Document:

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                                                                     Exhibit 4.2

                          REGISTRATION RIGHTS AGREEMENT

                           7 3/4% SENIOR NOTES DUE 2013

                                   dated as of

                                  May 20, 2003

                                      among

                       EL PASO PRODUCTION HOLDING COMPANY

                                       and

                         CITIGROUP GLOBAL MARKETS INC.

                                       and

                         CREDIT SUISSE FIRST BOSTON LLC
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                          REGISTRATION RIGHTS AGREEMENT

      THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made and entered
into as of May 20, 2003, by and among EL PASO PRODUCTION HOLDING COMPANY (the
"COMPANY"), a corporation duly organized and existing under the laws of the
State of Delaware, the Guarantors (as defined below), and the several initial
purchasers listed on Schedule I hereto, (the "INITIAL PURCHASERS").

      This Agreement is made pursuant to the Purchase Agreement dated May 20,
2003, by and among the Company, the guarantors listed in Schedule II (the
"GUARANTORS" and the Initial Purchasers (the "PURCHASE AGREEMENT"), which
provides for the sale by the Company to the Initial Purchasers of $1,200,000,000
principal amount of its 7 3/4% Senior Notes due 2013 (the "SECURITIES") to be
guaranteed by the Guarantors. The Securities are to be issued pursuant to the
provisions of an Indenture dated as of May 23, 2003, (as amended, supplemented
or otherwise modified from time to time, the "INDENTURE") by and among the
Company, the Guarantors and Wilmington Trust Company, as trustee (the
"TRUSTEE").

      In order to induce the Initial Purchasers to enter into the Purchase
Agreement, the Company has agreed to provide to each Initial Purchaser and its
direct and indirect transferees the registration rights with respect to the
Securities set forth in this Agreement.

      In consideration of the foregoing, the parties hereto agree as follows:

      1. Definitions.

      As used in this Agreement, the following capitalized defined terms shall
have the following meanings:

      "1933 ACT" shall mean the Securities Act of 1933, as amended from time to
time.

      "1934 ACT" shall mean the Securities Exchange Act of 1934, as amended from
time to time.

      "AGREEMENT" shall have the meaning set forth in the preamble.

      "BUSINESS DAY" shall have the meaning set forth in Rule 13e-4(a)(3) under
the 1934 Act.

      "CLOSING DATE" shall mean the Closing Date as defined in the Purchase
Agreement.

      "COMPANY" shall have the meaning set forth in the preamble and shall also
include the Company's successors.

      "EXCHANGE DATES" shall have the meaning set forth in Section 2(a)(ii).
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      "EXCHANGE OFFER" shall mean the exchange offer by the Company of Exchange
Securities for all Securities that are Registrable Securities pursuant to
Section 2(a) hereof.

      "EXCHANGE OFFER REGISTRATION" shall mean a registration under the 1933 Act
effected pursuant to Section 2(a) hereof.

      "EXCHANGE OFFER REGISTRATION STATEMENT" shall mean a registration
statement on Form S-4 (or, if applicable, on another appropriate form) relating
to an offering of Exchange Securities pursuant to an Exchange Offer and all
amendments and supplements to such registration statement, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

      "EXCHANGE SECURITIES" shall mean any securities issued by the Company to
be offered to Holders in exchange for Securities (pursuant to the Exchange Offer
or otherwise) pursuant to an Exchange Offer Registration Statement containing
terms identical in all material respects to the Securities for which they are
exchanged (except that (i) interest thereon shall accrue from the last date on
which interest was paid on the Securities or, if no such interest has been paid,
from the date of issuance of the Securities, (ii) the Exchange Securities will
not contain the legend appearing on the face of the Securities in the form
recited in the Indenture and will not contain terms with respect to transfer
restrictions and (iii) the Exchange Securities will not contain terms with
respect to the payment of liquidated damages.

      "GUARANTORS" shall have the meaning set forth in the preamble.

      "HOLDER" shall mean each Initial Purchaser, for so long as it owns any
Registrable Securities, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Registrable Securities
under the Indenture; provided that for purposes of Sections 4 and 5 of this
Agreement, the term "Holder" shall include Participating Broker-Dealers (as
defined in Section 4(a)).

      "INDEMNIFIED PARTY" shall have the meaning set forth in Section 5(c).

      "INDEMNIFYING PARTY" shall have the meaning set forth in Section 5(c).

      "INDENTURE" shall have the meaning set forth in the preamble.

      "INITIAL PURCHASERS" shall have the meaning set forth in the preamble.

      "LIQUIDATED DAMAGES" shall have the meaning set forth in Section 2(e).

      "MAJORITY HOLDERS" shall mean the Holders of a majority of the aggregate
principal amount of outstanding Registrable Securities; provided that, for
purposes of Section 6(b), whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company or any of its affiliates (as such
term is defined in Rule 405 under the 1933 Act) (other than the Initial

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Purchasers or subsequent Holders of Registrable Securities if such subsequent
Holders are deemed to be such affiliates solely by reason of their holding of
such Registrable Securities) shall not be considered outstanding and shall not
be counted in determining whether such consent or approval was given by the
Holders of such required percentage or amount.

      "PARTICIPANT" shall have the meaning set forth in Section 5(a).

      "PARTICIPATING BROKER-DEALER" shall have the meaning set forth in Section
4(a) hereof.

      "PERSON" shall mean an individual, partnership, limited liability company,
corporation, trust or unincorporated organization, or a government or agency or
political subdivision thereof.

      "PROSPECTUS" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to such prospectus, and in each case including
all material incorporated by reference therein.

      "PURCHASE AGREEMENT" shall have the meaning set forth in the preamble.

      "REGISTRABLE SECURITIES" shall mean the Securities; provided, however,
that the Securities shall cease to be Registrable Securities when (i) a
Registration Statement with respect to such Securities shall have been declared
effective under the 1933 Act and such Securities shall have been exchanged for
Exchange Securities pursuant to an Exchange Offer Registration Statement or
disposed of pursuant to a Shelf Registration Statement, as applicable, (ii) such
Securities have been sold to the public pursuant to Rule 144 under the 1933 Act
or are saleable pursuant to Rule 144(k)(or any similar provision then in force,
but not Rule 144A) under the 1933 Act or (iii) such Securities shall have ceased
to be outstanding.

      "REGISTRATION DEFAULT" shall have the meaning set forth in Section 2(e).

      "REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance by the Company and the Guarantors, with this
Agreement, including without limitation: (i) all SEC, stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees, (ii) all
fees and expenses incurred in connection with compliance with state securities
or blue sky laws (including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of any of the
Exchange Securities or Registrable Securities), (iii) all expenses of any Person
in preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, any amendments or
supplements thereto, any underwriting agreements, securities sales agreements
and other documents relating to the performance of

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and compliance with this Agreement, (iv) all rating agency fees, (v) all fees
and disbursements relating to the qualification of the Indenture under
applicable securities laws, (vi) the fees and disbursements of the Trustee and
its counsel, (vii) the fees and disbursements of counsel for the Company and the
Guarantors, and, in the case of a Shelf Registration Statement, the reasonable
fees and disbursements of one counsel for the Holders (which counsel shall be
selected by the Majority Holders and which counsel may also be counsel for the
Initial Purchasers) and (viii) the fees and disbursements of the independent
public accountants of the Company and the Guarantors, including the expenses of
any special audits or "cold comfort" letters required by or incident to such
performance and compliance, but excluding fees of counsel to the Underwriters
(other than the fees and expenses set forth in clause (ii) above) and the
Holders and underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of Registrable Securities by a Holder.

      "REGISTRATION STATEMENT" shall mean any registration statement of the
Company that covers any of the Exchange Securities or the Registrable Securities
pursuant to the provisions of this Agreement and all amendments and supplements
to any such Registration Statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

      "SEC" shall mean the Securities and Exchange Commission.

      "SECURITIES" shall have the meaning set forth in the preamble.

      "SHELF REGISTRATION" shall mean a registration effected pursuant to
Section 2(b) hereof.

      "SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration statement
of the Company pursuant to the provisions of Section 2(b) of this Agreement
which covers all of the Registrable Securities (but no other securities unless
approved by the Holders of a majority of the aggregate principal amount of
outstanding Registrable Securities that are covered by such Shelf Registration
Statement) on an appropriate form under Rule 415 under the 1933 Act, or any
similar rule that may be adopted by the SEC, and all amendments and supplements
to such registration statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

      "TIA" shall have the meaning set forth in Section 3(1) hereof.

      "TRUSTEE" shall have the meaning set forth in the preamble.

      "UNDERWRITER" shall have the meaning set forth in Section 3 hereof.

      "UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING" shall mean a
registration in which Registrable Securities are sold to an Underwriter for
reoffering to the public.

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      2. Registration under the 1933 Act.

            (a) To the extent not prohibited by any applicable law or applicable
      interpretation of the staff of the SEC, the Company and each Guarantor
      shall (1) cause to be filed an Exchange Offer Registration Statement
      within 90 days following the Closing Date covering the offer by the
      Company to the Holders to exchange all of the Registrable Securities for
      an equal aggregate principal amount of Exchange Securities and (2) use
      their reasonable best efforts to cause such Exchange Offer Registration
      Statement to become effective within 210 days following the Closing Date.
      The Company and each Guarantor shall use their reasonable best efforts to
      have the Exchange Offer Registration Statement remain effective until the
      closing of the Exchange Offer. The Company shall commence the Exchange
      Offer promptly after the Exchange Offer Registration Statement has been
      declared effective by the SEC and use its reasonable best efforts to have
      the Exchange Offer consummated not later than 30 Business Days after such
      effective date. The Company shall commence the Exchange Offer by mailing
      the related exchange offer Prospectus and accompanying documents to each
      Holder stating, in addition to such other disclosures as are required by
      applicable law:

                  (i) that the Exchange Offer is being made pursuant to this
            Agreement and that all Registrable Securities validly tendered will
            be accepted for exchange;

                  (ii) the dates of acceptance for exchange (which shall be a
            period of at least 20 Business Days from the date such notice is
            mailed) (the "EXCHANGE DATES");

                  (iii) that any Registrable Security not tendered will remain
            outstanding and continue to accrue interest, but will not retain any
            rights under this Agreement;

                  (iv) that Holders electing to have a Registrable Security
            exchanged pursuant to the Exchange Offer will be required to
            surrender such Registrable Security, together with the enclosed
            letters of transmittal, to the institution and at the address
            specified in the notice prior to the close of business on the last
            Exchange Date; and

                  (v) that Holders will be entitled to withdraw their election,
            not later than the close of business on the last Exchange Date, by
            sending to the institution and at the address (located in the
            Borough of Manhattan, The City of New York) specified in the notice,
            a telegram, telex, facsimile transmission or letter setting forth
            the name of such Holder, the principal amount of Registrable
            Securities delivered for exchange and a statement that such Holder
            is withdrawing his election to have such Registrable Securities
            exchanged.

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                  As soon as practicable after the last Exchange Date, the
            Company shall:

                        (A) accept for exchange Registrable Securities or
                  portions thereof tendered and not validly withdrawn pursuant
                  to the Exchange Offer; and

                        (B) deliver, or cause to be delivered, to the Trustee
                  for cancellation all Registrable Securities or portions
                  thereof so accepted for exchange by the Company and issue, and
                  cause the Trustee to promptly authenticate and mail to each
                  Holder, an Exchange Security equal in aggregate principal
                  amount to the aggregate principal amount of the Registrable
                  Securities surrendered by such Holder.

                  The Company and the Guarantors shall use their reasonable best
            efforts to complete the Exchange Offer as provided above and shall
            comply with the applicable requirements of the 1933 Act, the 1934
            Act and other applicable laws and regulations in connection with the
            Exchange Offer. The Exchange Offer shall not be subject to any
            conditions, other than that the Exchange Offer does not violate
            applicable law or any applicable interpretation of the staff of the
            SEC. The Company shall inform the Initial Purchasers of the names
            and addresses of the Holders to whom the Exchange Offer is made, and
            the Initial Purchasers shall have the right, subject to applicable
            law, to contact such Holders and otherwise facilitate the tender of
            Registrable Securities in the Exchange Offer.

                  If, during the period the Exchange Offer Registration
            Statement is effective, an event occurs which makes any statement
            made in such Exchange Offer Registration Statement or the related
            Prospectus untrue in any material respect or which requires the
            making of any changes in such Exchange Offer Registration Statement
            in order to make the statements therein not misleading or in such
            Prospectus in order to make the statements therein, in the light of
            the circumstances under which they were made, not misleading, the
            Company and the Guarantors shall use their reasonable best efforts
            to prepare and file with the SEC a supplement or post-effective
            amendment to the Exchange Offer Registration Statement or the
            related Prospectus or any document incorporated therein by reference
            or file any other required document so that, as thereafter delivered
            to the purchasers of the Registrable Securities, such Prospectus
            will not contain any untrue statement of a material fact or omit to
            state a material fact necessary to make the statements therein, in
            light of the circumstances under which they were made, not
            misleading. The Company agrees to notify the Holders to suspend the
            exchange of the Registrable Securities as promptly as practicable
            after the occurrence of such an event, and the Holders hereby agree
            to suspend such exchange until the Company and the Guarantors have
            amended or supplemented the Prospectus to correct such misstatement
            or omission.

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                  (b) If (i) the Company determines that the Exchange Offer
            Registration provided for in Section 2(a) above is not available or
            may not be consummated as soon as practicable after the last
            Exchange Date because it would violate applicable law or the
            applicable interpretations of the staff of the SEC, (ii) the
            Exchange Offer is not for any other reason consummated within 260
            days following the Closing Date or (iii) in the written opinion of
            counsel for the Holders a Shelf Registration Statement must be filed
            and a Prospectus must be delivered by any Holder in connection with
            any reoffering or resale of Registrable Securities, the Company and
            the Guarantors shall (x) file with the SEC within 75 days following
            such determination, date or notice of such opinion of counsel is
            given to the Company, a Shelf Registration Statement providing for
            the resale by the Holders (other than those who fail to comply with
            the paragraph immediately following clause (p) of Section 3) of all
            of their Registrable Securities and (y) use their reasonable best
            efforts to cause such Shelf Registration Statement to become
            effective within 60 days of the filing of such Shelf Registration
            Statement. If the Company is required to file a Shelf Registration
            Statement solely as a result of the matters referred to in clause
            (iii) of the preceding sentence, the Company and the Guarantors
            shall use their reasonable best efforts to file and have declared
            effective by the SEC both an Exchange Offer Registration Statement
            pursuant to Section 2(a) with respect to all Registrable Securities
            and a Shelf Registration Statement (which may be a combined
            Registration Statement with the Exchange Offer Registration
            Statement) with respect to reoffers and resales of Registrable
            Securities held by the Holders who must deliver the related
            Prospectus. The Company and the Guarantors agree to use their
            reasonable best efforts to keep the Shelf Registration Statement
            continuously effective until the expiration of the period referred
            to in Rule 144(k) of the 1933 Act with respect to the Registrable
            Securities or such shorter period that will terminate when all of
            the Registrable Securities covered by the Shelf Registration
            Statement have been sold pursuant to the Shelf Registration
            Statement or cease to be Registrable Securities within the meaning
            of this Agreement. The Company and the Guarantors further agree to
            supplement or amend the Shelf Registration Statement if required by
            the rules, regulations or instructions applicable to the
            registration form used by the Company and the Guarantors for such
            Shelf Registration Statement or by the 1933 Act or by any other
            rules and regulations thereunder for shelf registration or if
            reasonably requested by a Holder with respect to information
            relating to such Holder, and to use its reasonable best efforts to
            cause any such amendment to become effective and such Shelf
            Registration Statement to become usable as soon as thereafter
            practicable. The Company agrees to furnish to the Holders of
            Registrable Securities copies of any such supplement or amendment
            promptly after its being used or filed with the SEC.

