing.

                  On or before the Closing Date, the following transactions
shall be consummated (if on the Closing Date, simultaneously, unless otherwise
specified herein or in the other Transaction Documents), subject to the terms
and conditions hereof and on the basis of the representations and warranties set
forth herein:

                  (a) El Paso. (i) At least one Business Day prior to the
Closing Date, El Paso shall cause its interests in the Specified New Assets to
be sold to Mesquite.

                  (ii) On the Closing Date, El Paso shall (i) contribute $4,000
to the Share Trust as consideration for the sole certificate of beneficial
interest in the Share Trust and (ii) issue the El Paso Preferred Stock to the
Share Trust against payment therefor of $2,000 from the Share Trust and other
good and valuable consideration described in the Share Trust Agreement and the
Transaction Documents.

                  (iii) On the Closing Date, El Paso shall, and shall cause the
Share Trust to, enter into the Share Trust Agreement and the Remarketing
Agreement.

                  (iv) On the Closing Date, El Paso shall issue El Paso Debt
Securities to the Overfund Trust in an aggregate principal amount equal to the
Overfund Amount (less amounts, if

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any, invested in Financial Investments) against payment to El Paso of an amount
equal to the Overfund Amount.

                  (v) On the Closing Date, El Paso shall enter into the
Limestone Trust Agreement, the Share Trust Agreement, the Overfund Trust
Agreement, the Tax Indemnification Agreement, the El Paso Debt Security
Direction Letter and each other Transaction Document to which it is a party and
that has not previously been entered into by it.

                  (vi) On the Closing Date, notwithstanding the terms of the
Existing El Paso Demand Note, El Paso shall repay $61,600,509.17 of the
principal amount of the Existing El Paso Demand Note in accordance with the
demand made by Chaparral pursuant to Section 2.3(j)(ii) and the outstanding
principal amount of the Existing El Paso Demand Note shall be reduced to
$11,149,490.83.

                  (vii) On the Closing Date, El Paso shall amend and restate the
Existing El Paso Demand Note to reflect the transactions described in clause
(vi) above, and the original Existing El Paso Demand Note providing for a
maximum outstanding principal amount of $72,750,000 shall be returned to El Paso
for cancellation.

                  (viii) On the Closing Date, El Paso shall issue one or more El
Paso Notes to Mesquite evidencing loans to El Paso with an aggregate outstanding
principal amount of approximately $131,354,009.17 representing the amount of the
proceeds of the issuance of the Limestone Securities not used for other purposes
by Mesquite.

                  (b) El Paso Chaparral Holding. On the Closing Date, El Paso
Chaparral Holding shall enter into each Transaction Document to which it is a
party and that has not previously been entered into by it.

                  (c) El Paso Chaparral. On the Closing Date, El Paso Chaparral
shall enter into the Chaparral LLC Agreement, the Management Agreement and each
other Transaction Document to which it is a party and that has not previously
been entered into by it.

                  (d) El Paso Chaparral Holding II. On the Closing Date, El Paso
Chaparral Holding II shall enter into the Chaparral LLC Agreement and each other
Transaction Document to which it is a party and that has not previously been
entered into by it.

                  (e) Electron. (i) On the Closing Date, Electron shall purchase
the Subsequent Certificates and pay Limestone the full consideration therefor,
each to the extent it has funds available.

                  (ii) On the Closing Date, Electron, as sole Certificateholder,
shall enter into the Limestone Trust Agreement, the Tax Indemnification
Agreement and each other Transaction Document to which it is a party and that
has not previously been entered into by it.

                  (f) Limestone. (i) On March 15, 2000, Limestone shall enter
into the Note Purchase Agreement. On the Closing Date, Limestone shall enter
into the Indenture, and shall issue the Initial Notes under the Indenture to the
Initial Purchaser pursuant to the terms of the

                                       3
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Note Purchase Agreement against payment of the purchase price therefor of
$1,000,000,000 by the Initial Purchaser to Limestone.

                  (ii) On March 15, 2000, Limestone shall cause the Co-Issuer to
enter into the Note Purchase Agreement. On the Closing Date, Limestone shall
cause the Co-Issuer to enter into the Indenture, the Administrative Services
Agreement and each other Transaction Document to which the Co-Issuer is a party
and that has not previously been entered into by it.

                  (iii) On the Closing Date, Limestone shall issue the
Subsequent Certificates to Electron pursuant to the Limestone Trust Agreement
against payment of the purchase price thereof of $100,000,000 by Electron to
Limestone.

                  (iv) On the Closing Date, Limestone shall pay the proceeds of
the Initial Notes and Subsequent Certificates, if any, (A) as a Capital
Contribution to Chaparral in the amount of $1,027,250,000 pursuant to the
Chaparral LLC Agreement and (B) to the Limestone Lender in the amount of
$72,750,000 in full satisfaction of the outstanding principal amount of the
Limestone Loan.

                  (v) On the Closing Date, Limestone shall use the distribution
from Chaparral described in Section 2.3(j)(iii) to pay $1,200,716.02 to the
Limestone Lender in full satisfaction of the accrued and unpaid interest on the
Limestone Loan.

                  (vi) On the Closing Date, Limestone shall enter into the
Remarketing Agreement and the Security Agreement, and shall pledge its rights
thereunder to the Indenture Trustee pursuant to the Indenture.

                  (vii) On the Closing Date, Limestone shall enter into the
Limestone Trust Agreement, the Chaparral LLC Agreement, the Tax Indemnification
Agreement, the El Paso Debt Security Direction Letter, the Administrative
Services Agreement and each other Transaction Document to which it is a party
and that has not previously been entered into by it.

                  (viii) On the Closing Date, Limestone shall, and shall cause
the Co-Issuer to, enter into the Administrative Services Agreement with the
administrator named therein.

                  (g) Co-Issuer. (i) On or before the Closing Date, the
Co-Issuer shall issue its stock to Limestone.

                  (ii) On the Closing Date, the Co-Issuer shall co-issue the
Initial Notes with Limestone under the Indenture to the Initial Purchaser
pursuant to the terms of the Note Purchase Agreement against payment of the
purchase price therefor of $1,000,000,000 by the Initial Purchaser to Limestone.

                  (iii) On March 15, 2000, the Co-Issuer shall enter into the
Note Purchase Agreement. On the Closing Date, the Co-Issuer shall enter into the
Indenture, the Administrative Services Agreement and each other Transaction
Document to which it is a party and that has not previously been entered into by
it.

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                  (h) Limestone Lender. On the Closing Date, the Limestone
Lender shall release Limestone from all obligations under the Limestone Credit
Agreement in exchange for payment of the outstanding principal of and accrued
interest on the Limestone Loan and shall execute appropriate Uniform Commercial
Code termination statements to evidence the release of the security interests
granted under the Assignment and Assumption Agreement.

                  (i) Management Company. On the Closing Date, the Management
Company shall enter into the Management Agreement and each other Transaction
Document to which it is a party and that has not previously been entered into by
it.

                  (j) Chaparral. (i) At least one Business Day prior to the
Closing Date, Chaparral shall make a contribution to Mesquite of all assets
currently held by Chaparral (other than the Existing El Paso Demand Note and the
Mesquite LLC Interest), to the extent not already owned by Mesquite.

                  (ii) On or prior to the Closing Date, Chaparral shall demand
payment from El Paso on the Existing El Paso Demand Note in an amount equal to
$61,600,509.17 in principal amount plus $1,200,716.02 in payment of a portion of
the accrued and unpaid interest on the Existing El Paso Demand Note through the
Closing Date leaving an unpaid principal balance thereon of $11,149,490.83.

                  (iii) On the Closing Date, Chaparral shall distribute
$1,200,716.02 to Limestone, as Class A Member of Chaparral, to be used by
Limestone to pay the accrued and unpaid interest on the Limestone Loan.

                  (iv) On the Closing Date, Chaparral shall issue Certificates
of Interest representing the Member interests in Chaparral to El Paso Chaparral,
El Paso Chaparral Holding II and Limestone pursuant to the Chaparral LLC
Agreement.

                  (v) On the Closing Date, Chaparral shall increase Limestone's
Class A Member capital account by $1,027,250,000 in connection with the Capital
Contribution of Limestone described in Section 2.3(f)(iv).

                  (vi) On the Closing Date, Chaparral shall enter into the
Chaparral Documents, the El Paso Debt Security Direction Letter and each other
Transaction Document to which it is a party and that has not previously been
entered into by it.

                  (vii) On the Closing Date, Chaparral shall contribute to the
Overfund Trust the Overfund Amount in further consideration for the sole
certificate of beneficial interest in the Overfund Trust.

                  (viii) On the Closing Date, Chaparral shall make a cash
contribution to Mesquite of approximately $796,013,202.43 representing the
amount of the proceeds of the issuance of the Limestone Securities not used for
other purposes by Chaparral.

                  (ix) Upon the issuance by El Paso of an amended and restated
El Paso Note pursuant to Section 2.3(a)(vii), Chaparral shall deliver to El
Paso, for cancellation, the original Existing El Paso Demand Note providing for
a maximum principal amount of $72,750,000.

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<PAGE>

                  (k) Mesquite. (i) On the Closing Date, Mesquite shall pay El
Paso approximately $664,659,193.26 to repay amounts outstanding under the
Mesquite Credit Agreement (which repayment shall not limit or otherwise affect
Mesquite's right to reborrow and repay advances thereunder).

                  (ii) On the Closing Date, Mesquite shall enter into the
Management Agreement and each other Transaction Document to which it is a party
and that has not previously been entered into by it.

                  (iii) On or prior to the Closing Date, as applicable, Mesquite
shall increase Chaparral's capital account in Mesquite in connection with the
contribution of Chaparral described in Sections 2.3(j)(i) and 2.3(j)(viii).

                  (iv) On the Closing Date, Mesquite shall loan an aggregate
principal amount of approximately $131,354,009.17 representing the amount of the
proceeds of the issuance of the Limestone Securities not used for other purposes
by Mesquite to El Paso, which loan shall be evidenced by one or more El Paso
Notes.

                  (l) Overfund Trust. (i) On the Closing Date, the Overfund
Trust shall issue a certificate of beneficial interest in the Overfund Trust to
Chaparral pursuant to the Overfund Trust Agreement as described above.

                  (ii) On the Closing Date, the Overfund Trust shall use a
portion of the Overfund Amount to purchase an El Paso Debt Security that will
provide payments of principal and interest at the times and in the amounts
required to satisfy clause (b)(i) of the definition of the Class A Member's
Priority Return.

                  (iii) On the Closing Date, the Overfund Trust shall use a
portion of the Overfund Amount to purchase an El Paso Debt Security that will
provide payments of principal and interest at the times and in the amounts
required to satisfy clause (b)(ii) of the definition of the Class A Member's
Priority Return.

                  (iv) On the Closing Date, the Overfund Trust shall enter into
the Security Agreement to secure its obligations to make payments to Limestone
in accordance with Section 5.5(b) hereof.

                  (v) On the Closing Date, the Overfund Trust shall enter into
the Overfund Trust Agreement, the El Paso Debt Security Direction Letter and
each other Transaction Document to which it is a party.

                  (m) Share Trust. (i) On the Closing Date, the Share Trust
shall issue a certificate of beneficial interest in the Share Trust to El Paso
pursuant to the Share Trust Agreement against payment therefor of $4,000 by El
Paso.

                  (ii) On the Closing Date, the Share Trust shall purchase the
El Paso Preferred Stock and pay El Paso $2,000 and other good and valuable
consideration described in the Share Trust Agreement and the Transaction
Documents as full consideration therefor.

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<PAGE>

                  (iii) On the Closing Date, the Share Trust shall enter into
the Share Trust Agreement, the Remarketing Agreement and each other Transaction
Document to which it is a party.

                  (n) The Indenture Trustee. On the Closing Date, the Indenture
Trustee shall enter into the Indenture, the Remarketing Agreement, the El Paso
Debt Security Direction Letter and each other Transaction Document to which it
is a party.

                  Section 2.4 Consent.

                  Pursuant to the Original Participation Agreement, each of the
parties thereto, on behalf of itself and its successors and assigns, consented
to and approved of all transactions contemplated thereby and by any other
Transaction Document or other document referred to therein, and each such party,
for itself and its successors and assigns, represented that no transaction
contemplated thereby or by any Transaction Document or other document referred
to therein constituted or gave rise to a Default or Liquidating Event under the
Chaparral LLC Agreement or any other Transaction Document on the part of such
party; provided that such consent, approval and representation shall not affect
any right of any such party to indemnity or reimbursement under any Transaction
Document.

                                   ARTICLE III

                              CONDITIONS PRECEDENT

                  Section 3.1 Conditions to the Occurrence of the Closing Date.

                  The obligation of each party to the Original Participation
Agreement to enter into the transactions described in Section 2.3 hereof on or
prior to the Closing Date shall be (i) subject to the terms and conditions
hereof, (ii) on the basis of the representations and warranties set forth herein
and (iii) subject to the satisfaction (or waiver by such party) on or prior to
the Closing Date of the following conditions precedent:

                  (a) Transaction Documents. Each of the Transaction Documents
entered into or required to be entered into on or prior to the Closing Date
shall be reasonably satisfactory to such party and shall, upon execution and
delivery thereof as contemplated in Section 3.1(b), be in full force and effect.

                  (b) Authorization, Execution and Delivery of Documents. Each
of the Transaction Documents entered into or required to be entered into on or
prior to the Closing Date shall have been duly authorized, executed and
available for delivery by each of the parties thereto (other than such party).
Such party shall have received a true and correct copy of each Transaction
Document (not furnished in original form) entered into or required to be entered
into on or prior to the Closing Date, including without limitation all
amendments and supplements to each such Transaction Document.

                  (c) Collateral. All actions necessary, in the reasonable
opinion of such party (other than the Indenture Trustee), in order to
effectively establish and create a first priority lien

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<PAGE>

and perfected security interest in the Security for the Limestone Notes,
subject, in each case, only to Permitted Liens, shall have been duly taken (or
provisions therefor shall have been made), including without limitation, the
making of all conveyances, registrations and filings.

                  (d) Ratings. El Paso shall have received ratings letters from
S&P and Moody's, confirming that the Initial Notes have been rated at least
"BBB-" by S&P and "Baa3" by Moody's, respectively.

                  (e) Opinions. Opinions addressed to the Arranger and the
Certificateholders (except as otherwise specified below) dated the Closing Date
of the following counsel (or, if counsel is not identified, of counsel
reasonably satisfactory to such Persons), shall have been delivered to the
applicable addressees, each such opinion to be reasonably satisfactory to the
recipients and their counsel:

                           (i) Jones, Day, Reavis & Pogue, counsel to El Paso,
         with a separate opinion as to the non-consolidation of certain
         entities.

                           (ii) Kelly Jameson, senior counsel of El Paso;

                           (iii) King & Spalding, FERC counsel to El Paso;

                           (iv) Potter Anderson & Corroon LLP, special Delaware
         counsel to El Paso;

                           (v) Richards, Layton & Finger, P.A., counsel to
         Wilmington Trust Company (addressed to El Paso, the Arranger and the
         Certificateholders);

                           (vi) Seward & Kissel LLP, counsel to the Indenture
         Trustee;

                           (vii) Dewey Ballantine LLP, special counsel to the
         Certificateholders (addressed to the Certificateholders only), with a
         separate opinion addressed to El Paso as to the enforceability of each
         Transaction Document to which the Certificateholders are parties), and
         a separate opinion addressed to the Arranger, the Certificateholders
         and El Paso as to the status of the Certificateholders as Qualified
         Purchasers; and

                           (viii) Milbank, Tweed, Hadley & McCloy LLP, special
         counsel to the Arranger (addressed to the Arranger only), with a
         separate opinion addressed to El Paso as to the enforceability of the
         Remarketing Agreement against DLJ.

                                       8
<PAGE>

                  (f) Closing Certificates. (i) On the Closing Date, such party
shall have received a certificate of each other party (other than the
Certificateholders and the Limestone Lender) dated the Closing Date in form and
substance reasonably satisfactory to such party, certifying (A) as to the facts
and circumstances applicable to the certifying party set forth in Section 3.1(h)
hereof, (B) that the Transaction Documents to which such certifying party is a
party have been duly executed and delivered by such certifying party and are in
full force and effect, and (C) such certifying party has satisfied all
conditions precedent (other than conditions precedent that have been waived)
contained in the Transaction Documents to which it is a party required to be
satisfied by it on or prior to the Closing Date.

                  (ii) On the Closing Date, such party shall have received a
certificate of each other party (other than the Certificateholders and the
Limestone Lender) dated the Closing Date in form and substance reasonably
satisfactory to such Person, attaching and certifying as of the Closing Date as
to (A) the certifying party's Organizational Documents, (B) the resolutions of
the certifying party's board of directors or other governing body, if
applicable, duly authorizing the certifying party's execution, delivery and
performance of each Transaction Document to which it is or is to be a party and
each other document required to be executed and delivered by it in accordance
with the provisions hereof or thereof and (C) the incumbency and signatures of
the Persons authorized to execute and deliver, as may be required hereunder,
documents on its behalf in connection with the transactions contemplated hereby
and by the other Transaction Documents.

                  (g) Fees and Expenses. On the Closing Date, El Paso shall have
paid or provided for payment (without duplication of any amounts paid in
connection with the Phase II Participation Agreement or any agreements referred
to therein) of (i) the out-of-pocket expenses and fees due and payable through
the Closing Date, and the trustee fees for the first year, payable to Wilmington
Trust Company as the Electron Trustee under the Electron Trust Agreement, the
Limestone Trustee under the Limestone Trust Agreement, the Overfund Trustee
under the Overfund Trust Agreement and the Share Trustee under the Share Trust
Agreement, and the indenture trustee fees for the first year, payable to United
States Trust Company of New York as the Indenture Trustee under the Indenture,
(ii) the out-of-pocket expenses and fees due and payable through the Closing
Date of the Arranger (in each case, including, to the extent an invoice therefor
has been delivered to El Paso at least one Business Day before the Closing Date,
the reasonable fees and expenses of counsel to such Persons through the Closing
Date), and (iii) to the extent an invoice therefor has been delivered to El Paso
at least one Business Day before the Closing Date, the out-of-pocket expenses of
the Certificateholders and any Certificateholder Related Person and the
reasonable fees and expenses of counsel to the Certificateholders through the
Closing Date, in each case, in accordance with the funding memorandum dated as
of the Closing Date.

                  (h) Certain Facts and Circumstances. (i) The representations
and warranties of each party set forth in this Agreement and each other
Transaction Document shall be true and correct on and as of the Closing Date
(both immediately prior to the consummation of the transactions intended to
occur on the Closing Date and also after giving effect thereto) in all material
respects as if made on and as of such date (or, if stated to have been made
solely as of an earlier date, were true and correct as of such date).

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<PAGE>

                  (ii) No Default shall have occurred and be continuing on the
Closing Date.

                  (iii) No change in the financial or other condition of El Paso
shall have occurred that would reasonably be expected to result in an El Paso
Material Adverse Effect and no other act, event or circumstance shall have
occurred that has had or would reasonably be expected to have an El Paso
Material Adverse Effect.

                  (iv) There shall be no actions, suits, investigations or
proceedings at law or in equity by or before any Governmental Authority pending
or, to the actual knowledge of any Responsible Officer of El Paso, threatened,
and there shall not have been issued or, to the actual knowledge of any
Responsible Officer of El Paso, proposed to be issued any orders, judgments or
decrees by any Governmental Authority, to set aside, restrain, enjoin or prevent
the execution, delivery or performance of any of the Transaction Documents or
the consummation of the transactions contemplated thereby.

                  (i) No Liability. The closing of the transactions contemplated
hereby and by each of the other Transaction Documents will not violate any
Applicable Law in effect as of the Closing Date and will not subject any party
that was a party to the Phase II Participation Agreement (other than El Paso, El
Paso Chaparral Holding and El Paso Chaparral) to any Tax (other than any
Documentary Tax for which such Party is indemnified under the Transaction
Documents and other than income taxes incurred after December 28, 1999), penalty
or liability under or pursuant to any Applicable Law in effect as of the Closing
Date.

                  (j) Additional Documents and Certificates, Etc. The Arranger
and the Certificateholders shall have received such other documents,
certificates and opinions as any such Person or their counsel may reasonably
request.

                  Section 3.2 Reserved.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  Section 4.1 Representations and Warranties of El Paso.

                  El Paso makes the following representations and warranties on
its own behalf to the other Parties as of March 15, 2000 and as of the Closing
Date:

                  (a) Corporate Existence and Power. El Paso is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. Each Relevant El Paso Party is duly incorporated or
organized, validly existing and in good standing in the jurisdiction of its
incorporation or organization. Each of El Paso and the Relevant El Paso Parties
possesses all corporate, partnership, limited liability company or other
applicable Business Entity powers and other authorizations and licenses
necessary to engage in its business and operations as now conducted and as
contemplated by the Transaction Documents (other than the Note Purchase
Agreement), the failure to obtain or maintain which would have an El Paso
Material Adverse Effect.

                                       10
<PAGE>

                  (b) Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by each of El Paso and
the Relevant El Paso Parties of each Transaction Document (other than the Note
Purchase Agreement) to which it is a party are within its corporate,
partnership, limited liability company or other applicable Business Entity
powers, have been duly authorized by all necessary corporate, limited liability
company or other applicable Business Entity action, and do not contravene (i)
its Organizational Documents or (ii) any law or material contractual restriction
binding on or affecting it.

                  (c) Governmental Approvals. No authorization or approval or
other action by, and no notice to or filing with, any Governmental Authority is
required for the due execution, delivery and performance by each of El Paso and
the Relevant El Paso Parties of each Transaction Document (other than the Note
Purchase Agreement) to which it is a party, except (i) those that have been
obtained or made and (ii) those that are necessary to comply with laws, rules,
regulations and orders required in the ordinary course to comply with the
ongoing obligations of (A) El Paso under Article V and (B) El Paso and the
Relevant El Paso Parties under the Transaction Documents to which they are a
party, provided that all authorizations, approvals, actions, notices and filings
described in this clause (ii) that are necessary to have been obtained or made
on or prior to the Closing Date for the consummation by El Paso and the Relevant
El Paso Parties of the transactions contemplated by the Transaction Documents or
are required to have been obtained or made on or prior to the Closing Date have
been obtained or made on or prior to the Closing Date.

                  (d) Binding Effect. Each Transaction Document (other than the
Note Purchase Agreement) to which any of El Paso and the Relevant El Paso
Parties is a party will be duly executed and delivered by El Paso and such
Relevant El Paso Party and, subject to the due execution and delivery by the
other parties thereto, will, upon such due execution and delivery, constitute
the legal, valid and binding obligations of El Paso and/or such Relevant El Paso
Party, as applicable, enforceable against El Paso and/or such Relevant El Paso
Party, as applicable, in accordance with its terms, except as may be limited by
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors rights generally or by general principles of equity
(whether enforcement is sought by proceedings in equity or at law).

                  (e) Compliance with Laws. Each of El Paso and the Relevant El
Paso Parties is in compliance with all laws, rules, regulations and orders of
any governmental authority applicable to it or its property, except where the
failure to so comply, individually or in the aggregate, would not, in the
reasonable judgment of El Paso, be expected to result in an El Paso Material
Adverse Effect.

                  (f) Litigation. There is no action, suit or proceeding
pending, or, to the knowledge of any Responsible Officer of El Paso, threatened,
against or involving El Paso or any Relevant El Paso Party in any court, or
before any arbitrator of any kind, or before or by any governmental body, which,
in the reasonable judgment of El Paso (taking into account the exhaustion of all
appeals), would have an El Paso Material Adverse Effect, or which purports to
affect the legality, validity, binding effect or enforceability against El Paso
or any Relevant El Paso Party of any Transaction Document (other than the Note
Purchase Agreement) to which it is a party.

                                       11
<PAGE>

                  (g) Taxes. Each of El Paso and the Relevant El Paso Parties
has duly filed all tax returns required to be filed, and has duly paid and
discharged all taxes, assessments and governmental charges upon it or against
its properties now due and payable, the failure to file or pay which would have
an El Paso Material Adverse Effect, unless and to the extent only that the same
are being contested by such Person in good faith and by appropriate proceedings.

                  (h) ERISA. (i) No ERISA Termination Event has occurred or is
reasonably expected to occur with respect to any Plan which, with the giving of
notice or lapse of time or both, would result in an aggregate liability of El
Paso or any ERISA Affiliate that would exceed 10% of the Net Worth of El Paso.

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

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

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

                  (i) Neither El Paso nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization, insolvent or has
been terminated, within the meaning of Title IV of ERISA, and no Multiemployer
Plan is reasonably expected to be in reorganization, to become insolvent or to
be terminated within the meaning of Title IV or ERISA, the effect of which would
result in an aggregate liability of El Paso or any ERISA Affiliate that would
exceed 10% of the Net Worth of El Paso.

                  (j) Financial Statements. PricewaterhouseCoopers LLP (the
"Auditors") are independent certified public accountants with respect to El Paso
within the meaning of the Securities Act and Rule 101 of the Code of
Professional Conduct of the American Institute of Certified Public Accountants
and its interpretations and rulings thereunder. The historical financial
statements of El Paso included or incorporated by reference in the Preliminary
Offering Memorandum and the Offering Memorandum and the related notes thereto
present fairly, in conformity with GAAP except as otherwise expressly noted
therein, the consolidated financial position of El Paso and its Subsidiaries at
the dates indicated and the statement of operations, stockholders' equity and
cash flows of El Paso and its Consolidated Subsidiaries for the periods
specified, and such financial statements have been prepared in accordance with
GAAP consistently applied throughout the periods purported to be covered
thereby. The pro forma financial statements and the related notes thereto, if
any, included or incorporated by reference in the Preliminary Offering
Memorandum and the Offering Memorandum present fairly the information shown
therein, have been properly compiled on the bases described therein, and the

                                       12
<PAGE>

assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions and
circumstances referred to therein.

                  (k) Not an Investment Company. El Paso is not an "investment
company" within the meaning of the Investment Company Act. Each of the Relevant
El Paso Parties is not an "investment company" within the meaning of the
Investment Company Act.

                  (l) PUHCA. El Paso is not a "holding company" or a "subsidiary
company" of a "holding company" within the meaning of PUHCA. Each of the
Relevant El Paso Parties is not a "holding company" or a "subsidiary company" of
a "holding company" within the meaning of PUHCA.

                  (m) No Defaults. To the actual knowledge of any Responsible
Officer of El Paso, on the Closing Date there will exist no Default and no
Limestone Note Trigger Event on the part of El Paso under any of the Transaction
Documents (other than the Note Purchase Agreement) to which El Paso is a party.

                  (n) Presentation to Investors. Except with respect to (i)
financial projections and (ii) information for which the source is any
separately identified third party, the El Paso Energy Presentation to Investors
attached as Annex B hereto does not contain any untrue statement of material
fact or omit to state a material fact necessary in order for such information
(taken as a whole) not to be misleading in light of the circumstances in which
made with respect to (x) El Paso and its Subsidiaries, Limestone, Chaparral,
Mesquite, the Existing Assets or the New Assets referred to in clause (i) or
(ii) of the definition thereof and (y) the Transaction Documents.

                  (o) Due Diligence Presentation Material. Except with respect
to (i) financial projections and (ii) information for which the source is any
separately identified third party, the due diligence presentation material
attached as Annex C hereto does not contain any untrue statement of material
fact or omit to state a material fact necessary in order for such information
(taken as a whole) not to be misleading in light of the circumstances in which
made with respect to (x) El Paso and its Subsidiaries, Limestone, Chaparral,
Mesquite, the Existing Assets or the New Assets referred to in clause (i) or
(ii) of the definition thereof and (y) the Transaction Documents.

                  (q) Title to Property. Each of El Paso and the Relevant El
Paso Parties has good title to their respective properties and assets, free and
clear of all Liens, except for (A) Liens (including covenants, restrictions,
rights, easements and minor irregularities in title) that do not materially
interfere with the business or operations of such Person as presently conducted,
(B) Liens not prohibited by the El Paso Additional Credit Facility Agreement and
(C) the pledges and security interests provided to El Paso in connection with
the Mesquite Financing Documents, and except that no representation or warranty
is made with respect to Margin Stock.

                  (r) Disclosure. Except as set forth on Schedule I, there is no
fact known to El Paso, any Relevant El Paso Party, Chaparral or Mesquite after
reasonable inquiry that has specific application to El Paso, any Relevant El
Paso Party, Chaparral or Mesquite or the Project Companies (other than general
economic or industry conditions) and that, as far as El Paso can

                                       13
<PAGE>

reasonably foresee, would reasonably be expected to have an Aggregate Chaparral
Material Adverse Effect.

                  (s) Compliance. El Paso has complied with the covenants set
forth in Section 5.1 of the Phase II Participation Agreement for the period
commencing on December 28, 1999 and terminating on the Closing Date.

                  (t) Management Fee. The Management Company has not exercised,
and El Paso has not caused the Management Company to exercise, its rights under
Section 5.4 of the Phase II Participation Agreement.

                  Section 4.2 Representations and Warranties of El Paso with
Respect to Limestone, the Co-Issuer, Chaparral, Mesquite, the Overfund Trust and
the Share Trust.

                  El Paso makes the following representations and warranties
with respect to Limestone, the Co-Issuer, Chaparral, Mesquite, the Overfund
Trust and the Share Trust to the other Parties as of March 15, 2000 and as of
the Closing Date, except as otherwise specified:

                  (a) Existence and Power. Each of Limestone, the Overfund Trust
and the Share Trust (together, the "Trusts") is a business trust duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite trust powers and all material Permits required to carry on
its business as now conducted and as contemplated by the Transaction Documents.
Each of Chaparral and Mesquite is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite limited liability company powers and all material Permits
required to carry on its business as now conducted and as contemplated by the
Transaction Documents the failure to have which would reasonably be expected to
have an Aggregate Chaparral Material Adverse Effect. The Co-Issuer is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate powers and all
material Permits required to carry on its business as now conducted and as
contemplated by the Transaction Documents.

                  (b) Limestone and Co-Issuer Special Purpose Status. Limestone
has not engaged in any activities since its organization (other than those
incidental to its organization, activities referred to in or contemplated by the
Participation Agreement dated as of December 28, 1999 (the "Phase II
Participation Agreement") among El Paso, Limestone, Limestone Investors, DLJ
Inc., DLJ Capital Corporation, El Paso Chaparral Holding, El Paso Chaparral
Holding II, El Paso Chaparral, the Management Company, Chaparral, Mesquite and
Electron and other appropriate steps including the issuance of certificates
representing beneficial ownership interests in Limestone and arrangements for
the payment of fees to its trustees, the authorization and the issuance of the
Limestone Notes and the Limestone Certificates, the execution of the Transaction
Documents to which it is a party executed on or prior to March 15, 2000 and the
activities referred to in or contemplated by such Transaction Documents), and
has not made any distributions since its organization other than the
distributions made to Electron on January 18, 2000 in the amount of $33,578.13
and March 10, 2000 in the amount of $1,008,155.58, each with respect to a
special tax distribution pursuant to Section 5.01(c) of the Third Amended and
Restated Limited Liability Company Agreement of Chaparral. The Co-Issuer has not
engaged in

                                       14
<PAGE>

any activities since its incorporation (other than those incidental to its
incorporation and other appropriate corporate steps including the issuance of
stock to Limestone and arrangements for the payment of fees to its directors,
the authorization and the issue of the Limestone Notes, the execution of the
Transaction Documents to which it is a party executed on or prior to March 15,
2000 and the activities referred to in or contemplated by such Transaction
Documents), and has not paid any dividends or made any distributions since its
incorporation.

                  (c) Overfund Trust Special Purpose Status. The Overfund Trust
has not engaged in any activities since its organization (other than those
incidental to its organization and other appropriate steps including (i)
arrangements for the payment of fees to its trustees, (ii) the issuance of a
certificate of beneficial interest in the Overfund Trust to Chaparral pursuant
to the Overfund Trust Agreement, (iii) the execution of the Transaction
Documents to which it is a party executed on or prior to March 15, 2000 and (iv)
the other activities referred to in or contemplated by the Overfund Trust
Agreement, this Agreement and the other Transaction Documents), and has not made
any distributions since its organization.

                  (d) Share Trust Special Purpose Status. The Share Trust has
not engaged in any activities since its organization (other than those
incidental to its organization and other appropriate steps including (i)
arrangements for the payment of fees to its trustees, (ii) the issuance of a
certificate of beneficial interest in the Share Trust to El Paso pursuant to the
Share Trust Agreement, (iii) the execution of the Transaction Documents to which
it is a party executed on or prior to March 15, 2000 and (iv) the other
activities referred to in or contemplated by the Share Trust Agreement, this
Agreement and the other Transaction Documents), and has not made any
distributions since its organization.

                  (e) Chaparral and Mesquite. The operations, activities and
business of each of Chaparral and Mesquite since its inception have been
conducted in accordance with its Organizational Documents, and each of Chaparral
and Mesquite has no accrued liabilities other than (i) any such liabilities in
connection with activities in accordance with the Phase II Participation
Agreement and any agreements referred to therein, (ii) any such liabilities that
will be paid in full upon the Closing Date, (iii) in the case of Chaparral, any
such liabilities that are set forth in Schedule II hereto and (iv) in the case
of Mesquite, any such liabilities that are not prohibited by the Chaparral LLC
Agreement or the Mesquite LLC Agreement.

                  (f) Trust, Corporate or Company and Governmental
Authorization; No Contravention. The execution, delivery and performance by each
of Limestone, the Co-Issuer, Chaparral, Mesquite, the Overfund Trust and the
Share Trust of each of the Transaction Documents (other than the Note Purchase
Agreement) to which it is a party are (i) within Limestone's trust powers, the
Co-Issuer's corporate powers, Chaparral's limited liability company powers,
Mesquite's limited liability company powers, the Overfund Trust's trust powers
and the Share Trust's trust powers, as the case may be, (ii) have been duly
authorized by all necessary trust, corporate or limited liability company
action, as the case may be, (iii) require in respect of Limestone, the
Co-Issuer, Chaparral, Mesquite, the Overfund Trust and the Share Trust, as the
case may be, no action by or in respect of, or filing (except Uniform Commercial
Code continuation statements to be filed in the future) with, any Governmental
Authority that has not been taken or made and (iv) do not contravene, or
constitute a default under, any provision of Applicable Law in effect on the
Closing Date or of Limestone's, the Co-Issuer's, Chaparral's,

                                       15
<PAGE>

Mesquite's, the Overfund Trust's or the Share Trust's Organizational Documents,
or of any agreement or other instrument binding upon Limestone, the Co-Issuer,
Chaparral, Mesquite, the Overfund Trust or the Share Trust, as the case may be,
or result in the creation or imposition of any Lien on any asset of Limestone,
the Co-Issuer, Chaparral, Mesquite, the Overfund Trust or the Share Trust, as
the case may be, except for (A) Permitted Liens, in the case of Chaparral or
Mesquite and (B) Permitted Liens of the type described in clause (iii) of the
definition thereof, in the case of Limestone, the Co-Issuer, the Overfund Trust
or the Share Trust.

                  (g) Binding Effect. (i) Each of the Transaction Documents
(other than the Note Purchase Agreement) to which any of Limestone, Chaparral,
Mesquite, the Overfund Trust or the Share Trust is a party has been or on the
Closing Date will be duly executed and delivered by such Party and, subject to
the due execution and delivery by the other parties thereto, each of the
Transaction Documents (other than the Note Purchase Agreement) to which any of
Limestone, Chaparral, Mesquite, the Overfund Trust or the Share Trust is a party
constitutes or will constitute (or in the case of the Limestone Notes, when duly
authenticated, issued, paid for and delivered in accordance with the Indenture
and the Note Purchase Agreement, will constitute) a legal, valid and binding
obligation of Limestone, Chaparral, Mesquite, the Overfund Trust or the Share
Trust, as the case may be, enforceable against Limestone, Chaparral, Mesquite,
the Overfund Trust or the Share Trust, as the case may be, in accordance with
its terms except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general equitable principles
(whether enforcement is sought by proceedings in equity or at law).

                  (ii) Each of the Transaction Documents (other than the Note
Purchase Agreement) to which the Co-Issuer is a party has been or on the Closing
Date will be duly executed and delivered by the Co-Issuer and, subject to the
due execution and delivery by the other parties thereto, each of the Transaction
Documents (other than the Note Purchase Agreement) to which the Co-Issuer is a
party constitutes or will constitute (or in the case of the Limestone Notes,
when duly authenticated, issued, paid for and delivered in accordance with the
Indenture and the Note Purchase Agreement, will constitute) a legal, valid and
binding obligation of the Co-Issuer, enforceable against the Co-Issuer in
accordance with its terms except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles (whether enforcement is sought by proceedings in equity or at law).

                  (h) Security for the Limestone Notes. The Grant (as defined in
the Indenture) of the Security for the Limestone Notes securing the payment of
the Secured Obligations (as defined in the Indenture) for the benefit of the
Indenture Trustee and the Holders of the Limestone Notes will constitute a
valid, first priority, perfected security interest in the Security for the
Limestone Notes, free and clear of any Lien or claims of any Person (other than
Permitted Liens), to the extent perfection can occur under Article 8 and Article
9 of the New York UCC by possession, filing of a financing statement or control
of a securities account. Following such perfection, such security interest will
be enforceable as such subject to Permitted Liens against all creditors of
Limestone and any Persons purporting to purchase any of the Security for the
Limestone Notes from Limestone, except in each case as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the

                                       16
<PAGE>

enforcement of creditors' rights generally and general equitable principles
(whether enforcement is sought by proceedings in equity or at law) and other
than as permitted by the Transaction Documents. None of Limestone, Chaparral,
Mesquite, the Overfund Trust or the Share Trust has executed any valid financing
statement covering the Indenture Trustee's interest in the Security for the
Limestone Notes that is on file in any public office other than the financing
statements, if any, filed pursuant to the Transaction Documents and the
financing statements, if any, with respect to the Limestone Loan.

                  (i) No Consents. (i) The execution, delivery and performance
by each of Limestone, the Co-Issuer, Chaparral, Mesquite, the Overfund Trust or
the Share Trust of each Transaction Document (other than the Note Purchase
Agreement) to which each of Limestone, the Co-Issuer, Chaparral, Mesquite, the
Overfund Trust or the Share Trust is a party do not require the consent or the
approval or authorization of, or any filing, registration or qualification with,
any Person or any Governmental Authority on the part of such Party as a
condition to such execution, delivery and performance by it as and when required
that has not been obtained, given or taken except where the failure to obtain
such consent, approval or authorization, or make such filing, registration or
qualification, would not reasonably be expected to have, in the case of
Chaparral or Mesquite, an Aggregate Chaparral Material Adverse Effect.

                  (ii) The offering of the Limestone Securities by Limestone and
the Co-Issuer and the creation of the Security for the Limestone Notes do not
require the consent or the approval or authorization of, or filing, registration
or qualification with, any Person or any Governmental Authority on the part of
Limestone or the Co-Issuer as a condition to such execution, delivery and
performance as and when required which has not been obtained, given or taken
except (i) for filings of financing statements to perfect the security interests
contemplated by the Indenture and (ii) where the failure to obtain such consent,
approval or authorization, or filing, registration or qualification would not
have an Issuer Material Adverse Effect. Neither the issuance or delivery of the
Limestone Notes to the Initial Purchaser, nor the consummation of any other of
the transactions contemplated herein, nor compliance with the provisions of the
Indenture, will conflict with or result in, the breach of any material term or
provision of any agreements to which Limestone or the Co-Issuer is a party, or
constitute a violation of any Applicable Law.

                  (j) Litigation. There is no Proceeding pending against or,
after reasonable inquiry, to the actual knowledge of any Responsible Officer of
El Paso, threatened against any of Limestone, the Co-Issuer, Chaparral,
Mesquite, the Overfund Trust or the Share Trust before any Governmental
Authority.

                  (k) Tax Claims. There is no Tax claim pending against or,
after reasonable inquiry, to the actual knowledge of any Responsible Officer of
El Paso, threatened against any of Limestone, the Co-Issuer, Chaparral,
Mesquite, the Overfund Trust or the Share Trust. Limestone and the Co-Issuer
have each paid all Taxes that they are required to have paid prior to March 15,
2000 and prior to the Closing Date.

                  (l) Not an Investment Company. None of Limestone, the
Co-Issuer, Chaparral, Mesquite, the Overfund Trust and the Share Trust will be
required to be registered as an "investment company" within the meaning of the
Investment Company Act, and none of

                                       17
<PAGE>

Limestone, the Co-Issuer, Chaparral, Mesquite, the Overfund Trust or the Share
Trust will become such as a result of the issuance and sale of the Limestone
Notes and the Limestone Certificates or the other transactions contemplated by
the Transaction Documents.

                  (m) Liens. (i) There are no Liens of any kind (other than
Permitted Liens described under clause (iii) of the definition thereof)
affecting title to any of the assets or rights of any of Limestone, the
Co-Issuer, the Overfund Trust or the Share Trust under any Transaction Documents
(other than the Note Purchase Agreement).

                  (ii) There are no Liens of any kind (other than Permitted
Liens) affecting title to any of the assets or rights of Chaparral or Mesquite
under any Transaction Documents (other than the Note Purchase Agreement).

                  (n) Compliance. Each of Limestone, the Co-Issuer, Chaparral,
Mesquite, the Overfund Trust and the Share Trust is not in breach or violation
of or in default (nor, after reasonable inquiry, to the actual knowledge of any
Responsible Officer of El Paso, has an event occurred that with notice or lapse
of time or both would constitute a default) under the terms of (i) its
Organizational Documents, (ii) any of the Transaction Documents (other than the
Note Purchase Agreement) or any other agreements to which Limestone, Chaparral,
Mesquite, the Overfund Trust or the Share Trust is a party, as the case may be,
or (iii) any Applicable Law, the default in or the breach or violation of which
in the case of clauses (ii) and (iii), would reasonably be expected to have (A)
an Aggregate Chaparral Material Adverse Effect, in the case of Chaparral or
Mesquite, or (B) an Issuer Material Adverse Effect, in the case of Limestone or
the Co-Issuer.

                  (o) Margin Compliance. No part of the proceeds of the sale of
the Limestone Securities will be used, directly or indirectly, for the purpose
of purchasing or carrying any "margin stock" within the meaning of Regulations U
and X of the Board of Governors of the Federal Reserve System.

                  (p) Indebtedness. None of Limestone, the Co-Issuer, Chaparral,
Mesquite, the Overfund Trust and the Share Trust has created, assumed or
incurred any indebtedness in violation of its Organizational Documents or any
other Transaction Document.

                  (q) Employees; Subsidiaries. (i) Limestone, the Co-Issuer, the
Overfund Trust and the Share Trust have no employees, no subsidiaries (other
than the Co-Issuer in the case of Limestone) and no place of business outside of
the State of Delaware.

                  (ii) Chaparral has no employees, no direct subsidiaries (other
than Mesquite and the Overfund Trust (as of the Closing Date)), and no place of
business outside of the State of Delaware; provided that Chaparral may be
required to qualify as a foreign Business Entity in certain jurisdictions.

                  (iii) Mesquite has no employees, no subsidiaries, other than
Mesquite Operating Subsidiaries, and no place of business outside of the State
of Delaware; provided that Mesquite is or may be required to qualify as a
foreign Business Entity in Massachusetts and certain other jurisdictions.

                                       18
<PAGE>

                  (r) Compliance with Environmental Law. Each of Limestone, the
Co-Issuer, Chaparral, Mesquite, the Overfund Trust and the Share Trust is in
compliance with all, and is not subject to current liability under any,
applicable Environmental Law except, in the case of Chaparral or Mesquite, for
any such non-compliance or liability that would not reasonably be expected to
have an Aggregate Chaparral Material Adverse Effect.

                  (s) PUHCA. None of Limestone, the Co-Issuer, Chaparral,
Mesquite, the Overfund Trust and the Share Trust is subject to regulation as a
"holding company" or a "subsidiary company" or an "affiliate" of a "holding
company," in each case as such terms are defined in the PUHCA.

                  (t) FPA. None of Limestone, the Co-Issuer, Chaparral,
Mesquite, the Overfund Trust and the Share Trust is in the business of
producing, transmitting or selling electrical power and the principal business
of each of Limestone, the Co-Issuer, Chaparral, Mesquite, the Overfund Trust or
the Share Trust is other than that of a "public utility" as such term is defined
in Section 201 of the FPA and the orders of the FERC interpreting such section.

                  (u) Securities Act. Assuming that the representations of the
Initial Purchaser relating to matters of securities law set forth in the Note
Purchase Agreement and the representations of the Certificateholders relating to
matters of securities law set forth in the Limestone Trust Agreement and in the
Investment Certificate (as defined in the Limestone Trust Agreement) delivered
by them pursuant hereto and thereto are true and correct, and assuming
compliance by the Initial Purchaser and the Certificateholders with the
restrictive legends contained in the Limestone Notes and the Limestone
Certificates, respectively, the sale of the Limestone Notes and the Limestone
Certificates by Limestone in the manner contemplated by the Note Purchase
Agreement and the Limestone Trust Agreement, respectively, will be exempt from
the registration requirements of the Securities Act by reason of Section 4(2)
thereof.

                  (v) Title to Property. Immediately after giving effect to the
transactions occurring as of March 15, 2000, Chaparral has good title to its
properties and assets that are material to the operations of Chaparral, free and
clear of all Liens, except (A)(1) Permitted Liens and (2) the pledges and
security interests provided to El Paso in connection with the Mesquite Financing
Documents, or (B) where the failure to own or have good title to such properties
and assets, or the existence of such Lien, would not have an Aggregate Chaparral
Material Adverse Effect.

                  (w) No Defaults. To the actual knowledge of any Responsible
Officer of El Paso, no Event of Default has occurred and is continuing and no
condition, event or act has occurred and is continuing which with the giving of
notice and/or the lapse of time and/or any determination or certification would
constitute an Event of Default.

                  Section 4.3 Representations and Warranties of El Paso with
Respect to the New Assets.

                  (a) Except for, or with respect to, any acquisition of New
Assets during a period during which the Class A Member has exercised its rights
under Section 6.1(a) of the Chaparral LLC Agreement or Section 5.2 of the
Management Agreement to (i) remove

                                       19
<PAGE>

(A) El Paso Chaparral as the Managing Member of Chaparral or (B) the Management
Company as the Manager under the Management Agreement, or (ii) cause (A) El Paso
Chaparral to cease to act as the Managing Member of Chaparral or (B) the
Management Company to cease to act as the Manager under the Management Agreement
(any such period, the "Replacement Period"), El Paso shall be deemed to make to
the Certificateholders as of the date of the acquisition by purchase,
contribution or exchange of each New Asset the following representations and
warranties with respect to such New Asset at the time of, and immediately after,
giving effect to the acquisition of such New Asset; provided, however, that the
breach of, or inaccuracy in, such representations and warranties shall not
constitute a Default under any of the Transaction Documents but shall be subject
to the indemnity contained in Section 6.1.

                  (b) Organization; Authority. The Chaparral Operating
Subsidiary, Mesquite Operating Subsidiary or the Underlying Entity, as
applicable, is duly incorporated, in the case of a corporation, or organized, in
the case of any other Business Entity, validly existing and, to the extent
applicable, and except where the failure to be in good standing would not
reasonably be expected to have an Aggregate Chaparral Material Adverse Effect,
in good standing under the laws of the state of its jurisdiction of
incorporation or organization. Such Chaparral Operating Subsidiary, such
Mesquite Operating Subsidiary and their Subsidiaries or such Underlying Entity,
as applicable have all corporate, limited liability company and other applicable
Business Entity power and authority and all Permits required in each case to
carry on its business, except to the extent that the failure to have such power,
authority and Permits would not reasonably be expected to have an Aggregate
Chaparral Material Adverse Effect.

                  (c) No Violation. The execution, delivery and performance by
(i) such Mesquite Operating Subsidiary of the relevant Investment Agreement or
(ii) any of El Paso, El Paso Chaparral Holding, El Paso Chaparral, Chaparral,
Mesquite, any Chaparral Operating Subsidiary, any Mesquite Operating Subsidiary
or any Underlying Entity (collectively, the "Reference Entities") of the
relevant Contingent Debt Instrument or New Contingent Debt Instrument and
related documents, if any, to which it is a party, in each case, do not (1)
violate any Applicable Law to which any of such Reference Entities, as
applicable, is a party or to which any of such Reference Entities, as
applicable, is subject; or (2) conflict with, or result in a breach or violation
of the terms of any agreement, contract, indenture or other instrument to which
any of such Reference Entities, as applicable, is a party or to which any of
their respective properties is subject, except in the case of clause (1) or (2)
as would not reasonably be expected to have, in the case of El Paso, El Paso
Chaparral Holding or El Paso Chaparral, an El Paso Material Adverse Effect, or
in the case of any other Reference Entity, an Aggregate Chaparral Material
Adverse Effect.

                  (d) Approvals. The execution, delivery and performance by (i)
such Chaparral Operating Subsidiary or such Mesquite Operating Subsidiary, as
applicable, of the relevant Investment Agreement or (ii) any of such Reference
Entities of such Contingent Debt Instrument or New Contingent Debt Instrument
and related documents, if any, to which it is a party, in each case, do not
require the consent, approval, order or authorization of any Government
Authority or, any other Person under any Permit, agreement, indenture or other
instrument to which any of such Reference Entities, as applicable, is a party or
to which any of its respective properties are subject, and no declaration,
filing or registration with any Governmental Authority is required by any of
such Reference Entities, as applicable, in

                                       20
<PAGE>

connection with the execution, delivery and performance by it of such Investment
Agreement or Contingent Debt Instrument or New Contingent Debt Instrument and
related documents, if any, to which it is a party, as applicable, except in each
case above as has been obtained or made or as would not reasonably be expected
to have, in the case of El Paso, El Paso Chaparral Holding or El Paso Chaparral,
an El Paso Material Adverse Effect, or in the case of any other Reference
Entity, an Aggregate Chaparral Material Adverse Effect.

                  (e) Litigation. Except as set forth in the Disclosure
Schedule, no action, suit or proceeding has been commenced and is pending, or,
to the actual knowledge of any Responsible Officer of El Paso, threatened
against any of such Reference Entities, as applicable, before any Governmental
Authority, challenging the legality of or seeking to restrain or enjoin the
acquisition of such New Asset or except for matters that, if adversely
determined, would not reasonably be expected to have, in the case of El Paso, El
Paso Chaparral Holding or El Paso Chaparral, an El Paso Material Adverse Effect,
or in the case of any other Reference Entity, an Aggregate Chaparral Material
Adverse Effect.

                  (f) Environmental Matters. Except as set forth in the
Disclosure Schedule, the operation of any of such Reference Entities, as
applicable, are conducted in compliance with all applicable Environmental Laws,
except to the extent the failure to comply with such applicable Environmental
Laws would not reasonably be expected to have, in the case of El Paso, El Paso
Chaparral Holding or El Paso Chaparral, an El Paso Material Adverse Effect, or
in the case of any other Reference Entity, an Aggregate Chaparral Material
Adverse Effect. Except as set forth in the Disclosure Schedule, to the actual
knowledge of any Responsible Officer of El Paso, none of such Reference
Entities, as applicable, has received any notice, notification, demand, request
for information, citation, summons or order from, and no complaint has been
filed by, and no penalty has been assessed by, any Governmental Authority with
respect to matters arising out of or relating to any applicable Environmental
Law that would, individually or in the aggregate, reasonably be expected to
have, in the case of El Paso, El Paso Chaparral Holding or El Paso Chaparral, an
El Paso Material Adverse Effect, or in the case of any other Reference Entity,
an Aggregate Chaparral Material Adverse Effect.

                  (g) Compliance with Law. Except as set forth in the Disclosure
Schedule, none of such Reference Entities, as applicable, has violated, or to
the actual knowledge of any Responsible Officer of El Paso, is under
investigation with respect to or has been threatened to be charged with or given
notice of any material violation of, any Applicable Law, except as would not
reasonably be expected to have, in the case of El Paso, El Paso Chaparral
Holding or El Paso Chaparral, an El Paso Material Adverse Effect, or in the case
of any other Reference Entity, an Aggregate Chaparral Material Adverse Effect.

                  (h) Taxes. Except as set forth in the Disclosure Schedule, (i)
all tax returns of or with respect to any Tax that are required to have been
filed by or with respect to (x) such Chaparral Operating Subsidiary or such
Mesquite Operating Subsidiary, as applicable, on or before the Investment
Closing Date or (y) such Underlying Entity on or before the closing of the
purchase of the relevant Contingent Debt Instrument or New Contingent Debt
Instrument, in each case, (1) have been timely filed and (2) include all items
of income, gain, loss, deduction and credit or other items required to be
included in each such tax return, (ii) all information provided in each such tax
return is true, correct and complete in all material respects, (iii) all

                                       21
<PAGE>

Taxes that have become due with respect to the period covered by each such tax
return have been timely paid in full or are being contested in good faith by
appropriate proceedings and for which adequate reserves have been established in
accordance with GAAP on the books and records of the Person contesting such
Taxes, and (iv) all withholding Tax requirements imposed on or with respect to
(x) such Chaparral Operating Subsidiary or such Mesquite Operating Subsidiary,
as applicable, since the Investment Closing Date or (y) such Underlying Entity
since the closing of the purchase of the Contingent Debt Instrument or New
Contingent Debt Instrument, have been satisfied in full in all material respects
or are being contested in good faith by appropriate proceedings, except where
the failure of any statement contained in clauses (i), (ii), (iii) or (iv) above
to be true would not reasonably be expected to have an Aggregate Chaparral
Material Adverse Effect.

                  (i) Subsidiary Assets. Except as set forth in the Disclosure
Schedule, the assets owned or used under valid lease, license or other
contractual rights by such Chaparral Operating Subsidiary or such Mesquite
Operating Subsidiary, as applicable, (or any Subsidiary thereof that consists of
an operating business) (i) constitute all of the assets necessary for the
conduct of the business conducted by such Chaparral Operating Subsidiary or such
Mesquite Operating Subsidiary, as applicable, as currently conducted and (ii)
have been maintained in accordance with standard industry practices, ordinary
wear and tear and retirements in accordance with ordinary industry practice
excepted, except where the failure of any statement contained in clauses (i) or
(ii) above to be true would not reasonably be expected to have an Aggregate
Chaparral Material Adverse Effect.

                  (j) Information. (i) Any historical financial statements that
have been prepared by El Paso or its Affiliates for such Chaparral Operating
Subsidiary or such Mesquite Operating Subsidiary or such Underlying Entity, as
applicable, set forth in any information provided to Limestone or the
Certificateholders have been prepared in accordance with GAAP and fairly present
in all material respects the financial position of such Chaparral Operating
Subsidiary or such Mesquite Operating Subsidiary or such Underlying Entity, as
applicable, as at the dates thereof and the results of operations and cash flows
for the periods set forth therein and (ii) any statistical and market-related
data prepared by El Paso or its Affiliates with respect to such Chaparral
Operating Subsidiary or such Mesquite Operating Subsidiary or such Underlying
Entity, as applicable, that are set forth in any information provided to
Limestone or the Certificateholders are based on or derived from sources that El
Paso believes to be reliable and accurate in all material respects and are based
upon assumptions and qualifications that El Paso considers reasonable and
appropriate in all material respects.

                  (k) Costs of Investments. No New Asset shall be acquired that
shall require Mesquite, Chaparral or any member thereof to qualify to do
business, obtain any permit or pay any tax in the jurisdiction in which such New
Asset is acquired nor shall Mesquite or Chaparral be responsible for any
expenses or any other amounts for which the entity in which such New Asset is
acquired may be or become liable, except for any such required qualification,
permit or tax, or any such expenses, (i) that would not reasonably be expected
to have an Aggregate Chaparral Material Adverse Effect or (ii) as to which
Limestone, any Certificateholder or Certificateholder Related Person is
indemnified under Section 6.1(a).

                                       22
<PAGE>

                  (l) Binding Effect. Each of the Contingent Debt Instrument or
New Contingent Debt Instrument and related documents to which any Reference
Entity is a party has been or, on the closing date of the purchase of such
Contingent Debt Instrument or New Contingent Debt Instrument, will be duly
executed and delivered by such Reference Entity party thereto and, subject to
the due execution and delivery by the other parties thereto, each of the
Contingent Debt Instrument or New Contingent Debt Instrument and related
documents to which such Reference Entity is a party constitutes or, on the
closing date of the purchase of such Contingent Debt Instrument or New
Contingent Debt Instrument, will constitute a legal, valid and binding
obligation of such Reference Entity, enforceable against such Reference Entity
in accordance with its terms except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and general equitable principles
(whether enforcement is sought by proceedings in equity or at law).

                  Section 4.4 Representations and Warranties of El Paso with
Respect to the Specified New Assets.

                  El Paso shall be deemed to make to the Certificateholders as
of March 15, 2000 and as of the Closing Date the following representation and
warranty with respect to the Specified New Assets after giving effect to the
contribution of such Specified New Assets from El Paso indirectly to Mesquite;
provided, however, that the breach of, or inaccuracy in, such representation and
warranty shall not constitute a Default under any of the Transaction Documents
but shall be subject to the indemnity contained in Section 6.1:

                  Each subsidiary of Chaparral (other than the Project Companies
or any subsidiary directly owning a Project Company) owning, directly or
indirectly, Specified New Assets owns such Specified New Assets free and clear
of all Liens other than the Liens set forth on Schedule III hereto.

                  Section 4.5 Representations and Warranties of the Indenture
Trustee.

                  United States Trust Company of New York, in its individual
capacity, makes the following representations and warranties on its own behalf
to the other Parties as of March 15, 2000 and as of the Closing Date:

                  (a) Corporate Existence and Power. United States Trust Company
of New York is a banking corporation duly organized, validly existing and in
good standing under the laws of the State of New York and has all requisite
corporate powers and all material Permits required to carry on its business as
now conducted and as contemplated by the Transaction Documents.

                  (b) Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by United States Trust
Company of New York, in its individual or trustee capacity, as applicable, of
each of the Transaction Documents to which it is a party are within United
States Trust Company of New York's corporate powers, have been duly authorized
by all necessary corporate action and do not contravene, or constitute a default
under, any provision of the Organizational Documents of United States Trust
Company of New York.

                                       23
<PAGE>

                  (c) Binding Effect. Each of the Transaction Documents to which
United States Trust Company of New York, in its individual or trustee capacity,
is a party has been duly executed and delivered by United States Trust Company
of New York and each constitutes a legal, valid and binding agreement of United
States Trust Company of New York enforceable against United States Trust Company
of New York in accordance with its terms except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).

                  Section 4.6 Representations and Warranties of Wilmington Trust
Company.

                  Wilmington Trust Company, in its individual capacity, hereby
represents and warrants to the other Parties as of March 15, 2000 and as of the
Closing Date that:

                  (a) it is duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation;

                  (b) it has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement and each other
Transaction Document to which it is a party, and this Agreement and each other
Transaction Document to which it is a party have been duly authorized by it by
all necessary corporate action;

                  (c) no authorization, consent or approval of any governmental
authority, regulatory body or other Person is required for the due
authorization, execution, delivery or performance by it of this Agreement and
any Transaction Document to which it is a party;

                  (d) this Agreement and any Transaction Document to which it is
a party have been duly executed and delivered by it and (subject to the due
execution and delivery by the other parties hereto) constitute its legal and
binding obligation, enforceable against it in accordance with their terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in effect,
relating to the enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity); and

                  (e) it complies with all the requirements of the Act relating
to the qualification of a trustee of a Delaware business trust.

                                    ARTICLE V

                           COVENANTS; ACKNOWLEDGEMENTS

                  Section 5.1 Covenants of El Paso.

                  El Paso covenants and agrees (except, in the case of
Chaparral, Mesquite and the Overfund Trust, during any Replacement Period), from
and after the Closing Date, for the

                                       24
<PAGE>

benefit of the other Parties and the Certificateholders, as follows, so long as
any of the Limestone Notes or the Limestone Certificates shall remain
outstanding:

                  (a) Maintenance of Existence. (i) El Paso shall at all times
preserve and maintain its legal existence; provided that this Section 5.1(a)(i)
shall not apply to or prohibit any merger or consolidation or other act to
similar effect where El Paso is the survivor or the survivor assumes all of the
obligations of El Paso under the Transaction Documents (other than the Note
Purchase Agreement, the Closing Agreement and the Dealer Manager Agreement) to
which El Paso is a party and no Limestone Note Trigger Event, Specified Equity
Event or Limestone Certificate Trigger Event or event that with the giving of
notice or lapse of time, or both, would become a Limestone Note Trigger Event,
Specified Equity Event or Limestone Certificate Trigger Event shall have
occurred and be continuing immediately after giving effect to such merger,
consolidation or other act to similar effect.

                  (ii) El Paso shall at all times cause Limestone to preserve
and maintain its legal existence, rights (charter, if applicable, and statutory)
and material franchises except as otherwise provided in the Limestone Trust
Agreement.

                  (iii) El Paso shall at all times (except during a Replacement
Period) cause each Relevant El Paso Party, to the extent within its power, to
cause the Overfund Trust to preserve and maintain its legal existence, rights
(charter, if applicable, and statutory) and material franchises except as
otherwise provided in the Overfund Trust Agreement.

                  (iv) El Paso shall at all times cause the Share Trust to
preserve and maintain its legal existence, rights (charter, if applicable, and
statutory) and material franchises except as otherwise provided in the Share
Trust Agreement.

                  (v) El Paso shall cause each of the Relevant El Paso Parties
at all times to preserve and maintain its legal existence, rights (charter, if
applicable, and statutory) and franchises; provided, that this Section 5.1(a)(v)
shall not apply to or prohibit any merger or consolidation or other act to
similar effect where the applicable Relevant El Paso Party is the survivor or
the survivor assumes all of the obligations of such applicable Relevant El Paso
Party under the Transaction Documents (other than the Note Purchase Agreement)
to which such applicable Relevant El Paso Party is a party and no Limestone Note
Trigger Event, Specified Equity Event or Limestone Certificate Trigger Event
shall have occurred and be continuing immediately after giving effect to such
merger, consolidation or other act to similar effect; provided, further that El
Paso may permit any such Person to Dispose of any such rights or franchises if
El Paso shall determine that the preservation thereof is no longer desirable in
the conduct of the business of such Person and that the loss thereof would not
reasonably be expected to have an Aggregate Chaparral Material Adverse Effect.

                  (vi) El Paso shall cause each of Chaparral and Mesquite to, at
all times preserve and maintain its legal existence, rights (charter, if
applicable, and statutory) and material franchises; provided that El Paso may
permit any such Person to Dispose of any such rights or franchises if El Paso
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of such Person and that the loss thereof would not
reasonably be expected to have an Aggregate Chaparral Material Adverse Effect.

                                       25
<PAGE>

                  (b) Maintenance of Government Approvals and Permits. (i) El
Paso shall cause Chaparral, Mesquite, the Overfund Trust and the Share Trust to,
and shall take no action to cause Limestone not to, obtain and maintain, or
cause to be obtained and maintained, in full force and effect all necessary
Governmental Approvals and Permits required to be obtained in its name from time
to time, unless failure to obtain or maintain the same would not reasonably be
expected to have an Aggregate Chaparral Material Adverse Effect.

                  (ii) El Paso shall cause Chaparral, Mesquite, the Overfund
Trust and the Share Trust not to, and shall take no action to cause Limestone
to, take any action that would or might, or fail to take any action the failure
to take which would or might, reasonably be expected to cause any Government
Approval or Permit required to be obtained or maintained from time to time in
the name of any Mesquite Operating Subsidiary not to be so obtained or
maintained, the failure to obtain or maintain which would reasonably be expected
to have an Aggregate Chaparral Material Adverse Effect.

                  (c) Compliance with Laws. (i) El Paso shall, and shall cause
each of the Relevant El Paso Parties to, comply in all material respects with
all applicable laws, rules, regulations and orders (including, without
limitation, all environmental laws and laws requiring payment of all taxes,
assessments and governmental charges imposed upon it or upon its property except
to the extent contested in good faith by appropriate proceedings) the failure to
comply with which would have an El Paso Material Adverse Effect.

                  (ii) El Paso shall take no action to cause Limestone not to
comply with all Applicable Law, applicable Permits and applicable governmental
requirements, except where non-compliance therewith would not reasonably be
expected to result in an Aggregate Chaparral Material Adverse Effect.

                  (iii) El Paso shall cause Chaparral, Mesquite, the Share Trust
and the Overfund Trust to comply with all Applicable Law, applicable Permits and
applicable governmental requirements, except where non-compliance therewith
would not reasonably be expected to result in an Aggregate Chaparral Material
Adverse Effect.

                  (d) Insurance. El Paso shall, on behalf of each of Chaparral
and Mesquite, maintain or cause to be maintained in effect, with underwriters or
insurance companies of repute, which may be Affiliates of El Paso, policies of
insurance in relation to the business and assets of Chaparral and Mesquite and
the business and assets of the Mesquite Operating Subsidiaries consistent with
normal industry standards for the business conducted by such Persons (including,
where appropriate consistent with the foregoing standard, policies to cover
public and third party liability and insurance against business interruption).

                  (e) Information. El Paso shall deliver to Limestone, the
Indenture Trustee and the Rating Agencies by making available on "EDGAR" or El
Paso's home page on the "World Wide Web" at www.elpaso.com, or otherwise
transmitting to Limestone, the Indenture Trustee and the Rating Agencies (i)
promptly after the sending or filing thereof, a copy of each of El Paso's
reports on Form 8-K (or any comparable form), (ii) promptly after the filing or
sending thereof, and in any event within 45 days after the end of each of the
first three fiscal quarters of each fiscal year of El Paso a copy of El Paso's
report on Form 10-Q (or any comparable form) for

                                       26
<PAGE>

such quarter, which report will include El Paso's quarterly unaudited
consolidated financial statements as of the end of and for such quarter, (iii)
promptly after the filing or sending thereof, and in any event within 90 days
after the end of each fiscal year of El Paso, a copy of El Paso's report on Form
10-K (or any comparable form) for such year, (iv) promptly after the filing or
sending thereof, and in any event within 120 days after the end of each fiscal
year of El Paso, a copy of El Paso's annual report which it sends to its public
security holders, which annual report or Form 10-K will include El Paso's annual
audited consolidated financial statements as of the end of and for such year and
(v) notice or a copy of any filing by El Paso of a report on Form 8-K (or any
comparable form) sent pursuant to Section 7.2 hereof.

                  (ii) El Paso shall deliver to Limestone, the Indenture Trustee
and the Rating Agencies simultaneously with the furnishing of each of the annual
or quarterly reports referred to in clause (i) above, a certificate of a
Responsible Officer of El Paso in a form reasonably acceptable to the Indenture
Trustee stating whether, to the knowledge of El Paso, there exists on the date
of such certificate any Event of Default, any New Indenture Event of Default, a
Limestone Note Trigger Event, a Specified Equity Event or a Limestone
Certificate Trigger Event, and if so, setting forth the details thereof and the
action that El Paso has taken and proposes to take with respect thereto;

                  (iii) El Paso shall deliver to Limestone, the Indenture
Trustee and the Rating Agencies (A) as soon as possible and in any event within
the five Business Days after a Responsible Officer of El Paso obtains knowledge
thereof, notice of the occurrence of any Event of Default, any New Indenture
Event of Default, a Limestone Note Trigger Event, a Specified Equity Event or a
Limestone Certificate Trigger Event, or any event which, with the giving of
notice or lapse of time, or both, would constitute an Event of Default, a New
Indenture Event of Default, a Limestone Note Trigger Event, a Specified Equity
Event or a Limestone Certificate Trigger Event, continuing on the date of such
notice, and a statement of a Responsible Officer of El Paso setting forth
details of such event and the action which El Paso has taken and proposes to
take with respect thereto; and (B) promptly, and in any event, within five
Business Days after a Responsible Officer of El Paso obtains knowledge thereof,
notice of a change in, or issuance of any rating of El Paso's senior unsecured
long-term debt by S&P or Moody's which causes a reduction in, the rating level
of such debt; and

                  (iv) El Paso shall deliver to Limestone, the Indenture Trustee
and the Rating Agencies the information specified in Rule 144A(d)(4)(i) and (ii)
with respect to the Issuers to enable the Issuers to satisfy their obligations
to furnish such information pursuant to Section 7.01(t) of the Indenture.

                  (f) Nature of Business. El Paso shall not cause Chaparral or
Mesquite to engage in any business other than as expressly permitted by the
terms of the Chaparral LLC Agreement and the Mesquite LLC Agreement,
respectively, or the other Transaction Documents.

                  (g) Transactions with Affiliates. El Paso shall not, and shall
cause its Affiliates not to, enter into transactions with Chaparral, Mesquite,
any Chaparral Operating Subsidiary or any Mesquite Operating Subsidiary in
violation of Section 6.3 of the Management Agreement.

                                       27
<PAGE>

                  (h) Disclosure Schedule. El Paso shall deliver to the
Certificateholders, as soon as reasonably practicable following the acquisition
thereof, a Disclosure Schedule for each New Asset acquired after the Closing
Date pursuant to the Chaparral LLC Agreement.

                  (i) Future Acquisitions of Non-Utility Generation Assets. El
Paso shall comply, and shall cause each controlled Affiliate of El Paso to
comply, with Section 3.4(e) of the Chaparral LLC Agreement.

                  (j) Reserved.

                  Section 5.2 Guaranty.

                  Subject to Section 6.1(c), El Paso hereby absolutely,
unconditionally and irrevocably, to the fullest extent permitted by Applicable
Law, irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
guarantees, for the benefit of the Parties, the performance and observance by
each of the Relevant El Paso Parties of each of its obligations under each
Transaction Document to which it is a party, but excluding any obligation of El
Paso Chaparral, as the Managing Member, to cause Chaparral to pay the Class A
Member's Priority Return or to make any other distributions or other payment on
or in respect of the Class A Member Interest under the Chaparral LLC Agreement
(except to the extent that there are funds on deposit in the Chaparral
Investor's Account that are available to be applied to such payment at the time
such payment is due and are properly payable in respect thereof, and then only
from such funds and except with respect to a failure to make a payment once an
Irrevocable Election is given); provided that the foregoing provisions of this
Section 5.2 shall in no event constitute a Guaranty by El Paso of the payment
obligations of Limestone under the Limestone Certificates, the Limestone Notes
or the Indenture or (without limiting the El Paso Guarantee) the New Limestone
Notes or the New Indenture. Without limiting the foregoing, El Paso hereby
expressly waives diligence, presentment, demand of payment, protest and all
notices whatsoever, and any requirement that any Party hereto exhaust any right,
power or remedy or proceed against any Relevant El Paso Party or any other
Person under this Agreement or any other agreement or instrument referred to
herein in respect of such obligations of the Relevant El Paso Parties whose
obligations are guaranteed hereunder.

                  Section 5.3 Covenant of Chaparral.

                  Chaparral shall cause the Overfund Trust to make the payments
to Limestone that are described in Section 5.5(b) hereof.

                  Section 5.4 Agreement of Parties.

                  Each Party acknowledges and agrees that (a) any payments from
the Overfund Trust to Limestone or the Indenture Trustee, as applicable, in
accordance with Section 5.5(b) hereof, to the extent of each such payment made
to Limestone or directly to the Indenture Trustee (less any amounts disbursed by
the Indenture Trustee to Chaparral pursuant to Section 5.04(a), 5.04(b) or
5.04(d) of the Indenture) and (b) any payment of the New Notes Liquidity Payment
to the New Indenture Trustee in accordance with Section 3.08 of the New
Indenture (less any amounts in excess of any interest or Default Interest on the
New Notes) shall be

                                       28
<PAGE>

deemed to satisfy the obligation of Chaparral to make a Distribution of the
Class A Member's Priority Return in respect of the Class A Member Interest
pursuant to Section 5.1(a) of the Chaparral LLC Agreement. Except as provided in
Section 5.4 of the Chaparral LLC Agreement, each such payment shall reduce the
Capital Account of the Class A Member pursuant to the Chaparral LLC Agreement to
the same extent as if such payment had been made by Chaparral to Limestone as a
Distribution. Each party acknowledged in the Original Participation Agreement
that (i) Annex A thereto would be revised after March 15, 2000 but on or prior
to the Closing Date to conform to the definitive form of Annex A attached to the
Chaparral LLC Agreement and, on and after the Closing Date, all references to
such Annex A in this Agreement or any other Transaction Document shall, without
any further act by any Person, be deemed to refer to such Annex A as so revised
on or prior to the Closing Date and as amended, supplemented, amended and
restated or otherwise modified from time to time after the Closing Date in
accordance with the Transaction Documents and (ii) the Mesquite Credit Agreement
would be amended prior to the Closing Date to provide for rolling monthly
determination of a single "Eurodollar Rate" thereunder to be applicable to all
loans outstanding during such period on such rate.

                  Section 5.5 Covenants of Overfund Trust.

                  (a) Financial Investments. The Overfund Trust shall promptly
invest, or cause the investment of, all amounts authorized or required to be
invested by it under the terms of the Overfund Trust Agreement in such El Paso
Debt Securities or other Financial Investments that amortize to generate
payments to the Overfund Trust in amounts and at the times at least sufficient
to pay on each Distribution Date the amounts described in clauses (b)(i) and
(b)(iii) of the definition of Class A Member's Priority Return due and owing on
such Distribution Date as El Paso shall direct from time to time by written
notice to the Overfund Trust and the Indenture Trustee signed by a Responsible
Officer of El Paso; provided, that in the event an El Paso Debt Obligation
Repayment Event occurs, any El Paso Debt Securities or other loans to El Paso
(other than loans constituting Financial Investments issued by El Paso) from the
Overfund Trust shall by their terms become due and payable immediately, subject
to any applicable grace period, or, in the case of demand loans, be deemed on
the date such event occurs, to be subject to a demand for repayment. If any El
Paso Debt Obligation Repayment Event occurs and El Paso is required to repay any
El Paso Debt Obligations held by the Overfund Trust, subject to the provisions
of the Indenture, the Indenture Trustee shall, as promptly as possible, invest
such funds, or cause such funds to be invested, in Financial Investments
described in clause (d) of the definition thereof that mature no later than the
Maturity Date. The investment of any such amounts in Financial Investments by
the Indenture Trustee in accordance with this Agreement and the Indenture shall
be deemed to satisfy the obligations of the Overfund Trust under this Section
5.5(a).

                  (b) Payment Obligations to Limestone. The Overfund Trust shall
pay or cause to be paid to Limestone (or, so long as the Indenture has not been
discharged, to the Indenture Trustee, as assignee of Limestone), on or before
11:00 a.m. (New York City time) on each Distribution Date, any payments received
by the Overfund Trust in respect of the El Paso Debt Securities or other
Financial Investments that the Overfund Trust purchased with the Overfund Amount
or the proceeds thereof (unless paid by El Paso pursuant to Section 5.5(a)
hereof). Each payment made by the Overfund Trust pursuant to this Section 5.5(b)
shall be as

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<PAGE>

follows: (a) so long as the Indenture has not been discharged pursuant to
Section 10.01 thereof, each payment shall be made directly to the Indenture
Trustee, as assignee of Limestone, for deposit in the Indenture Distribution
Account and (b) upon and after the discharge of the Indenture pursuant to
Section 10.01 thereof, each such payment shall be made to Limestone, for deposit
in the Limestone Distribution Account.

                  Section 5.6 Covenants of Indenture Trustee.

                  (a) Financial Investments. Subject to the Indenture Trustee's
rights of control and rights as entitlement holder, the Indenture Trustee shall
promptly invest all amounts authorized or required to be invested by it under
the terms of the Indenture in such Financial Investments as El Paso shall direct
from time to time by written direction to the Indenture Trustee signed by a
Responsible Officer of El Paso; provided, that upon the occurrence of an El Paso
Debt Obligation Repayment Event, the provisions of Section 5.5(a) hereof shall
govern.

                  (b) Gains and Losses. Any proceeds of Financial Investments in
excess of the amount required to redeem or prepay the Limestone Securities under
the terms thereof and any losses generated by such investments shall be for the
account of El Paso, except as otherwise provided in the Transaction Documents.

                  Section 5.7 Withdrawal of DLJ Inc.

                  DLJ Inc. and each Party acknowledges and agrees that (a) DLJ
Inc. was a party to the Original Participation Agreement and pursuant to Section
7.5 thereof, is required to sign this Agreement and (b) DLJ Inc. has no further
rights or obligations under this Agreement and, from and after the date hereof,
DLJ Inc. shall withdraw from, and no longer be considered a party to, this
Agreement.

                                   ARTICLE VI

                                 INDEMNIFICATION

                  Section 6.1 General Indemnification.

                  (a) Expense Indemnification. Whether or not (i) any of the
Limestone Certificates are sold or the Closing occurs or (ii) such Expense
Indemnified Person shall be indemnified as to such Indemnified Expense by any
other Person, El Paso agrees, subject to Section 7.11 hereof, to indemnify,
protect, defend and hold harmless each Expense Indemnified Person on an
After-Tax Basis against Indemnified Expenses directly or indirectly resulting
from or arising out of or alleged by a Person other than such Expense
Indemnified Person to result from or arise out of:

                           (i) this Agreement, the "Transaction Documents" as
         defined in the Phase II Participation Agreement (the "Phase II
         Transaction Documents") or any other Transaction Document or any of the
         transactions contemplated hereby and thereby whether or not in
         compliance with the terms of the Transaction Documents;

                                       30
<PAGE>

                           (ii) (A) any act or omission (whether negligent or
         otherwise) by El Paso or any Affiliate of El Paso, (B) any breach of,
         failure to perform or observe, or other non-compliance with, any
         covenant, condition or agreement to be performed by, or other
         obligation of, El Paso or any Affiliate of El Paso under any of the
         Transaction Documents, or (C) the breach of any representation or
         warranty (without giving effect to any qualification with respect to
         the materiality thereof) made by El Paso in any of the Transaction
         Documents or in any document or certificate delivered in connection
         therewith;

                           (iii) any violation of Applicable Law by El Paso or
         any of its Related Persons in respect of the transactions contemplated
         by the Transaction Documents or the Phase II Transaction Documents;

                           (iv) any sale, transfer or holding of Limestone
         Certificates being deemed to result in a non-exempt "prohibited
         transaction" under ERISA and/or Section 4975 of the Code due to any act
         or omission by El Paso or its Affiliates; provided that the Expense
         Indemnification set forth in this clause (iv) shall not apply to any
         Certificateholder to the extent that such "prohibited transaction"
         results from a breach by such Certificateholder of its representations,
         warranties or covenants contained in the Investment Certificate
         delivered by it pursuant to this Agreement and the Limestone Trust
         Agreement;

                           (v) any Chaparral Extraordinary Liabilities except to
         the extent attributable to any Replacement Period; provided that the
         Expense Indemnification provided for in this Section 6.1(a)(v) shall
         continue to apply during any Replacement Period for any Chaparral
         Extraordinary Liabilities to the extent attributable to events or
         circumstances that existed prior to the Replacement Period and with
         respect to which a Successor Manager has (x) pursued or continued the
         same course of action as the Management Company in accordance with
         standard utility or other applicable industry practices (if the
         Management Company knew of and had taken a course of action in respect
         of such events or circumstances) or (y) acted in accordance with
         standard utility or other applicable industry practices (if the
         Management Company did not know of such events or circumstances or had
         taken no action as a result thereof);

                           (vi) any agreement, activity or action or failure to
         take action or any violation of Applicable Law by or of either of
         Chaparral and Mesquite, except to the extent attributable to any such
         agreement, action, failure to take action or violation made or taken or
         omitted to be made or taken during any Replacement Period;

                           (vii) Documentary Taxes;

                           (viii) [reserved];

                           (ix) the acquisition or ownership by Chaparral,
         Mesquite or any Subsidiary of Mesquite of the New Assets, except for
         any New Assets acquired during any Replacement Period; and

                                       31
<PAGE>

                           (x) any of the Certificateholders or Limestone
         becoming (A) subject to regulation as a "public utility" as such term
         is defined in Section 201 of the FPA, or (B) subject to the
         requirements of Section 203 of the FPA, in each case solely by virtue
         of any Certificateholder's acquiring and holding the Limestone
         Certificates and exercising, or the Class A Member exercising, the
         rights available to such Certificateholder under the Limestone Trust
         Agreement or to such Class A Member under the Chaparral LLC Agreement
         in the manner contemplated by the Limestone Trust Agreement or the
         Chaparral LLC Agreement; provided that this clause (x) shall not apply
         to any Indemnified Expenses to the extent such Indemnified Expenses
         result from or arise out of any of the following actions by the Class A
         Member: (1) such Class A Member chooses not to file, or cause to be
         filed by the appropriate entity, an application pursuant to Section 203
         of the FPA in the circumstances described in Section 6.1 of the
         Chaparral LLC Agreement and Section 5.2 of the Management Agreement,
         (2) such Class A Member causes the Disposition of any asset of
         Chaparral or Mesquite pursuant to an Asset Disposition or pursuant to
         Section 11.3 of the Chaparral LLC Agreement without the filing by the
         appropriate entity of an application pursuant to Section 203 of the FPA
         with respect to such Disposition and the receipt of any requisite order
         pursuant thereto, or (3) such Class A Member acts, or causes Chaparral
         or Mesquite (or any other holder of FERC jurisdictional assets) to act,
         in material contravention of any such filing referred to in subclause
         (1) or (2) above or any order received in respect thereof.

                  (b) Economic Losses Indemnification. El Paso agrees (except as
provided below) to indemnify, protect, defend and hold harmless each Loss
Indemnified Person against Economic Losses directly or indirectly resulting from
or attributable to Chaparral Expense Payments to the extent but only to the
extent such Chaparral Expense Payments are paid or incurred by Chaparral,
Mesquite, any Subsidiary of Mesquite or any Mesquite Minority Owned QEC by
reason of:

                           (i) (A) any act or omission constituting gross
         negligence or wilful misconduct on the part of El Paso or any Affiliate
         of El Paso, other than the Management Company or any other Affiliate of
         El Paso acting as Manager under the Management Agreement, or as a
         subcontractor thereto, or as a supervisor of such Manager, in
         connection with the performance of general management or other
         obligations or duties under the Management Agreement, unless such
         performance constitutes wilful misconduct or gross negligence, (B) any
         breach of, failure to perform or observe, or other non-compliance with,
         any covenant, condition or agreement to be performed by, or other
         obligation of, El Paso or any Affiliate of El Paso under any of the
         Transaction Documents, except with respect to Sections 2, 3 and 6.1 of
         the Management Agreement, unless such breach, failure or non-compliance
         with respect to the obligations of El Paso under such Sections 2, 3 and
         6.1 of the Management Agreement constitutes wilful misconduct or gross
         negligence, or (C) the breach of any representation or warranty
         (without giving effect to any qualification with respect to the
         materiality thereof) made by El Paso in any of the Transaction
         Documents or in any document or certificate delivered in connection
         therewith;

                           (ii) any violation of Applicable Law by El Paso, El
         Paso Chaparral, the Management Company, Chaparral, Mesquite, any
         Subsidiary of Mesquite or any

                                       32
<PAGE>

         Mesquite Minority Owned QEC, except, in the case of Chaparral and
         Mesquite, during any Replacement Period; and

                           (iii) Chaparral Extraordinary Liabilities, except to
         the extent attributable to any Replacement Period; provided that the
         Loss Indemnification provided for in this Section 6.1(b)(iii) shall
         continue to apply during any Replacement Period for any Chaparral
         Extraordinary Liabilities to the extent attributable to events or
         circumstances that existed prior to the Replacement Period and with
         respect to which a Successor Manager has (x) pursued or continued the
         same course of action as the Management Company in accordance with
         standard utility or other applicable industry practices (if the
         Management Company knew of and had taken a course of action in respect
         of such events or circumstances) or (y) acted in accordance with
         standard utility or other applicable industry practices (if the
         Management Company did not know of such events or circumstances or had
         taken no action as a result thereof);.

                  Any amount payable pursuant to this Section 6.1(b) shall be
payable upon the earliest of the Retirement Date, the Purchase Date or the
Payment Date with respect to a liquidation of Chaparral (the "Economic Loss
Indemnity Payment Date"). On the Economic Loss Indemnity Payment Date, if there
would, but for the payment provided for pursuant to this Section 6.1(b), exist
an Economic Loss, El Paso shall supply to each Certificateholder computations
setting forth in reasonable detail the basis on which the amount payable
pursuant to this Section 6.1(b) is determined. The provisions of Section 6.1(e)
shall not apply to any indemnity pursuant to this Section 6.1(b).

                  Except as expressly set forth in this Section 6.1(b), in no
event shall El Paso have any indemnification obligation for, and in no event
shall El Paso be deemed a guarantor of, or otherwise be responsible for, any (x)
Economic Losses incurred by any Certificateholder or the failure of any
Certificateholder to receive any yield or other return on, or return of the
Certificate Face Amount of, or any other amount in respect of, such
Certificateholder's Limestone Certificates or (y) any Economic Losses incurred
by the Limestone Lender or the failure of the Limestone Lender to receive any
principal of, interest on or any other amounts in respect of, the Limestone Loan
and the indemnification obligations of El Paso hereunder shall in no event
constitute a guaranty of payment with respect to the Limestone Certificates or
the Limestone Loan.

                  (c) Limitations on Indemnification Obligations. The
indemnification and other obligations of El Paso provided in this Section 6.1
shall be subject to the following limitations:

                  (i)      Limitation by Law. Such indemnification or other
                           obligations of El Paso shall be enforced only to the
                           maximum extent permitted by law.

                  (ii)     No Duplication. Indemnified amounts under this
                           Section 6.1 shall be without duplication of any
                           amounts actually paid to Indemnified Persons under
                           (A) indemnification, reimbursement or other
                           provisions of any Transaction Document or (B) any
                           insurance policy or other relevant Contractual
                           Obligation.

                                       33
<PAGE>

                  (d) Insured Items. In the case of any Indemnified Expenses or
Economic Losses covered by a policy of insurance maintained by El Paso or any of
its Affiliates, or by Chaparral, Mesquite or any of Mesquite's Subsidiaries or
any Mesquite Minority Owned QEC, or by any other Person, each Indemnified Person
agrees to provide reasonable cooperation to the insurers in the exercise of
their rights to investigate, defend, settle or compromise any claim, action,
suit or other circumstance giving rise to any Chaparral Expense Payment,
Indemnified Expenses or Economic Losses as may be required for El Paso or any of
its Affiliates, or Chaparral, Mesquite or any of Mesquite's Subsidiaries or any
Mesquite Minority Owned QEC, or any such other Person, to retain the benefits
of, and effect recovery under, such insurance with respect to such item.

                  (e) Claims Procedure. (i) An Indemnified Person shall, after
obtaining actual knowledge thereof, promptly notify El Paso in writing of any
claim, action, suit or other legal or regulatory proceeding (collectively,
"Legal Proceedings") or other event or circumstance giving rise to an
Indemnified Expense or Economic Loss as to which indemnification will be sought
pursuant to this Agreement (the foregoing, collectively, "Indemnified Events");
provided, however, that the failure to give such notice shall not release El
Paso from any of its obligations under this Section 6.1, except (but only if El
Paso shall not have actual knowledge of such Indemnified Event) to the extent
that failure to give notice of any such Indemnified Event shall prejudice El
Paso's ability to defend or contest any Indemnified Event or Indemnified Expense
(or results in El Paso's forfeiture of substantive rights or defenses) or
recover proceeds under any insurance policies maintained by El Paso or any of
its Affiliates, or by Chaparral, Mesquite or any of Mesquite's Subsidiaries or
any Mesquite Minority Owned QEC, or by any other Person. El Paso shall, after a
Responsible Officer of El Paso obtains actual knowledge thereof, promptly notify
each Indemnified Person of any Indemnified Event affecting such Indemnified
Person. Each Indemnified Person agrees to provide El Paso with a copy of all
relevant documents and details, including all relevant papers served, claims
made and invoices received, in each case, as are reasonably requested by El
Paso, to the extent such information is available to such Indemnified Person and
such Indemnified Person can do so in a commercially reasonable manner. Subject
to the provisions of the following paragraph, El Paso shall at its sole option,
and at its sole cost and expense, be entitled to participate in, or to control
and to assume full responsibility for, the defense of such Indemnified Event
with Jones, Day, Reavis & Pogue or Fried, Frank, Harris, Shriver & Jacobson, or
with other counsel reasonably satisfactory to such Indemnified Person, and shall
provide the Indemnified Person(s) who are the subject of such Indemnified Event
with all information with respect to such Indemnified Event as such Indemnified
Person(s) shall reasonably request to the extent such disclosure shall not (A)
result in the waiver of any attorney-client privilege between El Paso and its
counsel or otherwise result in the loss of any attorney work product or other
privilege preventing disclosure of confidential material or (B) violate any
applicable confidentiality agreement relating to an asset of a Chaparral
Operating Subsidiary or a Mesquite Operating Subsidiary or entered into in good
faith or (C) violate any Applicable Law.

                  (ii) Notwithstanding any of the foregoing to the contrary, El
Paso shall not be entitled to control and assume responsibility for the defense
of any Indemnified Event if (A) such Indemnified Person shall have reasonably
concluded in good faith that there exists an actual or potential conflict of
interest between such Indemnified Person and El Paso such that it is advisable
for such Indemnified Person to retain control of all or any portion of such
Indemnified

                                       34
<PAGE>

Event (except that El Paso shall be entitled to control and assume
responsibility for the defense of that portion of the Indemnified Event as to
which such conflict of interest does not apply), or (B) such Indemnified Event
involves the possibility of criminal sanctions against or criminal liability of
such Indemnified Person. In the circumstances described in clauses (A) and (B),
the Indemnified Person shall be entitled to control and assume responsibility
for the defense of that aspect of such Indemnified Event covered by clauses (A)
and (B) at the expense of El Paso, provided that such defense is conducted by
one counsel (in addition to any local counsel) acceptable to El Paso, such
acceptance not to be unreasonably withheld or delayed. Each Indemnified Person,
by its acceptance of any indemnification rights hereunder, agrees that El Paso
shall only be responsible for the expenses of one counsel to be retained by all
Indemnified Persons with respect to any Indemnified Event for which a claim for
indemnification will be sought under this Section 6.1 in a particular
jurisdiction, unless counsel to any Indemnified Person reasonably determines
that there are actual or potential conflicts of interest between such
Indemnified Person and other Indemnified Persons or that there may be one or
more different or additional defenses, claims, counterclaims, or causes of
action available to such Indemnified Person, in which case such Indemnified
Person may retain separate counsel together with all other Indemnified Persons
subject to the same conflict of interest or sharing such additional defenses,
claims, counterclaims or causes of action at the expense of El Paso. In addition
any Indemnified Person may participate in any Indemnified Event controlled by El
Paso pursuant to this Section 6.1, (x) at its own expense in respect of any such
Indemnified Event as to which El Paso shall have acknowledged in writing its
obligation to indemnify such Indemnified Person pursuant to this Section 6.1 for
Indemnified Expenses (subject to the limitations and exclusions contained in
this Agreement) and in a manner that is not materially prejudicial to the
interests of El Paso, and (y) at the expense of El Paso in respect of any such
Indemnified Event as to which El Paso shall not have so acknowledged its
obligation in respect of Indemnified Expenses to such Indemnified Person
pursuant to this Section 6.1, or for so long as El Paso fails to assume
responsibility for the defense of such Indemnified Event. El Paso may in any
event participate in all Indemnified Events at its own cost. Nothing contained
in this Section 6.1(e) shall be deemed to require an Indemnified Person to
contest any Indemnified Event or to assume responsibility for or control of any
judicial proceeding with respect thereto.

                  (iii) Without the prior written consent of such Indemnified
Person, El Paso shall not settle or compromise, or consent to the entry of any
judgment in, any pending or threatened Indemnified Event, unless such
settlement, compromise or consent or related judgment includes an unconditional
release of such Indemnified Person from all liability for Indemnified Expenses
under the underlying claim in the Legal Proceeding that is the basis of such
Indemnified Event. No Indemnified Person shall settle or compromise, or consent
to the entry of any judgment, decree or order in, any pending or threatened
Indemnified Event in respect of which any payment or claim for indemnification
would or will result or be made by such Indemnified Person hereunder or under
the other Transaction Documents without the prior written consent of El Paso,
such consent not to be unreasonably withheld or delayed.

                  (f) Subrogation. If an Indemnified Expense or Economic Loss
indemnified by El Paso under this Section 6.1 other than with respect to Taxes
is paid in full by El Paso and/or an insurer under a policy of insurance
maintained by El Paso or any of its Affiliates or by Chaparral, Mesquite or any
of Mesquite's Subsidiaries or any Mesquite Minority Owned QEC, or by any other
Person, such insured Person and/or such insurer, as the case may be, shall be

                                       35
<PAGE>

subrogated to the extent of such payment to the rights and remedies of the
Indemnified Person (other than (i) under insurance policies maintained by such
Indemnified Person or (ii) against any of Chaparral, Mesquite, Limestone, the
Limestone Trustee or the holders of the Limestone Certificates) on whose behalf
such Indemnified Expense or Economic Loss was paid with respect to the
Indemnified Event giving rise thereto. So long as no event referred to in clause
(A) of Section 6.1(e)(ii) hereof shall have occurred and be continuing, if an
Indemnified Person receives any refund, in whole or in part, with respect to any
Indemnified Expense or Economic Loss paid by El Paso hereunder, it shall
promptly pay over the amount refunded (but not in excess of the amount El Paso,
any such other insured Person or any of their respective insurers has paid) to
El Paso or such other insured person, as their interests may appear.

                  (g) Reports and Returns. In case any return, report or
statement shall be required to be made with respect to any obligation of El Paso
under or arising out of this Section 6.1 of which a Responsible Officer of El
Paso is, or through reasonable due diligence should be, aware, El Paso shall, to
the extent required or permitted by law, make and file in its own name such
return, statement or report, and in the case of any such return, statement or
report required to be made in the name of an Indemnified Person, to the extent
of the actual knowledge of a Responsible Officer of El Paso, advise such
Indemnified Person in writing of such fact and, to the extent such information
is available to El Paso and El Paso can do so in a commercially reasonable
manner, provide such Indemnified Person with information sufficient to permit
such return, statement or report to be properly and timely made with respect to
any obligations of El Paso under or arising out of this Section 6.1.

                  (h) Affiliated Group. For purposes of this Section 6.1, the
term "Indemnified Person" when used in respect of a Certificateholder (or a
member, partner or beneficiary of a Certificateholder that is a pass-through
entity for Tax purposes), shall include any combined, consolidated or affiliated
group and each member thereof of which such Certificateholder (or member,
partner or beneficiary of such Certificateholder that is a pass-through entity
for Tax purposes) is or shall become a member if combined or consolidated
returns are or shall be filed for such affiliated group for Tax purposes.

                  (i) Calculation of Payments in Respect of Taxes. Any indemnity
that El Paso shall be required to make to or for the account of any Indemnified
Person under this Section 6.1 shall include an additional amount necessary to
hold such Indemnified Person harmless on an After-Tax Basis from any Taxes
required to be paid or accrued by such Indemnified Person as a result of such
payment, and the exclusion of the Excluded Items shall be disregarded in
determining such additional amount.

                  (j) Payment in Respect of Taxes. El Paso shall pay any Tax for
which it is liable pursuant to this Section 6.1 directly to the appropriate
taxing authority on a timely basis sufficient to avoid the imposition of
interest and penalties (or upon demand of an Indemnified Person to such
Indemnified Person within 30 Business Days of a written demand, but in no event
prior to the date which is more than 5 days prior to the date such Tax is due
(including all extensions)) or, in the case of Taxes which are being contested
pursuant to a contest permitted pursuant to Section 6.1(e), the time such
contest is finally resolved. Any such demand shall specify in reasonable detail
the calculation of the payment and the facts upon which the right to payment is
based. Each Indemnified Person shall promptly forward to El Paso any notice,
bill or

                                       36
<PAGE>

advice received by it from the relevant taxing authority concerning any Tax
which El Paso may be required to indemnify against hereunder but the failure to
give such notice shall not diminish El Paso's obligation hereunder except to the
extent the right of El Paso to contest (or cause a contest of) such claim in a
court of competent jurisdiction is thereby precluded. El Paso shall furnish the
relevant Indemnified Person with the original or a certified copy of a receipt
(if any is available to El Paso) for El Paso's payment of any Tax that is
subject to indemnification pursuant to this Section 6.1, or such other evidence
of payment of such Tax as is reasonably requested by such Indemnified Person.

                  (k) Tax Savings. (i) Upon receipt by any Indemnified Person of
a refund (the amount of any such refund to be determined, in the case of an
Indemnified Person in the reasonable judgment of such Indemnified Person) of all
or part of any Taxes which El Paso shall have paid for such Indemnified Person
or for which El Paso shall have reimbursed, advanced funds to or indemnified
such Indemnified Person, such Indemnified Person shall, but not before El Paso
shall have made all payments then due pursuant to this Section 6.1 and any other
payments then due to such Indemnified Person under any of the Transaction
Documents and, in any event, provided that no Event of Default or New Indenture
Event of Default shall have occurred and be continuing, pay or repay to El Paso
an amount which, after the subtraction of the amount of any further net Tax
savings actually realized by such Indemnified Person as a result of the payment
under this Section 6.1 (but only to the extent of the amounts previously paid by
El Paso with respect to such refunded Taxes in order to pay them on an After-Tax
Basis), and the addition of any net Tax detriment realized by such Indemnified
Person as a result of the receipt or accrual of such refund and any interest
received or accrued by such Indemnified Person on such refund, is equal to the
amount of such refund and any interest received by such Indemnified Person that
is fairly attributable to such refund. If it is later determined that the
Indemnified Person was not entitled to such refund, the portion of such refund
that is repaid, recaptured or disallowed will be treated as Taxes for which El
Paso must indemnify the Indemnified Person pursuant to the provisions of Section
6.1(a) but without regard to the exclusion of Excluded Items.

                  (ii) If an Indemnified Person shall actually realize for any
taxable period a reduction in Tax (whether attributable to a credit, deduction,
exclusion from income or otherwise) which would not have been realized but for
any Tax, claim or other cost or expense with respect to which El Paso has
reimbursed or indemnified such Indemnified Person on an After-Tax Basis pursuant
to this Section 6.1, and such reduction in Tax was not taken into account in
determining the amount payable by El Paso on account of such indemnification,
such Indemnified Person shall pay to El Paso, so long as no Event of Default or
New Indenture Event of Default shall have occurred and be continuing, within 30
days after such Indemnified Person shall have actually realized such Tax
savings, the amount of such savings, together with the amount of any Tax savings
actually realized as a result of any payment pursuant to this sentence; provided
that El Paso shall not be entitled to receive an amount in excess of the amount
of such Taxes, claims, costs or expenses in respect of which the indemnification
was paid by El Paso. Each Indemnified Person shall have sole control over the
positions taken with respect to its tax returns and filings and such Indemnified
Person shall determine in good faith the realization of any Tax benefit, saving,
deduction or credit for purposes of calculations made under this Section 6.1. If
it is later determined that the Indemnified Person was not entitled to such Tax
savings or reduction in Tax, the portion of such Tax savings or reduction in Tax
that is repaid, recaptured or

                                       37
<PAGE>

disallowed will be treated as Taxes for which El Paso must indemnify the
Indemnified Person pursuant to the provisions of Section 6.1(a) but without
regard to the exclusion of Excluded Items.

                  (l) Notice. In the event that El Paso is required to make any
payments pursuant to this Section 6.1 with respect to the Limestone Certificates
and any Certificateholder Related Person, El Paso shall provide the Limestone
Trustee with written notice of the amount of such payment.

                  Section 6.2 Tax Indemnification.

                  El Paso shall enter into the Tax Indemnification Agreement as
of the Closing Date.

                  Section 6.3 Agreements.

                  (a) Each Party that was party to the Phase II Participation
Agreement hereby agrees that (i) except as set forth in Section 6.3(b) below,
the Phase II Participation Agreement shall be terminated effective as of March
15, 2000, and (ii) the indemnities set forth in this Article VI with respect to
the Parties that were party to the Phase II Participation Agreement shall be
effective as of December 28, 1999 (without duplication of the indemnities set
forth in the Phase II Participation Agreement).

                  (b) Each Party that was a party to the Phase II Participation
Agreement hereby agrees that (i) the Phase II Participation Agreement shall
continue to be in full force and effect with respect to DLJ Capital Corporation
and (ii) Section 7.8 of the Phase II Participation Agreement shall continue to
be in full force and effect with respect to each Party that was a party to the
Phase II Participation Agreement.

                                   ARTICLE VII

                                  MISCELLANEOUS

                  Section 7.1 Survival.

                  All agreements, representations, warranties and indemnities
contained in this Agreement and in any agreement, document or certificate
delivered pursuant hereto, or in connection herewith, shall survive and continue
in effect following the execution and delivery of this Agreement and the Closing
Date. Upon the repayment in full of the Outstanding Limestone Notes and the
cancellation of all Limestone Certificates pursuant to Section 7.04 of the
Limestone Trust Agreement, this Agreement shall terminate except as to those
provisions, including without limitation, Article VI and Section 7.9 hereof,
expressly intended to survive such termination.

                                       38
<PAGE>

                  Section 7.2 Notices.

                  Except as otherwise expressly provided herein in any
particular case, all notices, approvals, consents, requests and other
communications hereunder shall be in writing and shall, if addressed as provided
in the following sentence, be deemed to have been given, (i) when delivered by
hand on a Business Day, (ii) one Business Day after being sent by a private
nationally or internationally recognized overnight courier service or (iii) when
sent on a Business Day by telecopy, if immediately after transmission the
sender's facsimile machine records in writing the correct answer back. Actual
receipt at the address of an addressee, regardless of whether in compliance with
the foregoing is effective notice hereunder. Until otherwise so notified by the
respective parties, all notices, approvals, consents, requests and other
communications shall be addressed to the following addresses:

                  If to El Paso or the Relevant El Paso Parties:

                  1001 Louisiana Street
                  Houston, Texas  77002
                  Attention:  Tom Kilgore
                  Telecopier No.:  713-420-7249
                  Telephone No.:  713-420-5574

                  with a copy to:

                  1001 Louisiana Street
                  Houston, Texas  77002
                  Attention:  Kelly Jameson
                  Telecopier No.:  713-420-2529
                  Telephone No.:  713-420-2017

                  If to Limestone, the Limestone Trustee,
                  or the Certificateholders:

                  c/o Wilmington Trust Company, as Trustee
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, Delaware  19890-0001
                  Attention:  Corporate Trust Administration
                  Telecopier No.:  302-651-8882
                  Telephone No.:  302-651-8681

                  with copies to:

                  DLJ Investment Partners II, L.P.
                  11 Madison Avenue
                  New York, NY  10010
                  Attention: Igor DaCosta
                  Telecopier No.:  212-448-3443
                  Telephone No.:  212-538-8169

                                       39
<PAGE>

                  DLJ Investment Partners II, L.P.
                  11 Madison Avenue
                  New York, NY  10010
                  Attention:  Ivy Dodes
                  Telecopier No.:  212-325-8256
                  Telephone No.:  212-538-3948

                  Dewey Ballantine LLP
                  1301 Avenue of the Americas
                  New York, NY  10019
                  Attention:  Thomas C. Mazza
                  Telecopier No.:  212-259-6333
                  Telephone No.:  212-259-6700

                  If to the Share Trust or the Share Trustee:

                  c/o Wilmington Trust Company, as Trustee
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, Delaware 19890-0001
                  Attention:  Corporate Trust Administration
                  Telecopier No.:  302-651-8882
                  Telephone No.:  302-651-8681

                  with copies to:

                  1001 Louisiana Street
                  Houston, Texas  77002
                  Attention:  Kelly Jameson
                  Telecopier No.:  713-420-2529
                  Telephone No.:  713-420-2017

                  If to Chaparral, Mesquite or the Overfund Trust:

                  c/o Wilmington Trust Company
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, Delaware  19890-0001
                  Attention:  Corporate Trust Administration
                  Telecopier No.:  302-651-8882
                  Telephone No.:  302-651-1000

                                       40
<PAGE>

                  c/o El Paso Chaparral, as Manager
                  1001 Louisiana Street
                  Houston, Texas  77002
                  Attention:  Tom Kilgore
                  Telecopier No.:  713-420-7249
                  Telephone No.:  713-420-5574

                  with a copy to:

                  1001 Louisiana Street
                  Houston, Texas  77002
                  Attention:  Kelly Jameson
                  Telecopier No.:  713-420-2529
                  Telephone No.:  713-420-2017

                  If to the Indenture Trustee:

                  The Bank of New York
                  5 Penn Plaza
                  New York, New York  10001
                  Attention:  Louis P. Young
                  Telecopier No.:  212-896-7299
                  Telephone No.:  212-896-7249

                  A duplicate copy of each notice, approval, consent, request or
other communication given hereunder by each of the Parties, to any one of the
others or to the Certificateholders or the Indenture Trustee shall also be given
to all of the others. However, failure to give notice to any Party shall not
affect effectiveness of notice to Parties as to whom notice has been given in
accordance with the first two sentences of this Section 7.2. Each of the Parties
may, by notice given hereunder, designate any further or different addresses to
which subsequent notices, approvals, consents, requests or other communications
shall be sent or persons to whose attention the same shall be directed.

                  Section 7.3 Severability of Provisions.

                  If any provision hereof shall be held invalid or unenforceable
by any court of competent jurisdiction, such holding shall not invalidate or
render unenforceable any other provision hereof. To the extent permitted by
Applicable Law, the Parties hereto hereby agree that any provision hereof that
renders any other term or provision hereof invalid or unenforceable in any
respect shall be modified, but only to the extent necessary to avoid rendering
such other term or provision invalid or unenforceable, and such modification
shall be accomplished in the manner that most nearly preserves the benefit of
all Parties' bargain hereunder.

                  Section 7.4 Governing Law; Waiver of Jury Trial; Consent to
Jurisdiction.

                  (a) THE RIGHTS AND OBLIGATIONS OF EACH OF THE PARTIES UNDER
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.

                                       41
<PAGE>

                  (b) EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES TO THE
FULLEST EXTENT PERMITTED BY LAW ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING
ARISING OUT OF OR RELATING DIRECTLY OR INDIRECTLY TO ANY OF THIS AGREEMENT OR
ANY OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.

                  (c) ANY PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN
THE COUNTY OF NEW YORK IN THE COMMERCIAL DIVISION OF THE SUPREME COURT, CIVIL
BRANCH OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK OR THE
EASTERN DISTRICT OF NEW YORK AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH OF THE PARTIES HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS IN RESPECT OF, BUT ONLY IN RESPECT OF, PROCEEDINGS WITH RESPECT
TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.

                  (d) EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID PROCEEDINGS ARISING OUT OF
OR IN CONNECTION WITH THIS OR ANY OTHER TRANSACTION DOCUMENT BROUGHT IN THE
COURTS REFERRED IN SECTION 7.4(c) HEREOF AND HEREBY FURTHER IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO PLEAD OR
CLAIM IN ANY SUCH COURT THAT ANY SUCH PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.

                  (e) EACH OF LIMESTONE, THE SHARE TRUST AND THE OVERFUND TRUST
HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS AND HEREBY CONFERS AN
IRREVOCABLE SPECIAL POWER, AMPLE AND SUFFICIENT, TO CT CORPORATION SYSTEM, WITH
OFFICES ON THE DATE HEREOF AT 111 EIGHTH AVENUE, NEW YORK, NY 10011 AS ITS
DESIGNEE, APPOINTEE AND AGENT WITH RESPECT TO ANY SUCH PROCEEDING IN NEW YORK TO
RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS
PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS
WHICH MAY BE SERVED IN ANY SUCH PROCEEDING AND AGREES THAT THE FAILURE OF SUCH
AGENT TO GIVE ANY ADVICE OF ANY SUCH SERVICE OF PROCESS TO LIMESTONE SHALL NOT
IMPAIR OR AFFECT THE VALIDITY OF SUCH SERVICE OR OF ANY CLAIM BASED THEREON. IF
FOR ANY

                                       42
<PAGE>

REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS
SUCH, EACH OF LIMESTONE, THE SHARE TRUST AND THE OVERFUND TRUST AGREES TO
DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS AND
FOR THE PURPOSES OF THIS PROVISION. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF LIMESTONE, THE SHARE TRUST AND THE OVERFUND TRUST IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS WITH RESPECT TO ANY PROCEEDING (WHETHER OR NOT IN NEW
YORK), BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO SUCH PERSON, AT ITS RESPECTIVE ADDRESS SET FORTH IN SECTION 7.2
HEREOF, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.