                  (c) The Company shall pay all Registration Expenses in
            connection with the registration pursuant to Section 2(a) or Section
            2(b). Each Holder shall pay all underwriting discounts, if any, and
            commissions and transfer taxes, if any, relating to the sale or
            disposition of such Holder's Registrable Securities pursuant to a
            Shelf Registration Statement.

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                  (d) An Exchange Offer Registration Statement pursuant to
            Section 2(a) hereof or a Shelf Registration Statement pursuant to
            Section 2(b) hereof will not be deemed to have become effective
            unless it has been declared effective by the SEC; provided, however,
            that, if, after it has been declared effective, the offering of
            Registrable Securities pursuant to a Shelf Registration Statement is
            interfered with by any stop order, injunction or other order or
            requirement of the SEC or any other governmental agency or court,
            such Registration Statement will be deemed not to have become
            effective during the period of such interference until the offering
            of Registrable Securities pursuant to such Registration Statement
            may legally resume.

                  (e) The Company, each Guarantor and the Initial Purchasers
            agree that the Holders will suffer damages if the Company or the
            Guarantors fail to fulfill their respective obligations under
            Section 2(a) or Section 2(b) hereof and that it would not be
            feasible to ascertain the extent of such damages with precision.
            Accordingly, the Company and each Guarantor agrees that if:

                        (i) the Exchange Offer Registration Statement is not
                  filed with the SEC on or prior to the 90th day following the
                  Closing Date,

                        (ii) the Exchange Offer Registration Statement is not
                  declared effective on or prior to the 210th day following the
                  Closing Date,

                        (iii) the Exchange Offer is not completed on or prior to
                  the 260th day following the Closing Date, or

                        (iv) the Shelf Registration Statement is required to be
                  filed but is not filed or declared effective within the time
                  period set forth herein or is declared effective but
                  thereafter ceases to be effective or usable prior to the
                  expiration of the period referred to in Rule 144(k) with
                  respect to the Registrable Securities other than after the
                  Registrable Securities have been disposed of under the Shelf
                  Registration Statement or cease to be Registrable Securities,
                  without being succeeded within two Business Days by a
                  post-effective amendment which cures the failure and that is
                  itself immediately declared effective,

                  (each such event referred to in clauses (i) through (iv) a
            "REGISTRATION DEFAULT"), then the Company and the Guarantor hereby
            agree to pay each Holder of Registrable Securities affected thereby,
            liquidated damages ("LIQUIDATED DAMAGES"). Liquidated Damages will
            accrue on the affected Registrable Securities and the affected
            Exchange Securities, as applicable. The rate of Liquidated Damages
            will be 0.25% per annum of the principal amount of Registrable
            Securities held by such Holder for the first 90-day period
            immediately following the occurrence of a Registration Default,
            increasing by 0.25% per annum with respect to each subsequent 90-day
            period, up to a maximum of 1.00% per annum, from and including the
            date on which any such Registration Default shall occur to, but
            excluding, the earlier of (1)

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      the date on which all Registration Defaults have been cured or (2) the
      date on which all the Registrable Securities and Exchange Securities
      otherwise become freely transferable by Holders other than affiliates of
      the Securities without further registration under the 1933 Act.

            Notwithstanding the foregoing, (1) the amount of Liquidated Damages
      payable shall not increase because more than one Registration Default has
      occurred and is pending and (2) a Holder of Registrable Securities or
      Exchange Securities who is not entitled to the benefits of the Shelf
      Registration Statement (i.e., such Holder has not elected to including
      information) shall not be entitled to Liquidated Damages with respect to a
      Registration Default that pertains to the Shelf Registration Statement.

            The obligations to pay Liquidated Damages under this Agreement shall
      be joint and several obligations of the Company and each Guarantor.

            (f) The Company shall notify the Trustee within one Business Day
      after each date on which an event occurs in respect of which Liquidated
      Damages are required to be paid. Any amounts of Liquidated Damages due
      pursuant to this Section 2 will be payable in addition to any other
      interest payable from time to time with respect to the Registrable
      Securities in cash semi-annually on the interest payment dates specified
      in the Indenture (to the holders of record as specified in the Indenture),
      commencing with the first such interest payment date occurring after any
      such Liquidated Damages commence to accrue. The amount of Liquidated
      Damages will be determined in a manner consistent with the calculation of
      interest under the Indenture.

            (g) Without limiting the remedies available to the Holders, the
      Company and the Guarantors acknowledge that any failure by the Company or
      a Guarantor to comply with their respective obligations under Section 2(a)
      and Section 2(b) hereof may result in material irreparable injury to the
      Holders for which there is no adequate remedy at law, that it will not be
      possible to measure damages for such injuries precisely and that, in the
      event of any such failure, the Initial Purchasers or any Holder may obtain
      such relief as may be required to specifically enforce the Company's
      obligations and the Guarantors' under Section 2(a) and Section 2(b)
      hereof.

      3. Registration Procedures.

      In connection with the obligations of the Company and the Guarantors with
respect to the Registration Statements pursuant to Section 2(a) and Section 2(b)
hereof, the Company and the Guarantors shall as expeditiously as possible
(provided, however, that they shall not be required to take actions more
promptly than required by Sections 2(a) and 2(b)):

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            (a) prepare and file with the SEC a Registration Statement on the
      appropriate form under the 1933 Act, which form shall (x) be selected by
      the Company, (y) in the case of a Shelf Registration, be available for the
      sale of the Registrable Securities by the selling Holders thereof and (z)
      comply as to form in all material respects with the applicable
      requirements of the 1933 Act and rules and regulations promulgated
      thereunder and include all financial statements required by the SEC to be
      filed therewith, and use reasonable best efforts to cause such
      Registration Statement to become effective and remain effective in
      accordance with Section 2 hereof;

            (b) prepare and file with the SEC such amendments and post-effective
      amendments to each Registration Statement as may be necessary to keep such
      Registration Statement effective for the applicable period and cause each
      Prospectus to be supplemented by any required prospectus supplement and,
      as so supplemented, to be filed pursuant to Rule 424 under the 1933 Act;
      and keep each Prospectus current during the period described under Section
      4(3) and Rule 174 under the 1933 Act that is applicable to transactions by
      brokers or dealers with respect to the Registrable Securities or Exchange
      Securities;

            (c) in the case of a Shelf Registration, furnish to each Holder of
      Registrable Securities, to counsel for the Initial Purchasers and to
      counsel for the Holders and to each Underwriter of an Underwritten
      Offering of Registrable Securities, if any, without charge, as many copies
      of each Prospectus, including each preliminary Prospectus and any
      amendment or supplement thereto and such other documents as such Holder or
      Underwriter may reasonably request, in order to facilitate the public sale
      or other disposition of the Registrable Securities; and, subject to
      Section 3(i), the Company consents to the use of such Prospectus and any
      amendment or supplement thereto in accordance with applicable law by each
      of the selling Holders of Registrable Securities and any such Underwriters
      in connection with the offering and sale of the Registrable Securities
      covered by and in the manner described in such Prospectus or any amendment
      or supplement thereto in accordance with applicable law;

            (d) use its reasonable best efforts to register or qualify the
      Registrable Securities under all applicable state securities or blue sky
      laws of such jurisdictions as any Holder of Registrable Securities covered
      by a Registration Statement shall reasonably request in writing by the
      time the applicable Registration Statement is declared effective by the
      SEC, and to cooperate with such Holders in connection with any filings
      required to be made with the National Association of Securities Dealers,
      Inc. and do any and all other acts and things which may be reasonably
      necessary or advisable to enable such Holder to consummate the disposition
      in each such jurisdiction of such Registrable Securities owned by such
      Holder; provided, however, that the Company shall not be required to (i)
      qualify as a foreign corporation or as a dealer in securities in any
      jurisdiction where it would not otherwise be required to qualify but for
      this Section 3(d), (ii) file any general consent to service of process or
      (iii) subject itself to taxation in any such jurisdiction if it is not so
      subject;

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            (e) in the case of a Shelf Registration, notify each Holder of
      Registrable Securities, counsel for the Holders and counsel for the
      Initial Purchasers (or, if applicable, separate counsel for the Holders)
      promptly and, if requested by any such Holder or counsel, confirm such
      advice in writing, (i) when a Registration Statement has become effective
      and when any post-effective amendment thereto has been filed and becomes
      effective, (ii) of any request by the SEC or any state securities
      authority for amendments and supplements to a Registration Statement and
      Prospectus or for additional information after the Registration Statement
      has become effective, (iii) of the issuance by the SEC or any state
      securities authority of any stop order suspending the effectiveness of a
      Registration Statement or the initiation of any proceedings for that
      purpose, (iv) if, between the effective date of a Registration Statement
      and the closing of any sale of Registrable Securities covered thereby, the
      representations and warranties of the Company and the Guarantors contained
      in any underwriting agreement, securities sales agreement or other similar
      agreement, if any, relating to the offering cease to be true and correct
      in all material respects or if the Company receives any notification with
      respect to the suspension of the qualification of the Registrable
      Securities for sale in any jurisdiction or the initiation of any
      proceeding for such purpose, (v) of the happening of any event during the
      period a Shelf Registration Statement is effective which makes any
      statement made in such Shelf Registration Statement or the related
      Prospectus untrue in any material respect or which requires the making of
      any changes in such Registration Statement in order to make the statements
      therein not misleading or in such Prospectus in order to make the
      statements therein, in the light of the circumstances under which they
      were made, not misleading and (vi) of any determination by the Company
      that a post-effective amendment to a Registration Statement would be
      appropriate;

            (f) use its reasonable best efforts to obtain the withdrawal of any
      order suspending the effectiveness of a Registration Statement at the
      earliest possible moment and provide immediate notice to each Holder of
      the withdrawal of any such order;

            (g) in the case of a Shelf Registration, furnish to each Holder of
      Registrable Securities, without charge, at least one conformed copy of
      each Registration Statement and any post-effective amendment thereto
      (without documents incorporated therein by reference or exhibits thereto,
      unless requested in writing);

            (h) in the case of a Shelf Registration, cooperate with the selling
      Holders of Registrable Securities to facilitate the timely preparation and
      delivery of certificates representing Registrable Securities to be sold
      and not bearing any restrictive legends (unless required by applicable
      securities laws) and enable such Registrable Securities to be in such
      denominations (consistent with the provisions of the Indenture) and
      registered in such names as the selling Holders may reasonably request at
      least two Business Days prior to the closing of any sale of Registrable
      Securities;

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            (i) in the case of a Shelf Registration, upon the occurrence of any
      event contemplated by Section 3(e)(v) hereof, use its reasonable best
      efforts to prepare and file with the SEC a supplement or post-effective
      amendment to a Registration Statement or the related Prospectus or any
      document incorporated therein by reference or file any other required
      document so that, as thereafter delivered to the purchasers of the
      Registrable Securities, such Prospectus will not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements therein, in the light of the circumstances under which
      they were made, not misleading. The Company agrees to notify the Holders
      to suspend use of the Prospectus as promptly as practicable after the
      occurrence of such an event, and the Holders hereby agree to suspend use
      of the Prospectus until the Company has amended or supplemented the
      Prospectus to correct such misstatement or omission and has furnished
      copies of the amended or supplemented Prospectus to the Holders or until
      the Company notifies the Holders that the sale of the Registrable
      Securities may be resumed;

            (j) a reasonable time prior to the filing of any Registration
      Statement, any Prospectus, any amendment to a Registration Statement or
      amendment or supplement to a Prospectus, or any document which is to be
      incorporated by reference into a Registration Statement or Prospectus
      after the initial filing of a Registration Statement, provide copies of
      such document to the Initial Purchasers and their counsel (and, in the
      case of a Shelf Registration Statement, the Holders and their counsel) and
      make such of the representatives of the Company as shall be reasonably
      requested by the Initial Purchasers or their counsel (and, in the case of
      a Shelf Registration Statement, the Holders or their counsel) available
      for discussion of such document, and shall not at any time file or make
      any amendment to the Shelf Registration Statement, any Prospectus or any
      amendment of or supplement to a Shelf Registration Statement or a
      Prospectus or any document which is to be incorporated by reference into a
      Registration Statement or a Prospectus, of which the Initial Purchasers
      and their counsel (and, in the case of a Shelf Registration Statement, the
      Holders or their counsel) shall not have previously been advised and
      furnished a copy or to which the Initial Purchasers or their counsel (and,
      in the case of a Shelf Registration Statement, the Holders or their
      counsel) shall reasonably object;

            (k) obtain a CUSIP number for all Exchange Securities or Registrable
      Securities, as the case may be, not later than the effective date of the
      applicable Registration Statement;

            (l) cause the Indenture to be qualified under the Trust Indenture
      Act of 1939, as amended (the "TIA"), in connection with the registration
      of the Exchange Securities or Registrable Securities, as the case may be,
      and cooperate with the Trustee and the Holders to effect such changes to
      the Indenture as may be required for the Indenture to be so qualified in
      accordance with the terms of the TIA and execute, and use commercially
      reasonable best efforts to cause the Trustee to execute,

                                       12
<PAGE>
      all documents as may be required to effect such changes and all other
      forms and documents required to be filed with the SEC to enable the
      Indenture to be so qualified in a timely manner;

            (m) in the case of a Shelf Registration, make available for
      inspection by a representative of the Holders of the Registrable
      Securities, any Underwriter participating in any disposition pursuant to
      such Shelf Registration Statement, and attorneys and accountants
      designated by the Holders, at reasonable times and in a reasonable manner,
      all relevant financial and other records, pertinent documents and
      properties of the Company and the Guarantors; and cause the respective
      officers, directors and employees of the Company and the Guarantors to
      supply all information reasonably requested by any such representative,
      Underwriter, attorney or accountant in connection with a Shelf
      Registration Statement, in each case that would customarily be reviewed or
      examined in connection with "due diligence" review of the Company and the
      Guarantors;

            (n) use its reasonable best efforts to cause the Exchange Securities
      to continue to be rated by two nationally recognized statistical rating
      organizations (as such term is defined in Rule 436(g)(2) under the 1933
      Act), if the Registrable Securities have been rated prior to the initial
      sale of such Registrable Securities;

            (o) if reasonably requested by any Holder of Registrable Securities
      covered by a Registration Statement, (i) promptly incorporate in a
      Prospectus supplement or post-effective amendment such information with
      respect to such Holder as such Holder reasonably requests to be included
      therein and (ii) make all required filings of such Prospectus supplement
      or such post-effective amendment as soon as reasonably practicable after
      the Company has received notification of the matters to be incorporated in
      such filing; and

            (p) in the case of a Shelf Registration, enter into such customary
      agreements and take all such other actions in connection therewith
      (including those reasonably requested by the Holders of a majority of the
      Registrable Securities being sold thereunder) in order to expedite or
      facilitate the disposition of such Registrable Securities thereunder
      including, but not limited to, pursuant to an Underwritten Offering and in
      such connection, (i) to the extent possible, make such representations and
      warranties to the Holders and any Underwriters of such Registrable
      Securities with respect to the business of the Company and its
      subsidiaries, the Registration Statement, Prospectus and documents
      incorporated by reference or deemed incorporated by reference, if any, in
      each case, in form, substance and scope as are customarily made by issuers
      to underwriters in underwritten offerings and confirm the same if and when
      requested, (ii) obtain opinions of counsel to the Company (which counsel
      and opinions, in form, scope and substance, shall be reasonably
      satisfactory to the Holders of a majority in principal amount of the
      Registrable Securities being sold under such Shelf Registration Statement,
      such Underwriters and their respective counsel) addressed to each selling
      Holder and Underwriter of

                                       13
<PAGE>
      Registrable Securities, covering the matters customarily covered in
      opinions requested in underwritten offerings, (iii) obtain "cold comfort"
      letters from the independent certified public accountants of the Company
      (and, if necessary, any other certified public accountant of any
      subsidiary of the Company, or of any business acquired by the Company for
      which financial statements and financial data are or are required to be
      included in the Registration Statement) addressed to each selling Holder
      and Underwriter of Registrable Securities, such letters to be in customary
      form and covering matters of the type customarily covered in "cold
      comfort" letters in connection with underwritten offerings, and (iv)
      deliver such documents and certificates as may be reasonably requested by
      the Holders of a majority in principal amount of the Registrable
      Securities being sold under such Shelf Registration Statement or by the
      Underwriters, and which are customarily delivered in underwritten
      offerings, to evidence the continued validity of the representations and
      warranties of the Company and the Guarantors made pursuant to clause (i)
      above and to evidence compliance with any customary conditions contained
      in an underwriting agreement.