                  Section 7.5 Amendments, Waivers, Etc.

                  This Agreement may not be amended, discharged or terminated
nor may any provision hereof be waived unless such amendment, discharge,
termination or waiver is in writing and signed by each Party.

                  Section 7.6 Entire Agreement.

                  Except as otherwise provided in Section 6.3 with respect to
the Phase II Participation Agreement, (i) this Agreement (including, without
limitation, the appendices hereto) and the other Transaction Documents supersede
all prior agreements, written or oral, between or among any of the Parties
relating to the transactions contemplated hereby and thereby, and (ii) each of
the Parties represents and warrants to the others that this Agreement and the
other Transaction Documents constitute the entire agreement among the Parties
relating to the transactions contemplated hereby and thereby.

                  Section 7.7 Benefit of Agreement.

                  All agreements, representations, warranties and indemnities in
this Agreement and in any agreement, document or certificate delivered pursuant
hereto shall be binding upon the Person making the same and its successors and
assigns and shall inure to the benefit of and be enforceable by the Person for
whom made and its successors and assigns (including, in the case of agreements,
representations, warranties and indemnities made to each Certificateholder, any
Person claiming by, through or under such Certificateholder or who is entitled
to any contractual right of reimbursement or indemnity in connection with the
transactions contemplated herein); provided, however, none of El Paso,
Limestone, El Paso Chaparral Holding, El Paso Chaparral, the Management Company,
Chaparral, Mesquite, the Overfund Trust or the Share Trust may assign or
transfer any of its rights or obligations hereunder except as provided in the
Transaction Documents without the prior written consent of the
Certificateholders or, so long as any Limestone Notes are Outstanding, the
Indenture Trustee, except pursuant to any merger, consolidation or other act to
similar effect permitted under Section 5.1(a) hereof where El Paso or such other
entity is the survivor or the survivor assumes all the obligations of such
entity. This Agreement is for the sole benefit of the Parties and their
respective successors and assigns and all Indemnified Persons and their
respective successors and assigns, and is not for the benefit of any other
Person.

                                       43
<PAGE>

                  Section 7.8 Expenses.

                  All statements, reports, certificates, opinions and other
documents or information required to be furnished by any Party to the Indenture
Trustee, Limestone or the Certificateholders under this Agreement or any other
Transaction Document shall be supplied without cost to the Indenture Trustee,
Limestone or the Certificateholders. El Paso shall pay, within 30 days after
demand therefor, (a) any Administrative Expenses incurred by the Indenture
Trustee, the Limestone Trustee, the Overfund Trustee, the Share Trustee or any
Certificateholder Related Person to the extent such amounts are not paid
pursuant to the Transaction Documents and (b) all reasonable and documented
out-of-pocket costs and expenses of the Indenture Trustee, Limestone, the
Limestone Trustee, the Overfund Trustee, the Share Trustee or the
Certificateholders (and any Person claiming by, through or under such
Certificateholders or who is entitled to any contractual right of reimbursement
or indemnity in connection with the transactions contemplated herein), incurred
in connection with (i) the negotiation, preparation, execution and delivery of
the Transaction Documents or any waiver or amendment of, or supplement or
modification to, the Transaction Documents and (ii) the review of any of the
other agreements, instruments or documents referred to in this Agreement or
relating to the transactions contemplated hereby. In addition, El Paso shall
pay, or cause to be paid, within 30 days after demand therefor, all reasonable
and documented out-of-pocket costs and expenses of the Indenture Trustee,
Limestone and the Certificateholders (and any Person claiming by, through or
under such Certificateholders or who is entitled to any contractual right of
reimbursement or indemnity in connection with the transactions contemplated
herein) (including the reasonable and documented fees and disbursements of
counsel), incurred in connection with the enforcement or protection of its
rights under the Transaction Documents, including in connection with any
workout, restructuring or negotiations in respect thereof, and including the
exercise of the remedies of the Indenture Trustee, Limestone and the
Certificateholders (and any Person claiming by, through or under such
Certificateholders or who is entitled to any contractual right of reimbursement
or indemnity in connection with the transactions contemplated herein) under the
Transaction Documents following the occurrence of a Default under the
Transaction Documents.

                  Section 7.9 No Bankruptcy Petitions.

                  (a) El Paso. El Paso covenants and agrees that prior to the
date that is a year and a day after the cancellation of all outstanding
Limestone Certificates pursuant to Section 7.04 of the Limestone Trust
Agreement, it will not institute against, or join any other person in
instituting against, Limestone, El Paso Chaparral Holding, El Paso Chaparral,
the Management Company, Chaparral, Mesquite, the Overfund Trust or the Share
Trust any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or similar proceeding under the laws of the United States or any
state of the United States.

                  (b) Chaparral. Chaparral covenants and agrees that prior to
the date that is a year and a day after the cancellation of all outstanding
Limestone Certificates pursuant to Section 7.04 of the Limestone Trust
Agreement, it will not, other than upon the direction of Limestone, institute
against, or join any other person in instituting against, Limestone, the
Management Company, Mesquite, the Share Trust or the Overfund Trust any
bankruptcy, reorganization,

                                       44
<PAGE>

arrangement, insolvency or liquidation proceedings or similar proceeding under
the laws of the United States or any state of the United States.

                  (c) Mesquite. Mesquite covenants and agrees that prior to the
date that is a year and a day after the cancellation of all outstanding
Limestone Certificates pursuant to Section 7.04 of the Limestone Trust
Agreement, it will not, other than upon the direction of Chaparral, institute
against, or join any other person in instituting against, Chaparral, the
Overfund Trust, the Share Trust or the Management Company, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or similar
proceeding under the laws of the United States or any state of the United
States.

                  Section 7.10 Limitation of Liability.

                  It is expressly understood and agreed by the parties hereto
that, except with respect to Section 4.6, (a) this Agreement is executed and
delivered by Wilmington Trust Company, not individually or personally, but
solely as Trustee, in the exercise of the powers and authority conferred and
vested in it, (b) each of the representations, undertakings and agreements
herein made on the part of Limestone, the Overfund Trust or the Share Trust is
made and intended not as personal representations, undertakings and agreements
by Wilmington Trust Company but is made and intended for the purpose of binding
only Limestone, the Overfund Trust or the Share Trust, respectively, (c) nothing
herein contained shall be construed as creating any liability on Wilmington
Trust Company, individually or personally, to perform any covenant either
expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties hereto and by any Person claiming by, through or
under the parties hereto, and (d) under no circumstances shall Wilmington Trust
Company be personally liable for the payment of any indebtedness or expenses of
Limestone, the Overfund Trust or the Share Trust or be liable for the breach of
failure of any obligation, representation, warranty or covenant made or
undertaken by Limestone, the Overfund Trust or the Share Trust under this
Agreement.

                  Section 7.11 General Limitation of Liability.

                  Subject to the following sentence, no Party to any Transaction
Document shall be liable for any punitive, exemplary, or treble damages,
including without limitation for the inaccuracy of any representation or
warranty made by such Party; in addition, with respect to the representations,
warranties, covenants and indemnities made by El Paso in this Agreement, or
otherwise in any Transaction Document, El Paso shall not be liable for any
punitive, exemplary, treble or consequential damages arising out of a breach,
default or other violation thereof. Notwithstanding the limitations of liability
described in the preceding sentence, Indemnified Expenses will include
out-of-pocket payments by an Indemnified Person of consequential, punitive,
exemplary or treble damages owing to a third Person arising out of any claim,
action or suit against such Indemnified Person to the extent not excluded
pursuant to Section 6.1(c).

                  Section 7.12 Counterparts.

                  This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.

                                       45
<PAGE>

                  Section 7.13 Effectiveness.

                  This Agreement shall become effective on and as of the
Effective Date.

                            [signature pages follow]

                                       46
<PAGE>
                  IN WITNESS WHEREOF, each of El Paso, Limestone, the Co-Issuer,
Credit Suisse First Boston (USA), Inc., El Paso Chaparral Holding, El Paso
Chaparral Holding II, El Paso Chaparral, the Management Company, Chaparral,
Mesquite, the Overfund Trust, the Share Trust, Electron, Wilmington Trust
Company and The Bank of New York has caused this Agreement to be executed in its
name and on its behalf as of the date first above written.

                        EL PASO CORPORATION

                        By:      /s/  Thomas G. Kilgore
                             ---------------------------------
                             Name:    Thomas G. Kilgore
                             Title:   Vice President

                             Participation Agreement

<PAGE>
                        LIMESTONE ELECTRON TRUST

                        By:  WILMINGTON TRUST COMPANY,
                               not in its individual capacity but
                               solely in its capacity as trustee

                        By:      /s/  Ann E. Roberts
                             ---------------------------------
                             Name:    Ann E. Roberts
                             Title:   Assistant Vice President

                             Participation Agreement

<PAGE>
                        LIMESTONE ELECTRON, INC.

                        By:      /s/  John L. Harrison
                             ---------------------------------
                             Name:    John L. Harrison
                             Title:   Senior Vice President

                             Participation Agreement

<PAGE>
                        CREDIT SUISSE FIRST BOSTON (USA), INC.

                        By:     /s/  Hamilton E. James
                             -------------------------------------
                             Name:   Hamilton E. James
                             Title:  Chairman of Global Investment
                                     Banking & Private Equity

                             Participation Agreement

<PAGE>
                        EL PASO CHAPARRAL HOLDING COMPANY

                         By:     /s/  John L. Harrison
                             ---------------------------------
                             Name:    John L. Harrison
                             Title:   Senior Vice President

                        EL PASO CHAPARRAL HOLDING II COMPANY

                         By:     /s/  John L. Harrison
                             ---------------------------------
                             Name:    John L. Harrison
                             Title:   Senior Vice President

                        EL PASO CHAPARRAL INVESTOR, L.L.C.

                        By:      El Paso Chaparral Holding Company, as its sole
                                 Member

                        By:      /s/  John L. Harrison
                             ---------------------------------
                             Name:    John L. Harrison
                             Title:   Senior Vice President

                         EL PASO CHAPARRAL MANAGEMENT, L.P.

                        By:      El Paso Chaparral Partner, L.L.C., as general
                                 partner

                        By:      /s/  John L. Harrison
                             ---------------------------------
                             Name:    John L. Harrison
                             Title:   Senior Vice President

                             Participation Agreement

<PAGE>
                        CHAPARRAL INVESTORS, L.L.C.

                        By:      El Paso Chaparral Investor, L.L.C., as Managing
                                 Member

                        By:      El Paso Chaparral Holding Company, as its sole
                                 Member

                        By:       /s/  John L. Harrison
                             ---------------------------------
                             Name:     John L. Harrison
                             Title:    Senior Vice President

                        MESQUITE INVESTORS, L.L.C.

                        By:      Chaparral Investors, L.L.C., as sole Member

                        By:      El Paso Chaparral Investor, L.L.C., as Managing
                                 Member

                        By:      El Paso Chaparral Holding Company, as its sole
                                 Member

                        By:       /s/  John L. Harrison
                             ---------------------------------
                             Name:     John L. Harrison
                             Title:    Senior Vice President

                             Participation Agreement

<PAGE>
                        EL PASO ELECTRON OVERFUND TRUST

                        By:  WILMINGTON TRUST COMPANY,
                             not in its individual capacity but
                             solely in its capacity as trustee

                        By:      /s/  Ann E. Roberts
                             ---------------------------------
                             Name:    Ann E. Roberts
                             Title:   Assistant Vice President

                        EL PASO ELECTRON SHARE TRUST

                        By:  WILMINGTON TRUST COMPANY,
                             not in its individual capacity but
                             solely in its capacity as trustee

                        By:      /s/  Ann E. Roberts
                             ---------------------------------
                             Name:    Ann E. Roberts
                             Title:   Assistant Vice President

                        ELECTRON TRUST

                        By:      Wilmington Trust Company,
                                 not in its individual capacity, but solely as
                                 Trustee

                        By:      /s/  Ann E. Roberts
                             ---------------------------------
                             Name:    Ann E. Roberts
                             Title:   Assistant Vice President

                        WILMINGTON TRUST COMPANY

                        By:      /s/  Ann E. Roberts
                             ---------------------------------
                             Name:    Ann E. Roberts
                             Title:   Assistant Vice President

                             Participation Agreement
<PAGE>
                        THE BANK OF NEW YORK

                        By:   /s/  Louis P. Young
                             ---------------------------------
                        Name:      Louis P. Young
                        Title:     Authorized Signatory

<PAGE>

                                   ANNEX A TO
                           FIFTH AMENDED AND RESTATED
                     LIMITED LIABILITY COMPANY AGREEMENT OF
                           CHAPARRAL INVESTORS, L.L.C.
                       AND TO THE PARTICIPATION AGREEMENT

                      DEFINITIONS AND RULES OF CONSTRUCTION

         SECTION 1.01 DEFINITIONS. Capitalized terms used in this Annex A and,
except as otherwise expressly provided in any Transaction Document with respect
to specific capitalized or other terms used in such Transaction Document,
capitalized terms used in the Transaction Documents and all appendices,
schedules and exhibits thereto, shall in each case have the respective meanings
given to them in this Section 1.01. Not all of the terms defined in this Annex A
are used in any particular Transaction Document.

         "ACCELERATION TRIGGER" means the occurrence of an Event of Default
under the Indenture and the acceleration of the Limestone Notes as a result
thereof.

         "ACT" means the Delaware Business Trust Act, Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code Section 3801 et seq., as in effect from time to
time.

         "ADDITIONAL CAPITAL CONTRIBUTIONS" means, with respect to each Member,
the Capital Contributions made by such Member (or its predecessors in interest)
pursuant to Section 3.3 of the Chaparral LLC Agreement.

         "ADDITIONAL CLASS B MEMBER INTEREST" is defined in Section 3.2(b)(iii)
of the Chaparral LLC Agreement.

         "ADDITIONAL FINANCING COSTS" means (i) all Administrative Expenses,
excluding any Taxes other than Documentary Taxes, plus (ii) if applicable, any
Limestone Notes Make-Whole Premium and/or New Limestone Notes Make-Whole
Premium.

         "ADDITIONAL FINANCING COSTS PAYMENT DATE" is defined in Section 6.10 of
the Chaparral LLC Agreement.

         "ADDITIONAL SHARES" means shares of El Paso Common Stock or, if
authorized by the Board of Directors of El Paso, El Paso Preferred Stock, in
each case to be issued by El Paso following a Partial Remarketing pursuant to
Section 8(f) of the Remarketing Agreement.

         "ADJUSTED CAPITAL ACCOUNT" means, with respect to any Member, the
balance, if any, in such Member's Capital Account as of the end of the relevant
Allocation Period, after giving effect to the following adjustments:

                                Project Electron

<PAGE>

                                                                         Annex A

                  (i) Credit to such Capital Account any amounts that such
         Member is obligated to contribute or deemed to be obligated to
         contribute pursuant to the penultimate sentences of Regulation Sections
         1.704-2(g)(1) and 1.704-2(i)(5); and

                  (ii) Debit to such Capital Account the items described in
         Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5)
         and 1.704-1(b)(2)(ii)(d)(6).

         The foregoing definition of Adjusted Capital Account is intended to
comply with the provisions of Regulation Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.

         "ADMINISTRATIVE EXPENSES" means, without duplication: (a) any fees,
expenses (including extraordinary expenses) and/or indemnities due or payable as
of any Limestone Note Payment Date or any Additional Financing Costs Payment
Date to any of the Indenture Trustee, the Limestone Trustee, the Overfund
Trustee and the Share Trustee or any Certificateholder Related Person, in each
case, in accordance with the Transaction Documents, including all amounts set
forth in the Administrative Expenses Certificate; (b) any fees and expenses due
or payable as of any Limestone Note Payment Date or any Additional Financing
Costs Payment Date, to (i) each of the accountants and agents of (including the
servicer under the Administrative Services Agreement) and counsel for Limestone
and the Co-Issuer, the Overfund Trust and the Share Trust in connection with
services rendered in accordance with the Transaction Documents, and (ii) each
Rating Agency in connection with any rating or rating estimate of the Limestone
Notes or the Limestone Certificates as contemplated by the Transaction
Documents; (c) any governmental fee, charge or tax, including Taxes, due or
payable as of any Limestone Note Payment Date or any Additional Financing Costs
Payment Date by each of the Issuer, the Co-Issuer, the Overfund Trust and the
Share Trust; provided, however, that Administrative Expenses shall not include
any amounts due or accrued with respect to any actions taken on or in connection
with the Closing Date which shall be paid on the Closing Date.

         "ADMINISTRATIVE EXPENSES CERTIFICATE" means the certificate of
Limestone dated as of the Closing Date and delivered to the Indenture Trustee
setting forth the annual Administrative Expenses, as such certificate may be
amended from time to time; provided, that, with respect to any contemplated
amendment of the Administrative Expenses Certificate in connection with a
recurring Administrative Expense, Limestone shall provide as much advance notice
as is practicable to El Paso of such contemplated amendment and Limestone shall
use its best efforts to allow El Paso to take reasonable steps to manage the
amount of such recurring Administrative Expense.

         "ADMINISTRATIVE SERVICES AGREEMENT" means the Amended and Restated
Administrative Services Agreement dated as of March 27, 2002, among Limestone,
the Co-Issuer and the Management Company.

         "AFFILIATE" means with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such Person. The term "control"
(including the correlative term "controlled") means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting stock, by
contract, or

                                      -2-

                                Project Electron

<PAGE>

                                                                         Annex A

otherwise. Affiliate, when used with respect to El Paso or any of its
Subsidiaries, shall not include Chaparral or any of its Subsidiaries; provided
that none of Limestone, Chaparral, Mesquite, or any of their Subsidiaries shall
be deemed to be Affiliates of El Paso.

         "AFTER-TAX BASIS" means, with respect to any payment to be made on an
"AFTER-TAX BASIS", that such payment will be grossed-up by the payor to make the
payee whole for the net amount of additional Taxes payable as a result of the
receipt or accrual of such payment and such gross-up amount (taking into account
all available credits or deductions attributable to the payment or accrual of
such additional Taxes). In calculating the gross-up amount, the Tax rates used
shall be the highest marginal Tax rates in effect for (and payable by) the payee
(or in the case of a payee that is a pass-through entity for any Tax purposes,
the Persons who are required to take into account any items of income, gain,
loss, deduction or credit with respect to such entity) on the date of such
payment or accrual; provided, however, that in the case of a payee that is (i) a
pass-through entity in which CSFB or any of its Affiliates is a general partner
or managing member or is otherwise managed by CSFB or any of its Affiliates, or
(ii) a pass-through entity in which a party in (i) above has a direct or
indirect beneficial interest, the Tax rates used shall be the highest marginal
Tax rates in effect for an individual residing in the United States.

         "AGGREGATE CHAPARRAL MATERIAL ADVERSE EFFECT" means that:

         (a) with respect to any Immateriality Exception in any representation
and warranty, or any covenant, respectively, made by El Paso or any El Paso
Party in a particular agreement:

                  (i) the aggregate amount (without duplication) of (A) all
         items included in such Immateriality Exception, and consequently
         excluded from the coverage of such representation and warranty, or such
         covenant, respectively, by reason of such Immateriality Exception, plus
         (B) all other items included in the Immateriality Exceptions to, and
         consequently excluded from the coverage of, other representations and
         warranties, or covenants, respectively made by such Persons in the
         Transaction Documents, less

                  (ii) to the extent relevant to such determination, the
         aggregate of the amounts with respect to all items referred to in
         clauses (a)(i)(A) and (a)(i)(B) that both (A) were reserved for on the
         consolidated balance sheet of Chaparral and its consolidated
         Subsidiaries and (B) were reflected in a reduction in the purchase
         price or acquisition cost to Chaparral, Mesquite or Mesquite's
         Subsidiaries of any asset or assets to which such representation and
         warranty, or covenant, respectively, applies, as reflected on the
         acquisition cash flow model for such purchase or acquisition would have
         (I) a material adverse effect on the financial condition or operations
         of Chaparral and its consolidated subsidiaries determined on a
         consolidated basis, or (II) a material adverse effect on the ability of
         any of El Paso, El Paso Chaparral Holding, El Paso Chaparral,
         Chaparral, Mesquite or Management Company to perform its material
         obligations under any Transaction Document to which it is a party; or

                                      -3-

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<PAGE>
                                                                         Annex A

         (b) there would result the invalidity or unenforceability, in whole or
in material part, of any Transaction Document to which any of El Paso, El Paso
Chaparral Holding, El Paso Chaparral, Chaparral, Mesquite or Management Company
is a party; or

         (c) there would result a material adverse effect on the rights and
remedies of any Indemnified Person under any such Transaction Document.

         "ALLOCATION PERIOD" means (a) if no Earn-Out Period Commencement Date
has occurred, the annual period beginning on January 1 of each year, (b) if an
Earn-Out Period Commencement Date occurs, the period beginning on the first day
of each calendar month beginning with the first month in the calendar year in
which the Earn-Out Period Commencement Date occurs and ending on the earlier of
the last day of such month or the Earn-Out Period Termination Date and (c) if
Chaparral shall not have been liquidated on the Earn-Out Period Termination
Date, the period commencing immediately after such date and ending on the last
day of the calendar year in which such date occurs, and each calendar year
thereafter; provided, however, that in the year in which Chaparral is
liquidated, the final Allocation Period shall end on the date Chaparral is
liquidated.

         "ALTERNATE BASE RATE" means, for any period a fluctuating interest rate
per annum as shall be in effect from time to time, which rate per annum shall at
all times be equal to the highest of (a) the rate of interest announced publicly
by JPMorgan Chase Bank in New York, New York, from time to time, as its base
rate and (b) 1/2 of 1% (1/2%) per annum above the Federal Funds Rate.

         "AMENDED EL PASO/CHAPARRAL NOTE" is defined in the Preliminary
Statements to the Chaparral LLC Agreement.

         "ANNUAL FIXED FEE" means, for the year ending December 31, 2000, and
for each succeeding year, $20,000,000; provided, that during any year (or
portion thereof) from the Earn-Out Period Commencement Date to the Earn-Out
Period Termination Date, "Annual Fixed Fee" shall mean $5,000,000 (or the pro
rata portion thereof). For purposes of clause (b)(iv) of the definition of
"Available Net Present Value" and clause (b)(iv) of the definition of "Coverage
Ratio", the Earn-Out Period Commencement Date shall be assumed to occur on March
15, 2003.

         "ANNUAL PERFORMANCE FEE" means (i) for the year ending December 31,
2000, $80,000,000 and (ii) for each succeeding calendar year, 20% of Available
Net Present Value, in each case as determined pursuant to Section 4.3 of the
Management Agreement and as adjusted pursuant to Section 4.4 of the Management
Agreement.

         "APPLICABLE DISCOUNT RATE" is defined in Section 1 of the Management
Agreement.

         "APPLICABLE LAW" means any legally binding law, statute, treaty,
constitution, regulation, rule, ordinance, order or Governmental Approval, or
other legally binding governmental restriction, requirement or determination, of
or by any Governmental Authority.

                                      -4-

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                                                                         Annex A

         "APPLICABLE TERMINATION PERIOD" means the period beginning on the first
of the following dates to occur: (i) the first day of the Earn-Out Period and
(ii) the first day following a Mark-to-Market Measurement Date.

         "ARRANGER" means CSFB, as successor to Donaldson, Lufkin & Jenrette
Securities Corporation.

         "ASSET DISPOSITION" is defined in Section 5.1(g) of the Chaparral LLC
Agreement.

         "ASSET PV" means, with respect to any asset, the Present Value of such
asset's Cash Flows, which Asset PV shall (a) in the case of any asset held by
Chaparral or any Project Company on the Management Fee Calculation Date next
preceding the applicable date of determination, be calculated as of such
preceding Management Fee Calculation Date and (b) in the case of any asset
acquired thereafter, be calculated as the Present Value of such asset's Cash
Flows, as determined in the manner specified in the Management Agreement.

         "ASSET REMEDY" is defined in Section 11.3(a) of the Chaparral LLC
Agreement.

         "ASSET REMEDY NOTICE" is defined in Section 11.3(a) of the Chaparral
LLC Agreement.

         "ASSET REMEDY STANDSTILL EXPIRATION DATE" means, with respect to any
Limestone Note Trigger Event or New Indenture Event of Default, the expiration
of the 21-day or 120-day period (as applicable) referred in the definition of
Asset Remedy Standstill Period.

         "ASSET REMEDY STANDSTILL PERIOD" means (a) in the case of a Limestone
Note Trigger Event arising as a result of an Acceleration Trigger, the later of
(x) 21 days after such Acceleration Trigger and (y) if, within 21 days after
such event, El Paso files a registration statement for and is diligently
pursuing the registration and sale of El Paso equity consisting of mandatorily
convertible preferred stock or common stock (including the El Paso Preferred
Stock and the shares issued pursuant to the Remarketing Agreement) in order to
generate proceeds at least equal to the Share Trust Amount, then 120 days
following the occurrence of such Acceleration Trigger, (b) in the case of a
Limestone Note Trigger Event arising as a result of a Maturity Trigger, 120 days
following the occurrence of such Limestone Note Trigger Event and (c) in the
case of a New Indenture Event of Default, the period commencing on the
occurrence of such New Indenture Event of Default and ending 120 days after the
acceleration (if any) of the New Limestone Notes as a result thereof.

         "ASSIGNMENT AND ASSUMPTION AGREEMENT" is defined in the Preliminary
Statements to the Chaparral LLC Agreement.

         "ATTRIBUTABLE PERCENTAGE" means, in respect of a non-wholly owned
Subsidiary of Mesquite or a Mesquite Minority Owned QEC, the proportion that (i)
Mesquite's direct or indirect common stock, limited liability company or other
ordinary Equity Interests in such Business Entity bears to (ii) the total
outstanding common stock, limited liability company or other ordinary Equity
Interests of such Business Entity.

         "AUDITORS" is defined in Section 4.1(j) of the Participation Agreement.

                                      -5-

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<PAGE>

                                                                         Annex A

         "AUTHORIZED OFFICER" means (a) in the case of El Paso (in any capacity)
and the Co-Issuer, any president, vice president, secretary, treasurer or any
other authorized officer or agent as may from time to time be designated as
such, and (b) in the case of the Indenture Trustee, the New Indenture Trustee
and Limestone, a Responsible Officer or such other Persons as may from time to
time be designated as such.

         "AVAILABLE CASH" means on any date, (a) with respect to Chaparral, the
amount of Cash held by Chaparral on such date, less all Company Expenses of
Chaparral, less all other cash requirements of Chaparral, as reasonably
determined by the Managing Member, and (b) with respect to Mesquite, the amount
of Cash held by Mesquite on such date, less all Company Expenses of Mesquite,
less all contingent purchase price payments and capital expenditures, less all
other cash requirements of Mesquite, as reasonably determined by the Managing
Member.

         "AVAILABLE NET PRESENT VALUE" is defined in Section 1 of the Management
Agreement.

         "BANKRUPTCY" means, with respect to any Person, a Voluntary Bankruptcy
or an Involuntary Bankruptcy. A "VOLUNTARY BANKRUPTCY" means, with respect to
any Person: (a) (i) the inability of such Person generally to pay its debts as
such debts become due, (ii) the failure of such Person generally to pay its
debts as such debts become due or (iii) an admission in writing by such Person
of its inability to pay its debts generally or a general assignment by such
Person for the benefit of creditors; (b) the filing of any petition by such
Person seeking to adjudicate it a bankrupt or insolvent, or seeking for itself
any liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of such Person or its debts under any
Applicable Law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking, consenting to, or acquiescing in the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for such Person or for any substantial part of its property or the
filing of an answer or other pleading admitting or failing to contest the
allegations of a petition filed against it in any proceeding of the foregoing
nature; or (c) action taken by such Person to authorize any of the actions set
forth above. An "INVOLUNTARY BANKRUPTCY" means, with respect to any Person,
without the consent or acquiescence of such Person, the entering of an order for
relief or approving a petition for relief or reorganization or any other
petition seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or other similar relief under any present or future
bankruptcy, insolvency or similar Applicable Law, or the filing of any such
petition against such Person, that shall not be dismissed or stayed within 60
days, or, without the consent or acquiescence of such Person, the entering of an
order appointing a trustee, custodian, receiver or liquidator of such Person or
of all or any substantial part of the property of such Person that shall not be
dismissed or stayed within 60 days. This definition is intended to supersede the
definition of Bankruptcy and similar events set forth in Sections 18-101(1) and
18-304 of the LLC Act.

         "BENEFIT PLAN INVESTOR" has the meaning given to such term in the Plan
Asset Regulations issued by the United States Department of Labor at 29 C.F.R.
Section 2510.3-101.

         "BUDGET PARAMETERS" means the budget parameters described on Schedule
6.3(f) to the Chaparral LLC Agreement.

                                      -6-

                                Project Electron

<PAGE>

                                                                         Annex A

         "BUSINESS DAY" means (a) any day of the year except Saturday, Sunday
and any day on which commercial banking institutions are authorized or obligated
by law, regulation or executive order to close in New York, New York,
Wilmington, Delaware or Houston, Texas and (b) if the applicable Business Day
relates to any day on which any amount to be paid under any of the Transaction
Documents is based on the Eurodollar Rate, any day that is a "Business Day"
described in clause (a) and that is also a day for trading by and between banks
in the London interbank market.

         "BUSINESS ENTITY" means a corporation (or, when used as an adjective,
corporate), limited liability company, partnership (whether general or limited),
business trust, joint stock company, unincorporated association, joint venture
or other applicable business entity and any asset or group of assets that is or
can be operated as or as part of a business unit, whether or not having distinct
legal existence.

         "CAPITAL ACCOUNT" means, with respect to any Member, the Capital
Account in Chaparral maintained for such Member in accordance with the following
provisions:

                  (i) To each Member's Capital Account there shall be credited
         such Member's Capital Contributions (including all Additional Capital
         Contributions), such Member's distributive share of Net Income and any
         items in the nature of income or gain allocated to such Member pursuant
         to Article IV of the Chaparral LLC Agreement, and the amount of any
         Chaparral liabilities of such Member assumed by such Member or which
         are secured by any Chaparral Property or Mesquite Property Distributed
         to such Member;

                  (ii) To each Member's Capital Account there shall be debited:
         (a) the amount of Cash and the Gross Asset Value of any Chaparral
         Property or Mesquite Property Distributed to such Member pursuant to
         any provision of the Chaparral LLC Agreement (including the Gross Asset
         Value of any El Paso Note Distributed to any Member) or deemed
         Distributed pursuant to Sections 5.4 or 5.5 of the Chaparral LLC
         Agreement; (b) the amount of liabilities of any such Member assumed by
         Chaparral or which are secured by and such property contributed by such
         Member to Chaparral; and (c) such Member's distributive share of Net
         Losses and any items in the nature of expenses or losses, allocated to
         such Member pursuant to Article IV of the Chaparral LLC Agreement;

                  (iii) The obligations of El Paso pursuant to the Remarketing
         Agreement, the Share Trust Agreement and the El Paso Guarantee shall
         each be treated for purposes of maintaining Capital Accounts as a
         deficit restoration obligation within the meaning of Regulations
         Section 1.704-1(b)(2)(ii)(c) in an amount equal to the Share Trust
         Amount (in the case of El Paso's obligations pursuant to the
         Remarketing Agreement and Share Trust Agreement) or the aggregate
         Outstanding principal amount of the New Limestone Notes together with
         accrued interest and premium (if any) thereon (in the case of El Paso's
         obligations under the El Paso Guarantee);

                  (iv) In the event all or a portion of an Interest in Chaparral
         is Disposed of in accordance with the terms of the Chaparral LLC
         Agreement, the transferee shall succeed

                                      -7-

                                Project Electron

<PAGE>

                                                                         Annex A

         to the Capital Account of the transferor to the extent it relates to
         the Transferred Interest; and

                  (v) In determining the amount of any liability for purposes of
         this definition of "Capital Account", there shall be taken into account
         Code Section 752(c) and any other applicable provisions of the Code and
         Regulations.

         The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Regulations.

         "CAPITAL CONTRIBUTIONS" means, with respect to any Member, the amount
of Cash and the Initial Gross Asset Value of any Chaparral Permitted Assets
(other than Cash) contributed (or deemed to be contributed) to Chaparral by such
Member (or its predecessors in interest) with respect to the Interest held by
such Member.

         "CASH" means cash, amounts credited to deposit accounts and other
immediately available funds that are denominated in Dollars.

         "CASH FLOWS" is defined in Section 1 of the Management Agreement.

         "CDI PROJECT INTERESTS" means, subject to the provisions of Section 3
of the Contingent Debt Instrument: (a) the 45.75% limited partnership interest
in Polk Power Partners, L.P., a Delaware limited partnership, which is owned at
the Closing Date by EPEC MLP Inc., a Delaware corporation, (b) the 50% interest
in Polk Power GP II, Inc., a Delaware corporation, which is owned at the Closing
Date by El Paso Energy International Company, a Delaware corporation, (c) the
49.5% limited partnership interest in Orange Cogeneration Limited Partnership, a
Delaware limited partnership, which is owned at the Closing Date by Orange
Acquisition Inc., a Delaware corporation, (d) the 50% interest in Orange
Cogeneration GP II, Inc., a Delaware corporation, which is owned at the Closing
Date by El Paso Energy International Company, a Delaware corporation, (e) the
17.5% general partnership interest in Masspower, which is owned at the Closing
Date by EPEC Independent Power I Company, a Delaware corporation, (f) the 25%
unit membership interest in Berkshire Power Company, LLC, a Massachusetts
limited liability company which is owned at the Closing Date by El Paso
Berkshire Power II Company, a Delaware corporation, (g) the 25% unit membership
interest in Milford Power Company LLC, a Delaware limited liability company,
which is owned at the Closing Date by El Paso Milford Power II Company, a
Delaware corporation, (h) any Involuntary Transfer Non-Cash Consideration
received in connection with any Involuntary Transfer, as contemplated by Section
3(b) of the Contingent Debt Instrument, and (i) any Additional Polk Power
Interests and Additional Orange Cogeneration Interests acquired as contemplated
by clause (ii) of the definition of Project Interest Contributions (as defined
in the Contingent Debt Instrument).

         "CERTIFICATE FACE AMOUNT" means, with respect to each Limestone
Certificate, the portion of the aggregate face amount of Limestone Certificates
outstanding corresponding to such Limestone Certificate as specified on the face
of such Limestone Certificate on its date of issuance.

                                      -8-

                                Project Electron

<PAGE>

                                                                         Annex A

         "CERTIFICATE OF INTEREST" is defined in Section 3.1 of the Chaparral
LLC Agreement.

         "CERTIFICATE PURCHASE AMOUNT" means, as of any date of determination,
the aggregate amount that would be required to be paid to the Class A Member as
the Purchase Price of the Class A Member Interest pursuant to Section 11.2(e) of
the Chaparral LLC Agreement as if such date of determination were the Purchase
Date for purposes of such Section of the Chaparral LLC Agreement, minus the
aggregate amount then necessary to discharge both (x) the Indenture under
Section 10.01 thereof and (y) the New Indenture under Section 10.01 thereof.

         "CERTIFICATE PURCHASE OPTION" is defined in Section 7.02(b) of the
Limestone Trust Agreement.

         "CERTIFICATE PURCHASE OPTION NOTICE" means a notice delivered by the
holder of the El Paso Interest or its designee or assign in accordance with
Section 7.02(b) of the Limestone Trust Agreement.

         "CERTIFICATEHOLDER" is defined in Article II of the Limestone Trust
Agreement.

         "CERTIFICATEHOLDER RELATED PERSON" means each Person claiming by,
through or under a Certificateholder, or who is entitled to any contractual
right of reimbursement or indemnity from a Certificateholder, in connection with
the transactions contemplated by the Transaction Documents.

         "CHAPARRAL" means Chaparral Investors, L.L.C., the limited liability
company formed pursuant to the Original LLC Agreement and the Chaparral
Certificate of Formation and continued pursuant to each of the First Amended and
Restated LLC Agreement, the Second Amended and Restated LLC Agreement, the Third
Amended and Restated LLC Agreement, the Fourth Amended and Restated LLC
Agreement and the Chaparral LLC Agreement, and the limited liability company
continuing the business of Chaparral Investors, L.L.C. pursuant to Section 12.1
of the Chaparral LLC Agreement in the event of dissolution of Chaparral as
provided in the Chaparral LLC Agreement.

         "CHAPARRAL ACCOUNTANTS" means PricewaterhouseCoopers LLP or any other
independent accounting firm of national reputation selected by the Managing
Member with the consent of the Class A Member, which consent shall not be
unreasonably withheld or delayed.

         "CHAPARRAL CERTIFICATE OF FORMATION" is defined in Section 1.6 of the
Chaparral LLC Agreement.

         "CHAPARRAL DOCUMENTS" means the Chaparral LLC Agreement, the
Participation Agreement, the Mesquite LLC Agreement, the Management Agreement
and the Overfund Trust Agreement.

         "CHAPARRAL EXPENSE PAYMENTS" means, collectively but without
duplication, 100% of amounts paid by Chaparral, Mesquite or any wholly-owned
Subsidiary of Mesquite, and the Attributable Percentage of amounts paid by any
non-wholly owned Subsidiary of Mesquite or any Mesquite Minority Owned QEC, (i)
to third Persons in respect of judgments, damages or

                                      -9-

                                Project Electron

<PAGE>

                                                                         Annex A

penalties with respect to, or to third Persons in settlement of, claims
(including but not limited to negligence, strict or absolute liability,
liability in tort and liabilities arising out of violation of regulatory
requirements or other Applicable Laws of any kind), actions or suits and (ii) in
respect of out-of-pocket costs, expenses, disbursements (including reasonable
fees and disbursements of counsel (other than such fees and disbursements
constituting Chaparral Extraordinary Liabilities) and claims, damages,
liabilities and expenses relating to environmental matters) of Chaparral,
Mesquite, any Subsidiary of Mesquite or any Mesquite Minority Owned QEC and
other obligations payable by Chaparral, Mesquite, any Subsidiary of Mesquite or
any Mesquite Minority Owned QEC to third Persons.

         "CHAPARRAL EXTRAORDINARY LIABILITIES" means for any year, without
duplication, any and all:

                  (a) (x) liabilities, taxes, losses, damages (including
         foreseeable and unforeseeable, consequential and punitive damages),
         obligations, and charges (including, without limitation, penalties,
         fines, court costs, administrative service fees, response and
         remediation costs, stabilization costs, encapsulation costs, treatment,
         storage or disposal costs, groundwater monitoring or environmental
         study, sampling or monitoring costs, and any other costs and reasonable
         expenses (including reasonable attorneys', experts' and consultants'
         fees and disbursements and investigating, laboratory and data review
         fees)), and (y) sums paid in settlement of actions (formal or informal,
         governmental, third-party or otherwise), claims (including claims for
         personal injury under any theory or for real or personal property
         damage), liens or administrative proceedings, in each case in clauses
         (x) and (y) above, that are imposed upon or incurred by Chaparral or
         any of the Project Companies arising directly or indirectly out of:

                           (i) the past, present or future release, spill,
                  emission, injection, leaching, dumping, escaping or seeping of
                  any Hazardous Materials, or material containing or alleged to
                  contain Hazardous Materials, at or from any past, present or
                  future properties or assets of Chaparral or any of the Project
                  Companies;

                           (ii) the violation or alleged violation by Chaparral,
                  any of the Project Companies or any third party of any
                  Environmental Laws with regard to the past, present or future
                  ownership, operation, use or occupying of any property or
                  asset of Chaparral or any of the Project Companies; or

                           (iii) any Environmental Action arising in connection
                  with any business or activities of Chaparral or any of the
                  Project Companies; and

                  (b) expenses incurred by Chaparral or any of the Project
         Companies as a result of casualty, theft, product liability, tort or
         breach of contract or any allegation of any of the foregoing to the
         extent not paid or reimbursed by insurance;

provided, however, in the case of clause (a) or (b), (x) amounts shall be taken
into account only to the extent that such amounts are imposed upon or incurred
directly by Mesquite or Chaparral or are included in Chaparral's distributive
share of profits or losses from any Project Company

                                      -10-

                                Project Electron

<PAGE>

                                                                         Annex A

and exceed, in the aggregate for such year, $3,000,000 and (y) no Taxes or
Excluded Items shall be taken into account.

         "CHAPARRAL EXTRAORDINARY LIABILITY RECOVERY AMOUNT" means the remainder
of (x) the cumulative Chaparral Extraordinary Liabilities incurred, minus (y)
the cumulative Extraordinary Expenditure Recoveries.

         "CHAPARRAL FINANCIAL MODEL" is defined in Section 4.1(n) of the
Participation Agreement.

         "CHAPARRAL INVESTOR'S ACCOUNT" means the Chaparral Investors, L.L.C.
account (account number 003-3646) at Mellon Bank, ABA # 043000261.

         "CHAPARRAL LLC AGREEMENT" means the Fifth Amended and Restated Limited
Liability Company Agreement of Chaparral Investors, L.L.C., dated as of the
Signing Date, and includes this Annex A and all other annexes, schedules and
exhibits attached thereto, as amended, supplemented, amended and restated or
otherwise modified from time to time.

         "CHAPARRAL OPERATING SUBSIDIARY" means the direct or indirect
subsidiaries of Chaparral which are organized to acquire (by purchase, exchange
or contribution) New Assets or other Qualified Energy Assets acquired from time
to time.

         "CHAPARRAL PERMITTED ASSETS" means:

                  (a) the Mesquite LLC Interest;

                  (b) El Paso Loans;

                  (c) Financial Investments;

                  (d) Qualified Energy Assets that are Limited Liability Equity
         Interests; provided, that such assets will only be "Chaparral Permitted
         Assets" if (i) acquired by Chaparral for the purpose of transferring
         (by contribution, sale or otherwise) such assets to Mesquite and (ii)
         such assets are, or represent direct or indirect interests in, assets
         located in the United States or Canada;

                  (e) Chaparral's sole beneficial interest in the Overfund
         Trust; and

                  (f) any other assets that are contributed to or otherwise
         acquired by Chaparral with the consent of all of the Members; provided,
         that any assets acquired pursuant to this clause (f) that are Qualified
         Energy Assets shall be, or shall represent direct or indirect interests
         in, assets located in the United States or Canada.

         "CHAPARRAL PERMITTED LIENS" means, collectively, (a) Permitted Liens
and (b) Liens created under the Mesquite Pledge Agreement.

         "CHAPARRAL PROPERTY" means all real and personal property owned by
Chaparral and any improvements thereto, including both tangible and intangible
property.

                                      -11-

                                Project Electron

<PAGE>

                                                                         Annex A

         "CLASS A MEMBER" means any Person that holds all or any part of the
Class A Member Interest or the collective reference to all such Persons, as the
context may require.

         "CLASS A MEMBER INTEREST" means the Interest in Chaparral designated as
a Class A Member Interest under the Chaparral LLC Agreement.

         "CLASS A MEMBER'S CUMULATIVE PRIORITY RETURN" means, as of any given
day, the sum of the amounts determined pursuant to the definition of the "CLASS
A MEMBER'S PRIORITY RETURN" for each Current Period since the Closing Date, and
ending before such day.

         "CLASS A MEMBER'S PRIORITY RETURN" means, (a) for the period beginning
January 1, 2000 and ending on the Closing Date $3,318,383.12, and (b) for the
period beginning on the day after the Closing Date and ending September 15,
2000, and each succeeding period ending on a Distribution Date or any other date
of determination, the sum of the amounts (without duplication) determined for
each day during such period (including the first day and excluding the last day
thereof), equal to the sum of:

                  (i) if any Limestone Notes are then outstanding, the amount of
         interest (including Default Interest on any overdue amount) accruing on
         such Limestone Notes for such day;

                  (ii) if any New Limestone Notes are then outstanding, the
         amount of interest (including any Default Interest on any overdue
         amount) accruing on such New Limestone Notes for such day.

                  (iii) the amount of interest that would accrue with respect to
         the Limestone Equity Cash Component for such day as if such component
         represented indebtedness accruing interest at a rate of (x) on any date
         prior to March 15, 2003, 10.35% and (y) on any date occurring on or
         after March 15, 2003, 10.85% (plus an additional 0.50% for every
         additional successive semi-annual period commencing on or after
         September 15, 2003 until March 15, 2006), in each case, calculated on
         the basis of a 360-day year consisting of twelve 30-day months and
         including Default Yield on any overdue amount; and

                  (iv) an amount equal to 17.5% per annum, compounded
         semi-annually on the Limestone Equity PIK Component for such day.

         "CLASS A PERCENTAGE" means, with respect to any Class A Member as of
any date, the ratio (expressed as a percentage) of such Class A Member's Capital
Account on such date to the aggregate Capital Accounts of all Class A Members on
such date, such Capital Accounts to be determined after giving effect to all
contributions, distributions and allocations for all Allocation Periods ending
on or prior to such date. If it is necessary to determine the relative Class A
Percentages of the Class A Members at a time when the balances of the Capital
Accounts of the Class A Members are zero or less, their relative Class A
Percentages shall be deemed to be their respective Class A Percentages as of the
last date on which a new Class A Member was admitted to Chaparral.

                                      -12-

                                Project Electron

<PAGE>

                                                                         Annex A

         "CLASS B MEMBER" means any Person that holds all or any part of the
Class B Member Interest or the collective reference to all such Persons, as the
context may require.

         "CLASS B MEMBER INTEREST" means each Interest in Chaparral designated
as a Class B Member Interest under the Chaparral LLC Agreement.

         "CLASS B PERCENTAGE" means, with respect to any Class B Member as of
any date, the ratio (expressed as a percentage) of such Class B Member's Capital
Account on such date to the aggregate Capital Accounts of all Class B Members on
such date, such Capital Accounts to be determined after giving effect to all
contributions, distributions and allocations for all Allocation Periods ending
on or prior to such date. If it is necessary to determine the relative Class B
Percentages of the Class B Members at a time when the balances of the Capital
Accounts of the Class B Members are zero or less, their relative Class B
Percentages shall be deemed to be their respective Class B Percentages as of the
last date on which a new Class B Member was admitted to Chaparral.

         "CLOSING AGREEMENT" means the Closing Agreement dated as of March 27,
2002, among Limestone, the Co-Issuer, El Paso, Electron and The Bank of New
York, in its individual capacity and as New Indenture Trustee.

         "CLOSING COSTS" means (i) all fees, costs and expenses payable pursuant
to the DLJ Fee Letter, (ii) all fees, costs and expenses of El Paso and its
Affiliates incurred in connection with the transactions contemplated in the
Chaparral LLC Agreement and the other Transaction Documents including El Paso's
counsel and accountants fees, (iii) all fees, costs and expenses of the Class A
Member incurred in connection with the transactions contemplated in the
Chaparral LLC Agreement, including the Class A Member's counsel fees, (iv) all
fees, costs and expenses of the Limestone Trustee, the Share Trustee, the
Overfund Trustee and the Indenture Trustee, including the respective counsel
fees of the Limestone Trustee, the Share Trustee, the Overfund Trustee and the
Indenture Trustee, and (v) any other fees, costs and expenses with respect to
the Limestone Certificates incurred in connection with the transactions
contemplated in the Chaparral LLC Agreement and the other Transaction Documents
certified in writing by the Limestone Trustee.

         "CLOSING DATE" means March 27, 2000.

         "CLOSING PRICE" for any Trading Day, means, for a security, an amount
equal to the closing price for such security on such Trading Day as reported by
Bloomberg L.P., or if not so reported by Bloomberg L.P., as reported by another
recognized source selected by the Chief Executive Officer or Chief Financial
Officer of El Paso, or by the Remarketing Agents, if the Chief Executive Officer
or Chief Financial Officer of El Paso fails to make such selection promptly upon
request by the Indenture Trustee (or, if a Limestone Contingent Share Trust
Remedy Condition shall exist, by Limestone).

         "CODE" means the United States Internal Revenue Code of 1986, as
amended from time to time.

                                      -13-

                                Project Electron

<PAGE>

                                                                         Annex A

         "CO-ISSUER" means Limestone Electron, Inc., a corporation organized
under the law of the State of Delaware.

         "COLLECTIONS" is defined in Article II of the Share Trust Agreement.

         "COMMENCEMENT DATE" means March 28, 2002.

         "COMPANY EXPENSES" means (a) with respect to Chaparral, all interest,
costs, expenses, indemnities, fees (including reasonable attorneys' and
accountants' fees), Additional Financing Costs, Taxes and other payment
obligations incurred or owing by Chaparral, but not including any Distributions
required to be paid pursuant to Article V, Section 11.1, Section 11.2 or Article
XII of the Chaparral LLC Agreement, together with reasonable reserves for
payment of the foregoing, and (b) with respect to Mesquite, all interest, costs,
expenses, indemnities, fees (including reasonable attorneys' and accountants'
fees), Additional Financing Costs, Taxes and other payment obligations incurred
or owing by Mesquite, but not including any obligation to make Distributions
required to be paid pursuant to the Mesquite LLC Agreement, together with
reasonable reserves for payment of the foregoing.

         "CONSOLIDATED" refers, with respect to any Person, to the consolidation
of accounts of such Person and its Subsidiaries in accordance with GAAP.

         "CONTINGENT DEBT INSTRUMENT" means the contingent interest promissory
note of El Paso dated as of January 12, 2000.

         "CONTRACTUAL OBLIGATION" means, as to any Person, any security issued
by, or Permitted Financial Obligation of, such Person or any other agreement,
instrument or undertaking to which such Person is a party or by which it or any
of its property is bound, or any provision of any of the foregoing.

         "COVERAGE RATIO" means the ratio, determined as of the Closing Date for
the period ending December 31, 2000, and determined annually after the Closing
Date as provided in Section 4.3 of the Management Agreement and subject to
adjustment pursuant to Sections 4.4 and 4.5 of the Management Agreement, of (a)
the sum of (i) the Present Value of Cash Flows, plus (ii) the Fair Market Value
of Financial Investments, plus (iii) the outstanding principal amount of an
accrued and unpaid interest on all loans to El Paso from Chaparral, Mesquite or
any of their Subsidiaries, plus (iv) the Present Value of all other assets and
minus (v) with respect to the period ending December 31, 2000, $80,000,000, and
with respect to any succeeding calendar year, the Annual Performance Fee for
such succeeding calendar year and minus (vi) the unpaid portion of any Annual
Performance Fee deferred pursuant to Section 4.2(a) or 4.2(b) of the Management
Agreement to (b) the sum of (i) Liabilities not otherwise taken into account in
the computation of Cash Flows, (ii) the Limestone Equity Cash Component and
Limestone Equity PIK Component, (iii) the Limestone Note Component and (iv) the
Present Value of all Annual Fixed Fees payable to the Management Company after
the time of determination through March 31, 2003. Solely for purposes of
calculating Cash Flows in connection with the determination of the Coverage
Ratio, projection will be adjusted to reflect the benefits only of
restructurings that have actually occurred (i.e., unrestructured Present Value
will be used for projects that have not actually been restructured).

                                      -14-

                                Project Electron

<PAGE>

                                                                         Annex A

         "COVERAGE RATIO TEST" is defined in Section 1 of the Management
Agreement.

         "CREDIT AGREEMENT" is defined in Section 1 of the Management Agreement.

         "CSFB" means Credit Suisse First Boston Corporation.

         "DEALER MANAGER" means CSFB.

         "DEALER MANAGER AGREEMENT" means the Dealer Manager and Consent
Solicitation Agreement dated as of the Commencement Date among Limestone, the
Co-Issuer, El Paso and CSFB.

         "DEFAULT" means any event or occurrence which with the giving of notice
or lapse of time or both would become a Limestone Note Trigger Event, a
Limestone Certificate Trigger Event, a New Indenture Event of Default or a
Specified Equity Event.

         "DEFAULT INTEREST" means, for any period with respect to any defaulted
payment, the product of (a) the Default Interest Rate, (b) the amount overdue
and (c) the quotient of (i) the number of days actually elapsed since the date
on which such payment was due (calculated on the basis of a 360-day year
consisting of twelve 30-day months) and (ii) 360.

         "DEFAULT INTEREST RATE" means 2% per annum.

         "DEFAULT NOTICE" is defined in Section 9.01 of the Indenture (with
respect to the Limestone Notes) and Section 9.01 of the New Indenture (with
respect to the New Limestone Notes).

         "DEFAULT YIELD" means, for any period with respect to any defaulted
payment, the product of (a) the Default Yield Rate, (b) the amount overdue and
(c) the quotient of (i) the number of days actually elapsed since the date on
which such payment was due (calculated on the basis of a 360-day year consisting
of twelve 30-day months) and (ii) 360.

         "DEFAULT YIELD RATE" means 2% per annum.

         "DELAWARE UCC" means the Uniform Commercial Code as in effect from time
to time in the State of Delaware.

         "DEPRECIATION" means, for each Allocation Period, an amount equal to
the depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such Allocation Period (including the amortization of
any Closing Costs whether or not deductible for federal income tax purposes),
except that if the Gross Asset Value of an asset differs from its adjusted basis
for federal income tax purposes at the beginning of such Allocation Period,
Depreciation shall be an amount which bears the same ratio to such beginning
Gross Asset Value as the federal income tax depreciation, amortization, or other
cost recovery deduction for such Allocation Period bears to such beginning
adjusted tax basis; provided, however, that if the adjusted basis for federal
income tax purposes of an asset at the beginning of such Allocation Period is
zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the Managing Member.

                                      -15-

                                Project Electron

<PAGE>

                                                                         Annex A

         "DISCLOSURE SCHEDULE" means the schedule, if any, accompanying the
representations given pursuant to Section 4.3 of the Participation Agreement.

         "DISCUSSION AND ANALYSIS" is defined in Section 8.2(b)(ii) of the
Chaparral LLC Agreement.

         "DISPOSITION" means, with respect to any property, any sale,
assignment, gift, exchange, lease, conversion, transfer, pledge or other
disposition or divestiture of such property, including any transfer by way of a
capital contribution and the creation of any, or material increase in any
existing, royalty, overriding royalty, reversionary interest, production
payment, or similar burden. "DISPOSE" and "DISPOSED" shall have correlative
meanings.

         "DISTRIBUTION" means, as applicable, any distribution or dividend or
return of capital or any other distribution, payment, remittance or delivery of
property or Cash in respect of, or the redemption, retirement, purchase or other
acquisition, directly or indirectly, of, any Interest now or hereafter
outstanding or the setting aside of any funds for any of the foregoing purposes,
including any distribution under Section 5.1, Section 5.4, Section 11.1(d) or
Article XII of the Chaparral LLC Agreement, but specifically excluding any
Termination Period Guaranteed Payment or any payment under Section 3.4(f) or
6.10 of the Chaparral LLC Agreement or any other payment to the Class A Member
that is specified to be treated as a guaranteed payment pursuant to the
Chaparral LLC Agreement. "DISTRIBUTE", "DISTRIBUTED" and "DISTRIBUTIVE" shall
have correlative meanings.

         "DISTRIBUTION AGREEMENT" means an underwriting, purchase, distribution
or placement agency agreement to be entered into among El Paso, the Share Trust,
the Remarketing Agents and any other Persons engaged by El Paso, the Share Trust
or the Remarketing Agents to remarket or distribute the Shares pursuant to the
provisions of the Remarketing Agreement (such agreement to be in a form
customary for a firm commitment underwritten public offering (in the case of an
underwriting agreement), a firm commitment underwritten private offering (in the
case of a purchase or distribution agreement) or a best efforts private
placement (in the case of a placement agency agreement), including without
limitation, representations and warranties, covenants, conditions precedent,
indemnification and other provisions as are then customary for such agreements),
and to be prepared, executed and delivered by El Paso and the Share Trust to the
Remarketing Agents on or prior to the Successful Repricing Date, as set forth in
Section 12 of the Remarketing Agreement.

         "DISTRIBUTION DATE" means (a) prior to an Earn-Out Period, each
Limestone Note Payment Date and (b) during an Earn-Out Period, the 15th day of
each month.

         "DLJ" means Donaldson, Lufkin & Jenrette Securities Corporation or any
of its successors.

         "DLJ FEE LETTER" means the engagement letter dated August 12, 1999 from
DLJ to El Paso.

         "DLJ INC." means Donaldson, Lufkin & Jenrette, Inc. or any of its
successors.

                                      -16-

                                Project Electron

<PAGE>

                                                                         Annex A

         "DOCUMENTARY TAXES" means Taxes (other than income or franchise taxes)
payable by reason of or in connection with the execution, delivery, filing,
release, discharge, amendment or recording of any Transaction Document.

         "DOLLARS" and the sign "$" each mean the lawful currency of the United
States.

         "EARN-OUT AMOUNT" means the excess, if any, of the maximum amount of
Gross Income that may be allocated to the Class A Member pursuant to Section
4.2(a)(i) of the Chaparral LLC Agreement over the amount of Gross Income
actually allocated pursuant to such Section.

         "EARN-OUT DISTRIBUTION DATE" means (a) the fifteenth day of each month
on or after the Earn-Out Period Commencement Date (but prior to the Earn-Out
Period Termination Date) and (b) without duplication, the last Business Day of
the Earn-Out Period; provided, however, that if any day described in clause (a)
is not a Business Day, the Earn-Out Distribution Date for the applicable month
shall occur on the next succeeding Business Day.

         "EARN-OUT PERIOD" means the period commencing on the first day of any
Fiscal Year in which the Earn-Out Period Commencement Date occurs and ending on
the Earn-Out Period Termination Date.

         "EARN-OUT PERIOD COMMENCEMENT DATE" means the earliest date on which
both of the following shall have occurred: (i) the earlier of (x) the Maturity
Date and (y) the occurrence of a Limestone Note Trigger Event or a Specified
Equity Event and (ii) repayment in full of the Outstanding Limestone Notes and
the New Limestone Notes.

         "EARN-OUT PERIOD TERMINATION DATE" means during an Earn-Out Period the
earliest to occur of: (i) the date on which: (x) the Earn-Out Amount equals zero
and (y) no further amounts are distributable pursuant to Section 5.1(b) of the
Chaparral LLC Agreement as the Capital Account of the Class A Member has been
reduced to zero and the Termination Period Guaranteed Payment has been paid in
full; (ii) the Purchase Date; (iii) the Retirement Date; and (iv) the date of a
Liquidating Event.

         "ECONOMIC LOSS INDEMNITY PAYMENT DATE" is defined in Section 6.1(b) of
the Participation Agreement.

         "ECONOMIC LOSSES" means with respect to each Certificateholder, the
excess of (x) the amount such Certificateholder would have received on the
Economic Loss Indemnity Payment Date if Chaparral, Mesquite or any Project
Company had each realized on the Mark-to-Market Measurement Date as an item of
income, a recovery of the Chaparral Extraordinary Liability Recovery Amount
incurred by such Person, and had each received on the last day of a liquidation
of Chaparral pursuant to Article XII of the Chaparral LLC Agreement, Cash in
respect of such amount realized, over (y) the amount such Certificateholder
actually receives on the Economic Loss Indemnity Payment Date pursuant to the
Transaction Documents.

         "EFFECTIVE DATE" means the date upon which the Exchange Offer is
consummated.

         "ELECTING PURCHASER" is defined in Section 11.2(a) of the Chaparral LLC
Agreement.

                                      -17-

                                Project Electron

<PAGE>

                                                                         Annex A

         "ELECTRON" means Electron Trust, a special purpose statutory business
trust created under the law of the State of Delaware.

         "EL PASO" means El Paso Corporation, a Delaware corporation, and any
successor not prohibited by the terms of the Participation Agreement.

         "EL PASO AFFILIATE" means any Person that, directly or indirectly
through one or more intermediaries, controls or is under direct or indirect
common control with El Paso; provided, that El Paso retains, directly or
indirectly, economic exposure to no less than 50% of the equity interest in such
Person. As used in this definition, the term "CONTROL" means possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

         "EL PASO APPLICABLE MARGIN" means 0.50% per annum.

         "EL PASO APPLICABLE RATE" means for any day during any Eurodollar
Period a rate equal to the Eurodollar Rate for such Eurodollar Period plus the
El Paso Applicable Margin; provided, however, that in the event (i) adequate and
fair means do not exist to enable Chaparral to determine the Eurodollar Rate or
(ii) it is unlawful for banks generally in the United States to fund or maintain
loans bearing interest calculated by reference to the Eurodollar Rate hereunder,
then for each day thereafter and until the circumstances described in clause (i)
or (ii) no longer exists, the El Paso Applicable Rate shall be the Alternate
Base Rate on such day.

         "EL PASO CHAPARRAL" means El Paso Chaparral Investor, L.L.C., a
Delaware limited liability company, and an indirect Wholly Owned Affiliate of El
Paso.

         "EL PASO CHAPARRAL HOLDING" means El Paso Chaparral Holding Company, a
Delaware corporation and an indirect wholly-owned Subsidiary of El Paso.

         "EL PASO CHAPARRAL HOLDING II" means El Paso Chaparral Holding II
Company, a Delaware corporation and an indirect wholly-owned Subsidiary of El
Paso Chaparral Holding.

         "EL PASO CHAPARRAL LLC AGREEMENT" means the Second Amended and Restated
Limited Liability Company Agreement of El Paso Chaparral dated as of March 27,
2000.

         "EL PASO COMMON STOCK" means the common stock, par value $3.00 per
share, of El Paso.

         "EL PASO CREDIT FACILITY AGREEMENT" means the 364-Day Revolving Credit
and Competitive Advance Facility Agreement dated as of June 11, 2001, among El
Paso and certain of its Affiliates, the several banks and other financial
institutions from time to time party thereto, JPMorgan Chase Bank, as
administrative agent and CAF Advance Agent, Citibank, N.A. and ABN Amro Bank
N.V., as co-documentation agents and Bank of America, N.A. and Credit Suisse
First Boston, as co-syndication agents.

         "EL PASO DEBT OBLIGATION REPAYMENT EVENT" means the occurrence of any
of the following: (a) any event described in Section 9.01(m) of the Indenture or
Section 9.01(k) of the New Indenture, (b) El Paso fails to make payment of
principal of or interest on any El Paso Debt

                                      -18-

                                Project Electron

<PAGE>

                                                                         Annex A

Obligations (i) in the case of any El Paso Debt Securities, when due and such
default continues beyond the five Business Day grace period applicable to such
principal and interest payments, (ii) in the case of any El Paso Loan, within
five Business Days after any demand thereon and (iii) in the case of any other
El Paso Debt Obligations, on the date such principal and interest thereon is due
(after giving effect to any applicable grace period with respect thereto), or
(c) an Acceleration Trigger, an acceleration of the New Limestone Notes or a
Specified Equity Event.

         "EL PASO DEBT OBLIGATIONS" means (a) the El Paso Debt Securities, (b)
the El Paso Loans and any other loans to El Paso made by the Overfund Trust,
Chaparral or Mesquite or made from amounts deposited in the Indenture Collection
Account pursuant to Section 5.03 of the Indenture or amounts deposited in the
New Notes Account pursuant to Section 5.02 of the New Indenture, which in each
case, by their terms, become due and payable upon the occurrence of an El Paso
Debt Obligation Repayment Event.

         "EL PASO DEBT SECURITIES" means senior unsecured debt obligations of El
Paso the principal of which shall amortize at such times and in such amounts
that, together with the interest payments thereon, shall provide payments on
each Distribution Date in an amount equal to the Class A Member's Priority
Return (other than any amount described under clause (b)(ii) or (b)(iv) of the
definition thereof) to be Distributed by Chaparral on such Distribution Date
pursuant to Section 5.1(a) of the Chaparral LLC Agreement; provided that (i) any
such payment of principal and interest will have a five Business Day grace
period and (ii) each El Paso Debt Security shall provide that the principal and
accrued interest thereon becomes due and payable upon the occurrence of an El
Paso Debt Obligation Repayment Event.

         "EL PASO DEBT SECURITY DIRECTION LETTER" means the letter agreement
among the Overfund Trust, El Paso, the Indenture Trustee and Limestone dated as
of the Closing Date, directing El Paso to make payments in respect of the El
Paso Debt Securities directly to the Indenture Trustee until the Indenture has
been satisfied and discharged, and thereafter to Limestone.

         "EL PASO ENERGY WEST COAST INTEREST" means the sole membership interest
in El Paso Energy West Coast, L.L.C., a Delaware limited liability company.

         "EL PASO GUARANTEE" is defined in Section 1.01 of the New Indenture.

         "EL PASO INTEREST" has the meaning assigned to such term in the
Limestone Trust Agreement.

         "EL PASO LOANS" means loans, including the El Paso Loan evidenced by
the Amended El Paso/Chaparral Note, made from time to time by Chaparral,
Mesquite or any of Mesquite's Subsidiaries to, and at all times the obligor
under which is, El Paso; provided that (i) the obligations of El Paso with
respect thereto rank at all times at least pari passu in priority of payment
with all other senior unsecured Relevant Indebtedness of El Paso, (ii) such loan
is payable five Business Days after demand thereon but only to the extent of the
amount demanded, (iii) such loan (other than the El Paso Loan evidenced by the
Amended El Paso/Chaparral Note which shall bear interest at the fixed rate
provided therein) bears interest at a floating rate not less than the El Paso
Applicable Rate, (iv) such loan is denominated in Dollars, (v) such loan is

                                      -19-

                                Project Electron

<PAGE>

                                                                         Annex A

evidenced by an El Paso Note and (vi) each El Paso Loan shall provide that the
principal and accrued interest thereon becomes due and payable upon the
occurrence of an El Paso Debt Obligation Repayment Event.

         "EL PASO MATERIAL ADVERSE EFFECT" means a material adverse effect on
the financial condition or operations of El Paso and its consolidated
Subsidiaries on a consolidated basis.

         "EL PASO NOTE" means any promissory note evidencing an El Paso Loan,
the form of which is attached as Exhibit B to the Chaparral LLC Agreement.

         "EL PASO PARTY" means any of, and "EL PASO PARTIES" means all of, El
Paso Chaparral Holding, El Paso Chaparral Holding II, El Paso Chaparral,
Chaparral, Mesquite and Management Company.

         "EL PASO PREFERRED STOCK" means the Mandatorily Convertible Single
Reset Preferred Stock, Series A, par value $5,000 per share, issued by El Paso
and having an initial liquidation preference, in the aggregate, of
$1,000,000,000.

         "EL PASO PREFERRED STOCK CERTIFICATE OF DESIGNATION" means the
Certificate of Designation adopted by the Board of Directors of El Paso
establishing the terms of the El Paso Preferred Stock.

         "ENERGY ASSETS" include all power generation (including power
generation tolling contracts), transmission and distribution assets and all
natural gas, liquefied natural gas, crude, or natural gas liquids storage,
transportation, liquefaction and extraction facilities (but excluding any
nuclear, solar or wind power assets).

         "ENVIRONMENTAL ACTION" means any action, suit, demand, demand letter,
claim, notice of noncompliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, any Environmental Permit or
Hazardous Material or arising from alleged injury or threat to health, safety or
the environment, including, without limitation, (a) by any Governmental
Authority for enforcement, cleanup, removal, response, remedial or other actions
or damages and (b) by any Governmental Authority or third party for damages,
contribution, indemnification, cost recovery, compensation or injunctive relief.

         "ENVIRONMENTAL LAW" means any Federal, state, local or foreign statute,
law, ordinance, rule, regulation, code, order, writ, judgment, injunction,
decree or judicial or agency interpretation, policy or guidance relating to
pollution or protection of the environment, health, safety or natural resources,
including, without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Materials.

         "ENVIRONMENTAL PERMIT" means any permit, approval, identification
number, license or other authorization required under any Environmental Law.

         "EQUITY INTERESTS" means, with respect to any Person (a) shares of
capital stock of (or other ownership or profit interests, including partnership,
member or trust interests, in) such

                                      -20-

                                Project Electron

<PAGE>
                                                                         Annex A

Person, (b) warrants, options or other rights for the purchase or other
acquisition from such Person of shares of capital stock of (or such other equity
ownership or equity profit interests in) such Person, or (c) securities
convertible into or exchangeable for shares of capital stock of (or such other
equity ownership or equity profit interests in) such Person, or warrants, rights
or options for the purchase or other acquisition from such Person of such shares
(or such other equity interests), in each case, whether voting or nonvoting, and
whether or not such shares, warrants, options, rights or other interests are
authorized or otherwise existing on any date of determination.

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

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

         "ERISA TERMINATION EVENT" means (a) a "reportable event," as such term
is described in Section 4043 of ERISA (other than a "reportable event" not
subject to the provision for 30-day notice to the PBGC under subsection .21,
..22, .23, .25, .27, .28, .31, .33, .35 or .64 of PBGC Reg. Section 4043), or an
event described in Section 4062(e) of ERISA, or (b) the withdrawal of El Paso or
any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it
was a "substantial employer," as such term is defined in Section 4001(a)(2) of
ERISA or the incurrence of liability by El Paso or any ERISA Affiliate under
Section 4064 of ERISA upon the termination of a Multiple Employer Plan, or (c)
the filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, or (d) the institution
of proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, or
(e) the conditions set forth in Section 302(f)(1)(A) and (B) of ERISA to the
creation of a lien upon property or rights to property of El Paso or any ERISA
Affiliate for failure to make a required payment to a Plan are satisfied, or (f)
the adoption of an amendment to a Plan requiring the provision of security to
such Plan, pursuant to Section 307 of ERISA, or (g) the occurrence of any other
event or the existence of any other condition which would reasonably be expected
to result in the termination of, or the appointment of a trustee to administer,
any Plan under Section 4042 of ERISA.

         "EURODOLLAR PERIOD" means, with respect to any El Paso Loan, (a) the
period beginning on the date such loan is made and ending on the day that
numerically corresponds to such date three months thereafter and (b) thereafter,
each subsequent period commencing on the last day of the immediately preceding
Eurodollar Period and ending on the day that numerically corresponds to such
date three months thereafter; provided, that (i) if such month has no
numerically corresponding day, such Eurodollar Period shall end on the last
Business Day of such month and (ii) if the last day of any such period is not a
Business Day, such Eurodollar Period shall end on the next following Business
Day (unless such next following Business Day is the first Business Day of a
calendar month, in which case such Eurodollar Period shall end on the Business
Day next preceding such numerically corresponding day).

         "EURODOLLAR RATE" means, for any Eurodollar Period, an interest rate
per annum equal to the rate per annum reported, on the date two Business Days
prior to the first day of such

                                      -21-

                                Project Electron

<PAGE>

                                                                         Annex A

Eurodollar Period, on the Dow Jones Markets Service (formerly known as Telerate)
display page 3750 (or if such page shall cease to be publicly available, as
reported on Reuters Screen page "LIBO" or by any other publicly available source
of similar market data) for London interbank offered rates for United States
dollar deposits for a three month period.

         "EVENTS OF DEFAULT" is defined in Section 9.01 of the Indenture.

         "EXCHANGE ACT" means the United States Securities Exchange Act of 1934,
as amended.

         "EXCHANGE OFFER" is defined in Section 1.01 of the Indenture and
Section 1.01 of the New Indenture.

         "EXCLUDED ITEMS" means with respect to the determination of Indemnified
Expenses of any Expense Indemnified Person or Economic Losses of any Loss
Indemnified Person, any Indemnified Expenses of such Indemnified Person or
Economic Losses of such Loss Indemnified Person to the extent arising out of,
resulting from or attributable to (i) the bad faith, gross negligence or willful
misconduct of such Indemnified Person, (ii) any breach of, any failure to
perform or observe, or any other non-compliance with, any covenant, condition or
agreement to be performed by, or other obligation of, such Indemnified Person
under any of the Transaction Documents, or the falsity of any representation,
warranty or certification of such Indemnified Person in any of the Transaction
Documents or in any document or certificate delivered in connection therewith,
and (iii) any claims settled, or judgments, orders or awards entered or granted,
in any such case or circumstance with the consent or approval of such
Indemnified Person and without the prior written consent of El Paso (unless such
consent by El Paso has been unreasonably withheld).

         "EXISTING ASSETS" means (a) the assets listed under "Existing Assets"
on Schedule 3.2(b) to the Chaparral LLC Agreement, (b) any Equity Interests in
any Business Entity that directly or indirectly (through one or more other
Business Entities) owns any of the assets referred to in clause (a) and (c) the
Contingent Debt Instrument.

         "EXISTING EL PASO DEMAND NOTE" means the Amended and Restated Demand
Promissory Note of El Paso dated August 19, 1999 in a maximum principal amount
of $200,000,000, payable to Chaparral, as amended and restated as of December
28, 1999 to evidence and provide for a maximum outstanding principal amount of
$72,750,000.

         "EXPENSE INDEMNIFIED PERSON" means (i) each Certificateholder, (ii)
each Certificateholder Related Person, (iii) the Indenture Trustee, (iv) the
Arranger and its Affiliates, (v) Limestone, (vi) the Indemnified Trustee
Persons, (vii) the respective directors, officers and employees of the Persons
referred to in clauses (i) through (vi) above, and (viii) the permitted
successors and assigns of each of the Persons referred to in clauses (i) through
(vii) above.

         "EXTRAORDINARY EXPENDITURES" means, for any year, the amount of
Chaparral Extraordinary Liabilities that are deductible for United States
federal income tax purposes in the Allocation Period in which such expenditures
were incurred.

                                      -22-

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                                                                         Annex A

         "EXTRAORDINARY EXPENDITURE RECOVERIES" means any amount received by
Chaparral or by any Project Company (but solely to the extent included in
Chaparral's distributive share of profits or losses from any such Project
Company), in each case in respect of indemnity claims, insurance proceeds,
reimbursements or other recoveries, including proceeds of settlements,
judgments, arbitrations or similar proceedings, that directly relate to the
previous payment of Extraordinary Expenditures, limited in each case to the
amount of the related Extraordinary Expenditure.

         "FAILED REMARKETING" means a failure to sell the Shares required to be
remarketed under the Remarketing Agreement because of a Legal Impossibility.

         "FAIR MARKET VALUE" is defined in Section 1 of the Management
Agreement.

         "FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rate quotations for such day on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers as
published by the Federal Reserve Board of New York on the following Business
Day, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for such day on such transactions received by
JPMorgan Chase Bank in New York, New York from three Federal funds brokers of
recognized standing selected by it.

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

         "FINAL DETERMINATION" means, in respect of any Indemnified Party or El
Paso, (i) a decision, judgment, decree or other order by any court of competent
jurisdiction, which decision, judgment, decree or other order is binding on such
Indemnified Party or El Paso, has become final after all appeals allowable by
law and required hereunder by either party to the action have been exhausted, or
the time for filing such appeals has expired, (ii) a closing agreement entered
into under Section 7121 of the Code or any other settlement agreement entered
into in connection with an administrative or judicial proceeding that is binding
on such Indemnified Party or El Paso, (iii) the expiration of the time for
instituting a suit against such Indemnified Party or El Paso with respect to the
claimed deficiency or (iv) the expiration of the time for such Indemnified Party
or El Paso to institute a claim for refund, or if such a claim was filed, the
expiration of the time for such Indemnified Party or El Paso to institute a suit
with respect thereto.

         "FINAL PAYMENT DATE" means the earliest date upon which either (a) the
Share Trust Amount equals zero or (b) an aggregate amount equal to the Share
Trust Amount shall have been distributed in accordance with the Share Trust
Agreement and the Remarketing Agreement.

         "FINANCIAL INVESTMENTS" means:

                  (a) Cash;

                  (b) Direct general obligations of, or obligations fully and
         unconditionally guaranteed as to the timely payment of principal and
         interest by, the United States or any

                                      -23-

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                                                                         Annex A

         agency or instrumentality thereof having maturities of not more than
         six months from the date of acquisition, but excluding any of such
         securities whose terms do not provide for payment of a fixed dollar
         amount upon maturity or call for redemption;

                  (c) Certificates of deposit and eurodollar time deposits with
         maturities of six months or less from the date of acquisition, bankers'
         acceptances with maturities not exceeding six months from the date of
         acquisition, and overnight bank deposits and other short-term deposit
         instruments, in each case with any domestic commercial bank having
         capital and surplus in excess of $500,000,000 and having a rating of at
         least "A2" (or the equivalent thereof) by Moody's and at least "A" (or
         the equivalent thereof) by S&P;

                  (d) Repurchase obligations with a term of not more than seven
         days for underlying securities of the types described in clause (b) or
         (c) above entered into with any financial institution meeting the
         qualifications specified in clause (c) above;

                  (e) Commercial paper (having original maturities of not more
         than 180 days) of any Person rated "P-2" (or the equivalent thereof) or
         better by Moody's or "A-2" (or the equivalent thereof) or better by
         S&P;

                  (f) Money market mutual or similar funds having assets in
         excess of $100,000,000, at least 95% of the assets of which are
         comprised of assets specified in clauses (a) through (e) above; and

                  (g) unless an El Paso Debt Obligation Repayment Event shall
         have occurred, El Paso Debt Obligations; provided, that in the event
         that an El Paso Debt Obligation Repayment Event occurs, any El Paso
         Debt Obligation shall by its terms become due and payable immediately.
         So long as the Indenture or New Indenture, as applicable, has not been
         discharged, if an El Paso Debt Obligation Repayment Event occurs and El
         Paso is required to repay the El Paso Debt Obligations, the Indenture
         Trustee or the New Indenture Trustee (with respect to amounts deposited
         into and credited to the New Notes Account only) shall invest such
         funds, or cause such funds to be invested, in Financial Investments, in
         each case, other than El Paso Debt Obligations and commercial paper of
         El Paso.

         "FIRST AMENDED AND RESTATED LLC AGREEMENT" is defined in the
Preliminary Statements to the Chaparral LLC Agreement.

         "FISCAL QUARTER" means (i) the period commencing on the Closing Date
and ending on March 31, 2000, and (ii) any subsequent three-month period
commencing on each of January 1, April 1, July 1 and October 1 and ending on the
next of March 31, June 30, September 30 and December 31, respectively; provided
that the last Fiscal Quarter shall end on the first date on which all Chaparral
Property is distributed pursuant to Section 12.2 of the Chaparral LLC Agreement
and the Chaparral Certificate of Formation has been canceled pursuant to the LLC
Act.

         "FISCAL YEAR" means (i) the period commencing on the Closing Date and
ending on December 31, 2000, and (ii) any subsequent period commencing on
January 1 and ending on the

                                      -24-

                                Project Electron

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                                                                         Annex A

earlier to occur of (a) the following December 31, or (b) the first date on
which all Chaparral Property is distributed pursuant to Section 12.2 of the
Chaparral LLC Agreement and the Chaparral Certificate of Formation has been
canceled pursuant to the LLC Act.

         "FOURTH AMENDED AND RESTATED LLC AGREEMENT" is defined in the
Preliminary Statements to the Chaparral LLC Agreement.

         "FPA" means the United States Federal Power Act.

         "GAAP" means consistently applied United States generally accepted
accounting principles as in effect from time to time.

         "GOVERNMENTAL APPROVAL" means, with respect to any Person, any consent,
license, approval, registration, permit, sanction or other authorization of any
nature which is required to be granted by any Governmental Authority under
Applicable Law (a) for the formation of such Person, (b) for the enforceability
of any Transaction Document against such Person and such Person's making of any
payments contemplated thereunder, and (c) for all such other matters as may be
necessary in connection with the performance of such Person's material
obligations under any Transaction Document.

         "GOVERNMENTAL AUTHORITY" means any federal, national, state,
provincial, municipal, local, territorial or other governmental department,
commission, board, bureau, agency, regulatory authority, instrumentality or
judicial or administrative body, whether domestic or foreign, having
jurisdiction over the matter or matters in question, provided that, with respect
to any Subsidiary of Chaparral, such Governmental Authorities shall be limited
to the jurisdictions in which such Subsidiary is organized or operates.

         "GROSS ASSET VALUE" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:

                  (i) The initial Gross Asset Value of any asset contributed by
         a Member to Chaparral shall be determined in accordance with the
         definition of "Initial Gross Asset Value";

                  (ii) The Gross Asset Values of all Chaparral assets shall be
         adjusted to equal their respective Mark-to-Market Values (A) as
         specified in Section 11.1, Section 11.2 and Section 12.2 of the
         Chaparral LLC Agreement and (B) upon the liquidation of Chaparral
         within the meaning of Regulation Section 1.704-1(b)(2)(ii)(g);

                  (iii) The Gross Asset Value of any Chaparral Property or
         Mesquite Property distributed to any Member shall be adjusted to equal
         the Mark-to-Market Value of such asset on the date of such
         distribution; and

                  (iv) The Gross Asset Values of the assets of Chaparral shall
         be increased (or decreased) to reflect any adjustments to the adjusted
         basis of such assets pursuant to Code Section 734(b) or Code Section
         743(b), but only to the extent that such adjustments are taken into
         account in determining Capital Accounts pursuant to Regulation Section
         1.704-1(b)(2)(iv)(m)

                                      -25-

                                Project Electron

<PAGE>

                                                                         Annex A

         and clause (v) of the definition of "NET INCOME" and "NET LOSSES" or
         Section 4.4(g) of the Chaparral LLC Agreement; provided, however, that
         Gross Asset Values shall not be adjusted pursuant to this clause (iv)
         to the extent that an adjustment pursuant to clause (ii) is required in
         connection with a transaction that would otherwise result in an
         adjustment pursuant to this clause (iv).

         "GROSS INCOME" means all items of gross income and gain (before
reduction for cost of goods sold or similar items of cost) that are realized by
Chaparral, including the component items of such income and gain that constitute
Chaparral's distributive share of income, gain, loss and deduction from any
Project Company or any Qualified Energy Assets, even if such component items are
not required to be separately stated.

         "GUARANTOR" is defined in Section 1.01 of the New Indenture.

         "HAZARDOUS MATERIALS" means (a) petroleum or petroleum products and
by-products or breakdown products thereof, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls and radon gas and (b)
any other chemicals, materials or substances designated, classified or regulated
as hazardous or toxic or as a pollutant or contaminant under any Environmental
Law.

         "HEDGE AGREEMENTS" means agreements relating to hedging activities in
accordance with standard utility practices.

         "HOLDERS" and "NOTEHOLDERS" are defined in Section 1.01 of the
Indenture.

         "IMMATERIALITY EXCEPTION" means any threshold, exclusion, exception or
qualification to, or limitation on, any representation and warranty, or any
covenant, respectively, made by any Person in a particular Transaction Document,
which threshold, exclusion, exception, qualification or limitation exists by
reason of the use therein of the term "Aggregate Chaparral Material Adverse
Effect".

         "INDEMNIFIED EVENTS" is defined in Section 6.1(e) of the Participation
Agreement.

         "INDEMNIFIED EXPENSES" means (i) any and all amounts paid to third
Persons in respect of judgments, damages or penalties with respect to, or
amounts paid to third Persons in settlement of, claims (including but not
limited to negligence, strict or absolute liability, liability in tort and
liabilities arising out of violation of regulatory requirements or other
Applicable Laws of any kind), actions or suits and (ii) any and all
out-of-pocket costs, Taxes, expenses, disbursements (including reasonable fees
and disbursements of counsel and claims, damages, liabilities and expenses
relating to environmental matters and to compliance with filing or other
regulatory requirements applicable to any Person solely by reason of their
participation in the transactions contemplated by the Transaction Documents) and
other obligations payable to third Persons, provided, however, that all
Indemnified Expenses shall expressly exclude (x) Taxes, other than Documentary
Taxes, (y) Economic Losses and (z) Excluded Items.

         "INDEMNIFIED PARTY" is defined in Section 1 of the Tax Indemnification
Agreement.

                                      -26-

                                Project Electron

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                                                                         Annex A

         "INDEMNIFIED PERSON" means any Expense Indemnified Person and any Loss
Indemnified Person.

         "INDEMNIFIED TRUSTEE PERSONS" means the Persons included in the
definition of "Indenture Trustee Persons" in Section 9.07 of the Limestone Trust
Agreement, Section 7.07 of the Overfund Trust Agreement and Section 7.07 of the
Share Trust Agreement.

         "INDENTURE" means the Second Supplemental Indenture dated as of the
Effective Date among Limestone, the Co-Issuer and the Indenture Trustee.

         "INDENTURE ACCOUNTS" means the Indenture Distribution Account and the
Indenture Collection Account.

         "INDENTURE COLLECTION ACCOUNT" is defined in Section 5.01(a) of the
Indenture.

         "INDENTURE DISTRIBUTION ACCOUNT" is defined in Section 5.01(a) of the
Indenture.

         "INDENTURE TRUSTEE" means The Bank of New York, as successor to the
United States Trust Company of New York, in its capacity as Trustee under the
Indenture or any successor thereto under the Indenture.

         "INDIRECT TAX MATTERS REPRESENTING PURCHASER" is defined in the
definition of "Tax Matters Representing Purchaser" in Article II of the
Limestone Trust Agreement.

         "INITIAL GROSS ASSET VALUE" means the initial Gross Asset Value of any
Chaparral Property or Mesquite Property (in each case, other than Cash) on the
Closing Date or on the date such Chaparral Property or Mesquite Property is
contributed or otherwise acquired, determined as follows:

                  (i) The Initial Gross Asset Value of any El Paso Loan shall be
         equal to the principal amount of the relevant El Paso Note;

                  (ii) The Initial Gross Asset Value of any Financial Investment
         shall be equal to its face value, less unamortized discount and plus
         unamortized premium, if any;

                  (iii) The Initial Gross Asset Value of the Contingent Debt
         Instrument or any New Contingent Debt Instrument shall be equal to the
         lower of (x) the face amount of such Contingent Debt Instrument or New
         Contingent Debt Instrument and (y) the Asset PV of such Contingent Debt
         Instrument or New Contingent Debt Instrument;

                  (iv) The Initial Gross Asset Value of any Chaparral Property
         or Mesquite Property other than El Paso Loans, Financial Investments
         and Contingent Debt Instruments shall be equal to (A) in the case of
         any Mesquite Property held by Mesquite on the Closing Date, the value
         set forth on Schedule 3.2(b) of the Chaparral LLC Agreement, and (B) in
         the case of any Chaparral Property or Mesquite Property contributed by
         the Class B Members after the Closing Date, the lower of (1) El Paso's
         book value of such Chaparral Property or Mesquite Property on El Paso's
         books and records in accordance with GAAP and (2) the Asset PV of such
         Chaparral Property or

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<PAGE>

                                                                         Annex A

         Mesquite Property, determined in each case as of the date such
         Chaparral Property or Mesquite Property was acquired by Chaparral or
         Mesquite; and

                  (v) The Initial Gross Asset Value of Chaparral Property
         contributed by the Class A Member with the consent of the members
         pursuant to Section 3.3(b) of the Chaparral LLC Agreement shall be (x)
         in the case of any Financial Investment, the face value of such
         Financial Investment less unamortized discount and plus unamortized
         premium, if any, and (y) otherwise, the value as agreed by the Members
         at the time of such consent.

         "INITIAL NOTES" means the 8.625% senior secured notes due 2003 issued
by Limestone and the Co-Issuer pursuant to the Original Indenture in an original
aggregate principal amount of $1,000,000,000.

         "INITIAL PURCHASER" means Donaldson, Lufkin & Jenrette Securities
Corporation.

         "INITIAL SHARES" has the meaning set forth in the recitals to the
Remarketing Agreement.

         "INTEREST" means any membership interest in Chaparral, including any
and all benefits to which the holder of such an interest may be entitled as
provided in the Chaparral LLC Agreement, together with all obligations of such
Person to comply with the terms and provisions of the Chaparral LLC Agreement.

         "INTERNAL RATE OF RETURN" or "IRR" means, as of the date of
determination, the internal rate of return with respect to the Limestone Equity
PIK Component calculated to be that discount rate compounded semi-annually
which, when applied to each cash distribution relating to the Limestone
Certificates from December 28, 1999, and up to and including the date such
calculation is made, reduced in each case by any distribution attributable to
the Limestone Equity Cash Component, and taking into account the date of each
such distribution, produces a present value of such amounts equal to
$50,000,000. For purposes of this definition, payments with respect to the
Limestone Certificates attributable to Sections 5.1(c) or 5.1(e)(ii) of the
Chaparral LLC Agreement will be deemed to be with respect to the Limestone
Equity PIK Component and all other payments with respect to the Limestone
Certificates will be deemed to be with respect to the Limestone Equity PIK
Component only to the extent such amounts exceed the Limestone Equity Cash
Component at the time of determination.

         "INVESTMENT" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, time deposit or otherwise.

         "INVESTMENT AGREEMENT" means the agreement(s) and other documentation
evidencing Mesquite's interest in the applicable New Asset.

         "INVESTMENT CERTIFICATE" is defined in Section 4.05(e) of the Limestone
Trust Agreement.

         "INVESTMENT CLOSING DATE" means the date of consummation of the
acquisition (by purchase, exchange or contribution) of the applicable New Asset.

                                      -28-

                                Project Electron

<PAGE>

                                                                         Annex A

         "INVESTMENT COMPANY ACT" means the United States Investment Company Act
of 1940, as amended.

         "INVOLUNTARY BANKRUPTCY" is defined in the definition of "Bankruptcy".

         "INVOLUNTARY TRANSFER" is defined in Section 10(a) of the Contingent
Debt Instrument.

         "INVOLUNTARY TRANSFER NON-CASH CONSIDERATION" is defined in Section
10(a) of the Contingent Debt Instrument.

         "IRREVOCABLE ELECTION" means, with respect to the Purchase Option or
Retirement Option, the delivery by the Primary Class B Member to the Class A
Member of a written notice pursuant to which the Primary Class B Member
unconditionally covenants and agrees that the Purchase Option or Retirement
Option shall be consummated on or prior to the Purchase Date or Retirement Date
specified in the related Purchase Option Notice or Retirement Notice.

         "ISSUANCE ITEMS" is defined in Section 4.4(h) of the Chaparral LLC
Agreement.

         "ISSUER" means Limestone.

         "ISSUER MATERIAL ADVERSE EFFECT" means a material adverse change in the
financial condition of the Issuers or any event or occurrence of whatever nature
that could reasonably be expected to materially and adversely affect the ability
of the Issuers to perform their obligations under the Transaction Documents.

         "ISSUERS" means Limestone and the Co-Issuer.

         "JUNE 11 AGREEMENT" means the El Paso Credit Facility Agreement dated
as of June 11, 2001 (without giving effect to any amendment, restatement,
termination, or replacement of such El Paso Credit Facility Agreement after such
date).

         "LEGAL IMPOSSIBILITY" is defined in Section 1 of the Remarketing
Agreement.

         "LEGAL PROCEEDINGS" is defined in Section 6.1(e) of the Participation
Agreement.

         "LIABILITIES" is defined in Section 1 of the Management Agreement.

         "LIEN" means any mortgage, pledge, hypothecation, assignment for
security, encumbrance, lien (statutory or other), security interest or other
security device or arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement and any lease having
substantially the same effect as any of the foregoing).

         "LIMESTONE" means Limestone Electron Trust, a special purpose statutory
business trust created under the law of the State of Delaware.

         "LIMESTONE CERTIFICATES" means the Limestone Certificates issued under
the Limestone Trust Agreement, including the Original Certificates and the
Subsequent Certificates, but expressly excluding the El Paso Interest.

                                      -29-

                                Project Electron

<PAGE>

                                                                         Annex A

         "LIMESTONE CERTIFICATE TRIGGER EVENT" means (i) the occurrence of a
Limestone Note Trigger Event (and the expiration of the applicable Asset Remedy
Standstill Period or Share Trust Remedy Standstill Period, as applicable), (ii)
after the repayment in full of the Outstanding Limestone Notes, the occurrence
of a New Indenture Event of Default and the acceleration of the New Limestone
Notes as a result thereof (and the expiration of the applicable Asset Remedy
Standstill Period) or (iii) following the repayment of the Limestone Notes and
the New Limestone Notes in full and the commencement of the Earn-Out Period, the
failure of Chaparral to make the distributions or payments to Limestone in
respect of its Class A Member Interest under Sections 3.4(f), 5.1, 6.10, 11.1,
11.2 and 12.2 of the Chaparral LLC Agreement.

         "LIMESTONE CERTIFICATE YIELD" means, for any period, the product of (a)
a rate of (x) on any date prior to March 15, 2003, 10.35% and (y) on any date
occurring on or after March 15, 2003, 10.85% (plus an additional 0.50% for every
additional successive semi-annual period commencing on or after September 15,
2003 until March 15, 2006), in each case, per annum and (b) the Limestone Equity
Cash Component and (c) the quotient of (i) the number of days actually elapsed
(calculated on the basis of a 360-day year consisting of twelve 30-day months)
since the later of the Closing Date or the last payment of Limestone Certificate
Yield and (ii) 360.

         "LIMESTONE COLLECTION ACCOUNT" is defined in Section 6.02(b) of the
Limestone Trust Agreement.

         "LIMESTONE CONTINGENT SHARE TRUST REMEDY CONDITION" is defined in
Section 1 of the Remarketing Agreement.

         "LIMESTONE CREDIT AGREEMENT" means the $72,750,000 Credit Agreement
dated as of August 19, 1999, among Limestone (as assignee of Limestone
Investors), the Limestone Lenders, and Donaldson, Lufkin & Jenrette, Inc. as
administrative agent and as security agent, as amended by the Assignment and
Assumption Agreement.

         "LIMESTONE DISTRIBUTION ACCOUNT" is defined in Section 6.02(a) of the
Limestone Trust Agreement.

         "LIMESTONE EQUITY CASH COMPONENT" means $100,000,000 or such lesser
amount as may be indicated in writing by Limestone to the Managing Member from
time to time pursuant to Section 6.07(b) of the Limestone Trust Agreement.

         "LIMESTONE EQUITY CASH COMPONENT MAKE-WHOLE PREMIUM" means (i) if
calculated on any date on or prior to March 14, 2003, the excess, if any, of (x)
the present value as of such date of a stream of semi-annual payments consisting
of 10.35% annual interest on the Limestone Equity Cash Component in effect on
such date payable on each Distribution Date from such date through the Maturity
Date, and a payment of the Limestone Equity Cash Component in effect on the date
of determination on the Maturity Date, discounted on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the applicable
Treasury Yield plus 100 basis points, over (y) the Limestone Equity Cash
Component in effect on such date and (ii) if calculated on or after the Maturity
Date, zero.

                                      -30-

                                Project Electron

<PAGE>

                                                                         Annex A

         "LIMESTONE EQUITY PIK COMPONENT" means on the Closing Date
$51,148,850.05 and on any date thereafter, such amount increased by the portion
of the cumulative Class A Member's Priority Return described in clause (b)(iv)
of the definition thereof which has accrued through such date and decreased by
the sum of (a) the aggregate distributions made pursuant to Section 5.1(c) or
Section 5.1(e)(ii) of the Chaparral LLC Agreement and pursuant to Section 5.1(c)
or Section 5.1(e)(ii) of the Fourth Amended and Restated LLC Agreement, and (b)
such amounts as may be indicated in writing by Limestone to the Managing Member
from time to time pursuant to Section 6.07(b) of the Limestone Trust Agreement.

         "LIMESTONE EQUITY PIK COMPONENT MARK-TO-MARKET YIELD AMOUNT" means

         (a) if the Earn-Out Period Commencement Date has not occurred, that
amount when added to other cash to be paid or distributed on such date with
respect to the Limestone Certificates that is with respect to the Limestone
Equity PIK Component would produce the same IRR with respect to the Limestone
Equity PIK Component as would have been achieved if Limestone had received its
Capital Account balance with respect to its Class A Member Interest on the
Mark-To-Market Measurement Date (after giving effect to the allocations called
for on such Mark-to-Market Measurement Date) and the Limestone Notes and New
Limestone Notes were retired on such Mark-to-Market Measurement Date for an
amount equal to their outstanding principal balance and accrued interest
thereon, and

         (b) if the Earn-Out Period Commencement Date has occurred (i) on or
prior to the Maturity Date, the greater of (x) the Unpaid Premium Amount,
calculated as of such determination date, and (y) the amount that would be
determined under clause (ii) as of such date and (ii) after the Maturity Date,
that amount which when added to other cash to be distributed on such date with
respect to the Limestone Certificates that is attributable to the Limestone
Equity PIK Component would produce an IRR of 21% for the period from December
28, 1999 to the Earn-Out Period Commencement Date and 25% for the period from
the Earn-Out Period Commencement Date to the Earn-Out Period Termination Date.

         "LIMESTONE EQUITY PIK COMPONENT MAKE-WHOLE PREMIUM" means on any date,
the excess, if any, with respect to any amount distributed or paid prior to the
Maturity Date that, upon distribution with respect to the Limestone
Certificates, would reduce the Limestone Equity PIK Component (a "REDUCTION
AMOUNT") of (x) the sum of the present values to the date of determination of
(I) the Distributions that would have been made to the Class A Member pursuant
to Section 5.1(c) or Section 5.1(e)(ii) of the Chaparral LLC Agreement during
the period from such date of determination through March 15, 2005 assuming net
taxable income is allocated to the Class A Member sufficient to produce an IRR
of 17.5% with respect to such Reduction Amount during each taxable period during
such period, and (II) a hypothetical future payment with respect to such
Reduction Amount on March 15, 2005, which payment would produce an IRR with
respect to such Reduction Amount of 17.5%, each such payment discounted to the
date of determination on a semi-annual basis at the applicable Treasury Yield
plus 450 basis points over (y) such Reduction Amount of such date.

         "LIMESTONE INVESTORS" is defined in the Preliminary Statements to the
Chaparral LLC Agreement.

                                      -31-

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<PAGE>

                                                                         Annex A

         "LIMESTONE INVESTORS PURCHASE AGREEMENT" is defined in the Preliminary
Statements to the Chaparral LLC Agreement.

         "LIMESTONE LENDERS" means the "Lenders" under, and as defined in, the
Limestone Credit Agreement.

         "LIMESTONE LOAN" means the loan of $72,750,000 made by the Limestone
Lenders to Limestone pursuant to the Limestone Credit Agreement.

         "LIMESTONE NOTE COMPONENT" means, on any date, the aggregate
outstanding principal amount of the Limestone Notes and the New Limestone Notes.

         "LIMESTONE NOTE PAYMENT DATE" means (a) with respect to the Limestone
Notes, a Limestone Note Payment Date under (and as defined in) the Indenture and
(b) with respect to the New Limestone Notes, a Limestone Note Payment Date under
(and as defined in) the New Indenture.

         "LIMESTONE NOTES" means the 8.625% senior secured notes due 2003 issued
by Limestone and the Co-Issuer pursuant to the Original Indenture in an original
aggregate principal amount of $1,000,000,000.

         "LIMESTONE NOTES MAKE-WHOLE PREMIUM" means an amount equal to the
excess, if any, of (a) the aggregate amounts payable by the Issuers pursuant to
Section 14.01(e)(ii) of the Indenture as of any Optional Redemption Date (as
defined in the Indenture), over (b) the aggregate outstanding principal amount
of Limestone Notes to be redeemed as of such Optional Redemption Date.

         "LIMESTONE NOTE TRIGGER EVENT" means the occurrence of (a) the
Acceleration Trigger or (b) the Maturity Trigger.

         "LIMESTONE SECURITIES" means the Limestone Notes, the New Limestone
Notes (where applicable) and the Limestone Certificates.

         "LIMESTONE TRUST AGREEMENT" means the Third Amended and Restated Trust
Agreement dated as of the Signing Date, among El Paso, Electron, Wilmington
Trust Company, a Delaware banking corporation, and Limestone.

         "LIMESTONE TRUSTEE" means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as trustee under the
Limestone Trust Agreement.

         "LIMITED LIABILITY EQUITY INTERESTS" means Equity Interests that do not
provide for recourse against the holder thereof for the liabilities of the
issuer thereof.

         "LIQUIDATING EVENTS" is defined in Section 12.1 of the Chaparral LLC
Agreement.

         "LIQUIDATION NOTICE" is defined in Section 12.10(a) of the Chaparral
LLC Agreement.

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                                                                         Annex A

         "LIQUIDATOR" is defined in Section 12.8 of the Chaparral LLC Agreement.

         "LLC ACT" means the Delaware Limited Liability Company Act, as set
forth in Del. Code Ann. Tit. 6, Sections 18-101, et seq. and any successor
statute, as the same may be amended from time to time.

         "LOSS INDEMNIFIED PERSON" means each Person referred to in clauses (i)
and (ii) of the definition of Expense Indemnified Person, and the permitted
successors and assigns of such Person.

         "MAJORITY CERTIFICATEHOLDERS" has the meaning assigned to such term in
the Limestone Trust Agreement.

         "MAJORITY HOLDERS" or "MAJORITY NOTEHOLDERS" has the meaning assigned
to such term in the Indenture.

         "MAJORITY NEW HOLDERS" OR "MAJORITY NEW NOTEHOLDERS" has the meaning
assigned to such term in the New Indenture.

         "MANAGEMENT AGREEMENT" means the Amended and Restated Management
Agreement dated as of March 27, 2000 among El Paso Chaparral, Chaparral,
Mesquite, and the Management Company regarding the operations and management of
Chaparral, Mesquite and their respective Subsidiaries.

         "MANAGEMENT COMPANY" means El Paso Chaparral Management, L.P., a
Delaware limited partnership.

         "MANAGEMENT FEE CALCULATION DATE" means, with respect to each year,
October 1 of such year or such other date on which the Management Company shall
deliver to the Project Companies its calculation of the Annual Performance Fee
and the Coverage Ratio pursuant to Section 4.3 or 4.4 of the Management
Agreement.

         "MANAGER" means the Management Company or any successor manager
appointed pursuant to Section 5 of the Management Agreement, in each case
providing administrative and management services pursuant to Section 2 of the
Management Agreement.

         "MANAGING MEMBER" means (a) at all times prior to the appointment of
any replacement Managing Member in accordance with Section 6.1(a) of the
Chaparral LLC Agreement, the Primary Class B Member, and (b) on and after the
appointment of any replacement Managing Member in accordance with Section 6.1(a)
of the Chaparral LLC Agreement, the Class A Member.

         "MANDATORY REDEMPTION" means (a) with respect to the Notes, a Mandatory
Redemption under, and as defined in, the Indenture, and (b) with respect to the
New Limestone Notes, a Mandatory Redemption under, and as defined in, the New
Indenture.

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

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                                Project Electron

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                                                                         Annex A

         "MARK-TO-MARKET BALANCE SHEET" is defined in Section 8.2(d) of the
Chaparral LLC Agreement.

         "MARK-TO-MARKET MEASUREMENT DATE" means (a) with respect to the
retirement of the Class A Member Interest in accordance with Section 11.1 of the
Chaparral LLC Agreement, the last day of the Fiscal Quarter preceding the Fiscal
Quarter during which the earliest of (i) the Retirement Notice was delivered,
(ii) if the Retirement Notice is delivered after a Limestone Note Trigger Event,
the date such Limestone Note Trigger Event occurred or (iii) if the Retirement
Notice is delivered after a Specified Equity Event, the date such Specified
Equity Event occurred; (b) with respect to the liquidation of Chaparral pursuant
to Section 12.2 of the Chaparral LLC Agreement, the last day of the Fiscal
Quarter immediately preceding the Fiscal Quarter during which the earliest of
(i) the Liquidating Event giving rise to such liquidation occurred, (ii) if
applicable, the date the Limestone Note Trigger Event giving rise to such
Liquidating Event occurred or (iii) if applicable, the date the Specified Equity
Event giving rise to such Liquidating Event occurred; or (c) with respect to the
exercise of the Purchase Option, the last day of the Fiscal Quarter immediately
preceding the Fiscal Quarter during which the earliest of (i) the date on which
the Purchase Option Notice was delivered, (ii) if the Purchase Option Notice was
delivered after a Limestone Note Trigger Event, the date such Limestone Note
Trigger Event occurred or (iii) if the Purchase Option Notice is delivered after
a Specified Equity Event, the date such Specified Equity Event occurred.

         "MARK-TO-MARKET VALUE" means, with respect to any asset, the following:

                  (i) The Mark-to-Market Value of any El Paso Loan shall be the
         outstanding principal balance of such El Paso Loan plus accrued but
         unpaid interest.

                  (ii) The Mark-to-Market Value of any Financial Investment
         shall be its face value less unamortized discounts and plus unamortized
         premium, if any.

                  (iii) The Mark-to-Market Value of Chaparral shall be (A) prior
         to a Mark-to-Market Measurement Date, the sum of the Initial Gross
         Asset Values of the assets contributed by the Members to Chaparral, and
         (B) on or after a Mark-to-Market Measurement Date, the sum of the Asset
         PVs of each asset owned by Chaparral net of all applicable liabilities
         not taken into account in the calculation of Asset PVs.

                  (iv) The Mark-to-Market Value of Mesquite shall be (A) prior
         to a Mark-to-Market Measurement Date, the sum of the Initial Gross
         Asset Values of the assets contributed to Mesquite by Chaparral or
         otherwise acquired by Mesquite, and (B) on or after a Mark-to-Market
         Measurement Date, the sum of the Asset PVs of each asset owned by
         Mesquite net of all applicable liabilities not taken into account in
         the calculation of Asset PVs.

         "MASSPOWER" means MASSPOWER, a Massachusetts general partnership.

         "MATURITY DATE" means March 15, 2003.

                                      -34-

                                Project Electron

<PAGE>

                                                                         Annex A

         "MATURITY TRIGGER" means the failure to deposit with the Indenture
Trustee, at least 120 days prior to the Maturity Date, an amount that, in the
aggregate with all funds and any investments then held in the Indenture Accounts
and available to the Indenture Trustee for repayment of the Limestone Notes, is
sufficient to repay all accrued and unpaid interest on and all outstanding
principal of the Limestone Notes on the Maturity Date and any other determinable
amounts that are, or are scheduled to become, due and payable under the
Indenture on or prior to the Maturity Date.

         "MEMBERS" means the Class A Member and the Class B Members,
collectively. "MEMBER" means any one of the Members.

         "MEMBER NONRECOURSE DEBT MINIMUM GAIN" means an amount, with respect to
each partner nonrecourse debt within the meaning of Regulations Section
1.704-2(b)(4), equal to partnership minimum gain within the meaning of
Regulations Sections 1.704-2(b)(2) and 1.704-2(d) that would result if such
partner nonrecourse debt were treated as a nonrecourse liability with the
meaning of Regulations Section 1.704-2(b)(3), determined in accordance with
Regulation Section 1.704-2(i)(3).

         "MESQUITE" means Mesquite Investors, L.L.C., a Delaware limited
liability company of which Chaparral is the sole member.

         "MESQUITE CREDIT AGREEMENT" means the Credit Agreement dated as of
August 12, 1999, among Mesquite, the lenders party thereto, and El Paso, as
administrative agent, as amended, supplemented, amended and restated or
otherwise modified from time to time.

         "MESQUITE FINANCING DOCUMENTS" means, collectively, (a) the Mesquite
Specified Credit Documents and (b) each other agreement governing Mesquite
Permitted Financial Obligations and each agreement or instrument delivered in
connection with the granting of security for any Mesquite Permitted Financial
Obligation, in each case as amended, supplemented, amended and restated or
otherwise modified from time to time.

         "MESQUITE LLC AGREEMENT" means the Third Amended and Restated Limited
Liability Company Agreement of Mesquite dated as of the Closing Date, as amended
from time to time.

         "MESQUITE LLC INTEREST" means the sole membership interest in Mesquite.

         "MESQUITE MINORITY OWNED QEC" means any Qualified Energy Company (i) in
which Mesquite owns any Equity Interest and (ii) that is not a Subsidiary of
Mesquite.

         "MESQUITE OPERATING SUBSIDIARY" means the direct or indirect
subsidiaries of Mesquite which are organized to acquire (by purchase, exchange
or contribution) Existing Assets, New Assets or other Qualified Energy Assets
acquired from time to time.

         "MESQUITE PERMITTED ASSETS" means:

                  (a) Qualified Energy Assets that are Limited Liability Equity
         Interests (including the Existing Assets and the Specified New Assets);
         provided, that such assets will only be "Mesquite Permitted Assets" if
         such assets are, or represent direct or indirect interests in, assets
         located in the United States and Canada;

                                      -35-

                                Project Electron

<PAGE>

                                                                         Annex A

                  (b) Financial Investments;

                  (c) El Paso Loans;

                  (d) the Contingent Debt Instrument; and

                  (e) any other assets that are contributed to or otherwise
         acquired by Mesquite with the consent of all of the Members of
         Chaparral; provided, that any assets acquired pursuant to this clause
         (e) that are Qualified Energy Assets shall be, or shall represent
         direct or indirect interests in, assets located in the United States or
         Canada.