            In the case of a Shelf Registration Statement, the Company may
      require each Holder of Registrable Securities to furnish to the Company
      such information regarding the Holder and the proposed distribution by
      such Holder of such Registrable Securities as the Company may from time to
      time reasonably request in writing. No Holder of Registrable Securities
      may include its Registrable Securities in such Shelf Registration
      Statement unless and until such Holder furnishes such information to the
      Company. Each Holder including Registrable Securities in a Shelf
      Registration Statement shall agree to furnish promptly to the Company all
      information regarding such Holder and the proposed distribution by such
      Holder of such Registrable Securities required to make the information
      previously furnished to the Company by such Holder not materially
      misleading.

            In connection with an Exchange Offer Registration, each Holder
      exchanging Securities for Exchange Securities shall be required to
      represent that (i) the Exchange Securities are being obtained in the
      ordinary course of business of the Person receiving such Exchange
      Securities, whether or not such Person is a Holder, (ii) neither such
      Holder nor any such other Person has an arrangement or understanding with
      any Person to participate in the distribution of Securities or Exchange
      Securities, (iii) other than as set forth in Section 4, if the Holder is
      not a broker-dealer, or is a broker-dealer but will not receive Exchange
      Securities for its own account in exchange for Securities, neither the
      Holder nor any such other Person is engaged in or intends to participate
      in a distribution of the Exchange Securities and (iv) neither the Holder
      nor any such other Person is an "affiliate" of the Company within the
      meaning of Rule 405 under the 1933 Act or, if such Person is an
      "affiliate," that such Holder will comply with the registration and
      prospectus delivery requirements of the 1933 Act to the extent applicable.

                                       14
<PAGE>
            In the case of a Shelf Registration Statement, each Holder agrees
      that, upon receipt of any notice from the Company of the happening of any
      event of the kind described in Section 3(e)(v) hereof, such Holder will
      forthwith discontinue disposition of Registrable Securities pursuant to a
      Registration Statement until such Holder's receipt of the copies of the
      supplemented or amended Prospectus contemplated by Section 3(i) hereof,
      and, if so directed by the Company, such Holder will destroy or deliver to
      the Company (at its expense) all copies in its possession, other than
      permanent file copies then in such Holder's possession, of the Prospectus
      covering such Registrable Securities current at the time of receipt of
      such notice.

            If the Company shall give any such notice to suspend the disposition
      of Registrable Securities pursuant to a Registration Statement, the
      Company shall extend the period during which the Registration Statement
      shall be maintained effective pursuant to this Agreement by the number of
      days during the period from and including the date of the giving of such
      notice to and including the date when the Holders shall have received
      copies of the supplemented or amended Prospectus necessary to resume such
      dispositions. The Company may give such notice so long as there are no
      more than 90 days during any 365 day period in which such suspensions are
      in effect.

            The Holders of Registrable Securities covered by a Shelf
      Registration Statement who desire to do so may sell such Registrable
      Securities in an Underwritten Offering. In any such Underwritten Offering,
      the investment banker or investment bankers and manager or managers (the
      "UNDERWRITERS") that will administer the offering will be selected by the
      Majority Holders of the Registrable Securities included in such offering,
      provided that such Underwriters shall be reasonably acceptable to the
      Company.

      4. Participation of Broker-Dealers in Exchange Offer.

            (a) The parties hereto understand that the staff of the SEC has
      taken the position that any broker-dealer that receives Exchange
      Securities for its own account in the Exchange Offer in exchange for
      Securities that were acquired by such broker-dealer as a result of
      market-making or other trading activities (a "PARTICIPATING
      BROKER-DEALER"), may be deemed to be an "underwriter" within the meaning
      of the 1933 Act and must deliver a prospectus meeting the requirements of
      the 1933 Act in connection with any resale of such Exchange Securities.

            The Company and the Guarantors understand that it is currently the
      staff's position that if the Prospectus contained in the Exchange Offer
      Registration Statement includes a plan of distribution containing a
      statement to the above effect and the means by which Participating
      Broker-Dealers may resell the Exchange Securities, without naming the
      Participating Broker-Dealers or specifying the amount of Exchange
      Securities owned by them, such Prospectus may be delivered by
      Participating Broker-Dealers to satisfy their prospectus delivery
      obligation under the

                                       15
<PAGE>
      1933 Act in connection with resales of Exchange Securities for their own
      accounts, so long as the Prospectus otherwise meets the requirements of
      the 1933 Act.

            (b) In light of the above, notwithstanding the other provisions of
      this Agreement, the Company and the Guarantors agree that the provisions
      of this Agreement as they relate to a Shelf Registration shall also apply
      to an Exchange Offer Registration to the extent, and with such reasonable
      modifications thereto as may be, reasonably requested by the Initial
      Purchasers or by one or more Participating Broker-Dealers, in each case as
      provided in clause (ii) below, in order to expedite or facilitate the
      disposition of any Exchange Securities by Participating Broker-Dealers
      consistent with the positions of the Staff recited in Section 4(a) above;
      provided that:

                  (i) the Company shall not be required to amend or supplement
            the Prospectus contained in the Exchange Offer Registration
            Statement, as would otherwise be contemplated by Section 3(i), for a
            period exceeding 180 days after the last Exchange Date (as such
            period may be extended pursuant to the penultimate paragraph of
            Section 3 of this Agreement) and Participating Broker-Dealers shall
            not be authorized by the Company or any Guarantor to deliver and
            shall not deliver such Prospectus after such period in connection
            with the resales contemplated by this Section 4; and

                  (ii) the application of the Shelf Registration procedures set
            forth in Section 3 of this Agreement to an Exchange Offer
            Registration, to the extent not required by the positions of the
            staff of the SEC or the 1933 Act and the rules and regulations
            thereunder, will be in conformity with the reasonable request in
            writing to the Company by the Initial Purchasers or with the
            reasonable request in writing to the Company by one or more
            broker-dealers who certify to the Initial Purchasers and the Company
            in writing that they anticipate that they will be Participating
            Broker-Dealers; and provided further that, in connection with such
            application of the Shelf Registration procedures set forth in
            Section 3 to an Exchange Offer Registration, the Company shall be
            obligated (x) to deal only with one entity representing the
            Participating Broker-Dealers, which shall be Credit Suisse First
            Boston LLC unless it elects not to act as such representative, (y)
            to pay the fees and expenses of only one counsel representing the
            Participating Broker-Dealers, which shall be Cravath, Swaine & Moore
            LLP unless such counsel elects not to so act and (z) to cause to be
            delivered only one, if any, "cold comfort" letter with respect to
            the Prospectus in the form existing on the last Exchange Date and
            with respect to each subsequent amendment or supplement, if any,
            effected during the period specified in clause (i) above.

            (c) The Initial Purchasers shall have no liability to the Company or
      any Guarantor, other than as Holders in accordance with the terms hereof,
      or to any other

                                       16
<PAGE>
      Holder with respect to any request that they may make pursuant to Section
      4(b) above.

      5. Indemnification and Contribution.

            (a) Each of the Company and the Guarantors agrees, jointly and
      severally, to indemnify and hold harmless the Initial Purchasers, each
      Holder and each Person, if any, who controls the Initial Purchasers or any
      Holder within the meaning of either Section 15 of the 1933 Act or Section
      20 of the 1934 Act, or is under common control with, or is controlled by,
      the Initial Purchasers or any Holder (each, a "PARTICIPANT"), from and
      against all losses, claims, damages and liabilities (including, without
      limitation, any legal fees or other expenses reasonably incurred by a
      Participant in connection with defending or investigating any such action
      or claim) caused by any untrue statement or alleged untrue statement of a
      material fact contained in any Registration Statement (or any amendment
      thereto) pursuant to which Exchange Securities or Registrable Securities
      were registered under the 1933 Act, including all documents incorporated
      therein by reference, or caused by any omission or alleged omission to
      state therein a material fact required to be stated therein or necessary
      to make the statements therein not misleading, or caused by any untrue
      statement or alleged untrue statement of a material fact contained in any
      Prospectus (as amended or supplemented if the Company shall have furnished
      any amendments or supplements thereto) forming a part of such Registration
      Statement, or caused by any omission or alleged omission to state therein
      a material fact necessary to make the statements therein in light of the
      circumstances under which they were made not misleading, except insofar as
      such losses, claims, damages or liabilities are caused by any such untrue
      statement or omission or alleged untrue statement or omission based upon
      and in conformity with information relating to the Initial Purchasers or
      any Holder furnished to the Company in writing by the Initial Purchasers
      or any selling Holder expressly for use therein; provided that the
      foregoing indemnity with respect to any Prospectus shall not inure to the
      benefit of any Holder from whom the Person asserting any such losses,
      claims, damages or liabilities purchased Securities, or any Person
      controlling such Holder, if a copy of the final Prospectus (as then
      amended or supplemented if the Company shall have furnished any amendments
      or supplements thereto) was not sent by, or delivered on behalf of, such
      Holder to such Person at or prior to the written confirmation of the sale
      of the Securities to such Person, if the final Prospectus (as so amended
      or supplemented) would have cured the defect giving rise to such loss,
      claim, damage or liability. In connection with any Underwritten Offering
      permitted by Section 3, the Company and the Guarantors will also enter
      into an underwriting agreement pursuant to which the Company and the
      Guarantors will agree to jointly and severally indemnify the Underwriters,
      if any, selling brokers, dealers and similar securities industry
      professionals participating in such Underwritten Offering, their officers
      and directors and each Person who controls such Persons (within the
      meaning of either Section 15 of the 1933 Act or Section 20 of the 1934
      Act) to the same extent as

                                       17
<PAGE>
      provided above with respect to the indemnification of the Holders, if
      requested in connection with any Registration Statement for such
      Underwritten Offering.

            (b) Each Holder agrees, severally and not jointly, to indemnify and
      hold harmless the Company, the Guarantors, the Initial Purchasers and the
      other selling Holders, and each of their respective directors and officers
      and each Person, if any, who controls the Company, the Guarantors, the
      Initial Purchasers and any other selling Holder within the meaning of
      either Section 15 of the 1933 Act or Section 20 of the 1934 Act to the
      same extent as the foregoing indemnity from the Company and the Guarantors
      to the Initial Purchasers and the Holders pursuant to Section 5(a), but
      only with reference to information relating to such Holder furnished to
      the Company in writing by such Holder expressly for use in any
      Registration Statement (or any amendment thereto) or any Prospectus (or
      any amendment or supplement thereto).

            (c) In case any proceeding (including any governmental
      investigation) shall be instituted involving any Person in respect of
      which indemnity may be sought pursuant to either paragraph (a) or
      paragraph (b) above, such Person (the "INDEMNIFIED PARTY") shall promptly
      notify the Person against whom such indemnity may be sought (the
      "INDEMNIFYING PARTY") in writing, but the failure to so promptly notify
      the Indemnifying Party shall not negate the obligation to so indemnify
      such Indemnified Party unless the Indemnifying Party is materially
      prejudiced by such delay, and the Indemnifying Party, upon request of the
      Indemnified Party, shall retain counsel reasonably satisfactory to the
      Indemnified Party to represent the Indemnified Party and any others the
      Indemnifying Party may designate in such proceeding and shall pay the fees
      and expenses of such counsel related to such proceeding. In any such
      proceeding, any Indemnified Party shall have the right to retain its own
      counsel, but the fees and expenses of such counsel shall be at the expense
      of such Indemnified Party unless (i) the Indemnifying Party and the
      Indemnified Party shall have mutually agreed to the retention of such
      counsel or (ii) the named parties to any such proceeding (including any
      impleaded parties) include both the Indemnifying Party and the Indemnified
      Party and, in the opinion of counsel to the Indemnifying Party,
      representation of both parties by the same counsel would be inappropriate
      due to actual or potential differing interests between them. It is
      understood that the Indemnifying Party shall not, in connection with any
      proceeding or related proceedings in the same jurisdiction, be liable for
      (a) the fees and expenses of more than one separate firm (in addition to
      any local counsel) for the Initial Purchasers and all Persons, if any, who
      control the Initial Purchasers within the meaning of either Section 15 of
      the 1933 Act or Section 20 of the 1934 Act, (b) the fees and expenses of
      more than one separate firm (in addition to any local counsel) for the
      Company and the Guarantors, their respective directors and officers and
      each Person, if any, who controls the Company or a Guarantor within the
      meaning of either Section 15 of the 1933 Act or Section 20 of the 1934
      Act, and (c) the fees and expenses of more than one separate firm (in
      addition to any local counsel) for all Holders and all Persons, if any,
      who control any Holders within the meaning of either

                                       18
<PAGE>
      such Section, and that all such fees and expenses shall be reimbursed as
      they are incurred. In such case involving the Initial Purchasers and
      Persons who control the Initial Purchasers, such firm shall be designated
      in writing by the Initial Purchasers. In such case involving the Holders
      and such Persons who control Holders, such firm shall be designated in
      writing by the Majority Holders. In all other cases, such firm shall be
      designated by the Company. The Indemnifying Party shall not be liable for
      any settlement of any proceeding effected without its written consent but,
      if settled with such consent or if there be a final judgment for the
      plaintiff, the Indemnifying Party agrees to indemnify the Indemnified
      Party from and against any loss or liability by reason of such settlement
      or judgment. No Indemnifying Party shall, without the prior written
      consent of the Indemnified Party, effect any settlement of any pending or
      threatened proceeding in respect of which such Indemnified Party is or
      could have been a party and indemnity could have been sought hereunder by
      such Indemnified Party, unless such settlement includes an unconditional
      release of such Indemnified Party from all liability on claims that are
      the subject matter of such proceeding.

            (d) If the indemnification provided for in paragraph (a) or
      paragraph (b) of this Section 5 is unavailable to an Indemnified Party or
      insufficient in respect of any losses, claims, damages or liabilities,
      then each Indemnifying Party under such paragraph, in lieu of indemnifying
      such Indemnified Party thereunder, shall contribute to the amount paid or
      payable by such Indemnified Party as a result of such losses, claims,
      damages or liabilities in such proportion as is appropriate to reflect the
      relative fault of the Indemnifying Party or parties on the one hand and of
      the Indemnified Party or parties on the other hand in connection with the
      statements or omissions that resulted in such losses, claims, damages or
      liabilities, as well as any other relevant equitable considerations. The
      relative fault of the Company and the Guarantors, on the one hand, and the
      Holders, on the other hand, shall be determined by reference to, among
      other things, whether the untrue or alleged untrue statement of a material
      fact or the omission or alleged omission to state a material fact relates
      to information supplied by the Company and the Guarantors, on the one
      hand, or by the Holders, on the other hand, and the parties' relative
      intent, knowledge, access to information and opportunity to correct or
      prevent such statement or omission. The Holders' respective obligations to
      contribute pursuant to this Section 5(d) are several in proportion to the
      respective principal amount of Registrable Securities of the applicable
      Holder that were registered pursuant to a Registration Statement.

            (e) The Company, the Guarantors and each Holder agree that it would
      not be just or equitable if contribution pursuant to this Section 5(d)
      were determined by pro rata allocation or by any other method of
      allocation that does not take account of the equitable considerations
      referred to in Section 5(d) above. The amount paid or payable by an
      Indemnified Party as a result of the losses, claims, damages and
      liabilities referred to in Section 5(d) above shall be deemed to include,
      subject to the limitations set forth above, any legal or other expenses
      reasonably incurred by such Indemnified Party in connection with
      investigating or defending any such action or

                                       19
<PAGE>
      claim. Notwithstanding the provisions of this Section 5, no Holder shall
      be required to indemnify or contribute any amount in excess of the amount
      by which the total price at which Registrable Securities were sold by such
      Holder exceeds the amount of any damages that such Holder has otherwise
      been required to pay by reason of such untrue or alleged untrue statement
      or omission or alleged omission. No Person guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the 1933 Act)
      shall be entitled to contribution from any Person who was not guilty of
      such fraudulent misrepresentation. The remedies provided for in this
      Section 5 are not exclusive and shall not limit any rights or remedies
      which may otherwise be available to any Indemnified Party at law or in
      equity.

            The indemnity and contribution provisions contained in this Section
      5 shall remain operative and in full force and effect regardless of (i)
      any termination of this Agreement, (ii) any investigation made by or on
      behalf of the Initial Purchasers, any Holder or any Person controlling the
      Initial Purchasers or any Holder, or by or on behalf of the Company or the
      Guarantors, their respective officers or directors or any Person
      controlling the Company or a Guarantor, (iii) acceptance of any of the
      Exchange Securities and (iv) any sale of Registrable Securities pursuant
      to a Shelf Registration Statement.

      6. Miscellaneous.

            (a) No Inconsistent Agreements. Neither the Company nor any
      Guarantor has entered into, nor on or after the date of this Agreement
      will enter into, any agreement which is inconsistent with the rights
      granted to the Holders of Registrable Securities in this Agreement or
      otherwise conflicts with the provisions hereof. The rights granted to the
      Holders hereunder do not in any way conflict with and are not inconsistent
      with the rights granted to the holders of the Company's or any Guarantor's
      other issued and outstanding securities under any such agreements.

            (b) Amendments and Waivers. The provisions of this Agreement,
      including the provisions of this sentence, may not be amended, modified or
      supplemented, and waivers or consents to departures from the provisions
      hereof may not be given unless the Company has obtained the written
      consent of Holders of at least a majority in aggregate principal amount of
      the outstanding Registrable Securities affected by such amendment,
      modification, supplement, waiver or consent; provided, however, that no
      amendment, modification, supplement, waiver or consent to any departure
      from the provisions of Section 5 hereof or this paragraph (b) shall be
      effective as against any Holder of Registrable Securities unless consented
      to in writing by such Holder.

            (c) Notices. All notices and other communications provided for or
      permitted hereunder shall be made in writing by hand-delivery, registered
      first-class mail, telecopier, or any courier guaranteeing overnight
      delivery (i) if to a Holder, at the most current address given by such
      Holder to the Company by means of a notice given in accordance with the
      provisions of this Section 6(c), which address initially

                                       20
<PAGE>
      is, with respect to the Initial Purchasers, the address set forth in the
      Purchase Agreement; and (ii) if to the Company or any Guarantor, initially
      at the Company's address set forth in the Purchase Agreement and
      thereafter at such other address, notice of which is given in accordance
      with the provisions of this Section 6(c).

            All such notices and communications shall be deemed to have been
      duly given at the time delivered by hand, if personally delivered; five
      Business Days after being deposited in the mail, postage pre-paid, if
      mailed; when answered back, if telexed; when receipt is acknowledged, if
      telecopied; and on the next Business Day if timely delivered to an air
      courier guaranteeing overnight delivery.

            Copies of all such notices, demands, or other communications shall
      be concurrently delivered by the Person giving the same to the Trustee, at
      the address specified in the Indenture.

            (d) Successors and Assigns. This Agreement shall inure to the
      benefit of, and be binding upon, the successors, assigns and transferees
      of each of the parties, including, without limitation and without the need
      for an express assignment, subsequent Holders of Registrable Securities;
      provided that nothing herein shall be deemed to permit any assignment,
      transfer or other disposition of Registrable Securities in violation of
      the terms of the Securities and the Purchase Agreement. If any transferee
      of any Holder shall acquire Registrable Securities, in any manner, whether
      by operation of law or otherwise, such Registrable Securities shall be
      held subject to all of the terms of this Agreement, and by taking and
      holding such Registrable Securities such Person shall be conclusively
      deemed to have agreed to be bound by and to perform all of the terms and
      provisions of this Agreement and such Person shall be entitled to receive
      the benefits hereof. The Initial Purchasers shall have no liability or
      obligation to the Company or any Guarantor with respect to any failure by
      a Holder to comply with, or any breach by any other Holder of, any of the
      obligations of such Holder under this Agreement.

            (e) Purchases and Sales of Securities. The Company and the
      Guarantors shall not, and shall use their reasonable best efforts to cause
      their respective affiliates (as defined in Rule 405 under the 1933 Act)
      not to, purchase and then resell or otherwise transfer any Securities.

            (f) Third Party Beneficiary. Each Holder shall be a third party
      beneficiary to the agreements made hereunder between the Company and the
      Guarantors, on the one hand, and the Initial Purchasers, on the other
      hand, shall be bound by all of the terms and provisions of this Agreement
      and shall have the right to enforce such agreements directly to the extent
      it deems such enforcement necessary or advisable to protect its rights or
      the rights of Holders hereunder.

            (g) Counterparts. This Agreement may be executed in any number of
      counterparts and by the parties hereto in separate counterparts, each of
      which when so executed shall be deemed to be an original and all of which
      taken together shall constitute one and the same agreement.

            (h) Headings. The headings in this Agreement are for convenience of
      reference only and shall not limit or otherwise affect the meaning hereof.

            (i) Governing Law. This Agreement shall be governed by, and
      construed in accordance with, the laws of the State of New York.

            (j) Severability. In the event that any one or more of the
      provisions contained herein, or the application thereof in any
      circumstance, is held invalid, illegal or unenforceable the validity,
      legality and enforceability of any such provision in every other respect
      and of the remaining provisions contained herein shall not be affected or
      impaired thereby.

            (k) Commencement of Agreement. The rights and obligations hereunder
      of the Company, the Guarantors and the Initial Purchasers shall not become
      effective until the sale and delivery of the Offered Securities has been
      completed on the Closing Date (the terms "Offered Securities" and "Closing
      Date" have the meanings assigned to them in the Purchase Agreement).

                                       21
<PAGE>
      IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                             EL PASO PRODUCTION HOLDING COMPANY

                             By:  /s/ Gene Waguespack
                                ------------------------------------------------
                                  Name:     Gene Waguespack
                                  Title:    Senior Vice President and Chief
                                            Financial Officer

                             EL PASO PRODUCTION COMPANY

                             By:  /s/ Gene Waguespack
                                ------------------------------------------------
                                  Name:     Gene Waguespack
                                  Title:    Senior Vice President and Chief
                                            Financial Officer

                             EL PASO PRODUCTION GOM COMPANY

                             By:  /s/ Gene Waguespack
                                ------------------------------------------------
                                  Name:     Gene Waguespack
                                  Title:    Senior Vice President and Chief
                                            Financial Officer

                             EL PASO ENERGY RATON, L.L.C.

                             By:  /s/ Gene Waguespack
                                ------------------------------------------------
                                  Name:     Gene Waguespack
                                  Title:    Senior Vice President and Chief
                                            Financial Officer

                             VERMEJO MINERALS CORPORATION

                             By:  /s/ Gene Waguespack
                                ------------------------------------------------
                                  Name:     Gene Waguespack
                                  Title:    Senior Vice President and Chief
                                            Financial Officer

                                       22

<PAGE>
Credit Suisse First Boston LLC
Citigroup Global Markets Inc.

    Acting on behalf of themselves and as the
    representatives of the several Initial
    Purchasers

By: Credit Suisse First Boston LLC

By:   /s/ Paul A. Davis
----------------------------------
      Name:    Paul A. Davis
      Title:   Managing Director

                                       23

<PAGE>
By: Citigroup Global Markets Inc.

By:   /s/ Sean Dolan
------------------------------
      Name:    Sean Dolan
      Title:   Vice President

                                       24

<PAGE>
                                   SCHEDULE I

Initial Purchasers

Credit Suisse First Boston LLC
Citigroup Global Markets Inc.
Banc of America Securities LLC
Deutsche Bank Securities Inc.
Lehman Brothers Inc.
Scotia Capital (USA) Inc.
<PAGE>
                                   SCHEDULE II

Guarantors

El Paso Production Company
El Paso Production GOM, Inc.
El Paso Energy Raton, L.L.C.
Vermejo Minerals Corporation

                                       2<PAGE>
                                                                    EXHIBIT 10.1

(MULTICURRENCY--CROSS BORDER)

                                     ISDA(R)
                  INTERNATIONAL SWAP DEALERS ASSOCIATION, INC.

                                MASTER AGREEMENT

                           DATED AS OF JANUARY 1, 2001

EL PASO MERCHANT ENERGY, L.P.                         EL PASO PRODUCTION COMPANY
        ("PARTY A")                    AND                   ("PARTY B")

have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.

Accordingly, the parties agree as follows:

1.       INTERPRETATION

(a)      DEFINITIONS. The terms defined in Section 14 and in the Schedule will
have the meanings therein specified for the purpose of this Master Agreement.

(b)      INCONSISTENCY. In the event of any inconsistency between the provisions
of the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.

(c)      SINGLE AGREEMENT. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.

2.       OBLIGATIONS

(a)      GENERAL CONDITIONS.

         (i)      Each party will make each payment or delivery specified in
         each Confirmation to be made by it, subject to the other provisions of
         this Agreement.

         (ii)     Payments under this Agreement will be made on the due date for
         value on that date in the place of the account specified in the
         relevant Confirmation or otherwise pursuant to this Agreement, in
         freely transferable funds and in the manner customary for payments in
         the required currency. Where settlement is by delivery (that is, other
         than by payment), such delivery will be made for receipt on the due
         date in the manner customary for the relevant obligation unless
         otherwise specified in the relevant Confirmation or elsewhere in this
         Agreement.

         (iii)    Each obligation of each party under Section 2(a)(i) is subject
         to (1) the condition precedent that no Event of Default or Potential
         Event of Default with respect to the other party has occurred and is
         continuing, (2) the condition precedent that no Early Termination Date
         in respect of the relevant

<PAGE>
         Transaction has occurred or been effectively designated and (3) each
         other applicable condition precedent specified in this Agreement.

(b)      CHANGE OF ACCOUNT. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.

(c)      NETTING.  If on any date amounts would otherwise be payable:

         (i)      in the same currency; and

         (ii)     in respect of the same Transaction,

by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.

The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.

(d)      DEDUCTION OR WITHHOLDING FOR TAX.

         (i)      GROSS-UP. All payments under this Agreement will be made
         without any deduction or withholding for or on account of any Tax
         unless such deduction or withholding is required by any applicable law,
         as modified by the practice of any relevant governmental revenue
         authority, then in effect. If a party is so required to deduct or
         withhold, then that party ("X") will:

                  (1)      promptly notify the other party ("Y") of such
                  requirement;

                  (2)      pay to the relevant authorities the full amount
                  required to be deducted or withheld (including the full amount
                  required to be deducted or withheld from any additional amount
                  paid by X to Y under this Section 2(d)) promptly upon the
                  earlier of determining that such deduction or withholding is
                  required or receiving notice that such amount has been
                  assessed against Y;

                  (3)      promptly forward to Y an official receipt (or a
                  certified copy), or other documentation reasonably acceptable
                  to Y evidencing such payment to such authorities; and

                  (4)      if such Tax is an Indemnifiable Tax, pay to Y, in
                  addition to the payment to which Y is otherwise entitled under
                  this Agreement, such additional amount as is necessary to
                  ensure that the net amount actually received by Y (free and
                  clear of Indemnifiable Taxes, whether assessed against X or Y)
                  will equal the full amount Y would have received had no such
                  deduction or withholding been required. However, X will not be
                  required to pay any additional amount to Y to the extent that
                  it would not be required to be paid but for:

                           (A)      the failure by Y to comply with or perform
                           any agreement contained in Section 4(a)(i), 4(a)(iii)
                           or 4(d); or

                                      -2-
<PAGE>
                           (B)      the failure of a representation made by Y
                           pursuant to Section 3(f) to be accurate and true
                           unless such failure would not have occurred but for
                           (I) any action taken by a taxing authority, or
                           brought in a court of competent jurisdiction, on or
                           after the date on which a Transaction is entered into
                           (regardless of whether such action is taken or
                           brought with respect to a party to this Agreement) or
                           (II) a Change in Tax Law.

         (ii)     LIABILITY. If:

                  (1)      X is required by any applicable law, as modified by
                  the practice of any relevant governmental revenue authority,
                  to make any deduction or withholding in respect of which X
                  would not be required to pay an additional amount to Y under
                  Section 2(d)(i)(4);

                  (2)      X does not so deduct or withhold; and

                  (3)      a liability resulting from such Tax is assessed
                  directly against X,

         then, except to the extent Y has satisfied or then satisfies the
         liability resulting from such Tax, Y will promptly pay to X the amount
         of such liability (including any related liability for interest, but
         including any related liability for penalties only if Y has failed to
         comply with or perform any agreement contained in Section 4(a)(i),
         4(a)(iii) or 4(d)).

(e)      DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by Law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.

3.       REPRESENTATIONS

Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that:

(a)      BASIC REPRESENTATIONS.