         "MESQUITE PERMITTED FINANCIAL OBLIGATIONS" means Permitted Financial
Obligations of Mesquite and its Subsidiaries that are non-recourse to Chaparral
(except as to Chaparral's interest in the Mesquite LLC Interest) and are secured
(if at all) only by the Mesquite LLC Interest and/or the assets of Mesquite and
its Subsidiaries.

         "MESQUITE PLEDGE AGREEMENT" means the Pledge and Security Agreement
dated as of August 12, 1999, as amended from time to time, by Chaparral in favor
of El Paso.

         "MESQUITE PROPERTY" means all real and personal property owned by
Mesquite and any improvements thereto, including both tangible and intangible
property.

         "MESQUITE SPECIFIED CREDIT DOCUMENTS" means, collectively, the Mesquite
Credit Agreement, the Notes (as defined in the Mesquite Credit Agreement), and
the Mesquite Pledge Agreement.

         "MODIFIED ITEMS" is defined in Section 4.4(h) of the Chaparral LLC
Agreement.

         "MOODY'S" means Moody's Investors Service, Inc. or any successor by
merger, consolidation or otherwise to its business.

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

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

         "NET INCOME" and "NET LOSSES" means, for each Allocation Period, an
amount equal to Chaparral's taxable income or loss for such Allocation Period,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated

                                      -36-

                                Project Electron

<PAGE>

                                                                         Annex A

separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:

                  (i) Any income of Chaparral that is exempt from federal income
         tax and not otherwise taken into account in computing Net Income or Net
         Losses pursuant to this definition of "NET INCOME" and "NET LOSSES"
         shall be added to such taxable income or loss;

                  (ii) Any expenditures of Chaparral described in Code Section
         705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
         pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise
         taken into account in computing Net Income or Net Losses pursuant to
         this definition of "NET INCOME" and "NET LOSSES" shall be subtracted
         from such taxable income or loss;

                  (iii) In the event the Gross Asset Value of any asset of
         Chaparral is adjusted pursuant to clause (ii) or (iii) of the
         definition of Gross Asset Value, the amount of such adjustment shall be
         taken into account as taxable income or loss from the disposition of
         such asset for purposes of computing Net Income or Net Losses;

                  (iv) Gain or loss resulting from any disposition of Chaparral
         Property with respect to which gain or loss is recognized for federal
         income tax purposes shall be computed by reference to the Gross Asset
         Value of Chaparral Property disposed of, notwithstanding that the
         adjusted tax basis of such Chaparral Property differs from its Gross
         Asset Value;

                  (v) To the extent an adjustment to the adjusted tax basis of
         any asset of Chaparral pursuant to Code Section 734(b) is required,
         pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken
         into account in determining Capital Accounts as a result of a
         distribution other than in liquidation of a Member's Interest, the
         amount of such adjustment shall be treated as an item of gain (if the
         adjustment increases the basis of the asset) or loss (if the adjustment
         decreases such basis) from the disposition of such asset and shall be
         taken into account for purposes of computing Net Income or Net Losses;

                  (vi) Any items that are allocated pursuant to Section 4.2 or
         4.4 of the Chaparral LLC Agreement shall not be taken into account in
         computing Net Income or Net Losses; and

                  (vii) In lieu of depreciation, amortization and other cost
         recovery deductions taken into account in computing Net Income and Net
         Losses, there shall be taken into account Depreciation for such
         Allocation Period, computed in accordance with the definition of
         Depreciation.

         The amounts of the items of income, gain, loss or deduction of
Chaparral available to be allocated pursuant to Sections 4.2 and 4.4 of the
Chaparral LLC Agreement shall be determined by applying rules analogous to those
set forth in clauses (i) through (vi) above.

                                      -37-

                                Project Electron

<PAGE>

                                                                         Annex A

         "NET WORTH" means with respect to El Paso, as of any date of
determination, the sum of the preferred stock and stockholders' equity of El
Paso as shown on the most recent consolidated balance sheet of El Paso made
available in accordance with Section 5.1(e) of the Participation Agreement.

         "NEW ADMINISTRATIVE EXPENSES" is defined in Section 1.01 of the New
Indenture.

         "NEW ASSETS" means (i) the Specified New Assets, (ii) any Equity
Interests in any Business Entity that directly or indirectly (through one or
more other Business Entities) owns any of the Assets referred to in clause (i),
and (iii) any other assets that become Chaparral Permitted Assets owned by
Chaparral or Mesquite Permitted Assets owned by Mesquite.

         "NEW CONTINGENT DEBT INSTRUMENTS" means each instrument substantially
in the form of Exhibit C to the Chaparral LLC Agreement.

         "NEW HOLDERS" and "NEW NOTEHOLDERS" are defined in Section 1.01 of the
New Indenture.

         "NEW INDENTURE" means the indenture dated as of the Effective Date
among the Issuers, El Paso, as guarantor, and The Bank of New York, as New
Indenture Trustee.

         "NEW INDENTURE EVENTS OF DEFAULT" means the "Events of Default" under,
and as defined in, the New Indenture.

         "NEW INDENTURE TRUSTEE" means The Bank of New York in its capacity as
New Indenture Trustee under the New Indenture or any successor thereto under the
New Indenture.

         "NEW INDENTURE TRUSTEE FEE" means the initial and annual fee to be paid
to the New Indenture Trustee pursuant to Section 11.07 and in accordance with a
separate fee agreement between Limestone and the New Indenture Trustee.

         "NEW LIMESTONE NOTES" means up to $1,000,000,000 of aggregate principal
amount of 8.625% guaranteed senior unsecured notes due 2003 issued by Limestone
and the Co-Issuer pursuant to the New Indenture in exchange for a like aggregate
principal amount of Limestone Notes.

         "NEW LIMESTONE NOTES MAKE-WHOLE PREMIUM" means an amount equal to the
excess, if any, of (a) the aggregate amounts payable by the Issuers (x) pursuant
to Section 14.01(e)(ii) of the New Indenture as of any Optional Redemption Date
(as defined in the New Indenture) or (y) pursuant to Section 9.01 or 15.01 of
the New Indenture in connection with an acceleration of the New Limestone Notes
or a Mandatory Redemption of the New Limestone Notes as a result of a New
Indenture Event of Default of the type described in Section 9.01(a) of the New
Indenture over (b) the aggregate outstanding principal amount of New Limestone
Notes to be redeemed as of such Optional Redemption Date.

         "NEW NOTES ACCOUNT" is defined in Section 1.01 in the New Indenture.

         "NEW NOTES LIQUIDITY PAYMENTS" is defined in Section 3.08 of the New
Indenture.

                                      -38-

                                Project Electron

<PAGE>

                                                                         Annex A

         "NEW SERIES" means the shares of preferred stock or other equity
securities of El Paso, in each case which contemplate the mandatory issuance of
shares of El Paso Common Stock, or shares of El Paso Common Stock, the
registration and sale of which are permitted pursuant to Section 7(a) of the
Remarketing Agreement.

         "NON-UTILITY GENERATION ASSETS" means Limited Liability Equity
Interests in any Business Entity not less than 90% of the aggregate book value
of the property, plant and equipment of which at the time of the proposed
acquisition thereof are tangible assets that are electric power generation
assets (other than nuclear, solar or wind power assets) located in the United
States of America that have commenced commercial operations at the time of the
contemplated acquisition thereof.

         "NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement dated March
15, 2000 among El Paso, Limestone, the Co-Issuer and DLJ.

         "OBLIGATION" means, with respect to any Person, any obligation of such
Person of any kind, including, without limitation, any liability of such Person
on any claim, whether or not the right of any creditor to payment in respect of
such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured or unsecured, and
whether or not such claim is discharged, stayed or otherwise affected by any
proceeding.

         "OCTOBER 1 FINANCIAL MODEL" is defined in the definition of "Cash
Flows" in the Management Agreement.

         "OFFERING CIRCULAR AND CONSENT SOLICITATION STATEMENT" means the Offer
to Exchange and Consent Solicitation Statement dated March 28, 2002 of the
Issuers.

         "OFFERING MEMORANDUM" means the Offering Memorandum dated March 15,
2000 relating to the issuance and sale of the Limestone Notes.

         "OFFICER'S CERTIFICATE" means a certificate of any Person signed by any
Authorized Officer of such Person.

         "OPTIONAL REDEMPTION" means (a) with respect to the Limestone Notes, an
Optional Redemption under (and as defined in) the Indenture, and (b) with
respect to the New Limestone Notes, an Optional Redemption under (and as defined
in) the New Indenture.

         "ORDINARY PROJECT ACTIVITIES" means, with respect to any Project
Company, the operating and maintenance activities required to operate such
Project Company in accordance with standard utility practices (other than
Restructurings) including, but not limited to, entering into, amending or
canceling (i) operating and maintenance contracts, (ii) engineering,
construction and procurement contracts, (iii) power purchase or sales contracts,
(iv) gas/alternative fuel purchase and sales contracts, (v) purchase, sales or
disposals of inventories, parts, or other assets and (vi) other Permitted
Financial Obligations of such Project Company.

                                      -39-

                                Project Electron

<PAGE>

                                                                         Annex A

         "ORGANIZATIONAL DOCUMENTS" means, with respect to any Person, any
certificate of incorporation, charter, by-laws, memorandum of association,
articles of association, partnership agreement, limited liability company
agreement, certificate of formation of a limited liability company, certificate
of limited partnership, certificate of trust, trust agreement or other agreement
or instrument under which such Person is formed or organized, and which
established the legal personality of such Person under Applicable Law, and any
amendment to any of the foregoing.

         "ORIGINAL CERTIFICATES" means the $50,000,000 aggregate certificate
face amount of Limestone Certificates issued on December 28, 1999.

         "ORIGINAL INDENTURE" is defined in the first recital of the Indenture.

         "ORIGINAL LLC AGREEMENT" is defined in the Preliminary Statements to
the Chaparral LLC Agreement.

         "ORIGINAL OVERFUND TRUST AGREEMENT" means the Trust Agreement of El
Paso Electron Overfund Trust dated March 15, 2000.

         "ORIGINAL PARTICIPATION AGREEMENT" is defined in the Preliminary
Statements of the Participation Agreement.

         "ORIGINAL SHARE TRUST AGREEMENT" means the Trust Agreement of El Paso
Electron Share Trust dated March 15, 2000.

         "OUTSTANDING" is defined in Section 1.01 of the Indenture (with respect
to the Limestone Notes) and Section 1.01 of the New Indenture (with respect to
the New Limestone Notes).

         "OVERFUND AMOUNT" means $278,659,876.73 of the proceeds of the issuance
and sale of the Limestone Notes.

         "OVERFUND AMOUNT (LIMESTONE NOTES PORTION)" means the collective
reference to (i) the El Paso Debt Security captioned "El Paso Debt Security
(Limestone Notes)" in the initial principal amount of $225,899,784.09, created
to provide for payments at least equal to the interest payable on the Limestone
Notes, (ii) all payments of principal and interest thereon (whether upon stated
payment dates, prepayment, acceleration or otherwise), (iii) all Financial
Investments acquired with any proceeds of payments under such "El Paso Debt
Security (Limestone Notes)" or otherwise held to provide for payments at least
equal to the interest payable on the Limestone Notes and all proceeds of the
foregoing and (iv) all amounts (and investments thereof) paid to Limestone or
the Indenture Trustee from or in respect of the foregoing.

         "OVERFUND DISTRIBUTION ACCOUNT" is defined in Section 4.02(a) of the
Overfund Trust Agreement.

         "OVERFUND DISTRIBUTION DATE" means each and every Business Day other
than the Closing Date.

                                      -40-

                                Project Electron

<PAGE>

                                                                         Annex A

         "OVERFUND TRUST" means El Paso Electron Overfund Trust, a statutory
business trust created under the law of the State of Delaware.

         "OVERFUND TRUST AGREEMENT" means the Second Amended and Restated Trust
Agreement of El Paso Overfund Trust dated as of the Signing Date, among the
Overfund Trustee, Chaparral, El Paso, as depositor, and the Overfund Trust.

         "OVERFUND TRUSTEE" means Wilmington Trust Company, a Delaware banking
corporation, in its capacity as trustee of the Overfund Trust.

         "PARTIAL REMARKETING" is defined in Section 1 of the Remarketing
Agreement.

         "PARTICIPATION AGREEMENT" means the Amended and Restated Participation
Agreement dated as of the Signing Date, among El Paso, Limestone, DLJ Inc., El
Paso Chaparral Holding, El Paso Chaparral Holding II, El Paso Chaparral,
Management Company, Chaparral, Mesquite, Electron, Wilmington Trust Company (in
its individual capacity), the Indenture Trustee, the Overfund Trust and the
Share Trust.

         "PARTY" is defined in the first paragraph of the Participation
Agreement.

         "PAYMENT DATE" means with respect to (i) the liquidation of Chaparral
pursuant to Article XII of the Chaparral LLC Agreement, the date on which all
Chaparral Property is distributed pursuant to Section 12.2 of the Chaparral LLC
Agreement and the Chaparral Certificate of Formation has been canceled pursuant
to the LLC Act, (ii) the election by the Electing Purchasers to purchase the
Class A Member Interest pursuant to Section 11.2 of the Chaparral LLC Agreement,
the Purchase Date, or (iii) the election by the Class B Member to retire all of
the Class A Member Interest pursuant to Section 11.1 of the Chaparral LLC
Agreement, the Retirement Date.

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

         "PERMIT" means any approval, certificate of occupancy, consent, waiver,
exemption, variance, franchise, order, permit, authorization, right or license
of or from any Governmental Authority.

         "PERMITTED FINANCIAL OBLIGATIONS" of any Person means, without
duplication, (a) all indebtedness of such Person for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property or
services (other than any portion of any trade payable obligation that shall not
have remained unpaid for 91 days or more from the later of (i) the original due
date of such portion and (ii) the customary payment date in the industry and
relevant market for such portion), (c) all obligations of such Person evidenced
by bonds, notes, debentures or other similar instruments, (d) all obligations of
such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (whether or
not the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), (e) all
leases that have been or should be, in accordance with GAAP, recorded as
capitalized leases, (f) all obligations, contingent or otherwise, of such Person
under acceptance, letter of credit or similar

                                      -41-

                                Project Electron

<PAGE>

                                                                         Annex A

facilities, (g) all obligations of such Person to purchase, redeem, retire,
defease or otherwise acquire for value any partnership or member or other equity
interests of such Person, (h) the amount of all financial obligations of such
Person in respect of Hedge Agreements, (i) the amount of all other financial
obligations of such Person under any other Contractual Obligation of such
Person, (j) all Permitted Financial Obligations of other Persons of the type
described in clauses (a) through (i) above guaranteed directly or indirectly in
any manner by such Person, or in effect guaranteed directly or indirectly by
such Person through an agreement (i) to pay or purchase such Permitted Financial
Obligations or to advance or supply funds for the payment or purchase of such
Permitted Financial Obligations, (ii) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Permitted Financial Obligations or
to assure the holder of such Permitted Financial Obligations against loss, (iii)
to supply funds to or in any other manner invest in the debtor (including any
agreement to pay for property or services irrespective of whether such property
is received or such services are rendered) or (iv) otherwise to assure a
creditor against loss, and (k) all Permitted Financial Obligations of the type
described in clauses (a) through (j) above secured by (or for which the holder
of such Permitted Financial Obligations has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for payment of such Permitted Financial Obligations.

         "PERMITTED LIENS" with respect to any Person shall mean the following:

                  (i) Liens for taxes not yet delinquent or Liens for taxes
         being contested in good faith and by appropriate proceedings for which
         adequate reserves (in the good faith judgment of the management of such
         Person) have been established;

                  (ii) Liens in respect of property or assets imposed by law
         which were incurred in the ordinary course of business, such as
         carriers', warehousemen's, materialmen's and mechanics' Liens and other
         similar Liens arising in the ordinary course of business, which do not
         in the aggregate materially detract from the value of such property or
         assets or materially impair the use thereof in the operation of the
         business of such Person or any Subsidiary of such Person;

                  (iii) Liens created under or contemplated by any Transaction
         Document;

                  (iv) Mechanic's Liens, carrier's Liens, and other Liens to
         secure the performance of tenders, statutory obligations, contract
         bids, government contracts, performance and return-of-money bonds and
         other similar obligations, incurred in the ordinary course of business
         (exclusive of obligations in respect of the payment for borrowed
         money), whether pursuant to statutory requirements, common law or
         consensual arrangements; and

                  (v) Liens (including covenants, restrictions, rights,
         easements and minor irregularities in title) that do not materially
         interfere with the business or operations of such Person as presently
         conducted.

         "PERMITTED TRANSFER" is defined in Section 10.1(c) of the Chaparral LLC
Agreement.

                                      -42-

                                Project Electron

<PAGE>

                                                                         Annex A

         "PERMITTED TRANSFEREE" is defined in Section 10.1(c) of the Chaparral
LLC Agreement.

         "PERSON" means any individual, trust, estate, association, Business
Entity or other entity, or a government or any political subdivision or agency
thereof.

         "PHASE II PARTICIPATION AGREEMENT" is defined in Section 4.2(b) of the
Participation Agreement.

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

         "POWER ASSETS" means (a) the Existing Assets, (b) the Specified New
Assets and (c) the Contingent Debt Instrument.

         "PRELIMINARY OFFERING MEMORANDUM" means the Preliminary Offering
Memorandum dated March 10, 2000 relating to the issuance and sale of the
Limestone Notes.

         "PRESENT VALUE" is defined in Section 1 of the Management Agreement.

         "PRICING" means, with respect to any security, the determination of the
price at which the underwriter(s) (in a firm commitment underwriting
arrangement) or the purchaser(s) are willing to purchase, and the holder of such
security (or issuer thereof, if such security is being newly issued) is willing
to sell, such security.

         "PRIMARY CLASS B MEMBER" means El Paso Chaparral.

         "PRINCIPAL MARKET" means the principal exchange on which the security
in question is traded or the principal market on which such security is quoted,
as determined by the board of directors of El Paso from time to time.

         "PROCEEDING" means any suit in equity, action at law or other judicial
or administrative proceeding.

         "PROJECT COMPANIES" means Mesquite, any direct or indirect subsidiary
of Mesquite, each other Qualified Energy Company and each of their respective
direct or indirect subsidiaries.

         "PROJECT COMPANY FINANCIAL MODEL" is defined in Section 4.1(n)(ii) of
the Participation Agreement.

         "PROJECT DOCUMENTS" means (i) the respective Organizational Documents
of, or other applicable operating documents of, the Project Companies, (ii) any
material agreements with respect to the ownership, management, operation or
assets of the Project Companies, (iii) the power purchase agreements, steam sale
agreements, gas supply agreements and similar agreements held by the Project
Companies, (iv) any financing arrangements or other Contractual Obligations of
the Project Companies and (v) all documents and agreements executed in
connection with or relating to the foregoing.

         "PROJECT INTEREST CONTRIBUTIONS" is defined in Section 10(a) of each
Contingent Debt Instrument.

                                      -43-

                                Project Electron

<PAGE>

                                                                         Annex A

         "PROJECT MATERIAL ADVERSE EFFECT" means (i) a material adverse effect
on the financial condition, properties, or operations of the Project Companies
taken as a whole and on a consolidated basis, (ii) a material adverse effect on
the ability of any of the Project Companies to perform its respective material
obligations under Project Document to which it is a party, (iii) the invalidity
or unenforceability, in whole or in material part, of any Project Document to
which any of the Project Companies is a party or (iv) a material adverse effect
on the rights and remedies of any Project Company under any such Project
Document.

         "PTP RELEVANT PERSON" is defined in Article II of the Limestone Trust
Agreement.

         "PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.

         "PURCHASE DATE" is defined in Section 11.2(c)(iii) of the Chaparral LLC
Agreement.

         "PURCHASE OPTION" is defined in Section 11.2(a) of the Chaparral LLC
Agreement.

         "PURCHASE OPTION NOTICE" is defined in Section 11.2(a) of the Chaparral
LLC Agreement.

         "PURCHASE PRICE" is defined in Section 11.2(e) of the Chaparral LLC
Agreement.

         "QUALIFIED ENERGY ASSETS" means (i) real and personal property, whether
tangible or intangible, constituting Energy Assets, (ii) direct or indirect
(through one or more other Business Entities or otherwise) Equity Interests in
Qualified Energy Companies, (iii) Permitted Financial Obligations of, and other
Contractual Obligations and other Obligations of, Qualified Energy Companies,
(iv) rights under or in respect of Contractual Obligations and other
Obligations, or other rights, in each case relating to or derived from Energy
Assets, (v) to the extent not otherwise including in the foregoing, the Power
Assets, (vi) New Contingent Debt Instruments and (vii) any other assets that are
owned by, or contributed to or otherwise acquired by, Chaparral, Mesquite or any
Qualified Energy Company with the consent of all of the Members of Chaparral.

         "QUALIFIED ENERGY COMPANY" means any Business Entity not less than 90%
of the aggregate book value of the assets of which are comprised of (a)(i) real
and personal property, whether tangible or intangible, constituting Energy
Assets, (ii) rights under or in respect of Contractual Obligations and other
Obligations, or other rights, in each case relating to or derived from Energy
Assets, (iii) to the extent not otherwise included in the foregoing, the
Existing Assets (other than the Contingent Debt Instrument) and the Specified
New Assets, (iv) New Contingent Debt Instruments and (v) any other assets that
are approved as such by the unanimous consent of the Members of Chaparral; (b)
Permitted Financial Obligations of, and Hedge Agreements with, and other
Contractual Obligations of, Business Entities not less than 90% of the aggregate
book value of the assets of which is comprised of (I) assets referred to in
clause (a) above or (II) direct or indirect (through one or more other Business
Entities or otherwise) Equity Interests in other Business Entities not less than
90% of the aggregate book value of the assets of which is comprised of assets
referred to in clause (I) above; (c) direct or indirect (through one or more
other Business Entities or otherwise) Equity Interests in other Business
Entities not less than 90% of the aggregate book value of the assets of which is

                                      -44-

                                Project Electron

<PAGE>

                                                                         Annex A

comprised of assets referred to in clause (a) or (b) above; (d) El Paso Loans;
and/or (e) Financial Investments.

         "QUALIFIED EQUITY PROCEEDS" means, for purposes of the El Paso
Preferred Stock Certificate of Designation, amounts in Dollars.

         "QUALIFIED HOLDER" means any Person (i) with respect to which,
immediately after giving effect to the applicable Disposition of the Class A
Member Interest to such Person, (A) no more than 25% of the Equity Interests in
such Person shall be held by Benefit Plan Investors and (B) there shall be no
more than 99 PTP Relevant Persons and (ii) that is a Tax Matters Representing
Purchaser.

         "QUALIFIED PURCHASER" is defined in Section 2(a)(51)(A) of the
Investment Company Act.

         "RATE RESET DATE" means the earlier of (i) the date of the consummation
of the remarketing of the Initial Shares (which is expected to be on or about
the third Trading Day following the Successful Repricing Date) or (ii) the date
a Failed Remarketing is declared.

         "RATING AGENCIES" means Moody's and S&P.

         "RECOURSE FOR THE NOTES" has the meaning assigned to such term in
Section 2.05(f) of the New Indenture.

         "REDEMPTION EVENT" is defined in Section 2 of the El Paso Preferred
Stock Certificate of Designation.

         "REDEMPTION PROCEEDS" means any Collections in respect of the payment
of the redemption price for the El Paso Preferred Stock upon a Redemption Event
in accordance with the El Paso Preferred Stock Certificate of Designation.

         "REFERENCE ENTITIES" is defined in Section 4.3(c) of the Participation
Agreement.

         "REGULATIONS" means the Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as such regulations are amended,
modified or supplemented from time to time.

         "RELATED PERSONS" means, with respect to any Person, each Affiliate of
such Person and all officers, directors, employees, advisors and representatives
of such Person or any of its Affiliates.

         "RELEVANT EL PASO PARTY" means any of, and "RELEVANT EL PASO PARTIES"
means all of, El Paso Chaparral Holding, El Paso Chaparral Holding II, El Paso
Chaparral and Management Company.

         "RELEVANT INDEBTEDNESS" of any Person means, without duplication, (a)
indebtedness of such Person for borrowed money, (b) obligations of such Person
(other than any portion of any trade payable obligation of such Person that
shall not have remained unpaid for 91 days or more from the original due date of
such portion) to pay the deferred purchase price of property or

                                      -45-

                                Project Electron

<PAGE>

                                                                         Annex A

services, and (c) obligations of such Person as lessee under leases that shall
have been or should be, in accordance with GAAP, recorded as capital leases,
except that where such indebtedness or obligation of such Person is made
jointly, or jointly and severally, with any third party or parties other than
any consolidated Subsidiary of such Person, the amount thereof for the purposes
of this definition only shall be the pro rata portion thereof payable by such
Person, so long as such third party or parties have not defaulted on its or
their joint and several portions thereof.

         "REMARKETING AGENTS" means the Persons named as remarketing agent under
the Remarking Agreement.

         "REMARKETING AGREEMENT" means the Amended and Restated El Paso
Preferred Stock Remarketing and Registration Rights Agreement dated as of the
Signing Date among El Paso, Limestone, the Share Trust, the Indenture Trustee
and the Remarketing Agents.

         "REPLACEMENT BUDGET" is defined in Section 6.3(f) of the Chaparral LLC
Agreement.

         "REPLACEMENT PERIOD" is defined in Section 4.3(a) of the Participation
Agreement.

         "RESPONSIBLE OFFICER" means (a) with respect to El Paso, Chaparral and
Mesquite, any officer of El Paso or an El Paso Affiliate with knowledge of the
financial matters of El Paso and Chaparral, (b) with respect to the Limestone
Trustee, the Overfund Trustee and the Share Trustee, any officer of the
Corporate Trust Administration group, or other officer who customarily performs
similar functions of the Limestone Trustee, the Overfund Trustee or the Share
Trustee, respectively, and who has direct responsibility for the administration
of the related trust and (c) with respect to the Indenture Trustee or the New
Indenture Trustee, any officer assigned to the principal corporate trust office
of the Indenture Trustee or the New Indenture Trustee, including any managing
director, vice president, assistant vice president, assistant treasurer,
assistant secretary or any other officer of the Indenture Trustee or the New
Indenture Trustee customarily performing functions similar to those performed by
any of the above designated officers and having direct responsibility for the
administration of the Indenture or the New Indenture, as applicable, and also,
with respect to a particular matter, any other officer, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.

         "RESTRICTED PERSON" means any Certificateholder, Electron, CSFB and any
Affiliate of the foregoing (other than any such Affiliate that is an Affiliate
solely by reason of its investment in funds managed by affiliates of CSFB).

         "RESTRUCTURING" means, with respect to any Project Company, any
termination or material modification of the material Project Documents for such
Project Company, or any monetization of any Project Document for such Project
Company.

         "RESTRUCTURING GAINS" means any item of income or gain realized by
Chaparral in connection with a Restructuring.

         "RESTRUCTURING LOSSES" means any item of deduction or loss incurred by
Chaparral in connection with a Restructuring.

                                      -46-

                                Project Electron

<PAGE>

                                                                         Annex A

         "RETIREMENT AMOUNT" is defined in Section 11.1(d) of the Chaparral LLC
Agreement.

         "RETIREMENT DATE" is defined in Section 11.1(b)(ii) of the Chaparral
LLC Agreement.

         "RETIREMENT NOTICE" is defined in Section 11.1(a) of the Chaparral LLC
Agreement.

         "RETIREMENT OPTION" is defined in Section 11.1(a) of the Chaparral LLC
Agreement.

         "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor by merger, consolidation or
otherwise to its business.

         "SEC" means the Securities and Exchange Commission.

         "SECOND AMENDED AND RESTATED LLC AGREEMENT" is defined in the
Preliminary Statements to the Chaparral LLC Agreement.

         "SECRETARY OF STATE" means the office of the Secretary of State of the
State of Delaware.

         "SECURITIES ACT" means the Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to the Securities Act or any successor
law.

         "SECURITIES INTERMEDIARY" means (i) as used in the Indenture, United
States Trust Company of New York acting in such capacity and any successor
acting in such capacity and (ii) as used in the Limestone Trust Agreement and
the Overfund Trust Agreement, Wilmington Trust Company acting in such capacity
and any successor acting in such capacity.

         "SECURITY AGREEMENT" means the Amended and Restated Security Agreement
dated as of the Signing Date between the Overfund Trust and Limestone.

         "SECURITY FOR THE LIMESTONE NOTES" is defined in Section 3.01 of the
Indenture.

         "SHARE TRUST" means El Paso Electron Share Trust, a special purpose
statutory business trust created under the law of the State of Delaware pursuant
to the Original Share Trust Agreement for the purpose of holding the Shares.

         "SHARE TRUST AGREEMENT" means the Second Amended and Restated Trust
Agreement of El Paso Share Electron Trust dated as of the Signing Date among the
Share Trustee, El Paso and the Share Trust.

         "SHARE TRUST AMOUNT" means, as of any date of determination, an amount
equal to (a) the aggregate amount then necessary to discharge the Indenture
under Section 10.01 of the Indenture minus (b) any funds or the proceeds of the
sale of any investments then held in the Indenture Accounts and available to the
Indenture Trustee for the payment of the Limestone Notes (but in an amount not
in excess of the amount described in clause (a)) plus (c) the aggregate proceeds
from the Asset Remedy or from any asset sales made pursuant to Section 2.05(f)
of the New Indenture or from Asset Dispositions made by the Managing Member
after the Special Management Replacement Date that, in any such case, have been
used to repay the Limestone Notes or, to the extent included in the amount
referenced in clause (b) above, are then

                                      -47-

                                Project Electron

<PAGE>

                                                                         Annex A

available to the Indenture Trustee for the payment of the Limestone Notes, but
in an amount not to exceed the Certificate Purchase Amount as of such date (net
of any funds or the proceeds of the sale of any investments then held for the
benefit of the Limestone Certificateholders in the Limestone Distribution
Account, Limestone Collection Account or, to the extent such amounts are
available for distribution by the Indenture Trustee to Limestone for the benefit
of the Limestone Certificateholders under the Indenture, the Indenture
Accounts).

         "SHARE TRUST CONTRIBUTION ACCOUNT" is defined in Section 4.05(a) of the
Share Trust Agreement.

         "SHARE TRUST REMEDY STANDSTILL PERIOD" is defined in Section
9.04(b)(ii) of the Indenture.

         "SHARE TRUSTEE" means Wilmington Trust Company, a Delaware banking
corporation, in its capacity as trustee under the Share Trust Agreement.

         "SHARES" means the Initial Shares and the Additional Shares, or the
portion thereof that is then required to be issued or available for remarketing,
as the context requires.

         "SIGNING DATE" means April 12, 2002.

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

         "SOLVENT" means, when used with respect to any Person, that at the time
of determination: (a) the fair market value of such Person's assets is in excess
of the total amount of its liabilities (including, without limitation,
contingent liabilities), (b) the present fair saleable value of such Person's
assets is greater than its probable liability in its existing debts, as such
debts become absolute and mature, (c) such Person is then able to and believes
that it will be able to pay its indebtedness (including, without limitation,
contingent indebtedness and other commitments), as such indebtedness comes due,
and (d) such Person's remaining assets will not constitute unreasonably small
capital in relation to the businesses to be conducted by such Person.

         "SPECIAL MANAGEMENT REPLACEMENT DATE" means the date upon which the
Class A Member or its designee becomes the Managing Member of Chaparral pursuant
to Section 6.1(a) of the Chaparral LLC Agreement as a result of the occurrence
of a Specified Equity Event.

         "SPECIAL MANAGEMENT STANDSTILL EXPIRATION DATE" means (a) in the case
of a Specified Equity Event that arises as a result of (i) an "Event of Default"
under Section 7.1(a), 7.1(d) or 7.1(e) of the June 11 Agreement or (ii) an Event
of Default under Section 9.01(m) of the Indenture, the 30th day after the
occurrence of such Specified Equity Event and (b) in the case of any other
Specified Equity Event, the later of (x) the 30th day after the occurrence of
such Specified Equity Event and (y) if a Certificate Purchase Option Notice is
delivered within 30

                                      -48-

                                Project Electron

<PAGE>

                                                                         Annex A

days after the occurrence of such Specified Equity Event, the 60th day after the
occurrence of such Specified Equity Event.

         "SPECIAL REDEMPTION" means (a) with respect to the Limestone Notes, a
Special Redemption under, and as defined in, the Indenture, and (b) with respect
to the New Limestone Notes, a Special Redemption under, and as defined in, the
New Indenture.

         "SPECIAL REDEMPTION DATE" means (a) with respect to the Limestone
Notes, a Special Redemption Date under, and as defined in, the Indenture, and
(b) with respect to the New Limestone Notes, a Special Redemption Date under,
and as defined in, the New Indenture.

         "SPECIFIED NEW ASSETS" means the assets listed under "Specified New
Assets" on Schedule 3.2(b) to the Chaparral LLC Agreement.

         "SPECIFIED EQUITY CURE" means, in the case of any Specified Equity
Event other than a Specified Equity Event arising from (A) an event described in
Section 7.1(a), (d) or (e) of the June 11 Agreement or (B) an event described in
Section 9.01(l) (as it applies to El Paso or El Paso Chaparral only) or 9.01(m)
of the Indenture, the Underlying Default is remedied (or, in the case of a
payment default, paid) by El Paso on or prior to the Special Management
Standstill Expiration Date.

         "SPECIFIED EQUITY EVENT" means any of (a) the occurrence of an "Event
of Default" under (and as defined in) the June 11 Agreement giving effect to any
permitted cure period but without giving effect to any waiver of such "Event of
Default" (or any waiver of the covenants or representations underlying such
"Event of Default") by the lenders thereunder; provided that when notice is
required to commence the maturing of a "Default" into an "Event of Default"
under the June 11 Agreement, notice given by the Required Certificateholders to
El Paso shall also constitute notice under the June 11 Agreement for this
purpose; (b) after repayment in full of all Outstanding Limestone Notes but
prior to the date on which the New Limestone Notes shall have been paid in full,
any event that would constitute an "Event of Default" (other than an "Event of
Default" relating solely to an event of the type described in clause (a), (b) or
(f) of Section 9.01 of the Indenture or, unless the Share Trust Amount is
greater than zero, relating solely to an event related to the Share Trust) under
(and as defined in) the Indenture (as in effect on the Effective Date and as
supplemented, amended, restated or otherwise modified from time to time prior to
the repayment in full of all Outstanding Limestone Notes but without giving
effect to any supplement, amendment, restatement or other modification made in
contemplation of such repayment) that is not an "Event of Default" under the New
Indenture and/or (c) the acceleration of the New Limestone Notes.

         "SUBSEQUENT CERTIFICATES" means the $100,000,000 aggregate certificate
face amount of Limestone Certificates issued on the Closing Date.

         "SUBSIDIARY" means, as to any Person, any corporation, partnership,
joint venture, limited liability company, trust or estate of which (or in which)
more than 50% of (a) the issued and outstanding capital stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any

                                      -49-

                                Project Electron

<PAGE>

                                                                         Annex A

contingency), (b) the right or power to direct, in the case of any entity of
which such Person or any of its Subsidiaries is a general partner, or both the
beneficial ownership of and the right or power to direct, in any other case,
such limited liability company, partnership or joint venture, or (c) the
beneficial interest in such trust or estate, is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more of
its other Subsidiaries or by one or more of such Person's other Subsidiaries;
provided, however, that notwithstanding anything in this definition to the
contrary, in the case of Chaparral, the term "Subsidiary" shall include the
Project Companies; and, provided, further, that no such corporation,
partnership, joint venture or other entity shall (i) constitute a Subsidiary of
El Paso, unless such entity is a Consolidated Subsidiary of El Paso, or (ii)
constitute a Subsidiary of any other Person unless such entity would appear as a
consolidated subsidiary of such Person on a consolidated balance sheet of such
Person prepared in accordance with GAAP.

         "SUCCESSFUL REPRICING DATE" is defined in Section 1 of the Remarketing
Agreement.

         "SUCCESSOR MANAGER" is defined in Section 5.2 of the Management
Agreement.

         "TAX" or "TAXES" means any and all taxes (including net income, gross
income, franchise, value added, ad valorem, gross receipts, leasing, excise,
fuel, excess profits, sales, use, property (personal or real, tangible or
intangible) and stamp taxes), levies, imposts, duties, charges, assessments, or
withholdings of any nature whatsoever, general or special, ordinary or
extraordinary, now existing or hereafter created or adopted, together with any
and all interest, penalties, fines, additions to tax and interest thereon.

         "TAX INDEMNIFICATION AGREEMENT" means the Amended and Restated Tax
Indemnification Agreement dated as of the Closing Date among El Paso, Limestone
and Electron.

         "TAX MATTERS MEMBER" is defined in Section 8.3(a) of the Chaparral LLC
Agreement.

         "TAX MATTERS REPRESENTING PURCHASER" has the meaning assigned to such
term in Article II of the Limestone Trust Agreement.

         "TAX RATE" means the composite rate for an individual subject to the
highest generally applicable U.S. federal, state and local marginal income tax
rates, after taking into account the deductibility of state and local taxes for
U.S. federal income tax purposes.

         "TEMPORARY BUDGET" is defined in Section 6.3(f) of the Chaparral LLC
Agreement.

         "TERMINATION PERIOD GUARANTEED PAYMENT" means, on any date, an amount
equal to the excess, if any, of (a) the sum of (without duplication): (i) the
excess, if any, of (x) the Class A Member's Cumulative Priority Return,
excluding for any Applicable Termination Period if no Earn-Out Period
Commencement Date has occurred the amount described in clause (b)(iv) of the
definition of Class A Member's Priority Return, over (y) the aggregate amount of
items of Gross Income allocated to the Class A Member pursuant to Section
4.4(d)(i) of the Chaparral LLC Agreement; (ii) the Additional Financing Costs,
if any, due and payable by the Class A Member on or prior to such date; (iii) if
no Limestone Note Trigger Event, Limestone Certificate Trigger

                                      -50-

                                Project Electron

<PAGE>

                                                                         Annex A

Event, Specified Equity Event or acceleration of the New Limestone Notes as a
result of a New Indenture Event of Default (other than a Specified Equity Event
arising solely as a result of an acceleration of the New Limestone Notes that
arises as a result of a New Indenture Event of Default of the type described in
Section 9.01(a) of the New Indenture) has occurred, the Limestone Equity Cash
Component Make-Whole Premium (calculated as of such date); and (iv) the
Limestone Equity PIK Component Mark-To-Market Yield Amount over (b) without
duplication of any amount, any amounts previously paid to the Class A Member in
respect of the Termination Period Guaranteed Payment.

         Amounts payable as Termination Period Guaranteed Payments shall be
treated as guaranteed payments within the meaning of Code Section 707(c), shall
be considered an expense of Chaparral for income tax purposes and an expense or
capital item for financial reporting purposes, as the case may be, and shall not
be considered a distribution of money to the Class A Member that would reduce
its Capital Account.

         "TRADING DAY" means a day on which the Principal Market with respect to
a security is regularly scheduled to be open for trading. For purposes of this
definition, a day on which any such exchange is scheduled to close (as opposed
to unexpectedly closing) prior to its regular closing time shall not constitute
a Trading Day.

         "TRANSACTION DOCUMENTS" means the Participation Agreement, the
Limestone Trust Agreement, the Chaparral LLC Agreement, the Mesquite LLC
Agreement, the Management Agreement, the Overfund Trust Agreement, the Security
Agreement, the Indenture, the Limestone Notes, the Limestone Certificates, the
Share Trust Agreement, the Remarketing Agreement, the El Paso Preferred Stock
Certificate of Designation, the El Paso Notes, the Tax Indemnification
Agreement, the Note Purchase Agreement, the Administrative Services Agreement,
any other documents required to be executed in order to satisfy, comply or
evidence compliance with Section 2.3 of the Participation Agreement, the Closing
Agreement, the New Limestone Notes and the El Paso Guarantee endorsed thereon,
the New Indenture and the Dealer Manager Agreement.

         "TRANSFERRED INTEREST" is defined in Section 10.1(c) of the Chaparral
LLC Agreement.

         "TREASURY YIELD" means is defined in Section 1.01 of the Indenture.

         "UNCERTIFIED BUDGET" is defined in Section 6.3(f) of the Chaparral LLC
Agreement.

         "UNDERLYING DEFAULT" means with respect to any Specified Equity Event,
the "Event of Default" referenced in the definition of Specified Equity Event
that gave rise to such Specified Equity Event.

         "UNDERLYING ENTITY" means the entity owning the interest in any New
Asset, which interest will be subject to a New Contingent Debt Instrument, and
its subsidiaries and affiliates.

         "UNDERWRITERS" has the meaning assigned to such term in Section 4.02 of
the Indenture.

                                      -51-

                                Project Electron

<PAGE>

                                                                         Annex A

         "UNITED STATES" or "U.S." means the United States of America and the
territories, possessions and territorial waters of the United States of America.

         "UNPAID PREMIUM AMOUNT" means after the Earn-Out Period Commencement
Date the excess of (a) the sum of (x) all Limestone Equity PIK Component
Make-Whole Premiums as determined from time to time and (y) an accretion factor
of 17.5% per annum, compounded semi-annually with respect to the outstanding
Unpaid Premium Amount from time to time, over (b) the aggregate of any
distributions previously made with respect to the Limestone Certificates that
are treated as with respect to the Limestone Equity PIK Component pursuant to
the last sentence of the definition of Internal Rate of Return and that are not
applied in reduction thereof.

         "VOLUNTARY BANKRUPTCY" is defined in the definition of "Bankruptcy".

         "WHOLLY OWNED AFFILIATE" of any Person means (i) an Affiliate of such
Person 100% of the capital stock (or its equivalent in the case of entities
other than corporations) of which is owned beneficially by such Person,
directly, or indirectly through one or more Wholly Owned Affiliates, or by any
Person who, directly or indirectly, owns beneficially 100% of the capital stock
(or its equivalent in the case of entities other than corporations) of such
Person, and (ii) an Affiliate of such Person who, directly or indirectly, owns
beneficially 100% of the capital stock (or its equivalent in the case of
entities other than corporations) of such Person; provided that, for purposes of
determining the ownership of the capital stock of any Person, de minimis amounts
of stock held by directors, nominees and similar persons pursuant to statutory
or regulatory requirements shall not be taken into account.

         "WITHDRAWAL LIABILITY" shall have the meaning given such term under
Part 1 of Subtitle E of Title IV of ERISA.

         SECTION 1.02 RULES OF CONSTRUCTION. This Annex A and, except as
otherwise expressly provided in any Transaction Document with respect to
specific rules of construction for such Transaction Document, all Transaction
Documents and all appendices, schedules and exhibits to the Transaction
Documents shall be governed by, and construed in accordance with, the following
rules of construction:

         (a) Computation of Time Periods. In the computation of periods of time
from a specified date to a later specified date, the word or phrase "FROM" and
"COMMENCING ON" mean "from and including" and the words or phrase "TO" and
"UNTIL" and "ENDING ON" mean "to but excluding".

         (b) Accounting Terms. All accounting terms shall be construed in
accordance with GAAP applied consistently, except with respect to Capital
Accounts and items entering into the computation of Capital Accounts, and except
to the extent otherwise specified in the provisions of Section 1.01 or 1.02
hereof.

         (c) No Presumption Against Any Party. Neither any Transaction Document
nor any uncertainty or ambiguity therein shall be construed against any
particular party, whether under any rule of construction or otherwise. On the
contrary, each Transaction Document has been reviewed by each of the parties
thereto and their respective counsel and shall be construed and

                                      -52-

                                Project Electron

<PAGE>

                                                                         Annex A

interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties thereto.

         (d) Use of Certain Terms. Unless the context of any Transaction
Document requires otherwise, the plural includes the singular, the singular
includes the plural, and "INCLUDING" has the inclusive meaning of "including
without limitation." The words "HEREOF," "HEREIN," "HEREBY," "HEREUNDER," and
other similar terms of any Transaction Document refer to such Transaction
Document (including this Annex A to the extent incorporated or referred to
therein (whether or not actually attached thereto) and all other annexes,
schedules and exhibits attached thereto) as a whole and not exclusively to any
particular provision of such Transaction Document. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, or
neuter, singular or plural, as the identity of the Person or Persons may
require.

         (e) Headings and References. Article, Section and other headings are
for reference only, and are not intended to describe, interpret, define or limit
the scope, extent or intent of any Transaction Document or any provision
thereof. References in any Transaction Document to Articles, Sections, Annexes,
Schedules and Exhibits refer to Articles, Sections, Annexes, Schedules, and
Exhibits of or to such Transaction Document, and references in Sections of such
Transaction Document to any clause refer to such clause of such Section. Whether
or not specified in any Transaction Document or in this Annex A, references in
such Transaction Document or in this Annex A to such Transaction Document, any
other Transaction Document or any other agreement include, unless otherwise
provided in such Transaction Document or in this Annex A, this Annex A, such
Transaction Document, the other Transaction Documents and such other agreements,
as the case may be, as the same may be amended, restated, supplemented or
otherwise modified from time to time pursuant to the provisions thereof and of
any other Transaction Documents applicable thereto. Whether or not specified in
any Transaction Document or in this Annex A, a reference to any Applicable Law
or law (as the case may be) as at any time shall mean that Applicable Law or law
(as the case may be) as it may have been amended, restated, supplemented or
otherwise modified from time to time, and any successor Applicable Law or law
(as the case may be). A reference to a Person includes the successors and
assigns of such Person, but such reference shall not increase, decrease or
otherwise modify in any way the provisions in this Annex A or any Transaction
Document governing the assignment of rights and obligations under, or the
binding effect, of any provision of this Annex A or any Transaction Document.

                                      -53-

                                Project Electron<PAGE>

                                                                 Exhibit 10.BB.1

                           FIFTH AMENDED AND RESTATED

                       LIMITED LIABILITY COMPANY AGREEMENT

                                       OF

                           CHAPARRAL INVESTORS, L.L.C.

<PAGE>
\

TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               PAGE
<S>                                                                                                            <C>
ARTICLE I             FORMATION AND CONTINUATION OF CHAPARRAL.............................................       2
         Section 1.1       Formation and Continuation of Chaparral........................................       2

         Section 1.2       Name...........................................................................       2

         Section 1.3       Business of Chaparral..........................................................       3

         Section 1.4       Location of Principal Place of Business; Registered Office.....................       3

         Section 1.5       Filings; Registered Agent......................................................       3

         Section 1.6       Term...........................................................................       4

         Section 1.7       Title to Chaparral Property....................................................       4

         Section 1.8       Payments of Individual Obligations.............................................       4
ARTICLE II            DEFINITIONS.........................................................................       5
         Section 2.1       Definitions....................................................................       5

         Section 2.2       Rules of Construction..........................................................       5
ARTICLE III           INTERESTS; MEMBERS; CAPITAL CONTRIBUTIONS; ADDITIONAL AGREEMENTS....................       5
         Section 3.1       Interests......................................................................       5

         Section 3.2       Class A Member and Class B Members.............................................       5

         Section 3.3       Additional Capital Contributions...............................................       6

         Section 3.4       Additional Agreements Among Members............................................       8
ARTICLE IV            ALLOCATION OF NET INCOME AND NET LOSS...............................................      10
         Section 4.1       Allocation of Net Income and Net Loss..........................................      10

         Section 4.2       Allocations During and After Earn-Out Period...................................      11

         Section 4.3       Allocations Following Mark-to-Market...........................................      12

         Section 4.4       Special Tax Allocations........................................................      12

         Section 4.5       Curative Allocations...........................................................      14

         Section 4.6       Loss Limitation................................................................      15

         Section 4.7       Other Allocation Rules.........................................................      15

         Section 4.8       Tax Allocations; Code Section 704(c)...........................................      15

         Section 4.9       Order of Allocations...........................................................      16
ARTICLE V             DISTRIBUTIONS; WITHDRAWALS..........................................................      17
         Section 5.1       Distributions..................................................................      17

         Section 5.2       More than One Class A Member or Class B Member.................................      19

         Section 5.3       Amounts Withheld...............................................................      19

         Section 5.4       Payments from the Overfund Trust...............................................      19
</TABLE>

                                      -1-

<PAGE>

TABLE OF CONTENTS
(continued)

<TABLE>
<CAPTION>
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<S>                                                                                                            <C>
         Section 5.5       Deemed Distributions to Class A Member.........................................      19

         Section 5.6       Notice of Certain Distributions................................................      20
ARTICLE VI            MANAGEMENT..........................................................................      21
         Section 6.1       Management of Chaparral........................................................      21

         Section 6.2       Right to Rely on the Managing Member...........................................      23

         Section 6.3       Decisions Requiring Unanimous Member Consent...................................      23

         Section 6.4       Consents of the Class A Member.................................................      28

         Section 6.5       Duties and Obligations of the Managing Member..................................      28

         Section 6.6       Compensation and Expenses......................................................      32

         Section 6.7       Demand on El Paso Loans Held by Mesquite or Mesquite's Subsidiaries............      32

         Section 6.8       Execution of other Transaction Documents; Matters Relating to Mesquite
                           and the Overfund Trust.........................................................      32

         Section 6.9       Determination of Interest Rate on El Paso Loans................................      33

         Section 6.10      Additional Financing Costs; New Administrative Expenses........................      33

         Section 6.11      Certain Assets.................................................................      34

         Section 6.12      Covenant of the Managing Member................................................      34
ARTICLE VII           ROLE OF NON-MANAGING MEMBERS........................................................      34
         Section 7.1       Rights or Powers...............................................................      34

         Section 7.2       Voting Rights..................................................................      35

         Section 7.3       Procedure for Consent..........................................................      35

         Section 7.4       Special Rights of the Class A Member...........................................      35
ARTICLE VIII          ACCOUNTING; BOOKS AND RECORDS.......................................................      35
         Section 8.1       Accounting; Books and Records..................................................      35

         Section 8.2       Reports........................................................................      36

         Section 8.3       Tax Matters....................................................................      39

         Section 8.4       Proprietary Information........................................................      40
ARTICLE IX            AMENDMENTS; MEETINGS................................................................      40
         Section 9.1       Amendments.....................................................................      40

         Section 9.2       Meetings of the Members........................................................      40

         Section 9.3       Unanimous Consent..............................................................      41
ARTICLE X             TRANSFERS OF INTERESTS..............................................................      41
         Section 10.1      Restriction on Dispositions of Interests.......................................      41
</TABLE>

                                      -ii-

<PAGE>

TABLE OF CONTENTS
(continued)

<TABLE>
<CAPTION>
                                                                                                               PAGE
<S>                                                                                                            <C>
         Section 10.2      Prohibited Dispositions........................................................      42
ARTICLE XI            RETIREMENT OPTION; PURCHASE OPTION; EARN-OUT PERIOD.................................      42
         Section 11.1      Class B Member's Retirement Option.............................................      42

         Section 11.2      Class B Member's Purchase Option...............................................      44

         Section 11.3      Asset Remedy...................................................................      46

         Section 11.4      Earn-Out Period................................................................      48
ARTICLE XII           DISSOLUTION AND WINDING UP..........................................................      49
         Section 12.1      Liquidating Events.............................................................      49

         Section 12.2      Winding Up.....................................................................      49

         Section 12.3      No Restoration of Deficit Capital Accounts; Compliance With Timing
                           Requirements of Regulations....................................................      50

         Section 12.4      Deemed Distribution and Recontribution.........................................      51

         Section 12.5      Rights of Members..............................................................      51

         Section 12.6      Notice of Dissolution..........................................................      52

         Section 12.7      Character of Liquidating Distributions.........................................      52

         Section 12.8      The Liquidator.................................................................      52

         Section 12.9      Form of Liquidating Distributions..............................................      52

         Section 12.10     Liquidation Notice.............................................................      53
ARTICLE XIII          MISCELLANEOUS.......................................................................      54
         Section 13.1      Amendments.....................................................................      54

         Section 13.2      Notices........................................................................      54

         Section 13.3      No Waiver; Cumulative Remedies.................................................      54

         Section 13.4      Waiver of Jury Trial...........................................................      54

         Section 13.5      Counterparts...................................................................      55

         Section 13.6      Survival of Representations, Warranties and Indemnities: Entire Agreement......      55

         Section 13.7      Severability...................................................................      55

         Section 13.8      Construction...................................................................      55

         Section 13.9      Determination of Capital Accounts..............................................      55

         Section 13.10     Governing Law..................................................................      55

         Section 13.11     Waiver of Action for Partition.................................................      56
</TABLE>

                                     -iii-
<PAGE>

TABLE OF CONTENTS
(continued)

<TABLE>
<CAPTION>
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<S>                                                                                                            <C>
         Section 13.12     Consent to Jurisdiction........................................................      56

         Section 13.13     Specific Performance...........................................................      56

         Section 13.14     Limitation of Liability........................................................      56

         Section 13.15     Consent to Collateral Assignment by Class A Member; Rights of Action...........      56

         Section 13.16     Effectiveness..................................................................      57
</TABLE>

                                      -iv-

<PAGE>

                                      ANNEX

Annex A:                 Definitions

                                   SCHEDULES

Schedule 3.2(a)          Members and Capital Accounts
Schedule 3.2(b)          Existing Assets and Specified New Assets
Schedule 6.3(f)          Budget Parameters
Schedule 13.2            Notice Information

                                    EXHIBITS

Exhibit A:               Form of Membership Interest
Exhibit B:               Form of El Paso Note
Exhibit C:               Form of Contingent Debt Instrument
Exhibit D:               Form of Confidentiality Agreement

                                      -i-

<PAGE>

                           FIFTH AMENDED AND RESTATED

                       LIMITED LIABILITY COMPANY AGREEMENT

                                       OF

                           CHAPARRAL INVESTORS, L.L.C.

      FIFTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this
"CHAPARRAL LLC AGREEMENT") of Chaparral Investors, L.L.C. ("CHAPARRAL"), dated
as of April 12, 2002, among Chaparral, El Paso Chaparral Investor, L.L.C., a
Delaware limited liability company ("EL PASO CHAPARRAL"), El Paso Chaparral
Holding II Company, a Delaware corporation ("EL PASO CHAPARRAL HOLDING II") and
Limestone Electron Trust, a Delaware business trust ("LIMESTONE").

                             PRELIMINARY STATEMENTS

      Chaparral was formed as a limited liability company under and pursuant to
the provisions of the LLC Act (as hereinafter defined), with El Paso Chaparral
as the initial member of Chaparral, pursuant to the filing of the Chaparral
Certificate of Formation on July 28, 1999, and the execution of the Limited
Liability Company Agreement of Chaparral Investors, L.L.C. dated as of July 28,
1999 (the "ORIGINAL LLC AGREEMENT"). On August 12, 1999, El Paso Chaparral and
Chaparral entered into the First Amended and Restated Limited Liability Company
Agreement (the "FIRST AMENDED AND RESTATED LLC AGREEMENT") amending, restating
and superseding the Original LLC Agreement. On August 12, 1999, El Paso
Chaparral and Limestone Investors, L.L.C., a Delaware limited liability company
("LIMESTONE INVESTORS") entered into that certain Purchase Agreement (the
"LIMESTONE INVESTORS PURCHASE AGREEMENT") pursuant to which Limestone Investors
agreed to purchase El Paso Chaparral's Class A Member Interest subject to the
execution of the Second Amended and Restated Limited Liability Company Agreement
of Chaparral dated August 19, 1999 (the "SECOND AMENDED AND RESTATED LLC
AGREEMENT"). Simultaneously with the execution of the Second Amended and
Restated LLC Agreement and the consummation of the transactions contemplated by
the Limestone Investors Purchase Agreement, Limestone Investors was admitted to
Chaparral as a Class A Member of Chaparral, and El Paso Chaparral withdrew as a
Class A Member of Chaparral. On September 28, 1999, Chaparral, El Paso Chaparral
and Limestone Investors entered into the First Amendment to the Second Amended
and Restated LLC Agreement. On December 22, 1999, Chaparral, El Paso Chaparral,
Limestone Investors and El Paso Chaparral Holding II entered into a Second
Amendment to the Second Amended and Restated LLC Agreement, pursuant to which El
Paso Chaparral Holding II was admitted to Chaparral as a Class B Member.
Pursuant to an Assignment and Assumption Agreement dated as of December 28, 1999
(the "ASSIGNMENT AND ASSUMPTION AGREEMENT"), and in accordance with the timing
set forth in the Third Amended and Restated Limited Liability Company Agreement
of Chaparral dated as of December 28, 1999 (the "THIRD AMENDED AND RESTATED LLC
AGREEMENT"), Limestone acquired from Limestone Investors all of Limestone
Investors' right, title and interest in its Class A Member Interest and assumed
the debt of Limestone Investors specified therein, subject to the execution of
the Third Amended and Restated LLC Agreement. Simultaneously with the execution
of the Third Amended and Restated LLC Agreement, (i) Limestone was admitted to
Chaparral as the sole

               Fifth Amended and Restated Chaparral LLC Agreement

<PAGE>

                                                         Chaparral LLC Agreement

Class A Member of Chaparral and (ii) Limestone Investors withdrew as a Class A
Member of Chaparral. Simultaneously with the execution of the Fourth Amended and
Restated Limited Liability Company Agreement of Chaparral dated as of March 27,
2000, (the "FOURTH AMENDED AND RESTATED LLC AGREEMENT"), (i) Limestone made an
additional capital contribution in the amount of $1,027,250,000 to Chaparral to
increase its Capital Account attributable to its Class A Member Interest, (ii)
pursuant to a demand by Chaparral, El Paso repaid $61,600,509.17 of principal
and $1,200,716.02 of accrued interest on the Existing El Paso Demand Note
leaving an unpaid principal balance of $11,149,490.83 on the Existing El Paso
Demand Note and El Paso amended and restated such Existing El Paso Demand Note
and delivered such amended and restated note (the "AMENDED EL PASO/CHAPARRAL
NOTE") to Chaparral, and (iii) Chaparral (a) made a demand on the Existing El
Paso Demand Note as described in the preceding clause (ii), (b) paid to
Limestone an amount equal to $1,200,716.02, representing all priority return
accrued on the Class A Member Interest through March 27, 2000, (c) paid certain
fees and expenses in connection with the offering and sale of the Initial Notes
and the Subsequent Certificates in accordance with the Participation Agreement
and the Note Purchase Agreement in an aggregate amount of approximately
$14,177,430.00, (d) contributed approximately $796,013,202.43 of cash to
Mesquite thereby increasing the value of its investment represented by the
Mesquite LLC Interest, (e) upon receipt of the Amended El Paso/Chaparral Note,
returned the Existing El Paso Demand Note to El Paso for cancellation and (f)
contributed the Overfund Amount to El Paso Electron Overfund Trust, a Delaware
statutory business trust (the "OVERFUND TRUST"), in further consideration for
the sole beneficial ownership interest in the Overfund Trust.

      The parties hereto have agreed to enter into this Chaparral LLC Agreement
to further amend and restate the Fourth Amended and Restated LLC Agreement
effective on and as of the Effective Date in accordance with Section 13.16.

                                   ARTICLE I

                     FORMATION AND CONTINUATION OF CHAPARRAL

      Section 1.1 Formation and Continuation of Chaparral. Chaparral was formed
as a limited liability company under the LLC Act by the filing of the Chaparral
Certificate of Formation (as defined below) on July 28, 1999, with the Office of
the Secretary of State. The parties hereto agree to continue Chaparral as a
limited liability company. The Members agree that the Fourth Amended and
Restated LLC Agreement is hereby further amended and restated in its entirety as
set forth in, and is hereby superseded in its entirety by, this Chaparral LLC
Agreement effective as of the Effective Date.

      Section 1.2 Name. The name of Chaparral shall continue to be "Chaparral
Investors, L.L.C.", and all business of Chaparral shall continue to be conducted
in such name or, in the discretion of the Managing Member, under any other name;
provided, however, that (a) in no event shall the name of Chaparral include (i)
the name of the Class A Member, (ii) to the extent that the Managing Member
shall have actual knowledge thereof, the name of any Affiliate of the Class A
Member, (iii) the name of any Certificateholder or, to the extent that the
Managing Member shall have actual knowledge thereof, the name of any
Certificateholder Related Person,

                                       2

               Fifth Amended and Restated Chaparral LLC Agreement

<PAGE>

                                                         Chaparral LLC Agreement

or (iv) any abbreviation of any name described in clause (i), (ii) or (iii), and
(b) the Managing Member may change the name of Chaparral only upon executing and
filing an amendment to the Chaparral Certificate of Formation.

      Section 1.3 Business of Chaparral. The purposes of Chaparral are limited
to (i) engaging in the business of owning investments in Chaparral Permitted
Assets, managing, protecting and conserving such investments in Chaparral
Permitted Assets, and making additional investments in Chaparral Permitted
Assets, (ii) entering into, and performing its obligations under and
consummating the transactions contemplated by, the Chaparral Documents, (iii)
holding the sole beneficial interest in the Overfund Trust, (iv) engaging in
such additional business endeavors as are permitted under this Chaparral LLC
Agreement and (v) engaging in activities related or incidental to the foregoing.
Chaparral, and the Managing Member on behalf of Chaparral, may enter into and
perform the Chaparral Documents and, subject to Sections 6.3 and 7.4, all
documents, agreements, certificates and financing statements contemplated
thereby or related thereto, all without further act, vote or approval of any
Person. The authorization set forth in the preceding sentence shall not be
deemed a restriction on the power and authority of the Managing Member to enter
into other agreements or documents on behalf of Chaparral in accordance with the
terms of this Chaparral LLC Agreement and the other Chaparral Documents, and the
Managing Member is hereby directed by the Members to enter into on behalf of
Chaparral, the Chaparral Documents to which Chaparral is or is to be a party and
which have not been previously entered into by or on behalf of Chaparral.
Chaparral shall have the power to do any and all acts necessary, appropriate,
proper, advisable, incidental or convenient to or in furtherance of the purposes
of Chaparral set forth in this Section 1.3 and shall have, without limitation,
any and all powers that may be exercised on behalf of Chaparral by the Managing
Member pursuant to Article VI.

      Section 1.4 Location of Principal Place of Business; Registered Office.
The principal place of business of Chaparral shall be at c/o Wilmington Trust
Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001, Attention: Corporate Trust Administration. The registered office of
Chaparral in the State of Delaware is located at c/o Wilmington Trust Company,
1100 North Market Street, Wilmington, New Castle County, Delaware 19890.

      Section 1.5 Filings; Registered Agent.

      (a) Filings. The Managing Member shall take any and all other actions
necessary to perfect and maintain the status of Chaparral as a limited liability
company under the laws of the State of Delaware, including the preparation,
execution and filing of amendments to the Chaparral Certificate of Formation and
such other certificates, documents and instruments as may be required by law. In
addition, the Managing Member in its sole discretion may register or qualify
Chaparral as a limited liability company in any other jurisdiction in the United
States, including each other jurisdiction in which registration or qualification
is necessary or appropriate because the properties or activities of Chaparral
are located in that jurisdiction; provided, however, that (i) the Managing
Member shall notify the Class A Member if, following reasonable investigation,
the Managing Member knows or reasonably should know that, solely as a result of
Chaparral doing business in any other such jurisdiction, the Class A Member or
any Certificateholder Related Person would be required under the laws of such
jurisdiction to qualify

                                       3

               Fifth Amended and Restated Chaparral LLC Agreement

<PAGE>

                                                         Chaparral LLC Agreement

to do business in such jurisdiction and (ii) Chaparral shall not conduct
business in any jurisdiction other than the State of Delaware wherein the
conduct by Chaparral of business in such jurisdiction would reasonably be
expected to subject the Class A Member or any Certificateholder Related Person
to any penalty, liability or cost except to the extent that (x) such penalty,
liability or cost results from the activities of the Class A Member or any
Certificateholder Related Person in such jurisdiction (other than those
activities in connection with the transactions contemplated hereby) or (y) the
Class A Member or any Certificateholder Related Person is indemnified (or would
have been indemnified if it had complied with the provisions of the Transaction
Documents applicable to it) for such penalty, liability or cost under Section
3.4(f) or under any other provision under this Chaparral LLC Agreement or any
other Transaction Document and such penalty, liability or cost is not a criminal
penalty or liability.

      (b) Delivery of Certificates, etc. in Connection With Qualification of
Chaparral. At the request of the Managing Member, each Member shall execute,
acknowledge, swear to and deliver all certificates and other instruments
conforming with this Chaparral LLC Agreement that are necessary or appropriate
to form, qualify, continue and terminate Chaparral as a limited liability
company under the laws of the State of Delaware and to qualify, continue and
terminate Chaparral as a foreign limited liability company in all other
jurisdictions in which Chaparral may so qualify, all to the extent contemplated
and required by this Chaparral LLC Agreement.

      (c) Registered Agent. The registered agent for service of process on
Chaparral in the State of Delaware shall be Wilmington Trust Company, 1100 North
Market Street, Wilmington, New Castle County, Delaware 19890 or any successor as
appointed by the Managing Member in accordance with the LLC Act.

      (d) Dissolution. Upon the dissolution and completion of the winding up and
liquidation of Chaparral, the Liquidator, as an authorized person within the
meaning of the LLC Act, shall promptly execute and cause to be filed statements
of intent to dissolve and certificates of cancellation in accordance with the
LLC Act and the laws of any other states or jurisdictions in which the
Liquidator deems such filing necessary or advisable.

      Section 1.6 Term. The term of Chaparral commenced on the date the
certificate of formation described in Section 18-201 of the LLC Act (as amended
from time to time, the "CHAPARRAL CERTIFICATE OF FORMATION") was filed in the
office of the Secretary of State of the State of Delaware in accordance with the
LLC Act and shall continue until the winding up and liquidation of Chaparral and
the completion of its business following a Liquidating Event as provided in
Article XII.

      Section 1.7 Title to Chaparral Property. All Chaparral Property shall be
owned by Chaparral as an entity, and no Member shall have any ownership interest
in such property in its individual name or right. Each Member's interest in
Chaparral shall be personal property for all purposes. Chaparral shall hold all
of its property in the name of Chaparral and not in the name of any Member.

      Section 1.8 Payments of Individual Obligations. Chaparral's credit and
assets shall be used solely for the benefit of Chaparral, and no asset of
Chaparral shall be transferred or encumbered for or in payment of any individual
obligation of any Member.

                                       4

               Fifth Amended and Restated Chaparral LLC Agreement

<PAGE>

                                                         Chaparral LLC Agreement

                                   ARTICLE II

                                   DEFINITIONS

      Section 2.1 Definitions. Unless otherwise defined herein or the context
otherwise requires, capitalized terms used in this Chaparral LLC Agreement
(including the Preliminary Statements and the Schedules and Exhibits hereto)
shall have the meanings set forth in Section 1.01 of Annex A hereto.

      Section 2.2 Rules of Construction. This Chaparral LLC Agreement and the
definitions referred to in Section 2.1 shall be governed by, and construed in
accordance with, the rules of construction set forth in Section 1.02 of Annex A
hereto.

                                  ARTICLE III

        INTERESTS; MEMBERS; CAPITAL CONTRIBUTIONS; ADDITIONAL AGREEMENTS

      Section 3.1 Interests. There shall be two classes of Interests: a Class A
Member Interest and a Class B Member Interest. Certificates in the form attached
as Exhibit A hereto (each, a "CERTIFICATE OF INTEREST") shall be issued to each
Class A Member and Class B Member to evidence their respective Interests herein.
Each of the parties hereto hereby acknowledges and agrees that the Interests
shall constitute "securities" governed by Article 8 of the Uniform Commercial
Code as in effect in any applicable jurisdiction. The holder of the Class A
Member Interest shall have all of the rights and obligations provided to the
Class A Member under this Chaparral LLC Agreement, and the holders of the Class
B Member Interests shall have all of the rights and obligations provided to the
Class B Members under this Chaparral LLC Agreement; provided, that if any
Additional Class B Member Interest is held by the Class A Member, the Class A
Member shall not with respect to such Additional Class B Member Interest, except
as specifically provided herein, be subject to or bound by any terms of this
Chaparral LLC Agreement which are applicable to a Class B Member.

      Section 3.2 Class A Member and Class B Members.

      (a) Class A Member. On and as of the Closing Date, Limestone, as Class A
Member, made a Capital Contribution to Chaparral in Cash in the amount of
$1,027,250,000. On and as of the Closing Date and after giving effect to the
Capital Contribution referred to in the preceding sentence, the Distribution to
the Class A Member described in the first sentence of Section 5.1(a) and the
other transactions described in the Preliminary Statements hereto, but without
giving effect to any allocations of Net Income and Net Losses or any items of
Chaparral income, gain, loss or deduction for the period commencing on January
1, 2000 and ending on the Closing Date, the name and address of the Class A
Member and the Capital Account balance of the Class A Member was reflected in
the books and records of Chaparral as set forth in Schedule 3.2(a) hereto, and
the Managing Member executed on behalf of Chaparral a Certificate of Interest in
the name of the Class A Member representing its Class A Member Interest.

                                       5

               Fifth Amended and Restated Chaparral LLC Agreement

<PAGE>

                                                         Chaparral LLC Agreement

      (b) Class B Members. (i) Prior to the Closing Date, the Primary Class B
Member made a Capital Contribution to Chaparral of the Existing Assets
identified as contributions on Schedule 3.2(b) hereto and Chaparral contributed
all of the Existing Assets to Mesquite. The names and addresses of the Class B
Members and the respective approximate Capital Account balances of the Class B
Members on and as of the Closing Date and after giving effect to the
transactions referred to in the Preliminary Statements hereto, but without
giving effect to any allocation of Net Income and Net Losses or any items of
Chaparral income, gain, loss or deduction for the period commencing on January
1, 2000 and ending on the Closing Date, was reflected in the books and records
of Chaparral as set forth in Schedule 3.2(a) hereto, and the Managing Member
executed on behalf of Chaparral a Certificate of Interest in the name of each
Class B Member representing its Class B Member Interest.

            (ii) Each Class B Member (including the Class A Member as holder of
any Additional Class B Member Interest) other than the Primary Class B Member
hereby designates and appoints the Primary Class B Member as its
attorney-in-fact, in its name and stead, to give or withhold all consents and
approvals that such Class B Member shall be entitled to give or withhold, and to
exercise all other voting rights and other rights, and take all other actions,
that such Class B Member is entitled to exercise or take, pursuant to the
provisions of this Chaparral LLC Agreement (including, without limitation,
Section 7.3 and Article IX), until such time as such designation and appointment
is revoked in writing by notice to all other Members, and this Section
3.2(b)(ii) shall be, to the extent required by the LLC Act to give it effect,
construed as a proxy in favor of the Primary Class B Member.

            (iii) Upon the contribution (or deemed contribution) by the holder
of the El Paso Interest of any amount pursuant to Section 3.03 of the Limestone
Trust Agreement, Chaparral shall issue to the Class A Member a Class B Member
Interest (an "ADDITIONAL CLASS B MEMBER INTEREST"), together with a Certificate
of Interest executed by the Managing Member evidencing such Interest, whereupon
the Class A Member shall be admitted to Chaparral as an additional Class B
Member in respect of the Additional Class B Member Interest. Upon the issuance
of such Additional Class B Member Interest and upon any subsequent deemed
Distribution under Section 5.5(b), as applicable, the Capital Account in respect
of such Additional Class B Member Interest shall be credited in an amount equal
to the contribution (or deemed contribution) made by the holder of the El Paso
Interest pursuant to Section 3.03 of the Limestone Trust Agreement.

      (c) Separate Capital Accounts for Class A Member Interest and Class B
Member Interests. If an Additional Class B Member Interest is issued to the
Class A Member pursuant to Section 3.2(b)(iii), the Class A Member's Capital
Account shall be maintained separately for each of its Class A Member Interest
and Additional Class B Member Interest, which shall each be adjusted in
accordance with Article IV, and allocations and Distributions to the Class A
Member shall be deemed to be with respect to its Class A Member Interest and
allocations and Distributions to the Class B Members shall be deemed to be made
with respect to their Class B Member Interests.

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               Fifth Amended and Restated Chaparral LLC Agreement

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                                                         Chaparral LLC Agreement

      Section 3.3 Additional Capital Contributions.

      (a) Capital Contributions by Class B Members. The Class B Members shall be
permitted to make the following additional Capital Contributions to Chaparral
("ADDITIONAL CAPITAL CONTRIBUTIONS"):

            (i)   Capital Contributions of Chaparral Permitted Assets. The
                  Primary Class B Member may contribute from time to time
                  additional Financial Investments and, subject to Sections
                  6.3(b) and 6.3(c), additional Chaparral Permitted Assets.

            (ii)  Capital Contributions with Respect to Additional Financing
                  Costs. If Chaparral is required to make any payment of
                  Additional Financing Costs to the Class A Member, the Primary
                  Class B Member shall make a Capital Contribution to Chaparral,
                  in Cash, in an aggregate amount equal to the aggregate amount
                  of such Additional Financing Costs required to be paid. Such
                  Capital Contributions shall be made to Chaparral within a
                  sufficient time to provide Chaparral with sufficient funds to
                  enable Chaparral to make any payment under Section 6.10 when
                  due.

            (iii) Certain Payments Deemed Capital Contributions. (A) With
                  respect to (x) the proceeds of any remarketing of the Shares
                  received by the Indenture Trustee or Limestone, (y) any
                  payments required to be made by El Paso in connection with a
                  Failed Remarketing, and (z) any Redemption Proceeds received
                  by the Indenture Trustee or Limestone in each case, pursuant
                  to the Remarketing Agreement and Share Trust Agreement, the
                  Primary Class B Member shall be deemed to have made, on the
                  date any such amounts are distributed to Limestone or by the
                  Indenture Trustee to the holders of the Limestone Notes, a
                  Capital Contribution to Chaparral in the amount of such
                  proceeds and payments, and the Primary Class B Member's
                  Capital Account shall be increased by the amount of such
                  deemed Capital Contribution.

                  (B) With respect to any contribution to the Overfund Trust
                  required to be made by El Paso pursuant to Section 3.02(b) of
                  the Overfund Trust Agreement, the Primary Class B Member shall
                  be deemed to have made, on the date any such amounts are
                  distributed by the Indenture Trustee to the holders of the
                  Limestone Notes, a Capital Contribution to Chaparral in the
                  amount of such contribution and the Primary Class B Member's
                  Capital Account shall be increased by the amount of such
                  deemed Capital Contribution.

                  (C) With respect to any New Notes Liquidity Payments or any
                  payment made by the Guarantor pursuant to Section 3.01 of the
                  New Indenture, the Primary Class B Member shall be deemed to
                  have made, on the date such amounts are distributed by the New
                  Indenture Trustee to, or are otherwise received by, the New
                  Noteholders, a Capital Contribution to

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                                                         Chaparral LLC Agreement

                  Chaparral in the amount so distributed or otherwise received,
                  and the Primary Class B Member's Capital Account shall be
                  increased by the amount of such deemed Capital Contribution.

      (b) Capital Contributions by Class A Member. Except as provided in Section
3.2(a) and Section 5.4, the Class A Member shall make no additional Capital
Contributions to Chaparral without the prior written consent of all of the
Members.

      Section 3.4 Additional Agreements Among Members.

      (a) Return of Capital Contributions. Except as otherwise provided in
Article V, Section 11.1, Article XII or in the LLC Act, no Member shall be
entitled to demand or receive a return of its Capital Contributions or withdraw
its capital from Chaparral without the consent of all Members. Under
circumstances requiring a return of any Capital Contributions, no Member shall
have the right to receive property other than Cash except as specifically
provided in this Chaparral LLC Agreement.

      (b) No Interest or Draw. No Member shall receive any interest or draw with
respect to its Capital Contributions or its Capital Account, except as otherwise
provided in this Chaparral LLC Agreement.

      (c) Obligations of Chaparral. No Member (including the Managing Member)
shall be liable for the debts, liabilities, contracts or any other Obligations
of Chaparral. Except as otherwise provided by mandatory provisions of applicable
state law or the provisions of this Article III and except for the obligation of
the Primary Class B Member under Section 3.3(a)(ii), a Member shall not be
required to lend any funds to Chaparral or to make any additional Capital
Contributions to Chaparral. No Member shall have personal liability for the
repayment of any Capital Contributions of the other Members.

      (d) Other Investments. Subject to Section 3.4(e) and subject, in the case
of the Managing Member, to Sections 6.5(d) and 6.5(e), each Member acknowledges
that the other Members and their Affiliates are free to engage or invest in an
unlimited number of activities or businesses, any one or more of which may be
related to the activities or businesses of Chaparral, without having or
incurring any obligation to offer any interest in such activities or businesses
to Chaparral or any Member, and neither this Chaparral LLC Agreement nor any
activity undertaken pursuant to this Chaparral LLC Agreement shall prevent any
Member or its Affiliates from engaging in such activities, or require any Member
to permit Chaparral or any Member or its Affiliates to participate in any such
activities, and as a material part of the consideration for the execution of
this Chaparral LLC Agreement by each Member, each Member hereby waives,
relinquishes, and renounces any such right or claim of participation. Each
Member acknowledges that certain conflicts of interest may thus arise and hereby
agrees that the specific rights with respect to the Members' and their
Affiliates' freedom of action provided in this Section 3.4(d), together with the
other provisions of this Chaparral LLC Agreement, are sufficient to protect
their respective interests in relation to such possible conflicts and are to be
in lieu of all other possible limitations which might otherwise be implied in
fact, in law or in equity.

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               Fifth Amended and Restated Chaparral LLC Agreement

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                                                         Chaparral LLC Agreement

      (e) Future Acquisitions of Non-Utility Generation Assets. Each Class B
Member agrees that (x) so long as no Irrevocable Election and Purchase Option
Notice or Retirement Option Notice shall have been delivered and no Liquidation
Notice shall have been delivered and (y) except during any Replacement Period,
none of the Class B Members, El Paso or any controlled Affiliate of El Paso,
will acquire subsequent to January 1, 2000 any existing Non-Utility Generation
Assets unless the Primary Class B Member, subject to the proviso below and the
last sentence hereof, shall have first used its best, good faith efforts to
cause Chaparral to cause Mesquite to acquire such assets directly or indirectly
through Mesquite's Subsidiaries (subject to the consent rights of the Class A
Member under Section 6.3(b)); provided, that (i) the acquisition of such
Non-Utility Generation Assets is reasonably expected to be accomplished by
Mesquite without requiring any financing, capital contribution, indemnification,
guaranty or other current, future or contingent investment by any Class B Member
or El Paso or any other El Paso Affiliate (other than Mesquite) and (ii) debt
consents, FERC approvals and Governmental Approvals in connection with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other
third party approvals and filings (including without limitation those required
for the acquisition of such Non-Utility Generation Assets by Mesquite and/or its
subsidiaries) can be obtained or made on a commercially reasonable basis and
within a time frame that will not adversely affect the successful, timely
negotiation or consummation of the proposed acquisition and (iii) the Managing
Member, in its reasonable judgment, expects that (A) Mesquite or any other
applicable Project Company will be able to finance such acquisition through the
use of Available Cash of Mesquite and/or Mesquite Permitted Financial
Obligations having commercially reasonable terms and such terms would not cause
a reduction in the Management Fees that El Paso or its affiliates would have
otherwise been able to actually receive on a pro forma basis if such financing
had not occurred and (B) the financing described in clause (A) can be committed
for, arranged and consummated within the time periods necessary to make a
timely, effective and competitive purchase offer to, and fully finance (in a
manner consistent with clause (i) above) the acquisition from, the seller of
such Non-Utility Generation Assets or otherwise as specified by such seller and
(C) the Primary Class B Member does not have any reasonable expectation that the
asset proposed to be acquired may result in a material adverse Chaparral
Extraordinary Liability. Any Class B Member (or El Paso or any El Paso
Affiliate) may acquire, outside of the structure comprised of Chaparral and its
Subsidiaries, any Non-Utility Generation Asset if (i) Mesquite is unable to
complete the acquisition in a timely manner, (ii) any of the tests set forth in
this clause (e) are not satisfied or (iii) the Class A Member of Chaparral
declines to consent to the purchase of the asset in circumstances in which such
consent is required pursuant to this Chaparral LLC Agreement.

      (f) Payment of Certain Costs. If the Class A Member, any Certificateholder
or any Certificateholder Related Person incurs any costs with respect to (a) any
legal requirement that requires the Class A Member, any such Certificateholder
or any Certificateholder Related Person to be licensed or qualified to do
business in any jurisdiction solely as a result of the Class A Member holding
the Class A Member Interest or any Additional Class B Member Interest, or such
Certificateholder or Certificateholder Related Person holding its Limestone
Certificate or interest in a Limestone Certificate, as the case may be, or (b)
any legal requirement that requires the Class A Member, any such
Certificateholder or any Certificateholder Related Person to obtain any permits,
licenses or regulatory approvals solely as a result of the Class A Member
holding the Class A Member Interest or any Additional Class B Member Interest,
or such Certificateholder or Certificateholder Related Person holding its
Limestone Certificate or interest

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               Fifth Amended and Restated Chaparral LLC Agreement

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                                                         Chaparral LLC Agreement

in a Limestone Certificate, as the case may be, then the Class A Member, any
such Certificateholder or any Certificateholder Related Person shall provide the
Primary Class B Member with an invoice of such costs setting forth the
calculation of such amounts in reasonable detail. Within five Business Days
after receipt of such invoice, the Primary Class B Member shall pay all such
amounts (other than Taxes) on an After-Tax Basis to the Class A Member for its
own account or for distribution to such Certificateholder or Certificateholder
Related Person, as applicable. Any such payment shall not constitute a
Distribution and shall not affect the Class A Member's Capital Account balance.

      (g) Investment of Certain Proceeds. Upon receipt by Chaparral of the
proceeds of any payment from the Indenture Trustee pursuant to Section 5.04(b)
or 5.04(d) of the Indenture, Chaparral shall invest such proceeds in El Paso
Loans or other Chaparral Permitted Assets (including a capital contribution to
Mesquite), as directed by the Managing Member in its sole discretion.

                                   ARTICLE IV

                      ALLOCATION OF NET INCOME AND NET LOSS

      Section 4.1 Allocation of Net Income and Net Loss. The Members agree to
treat Chaparral as a partnership and the Members as partners thereof for Federal
income tax purposes and shall file all tax returns accordingly. For purposes of
this Article IV, cumulative Net Income and items of income or gain and
cumulative Net Losses and items of deduction or loss shall include all such
items of Net Income and Net Losses and all income, gain, loss and deduction as
were allocated to the respective Members for the period beginning from January
1, 2000 through the end of the relevant Allocation Period. Except as otherwise
provided in this Article IV, Chaparral's Net Income or Net Loss, as the case may
be, and each item of income, gain, loss and deduction entering into the
computation thereof, for each Allocation Period ending prior to the earlier of
(x) the day immediately following the Mark-to-Market Measurement Date and (y)
the commencement of the Earn-Out Period, shall be allocated to the Members as
follows:

            (a) Net Income. Net Income shall be allocated in the following order
      and priority:

            (i)   First, 100% to the Class B Members in an amount equal to the
                  excess, if any, of (i) the cumulative items of deduction or
                  loss allocated to the Class B Members pursuant to Section
                  4.4(a)(i) for the current and all prior Allocation Periods,
                  excluding for this purpose, items of Depreciation attributable
                  to Closing Costs or Additional Financing Costs, to the extent
                  capitalized, over (ii) the cumulative Net Income allocated to
                  the Class B Members pursuant to this Section 4.1(a)(i) for all
                  prior Allocation Periods;

            (ii)  Second, 100% to the Class A Member in an amount equal to the
                  excess, if any, of (i) the cumulative Net Losses and items of
                  deduction or loss allocated to the Class A Member pursuant to
                  Section 4.1(b)(iii) for the current and all prior Allocation
                  Periods, over (ii) the cumulative Net

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                                                         Chaparral LLC Agreement

                  Income allocated to the Class A Member pursuant to this
                  Section 4.1(a)(ii) for all prior Allocation Periods;

            (iii) Third, 100% to the Class B Members in an amount equal to the
                  excess, if any, of (x) the cumulative Net Losses and items of
                  deduction or loss allocated to the Class B Members pursuant to
                  Section 4.1(b)(iv) for the current and all prior Allocation
                  Periods, over (y) the cumulative Net Income allocated to the
                  Class B Members pursuant to this Section 4.1(a)(iii) for all
                  prior Allocation Periods;

            (iv)  Fourth, 80% to the Class A Member and 20% to the Class B
                  Members until the Class A Member's Capital Account Balance is
                  an amount which if distributed with respect to the Limestone
                  Equity PIK Component at the time the allocation is made would
                  produce an IRR of 21% with respect to the Limestone Equity PIK
                  Component; and

            (v)   Fifth, 1% to the Class A Member and 99% to the Class B
                  Members.

      (b) Net Losses. Net Losses shall be allocated in the following order and
priority:

            (i)   First, 1% to the Class A Member and 99% to the Class B Members
                  to the extent of the excess, if any, of (x) the cumulative Net
                  Income and items of income or gain allocated the pursuant to
                  Section 4.1(a)(v) for the current and all prior Allocation
                  Periods, over (y) the cumulative Net Losses allocated pursuant
                  to this Section 4.1(b)(i) for all prior Allocation Periods;

            (ii)  Second, 80% to the Class A Member and 20% to the Class B
                  Members to the extent of the excess, if any, of (x) the
                  cumulative Net Income and items of income or gain allocated
                  the pursuant to Section 4.1(a)(iv) for the current and all
                  prior Allocation Periods, over (y) the cumulative Net Losses
                  allocated pursuant to this Section 4.1(b)(ii) for all prior
                  Allocation Periods;

            (iii) Third, 100% to the Class A Member until the Class A Member's
                  Capital Account equals the aggregate outstanding principal
                  amount and accrued and unpaid interest on the Limestone Notes
                  and the New Limestone Notes; and

            (iv)  Fourth, 100% to the Class B Members.

      Section 4.2 Allocations During and After Earn-Out Period. For each
Allocation Period during the Earn-Out Period, Sections 4.1, 4.4(a)(iii) and 4.5
shall not apply, and

      (a) All items of Gross Income shall be allocated:

            (i) First, 100% to the Class A Member until the amount allocated
pursuant to this Section 4.2(a)(i) is equal to the excess, if any, of (x) the
cumulative Net Losses and items of deduction allocated to the Class A Member
pursuant to Section 4.1(b) over (y) the cumulative

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                                                         Chaparral LLC Agreement

Net Income and items of income or gain allocated to the Class A Member pursuant
to Section 4.1(a) in each case for all Allocation Periods ending before the
commencement of the Earn-Out Period; and

            (i)   Second, 100% to the Class B Members.

      (b) All Net Losses, computed after taking into account the allocations
made pursuant to Section 4.2(a), shall be allocated to the Class B Members.

      (c) If no Liquidating Event shall have occurred, then on and after the
Earn-Out Period Termination Date, all items of Gross Income, deduction and loss
shall be allocated to the Class B Members except as provided pursuant to the
Regulatory Allocations.

      Section 4.3 Allocations Following Mark-to-Market. During the period
commencing on the day immediately after the Mark-to-Market Measurement Date, all
allocations of Net Income, Gross Income, Net Losses and other items of income,
loss, deduction, gain or credit shall be allocated 100% to the Class B Members.

      Section 4.4 Special Tax Allocations.

      (a) Depreciation, Interest, Restructuring Losses and Items Relating to
Extraordinary Expenditures.

            (i) All items of loss and deduction attributable to Depreciation,
      Restructurings, and interest expense that are realized by Chaparral in any
      Allocation Period shall be allocated 100% to the Class B Members in such
      Allocation Period.

            (ii) Items of deduction in an amount equal to Extraordinary
      Expenditures incurred in any Allocation Period shall be allocated 100% to
      the Class B Members.

            (iii) Items of Gross Income in an amount equal to the Extraordinary
      Expenditure Recoveries realized in any Allocation Period shall be
      allocated 100% to the Class B Members in such Allocation Period.

In applying this Section 4.4(a), the amounts to be allocated shall be the
component items of income, gain, loss and deduction that constitute Chaparral's
distributive share of income, gain, loss and deduction from any Project Company,
or any Qualified Energy Assets even if such component items are not required to
be separately stated.

      (b) Minimum Gain Chargeback/Member Minimum Gain Chargeback. If there is a
net decrease in "partnership minimum gain" (within the meaning of Regulation
Section 1.704-2(d)) for an Allocation Period with respect to Chaparral, then
there shall be allocated to each Member items of income and gain of Chaparral
for that Allocation Period (and if necessary subsequent Allocation Periods)
equal to that Member's share of the net decrease in partnership minimum gain
(within the meaning of Regulation Section 1.704-2(g)(2)), subject to the
exceptions set forth in Regulation Section 1.704-2(f)(2) and (3), and to any
exceptions provided by the Commissioner of the Internal Revenue Service pursuant
to Regulation Section 1.704-2(f)(5), provided, that if Chaparral has any
discretion as to an exception provided pursuant to Regulation Section
1.704-2(f)(5), the Tax

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               Fifth Amended and Restated Chaparral LLC Agreement

<PAGE>

                                                         Chaparral LLC Agreement

Matters Partner may exercise reasonable discretion on behalf of Chaparral, which
discretion shall be exercised in good faith so as not to prejudice the interests
of any Member. The foregoing is intended to be a "minimum gain chargeback"
provision as described in Regulation Section 1.704-2(f) and shall be interpreted
and applied in all respects in accordance with that Regulation.

      If during an Allocation Period there is a net decrease in "partner
nonrecourse debt minimum gain" (as determined in accordance with Regulation
Section 1.704-2(i)(3)) with respect to Chaparral, then, in addition to the
amounts, if any, allocated pursuant to the preceding paragraph, any Member with
a share of that partner nonrecourse debt minimum gain (determined in accordance
with Regulation Section 1.704-2(i)(5)) as of the beginning of the Allocation
Period shall, subject to the exceptions set forth in Regulation Section
1.704-2(i)(4), be allocated items of income and gain of such Allocation Period
for the Allocation Period (and, if necessary, for subsequent Allocation Periods)
equal to that Member's share of the net decrease in the partner nonrecourse
minimum gain. The foregoing is intended to be the "chargeback of partner
nonrecourse debt minimum gain" required by Regulation Section 1.704-2(i)(4) and
shall be interpreted and applied in all respects in accordance with that
Regulation.

      (c) Qualified Income Offset. If during any Allocation Period a Member
unexpectedly receives any adjustment, allocation or distribution described in
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), which causes or
increases a deficit balance in such Member's Adjusted Capital Account, there
shall be allocated to such Member items of income and gain (consisting of a pro
rata portion of each item of income, including gross income, and gain of
Chaparral for such Allocation Period) in an amount and manner sufficient to
eliminate such deficit as quickly as possible provided that an allocation
pursuant to this Section 4.4(c) shall be made only if and to the extent that the
Class A Member would have a deficit balance in its Adjusted Capital Account
after all other allocations provided for in this Article IV have been
tentatively made as if this Section 4.4(c) were not in the Chaparral LLC
Agreement. The foregoing is intended to be a "qualified income offset" provision
as described in Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
and applied in all respects in accordance with that Regulation.

      (d) Gross Income Allocation.

            (i) In any Allocation Period ending prior to the beginning of any
      Applicable Termination Period, Gross Income equal to the excess, if any,
      of (x) the amount of the Class A Member's Cumulative Priority Return, as
      of the end of such Allocation Period, over (y) amounts previously
      allocated pursuant to this Section 4.4(d)(i), shall be allocated to the
      Class A Member;

            (ii) In the event that the Class A Member has a deficit balance in
      its Adjusted Capital Account at the end of any Allocation Period, the
      Class A Member shall be allocated items of income and gain in the amount
      of such deficit as quickly as possible; provided that an allocation
      pursuant to this Section 4.4(d)(ii) shall be made only if and to the
      extent that the Class A Member would have a deficit balance in its
      Adjusted Capital Account after all other allocations provided for in this
      Article IV have been tentatively made as if Section 4.4(c) and this
      Section 4.4(d)(ii) were not in the Chaparral LLC Agreement.

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               Fifth Amended and Restated Chaparral LLC Agreement

<PAGE>

                                                         Chaparral LLC Agreement

      (e) Member Nonrecourse Deductions. Notwithstanding anything to the
contrary in this Article IV, losses, deductions, or expenditures subject to Code
Section 705(a)(2)(B) that are attributable to a particular partner nonrecourse
liability shall be allocated to the Member that bears the economic risk of loss
for the liability in accordance with the rules of Regulation Section 1.704-2(i).

      (f) Nonrecourse Deductions. Nonrecourse deductions, within the meaning of
Regulation Sections 1.704-2(b)(1) and 1.704-2(c) shall be allocated 100% to the
Class B Members.

      (g) Section 754 Adjustments. To the extent Capital Accounts are required
under Code Section 734(b), including by reason of Regulation Section
1.704-1(b)(2)(iv)(m)(2) or (4), to reflect the adjustment to the adjusted tax
basis of an asset as a result of the distribution to the Class A Member in
complete liquidation of the Class A Member Interest, the amount of such
adjustment shall be treated as an item of gain (if the adjustment is an
increase) or loss (if the adjustment is a decrease) that is allocated to the
Members in accordance with their interests pursuant to Regulation Section
1.704-1(b)(2)(iv)(m)(2) or to the member to whom such distribution was made
pursuant to Regulation Section 1.704-1(b)(2)(iv)(m)(4) as applicable.

      (h) Allocations Relating to Taxable Issuance of Membership Interests or
Contingent Debt Instrument. Any income, gain, loss or deduction realized as a
direct or indirect result of (x) the issuance of an interest by Chaparral to a
Member, other than pursuant to Code Section 707(a)(2) ("ISSUANCE ITEMS") or (y)
the income tax treatment of any Contingent Debt Instrument other than as a debt
instrument subject to Regulation Section 1.1275-4(b) ("MODIFIED ITEMS") shall be
allocated among the members and other such allocations to be made under this
Chaparral LLC Agreement shall be adjusted so that, to the extent possible, the
net amount of such Issuance Items and Modified Items, together with all other
allocations under this Chaparral LLC Agreement to the Class A Member, shall be
equal to the net amount that would have been allocated to such Member if the
Issuance Items and Modified Items had not been realized.

      (i) Additional Financing Costs. Any Additional Financing Costs paid by
Chaparral for any Allocation Period shall be allocated 100% to the Class B
Members.

      (j) Allocations Relating to Purchase Option. Notwithstanding any other
provision of this Article IV, if the Class A Member Interest is purchased
pursuant to Section 11.2, items of income, gain, loss, deduction, and expense of
the year of purchase shall be allocated as necessary to cause the Class A
Member's Capital Account (after all adjustments hereunder) to equal the amount
payable under Section 11.2.

      Section 4.5 Curative Allocations. The allocations set forth in Sections
4.4(b), 4.4(c), 4.4(d)(ii), 4.4(e), 4.4(f), and 4.4(g) (the "REGULATORY
ALLOCATIONS") are intended to comply with certain requirements of the
Regulations. It is the intent of the Members that, to the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory Allocations
or with allocations of other items of income, gain, loss or deduction of
Chaparral pursuant to this Section 4.5. Therefore, notwithstanding any other
provision of this Article IV (other than the Regulatory Allocations), the
Managing Member shall make such offsetting allocations of income, gain, loss or
deduction of Chaparral in whatever manner it determines appropriate so that,
after such offsetting allocations are made, each Member's Capital Account
balance is, to the

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               Fifth Amended and Restated Chaparral LLC Agreement

<PAGE>

                                                         Chaparral LLC Agreement

extent possible, equal to the Capital Account balance such Member would have had
if the Regulatory Allocations were not part of the Chaparral LLC Agreement and
all items of Chaparral were allocated pursuant to this Article IV without regard
to the Regulatory Allocations. In exercising its discretion under this Section
4.5, the Managing Member shall take into account future Regulatory Allocations
under Section 4.4(c) that, although not yet made, are likely to offset other
Regulatory Allocations previously made under Sections 4.4(e) and 4.4(f).

      Section 4.6 Loss Limitation. The Net Losses allocated pursuant to Section
4.1(b) and Section 4.3 and the items of loss or deduction allocated pursuant to
Sections 4.3, 4.4, and 4.5 to the Class A Member shall not exceed the maximum
amount of Net Losses and items of loss or deduction that can be so allocated
without causing the Class A Member to have a deficit balance in its Adjusted
Capital Account at the end of any Allocation Period. All Net Losses and items of
loss or deduction in excess of the limitation set forth in this Section 4.6
shall be allocated to the Class B Members.

      Section 4.7 Other Allocation Rules. (a) Net Income, Net Losses and any
other items of income, gain, loss or deduction shall be allocated to the Members
pursuant to this Article IV as of the last day of each Allocation Period;
provided that Net Income, Net Losses and such other items shall also be
allocated at such other times as the Gross Asset Values of Chaparral Property
are adjusted pursuant to clause (ii) of the definition of Gross Asset Value.

      (b) The Members hereby agree to be bound by the provisions of this Article
IV in reporting their shares of Chaparral income and loss for income tax
purposes, except to the extent otherwise required by law. Notwithstanding any
requirements of law, the Members agree, for purposes of maintaining their
Capital Accounts, to be bound by the allocations contained in this Article IV,
notwithstanding any allocations for income tax purposes.

      (c) Solely for purposes of determining the Members' proportionate share of
the "excess non recourse liabilities" of Chaparral within the meaning of
Regulation Section 1.752-3(a)(3), the Members' interests in profits of Chaparral
are as follows: 0% to the Class A Member and 100% to the Class B Members.

      (d) To the extent permitted by Regulation Section 1.704-2(h)(3), the
Managing Member shall endeavor to treat distributions of Cash as having been
made from the proceeds of a nonrecourse liability (within the meaning of
Regulation Section 1.704-2(b)(3)) only to the extent that such distributions
would cause or increase any deficit balance of the Class A Member's Adjusted
Capital Account.

      Section 4.8 Tax Allocations; Code Section 704(c). In accordance with Code
Section 704(c) and the applicable Regulations thereunder, income, gain, loss,
and deduction with respect to any property contributed to Chaparral shall,
solely for tax purposes, be allocated among the Members so as to take account of
any variation between the adjusted basis of such property to Chaparral for
federal income tax purposes and its Initial Gross Asset Value.

      In the event the Gross Asset Value of any asset of Chaparral is adjusted
pursuant to clause (ii) or (iv) of the definition of Gross Asset Value,
subsequent allocations of income, gain, loss, and deduction with respect to such
asset shall take account of any variation between the

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               Fifth Amended and Restated Chaparral LLC Agreement

<PAGE>

                                                         Chaparral LLC Agreement

adjusted basis of such asset for federal income tax purposes and its Gross Asset
Value in the same manner as under Code Section 704(c) and the applicable
Regulations thereunder.

      Any elections or other decisions relating to such allocations shall be
made by the Managing Member in any manner that reasonably reflects the purpose
and intention of this Chaparral LLC Agreement, provided that Chaparral shall
elect to apply any allocation method permitted by the Regulations under Code
Section 704(c). In furtherance of the foregoing, Chaparral shall use any
reasonable method, in the discretion of the Managing Member, such that the
amount of such tax items allocable to the Class A Member hereunder for any
Allocation Period equal in the aggregate to the amount of book deductions
allocable to the Class A Member hereunder for such Allocation Period.
Allocations pursuant to this Section 4.8 are solely for purposes of federal,
state, and local taxes and shall not affect, or in any way be taken into account
in computing, any Member's Capital Account or share of Net Income, Net Losses,
other items, or distributions pursuant to any provision of this Chaparral LLC
Agreement.

      Except as otherwise provided in this Chaparral LLC Agreement, for Federal
state and local income tax purposes, all items of income, gain, loss, deduction,
and any other allocations not otherwise provided for shall be allocated to the
Members in the same manner as its correlative item of "book" income, gain, loss
or deduction is allocated pursuant to Sections 4.1, 4.2 and 4.4.

      To the extent that allocations made pursuant to this Article IV for any
Allocation Period ending prior to the commencement of the Earn-Out Period, if
any, include the allocation of an item of income or gain that is recaptured as
ordinary income under Code SectionSection 1245, 1250 and 1254 and that is
attributable to deductions TAken prior to the Closing Date, such ordinary income
shall be allocated to the Member to whom the deduction was allocated.

      Section 4.9 Order of Allocations. All allocations made pursuant to this
Article IV shall be made in the following order:

                  (i)      Section 4.2;
                  (ii)     Section 4.4(a);
                  (iii)    Section 4.4(b);
                  (iv)     Section 4.4(c);
                  (v)      Section 4.4(d);
                  (vi)     Section 4.4(e);
                  (vii)    Section 4.4(f);
                  (viii)   Section 4.4(h);
                  (ix)     Section 4.4(i);
                  (x)      Section 4.4(j); and
                  (xi)     Section 4.1.

Such provisions shall be applied as if all distributions and allocations were
made at the end of the applicable Allocation Period. Where any provision depends
on the balance of a Capital Account of any Member, that Capital Account shall be
determined after the operation of all preceding provisions for the applicable
Allocation Period. These allocations shall be made consistently with the
requirements of Regulation Section 1.704-2(j).

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               Fifth Amended and Restated Chaparral LLC Agreement

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                                                         Chaparral LLC Agreement

                                   ARTICLE V

                           DISTRIBUTIONS; WITHDRAWALS

      Section 5.1 Distributions.

      (a) Class A Member's Cumulative Priority Return. On the Closing Date,
Chaparral Distributed to the Class A Member an amount equal to $1,200,716.02,
representing all priority return accrued on the Class A Member Interest through
March 27, 2000 and the Class A Member's Capital Account was reduced by such
amount. Except as otherwise provided in Article XII, on or before 11:00 a.m.
(New York City time) on each Distribution Date occurring prior to the Earn-Out
Period Commencement Date, Available Cash of Chaparral shall be distributed 100%
to the Class A Member, until the Class A Member receives an amount equal to the
excess, if any, of (i) the Class A Member's Cumulative Priority Return without
regard to clause (b)(iv) of the definition of Class A Member's Priority Return
as of such Distribution Date, over (ii) all prior distributions to the Class A
Member pursuant to this Section 5.1(a).

      (b) Earn-out Period.

            (i) On each Earn-Out Distribution Date, all Available Cash of
      Chaparral (after provision for the payments required by clause (d) below)
      shall be distributed to the Class A Member until the Capital Account of
      the Class A Member shall equal zero (after taking into account all
      allocations required to be made to the Class A Member pursuant to Section
      4.2 as of such Earn-Out Distribution Date).

            (ii) On each Earn-Out Distribution Date, Chaparral shall pay the
      Class A Member, to the extent of all Available Cash (after providing for
      the payments required by 5.1(b)(i)), an amount equal to the Termination
      Period Guaranteed Payment, if any. Such amount shall be treated for income
      tax purposes as a "guaranteed payment" within the meaning of Code Section
      707(c) and, whether or not paid, shall not affeCT the Class A Member's
      Capital Account.

      (c) Special Class A Tax Distribution. Unless the Earn-Out Period
Commencement Date shall have occurred, five Business Days prior to each date on
which an individual taxpayer is required to make a quarterly payment of
estimated United States federal income taxes, Chaparral shall distribute to the
Class A Member an amount equal to the excess of (x): the product of (i) the Tax
Rate multiplied by (ii) the excess, if any, of (A) the projected net taxable
income, if any, allocated or allocable to the Class A Member for the period
commencing on December 28, 1999 and ending on the last day of the preceding
calendar month (determined as if the end of the preceding calendar month had
been the end of an Allocation Period), over (B) the Class A Member's Cumulative
Priority Return without regard to clause (b)(iv) of the definition of Class A
Member's Priority Return for the period described in clause (A), over (y) all
amounts previously distributed pursuant to this Section 5.1(c) or pursuant to
Section 5.01(c) of the Third Amended and Restated LLC Agreement. Upon the making
of any distribution pursuant to this Section 5.1(c), Chaparral shall provide the
Class A Member with notice of such distribution,

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               Fifth Amended and Restated Chaparral LLC Agreement

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                                                         Chaparral LLC Agreement

including the amount of such distribution and that such distribution is a
special Class A Member tax distribution.

      (d) Distributions in Connection with Asset Remedy. In connection with an
exercise of the Asset Remedy by the Class A Member, Chaparral shall Distribute
to the Class A Member, not later than 4:00 p.m. (New York City time) on the date
of each sale of an asset pursuant to such Asset Remedy, Cash in an aggregate
amount equal to the lesser of (i) the aggregate proceeds of such sale or sales
and (ii) the positive balance in the Class A Member's Capital Account, in each
case, as of such date after taking into account all allocations required to be
made to the Class A Member pursuant to Article IV as of such date; provided,
that, no Distributions shall be made to the Class A Member pursuant to this
clause (d) after the Earn-Out Period Termination Date; provided, further, that
the preceding proviso shall not be applicable to any Distributions to the Class
A Member pursuant to this clause (d) with respect to the proceeds of any Asset
Remedy occurring prior to the Earn-Out Period Termination Date which have not
been distributed on or prior to the Earn-Out Period Termination Date.

      (e) Distributions During Liquidation Period. If an Earn-Out Period
Commencement Date has not occurred, then during the Applicable Termination
Period, Chaparral shall not make Distributions under any provision of this
Section 5.1 other than this Section 5.1(e). As compensation for the use by
Chaparral during such Applicable Termination Period of amounts in the Capital
Account of the Class A Member, Chaparral shall pay (i) on each Distribution Date
occurring during such Applicable Termination Period, an amount of Cash equal to
the amount of the Class A Member's Priority Return that would otherwise have
been distributed pursuant to Section 5.1(a) hereof to the Class A Member on such
Distribution Date (such payment to constitute a partial payment of the
Termination Period Guaranteed Payment) and (ii) without duplication, the amount
that Chaparral would have been required to distribute pursuant to Section 5.1(c)
if the Class A Member Interest had not been deemed to be retired and treating
for that purpose amounts distributed pursuant to this Section 5.1(e)(ii) as
having been distributed pursuant to Section 5.1(c)(y).

      (f) Distributions to Class B Members. On and after the date on which all
Limestone Notes and all New Limestone Notes shall have been paid in full, the
Earn-Out Period Termination Date shall have occurred and no Liquidating Event
shall have occurred, all Available Cash of Chaparral shall be Distributed to the
Class B Members on such dates as the Primary Class B Member shall direct.

      (g) Distributions in Connection with the Special Management Replacement
Date. After the Special Management Replacement Date, Chaparral shall Distribute
to the Class A Member, not later than 4:00 p.m. (New York City time) on the date
of each sale of an asset by the Managing Member (each, an "Asset Disposition"),
Cash in an aggregate amount equal to the lesser of (i) the aggregate proceeds of
each such Asset Disposition and (ii) the positive balance in the Class A
Member's Capital Account, in each case, as of such date after taking into
account all allocations required to be made to the Class A Member pursuant to
Article IV as of such date; provided, that, no Distributions shall be made to
the Class A Member pursuant to this clause (g) after the Earn-Out Period
Termination Date; provided, further, that the preceding proviso shall not be
applicable to any Distributions to the Class A Member pursuant to this clause
(g) with respect to the proceeds of any Asset Dispositions occurring after the
Special Management

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               Fifth Amended and Restated Chaparral LLC Agreement

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                                                         Chaparral LLC Agreement

Replacement Date but prior to the Earn-Out Period Termination Date the proceeds
of which have not been distributed on or prior to the Earn-Out Period
Termination Date.

      (h) No Other Distributions. Except as provided in this Section 5.1,
Section 11.1(d), Section 11.2(e) and Section 12.2, no other Distributions shall
be permitted.

      Section 5.2 More than One Class A Member or Class B Member.

      (a) More than One Class A Member. In the event that there is more than one
Class A Member, allocations to the Class A Member pursuant to Article IV,
Distributions to the Class A Member, and all other references in this Chaparral
LLC Agreement and the Transaction Documents referring to amounts shall be
divided among the Class A Members in proportion to their respective Class A
Percentages. All references in this Chaparral LLC Agreement and the other
Transaction Documents to the Class A Member shall be deemed to refer to all of
such Class A Members, collectively.

      (b) More than One Class B Member. In the event that there is more than one
Class B Member, allocations to the Class B Members pursuant to Article IV,
Distributions to the Class B Members, and all other references in this Chaparral
LLC Agreement and the other Transaction Documents referring to amounts shall be
divided among the Class B Members in proportion to their respective Class B
Percentages.

      Section 5.3 Amounts Withheld. All amounts withheld or required to be
withheld pursuant to the Code or any provision of any state, local or foreign
Tax law, with respect to any payment, distribution or allocation to Chaparral or
the Members and treated by the Code (whether or not withheld pursuant to the
Code) or any such Tax law as amounts payable by or in respect of the Members or
any Person owning an interest, directly or indirectly, in such Member shall be
treated as a Distribution to the Members with respect to which such amount was
withheld pursuant to this Article V for all purposes under this Chaparral LLC
Agreement (including an appropriate debit to such Member's Capital Account).