         (i)      STATUS. It is duly organized and validly existing under the
         laws of the jurisdiction of its organisation or incorporation and, if
         relevant under such laws, in good standing;

         (ii)     POWERS. It has the power to execute this Agreement and any
         other documentation relating to this Agreement to which it is a party,
         to deliver this Agreement and any other documentation relating to this
         Agreement that it is required by this Agreement to deliver and to
         perform its obligations under this Agreement and any obligations it has
         under any Credit Support Document to which it is a party and has taken
         all necessary action to authorise such execution, delivery and
         performance;

         (iii)    NO VIOLATION OR CONFLICT. Such execution, delivery and
         performance do not violate or conflict with any law applicable to it,
         any provision of its constitutional documents, any order or judgment of
         any court or other agency of government applicable to it or any of its
         assets or any contractual restriction binding on or affecting it or any
         of its assets;

                                      -3-
<PAGE>
         (iv)     CONSENTS. All governmental and other consents that are
         required to have been obtained by it with respect to this Agreement or
         any Credit Support Document to which it is a party have been obtained
         and are in full force and effect and all conditions of any such
         consents have been complied with; and

         (v)      OBLIGATIONS BINDING. Its obligations under this Agreement and
         any Credit Support Document to which it is a party constitute its
         legal, valid and binding obligations, enforceable in accordance with
         their respective terms (subject to applicable bankruptcy,
         reorganisation, insolvency, moratorium or similar laws affecting
         creditors' rights generally and subject, as to enforceability, to
         equitable principles of general application (regardless of whether
         enforcement is sought in a proceeding in equity or at law)).

(b)      ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.

(c)      ABSENCE OF LITIGATION. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding at
law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.

(d)      ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.

(e)      PAYER TAX REPRESENTATION. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(e) is accurate and true.

(f)      PAYEE TAX REPRESENTATIONS. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(f) is accurate
and true.

4.       AGREEMENTS

Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:

(a)      FURNISH SPECIFIED INFORMATION. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:

         (i)      any forms, documents or certificates relating to taxation
         specified in the Schedule or any Confirmation;

         (ii)     any other documents specified in the Schedule or any
         Confirmation; and

         (iii)    upon reasonable demand by such other party, any form or
         document that may be required or reasonably requested in writing in
         order to allow such other party or its Credit Support Provider to make
         a payment under this Agreement or any applicable Credit Support
         Document without any deduction or withholding for or on account of any
         Tax or with such deduction or withholding at a reduced rate (so long as
         the completion, execution or submission of such form or document would
         not materially prejudice the legal or commercial position of the party
         in receipt of such demand), with any such form or document to be
         accurate and completed in a manner reasonably satisfactory to such
         other party and to be executed and to be delivered with any reasonably
         required certification,

in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.

                                      -4-
<PAGE>
(b)      MAINTAIN AUTHORIZATIONS. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party and will use all reasonable
efforts to obtain any that may become necessary in the future.

(c)      COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.

(d)      TAX AGREEMENT. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.

(e)      PAYMENT OF STAMP TAX. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated, organised, managed and
controlled, or considered to have its seat, or in which a branch or office
through which it is acting for the purpose of this Agreement is located ("Stamp
Tax Jurisdiction") and will indemnify the other party against any Stamp Tax
levied or imposed upon the other party or in respect of the other party's
execution or performance of this Agreement by any such Stamp Tax Jurisdiction
which is not also a Stamp Tax Jurisdiction with respect to the other party.

5.       EVENTS OF DEFAULT AND TERMINATION EVENTS

(a)      EVENTS OF DEFAULT. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party:

         (i)      FAILURE TO PAY OR DELIVER. Failure by the party to make, when
         due, any payment under this Agreement or delivery under Section 2(a)(i)
         or 2(e) required to be made by it if such failure is not remedied on or
         before the third Local Business Day after notice of such failure is
         given to the party;

         (ii)     BREACH OF AGREEMENT. Failure by the party to comply with or
         perform any agreement or obligation (other than an obligation to make
         any payment under this Agreement or delivery under Section 2 (a)(i) or
         2(e) or to give notice of a Termination Event or any agreement or
         obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied
         with or performed by the party in accordance with this Agreement if
         such failure is not remedied on or before the thirtieth day after
         notice of such failure is given to the party;

         (iii)    CREDIT SUPPORT DEFAULT.

                  (1)      Failure by the party or any Credit Support Provider
                  of such party to comply with or perform any agreement or
                  obligation to be complied with or performed by it in
                  accordance with any Credit Support Document if such failure is
                  continuing after any applicable grace period has elapsed;

                  (2)      the expiration or termination of such Credit Support
                  Document or the failing or ceasing of such Credit Support
                  Document to be in full force and effect for the purpose of
                  this Agreement (in either case other than in accordance with
                  its terms) prior to the satisfaction of all obligations of
                  such party under each Transaction to which such Credit Support
                  Document relates without the written consent of the other
                  party; or

                  (3)      the party or such Credit Support Provider disaffirms,
                  disclaims, repudiates or rejects, in whole or in part, or
                  challenges the validity of, such Credit Support Document;

         (iv)     MISREPRESENTATION. A representation (other than a
         representation under Section 3(e) or (f)) made or repeated or deemed to
         have been made or repeated by the party or any Credit Support Provider
         of such

                                      -5-
<PAGE>
         party in this Agreement or any Credit Support Document proves to have
         been incorrect or misleading in any material respect when made or
         repeated or deemed to have been made or repeated;

         (v)      DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit
         Support Provider of such party or any applicable Specified Entity of
         such party (1) defaults under a Specified Transaction and, after giving
         effect to any applicable notice requirement or grace period, there
         occurs a liquidation of, an acceleration of obligations under, or an
         early termination of, that Specified Transaction, (2) defaults, after
         giving effect to any applicable notice requirement or grace period, in
         making any payment or delivery due on the last payment, delivery or
         exchange date of, or any payment on early termination of, a Specified
         Transaction (or such default continues for at least three Local
         Business Days if there is no applicable notice requirement or grace
         period) or (3) disaffirms, disclaims, repudiates or rejects, in whole
         or in part, a Specified Transaction (or such action is taken by any
         person or entity appointed or empowered to operate it or act on its
         behalf);

         (vi)     CROSS DEFAULT. If "Cross Default" is specified in the Schedule
         as applying to the party, the occurrence or existence of (1) a default,
         event of default or other similar condition or event (however
         described) in respect of such party, any Credit Support Provider of
         such party or any applicable Specified Entity of such party under one
         or more agreements or instruments relating to Specified Indebtedness of
         any of them (individually or collectively) in an aggregate amount of
         not less than the applicable Threshold Amount (as specified in the
         Schedule) which has resulted in such Specified Indebtedness becoming,
         or becoming capable at such time of being declared, due and payable
         under such agreements or instruments, before it would otherwise have
         been due and payable or (2) a default by such party, such Credit
         Support Provider or such Specified Entity (individually or
         collectively) in making one or more payments on the due date thereof in
         an aggregate amount of not less than the applicable Threshold Amount
         under such agreements or instruments (after giving effect to any
         applicable notice requirement or grace period);

         (vii)    BANKRUPTCY. The party, any Credit Support Provider of such
         party or any applicable Specified Entity of such party:

                  (1)      is dissolved (other than pursuant to a consolidation,
                  amalgamation or merger); (2) becomes insolvent or is unable to
                  pay its debts or fails or admits in writing its inability
                  generally to pay its debts as they become due; (3) makes a
                  general assignment, arrangement or composition with or for the
                  benefit of its creditors; (4) institutes or has instituted
                  against it a proceeding seeking a judgment of insolvency or
                  bankruptcy or any other relief under any bankruptcy or
                  insolvency law or other similar law affecting creditors'
                  rights, or a petition is presented for its winding-up or
                  liquidation, and, in the case of any such proceeding or
                  petition instituted or presented against it, such proceeding
                  or petition (A) results in a judgment of insolvency or
                  bankruptcy or the entry of an order for relief or the making
                  of an order for its winding-up or liquidation or (B) is not
                  dismissed, discharged, stayed or restrained in each case
                  within 30 days of the institution or presentation thereof; (5)
                  has a resolution passed for its winding-up, official
                  management or liquidation (other than pursuant to a
                  consolidation, amalgamation or merger); (6) seeks or becomes
                  subject to the appointment of an administrator, provisional
                  liquidator, conservator, receiver, trustee, custodian or other
                  similar official for it or for all or substantially all its
                  assets; (7) has a secured party take possession of all or
                  substantially all its assets or has a distress, execution
                  attachment, sequestration or other legal process levied,
                  enforced or sued on or against all or substantially all its
                  assets and such secured party maintains possession, or any
                  such process is not dismissed, discharged, stayed or
                  restrained, in each case within 30 days thereafter; (8) causes
                  or is subject to any event with respect to it which, under the
                  applicable laws of any jurisdiction, has an analogous effect
                  to any of the events specified in clauses (1) to (7)
                  (inclusive); or (9) takes any action in furtherance of, or
                  indicating its consent to, approval of, or acquiescence in,
                  any of the foregoing acts; or

         (viii)   MERGER WITHOUT ASSUMPTION. The party or any Credit Support
         Provider of such party consolidates or amalgamates with, or merges with
         or into, or transfers all or substantially all its assets to, another
         entity and, at the time of such consolidation, amalgamation, merger or
         transfer:

                                      -6-
<PAGE>
                  (1)      the resulting, surviving or transferee entity fails
                  to assume all the obligations of such party or such Credit
                  Support Provider under this Agreement or any Credit Support
                  Document to which it or its predecessor was a party by
                  operation of law or pursuant to an agreement reasonably
                  satisfactory to the other party to this Agreement; or

                  (2)      the benefits of any Credit Support Document fail to
                  extend (without the consent of the other party) to the
                  performance by such resulting, surviving or transferee entity
                  of its obligations under this Agreement.

(b)      TERMINATION EVENTS. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below or a Tax Event Upon Merger if the event is specified in (iii) below,
and, if specified to be applicable, a Credit Event Upon Merger if the event is
specified pursuant to (iv) below or an Additional Termination Event if the event
is specified pursuant to (v) below:

         (i)      ILLEGALITY. Due to the adoption of, or any change in, any
         applicable law after the date on which a Transaction is entered into,
         or due to the promulgation of, or any change in, the interpretation by
         any court, tribunal or regulatory authority with competent jurisdiction
         of any applicable law after such date, it becomes unlawful (other than
         as a result of a breach by the party of Section 4(b)) for such party
         (which will be the Affected Party):

                  (1)      to perform any absolute or contingent obligation to
                  make a payment or delivery or to receive a payment or delivery
                  in respect of such Transaction or to comply with any other
                  material provision of this Agreement relating to such
                  Transaction; or

                  (2)      to perform, or for any Credit Support Provider of
                  such party to perform, any contingent or other obligation
                  which the party (or such Credit Support Provider) has under
                  any Credit Support Document relating to such Transaction;

         (ii)     TAX EVENT. Due to (x) any action taken by a taxing authority,
         or brought in a court of competent jurisdiction, on or after the date
         on which a Transaction is entered into (regardless of whether such
         action is taken or brought with respect to a party to this Agreement)
         or (y) a Change in Tax Law, the party (which will be the Affected
         Party) will, or there is a substantial likelihood that it will, on the
         next succeeding Scheduled Payment Date (1) be required to pay to the
         other party an additional amount in respect of an Indemnifiable Tax
         under Section 2(d)(i)(4) (except in respect of interest under Section
         2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount
         is required to be deducted or withheld for or on account of a Tax
         (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e))
         and no additional amount is required to be paid in respect of such Tax
         under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A)
         or (B));

         (iii)    TAX EVENT UPON MERGER. The party (the "Burdened Party") on the
         next succeeding Scheduled Payment Date will either (1) be required to
         pay an additional amount in respect of an Indemnifiable Tax under
         Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
         6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has
         been deducted or withheld for or on account of any Indemnifiable Tax in
         respect of which the other party is not required to pay an additional
         amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in
         either case as a result of a party consolidating or amalgamating with,
         or merging with or into, or transferring all or substantially all its
         assets to, another entity (which will be the Affected Party) where such
         action does not constitute an event described in Section 5(a)(viii);

         (iv)     CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is
         specified in the Schedule as applying to the party, such party ("X"),
         any Credit Support Provider of X or any applicable Specified Entity of
         X consolidates or amalgamates with, or merges with or into, or
         transfers all or substantially all its assets to, another entity and
         such action does not constitute an event described in Section
         5(a)(viii) but the creditworthiness of the resulting, surviving or
         transferee entity is materially weaker than that of X, such

                                      -7-
<PAGE>
         Credit Support Provider or such Specified Entity, as the case may be,
         immediately prior to such action (and, in such event, X or its
         successor or transferee, as appropriate, will be the Affected Party);
         or

         (v)      ADDITIONAL TERMINATION EVENT. If any "Additional Termination
         Event" is specified in the Schedule or any Confirmation as applying,
         the occurrence of such event (and, in such event, the Affected Party or
         Affected Parties shall be as specified for such Additional Termination
         Event in the Schedule or such Confirmation).

(c)      EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also constitutes
an Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.

6.       EARLY TERMINATION

(a)      RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event
of Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(l), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).

(b)      RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.

         (i)      NOTICE. If a Termination Event occurs, an Affected Party will,
         promptly upon becoming aware of it, notify the other party, specifying
         the nature of that Termination Event and each Affected Transaction and
         will also give such other information about that Termination Event as
         the other party may reasonably require.

         (ii)     TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality
         under Section 5(b)(i)(1) or a Tax Event occurs and there is only one
         Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
         Party is the Affected Party, the Affected Party will, as a condition to
         its right to designate an Early Termination Date under Section
         6(b)(iv), use all reasonable efforts (which will not require such party
         to incur a loss, excluding immaterial, incidental expenses) to transfer
         within 20 days after it gives notice under Section 6(b)(i) all its
         rights and obligations under this Agreement in respect of the Affected
         Transactions to another of its Offices or Affiliates so that such
         Termination Event ceases to exist.

         If the Affected Party is not able to make such a transfer it will give
         notice to the other party to that effect within such 20 day period,
         whereupon the other party may effect such a transfer within 30 days
         after the notice is given under Section 6(b)(i).

         Any such transfer by a party under this Section 6(b)(ii) will be
         subject to and conditional upon the prior written consent of the other
         party, which consent will not be withheld if such other party's
         policies in effect at such time would permit it to enter into
         transactions with the transferee on the terms proposed.

         (iii)    TWO AFFECTED PARTIES. If an Illegality under Section
         5(b)(i)(l) or a Tax Event occurs and there are two Affected Parties,
         each party will use all reasonable efforts to reach agreement within 30
         days after notice thereof is given under Section 6(b)(i) on action to
         avoid that Termination Event.