      Section 5.4 Payments from the Overfund Trust. All amounts paid from the
Overfund Trust to the Indenture Trustee or Limestone pursuant to the Overfund
Trust Agreement or Section 5.5(b) of the Participation Agreement shall be
treated for GAAP accounting and tax purposes and for all purposes under the
Transaction Documents as having been Distributed by Chaparral to the Class A
Member pursuant to Section 5.1(a), and the Capital Account of the Class A Member
shall be reduced by the amount of each such payment. Any amounts disbursed by
the Indenture Trustee to Chaparral pursuant to Section 5.04(b) or 5.04(d) of the
Indenture shall be treated for GAAP accounting and tax purposes and for all
purposes under the Transaction Documents as a Capital Contribution to Chaparral
in respect of the Class A Member Interest, and the Capital Account of the Class
A Member shall be increased by the amount of such disbursement.

      Section 5.5 Deemed Distributions to Class A Member.

      (a) Upon application by the Indenture Trustee or Limestone of (x) any
proceeds of any remarketing of the Shares, (y) any payments required to be made
by El Paso in connection with a Failed Remarketing, or (z) any Redemption
Proceeds received by the Indenture Trustee or

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               Fifth Amended and Restated Chaparral LLC Agreement

<PAGE>

                                                         Chaparral LLC Agreement

Limestone, in each case, pursuant to the Remarketing Agreement and Share Trust
Agreement, the Class A Member shall be deemed, for GAAP accounting and tax
purposes and all purposes under the Transaction Documents, to have received a
Cash Distribution with respect to its Class A Member Interest in the amount of
such proceeds and payments.

      (b) Following the contribution (or deemed contribution) by the holder of
the El Paso Interest of any amount pursuant to Section 3.03 of the Limestone
Trust Agreement, the Class A Member shall be deemed, for GAAP accounting and tax
purposes and all purposes under the Transaction Documents, to have received, on
the date any such amounts are distributed by the Indenture Trustee or the New
Indenture Trustee to the holders of the Limestone Notes or the holders of the
New Limestone Notes, as applicable, in connection with a contribution or deemed
contribution pursuant to Section 3.03(a) or (c) of the Limestone Trust
Agreement, as the case may be, or on the date on which Limestone Trust receives
any contributions pursuant to Section 3.03(b) of the Limestone Trust Agreement,
a Cash Distribution with respect to its Class A Member Interest equal to the sum
of (x) the outstanding principal amount of, and the accrued and unpaid interest
(including Default Interest, if any) to the date of repayment or redemption on,
the Limestone Notes or the New Limestone Notes so repaid or redeemed, as the
case may be, and (y) the amount of any payments received by Limestone Trust
pursuant to Section 3.03(b) of the Limestone Trust Agreement.

      (c) Upon the distribution by the New Indenture Trustee to the New
Noteholders of proceeds of (i) any New Notes Liquidity Payment or (ii) any
payment by El Paso under the El Paso Guarantee, the Class A Member shall be
deemed, for GAAP accounting and tax purposes and all purposes under the
Transaction Documents, to have received, on the date any such amounts are
distributed by the New Indenture Trustee to the New Noteholders, a Cash
Distribution in respect of its Class A Member Interest equal to the outstanding
principal amount to the extent so distributed and the accrued and unpaid
interest (including Default Interest, if any) to the date of such distribution
to the New Noteholders. To the extent that any New Notes Liquidity Payments or
other payments made by El Paso under the El Paso Guarantee are used by the New
Indenture Trustee to pay New Administrative Expenses or Additional Financing
Costs, the Class A Member shall be deemed to have received in such amount a
"guaranteed payment" within the meaning of Code Section 707(c) for income tax
purposes.

      Section 5.6 Notice of Certain Distributions. If Chaparral Distributes any
amount to the Class A Member in order to cause the redemption, in whole or in
part, of (a) the Limestone Notes pursuant to the terms of the Indenture and/or
(b) upon and after payment in full of the Limestone Notes, the New Limestone
Notes pursuant to the terms of the New Indenture, Chaparral shall notify
Limestone in writing (with a copy to the Indenture Trustee and/or the New
Indenture Trustee, as applicable), that such Distribution is being made in order
to cause such redemption and specifying the amount of such Distribution to be
used for such purpose and the relevant Optional Redemption Date, Mandatory
Redemption Date or Special Redemption Date, as applicable.

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               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>

                                                         Chaparral LLC Agreement

                                   ARTICLE VI

                                   MANAGEMENT

      Section 6.1 Management of Chaparral.

      (a) Managing Member. The management of Chaparral shall be vested in the
Managing Member, which shall be a "manager" within the meaning of the LLC Act,
and except as otherwise provided in this Chaparral LLC Agreement, the Managing
Member shall have full power and authority to manage the business and affairs of
Chaparral to the extent provided in the LLC Act, and no other Member shall have
any such management power or authority.

      The Primary Class B Member shall be the Managing Member at all times prior
to the appointment of a replacement Managing Member in accordance with this
Section 6.1. The Class A Member shall have the right to remove the Primary Class
B Member as Managing Member upon the occurrence of any of the following events:
(i) the Bankruptcy of El Paso, El Paso Chaparral Holding or the Primary Class B
Member; (ii) a material breach by the Primary Class B Member in its capacity as
Managing Member, of its obligations as Managing Member under this Chaparral LLC
Agreement or a material breach by the Management Company of any covenant set
forth in Section 6.2 of the Management Agreement, which breach, in either case,
continues and is uncured in all material respects on the date occurring 30 days
after El Paso or any Affiliate of El Paso receives written notice or has actual
knowledge thereof; (iii) the gross negligence of the Primary Class B Member, in
its capacity as Managing Member, in the performance of its obligations as
Managing Member under this Chaparral LLC Agreement or the gross negligence of
the Management Company in the performance of its obligations under the
Management Agreement, in either case, that continues and is uncured in all
material respects on the date occurring 30 days after El Paso or any Affiliate
of El Paso receives written notice or has actual knowledge thereof; or (iv) a
Specified Equity Event. The Class A Member shall exercise such right of removal
by providing written notice of such exercise to the Primary Class B Member after
the occurrence of any of the foregoing events and such notice shall become
effective (x) in the case of any notice under clause (i) above, immediately, (y)
in the case of any notice under clause (ii) or (iii) above, upon the expiration
of the applicable grace and cure periods referred to in such clause (ii) or
(iii), as applicable, and (z) in the case of any notice under clause (iv) above,
on the Special Management Standstill Expiration Date if the Specified Equity
Cure has not occurred on or before the 30th day after the relevant Specified
Equity Event; provided, however, that, in each case, if the Certificate Purchase
Option is consummated prior to the date on which such notice becomes effective,
then such notice shall be deemed to have been revoked and shall be of no further
force or effect. On the date any notice under this Section 6.1(a) becomes
effective, the Class A Member or its designee shall (unless the Primary Class B
Member shall be actively contesting such removal in good faith by appropriate
proceedings) without further act become the Managing Member of Chaparral for all
purposes of this Chaparral LLC Agreement and the Primary Class B Member shall no
longer be the Managing Member.

      (b) Authority of Managing Member. The Managing Member shall have the
authority on behalf and in the name of Chaparral to perform all acts necessary
and desirable to the objects and purposes of Chaparral, subject only to the
restrictions expressly set forth in this Chaparral

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               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>
                                                         Chaparral LLC Agreement

LLC Agreement (including Sections 6.3 and 6.5) and subject to the rights of the
Liquidator to liquidate Chaparral and take all actions incidental thereto during
the Liquidation Period. Subject to such restrictions, the authority of the
Managing Member shall include the authority to:

            (i) engage in transactions and dealings on behalf of Chaparral,
      including transactions and dealings with any Member or any Affiliate of
      any Member;

            (ii) call meetings of Members or any class thereof;

            (iii) vote any Equity Interests, Financial Investments or other
      Chaparral Permitted Assets held by Chaparral;

            (iv) purchase or otherwise acquire, or dispose of, Chaparral
      Permitted Assets and cause Mesquite to purchase or otherwise acquire, or
      dispose of, Mesquite Permitted Assets;

            (v) determine and make Distributions, in Cash or otherwise, on the
      Interests in accordance with the provisions of this Chaparral LLC
      Agreement and the LLC Act;

            (vi) appoint (and dismiss from appointment) officers, attorneys and
      agents on behalf of Chaparral, and engage (and dismiss from engagement)
      any and all Persons providing legal, accounting or financial services to
      Chaparral, or such other Persons as the Managing Member deems necessary or
      desirable for the management and operation of Chaparral;

            (vii) incur and pay all expenses and obligations incidental to the
      operation and management of Chaparral, including all Company Expenses of
      Chaparral and all fees, expenses and other amounts payable pursuant to the
      Management Agreement;

            (viii) open accounts (including, without limitation, the Chaparral
      Investor's Account);

            (ix) subject to Article XII, effect a dissolution of Chaparral after
      the occurrence of a Liquidating Event;

            (x) bring and defend (or settle) on behalf of Chaparral actions and
      proceedings at law or equity before any court or governmental,
      administrative or other regulatory agency, body or commission or any
      arbitrator or otherwise;

            (xi) prepare or cause to be prepared reports, statements and other
      relevant information for distribution to the Members as may be required by
      this Chaparral LLC Agreement or the LLC Act and any additional information
      determined to be appropriate by the Managing Member from time to time;

            (xii) execute and deliver, perform Chaparral's obligations under and
      exercise Chaparral's rights under, any Chaparral Documents to which
      Chaparral is a party, including any certificates and other documents and
      instruments related thereto;

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               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>
                                                         Chaparral LLC Agreement

            (xiii) prepare and file all necessary returns and statements and pay
      all taxes, assessments and other impositions applicable to Chaparral
      Property pursuant to Section 8.3; and

            (xiv) execute all other documents or instruments, perform all
      duties, exercise all powers, and do all things for and on behalf of
      Chaparral necessary or desirable for or incidental to the foregoing.

The Managing Member is hereby authorized and directed to enter into the
Management Agreement, pursuant to which it will delegate to the Manager certain
of its duties as Managing Member hereunder and on behalf of Chaparral, as sole
member of Mesquite, as more specifically provided in the Management Agreement,
any or all of which duties may be subcontracted to third Persons by the Manager.

      Section 6.2 Right to Rely on the Managing Member.

      (a) Any Person dealing with Chaparral may rely (without duty of further
inquiry) upon a certificate signed by the Managing Member as to:

            (i) The identity of the Managing Member, the Class A Member or the
      Class B Members;

            (ii) The existence or nonexistence of any fact or facts that
      constitute a condition precedent to acts by the Managing Member or that
      are in any other manner germane to the affairs of Chaparral;

            (iii) The Persons who are authorized to execute and deliver any
      instrument or document of Chaparral; and

            (iv) Any act or failure to act by Chaparral or any other matter
      whatsoever involving Chaparral or any Member.

      (b) The signature of the Managing Member shall be sufficient to convey
title to any property owned by Chaparral, and all of the Members agree that a
copy of this Chaparral LLC Agreement may be shown to the appropriate parties in
order to confirm the same, and further agree that the signature of the Managing
Member shall be sufficient to execute any documents necessary to effectuate this
or any other provision of this Chaparral LLC Agreement.

      Section 6.3 Decisions Requiring Unanimous Member Consent. Notwithstanding
any power or authority granted the Managing Member under the LLC Act, the
Chaparral Certificate of Formation or this Chaparral LLC Agreement (including
Sections 6.1 and 6.5), the Managing Member may not make any decision or take any
action for which the consent of all the Members is expressly required by the
Chaparral Certificate of Formation or this Chaparral LLC Agreement, without
first obtaining such consent. The Managing Member shall not have the authority
to, and covenants and agrees that it shall not, take any of the following
actions without the consent of all of the Members:

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               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>
                                                         Chaparral LLC Agreement

      (a) Contravention. Act in contravention of this Chaparral LLC Agreement or
any other Transaction Document applicable to Chaparral or Mesquite or, when
acting on behalf of Chaparral, on its own account or on behalf of Chaparral as a
member of Mesquite, engage in activities inconsistent with the purposes of this
Chaparral LLC Agreement, the purposes of the Mesquite LLC Agreement or the terms
of the Management Agreement, respectively;

      (b) Acquisitions. To ensure, to the extent commercially reasonable in the
circumstances, that the Qualified Energy Assets acquired by Chaparral and
Mesquite after the Closing Date are, when considered with all other Qualified
Energy Assets of Chaparral and Mesquite, reasonably geographically and
commercially diverse, cause or permit Chaparral, or cause Chaparral to cause or
permit Mesquite, to acquire by purchase, contribution or exchange in any single
transaction or series of related transactions with the same Person, (i)
Qualified Energy Assets using Mesquite equity in an amount in excess of 6.91085%
of the total assets of Chaparral as of the Closing Date, as shown on the pro
forma balance sheet delivered pursuant to Section 8.2(f), as consideration
therefor (excluding from such calculation funds of Mesquite used in such
acquisition transaction that are derived from Mesquite Permitted Financial
Obligations recourse for the payment of which does not extend to assets of
Mesquite other than Qualified Energy Assets of Mesquite) or (ii) any CDI Project
Interest;

      (c) Character of Permitted Investments. (i) Cause or permit Chaparral to
acquire, by purchase, contribution or exchange, any assets other than Chaparral
Permitted Assets or (ii) cause Chaparral to cause or permit Mesquite to acquire
by purchase, contribution or exchange any assets other than Mesquite Permitted
Assets, in each case, regardless of amount;

      (d) Dispositions by Chaparral. Cause or permit Chaparral to Dispose of any
Chaparral Property (other than a Disposition that constitutes the granting of a
Chaparral Permitted Lien); provided, however, that the unanimous consent of all
the Members shall not be required for, and the Managing Member shall have the
authority and be permitted to, cause or permit any such Disposition (other than
a Disposition of (i) Chaparral's interest in the Overfund Trust or (ii) the
Amended El Paso/Chaparral Note) if the consideration therefor is not less than
the greater of (x) the then-present Asset PV of the asset being Disposed of and
(y) the Gross Asset Value of such asset; provided, further, that this clause (d)
shall not apply to any Disposition of assets in connection with, or to produce
funds to successfully effect, (x) the Purchase Option, the Retirement Option or
an Asset Remedy, (y) any enforcement of, or levy on, a judgment obtained in
accordance with Section 2.05(f) of the New Indenture by the New Indenture
Trustee or the New Noteholders in connection with the occurrence of a New
Indenture Event of Default or (z) any Asset Disposition made by the Managing
Member after the Special Management Replacement Date;

      (e) Dispositions by Mesquite and Other Project Companies. With respect to
Mesquite and with respect to any other Project Company the disposition of assets
of which is subject to the unilateral control of Mesquite or as to which
Mesquite has shared control or consent, veto or other rights, cause or permit
Chaparral: (i) to cause or permit

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               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>
                                                         Chaparral LLC Agreement

Mesquite to Dispose of, (ii) to cause or permit Mesquite to cause or permit any
such Project Company to Dispose of, (iii) to cause or permit Mesquite to
exercise its shared control, consent, veto or other right to cause or permit any
such Project Company to Dispose of or (iv) to fail to prevent any such Project
Company from Disposing of, any of the Qualified Energy Assets of such Project
Company, other than (A) any Disposition in connection with a Restructuring, (B)
any Disposition pursuant to any of the Project Documents and outside of the
control of El Paso or its Affiliates, (C) any Disposition in connection with
Ordinary Project Activities, (D) any Disposition of assets that are worn out or
obsolete, (E) any pledge of assets or lien or realization on any pledge of
assets or lien in connection with Mesquite Financing Documents (other than
Mesquite Specified Credit Documents), and (F) any demand on any El Paso Loan
held by Mesquite or any Project Company if the proceeds of the payment of such
El Paso Loan are used by Mesquite or such Project Company, as the case may be,
to acquire additional Qualified Energy Assets; provided, however, that in
addition to the exceptions set forth above, the unanimous consent of all the
Members shall not be required for, and the Managing Member shall have the
authority and be permitted to, cause or permit any such Disposition if the
consideration therefor is not less than (1) in the case of a Disposition of a
Qualified Energy Asset by Mesquite, the greater of (x) the then-present Asset PV
of the asset being Disposed of and (y) the Gross Asset Value of such asset or
(2) in the case of a Disposition of a Qualified Energy Asset by any Project
Company other than Mesquite, the greater of (x) the then-present Asset PV of the
asset being Disposed of or (y) the portion of the Gross Asset Value of the
interest in such Project Company owned by Mesquite that is allocable to such
Qualified Energy Asset; provided, further, that this clause (e) shall not apply
to any Disposition of assets in connection with, or to produce funds used to
successfully effect, (x) the Purchase Option, the Retirement Option or an Asset
Remedy, (y) any enforcement of, or levy on, a judgment obtained in accordance
with Section 2.05(f) of the New Indenture by the New Indenture Trustee or the
New Noteholders in connection with the occurrence of a New Indenture Event of
Default or (z) any Asset Disposition made by the Managing Member after the
Special Management Replacement Date;

      (f) Budgets. Approve or amend, or cause or permit Chaparral to permit
Mesquite to approve or amend, any annual aggregate operating or capital budget
of Mesquite and Chaparral that El Paso has not certified (an "UNCERTIFIED
BUDGET") as falling within Budget Parameters agreed to by the Members as of the
Closing Date, as normalized for additional acquisitions and/or dispositions;
provided, that if the Members do not unanimously approve any such Uncertified
Budget, the prior year's operating and capital budget (as normalized for
acquisitions, dispositions and inflation, the "TEMPORARY BUDGET") shall continue
until a new operating and capital budget can be determined by a professional
retained by the Members to prepare such new budget (a "REPLACEMENT BUDGET"),
which Temporary Budget (pending preparation of a definitive Replacement Budget)
and Replacement Budget (when it becomes definitive) shall be final and shall not
require the approval of the Members;

      (g) Indebtedness, Etc. (i) Cause or permit Chaparral to incur, assume or
obligate itself by contract for any Permitted Financial Obligations owing by
Chaparral (except that Chaparral may enter into and incur obligations under the
Transaction

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               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>
                                                         Chaparral LLC Agreement

Documents, including costs, expenses, indemnities, fees (including reasonable
attorneys' and accountants' fees), Additional Financing Costs and Taxes) or (ii)
cause or permit Chaparral to cause or permit Mesquite to incur, assume or
obligate itself by contract for any Permitted Financial Obligations owing by
Mesquite other than Mesquite Permitted Financial Obligations and Company
Expenses of Mesquite;

      (h) Issuance of Additional Interests; Admission of Additional Members. (i)
Cause or permit Chaparral to issue additional Interests other than the Class A
Member Interest and the Class B Member Interests (including any Additional Class
B Member Interests), or to admit any Class A Member or Class B Member to
Chaparral other than pursuant to Section 3.2(b)(iii), Article X or Article XI,
or (ii) cause or permit Chaparral to cause or permit Mesquite to issue
additional interests, other than the Mesquite LLC Interest, or to admit any
member to Mesquite other than Chaparral; provided, that Capital Contributions
made by any existing Member of Chaparral or by Chaparral as the sole member of
Mesquite shall not constitute the admission of a member or the issuance of
additional Interests in Chaparral or member interests in Mesquite, as the case
may be;

      (i) Distributions or Redemptions of Member Interests. Cause or permit (i)
any Distribution in respect of Interests in Chaparral or member interests in
Mesquite or (ii) any redemption of Interests in Chaparral or member interests in
Mesquite, other than, in each case in clause (i) or (ii) above, as permitted or
contemplated by the Transaction Documents;

      (j) Transactions with Affiliates. Cause or permit any violation of the
second sentence of Section 6.5(a)(ii);

      (k) Changes to Chaparral Documents. Cause or consent to any amendment,
waiver or other modification of Chaparral's rights or obligations under any
Chaparral Document except (i) to cure any ambiguity, omission, defect or
inconsistency or (ii) to comply with Section 5.1(a) of the Participation
Agreement (provided that in connection with any amendment, waiver or
modification described in (i) or (ii) that has not been consented to by all the
Members, the Managing Member shall have delivered to each Member a legal opinion
of nationally recognized counsel experienced in structured finance (including
Jones, Day, Reavis & Pogue and Fried, Frank, Harris, Shriver & Jacobson) to the
effect that such amendment, waiver or other modification complies with this
clause k);

      (l) Amendments to El Paso Notes or Mesquite Specified Credit Documents.
Cause or consent to any amendment, waiver or modification of Chaparral's rights
or obligations under, or cause or give any consent, approval or make any
election under, any El Paso Note or the Mesquite Specified Credit Documents
except, in either case, for such amendments, waivers, modifications, consents,
approvals and elections made solely for the purpose of increasing the amount
available for borrowings thereunder (and making conforming changes to the
Mesquite Pledge Agreement and the notes delivered in connection with the
Mesquite Credit Agreement, if applicable).

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               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>
                                                         Chaparral LLC Agreement

      (m) Mergers. Cause or permit Chaparral, or cause or permit Chaparral to
cause or permit Mesquite, to legally merge or consolidate with or into any
Person;

      (n) Bankruptcy. Cause or permit Chaparral, or cause or permit Chaparral to
cause or permit Mesquite, to commence any Voluntary Bankruptcy, or commence, or
solicit others to commence, an Involuntary Bankruptcy against Mesquite;

      (o) Extension of Term. Cause or permit the extension of the term of
Chaparral or Mesquite;

      (p) Resignation as Managing Member. (i) Undertake to resign as the
Managing Member of Chaparral except in connection with any event referred to in
Section 6.1(a), or (ii) cause or permit Chaparral to undertake to resign or
withdraw as the sole member of Mesquite;

      (q) Successor Manager Under Management Agreement. Cause or permit
Chaparral, or cause or permit Chaparral to cause or permit Mesquite, to cause
the appointment of a successor manager to the Management Company under the
Management Agreement, except in accordance with Section 5 of the Management
Agreement and Section 7.4 hereof;

      (r) [Reserved];

      (s) Possession of Property. Under any circumstances (i) possess Chaparral
Property for other than a purpose of Chaparral or (ii) cause or permit Mesquite
to possess Mesquite Property for other than a Mesquite purpose;

      (t) Fiscal Year. Cause or permit Chaparral or Mesquite to change its
Fiscal Year;

      (u) Tax Treatment, etc. Take any of the following actions:

            (i)   Cause Chaparral to be treated as a corporation or other
                  association taxable as a corporation for federal income tax
                  purposes or to take a position inconsistent with Chaparral not
                  being treated as a corporation or other association taxable as
                  a corporation except as required by Applicable Law; or

            (ii)  Cause Mesquite to fail to be a disregarded entity for federal
                  income tax purposes or to take a position inconsistent with
                  such treatment except as required by Applicable Law;

      (v) ERISA. Cause or permit Chaparral or Mesquite to create or contribute
to any multiple employer plan, multi-employer or single-employer plan as defined
in Section 4001 of ERISA;

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               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>
                                                         Chaparral LLC Agreement

            (w) Distribution from Overfund Trust. Cause or consent to any
      Distribution of any amount or asset held in or by the Overfund Trust
      except as required or permitted by the Transaction Documents; and

            (x) Pledge of Interest in Overfund Trust. Except as required or
      permitted by the Transaction Documents, enter into any contract, option or
      other arrangement or undertaking, or permit the Overfund Trust to enter
      into any contract, option, arrangement or undertaking, with respect to the
      direct or indirect pledge of any interest in, or the control of,
      Chaparral's interest in the Overfund Trust.

      Section 6.4 Consents of the Class A Member. The Class A Member consents to
the following actions by the Managing Member to the extent that such actions
require the consent of the Class A Member pursuant to Section 6.3 (but such
consent shall not constitute a waiver of any other provision hereof):

            (a) The execution and delivery by the Managing Member, on behalf of
      Chaparral and Mesquite, as applicable, of each Transaction Document to
      which Chaparral or Mesquite is a party;

            (b) Any Restructuring entered into by Chaparral or any of its
      Subsidiaries or any Project Company; and

            (c) The sale of up to 50% of the El Paso Energy West Coast Interest.

      Section 6.5 Duties and Obligations of the Managing Member.

      (a) Actions of Chaparral. Anything in this Chaparral LLC Agreement to the
contrary notwithstanding, for so long as any Obligation of Chaparral is
outstanding, the Managing Member covenants to conduct the affairs of Chaparral
such that:

            (i) Each bank account of Chaparral shall be separate from the bank
      accounts of any other Person (subject to the rights of the Managing Member
      and the Manager referred to in clause (iii) below).

            (ii) Except as otherwise provided in or contemplated by the
      Management Agreement, all transactions between any of El Paso, El Paso
      Chaparral, or El Paso Chaparral Holding Company (or any of their
      respective Affiliates), on the one hand, and any of Chaparral and
      Chaparral on behalf of Mesquite, on the other, shall be duly authorized
      and documented and recorded accurately in the appropriate books and
      records of such entities, except where normal industry practice does not
      normally require authorization or documentation. Except as otherwise
      provided in or contemplated by the Management Agreement, the Managing
      Member shall not cause Chaparral, or cause Chaparral to cause Mesquite, to
      enter into any transaction with El Paso or any Affiliate of El Paso (other
      than transactions among Chaparral and any of its Subsidiaries or among
      Subsidiaries of Chaparral), other than transactions in any calendar
      quarter which, taken as a whole, are fair and reasonable and provide, in
      the aggregate, for exchanges of fair consideration and reasonably
      equivalent value between or among the parties thereto. The

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               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>
                                                         Chaparral LLC Agreement

      Members hereby agree that each of the Transaction Documents satisfies the
      standards set forth in the preceding sentence.

            (iii) Chaparral shall: (x) maintain and prepare separate financial
      reports and financial statements in accordance with GAAP, showing its
      assets and liabilities separate and apart from those of any other Person,
      and will not have its assets listed on the financial statement of any
      other Person, provided, however, that its assets may be included on a
      consolidated financial statement of its parent if: (A) such consolidated
      financial statement contains a footnote to the effect that Chaparral's
      assets are owned by Chaparral; and (B) such assets are listed on
      Chaparral's own balance sheet; (y) maintain its books, records and bank
      accounts separate from those of its Affiliates, any constituent party and
      any other Person; and (z) not permit any Affiliate or constituent party
      independent access to its bank accounts (other than access by the Managing
      Member in its capacity as such and access by the Manager in connection
      with the performance of its duties under the Management Agreement).

            (iv) Chaparral shall not commingle or pool any of the funds and
      other assets of Chaparral with those of any Affiliate or constituent party
      or any other Person, and it shall hold all of its assets in its own name.

            (v) Chaparral has done, or caused to be done, and shall do, all
      things necessary to observe limited liability company formalities and
      other organizational formalities and preserve its existence.

            (vi) Chaparral does not, and shall not, guarantee, become obligated
      for, or hold itself or its credit out to be responsible for or available
      to satisfy, the debts or obligations of any other Person or the decisions
      or actions respecting the daily business or affairs of any other Person
      (except as provided for in or permitted under the Transaction Documents).

            (vii) Chaparral shall not acquire Equity Interests of any Affiliate
      or of any of the Members (other than Chaparral Permitted Assets and except
      as otherwise provided for in or permitted under this Chaparral LLC
      Agreement or the other Transaction Documents). Chaparral shall not buy or
      hold any evidence of indebtedness for borrowed money issued by, or make
      any loan or advance to, any other Person (other than such evidence of
      indebtedness for borrowed money, loan or advance constituting Chaparral
      Permitted Assets and except as otherwise provided for in or permitted
      under this Chaparral LLC Agreement or the other Transaction Documents).

            (viii) Chaparral has not made any loans or advances (other than the
      El Paso Loans and other Chaparral Permitted Assets or as otherwise
      provided for in or permitted under the Transaction Documents) to, or
      pledged its assets (other than as otherwise provided for in or permitted
      under the Transaction Documents) for the benefit of, and shall not make
      any loans or advances (other than the El Paso Loans and other Chaparral
      Permitted Assets or as otherwise provided for in or permitted under the
      Transaction Documents) to, or pledge its assets (other than as otherwise
      provided for in or permitted

                                       29

               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>
                                                         Chaparral LLC Agreement

      under the Transaction Documents) for the benefit of, any Person,
      including, without limitation, any Affiliate, constituent party, or
      Affiliate of any constituent party.

            (ix) Chaparral shall not be consensually merged or legally
      consolidated with any other Person (other than, for financial reporting
      and federal tax purposes, any Person that is owned or partially-owned by
      Chaparral or Mesquite).

      (b) Limestone Trigger Events, Specified Equity Event and Liquidating
Events. The Managing Member shall notify the Members of the occurrence of any
acceleration of the New Limestone Notes as a result of a New Indenture Event of
Default, Limestone Note Trigger Event, Limestone Certificate Trigger Event,
Specified Equity Event or Liquidating Event or any event that with notice or
lapse of time or both would constitute such an event (other than the event
described in Section 12.1(a)) and the action that the Managing Member has taken
or proposes to take with respect thereto promptly, but no later than five
Business Days, after any Responsible Officer of El Paso has actual knowledge of
such occurrence; provided, that in the case of a Specified Equity Event, the
Managing Member shall provide the Members, within three Business Days after a
Responsible Officer of El Paso obtains knowledge of the occurrence of any
Underlying Default which is continuing or of any event not theretofore remedied
which with notice or lapse of time, or both, would constitute an Underlying
Default, notice of such occurrence together with a detailed statement by a
Responsible Officer of El Paso of the steps being taken by El Paso or the
appropriate subsidiary of El Paso to cure the effect of such Underlying Default.

      (c) Maintenance of Chaparral's Existence, etc. At Chaparral's expense, the
Managing Member shall take all actions that may be necessary or appropriate (i)
for the continuation of Chaparral's valid existence as a limited liability
company under the laws of the State of Delaware and its qualification to do
business under the laws of each other jurisdiction in which such existence or
qualification is necessary to protect the limited liability of the Members or to
enable Chaparral to conduct the business in which it is engaged or to perform
its obligations under any agreement to which it is a party, (ii) for the
accomplishment of Chaparral's purposes, including the acquisition, management,
maintenance, preservation, and operation of Chaparral Permitted Assets in
accordance with the provisions of this Chaparral LLC Agreement and applicable
laws and regulations and (iii) to enforce Chaparral's rights under each of the
Chaparral Documents and each El Paso Note. Without limitation of the foregoing,
the Managing Member shall cause Chaparral to maintain all licenses, permits,
registrations, authorizations, use agreements, consents, orders or approvals of
governmental or quasi-governmental agencies and authorities (whether Federal,
state, local, municipal or foreign) necessary to own its properties and to
conduct its activities in accordance with all applicable laws, rules,
regulations and orders, except where any failure to do so would not have an
Aggregate Chaparral Material Adverse Effect.

      (d) Devotion of Time; Other Activities. Without limitation of the
Manager's obligations under the Management Agreement, the Managing Member and
any of its Affiliates shall be required to devote only such time to the affairs
of Chaparral as the Managing Member determines in its reasonable discretion may
be necessary to manage and operate Chaparral, giving due consideration to the
provisions of the Management Agreement, and each such Person

                                       30

               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>
                                                         Chaparral LLC Agreement

shall be free to serve any other Person or enterprise in any capacity that it
may deem appropriate in its discretion.

      (e) Fiduciary Duty. Except as otherwise provided in Section 6.5(d), the
Managing Member shall be under a fiduciary duty to conduct the affairs of
Chaparral in the best interests of Chaparral, including the safekeeping and use
of all of Chaparral Property and the use thereof for the exclusive benefit of
Chaparral and will not conduct the affairs of Chaparral so as to benefit any
other business now owned or hereafter acquired by any Member if such conduct
also produces a detriment to Chaparral.

      (f) Making of Payments. Unless otherwise expressly provided herein, all
distributions or payments to the Members pursuant to any provision of this
Chaparral LLC Agreement shall be made no later than 12:00 noon, New York City
time, on the day of distribution or payment, and, at the time of any such
distribution or payment, the Managing Member shall provide to the Members a
notice identifying the nature of the distribution or payment, the Section or
Sections of this Chaparral LLC Agreement pursuant to which it is being made and
the amount being distributed or paid pursuant to each such Section.

      (g) Compliance with Chaparral LLC Agreement. The Managing Member shall
cause Chaparral to comply with all of the obligations of Chaparral set forth in
this Chaparral LLC Agreement; provided, however, that the Managing Member shall
have no obligation to cause Chaparral to pay the Class A Member's Priority
Return or make any other Cash distributions or other payments in respect of the
Class A Member Interest under this Chaparral LLC Agreement except to the extent
that there are funds on deposit in the Chaparral Investor's Account or, in
accordance with the Overfund Trust Agreement and Section 5.5(b) of the
Participation Agreement, the Overfund Trust, in either case, that are freely
available to be applied to such payment at the time such payment is due, and
then only from such funds; and provided, further, that in no event shall the
Managing Member have any personal obligation or liability with respect to any
obligations of Chaparral.

      (h) Notice Regarding Qualification to Do Business. The Managing Member
shall provide notice to the Members of any state or jurisdiction in which
Chaparral is qualified to do business (other than its jurisdiction of
organization and any jurisdiction in which Chaparral is qualified to do business
on the Closing Date).

      (i) Demand on Amended El Paso/Chaparral Note. The Managing Member shall
cause Chaparral to make demand on the Amended El Paso/Chaparral Note (i) within
a sufficient time to enable Chaparral to be able to pay any Distributions to the
Class A Member when due pursuant to Section 5.1(c), which is expected to be in
accordance with Schedule I to the Amended El Paso/Chaparral Note, (ii) on the
occurrence of a Liquidating Event, (iii) on the Retirement Date and (iv) if
requested by the Primary Class B Member, on any Purchase Date; provided,
however, that each such demand shall be made only to the extent necessary to
permit Chaparral to satisfy its obligations under Section 5.1(c), 11.1, 11.2 or
12.2, as applicable.

      (j) Payment of Closing Costs. To the extent not paid from other sources,
the Managing Member shall cause Chaparral to pay the Closing Costs on the
Closing Date or, if due after the Closing Date, on the due date therefor.

                                       31

               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>
                                                         Chaparral LLC Agreement

      Section 6.6 Compensation and Expenses. Except as provided in Section 6.10
or Section 3.4(f), and except pursuant to, or as contemplated by, the Management
Agreement, no Member or Affiliate of any Member shall receive any salary, fee,
or draw for services rendered to or on behalf of Chaparral or otherwise in its
capacity as a Member, nor shall any Member or Affiliate of any Member be
reimbursed for any expenses incurred by such Member or Affiliate on behalf of
Chaparral or otherwise in its capacity as a Member; provided, however, that the
Managing Member shall be promptly reimbursed by Chaparral for all reasonable
costs and expenses incurred by the Managing Member or its Affiliates in
connection with the management and operation of Chaparral.

      Section 6.7 Demand on El Paso Loans Held by Mesquite or Mesquite's
Subsidiaries. The Managing Member shall cause Chaparral to cause Mesquite to (x)
make demand on the El Paso Loans held by Mesquite and (y) cause any Subsidiary
of Mesquite to make demand on the El Paso Loans held by such Subsidiary, in each
case, (i) within a sufficient time to provide Chaparral with sufficient funds to
enable Chaparral to pay any distributions to the Class A Member when due
pursuant to Section 5.1(c) that cannot be satisfied from the Amended El
Paso/Chaparral Note, (ii) on the occurrence of a Liquidating Event, (iii) on the
Retirement Date, (iv) if requested by the Class B Member, on any Purchase Date,
(v) to acquire additional Qualified Energy Assets and (vi) to otherwise satisfy
the obligations of Chaparral; provided, however, that, upon the delivery by the
Class A Member of a written request to the Managing Member at any time during
the period from the Earn-Out Period Commencement Date to the Earn-Out Period
Termination Date, the Managing Member shall cause Chaparral to cause Mesquite to
(x) make demand on the El Paso Loans held by Mesquite or (y) cause any
Subsidiary of Mesquite to make demand on the El Paso Loans held by such
Subsidiary, in each case, in the amount specified by the Class A Member in its
notice.

      Section 6.8 Execution of other Transaction Documents; Matters Relating to
Mesquite and the Overfund Trust.

      (a) Execution of Transaction Documents. On the Signing Date,
simultaneously with the execution and delivery of this Chaparral LLC Agreement,
the Managing Member on behalf of Chaparral shall execute and deliver, or cause
to be executed and delivered, all Transaction Documents to be entered into by
Chaparral on or prior to the Signing Date (to the extent not previously
executed), and any amendments, restatements or supplements thereto, and take
such further actions, as are contemplated in the Closing Agreement and otherwise
in connection with consummation of the Exchange Offer and the transactions
contemplated thereby.

      (b) Sole Member of Mesquite; Sole Beneficial Owner of Overfund Trust. The
Managing Member shall cause Chaparral to be the sole member of Mesquite, unless
all of the Members consent in accordance with Section 6.3(h) to the issuance of
additional interests in Mesquite. The Managing Member shall cause Chaparral to
be the sole beneficial owner of the Overfund Trust.

      (c) Governmental Permits, etc. of Mesquite. The Managing Member, on behalf
of Chaparral as sole member of Mesquite, shall cause Mesquite to obtain or
effect all Governmental Approvals necessary under, and otherwise comply with,
the laws of the jurisdictions in which it is conducting business and to comply
with all of its Contractual Obligations, except in any case

                                       32
               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>
                                                         Chaparral LLC Agreement

above where any failure to do so would not have an Aggregate Chaparral Material
Adverse Effect.

      (d) Mesquite Subsidiary Financial Statements, Etc. The Managing Member, on
behalf of Chaparral as sole member of Mesquite, shall cause Mesquite to provide
to any Member promptly following a request therefor by such Members any
financial statements, material operational data, other material reports and
material notices delivered to Mesquite or subsidiaries of Mesquite pursuant to
the Project Documents, subject to the restrictions set forth in Section 8.4.

      Section 6.9 Determination of Interest Rate on El Paso Loans. The El Paso
Loans shall be administered by the Managing Member on behalf of Chaparral. Each
Member agrees that in order for the Managing Member to manage effectively the El
Paso Loans, the following provisions shall apply:

            (a) The Managing Member shall: (i) determine the El Paso Applicable
      Rate for each Eurodollar Period for each El Paso Loan made by Chaparral,
      and shall notify El Paso and each of the Members of each such
      determination and (ii) at the request of Mesquite or any Subsidiary of
      Mesquite, determine the El Paso Applicable Rate for each Eurodollar Period
      for each El Paso Loan made by Mesquite or any such Subsidiary, as the case
      may be, and shall notify El Paso, each of the Members and Mesquite or such
      Subsidiary (as applicable) of each such determination.

            (b) Each Member shall promptly notify the Managing Member in the
      event any Member receives a notice from any financial institution to the
      effect that the Eurodollar Rate does not reflect the cost of funds for
      such financial institution in connection with any proposed or current
      borrowings by such Member from such financial institution. In the event
      any Member has given the notice described in the first sentence of this
      clause (b), such Member agrees that in the event subsequent thereto, it
      receives a notice from such financial institution to the effect that the
      Eurodollar Rate would again reflect the cost of funds for such financial
      institution in connection with any proposed or current borrowings by such
      Member from such financial institution, such Member shall promptly notify
      the Managing Member that it has received such a notice.

            (c) Upon its receipt of any notice described in clause (b) of this
      Section, the Managing Member shall promptly notify El Paso of the change
      in the El Paso Applicable Rate required by any El Paso Note.

      Section 6.10 Additional Financing Costs; New Administrative Expenses. The
Class A Member may deliver to the Managing Member and the Class B Members a
notice requesting reimbursement for Additional Financing Costs, which notice
shall (i) be accompanied by supporting documents that demonstrate in reasonable
detail, and shall certify in reasonable detail, the nature of and, if
applicable, the method of computation of, any Additional Financing Costs
requested to be paid, (ii) whether the specified Additional Financing Costs will
be recurring and, if known, the duration of such recurrence and (iii) the
Business Day on which the Class A Member requests the Additional Financing Costs
to be paid (the "ADDITIONAL FINANCING COSTS PAYMENT DATE") (which date shall be
at least five Business Days after the date of such notice;

                                       33

               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>
                                                         Chaparral LLC Agreement

provided, however, that if the Additional Financing Costs are recurring and the
duration of such recurrence has been provided to the Managing Member and the
Class B Members and such Additional Financing Costs Payment Date will not be the
first payment date for such recurring Additional Financing Costs, no prior
notice shall be required). The delivery of such notice shall be deemed to be a
demand by the Class A Member for payment by Chaparral of the Additional
Financing Costs requested in such notice.

            Upon receipt by Chaparral of a Capital Contribution pursuant to
Section 3.3(a)(ii), the Managing Member shall cause Chaparral to pay to the
Class A Member on or before 12:00 noon (New York City time) on the Additional
Financing Costs Payment Date the amount of Additional Financing Costs requested
and correctly certified in the related notice. Any payment by Chaparral, the
Indenture Trustee or the New Indenture Trustee of or with respect to Additional
Financing Costs or New Administrative Expenses shall be treated as a guaranteed
payment to the Class A Member and shall not affect the Class A Member's Capital
Account balance.

      Section 6.11 Certain Assets. The Managing Member hereby represents and
warrants to the Class A Member, as of the Closing Date, as follows: (a) with
respect to the Existing Assets and Specified New Assets listed on Schedule
3.2(b) hereto that are specified as contributed, that the amount shown on such
Schedule below the heading "Asset Value" for each such asset is the lower of (1)
El Paso's book value of such Existing Asset or Specified New Asset at the time
of contribution thereof as reflected on El Paso's books and records in
accordance with GAAP and (2) the Asset PV of such Existing Asset or Specified
New Asset; (b) with respect to the Existing Assets and Specified New Assets
listed on Schedule 3.2(b) hereto that are specified as purchased, that the
amount shown on such Schedule below the heading "Asset Value" is the capitalized
purchase price paid for such property by Mesquite; and (c) prior to the Closing
Date, there have been no adjustments to the Gross Asset Values of such Existing
Assets or Specified New Assets to reflect any Mark-to-Market Values.

      Section 6.12 Covenant of the Managing Member. Except as otherwise
permitted by this Chaparral LLC Agreement, the Managing Member hereby covenants
and agrees not to (i) take any action to file a certificate of cancellation or
its equivalent with respect to itself, (ii) withdraw or attempt to withdraw from
Chaparral, (iii) exercise any power under the LLC Act to dissolve Chaparral,
(iv) except incident to a Permitted Transfer, Dispose of all or any portion of
its Interest in Chaparral or (v) petition for judicial dissolution of Chaparral.
Further, except incident to a Permitted Transfer, the Managing Member hereby
covenants and agrees to continue to carry out the duties of the Managing Member
under this Chaparral LLC Agreement until Chaparral is dissolved and liquidated
pursuant to Article XII.

                                  ARTICLE VII

                          ROLE OF NON-MANAGING MEMBERS

      Section 7.1 Rights or Powers. No Member (other than the Managing Member)
shall have any right or power to take part in the management or control of
Chaparral or its business

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               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>
                                                         Chaparral LLC Agreement

and affairs or to act for or bind Chaparral in any way. Notwithstanding the
foregoing, the Members shall have all the rights and powers specifically set
forth in this Chaparral LLC Agreement, including those rights set forth in
Section 7.4. Any Member, any Affiliate thereof or an employee, stockholder,
agent, member, manager, director or officer of a Member or any Affiliate
thereof, may also be an employee or agent of Chaparral or a member, manager or
officer of the Managing Member. The existence of these relationships and acting
in such capacities will not result in such Member being deemed to be
participating in the control of the business of Chaparral or otherwise affect
the limited liability of such Member.

      Section 7.2 Voting Rights. Except for the Managing Member acting in its
capacity as such, each Member shall have the right to vote only on those matters
expressly reserved for its vote (i) as provided in this Chaparral LLC Agreement
or (ii) as required by mandatory provisions of the LLC Act.

      Section 7.3 Procedure for Consent. In any circumstances requiring the
approval or consent of any Member specified in this Chaparral LLC Agreement,
such approval or consent may, except as expressly provided to the contrary in
this Chaparral LLC Agreement, be given or withheld in the sole and absolute
discretion of such Member; provided, however, that, other than with respect to
any approval or consent required pursuant to Section 7.4, if any Member does not
deliver notice of its approval or consent, or its withholding of approval or
consent, within ten Business Days after such Member's receipt of a request for
any such approval or consent, then such Member's approval or consent shall be
deemed given or withheld, as the case may be, as directed by the Managing Member
in its sole discretion. If the Managing Member receives the necessary approval
or consent of the Members to such action, the Managing Member shall be
authorized and empowered to implement such action without further authorization
by the Members.

      Section 7.4 Special Rights of the Class A Member. Notwithstanding any
other provision hereof, the Class A Member (a) shall have the right and power to
control the liquidation of Chaparral as Liquidator as set forth in Article XII
and (b) shall have the sole right to exercise the rights of Chaparral (for
itself and as the sole member of Mesquite) set forth in Sections 4.3, 4.4, 4.5,
5 and 9 of the Management Agreement and in the definitions of "Applicable
Discount Rate," "Fair Market Value" and "Present Value" or "PV" therein.

                                  ARTICLE VIII

                          ACCOUNTING; BOOKS AND RECORDS

      Section 8.1 Accounting; Books and Records.

      (a) Maintenance of Books and Records. Chaparral shall maintain at its
principal place of business or, upon notice to the Members, at such other place
as the Managing Member shall determine, separate books of account for Chaparral,
which shall include a record of all costs and expenses incurred, all charges
made, all credits made and received, and all income derived in connection with
the conduct of Chaparral and the operation of its business in accordance with
this Chaparral LLC Agreement.

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                                                         Chaparral LLC Agreement

      (b) Accounting Methods.

            (i) Chaparral shall maintain appropriate books and records in a
      manner as necessary to comply with GAAP and with the Code and the
      Regulations.

            (ii) All amounts payable under any agreement between Chaparral on
      the one hand and the Members or their Affiliates (excluding Chaparral) on
      the other hand, other than Distributions, shall be treated as occurring
      between Chaparral and a Person who is not a Member within the meaning of
      Section 707(a)(1) of the Code and such amounts payable by Chaparral to any
      Member or such Member's Affiliates shall be considered an expense or
      capital cost, as the case may be, of Chaparral for income tax and
      financial reporting purposes, and shall not be considered a Distribution
      to such Member, including in maintaining such Member's Capital Account,
      and any such amounts payable by any Member or its Affiliates to Chaparral
      shall not, except as specifically contemplated by Article III, be
      considered a contribution to Chaparral, including in maintaining such
      Member's Capital Account.

      (c) Access to Books, Records, etc. Subject to Section 8.4, each Member or
any agents or representatives of any Member (subject to reasonable safety
requirements), upon reasonable notice and with reasonable frequency, may visit
and inspect any of the properties of Chaparral and examine any information it
may reasonably request and make copies of and abstracts from the financial and
operating records and books of account of Chaparral, and discuss the affairs,
finances and accounts of Chaparral with the Managing Member and directors,
officers and independent accountants of Chaparral at such reasonable times and
as often as such Member or any agents or representatives of such Member may
reasonably request, and Chaparral shall pay or reimburse any such Member for its
reasonable costs and expenses incurred in connection with such visits,
inspections and examinations; provided, however, that Chaparral shall have no
obligation to pay the expense of such visits, inspections and examinations in
any calendar year to the extent that the aggregate amount of all such expenses
of the Class A Member incurred during such calendar year exceeds $50,000, unless
(x) a Limestone Note Trigger Event, Specified Equity Event or Liquidating Event
has occurred and is continuing or (y) the Earn-Out Period Commencement Date has
occurred and the Earn Out Period has not ended. The rights granted to each
Member pursuant to this Section 8.1(c) are expressly subject to compliance by
such Member with the confidentiality procedures and guidelines of Chaparral, as
such procedures and guidelines may be established from time to time.

      Section 8.2 Reports.

      (a) In General. The Managing Member shall be responsible for the
preparation of financial reports of Chaparral and the coordination of financial
matters of Chaparral with Chaparral's accountants. Each report delivered by
Chaparral to the Members pursuant to this Section 8.2 shall be accompanied by a
representation of a Responsible Officer of El Paso that such report presents
fairly in all material respects the information contained therein, subject, in
the case of the reports to be delivered pursuant to Section 8.2(c), to year-end
audit adjustments.

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                                                         Chaparral LLC Agreement

      (b) Annual Reports. Within 120 days after the end of each Fiscal Year
commencing with the Fiscal Year ending December 31, 1999, the Managing Member
shall cause to be prepared and to be delivered to each other Member, the
following:

            (i) Financial Statements. A balance sheet as of the last day of such
      Fiscal Year and an income statement and statement of cash flows for
      Chaparral for (x) in the case of the Fiscal Year ending December 31, 1999,
      the period from formation of Chaparral to December 31, 1999, and (y) in
      the case of any other Fiscal Year, such Fiscal Year, and notes associated
      with each, in each case prepared in accordance with GAAP and audited by
      the Chaparral Accountants; and

            (ii) Discussion and Analysis. The Managing Member's discussion and
      analysis (a "DISCUSSION AND ANALYSIS") of the performance of Chaparral,
      Mesquite and the Project Companies during such Fiscal Year (including
      assets acquired during such Fiscal Year), on an aggregate basis,
      including: (A) major income statement items and comparison to the prior
      period and current period budget; (B) liquidity, capital requirements and
      availability of capital resources of the Project Companies and Mesquite,
      including any proposed financings; (C) status of Restructurings, including
      progress toward prospective Restructurings and material changes to the
      expected completion dates and expected gains and losses; (D) summary
      description and terms of assets acquired during the period that did not
      require consent of the Class A Member; (E) material changes to the
      operations of the Project Companies; (F) material changes to the industry
      environment which may impact the operations of the business, including
      underlying commodity prices and competitive landscape; and (G) any other
      information the Managing Member deems reasonably relevant.

The financial statements described in this Section 8.2(b) shall be accompanied
by a representation of the Managing Member stating that (x) the financial
statements described in clause (i) of this Section 8.2(b) present fairly, in all
material respects, the financial position of Chaparral at the end of the most
recently completed Fiscal Year and the results of its operations and its cash
flows for such applicable period, in conformity with GAAP and (y) after
reasonable inquiry, the Managing Member has no actual knowledge of the
occurrence of any Limestone Note Trigger Event, Specified Equity Event,
acceleration of the New Limestone Notes as a result of a New Indenture Event of
Default, Limestone Certificate Trigger Event or Liquidating Event (other than a
Liquidating Event of the type described in Section 12.1(a)), in any such case,
that is then continuing or, if the Managing Member has such actual knowledge,
specifying the then continuing event and the action that the Managing Member has
taken or proposes to take with respect thereto.

      (c) Quarterly Reports. Within 60 days after the close of each Fiscal
Quarter during any Fiscal Year beginning with the Fiscal Quarter ending March
31, 2000, the Managing Member shall cause to be prepared and to be delivered to
each other Member the following:

            (i) Financial Reports. Unaudited financial statements consisting of
      a balance sheet as of the last day of such Fiscal Quarter and an income
      statement and a statement of cash flows for Chaparral for such Fiscal
      Quarter, in each case prepared in accordance

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                                                         Chaparral LLC Agreement

      with GAAP except that such quarterly financial statements need not include
      footnote disclosure and may be subject to ordinary year-end adjustment;

            (ii) Officers Certificate. Written certification by a Responsible
      Officer of the Managing Member that Chaparral is in compliance with
      Section 6.5(a)(ii); and

            (iii) Discussion and Analysis. The Managing Member's summary level
      Discussion and Analysis of the performance of Chaparral, Mesquite and the
      Project Companies during such Fiscal Quarter (including assets acquired
      during such Fiscal Quarter), on an aggregate basis.

The financial statements described in this Section 8.2(c) shall be accompanied
by a representation of the Managing Member stating that (x) the financial
statements described clause (i) of this Section 8.2(c) present fairly, in all
material respects, the financial position of Chaparral at the end of the most
recently completed Fiscal Quarter and the results of its operations and its cash
flows for such Fiscal Quarter, in conformity with GAAP, subject to year end
audit requirements, and (y) after reasonable inquiry, the Managing Member has no
actual knowledge of the occurrence of any Limestone Note Trigger Event,
Specified Equity Event, acceleration of the New Limestone Notes as a result of a
New Indenture Event of Default, Limestone Certificate Trigger Event or
Liquidating Event (other than a Liquidating Event of the type described in
Section 12.1(a)), in any such case, that is then continuing or, if the Managing
Member has such actual knowledge, specifying the then continuing event and the
action that the Managing Member has taken or proposes to take with respect
thereto.

      (d) Retirement, Purchase Option and Liquidation Date Reports. The Managing
Member shall cause to be prepared and to be delivered to each Member (x) on any
Payment Date, a balance sheet as of the Mark-to-Market Measurement Date setting
forth the aggregate Mark-to-Market Value for each of the Chaparral Permitted
Assets (a "MARK-TO-MARKET BALANCE SHEET") together with a certificate by the
Managing Member that such statements have been prepared in accordance with this
Chaparral LLC Agreement, subject to adjustment as a result of the audit to be
provided pursuant to the following clause (y) and (y) on the date on which final
distributions are made to the Members pursuant to Section 12.2 and not later
than seventy-five (75) days after the Retirement Date on which the Class A
Member Interest is retired or the Purchase Date, certification by the Chaparral
Accountants that such statements have been prepared in accordance with this
Chaparral LLC Agreement.

      (e) Valuation Reports. The Managing Member shall cause to be prepared
contemporaneously with any adjustment to the Gross Asset Values of Chaparral
assets in accordance with clause (ii) of the definition of Gross Asset Value,
reports required to determine the Mark-to-Market Value of such assets and (x) in
the event any Chaparral Permitted Asset is acquired (whether by contribution or
purchase), sold or distributed by Chaparral, with respect to such Chaparral
Permitted Asset only and (y) upon the occurrence of any adjustment to the Gross
Asset Value of all Chaparral Permitted Assets, with respect to all Chaparral
Permitted Assets, and the Managing Member shall furnish such reports to each
Member.

      (f) [Reserved].

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                                                         Chaparral LLC Agreement

      Section 8.3 Tax Matters.