                                      -8-
<PAGE>
         (iv)     RIGHT TO TERMINATE. If:

                  (1)      a transfer under Section 6(b)(ii) or an agreement
                  under Section 6(b)(iii), as the case may be, has not been
                  effected with respect to all Affected Transactions within 30
                  days after an Affected Party gives notice under Section
                  6(b)(i); or

                  (2)      an Illegality under Section 5(b)(i)(2), a Credit
                  Event Upon Merger or an Additional Termination Event occurs,
                  or a Tax Event Upon Merger occurs and the Burdened Party is
                  not the Affected Party,

         either party in the case of an Illegality, the Burdened Party in the
         case of a Tax Event Upon Merger, any Affected Party in the case of a
         Tax Event or an Additional Termination Event if there is more than one
         Affected Party, or the party which is not the Affected Party in the
         case of a Credit Event Upon Merger or an Additional Termination Event
         if there is only one Affected Party may, by not more than 20 days
         notice to the other party and provided that the relevant Termination
         Event is then continuing, designate a day not earlier than the day such
         notice is effective as an Early Termination Date in respect of all
         Affected Transactions.

(c)      EFFECT OF DESIGNATION.

         (i)      If notice designating an Early Termination Date is given under
         Section 6(a) or (b), the Early Termination Date will occur on the date
         so designated, whether or not the relevant Event of Default or
         Termination Event is then continuing.

         (ii)     Upon the occurrence or effective designation of an Early
         Termination Date, no further payments or deliveries under Section
         2(a)(i) or 2(e) in respect of the Terminated Transactions will be
         required to be made, but without prejudice to the other provisions of
         this Agreement. The amount, if any, payable in respect of an Early
         Termination Date shall be determined pursuant to Section 6(e).

(d)      CALCULATIONS.

         (i)      STATEMENT. On or as soon as reasonably practicable following
         the occurrence of an Early Termination Date, each party will make the
         calculations on its part, if any, contemplated by Section 6(e) and will
         provide to the other party a statement (1) showing, in reasonable
         detail, such calculations (including all relevant quotations and
         specifying any amount payable under Section 6(e)) and (2) giving
         details of the relevant account to which any amount payable to it is to
         be paid. In the absence of written confirmation from the source of a
         quotation obtained in determining a Market Quotation, the records of
         the party obtaining such quotation will be conclusive evidence of the
         existence and accuracy of such quotation.

         (ii)     PAYMENT DATE. An amount calculated as being due in respect of
         any Early Termination Date under Section 6(e) will be payable on the
         day that notice of the amount payable is effective (in the case of an
         Early Termination Date which is designated or occurs as a result of an
         Event of Default) and on the day which is two Local Business Days after
         the day on which notice of the amount payable is effective (in the case
         of an Early Termination Date which is designated as a result of a
         Termination Event). Such amount will be paid together with (to the
         extent permitted under applicable law) interest thereon (before as well
         as after judgment) in the Termination Currency, from (and including)
         the relevant Early Termination Date to (but excluding) the date such
         amount is paid, at the Applicable Rate. Such interest will be
         calculated on the basis of daily compounding and the actual number of
         days elapsed.

(e)      PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.

                                      -9-
<PAGE>
         (i)      EVENTS OF DEFAULT. If the Early Termination Date results from
         an Event of Default:

                  (1)      First Method and Market Quotation. If the First
                  Method and Market Quotation apply, the Defaulting Party will
                  pay to the Non-defaulting Party the excess, if a positive
                  number, of (A) the sum of the Settlement Amount (determined by
                  the Non-defaulting Party) in respect of the Terminated
                  Transactions and the Termination Currency Equivalent of the
                  Unpaid Amounts owing to the Non-defaulting Party over (B) the
                  Termination Currency Equivalent of the Unpaid Amounts owing to
                  the Defaulting Party.

                  (2)      First Method and Loss. If the First Method and Loss
                  apply, the Defaulting Party will pay to the Non-defaulting
                  Party, if a positive number, the Non-defaulting Party's Loss
                  in respect of this Agreement.

                  (3)      Second Method and Market Quotation. If the Second
                  Method and Market Quotation apply, an amount will be payable
                  equal to (A) the sum of the Settlement Amount (determined by
                  the Non-defaulting Party) in respect of the Terminated
                  Transactions and the Termination Currency Equivalent of the
                  Unpaid Amounts owing to the Non-defaulting Party less (B) the
                  Termination Currency Equivalent of the Unpaid Amounts owing to
                  the Defaulting Party. If that amount is a positive number, the
                  Defaulting Party will pay it to the Non-defaulting Party; if
                  it is a negative number, the Non-defaulting Party will pay the
                  absolute value of that amount to the Defaulting Party.

                  (4)      Second Method and Loss. If the Second Method and Loss
                  apply, an amount will be payable equal to the Non-defaulting
                  Party's Loss in respect of this Agreement. If that amount is a
                  positive number, the Defaulting Party will pay it to the
                  Non-defaulting Party; if it is a negative number, the
                  Non-defaulting Party will pay the absolute value of that
                  amount to the Defaulting Party.

         (ii)     TERMINATION EVENTS. If the Early Termination Date results from
         a Termination Event:

                  (1)      One Affected Party. If there is one Affected Party,
                  the amount payable will be determined in accordance with
                  Section 6(e)(i)(3), if Market Quotation applies, or Section
                  6(e)(i)(4), if Loss applies, except that, in either case,
                  references to the Defaulting Party and to the Non-defaulting
                  Party will be deemed to be references to the Affected Party
                  and the party which is not the Affected Party, respectively,
                  and, if Loss applies and fewer than all the Transactions are
                  being terminated, Loss shall be calculated in respect of all
                  Terminated Transactions.

                  (2)      Two Affected Parties. If there are two Affected
                  Parties:

                           (A)      if Market Quotation applies, each party will
                           determine a Settlement Amount in respect of the
                           Terminated Transactions, and an amount will be
                           payable equal to (I) the sum of (a) one-half of the
                           difference between the Settlement Amount of the party
                           with the higher Settlement Amount ("X") and the
                           Settlement Amount of the party with the lower
                           Settlement Amount ("Y") and (b) the Termination
                           Currency Equivalent of the Unpaid Amounts owing to X
                           less (II) the Termination Currency Equivalent of the
                           Unpaid Amounts owing to Y; and

                           (B)      if Loss applies, each party will determine
                           its Loss in respect of this Agreement (or, if fewer
                           than all the Transactions are being terminated, in
                           respect of all Terminated Transactions) and an amount
                           will be payable equal to one-half of the difference
                           between the Loss of the party with the higher Loss
                           ("X") and the Loss of the party with the lower Loss
                           ("Y").

                  If the amount payable is a positive number, Y will pay it to
                  X; if it is a negative number, X will pay the absolute value
                  of that amount to Y.

                                      -10-
<PAGE>
         (iii)    ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
         Termination Date occurs because "Automatic Early Termination" applies
         in respect of a party, the amount determined under this Section 6(e)
         will be subject to such adjustments as are appropriate and permitted by
         law to reflect any payments or deliveries made by one party to the
         other under this Agreement (and retained by such other party) during
         the period from the relevant Early Termination Date to the date for
         payment determined under Section 6(d)(ii).

         (iv)     PRE-ESTIMATE. The parties agree that if Market Quotation
         applies an amount recoverable under this Section 6(e) is a reasonable
         pre-estimate of loss and not a penalty. Such amount is payable for the
         loss of bargain and the loss of protection against future risks and
         except as otherwise provided in this Agreement neither party will be
         entitled to recover any additional damages as a consequence of such
         losses.

7.       TRANSFER

Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:

(a)      a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and

(b)      a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).

Any purported transfer that is not in compliance with this Section will be void.

8.       CONTRACTUAL CURRENCY

(a)      PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable law,
any obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in converting the currency so tendered into the Contractual
Currency, of the full amount in the Contractual Currency of all amounts payable
in respect of this Agreement. If for any reason the amount in the Contractual
Currency so received falls short of the amount in the Contractual Currency
payable in respect of this Agreement, the party required to make the payment
will, to the extent permitted by applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary to compensate for the
shortfall. If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount of
such excess.

(b)      JUDGMENTS. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.

                                      -11-
<PAGE>
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.

(c)      SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed, and will not be affected by judgment being
obtained or claim or proof being made for any other sums payable in respect of
this Agreement.

(d)      EVIDENCE OF LOSS. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.

9.       MISCELLANEOUS

(a)      ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.

(b)      AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.

(c)      SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.

(d)      REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.

(e)      COUNTERPARTS AND CONFIRMATIONS.

         (i)      This Agreement (and each amendment, modification and waiver in
         respect of it) may be executed and delivered in counterparts (including
         by facsimile transmission), each of which will be deemed an original.

         (ii)     The parties intend that they are legally bound by the terms of
         each Transaction from the moment they agree to those terms (whether
         orally or otherwise). A Confirmation shall be entered into as soon as
         practicable and may be executed and delivered in counterparts
         (including by facsimile transmission) or be created by an exchange of
         telexes or by an exchange of electronic messages on an electronic
         messaging system, which in each case will be sufficient for all
         purposes to evidence a binding supplement to this Agreement. The
         parties will specify therein or through another effective means that
         any such counterpart, telex or electronic message constitutes a
         Confirmation.

(f)      NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power
or privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.

(g)      HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.

10.      OFFICES; MULTIBRANCH PARTIES

(a)      If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of booking
office or jurisdiction of incorporation or organisation of such party, the
obligations of such party are the same as if it

                                      -12-
<PAGE>
had entered into the Transaction through its head or home office. This
representation will be deemed to be repeated by such party on each date on which
a Transaction is entered into.

(b)      Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.

(c)      If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.

11.      EXPENSES

A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document to
which the Defaulting Party is a party or by reason of the early termination of
any Transaction, including, but not limited to, costs of collection.

12.      NOTICES

(a)      EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:

         (i)      if in writing and delivered in person or by courier, on the
         date it is delivered;

         (ii)     if sent by telex, on the date the recipient's answer back is
         received;

         (iii)    if sent by facsimile transmission, on the date that
         transmission is received by a responsible employee of the recipient in
         legible form (it being agreed that the burden of proving receipt will
         be on the sender and will not be met by a transmission report generated
         by the sender's facsimile machine);

         (iv)     if sent by certified or registered mail (airmail, if overseas)
         or the equivalent (return receipt requested), on the date that mail is
         delivered or its delivery is attempted; or

         (v)      if sent by electronic messaging system, on the date that
         electronic message is received,

unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.

(b)      CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.

13.      GOVERNING LAW AND JURISDICTION

(a)      GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.

(b)      JURISDICTION. With respect to any suit, action or proceedings relating
to this Agreement ("Proceedings"), each party irrevocably:

                                      -13-
<PAGE>
         (i)      submits to the jurisdiction of the English courts, if this
         Agreement is expressed to be governed by English law, or to the
         non-exclusive jurisdiction of the courts of the State of New York and
         the United States District Court located in the Borough of Manhattan in
         New York City, if this Agreement is expressed to be governed by the
         laws of the State of New York; and

         (ii)     waives any objection which it may have at any time to the
         laying of venue of any Proceedings brought in any such court, waives
         any claim that such Proceedings have been brought in an inconvenient
         forum and further waives the right to object, with respect to such
         Proceedings, that such court does not have any jurisdiction over such
         party.

Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.

(c)      SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and on
its behalf, service of process in any Proceedings. If for any reason any party's
Process Agent is unable to act as such, such party will promptly notify the
other party and within 30 days appoint a substitute process agent acceptable to
the other party. The parties irrevocably consent to service of process given in
the manner provided for notices in Section 12. Nothing in this Agreement will
affect the right of either party to serve process in any other manner permitted
by law.

(d)      WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the grounds
of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.

14.      DEFINITIONS

As used in this Agreement:

"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).

"AFFECTED PARTY" has the meaning specified in Section 5(b).

"AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.

"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.

"APPLICABLE RATE" means:

(a)      in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;

(b)      in respect of an obligation to pay an amount under Section 6(e) of
either party from and after the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate;

                                      -14-
<PAGE>
(c)      in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the
Non-default Rate; and

(d)      in all other cases, the Termination Rate.

"BURDENED PARTY" has the meaning specified in Section 5(b).

"CHANGE IN TAX LAW" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.

"CONSENT" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.

"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).

"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified as
such in this Agreement.

"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.

"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.

"DEFAULTING PARTY" has the meaning specified in Section 6(a).

"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).

"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.

"ILLEGALITY" has the meaning specified in Section 5(b).

"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organised, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).

"LAW" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"lawful" and "unlawful" will be construed accordingly.

"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial center, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.

                                      -15-
<PAGE>
"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3)
or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine its
Loss as of the relevant Early Termination Date, or, if that is not reasonably
practicable, as of the earliest date thereafter as is reasonably practicable. A
party may (but need not) determine its Loss by reference to quotations of
relevant rates or prices from one or more leading dealers in the relevant
markets.

"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that date. For this
purpose, Unpaid Amounts in respect of the Terminated Transaction or group of
Terminated Transactions are to be excluded but, without limitation, any payment
or delivery that would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition precedent) after
that Early Termination Date is to be included. The Replacement Transaction would
be subject to such documentation as such party and the Reference Market-maker
may, in good faith, agree. The party making the determination (or its agent)
will request each Reference Market-maker to provide its quotation to the extent
reasonably practicable as of the same day and time (without regard to different
time zones) on or as soon as reasonably practicable after the relevant Early
Termination Date. The day and time as of which those quotations are to be
obtained will be selected in good faith by the party obliged to make a
determination under Section 6(e), and, if each party is so obliged, after
consultation with the other. If more than three quotations are provided, the
Market Quotation will be the arithmetic mean of the quotations, without regard
to the quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation remaining
after disregarding the highest and lowest quotations. For this purpose, if more
than one quotation has the same highest value or lowest value, then one of such
quotations shall be disregarded. If fewer than three quotations are provided, it
will be deemed that the Market Quotation in respect of such Terminated
Transaction or group of Terminated Transactions cannot be determined.

"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.

"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).

"OFFICE" means a branch or office of a party, which may be such party's head or
home office.

"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.

"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.

                                      -16-
<PAGE>
"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organised, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.

"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.

"SET-OFF" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.

"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of:

(a)      the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and

(b)      such party's Loss (whether positive or negative and without reference
to any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.

"SPECIFIED ENTITY" has the meaning specified in the Schedule.

"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.

"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.

"STAMP TAX" means any stamp, registration, documentation or similar tax.

"TAX" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.

"TAX EVENT" has the meaning specified in Section 5(b).

"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).

"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).

"TERMINATION CURRENCY" has the meaning specified in the Schedule.

                                      -17-
<PAGE>
"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.

"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.

"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.

"UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market value of that which was (or would have been) required to be
delivered as of the originally scheduled date for delivery, in each case
together with (to the extent permitted under applicable law) interest, in the
currency of such amounts, from (and including) the date such amounts or
obligations were or would have been required to have been paid or performed to
(but excluding) such Early Termination Date, at the Applicable Rate. Such
amounts of interest will be calculated on the basis of daily compounding and the
actual number of days elapsed. The fair market value of any obligation referred
to in clause (b) above shall be reasonably determined by the party obliged to
make the determination under Section 6(e) or, if each party is so obliged, it
shall be the average of the Termination Currency Equivalents of the fair market
values reasonably determined by both parties.

IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.

EL PASO MERCHANT ENERGY, L.P.                        EL PASO PRODUCTION COMPANY
           ("Party A")                                      ("Party B")
-----------------------------                        --------------------------
         (Name of Party)                                (Name of Party)

By:  /s/ CECILIA HEILMANN                            By: /s/ ROBERT L. CAVNAR
    -------------------------                           -----------------------
    Name: Cecilia Heilmann                              Name: Robert L. Cavnar
    Title: Vice President,                              Title:
           Managing Director,                           Date:
           and Controller
    Date:

                                      -18-
<PAGE>
                                    SCHEDULE
                                     TO THE
                              ISDA MASTER AGREEMENT
                          (MULTICURRENCY-CROSS BORDER)

                          DATED AS OF JANUARY 1, 2001

                                     BETWEEN

                          EL PASO MERCHANT ENERGY, L.P.
     A LIMITED PARTNERSHIP ORGANIZED UNDER THE LAWS OF THE STATE OF DELAWARE
                                   ("PARTY A")

                                       AND

                           EL PASO PRODUCTION COMPANY
         A CORPORATION ORGANIZED UNDER THE LAWS OF THE STATE OF DELAWARE
                                   ("PARTY B")

                                     PART 1
                             TERMINATION PROVISIONS

In this Agreement:

                  (a)      "SPECIFIED ENTITY" means in relation to Party A for
                           the purpose of:

                           Section 5(a)(v): Not Applicable
                           Section 5(a)(vi): Not Applicable
                           Section 5(a)(vii): Not Applicable
                           Section 5(b)(iv): Not Applicable

                  in relation to Party B for the purpose of

                           Section 5(a)(v): Not Applicable
                           Section 5(a)(vi): Not Applicable
                           Section 5(a)(vii): Not Applicable
                           Section 5(b)(iv): Not Applicable

                  (b)      "SPECIFIED TRANSACTION" will have the meaning
                           specified in Section 14 of this Agreement.

                  (c)      The "CROSS DEFAULT" provisions of Section 5(a)(vi) of
                           this Agreement will not apply to Party A or Party B.

                  (d)      The "CREDIT EVENT UPON MERGER" provisions of Section
                           5(b)(iv) of this Agreement will apply to Party A and
                           will apply to Party B; provided however, that the
                           phrase "materially weaker" means (i) the unsecured,
                           senior, long-term indebtedness of the resulting,
                           surviving or transferee entity is rated less than
                           investment grade by either Standard & Poor's Rating
                           Group or Moody's Investor Service, Inc., or (ii) if
                           no such ratings exist, the Policies (as defined
                           below) in effect at the time, of the non-Affected
                           Party, would cause such non-Affected Party, solely as
                           a result of a change in the nature, character,
                           identity or condition of the Affected Party from its
                           state (as a party to the Agreement) prior to such
                           consolidation, amalgamation, merger or transfer, to
                           decline to make an extension of credit to, or enter
                           into a Transaction with, the resulting, surviving or
                           transferee entity. For purposes of this definition,
                           "Policies" means a party's (1) internal credit limits
                           applicable

                                       1
<PAGE>
                           to individual entities, (2) other limits on
                           conducting business with entities domiciled in
                           certain jurisdictions or engaging in certain
                           activities, or (3) internal restrictions on
                           conducting business with entities with whom such
                           party has had prior adverse business relations.

                  (e)      The "AUTOMATIC EARLY TERMINATION" provision of
                           Section 6(a) of this Agreement will not apply to
                           Party A and will not apply to Party B.

                  (f)      PAYMENTS ON EARLY TERMINATION. For the purpose of
                           Section 6(e) of this Agreement:

                           (i)      Market Quotation will apply; and
                           (ii)     The Second Method will apply.

                  (g)      "TERMINATION/CONTRACTUAL CURRENCY" means United
                           States Dollars.

                  (h)      "ADDITIONAL TERMINATION EVENT" will apply. The
                           following shall constitute an Additional Termination
                           Event:

                           "MATERIAL ADVERSE CHANGE" The occurrence of a
                           Material Adverse Change (as hereinafter defined) with
                           respect to a party ("X") (which will be the Affected
                           Party). "Material Adverse Change" means a reduction
                           in the rating of X's or X's Credit Support Provider's
                           unsecured, long term, senior indebtedness not
                           supported by third party credit enhancement by
                           Standard & Poor's Corporation or its successor
                           ("S&P") to below "BBB-", or by Moody's Investors
                           Service, Inc. or its successor ("Moody's") to below
                           "Baa3".

                                     PART 2
                               TAX REPRESENTATIONS

                  (a)      PAYER TAX REPRESENTATION. For the purpose of Section
                           3(e) of this Agreement, each of Party A and Party B
                           will make the following representation:

                           It is not required by any applicable law, as modified
                           by the practice of any relevant governmental revenue
                           authority, of any Relevant Jurisdiction to make any
                           deduction or withholding for or on account of any Tax
                           from any payment (other than interest under Section
                           2(e), 6(d)(ii) or 6(e) of this Agreement) to be made
                           by it to the other party under this Agreement. In
                           making this representation, it may rely on (i) the
                           accuracy of any representations made by the other
                           party pursuant to Section 3(f) of this Agreement,
                           (ii) the satisfaction of the other party contained in
                           Section 4(a)(i) or 4(a)(iii) of this Agreement and
                           the accuracy and effectiveness of any document
                           provided by the other party pursuant to Section
                           4(a)(i) or 4(a)(iii) of this Agreement and (iii) the
                           satisfaction of the agreement of the other party
                           contained in Section 4(d) of this Agreement, provided
                           that it shall not be a breach of this representation
                           where reliance is placed on clause (ii) herein and
                           the other party does not deliver a form or document
                           under Section 4(a)(iii) by reason of material
                           prejudice to its legal or commercial position.

                  (b)      PAYEE TAX REPRESENTATIONS. For the purpose of Section
                           3(f) of this Agreement, Party A and Party B make the
                           representation(s) specified below, if any:

                           PARTY A: Party A is a limited partnership organized
                           under the laws of the State of Delaware and is a
                           resident of the United States of America and its U.S.
                           taxpayer identification number is 76-0623745.

                                       2
<PAGE>
                           PARTY B: is a corporation organized under the laws of
                           the State of Delaware and is a resident of the United
                           States of America and its U.S. taxpayer
                           identification number is 63-0593810

                                       3

<PAGE>

                                     PART 3
                         AGREEMENT TO DELIVER DOCUMENTS

For the purpose of Section 4(a) of this Agreement, each party agrees to deliver
the following documents, as applicable:

<Table>
<CAPTION>
                                                                                                                    Covered by
Party required to                                                                      Date by which                Section 3(d)
deliver document        Form/Document/Certificate                                      to be delivered              Representation
----------------        -------------------------                                      ---------------              --------------
<S>                     <C>                                                            <C>                          <C>
Party A and             Certified incumbency certificate or other evidence of          At execution of this         Yes
Party B                 authority and specimen signatures with respect to each         Master Agreement
                        Party, its Credit Support Provider (if any), and their
                        respective signatories.

Party A and             A certified copy of a resolution adopted by the Board of       At execution of this         Yes
Party B                 Directors of each Party authorising the execution and          Master Agreement
                        delivery of this Master Agreement and each Confirmation

Party A and             A copy of the annual report of the party (or, if               Upon request.                Yes
Party B                 applicable, any Credit Support Provider) containing
                        audited consolidated financial statements for such
                        fiscal year certified by independent public accountants
                        and prepared in accordance with generally accepted
                        accounting principles consistently applied.

Party A and             Such other documents as the other may reasonably request.      Upon request                 No
Party B
</Table>

                                       4
<PAGE>
                                     PART 4
                                  MISCELLANEOUS

                  (a)      ADDRESSES FOR NOTICES. For the purpose of Section
                           12(a) of this Agreement:

                           PARTY A: ADDRESS FOR CONFIRMATIONS OR NOTICES:

                           Address:         El Paso Merchant Energy, L.P.
                                            1001 Louisiana Street
                                            Houston, Texas 77002

                           Attention:       Risk Management (Derivative
                                            Confirmations Only)
                                            Contract Services-Financial (All
                                            Other Documentation)

                           Facsimile No.:   (713) 420-2180 (Derivative
                                            Confirmations Only)
                                            (713) 420-7577 (All Other
                                            Documentation)

                           Telephone No.:   (713) 420-3415 (Derivative
                                            Confirmations Only)
                                            (713) 420-3548 (All Other
                                            Documentation)

                           PARTY B: ADDRESS FOR CONFIRMATIONS OR NOTICES:

                           Address:         El Paso Production Company
                                            Four Greenway Plaza
                                            Houston, Texas 77046

                           Attention:       Rick Piacenti

                           Facsimile No.:   (713) 402-4550
                           Telephone No.:   (713) 850-3871

                  (b)      PROCESS AGENT. For the purpose of Section 13(c) of
                           this Agreement:

                           Party A's Process Agent: Not Applicable.
                           Party B's Process Agent: Not Applicable.

                           If a party becomes organized outside the United
                           States of America, then such party shall, irrevocably
                           appoint an agent for service of process in the United
                           States of America reasonably satisfactory to the
                           other party and provide the other party with a copy
                           of such agent's written acceptance of such
                           appointment.

                  (c)      OFFICES. The provisions of Section 10(a) of this
                           Agreement will apply to this Agreement.

                  (d)      MULTIBRANCH PARTY. Neither Party A nor Party B is a
                           Multibranch Party.

                  (e)      CALCULATION AGENT. The Calculation Agent is Party A;
                           however, if Party A is the Defaulting Party, the
                           Calculation Agent shall be Party B (or any designated
                           third party mutually agreed to by the parties) until
                           such time as Party A is no longer a Defaulting Party.
                           In the event a calculation or determination is
                           disputed by Party B, the parties shall first endeavor
                           to resolve such dispute. If the parties are unable to
                           resolve such dispute within a commercially reasonable
                           time, the parties shall mutually select a dealer in
                           the applicable commodity to act as Calculation Agent
                           with respect to the issue in dispute.

                  (f)      CREDIT SUPPORT DOCUMENT(s):  None.

                                       5
<PAGE>
                  (g)      CREDIT SUPPORT PROVIDER(s): None.

                  (h)      GOVERNING LAW. This Agreement and each Transaction
                           will be governed by and construed in accordance with
                           the laws of the State of New York, without reference
                           to choice of law doctrine.

                  (i)      JURISDICTION. Section 13(b) of this Agreement is
                           hereby deleted in its entirety and replaced with the
                           following:

                           ARBITRATION Any controversy or claim arising out of
                           or relating to this Agreement or the breach of shall
                           be settled by arbitration by three arbitrators in
                           Houston, Texas, in accordance with the American
                           Arbitration Association Commercial Arbitration rules.
                           Judgment upon the award rendered by the arbitrators
                           may be entered in any court having jurisdiction
                           thereof. The prevailing party shall be entitled to
                           its reasonable attorneys' fees. Any monetary award
                           shall accrue interest from the date of the breach to
                           the date of any judgment entered on the award at the
                           prime commercial rate charged on the date of the
                           breach by Citibank, N.A. New York, New York, plus two
                           (2) percent or at the maximum legal rate, whichever
                           is less. If a party files a complaint in any court
                           with respect to any matter subject to arbitration
                           hereunder, the defendant in such court action shall
                           be entitled to recover its reasonable attorneys' fees
                           in connection with the court action. This arbitration
                           provision shall survive termination of this
                           Agreement.

                  (j)      NETTING. Section 2(c)(ii) will not apply and
                           therefore the netting specified in Section 2(c) of
                           this Agreement will apply across all Transactions
                           with effect from the date of this Agreement. The
                           Calculation Agent shall notify the parties of the
                           amounts of such netted payments (which notice may be
                           made by telephone). Notwithstanding the foregoing and
                           the netting of payments pursuant hereto, each party
                           will provide the other party with separate invoices
                           and documentation covering each Transaction
                           sufficient to permit the other party to comply with
                           its internal accounting and record keeping procedures
                           concerning individual Transactions.

                  (k)      "AFFILIATE" will have the meaning specified in
                           Section 14 of this Agreement.

                  (l)      PRIOR SWAPS. Party A and Party B have entered into
                           Swaps and similar agreements ("Existing
                           Transactions") prior to the execution of this
                           Agreement which they hereby agree shall be made and
                           constitute Transactions under this Agreement. These
                           Existing Transactions shall for all purposes be
                           Transactions hereunder and shall be subject to all
                           the terms of this Agreement. The delivery of
                           documents pursuant to Part 3 of this Schedule shall
                           not be required in connection with Existing
                           Transactions. To the extent the terms herein conflict
                           with the terms of the agreements governing the
                           Existing Transactions, the terms of this Agreement
                           shall apply.

                                     PART 5
                                OTHER PROVISIONS

                  (a)      ABSENCE OF LITIGATION. Section 3(c) of this Agreement
                           is hereby amended by: (i) adding in the second line
                           thereof after the word "governmental" the words "or
                           regulatory" and (ii) adding the words "in any
                           material respect" immediately prior to the end of the
                           section.

                  (b)      ACCURACY OF SPECIFIED INFORMATION. Section 3(d) of
                           this Agreement is hereby amended by adding in the
                           third line thereof after the word "respect" and
                           before the period the words "or, in the case of
                           audited or unaudited financial statements, a
                           presentation of the financial condition of the
                           relevant party in accordance with generally accepted
                           accounting principles, consistently applied."

                                       6
<PAGE>
                  (c)      ADDITIONAL REPRESENTATIONS. Section 3 of this
                           Agreement is hereby amended by adding at the end
                           thereof the following Subparagraphs (g), (h), (i),
                           (j) and (k):

                           (g)      LINE OF BUSINESS. It has entered into this
                                    Agreement (including each Transaction
                                    evidenced hereby) in conjunction with its
                                    line of business (including financial
                                    intermediation services) or the financing of
                                    its business.

                           (h)      ELIGIBLE SWAP PARTICIPANT. It constitutes an
                                    "eligible swap participant" as such term is
                                    defined in Rule 35.1(b)(2) of the Commodity
                                    Futures Trading Commission, 17 C.F.R.
                                    Section 35.1(b)(2) (1994).

                           (i)      STANDARDIZATION, CREDITWORTHINESS, AND
                                    TRANSFERABILITY. The economic terms of this
                                    Agreement, any Credit Support Document and
                                    each Transaction have been individually
                                    tailored and negotiated by each party. Each
                                    party has received and reviewed financial
                                    information concerning the other party and
                                    has had a reasonable opportunity to ask
                                    questions of and receive answers and
                                    information from the other party concerning
                                    such other party, this Agreement, such
                                    Credit Support Document, and such
                                    Transaction. The creditworthiness of the
                                    other party was a material consideration to
                                    each Party in entering into or determining
                                    the terms of this Agreement, such Credit
                                    Support Document, and such Transaction. The
                                    transferability of this Agreement, such
                                    Credit Support Document, and such
                                    Transaction is restricted as provided herein
                                    and therein.