      (a) Actions by Managing Member. The Managing Member is authorized to make
any and all elections for federal, state, and local tax purposes including any
election, if permitted by applicable law: (i) to adjust the basis of Chaparral
Property pursuant to Code Sections 754, 734(b) and 743(b), or comparable
provisions of state or local law, in connection with Dispositions of Interests
in Chaparral and Chaparral distributions; (ii) with the consent of the Members,
to extend the statute of limitations for assessment of tax deficiencies against
the Members with respect to adjustments to Chaparral's federal, state, or local
tax returns; and (iii) to the extent provided in Code Sections 6221 through
6231, to represent Chaparral and the Members before taxing authorities or courts
of competent jurisdiction in tax matters affecting Chaparral or the Members in
their capacities as Members, and to file or cause to be filed any tax returns
and execute any agreements or other documents relating to or affecting such tax
matters, including agreements or other documents that bind the Members with
respect to such tax matters or otherwise affect the rights of Chaparral and the
Members. The Managing Member is specifically authorized to act as the "TAX
MATTERS MEMBER" under the Code and in any similar capacity under state or local
law.

      (b) Tax Information and Filings. The Managing Member shall deliver or
cause to be delivered to each Member necessary tax information for each Member's
estimated quarterly tax filings as soon as practicable after the end of each
quarter of each Fiscal Year of Chaparral. The Managing Member shall deliver or
cause to be delivered to each Member: (i) on or prior to March 30 of each Fiscal
Year, the Managing Member's good faith estimate of the amount of such Member's
allocable share of taxable income or loss of Chaparral for the preceding Fiscal
Year, (ii) on or prior to July 30 of each Fiscal Year, an update of the estimate
for the preceding Fiscal Year delivered pursuant to clause (i) and (iii) as soon
as practicable after the end of each Fiscal Year of Chaparral but not later than
September 15 of the next succeeding Fiscal Year, necessary tax information for
each Member's annual tax filings. The Managing Member shall file or cause to be
filed tax or information returns and all other filings for Chaparral prepared in
accordance with the Code, the Regulations and applicable state and local tax
laws. The Managing Member shall use reasonable efforts to provide the Class A
Member with details concerning the foregoing information upon the Class A
Member's reasonable inquiries.

      (c) Tax Classification.

            (i) The Managing Member shall take such action as may be required
under the Code and Regulations to cause Chaparral to be treated as a partnership
and Mesquite to be treated as a disregarded entity for United States federal
income tax purposes.

            (ii) To the extent Section 8.3(c)(i) does not govern the state and
local tax classification of Chaparral and Mesquite, the Managing Member shall
take such action as may be required under applicable state and/or local law to
cause Chaparral to be treated as, and in a manner consistent with a partnership
(or the functional equivalent thereof) and to cause Mesquite to be treated as,
and in a manner consistent with a disregarded entity (or the functional
equivalent thereof) for state and local income and franchise tax purposes;
provided, that the Managing Member shall not take any action under this clause
(c)(ii) which would be inconsistent with its obligations under Section
8.3(c)(i).

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               Fifth Amended and Restated Chaparral LLC Agreement
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                                                         Chaparral LLC Agreement

      Section 8.4 Proprietary Information. Notwithstanding any provision of this
Chaparral LLC Agreement or any other Transaction Document to the contrary, the
Class A Member shall not have access to (i) information that the Managing Member
reasonably believes to be in the nature of trade secrets or proprietary
information, (ii) any information subject to the attorney-client privilege or
(iii) any information that is required by Applicable Law or any Contractual
Obligation entered into by any Class B Member, Chaparral or any Project Company
in good faith or other Obligation to be kept confidential, unless, in any such
case, (A) the disclosure of such information to the Class A Member does not
contravene or constitute a default under any Project Document and (B) the Class
A Member shall have executed and delivered to the Managing Member a
confidentiality agreement that (x) is substantially in the form attached hereto
as Exhibit D and is otherwise reasonably acceptable to the Members (including
the Managing Member) and (y) if applicable, complies with all requirements set
forth in any Project Document that restricts access to any such information.

                                   ARTICLE IX

                              AMENDMENTS; MEETINGS

      Section 9.1 Amendments. Amendments to this Chaparral LLC Agreement may be
proposed by the Members. Following such proposal, the Managing Member shall
submit to the Members a verbatim statement of any proposed amendment if counsel
for Chaparral shall have approved of the same in writing as to form, and the
Managing Member shall include in any such submission a recommendation as to the
proposed amendment. The Managing Member shall seek the written vote of the
Members on the proposed amendment or shall call a meeting to vote thereon and to
transact any other business that it may deem appropriate. A proposed amendment
shall be adopted and be effective as an amendment to this Chaparral LLC
Agreement only if it receives the affirmative vote of all of the Members.

      Section 9.2 Meetings of the Members. (a) Meetings of the Members may be
called by the Managing Member and shall be called upon the written request of
any Member. The notice shall state the nature of the business to be transacted.
Subject to other requirements specified herein regarding notice periods, notice
of any such meeting shall be given to all Members not less than five Business
Days nor more than thirty days prior to the date of such meeting. Members may
vote in person, by proxy or by telephone at such meeting. Whenever the vote or
consent of Members is permitted or required under this Chaparral LLC Agreement,
such vote or consent may be given at a meeting of Members or may be given in
accordance with the procedure prescribed in Section 9.3. Except as otherwise
expressly provided in this Chaparral LLC Agreement, the unanimous vote of the
Members shall be required to constitute the act of the Members.

      (b) For the purpose of determining the Members entitled to vote on, or to
vote at, any meeting of the Members or any adjournment thereof, the Managing
Member or the Member requesting such meeting may fix, in advance, a date as the
record date for any such determination. Such date shall not be more than thirty
days nor less than one Business Day before any such meeting.

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               Fifth Amended and Restated Chaparral LLC Agreement
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                                                         Chaparral LLC Agreement

      (c) Each Member may authorize any Person or Persons to act for it by proxy
on all matters in which the Member is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. Every proxy must
be signed by the Member or its attorney-in-fact. No proxy shall be valid after
the expiration of eleven months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the Member
executing it or as provided under the terms of such proxy.

      (d) Each meeting of Members shall be conducted by the Managing Member or
such other Person as the Managing Member may appoint pursuant to such rules for
the conduct of the meeting as the Managing Member or such other Person deems
appropriate.

      Section 9.3 Unanimous Consent. In the event the consent of the Members is
required for any action to be taken by Chaparral, such consent may be given at a
meeting, which may be conducted by conference telephone call, or provided in a
writing executed by all the Members.

                                   ARTICLE X

                             TRANSFERS OF INTERESTS

      Section 10.1 Restriction on Dispositions of Interests.

      (a) Dispositions of Class A Member Interest. Except as provided in Article
XI or Section 13.15, the Class A Member shall not Dispose of (other than by a
retirement or redemption) all or any portion of its Class A Member Interest or
withdraw from Chaparral without the prior written consent of the Primary Class B
Member in its sole discretion; provided, however, that no such consent of the
Primary Class B Member shall be required in connection with the Disposition by
the Class A Member of its Class A Member Interest to a Qualified Holder at any
time (x) after (i) the occurrence of a Limestone Note Trigger Event or (ii) the
occurrence of a Specified Equity Event or (y) during the Earn-Out Period.
Following any such Disposition by Limestone of its entire Class A Member
Interest in Chaparral, Limestone shall be deemed withdrawn from Chaparral as a
Class A Member. Upon any Disposition, in whole or in part, made in accordance
with this Section 10.1(a), the transferee of such Interest will be admitted as a
Class A Member of Chaparral without further action or consent by any other
Member.

      (b) Dispositions of Class B Member Interest and any Additional Class B
Member Interest. No Class B Member shall Dispose of its Class B Member Interest
to any Person or withdraw from Chaparral without the prior written consent of
the Class A Member; provided, however, that any Class B Member may Dispose of
all or any portion of its Class B Member Interest to any El Paso Affiliate that
is a Qualified Holder and shall, if such interest is transferred in whole, be
deemed withdrawn from Chaparral as a Class B Member. Except as provided in
Article XI or Section 13.15, no holder of any Additional Class B Member Interest
shall Dispose of (other than by a retirement or redemption) all or any portion
of such Additional Class B Member Interest without the prior written consent of
the Primary Class B Member in its sole discretion; provided, that no such
consent of the Primary Class B Member shall be required in connection with the
Disposition by the holder of any Additional Class B Member Interest to a

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               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>
                                                         Chaparral LLC Agreement

Qualified Holder after the occurrence of a Limestone Note Trigger Event,
Specified Equity Event or Limestone Certificate Trigger Event. Following any
Disposition in whole by the holder of any Additional Class B Member Interest,
such holder shall be deemed withdrawn from Chaparral as a Class B Member. Upon
any Disposition made in accordance with this Section 10.1(b), the transferee of
such Interest will be admitted as a Class B Member of Chaparral without further
action or consent by any other Member.

      (c) Permitted Transfers. Any Disposition permitted by this Section 10.1
shall be referred to in this Chaparral LLC Agreement as a "PERMITTED TRANSFER,"
the Person to which the Interest is transferred shall be a "PERMITTED
TRANSFEREE" and the Interest transferred shall be a "TRANSFERRED INTEREST." A
Permitted Transferee shall be entitled to become a substituted Member in
Chaparral in respect of the applicable Transferred Interest without any further
act on the part of any other Member or the Managing Member being required. Any
Permitted Transferee of 100% of the Primary Class B Member's Interest shall
become the successor Managing Member hereunder without any further act on the
part of any other Member being required.

      Section 10.2 Prohibited Dispositions. Any purported Disposition of an
Interest that is not a Permitted Transfer shall be null and void and of no
effect whatever; provided, however, that, if Chaparral is required to recognize
a Disposition of an Interest that is not a Permitted Transfer, the Transferred
Interest shall be strictly limited to the transferor's rights to allocations and
distributions as provided by this Chaparral LLC Agreement with respect to the
Transferred Interest, which allocations and distributions may be applied
(without limiting any other legal or equitable rights of Chaparral) to satisfy
any debts or obligations, or liabilities for damages that the transferor or
transferee of such Interest may have to Chaparral.

      To the fullest extent permitted by law, in the case of a Disposition or
attempted Disposition of an Interest that is not a Permitted Transfer, the
parties engaging or attempting to engage in such Disposition shall be liable to
indemnify and hold harmless Chaparral and the other Members from all losses,
costs, liability, and damages that any of such indemnified Persons may incur
(including incremental tax liability and reasonable lawyers' fees and expenses)
as a result of such Disposition or attempted Disposition and efforts to enforce
the indemnity granted hereby.

                                   ARTICLE XI

               RETIREMENT OPTION; PURCHASE OPTION; EARN-OUT PERIOD

      Section 11.1 Class B Member's Retirement Option.

      (a) The Primary Class B Member may elect, at any time prior to a
Liquidating Event, to cause not less than all of the Class A Member Interest to
be retired in accordance with this Section 11.1 (the "RETIREMENT OPTION"), by
making an Irrevocable Election and giving written notice thereof (a "RETIREMENT
NOTICE") to Chaparral, the other Members, the Indenture Trustee (if any
Limestone Notes are then Outstanding) and the New Indenture Trustee (if any New
Limestone Notes are then Outstanding); provided, however, that (i) the
Retirement Option shall

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<PAGE>
                                                         Chaparral LLC Agreement

not be exercised by the Primary Class B Member if the Retirement Amount payable
in connection with such Retirement Option would exceed the balance of the Class
A Member's Capital Account immediately after giving effect to the adjustments
and allocations required by the first sentence of Section 11.1(c) and (ii) the
Retirement Option may not be exercised during the Earn-Out Period at any time
following the date on which an Asset Remedy Notice becomes effective pursuant to
Section 11.3(b) until the earlier of the date of (x) the rescission of such
Asset Remedy Notice by the Class A Member and (y) the Distribution of the
proceeds received from the sale of all assets identified in such Asset Remedy
Notice in accordance with Section 5.1(d).

      (b) Any Retirement Notice shall include the following:

            (i) a statement that the entire Class A Member Interest is to be
      retired;

            (ii) the date on which the retirement distribution shall be made to
      the Class A Member (the "RETIREMENT DATE"), which date shall not be less
      than ten Business Days nor more than ninety days after the date on which
      the Retirement Notice was given; provided, however, that prior to the
      Earn-Out Period Commencement Date and so long as any Limestone Notes or
      New Limestone Notes are Outstanding, if an Asset Remedy Notice or
      Liquidation Notice has been delivered or a Specified Equity Event has
      occurred, in each case prior to the delivery of such Retirement Notice,
      the Retirement Date shall not be later than (A) the date upon which such
      Asset Remedy Notice or Liquidation Notice, as the case may be, becomes
      effective pursuant to Section 11.3(a)(i) or Section 12.10(a), respectively
      or (B) in the case of a Specified Equity Event, the later to occur of (x)
      the earlier of the Special Management Replacement Date and the date on
      which an Asset Remedy Notice becomes effective in accordance with Section
      11.3(a), as applicable, and (y) the fifth Business Day following delivery
      of such Retirement Notice (provided such Retirement Notice is given prior
      to either of the dates referred to in clause (x) above); and

            (iii) a representation and warranty by the Primary Class B Member
      that Chaparral has, or will have on the Retirement Date, Cash in an amount
      equal to or greater than the Retirement Amount.

      (c) On the Retirement Date, the Gross Asset Values of all of Chaparral
assets shall be adjusted to equal their respective Mark-to-Market Values as of
the Mark-to-Market Measurement Date and any Net Income, Net Losses and other
items of income, gain, loss and deduction of Chaparral shall be allocated among
the Members as of such Mark-to-Market Measurement Date in accordance with
Article IV. Solely for GAAP accounting purposes, the retirement of the Class A
Member Interest pursuant to this Section 11.1(c) shall be deemed to be effective
on the applicable Mark-to-Market Measurement Date. For all purposes of the
Transaction Documents, on and after the retirement of the Class A Member
Interest pursuant to this Section 11.1(c), the Class A Member shall be deemed to
have withdrawn as, and no longer be, a Class A Member hereunder.

      (d) On the Retirement Date, Chaparral shall Distribute to the Class A
Member Cash in an amount equal to the Purchase Price that would have been
payable on the applicable

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<PAGE>
                                                         Chaparral LLC Agreement

Retirement Date if the Electing Members had delivered a Purchase Option Notice
specifying such Retirement Date as the Purchase Date (the "RETIREMENT AMOUNT").
Such Distribution shall be made to the Class A Member, and the Class A Member
Interest in Chaparral shall be retired, at 11:00 a.m. (New York City time) on
the Retirement Date. Distributions to the Class A Member in connection with a
retirement of the Class A Member Interest shall consist solely of Cash unless
otherwise consented to by the Class A Member.

      (e) Treatment as a Retirement under Section 736. Payments made in
liquidation of the Interest of the retiring Class A Member other than the
Termination Period Guaranteed Payment, shall be made in exchange for the
interest of such Member in Chaparral Property pursuant to Section 736(b)(1) of
the Code, including the interest of such Member in the goodwill of Chaparral.

      Section 11.2 Class B Member's Purchase Option.

      (a) The Primary Class B Member may, at any time permitted pursuant to
Section 11.2(b), elect to purchase or to cause the purchase of the Class A
Member's entire Class A Member Interest (the "PURCHASE OPTION"); provided, that
the Primary Class B Member makes an Irrevocable Election and the Electing
Purchasers give written notice to all the Members, the Indenture Trustee (if any
Limestone Notes are then Outstanding) and New Indenture Trustee (if any New
Limestone Notes are then Outstanding) (the "PURCHASE OPTION NOTICE"). The
Primary Class B Member may designate any Person as having the right, and may
assign to any Person the right, to purchase all or a portion of the Class A
Member Interest (the Primary Class B Member and each such designee or assignee,
an "ELECTING PURCHASER").

      (b) The Purchase Option may be exercised at any time prior to the earliest
to occur of: (i) a Liquidating Event, (ii) after a Limestone Note Trigger Event
has occurred, the end of the Asset Remedy Standstill Period for such Limestone
Note Trigger Event or (iii) if a Specified Equity Event has occurred and is
continuing, the earlier of the Special Management Replacement Date and the date
on which an Asset Remedy Notice becomes effective in accordance with Section
11.3(a); provided, however, that the Purchase Option may not be exercised during
the Earn-Out Period at any time following the date on which an Asset Remedy
Notice becomes effective pursuant to Section 11.3(b) until the earlier of the
date of (x) the rescission of such Asset Remedy Notice by the Class A Member and
(y) the Distribution of the proceeds received from the sale of all assets
identified in such Asset Remedy Notice in accordance with Section 5.1(d).

      (c) Any Purchase Option Notice shall include the following:

            (i) a statement that the entire Class A Member Interest is to be
purchased;

            (ii) a statement listing the Electing Purchasers and specifying the
amount of the Class A Member Interest that each such Electing Purchaser has
agreed to purchase; and

            (iii) a statement specifying the date on which the closing of the
purchase and sale of the Class A Member Interest shall occur (the "PURCHASE
DATE"), which Purchase Date shall not be less than ten Business Days nor more
than ninety days after the date on which the Purchase Option Notice was given;
provided, however, that prior to the Earn-Out Period

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               Fifth Amended and Restated Chaparral LLC Agreement
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                                                         Chaparral LLC Agreement

Commencement Date and so long as any Limestone Notes or New Limestone Notes are
outstanding, if (x) an Asset Remedy Notice or Liquidation Notice has been
delivered or (y) a Specified Equity Event has occurred, in each case prior to
the delivery of such Purchase Option Notice, then the Purchase Date shall not be
later than (A) the date upon which such Asset Remedy Notice or Liquidation
Notice as the case may be, becomes effective pursuant to Section 11.3(a)(i),
Section 12.10(a), respectively or (B) in the case of a Specified Equity Event,
the later to occur of (x) the earlier of the Special Management Replacement Date
and the date on which an Asset Remedy Notice becomes effective in accordance
with Section 11.3(a), as applicable, and (y) the fifth Business Day following
delivery of such Purchase Option Notice (provided that such Purchase Option
Notice is given prior to either of the dates referred to in clause (x) above).

      (d) Mark-to-Market. On the Purchase Date, the Gross Asset Values of all of
Chaparral assets shall be adjusted to equal their respective Mark-to-Market
Values as of the Mark-to-Market Measurement Date and any Net Income, Gross
Income, Net Losses and other items of income, loss, gain, deduction and credit
of Chaparral shall be allocated among the Members as of such Mark-to-Market
Measurement Date in accordance with Article IV.

      (e) Purchase Price/Payment. On the Purchase Date, the Electing
Purchaser(s) shall pay to the Class A Member an amount of Cash equal to the
following (the "PURCHASE PRICE"):

            (i) If the Purchase Option is exercised on or prior to the Earn-Out
      Period Commencement Date, the Purchase Price shall be the greater of (a)
      the sum of (x) the balance of the Class A Member's Capital Account (as of
      the Purchase Date and after giving effect to the allocations resulting
      from the adjustments described in Section 11.2(d)), and (y) the
      Termination Period Guaranteed Payment that would be payable in respect of
      the period beginning immediately after the Mark-to-Market Measurement Date
      and ending on the Purchase Date, and (b) the sum of (I) the accrued Class
      A Member's Priority Return accrued from the immediately preceding
      Distribution Date to the Purchase Date without regard to the portion
      thereof described in clause (b)(iv) of the definition of Class A Member's
      Priority Return, (II) the excess as of the immediately preceding
      Distribution Date of the amount required to be Distributed pursuant to
      Section 5.1(a) on such date over the amount Distributed pursuant to
      Section 5.1(a) on such date, (III) the aggregate outstanding principal
      amount of the Limestone Notes and the New Limestone Notes, (IV) the
      Limestone Equity Cash Component, (V) if no Limestone Note Trigger Event,
      Limestone Certificate Trigger Event or Specified Equity Event or
      acceleration of the New Limestone Notes as a result of a New Indenture
      Event of Default (other than Specified Equity Event arising solely as a
      result of an acceleration of the New Limestone Notes as a result of a New
      Indenture Event of Default of the type described in Section 9.01(a) of the
      New Indenture) has occurred, the Limestone Equity Cash Component
      Make-Whole Premium, (VI) the Limestone Equity PIK Component, (VII) if the
      Purchase Date is prior to the Maturity Date, the Limestone Equity PIK
      Component Make-Whole Premium, if any, and (VIII) all accrued and
      unreimbursed Additional Financing Costs, in each case, as of the Purchase
      Date; or

            (ii) In the event that the Purchase Option is exercised after the
      Earn-Out Period Commencement Date, the greater of (a) the amount that
      would be determined

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                                                         Chaparral LLC Agreement

      pursuant to Section 11.2(e)(i) and (b) an amount that would if distributed
      on the Purchase Date with respect to the Limestone Certificates result in
      an IRR of 21% for the period from December 28, 1999 to the Earn-Out Period
      Commencement Date and 25% from the Earn-Out Period Commencement Date to
      the Purchase Date. For purposes of the determination made pursuant to
      clause (a) of the preceding sentence, it shall be assumed that: (I) an
      Earn-Out Period Commencement Date has not occurred, except for purposes of
      computing any amount (including but not limited to the Class A Member's
      Priority Return) that is determined by reference to any date; and (II) a
      Limestone Note Trigger Event and Limestone Certificate Trigger Event has
      occurred on the date the Purchase Option Notice is delivered and (III)
      Section 11.2(e)(i)(b)(VII) shall be applied as if it read in its entirety
      "the Unpaid Premium Amount, and."

      (f) Purchase. (i) The closing of the purchase and sale of the Class A
Member Interest shall occur on the Purchase Date specified in the Purchase
Option Notice.

            (ii) The closing shall occur at such place as is mutually agreeable
      to the Members, or upon the failure to agree, at the principal place of
      business of Chaparral. On the Purchase Date, the Class A Member shall
      deliver to the Electing Purchasers good title to the Class A Member
      Interest purchased, free and clear of any liens, claims, encumbrances,
      security interests or options.

            (iii) On the Purchase Date, the Members shall execute such documents
      and instruments of conveyance as may be necessary or appropriate to
      effectuate the transaction contemplated hereby, including the Disposition
      of the Class A Member Interest. The reasonable costs of such Disposition
      and closing, including attorneys' fees and filing fees of the Members,
      shall be paid by the Electing Purchasers in proportion to their respective
      Class A Member Interest.

            (iv) Solely for GAAP accounting purposes and for purposes of the
      Act, the purchase of the Class A Member Interest pursuant to this Section
      11.2 shall be deemed to be effective as of the close of business on the
      applicable Mark-to-Market Measurement Date and, thereafter, the Electing
      Purchasers shall be admitted as substitute Class A Members of Chaparral in
      respect of the portions of Limestone's (or its successor's) Class A Member
      Interest acquired thereby and the Class A Member shall be deemed withdrawn
      as, and shall no longer be, a Class A Member hereunder.

      (g) Treatment as Purchase Under Section 741. The Members agree to treat
the Disposition of the Class A Member Interest to the Electing Purchasers
pursuant to this Section 11.2 as a purchase and sale under Section 741 of the
Code and not as a retirement under Section 736 of the Code.

      Section 11.3 Asset Remedy.

      (a) Asset Remedy Prior to Earn-Out Period. (i) So long as any Limestone
Notes or any New Limestone Notes are outstanding, the Class A Member may, at any
time following the occurrence of a Limestone Note Trigger Event, or, after the
repayment in full of all Outstanding Limestone Notes, a Specified Equity Event,
elect to cause the sale of one or more assets of

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                                                         Chaparral LLC Agreement

Chaparral or Mesquite in accordance with paragraph (c) below (the "ASSET
REMEDY"), by delivering to the Managing Member (and, if the Primary Class B
Member is not the Managing Member, the Primary Class B Member) a written notice
of such election specifying the assets subject to such notice (an "ASSET REMEDY
NOTICE"), and such Asset Remedy Notice shall, unless the entire Class A Member
Interest is retired pursuant to Section 11.1 or purchased pursuant to Section
11.2 on or prior to (A) the applicable expiration of the Asset Remedy Standstill
Period or (B) in the case of a Specified Equity Event, the Special Management
Standstill Expiration Date, become effective to cause an Asset Remedy (x) upon
the applicable expiration of the Asset Remedy Standstill Period or (y) in the
case of a Specified Equity Event, the Special Management Standstill Expiration
Date; provided, however, that the Class A Member may rescind such Asset Remedy
Notice by delivering to the Managing Member (and, if the Primary Class B Member
is not the Managing Member, the Primary Class B Member) written notice of such
rescission; provided, further, that in the case of a Specified Equity Event,
such Asset Remedy Notice shall not become effective if the Specified Equity Cure
has occurred on or before the 30th day after the Specified Equity Event;
provided, further, that if the Certificate Purchase Option is consummated prior
to the date on which such notice delivered in connection with such Specified
Equity Event becomes effective, then such notice shall be deemed to have been
revoked and shall be of no further force and effect. Any such rescission shall
not affect the Class A Member's right to deliver any subsequent Asset Remedy
Notice.

            (ii) So long as no Limestone Notes and no New Limestone Notes are
      outstanding, and provided that the Earn-Out Period has not commenced, the
      Class A Member may, at any time following the occurrence and during the
      continuance of a failure of the Class A Member to receive any payment of
      the Class A Member's Cumulative Priority Return under Section 5.1(a)
      within five Business Days of any applicable Distribution Date, elect to
      cause the Asset Remedy by delivering to the Managing Member (and, if the
      Primary Class B Member is not the Managing Member, the Primary Class B
      Member) an Asset Remedy Notice and such Asset Remedy Notice shall become
      effective to cause an Asset Remedy on the 10th Business Day following
      delivery of such Asset Remedy Notice; provided, however, that the Class A
      Member may rescind such Asset Remedy Notice by delivering to the Managing
      Member (and, if the Primary Class B Member is not the Managing Member, the
      Primary Class B Member) written notice of such rescission; and provided,
      further, that if an Irrevocable Election has been made by the Primary
      Class B Member and a Purchase Option Notice or a Retirement Notice has
      been delivered on or prior to such 10th Business Day, no Asset Remedy
      Notice shall become effective to cause an Asset Remedy until the day after
      the Purchase Date or Retirement Date, as the case may be, specified in
      such notice (and then if, but only if, such purchase or retirement is not
      consummated). Any such rescission shall not affect the Class A Member's
      right to deliver any subsequent Asset Remedy Notice.

      (b) Asset Remedy During Earn-Out Period. The Class A Member may, on any
date during the Earn-Out Period, elect to cause the Asset Remedy by delivering
to the Managing Member (and, if the Primary Class B Member is not the Managing
Member, the Primary Class B Member) an Asset Remedy Notice and such Asset Remedy
Notice shall become effective to cause an Asset Remedy on the 10th Business Day
following delivery of such Asset Remedy Notice; provided, however, that the
Class A Member may rescind any Asset Remedy Notice by

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                                                         Chaparral LLC Agreement

delivering to the Managing Member (and, if the Primary Class B Member is not the
Managing Member, the Primary Class B Member) written notice of such rescission;
and provided, further, that if an Irrevocable Election has been made by the
Primary Class B Member and a Purchase Option Notice or Retirement Notice has
been delivered on or prior to such 10th Business Day, no Asset Remedy Notice
shall become effective to cause an Asset Remedy until the day after the Purchase
Date or Retirement Date, as the case may be, specified in such notice (and then
if, but only if, such purchase or retirement is not consummated). Any such
rescission shall not affect the Class A Member's right to deliver any subsequent
Asset Remedy Notice.

      (c) Dispositions. After the effective election of the Asset Remedy, the
Class A Member shall have the right and authority to cause Chaparral to Dispose
of any Chaparral Property, and cause Chaparral to cause Mesquite to Dispose of
any Mesquite Property; provided, however, that no such Disposition shall be made
to any Person that is the Class A Member, a Certificateholder, or any Restricted
Person.

      Section 11.4 Earn-Out Period.

      (a) Allocations; Distributions. During the Earn-Out Period (i) Net Income
and Net Losses shall be allocated as set forth in Section 4.2 and (ii)
Distributions shall be made to the Class A Member as set forth in Section
5.1(b).

      (b) Restrictions on Authority of Managing Member. Notwithstanding any
power or authority granted the Managing Member under the LLC Act, the Chaparral
Certificate of Formation or this Chaparral LLC Agreement, during the period
commencing on the Earn-Out Period Commencement Date and ending on the Earn-Out
Period Termination Date, (i) the Managing Member shall not have the authority
to, and covenants and agrees that it shall not, take any of the following
actions without the consent of all of the Members: (x) cause or permit Chaparral
or Mesquite to acquire (by purchase, contribution or exchange) any additional
assets, (y) cause or permit Chaparral or Mesquite to incur any additional
Indebtedness, or (z) cause or permit Chaparral or Mesquite to make any
Dispositions other than (1) Dispositions to provide Cash to be Distributed to
Chaparral for the purpose of enabling Chaparral to make Distributions under
Section 5.1(b) and (2) Dispositions of the type described in clause (B), (C), or
(E) of Section 6.3(e), and (ii) the Managing Member, on behalf of Chaparral as
sole member of Mesquite, shall cause Mesquite to distribute to Chaparral all
Available Cash of Mesquite to the extent permitted to be distributed in
accordance with the Mesquite Financing Documents (other than Mesquite Specified
Credit Documents) and the Transaction Documents.

      (c) Expiration of Earn-Out Period. If no Liquidating Event shall have
occurred, then on and after the Earn-Out Period Termination Date: (i) the Class
A Member shall have no right or authority to cause Chaparral to take any action
and, without limitation of the foregoing, all of the Class A Member's rights
under Section 7.4 shall be terminated and the Class B Member shall, without
further action, have all of the rights given to the Class A Member under such
Section, (ii) the Class B Member shall have the right and authority to cause
Chaparral to admit one or more additional Members and/or issue additional
membership interests, in each case as directed by the Class B Member, and (iii)
the Class B Member shall have the right to cause Chaparral to retire the Class A
Member Interest for an amount equal to the Class A Member's then current Capital
Account balance.

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               Fifth Amended and Restated Chaparral LLC Agreement
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                                                         Chaparral LLC Agreement

                                  ARTICLE XII

                           DISSOLUTION AND WINDING UP

      Section 12.1 Liquidating Events. Chaparral shall dissolve and commence
winding up and liquidating upon the first to occur of any of the following
(collectively, "LIQUIDATING EVENTS"):

            (a) Expiration of Term. The tenth anniversary of the Closing Date.

            (b) Liquidation Notice. The date on which, pursuant to Section
      12.10, a Liquidation Notice becomes effective to cause a Liquidating
      Event.

            (c) Unanimous Vote. The unanimous vote of the Members to dissolve,
      wind up, and liquidate Chaparral or Mesquite.

            (d) Voluntary Withdrawal or Removal of Managing Member. The
      voluntary withdrawal or removal of the Managing Member.

            (e) Illegality, etc. The happening of any event that makes it
      unlawful, impossible, or impractical to carry on the business of Chaparral
      or the Delaware Court of Chancery has entered a decree pursuant to Section
      18-802 of the LLC Act, and such decree has become final.

            (f) Failure of Earn-Out. The third anniversary of the Earn-Out
      Period Commencement Date shall have occurred and there has been no prior
      Earn-Out Period Termination Date.

The Members hereby agree that, notwithstanding any provision of the LLC Act,
Chaparral shall not dissolve prior to the occurrence of a Liquidating Event.
Upon the occurrence of any event set forth in Section 12.1(a) (so long as no
other Liquidating Event has occurred), Chaparral shall not be dissolved or
required to be wound up if at the time of such event there is at least one
remaining Member and that Member carries on the business of Chaparral in
accordance with Section 18-801 of the LLC Act (any such remaining Member being
hereby authorized to carry on the business of Chaparral). If at such time there
is not at least one remaining Member or the remaining Member does not carry on
the business of Chaparral, Chaparral shall be liquidated in accordance with this
Article XII.

      Section 12.2 Winding Up. Upon the occurrence of a Liquidating Event,
Chaparral shall continue solely for the purposes of winding up its affairs in an
orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Members, and no Member shall take any action with respect to
Chaparral that is inconsistent with the winding up of Chaparral's business and
affairs; provided that all covenants contained in this Chaparral LLC Agreement
and obligations provided for in this Chaparral LLC Agreement shall continue to
be fully binding upon the Members until such time as Chaparral Property has been
distributed pursuant to this Section 12.2 and the Chaparral Certificate of
Formation has been canceled pursuant to the LLC Act. The Liquidator shall be
responsible for overseeing the winding up and dissolution of

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                                                         Chaparral LLC Agreement

Chaparral. On the occurrence of a Liquidating Event, the Gross Asset Values of
all of Chaparral's assets shall be adjusted to equal their respective Mark-to
Market Values as of the Mark-to-Market Measurement Date and any Net Income,
Gross Income, Net Losses and other items of income, loss, deduction, gain and
credit of Chaparral shall be allocated among the Members as of such
Mark-to-Market Measurement Date in accordance with Article IV. The Liquidator
shall take full account of Chaparral's liabilities and the Chaparral Property
and, except as otherwise provided in Section 12.3, shall, within 75 days of the
occurrence of a Liquidating Event or, in the event that the certification by the
Chaparral Accountants required by Section 8.2(d) has not been delivered by such
75th day as soon as practicable after delivery of such accountant's
certification but in any event within 90 days of such Liquidating Event, cause
the Chaparral Property or the proceeds from the sale or disposition thereof (as
determined pursuant to Section 12.9), to the extent sufficient therefor, to be
applied and distributed, to the maximum extent permitted by Applicable Law and
notwithstanding anything in this Chaparral LLC Agreement to the contrary, in the
following order (without duplication):

            (a) First, to creditors (including the Class A Member to the extent
      such Member is a creditor, to the extent otherwise permitted by Applicable
      Law), other than the Class B Members and their Affiliates, in satisfaction
      of all of Chaparral's debts and liabilities other than liabilities for
      which reasonable provision for payment has been made;

            (b) Second, to the Class A Member in an amount equal to the amount
      of any Termination Period Guaranteed Payment to the extent not previously
      paid;

            (c) Third, to the payment and discharge of all of Chaparral's debts
      and liabilities to the Managing Member, the Class B Members and their
      Affiliates to the extent adequate provision therefor has not been made;
      and

            (d) Fourth, the balance to the Members in accordance with their
      respective Capital Accounts, as provided under Article IV, immediately
      after giving effect to the adjustments and allocations required by the
      third sentence of this Section 12.2.

The Managing Member shall not receive any additional compensation for any
services performed pursuant to this Article XII.

      The Managing Member understands and agrees that by accepting the
provisions of this Section 12.2 setting forth the priority of the distribution
of the assets of Chaparral to be made upon its liquidation, the Managing Member
expressly waives any right that it, as a creditor of Chaparral, might otherwise
have under the LLC Act to receive distributions of assets pari passu with the
other creditors of Chaparral in connection with a distribution of assets of
Chaparral in satisfaction of any liability of Chaparral, and hereby subordinates
to said creditors any such right.

      Section 12.3 No Restoration of Deficit Capital Accounts; Compliance With
Timing Requirements of Regulations. In the event Chaparral is "liquidated"
within the meaning of Regulation Section 1.704-1(b)(2)(ii)(g), (x) distributions
shall be made pursuant to this Article XII to the Members who have positive
Capital Accounts in compliance with Regulation Section 1.704-1(b)(2)(ii)(b)(2),
and (y) if the Class A Member's Capital Account or the Class B

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               Fifth Amended and Restated Chaparral LLC Agreement
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                                                         Chaparral LLC Agreement

Member's Capital Account has a deficit balance (after giving effect to all
contributions, distributions, and allocations for all taxable years, including
the taxable year during which such liquidation occurs), the Member whose Capital
Account has a negative balance shall have no obligation to contribute to the
capital of Chaparral the amount necessary to restore such deficit balance to
zero, and such deficit shall not be considered a debt owed to Chaparral or to
any other Person for any purpose whatsoever.

      In the discretion of the Liquidator, with the consent of the Members, a
portion (determined in the manner provided below) of the distributions that
would otherwise be made to the Members pursuant to this Article XII may be:

            (a) Distributed to a trust established for the benefit of the
      Members solely for the purposes of liquidating Chaparral Property,
      collecting amounts owed to Chaparral, and paying any contingent or
      unforeseen liabilities or obligations of Chaparral or of the Managing
      Member arising out of or in connection with Chaparral. The assets of any
      such trust shall be distributed to the Members from time to time, in the
      reasonable discretion of the Liquidator, in the same proportions as the
      amount distributed to such trust by Chaparral would otherwise have been
      distributed to the Members pursuant to Section 12.2; or

            (b) Withheld to provide a reasonable reserve for liabilities
      (contingent or otherwise) of Chaparral and to allow for the collection of
      the unrealized portion of any installment obligations owed to Chaparral;
      provided, however, that such withheld amounts shall be distributed to the
      Members as soon as practicable.

The portion of the distributions that would otherwise have been made to each of
the Members that is instead distributed to a trust pursuant to Section 12.3(a)
or withheld to provide a reserve pursuant to Section 12.3(b) shall be determined
in the same manner as the expense or deduction would have been allocated if
Chaparral had realized an expense equal to such amounts immediately prior to
distributions being made pursuant to Section 12.2.

      Section 12.4 Deemed Distribution and Recontribution. Notwithstanding any
other provision of this Section 12, in the event Chaparral is liquidated within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event
has occurred, the Chaparral Property shall not be liquidated, Chaparral's debts
and other liabilities shall not be paid or discharged, and Chaparral's affairs
shall not be wound up. Instead, solely for federal income tax purposes,
Chaparral shall be deemed to have contributed all of the Chaparral Property and
liabilities to a new limited liability company in exchange for an interest in
such new company and, and immediately thereafter, Chaparral Property will be
deemed to liquidate by distributing interests in the new company to the Members.

      Section 12.5 Rights of Members. Each Member shall look solely to the
Chaparral Property for the return of its Capital Contribution and, except as
otherwise provided in Section 12.9, shall have no right or power to demand or
receive property other than Cash from Chaparral.

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                                                         Chaparral LLC Agreement

      Section 12.6 Notice of Dissolution. The Managing Member shall promptly
provide written notice to each of the Members of the occurrence of any
acceleration of the New Limestone Notes as a result of a New Indenture Event of
Default, a Limestone Note Trigger Event, Limestone Certificate Trigger Event,
Specified Equity Event or Liquidating Event (other than a Liquidating Event of
the type described in Section 12.1(a)) in accordance with Section 6.5(b).

      Section 12.7 Character of Liquidating Distributions. All payments made in
liquidation of the Interest of a retiring Member (whether pursuant to Article XI
or Article XII), other than the Termination Period Guaranteed Payment, shall be
made in exchange for the interest of such Member in Chaparral Property pursuant
to Code Section 736(b)(1), including the interest of such Member in goodwill of
Chaparral.

      Section 12.8 The Liquidator.

      (a) Definition. The "LIQUIDATOR" means (i) in the case of any Liquidating
Event described in clause (a), (c) or (e) of Section 12.1, the Primary Class B
Member or any other Affiliate of El Paso appointed as Liquidator by the Primary
Class B Member and (ii) in the case of any other Liquidating Event, the Class A
Member or any other Person appointed as Liquidator by the Class A Member.

      The Primary Class B Member (or the Class A Member if it may then appoint
the Liquidator) may appoint an appointee to be Liquidator on or prior to the
date on which a Liquidating Event occurs by delivering written notice of such
appointment to the other Members. Any such appointment may be subsequently
withdrawn by similar written notice.

      The Liquidator shall have the rights set forth in Section 18-803(b) of the
LLC Act and exclusively shall have the rights, power and authority of the
Managing Member necessary or appropriate in its discretion to effect the
dissolution, winding up and liquidation of Chaparral. The actions of the
Liquidator shall for all purposes be the actions of Chaparral.

      (b) Fees. Chaparral is authorized to pay a reasonable fee to the
Liquidator for its services performed pursuant to this Article XII and to
reimburse the Liquidator for its reasonable costs and expenses incurred in
performing those services.

      (c) Resignation of Liquidator. At any time any Liquidator may, in its
discretion, resign as Liquidator and the Primary Class B Member (or the Class A
Member if it may then appoint the Liquidator) shall appoint a replacement
Liquidator pursuant to Section 12.8(a).

      Section 12.9 Form of Liquidating Distributions.

      (a) In General. Except as provided in this Section 12.9, for purposes of
making distributions required by Section 12.2, the Liquidator may determine
whether to distribute all or any portion of Chaparral Property in-kind or to
sell all or any portion of Chaparral Property and distribute the proceeds
therefrom, provided that the Liquidator shall not distribute Chaparral Property
other than Cash to the Class A Member without its consent, and the Liquidator
shall be required to reduce Chaparral Property to Cash to the extent necessary
to make distributions to the Class A Member pursuant to Section 12.2 in Cash.

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                                                         Chaparral LLC Agreement

      (b) Class A Member In-Kind Election. At the election of the Class A
Member, the Liquidator may be required to distribute all of the Chaparral
Property in-kind. In such event, Chaparral Property to be distributed to each
Member shall be determined by the Liquidator; provided that, subject to the next
sentence, distribution of any Chaparral Property to the Class A Member other
than the El Paso Notes or Financial Investments shall require the consent of all
of the Members. If the liquidation of Chaparral is caused by the Bankruptcy of
El Paso, the Class B Member, the Managing Member or Chaparral, upon the request
of the Class A Member, and to the extent so requested, the Liquidator shall
distribute to the Class A Member the El Paso Notes or Financial Investments to
the extent practicable.

      Section 12.10 Liquidation Notice.

      (a) Liquidating Events Prior to Earn-Out Period. Prior to the Earn-Out
Period Commencement Date, the Class A Member may, at any time on or after the
occurrence of a Limestone Note Trigger Event or a Specified Equity Event,
deliver to the Managing Member (and, if the Primary Class B Member is not the
Managing Member, the Primary Class B Member) a written notice (a "LIQUIDATION
NOTICE") stating that such Limestone Note Trigger Event or such Specified Equity
Event constitutes a Liquidating Event; provided, however, that: (i) the delivery
of a Liquidation Notice shall not become effective to cause a Liquidating Event
until (A) the expiration of the applicable Asset Remedy Standstill Period or (B)
in the case of a Specified Equity Event, the Special Management Standstill
Expiration Date; (ii) the Class A Member may rescind such Liquidation Notice by
delivering to the Managing Member (and, if the Primary Class B Member is not the
Managing Member, the Primary Class B Member) a rescission notice prior to (A)
the end of the applicable Asset Remedy Standstill Period or (B) in the case of a
Specified Equity Event, the Special Management Standstill Expiration Date; and
(iii) if an Irrevocable Election has been made by the Primary Class B Member and
a Purchase Option Notice or Retirement Notice has been delivered prior to (A)
the expiration of the Asset Remedy Standstill Period or (B) in the case of a
Specified Equity Event, the earlier of the Special Management Replacement Date
and the date on which an Asset Remedy Notice becomes effective in accordance
with Section 11.3(a), no Liquidation Notice shall become effective to cause a
Liquidating Event until the day after the Purchase Date or Retirement Date, as
the case may be, specified in such notice (and then if, but only if, such
purchase or retirement is not consummated); provided, further, that in the case
of a Specified Equity Event, such Liquidation Notice shall not become effective
if the Specified Equity Cure has occurred on or before the 30th day after such
Specified Equity Event; provided, further, that if the Certificate Purchase
Option is consummated prior to the date on which such notice becomes effective,
then such notice shall be deemed to have been revoked and shall be of no further
force and effect.

      (b) Liquidating Events During Earn-Out Period. The Class A Member may, on
any date during the Earn-Out Period, elect to cause a Liquidating Event by
delivering to the Managing Member (and, if the Primary Class B Member is not the
Managing Member, the Primary Class B Member) a Liquidation Notice; provided,
however, that: (i) the delivery of such Liquidation Notice shall not become
effective to cause a Liquidating Event until the 10th Business Day following
delivery of such Liquidation Notice; (ii) the Class A Member may rescind such
Liquidation Notice by delivering to the Managing Member (and, if the Primary
Class B Member is not the Managing Member, the Primary Class B Member) a
rescission notice prior to such 10th Business Day; and (iii) if an Irrevocable
Election has been made by the

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               Fifth Amended and Restated Chaparral LLC Agreement
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                                                         Chaparral LLC Agreement

Primary Class B Member and a Purchase Option Notice or Retirement Notice has
been delivered on or prior to such 10th Business Day, no Liquidation Notice
shall become effective to cause a Liquidating Event until the day after the
Purchase Date or Retirement Date, as the case may be, specified in such notice
(and then if, but only if, such purchase or retirement is not consummated).

                                  ARTICLE XIII

                                  MISCELLANEOUS

      Section 13.1 Amendments. No amendment or waiver of any provision of this
Chaparral LLC Agreement, and no consent to any departure by any party herefrom,
shall in any event be effective unless the same shall be in writing and signed
by all Members in accordance with Section 9.1. No such waiver of a provision or
consent to a departure in any one instance shall be construed as a further or
continuing waiver of or consent to subsequent occurrences, or a waiver of any
other provision or consent to any other departure.

      Section 13.2 Notices. Any notice, payment, demand, or communication
required or permitted to be given by any provision of Chaparral LLC Agreement
shall be in writing or by facsimile and shall be deemed to have been delivered,
given, and received for all purposes (a) if delivered personally to the Person
or to an officer of the Person to whom the same is directed or (b) when the same
is actually received (if during the recipient's normal business hours if during
a Business Day, or, if not, on the next succeeding Business Day), if sent by
facsimile (followed by a hard copy of the facsimiled communication sent by
certified mail, postage and charges prepaid), or by courier or delivery service
or by mail, addressed, if to any Member or the Managing Member, to such person
at its address or facsimile number set forth on Schedule 13.2 hereto or to such
other address as such Person may from time to time specify by notice, and if to
any other Person, at its address specified in the Transaction Document pursuant
to which such Person is to receive notice or by notice given in the manner
provided herein to each other Person entitled to receive notice hereunder, or,
in each case, to such other address (and with copies to such other Persons) as
the Person entitled to receive notice hereunder shall specify by notice given in
the manner provided herein to the other Persons entitled to receive notice under
the relevant Transaction Document.

      Section 13.3 No Waiver; Cumulative Remedies. No failure on the part of any
Person to exercise, and no delay in exercising, any right under this Chaparral
LLC Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Chaparral LLC Agreement preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in this Chaparral LLC Agreement are cumulative and not exclusive of any
remedies provided by Applicable Law.

      Section 13.4 Waiver of Jury Trial. EACH PARTY TO THIS CHAPARRAL LLC
AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS

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                                                         Chaparral LLC Agreement

CHAPARRAL LLC AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

      Section 13.5 Counterparts. This Chaparral LLC Agreement may be executed in
any number of counterparts and by different parties thereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
This Chaparral LLC Agreement may be delivered by facsimile transmission of the
relevant signature pages thereof.

      Section 13.6 Survival of Representations, Warranties and Indemnities:
Entire Agreement. All representations, warranties and indemnities and
undertakings to pay costs and expenses contained in this Chaparral LLC Agreement
or made by or on behalf of the parties hereto, as the case may be, in connection
with this Chaparral LLC Agreement shall survive (a) the execution and delivery
of this Chaparral LLC Agreement and the other Transaction Documents, (b)
performance by each party of its Obligations under this Chaparral LLC Agreement
and each other Transaction Document to which it is a party and (c) the
Disposition (whether or not such Disposition was a Permitted Transfer) by (A) El
Paso Chaparral of all or a portion of its Class B Member Interest in Chaparral
or any termination of its status as a Class B Member of Chaparral pursuant to
this Chaparral LLC Agreement or (B) any other Member of all or a portion of its
interest in Chaparral or any termination of such Person's status as a member of
Chaparral, and may be relied upon by the Persons permitted thereunder,
regardless of any investigation made at any time by or on behalf of such Persons
or any such assignee.

      Section 13.7 Severability. Any provision of this Chaparral LLC Agreement
that is prohibited by or unenforceable in any relevant jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions thereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

      Section 13.8 Construction. Every covenant, term, and provision of each
Transaction Document shall be construed simply according to its fair meaning and
not strictly for or against any party thereto.

      Section 13.9 Determination of Capital Accounts. In the event the Class A
Member or the Class B Member disputes in an appropriate proceeding the
determination of its Capital Account, an independent determination of the
Members' Capital Accounts shall be made without any special weight being given
to any prior determination made within the discretion of the Managing Member.

      Section 13.10 Governing Law. THE LAWS OF THE STATE OF DELAWARE (WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES) SHALL GOVERN THE VALIDITY OF THIS
CHAPARRAL LLC AGREEMENT, THE CONSTRUCTION OF ITS TERMS, AND THE INTERPRETATION
OF THE RIGHTS AND DUTIES OF THE MEMBERS.

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               Fifth Amended and Restated Chaparral LLC Agreement
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                                                         Chaparral LLC Agreement

      Section 13.11 Waiver of Action for Partition. Each of the Members
irrevocably waives any right that it may have to maintain any action for
partition with respect to any of the Chaparral Property.

      Section 13.12 Consent to Jurisdiction. Each Member (i) irrevocably submits
to the jurisdiction of any Delaware State court or federal court sitting in
Wilmington, Delaware in any action arising out of this Chaparral LLC Agreement,
(ii) agrees that all claims in such action may be decided in such court, (iii)
waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum and (iv) consents to the service of process by mail. A final
judgment in any such action shall be conclusive and may be enforced in other
jurisdictions. Nothing herein shall affect the right of any party to serve legal
process in any manner permitted by law or affect its right to bring any action
in any other court.

      Section 13.13 Specific Performance. Each Member agrees with the other
Members that the other Members would be irreparably damaged if any of the
provisions of this Chaparral LLC Agreement are not performed in accordance with
their specific terms and that monetary damages would not provide an adequate
remedy in such event. Accordingly, it is agreed that, in addition to any other
remedy to which the nonbreaching Members may be entitled, at law or in equity,
the nonbreaching Members shall be entitled to injunctive relief to prevent
breaches of the provisions of this Chaparral LLC Agreement and specifically to
enforce the terms and provisions of this Chaparral LLC Agreement in any action
instituted in any court of the United States or any state thereof having subject
matter jurisdiction thereof.

      Section 13.14 Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Chaparral LLC Agreement is executed
and delivered by Wilmington Trust Company, not individually or personally, but
solely as Trustee, in the exercise of the powers and authority conferred and
vested in it, (b) each of the representations, undertakings and agreements
herein made on the part of Limestone is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust Company but is
made and intended for the purpose of binding only Limestone, (c) nothing herein
contained shall be construed as creating any liability on Wilmington Trust
Company, individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived by
the parties hereto and by any Person claiming by, through or under the parties
hereto and (d) under no circumstances shall Wilmington Trust Company be
personally liable for the payment of any indebtedness or expenses of Limestone
or be liable for the breach of failure of any obligation, representation,
warranty or covenant made or undertaken by Limestone under this Chaparral LLC
Agreement.

      Section 13.15 Consent to Collateral Assignment by Class A Member; Rights
of Action.

      (a) Pursuant to the terms of the Indenture, the Class A Member has
transferred and assigned for security purposes, and granted a first priority
security interest in, substantially all of its assets (including, without
limitation, all of the rights of the Class A Member under (i) the Class A Member
Interest, (ii) any Additional Class B Member Interest and (iii) this Chaparral
LLC Agreement) to the Indenture Trustee for the benefit of the holders from time
to time of the Limestone Notes. Chaparral and each Class B Member hereby
acknowledges and consents, for the benefit of the Class A Member and the
Indenture Trustee, on behalf of the holders of the

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               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>
                                                         Chaparral LLC Agreement

Limestone Notes, to such collateral assignment by the Class A Member to the
Indenture Trustee (or to any subsequent transferee following foreclosure on such
security interest) and agrees that the Indenture Trustee, on behalf of the
holders of the Limestone Notes (or any subsequent transferee following
foreclosure on such security interest), shall, on or after a Limestone Note
Trigger Event, have the right to pursue any remedy available to the Class A
Member under this Chaparral LLC Agreement, the other Transaction Documents or in
law to secure the performance by Chaparral, any Class B Member or any other
Person of its obligations hereunder or thereunder.

      (b) The parties hereto further acknowledge the rights of action of the New
Indenture Trustee to enforce, and institute and maintain any suit, action or
proceeding against Limestone to enforce, or otherwise act in respect of, the
right of the New Noteholders under the New Indenture and to maintain any
proceeding against the assets of Limestone to enforce, or levy on, any judgment
resulting therefrom, subject to Section 2.05(f) of the New Indenture.

      Section 13.16 Effectiveness. This Chaparral LLC Agreement shall take
effect as of the Effective Date.

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               Fifth Amended and Restated Chaparral LLC Agreement
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                                                         Chaparral LLC Agreement

            IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date above first written.

                  CLASS A MEMBER:

                  LIMESTONE ELECTRON TRUST
                     By: Wilmington Trust Company, not in its individual
                         capacity but solely as trustee

                         By:      /s/ Ann Roberts
                                -----------------------------
                             Name:  Ann Roberts
                             Title: Assistant Vice President

                  CLASS B MEMBERS:

                  EL PASO CHAPARRAL INVESTOR, L.L.C.
                     By: El Paso Chaparral Holding Company, its sole member

                            By:   /s/ John L. Harrison
                                -----------------------------
                                Name:  John L. Harrison
                                Title: Senior Vice President

                  EL PASO CHAPARRAL HOLDING II COMPANY

                            By:   /s/ John L. Harrison
                                -----------------------------
                                Name:  John L. Harrison
                                Title: Senior Vice President

               Fifth Amended and Restated Chaparral LLC Agreement
<PAGE>
                                                         Chaparral LLC Agreement

ACKNOWLEDGED AND AGREED:
PRIMARY CLASS B MEMBER, as Managing Member:
EL PASO CHAPARRAL INVESTOR, L.L.C.
     By:  El Paso Chaparral Holding Company,
          its sole member

By:   /s/ John L. Harrison
    ------------------------
Name:  John L. Harrison
Title: Senior Vice President

ACKNOWLEDGED AND AGREED:
CHAPARRAL INVESTORS, L.L.C.,
     By: El Paso Chaparral Investor, L.L.C., as its managing member

     By: El Paso Chaparral Holding Company, as its sole member

By:    /s/ John L. Harrison
    ------------------------
Name:  John L. Harrison
Title: Senior Vice President

               Fifth Amended and Restated Chaparral LLC Agreement

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