                           (j)      NO RELIANCE. In connection with the
                                    negotiation of, the entering into, and the
                                    confirming of the execution of this
                                    Agreement, any Credit Support Document to
                                    which it is a party, and each Transaction:
                                    (i) it is acting as principal (and not as
                                    agent or in any other capacity, fiduciary or
                                    otherwise); (ii) the other party is not
                                    acting as a fiduciary or financial or
                                    investment advisor for it; (iii) it is not
                                    relying upon any representations (whether
                                    written or oral) of the other party other
                                    than the representations expressly set forth
                                    in this Agreement and in such Credit Support
                                    Document; (iv) the other party has not given
                                    to it (directly or indirectly through any
                                    other person) any advice, counsel,
                                    assurance, guarantee, or representation
                                    whatsoever as to the expected or projected
                                    success, profitability, return, performance,
                                    result, effect, consequence, or benefit
                                    (either legal, regulatory, tax, financial,
                                    accounting, or otherwise) of this Agreement,
                                    such Credit Support Document, or such
                                    Transaction; (v) it has consulted with its
                                    own legal, regulatory, tax, business,
                                    investment, financial, and accounting
                                    advisors to the extent it has deemed
                                    necessary, and it has made its own
                                    investment, hedging, and trading decisions
                                    based upon its own judgment and upon any
                                    advice from such advisors as it has deemed
                                    necessary, and not upon any view expressed
                                    by the other party; (vi) all trading
                                    decisions have been the result of arm's
                                    length negotiations between the parties; and
                                    (vii) it is entering into this Agreement,
                                    such Credit Support Document, and such
                                    Transaction with a full understanding of all
                                    of the risks hereof and thereof (economic
                                    and otherwise), and it is capable of
                                    assuming and willing to assume (financially
                                    and otherwise) those risks.

                           (k)      GENERIC RISK DISCLOSURE STATEMENT. Each
                                    party represents to the other that it has
                                    read and understands the "Generic Risks
                                    Associated with Over-the-Counter Derivative
                                    Transactions" statement attached as Exhibit
                                    A to this Agreement.

                  (d)      REFERENCE MARKET-MAKERS. The definition of "Reference
                           Market-makers" in Section 14 of this Agreement is
                           hereby amended by: (i) deleting "(a)" from the second
                           line thereof, (ii) deleting in the fourth line
                           thereof after the word "credit" the words "and (b) to
                           the extent practicable, from among such dealers
                           having an office in the same city" and (iii)

                                       7
<PAGE>
                           replacing such words with the words "or to enter into
                           transactions similar in nature to Transactions."

                  (e)      DEFINITIONS. This Agreement, each Confirmation, and
                           each Transaction are subject to the 1991 ISDA
                           Definitions and the 1992 ISDA FX and Currency Options
                           Definitions as amended, supplemented, updated,
                           restated (including the 1993 ISDA Commodity
                           Derivatives Definitions) (the "Definitions"), each as
                           published by the International Swaps and Derivatives
                           Association, Inc. ("ISDA"), and will be governed in
                           all respects by the Definitions (except that
                           references to "Swap Transactions" in the Definitions
                           will be deemed to be references to "Transactions").
                           The Definitions, as so modified, are incorporated by
                           reference herein, and made part of, this Agreement
                           and each Confirmation as if set forth in full in this
                           Agreement and such Confirmations. In the event of any
                           inconsistency between the provisions of this
                           Agreement and the Definitions, this Agreement will
                           prevail. In the event of any inconsistency between
                           the provisions of any Confirmation and this Agreement
                           or the Definitions, such Confirmation will prevail
                           for the purpose of the relevant Transaction.

                  (f)      SET-OFF. In addition to and not in limitation of any
                           other right or remedy (including any right to setoff,
                           counterclaim, or otherwise withhold payment) under
                           applicable law, the Non-defaulting Party or the
                           non-Affected Party (in either case, "X") may, at its
                           option and in its discretion, setoff, against any
                           amounts owed to the Defaulting Party or Affected
                           Party (in either case, "Y") in Dollars or any other
                           currency by X under this Agreement, any amounts owed
                           in Dollars or any other currency by Y to X under this
                           Agreement or any other agreement existing between
                           Party A and Party B. The obligations of Y and X in
                           respect of such amounts shall be deemed satisfied and
                           discharged to the extent of any such set-off. For
                           this purpose, the amounts subject to the set-off may
                           be converted at the applicable prevailing exchange
                           rate into the Termination Currency by the
                           Non-defaulting Party or non-Affected Party. If the
                           amount of an obligation has not been ascertained, X
                           may, in good faith, estimate that obligation and
                           setoff in respect of the estimate, subject to X or Y,
                           as the case may be, accounting to the other party
                           when the obligation is ascertained. X will give Y
                           notice of any setoff effected under this section
                           provided that failure to give such notice shall not
                           affect the validity of the setoff. Nothing in this
                           paragraph shall be deemed to create a charge or other
                           security interest.

                  (g)      LIMITATION OF RATE. Notwithstanding any provision to
                           the contrary contained in this Agreement, in no event
                           shall the Default Rate, Non-default Rate, or
                           Termination Rate exceed the Highest Lawful Rate. For
                           purposes hereof, "Highest Lawful Rate" shall mean,
                           with respect to each party, the maximum non-usurious
                           interest rate, if any, that at any time or from time
                           to time may be contracted for, taken, reserved,
                           charged, or received on the subject indebtedness
                           under the law applicable to such party which is
                           presently in effect or, to the extent allowed by law,
                           may hereafter be in effect and which allows a higher
                           maximum non-usurious interest rate than applicable
                           law presently allows.

                  (h)      LIMITATION OF LIABILITY. WITH RESPECT TO CLAIMS UNDER
                           THIS AGREEMENT, NO PARTY SHALL BE REQUIRED TO PAY OR
                           BE LIABLE FOR EXEMPLARY, PUNITIVE, INCIDENTAL,
                           CONSEQUENTIAL, OR INDIRECT DAMAGES (WHETHER OR NOT
                           ARISING FROM ITS NEGLIGENCE) TO ANY OTHER PARTY
                           EXCEPT TO THE EXTENT THAT THE PAYMENTS REQUIRED TO BE
                           MADE PURSUANT TO THIS AGREEMENT ARE DEEMED TO BE SUCH
                           DAMAGES. IF AND TO THE EXTENT ANY PAYMENT REQUIRED TO
                           BE MADE PURSUANT TO THIS AGREEMENT IS DEEMED TO
                           CONSTITUTE LIQUIDATED DAMAGES, THE PARTIES
                           ACKNOWLEDGE AND AGREE THAT SUCH DAMAGES ARE DIFFICULT
                           OR IMPOSSIBLE TO DETERMINE AND THAT SUCH PAYMENT IS
                           INTENDED TO BE A REASONABLE APPROXIMATION OF THE
                           AMOUNT OF SUCH DAMAGES AND NOT A PENALTY.

                                       8
<PAGE>
                  (i)      CONFIDENTIALITY. Any information made available by
                           one party or its Credit Support Provider to the other
                           party or its Credit Support Provider (if any) with
                           respect to this Agreement or any Transaction
                           hereunder is confidential and shall not be discussed
                           with or disclosed to any third party, except for such
                           information (i) as may become generally available to
                           the public other than as a result of a violation of
                           this Agreement, (ii) as may be required or
                           appropriate in response to any summons, subpoena, or
                           otherwise in connection with any litigation or to
                           comply with any applicable law, order, regulation, or
                           ruling, (iii) as may be obtained from a
                           non-confidential source that disclosed such
                           information in a manner that did not violate its
                           obligations to the other party or its Credit Support
                           Provider (if any) in making such disclosure, or (iv)
                           as may be furnished to any person or entity
                           (including, without limitation, that party's
                           auditors, attorneys, advisors, or financial
                           institutions) with which the party has a written
                           agreement or which are otherwise required to keep the
                           information that is disclosed in confidence.

                  (j)      FULLY-PAID TRANSACTIONS. Notwithstanding the terms of
                           Section 5 and 6 of this Agreement, if at any time and
                           so long as one of the parties to this Agreement ("X")
                           shall have satisfied in full its payment and delivery
                           obligations under Section 2(a)(i) of this Agreement
                           and shall at the time have no future payment or
                           delivery obligations, whether absolute or contingent,
                           under such Section 2(a)(i), then unless the other
                           party ("Y") is required pursuant to appropriate
                           proceedings to return to X or otherwise returns to X
                           upon demand of X any portion of any such payment or
                           delivery, the occurrence of an event described in
                           Section 5(a) of this Agreement with respect to X, any
                           Credit Support Provider of X or any Specified Entity
                           of X shall not constitute an Event of Default or a
                           Potential Event of Default with respect to X as the
                           Defaulting Party. Notwithstanding the foregoing
                           sentence, Y shall be entitled to designate an Early
                           Termination Date pursuant to Section 6 of this
                           Agreement only as a result of the occurrence of (i)
                           an Event of Default set forth in Section 5(a)(v) of
                           this Agreement with respect to X as the Defaulting
                           party or (ii) a Termination Event set forth in (A)
                           either Section 5(b)(i) or 5(b)(ii) of this Agreement
                           with respect to Y as the Affected Party or (B)
                           Section 5(b)(iii) of this Agreement with respect to Y
                           as the Burdened Party.

                  (k)      PROCEDURES FOR ENTERING INTO TRANSACTIONS. On or
                           promptly following the date on which the parties
                           reach agreement on the terms of a Transaction, as
                           contemplated by the first sentence of Section
                           9(e)(ii), Party A will send to Party B a
                           Confirmation. Party B will promptly thereafter
                           confirm the accuracy of (in the manner required by
                           Section 9(e)(ii)), or request the correction of, such
                           Confirmation (in the later case, indicating how it
                           believes the terms of such Confirmation should be
                           correctly stated and such other terms which should be
                           added to or deleted from such Confirmation to make it
                           correct). If any disputes shall arise as to whether
                           an error exists in a Confirmation, the parties shall
                           resolve the dispute in good faith. If Party B has not
                           accepted or disputed the Confirmation in the manner
                           set forth above within two (2) Local Business Days
                           after it was sent to Party B, the Confirmation shall
                           be deemed binding as sent, absent manifest error.

                  (l)      RECORDING OF TELEPHONE CONVERSATIONS. Party A and
                           Party B agree that (i) each may electronically record
                           all telephone conversations between them relating to
                           any Transaction, (ii) each waives any further notice
                           of such monitoring or recording, and agrees to notify
                           such officers and employees of such monitoring or
                           recording and to obtain any necessary consent of such
                           officers and employees and (iii) such recording may
                           be introduced as evidence of a Transaction.

                                       9
<PAGE>
                                     PART 6
                            ADDITIONAL PROVISIONS FOR
                        COMMODITY DERIVATIVE TRANSACTIONS

                  (a)      The 2000 Supplement to the 1993 Commodity Derivatives
                           Definitions, as published by the International Swaps
                           and Derivatives Association, Inc. (the "Commodity
                           Definitions"), shall apply, except as otherwise
                           specified herein or in the relevant Confirmation.

                  (b)      "ADDITIONAL MARKET DISRUPTION EVENTS" shall apply
                           only if so specified in the relevant Confirmation.

                  (c)      The following "Disruption Fallbacks" specified in
                           Section 7.5(c) of the Commodity Definitions shall
                           apply, in the following order, except as otherwise
                           specified in the relevant Confirmation:

                           (i)      "FALLBACK REFERENCE PRICE" (if the relevant
                                    parties have specified an alternate
                                    Commodity Reference Price in the
                                    Confirmation);

                           (ii)     "NEGOTIATED FALLBACK"; the Relevant Price
                                    will be determined and calculated as set
                                    forth in the definition "COMMODITY-REFERENCE
                                    DEALERS", with each party selecting in good
                                    faith two (2) Reference Dealers in the
                                    relevant market. Section 7.5 of the
                                    Commodity Definitions will apply only if and
                                    to the extent that after each party has
                                    acted in good faith to select the two
                                    Reference Dealers to determine the Relevant
                                    Price as provided above, the Relevant Price
                                    cannot be determined.

                           (iii)    "POSTPONEMENT" with three (3) Commodity
                                    Business Days as the Maximum Days of
                                    Disruption;

                           (iv)     "NO FAULT TERMINATION".

                                       10
<PAGE>
                                 EXECUTION PAGE

                                       TO

                                    SCHEDULE
                                     TO THE
                              ISDA MASTER AGREEMENT
                          (MULTICURRENCY-CROSS BORDER)

                           DATED AS OF JANUARY 1, 2001

                                     BETWEEN

                          EL PASO MERCHANT ENERGY, L.P.
                                   ("PARTY A")

                                       AND

                           EL PASO PRODUCTION COMPANY
                                   ("PARTY B")

         IN WITNESS WHEREOF, the parties hereto have executed this document as
of the date specified on the first page hereof.

EL PASO MERCHANT ENERGY, L.P.                        EL PASO PRODUCTION COMPANY

By:  /s/ CECILIA HEILMANN                            By: /s/ ROBERT L. CAVNAR
    -------------------------                           -----------------------
    Name: Cecilia Heilmann                              Name: Robert L. Cavnar
    Title: Vice President,                              Title:
           Managing Director,                           Date:
           and Controller
    Date:

                                       11
<PAGE>
                                    EXHIBIT A

     GENERIC RISKS ASSOCIATED WITH OVER-THE-COUNTER DERIVATIVE TRANSACTIONS

OTC derivative transactions, like other financial transactions, involve a
variety of significant risks. The specific risks presented by a particular OTC
derivative transaction necessarily depend upon the terms of the transaction and
your circumstances. In general, however, all OTC derivative transactions involve
some combination of market risk, credit risk, funding risk and operational risk.

Market risk is the risk that the value of a transaction will be adversely
affected by fluctuations in the level or volatility of or correlation or
relationship between one or more market prices, rates or indices or other market
factors or by illiquidity in the market for the relevant transaction or in a
related market.

Credit risk is the risk that a counterparty will fail to perform its obligations
to you when due.

Funding risk is the risk that, as a result of mismatches or delays in the timing
of cash flows due from or to your counterparties in OTC derivative transactions
or related hedging, trading, collateral or other transactions, you or your
counterparty will not have adequate cash available to fund current obligations.

Operational risk is the risk of loss to you arising from inadequacies in or
failures of your internal systems and controls for monitoring and quantifying
the risks and contractual obligations associated with OTC derivative
transactions, for recording and valuing OTC derivative and related transactions,
or for detecting human error, systems failure or management failure.

There may be other significant risks which you should consider based on the
terms of a specific transaction. Highly customized OTC derivative transactions
in particular may increase liquidity risk and introduce other significant risk
factors of a complex character. Highly leveraged transactions may experience
substantial gains or losses in value as a result of relatively small changes in
the value or level of an underlying or related market factor.

Because the price and other terms on which you may enter into or terminate an
OTC derivative transaction are individually negotiated, these may not represent
the best price or terms available to you from other sources.

In evaluating the risks and contractual obligations associated with a particular
OTC derivative transaction, you should also consider that an OTC derivative
transaction may be modified or terminated only by mutual consent of the original
parties and subject to agreement on individually negotiated terms. Accordingly,
it may not be possible for you to modify, terminate or offset your obligations
or your exposure to the risks associated with a transaction prior to its
scheduled termination date.

Similarly, while market makers and dealers generally quote prices or terms for
entering into or terminating OTC derivative transactions and provide indicative
or mid-market quotations with respect to outstanding OTC derivative
transactions, they are generally not contractually obligated to do so. In
addition, it may not be possible to obtain indicative or mid-market quotations
for an OTC derivative transaction from a market maker or dealer that is not a
counterparty to the transaction. Consequently, it may also be difficult for you
to establish an independent value for an outstanding OTC derivative transaction.
You should not regard your counterparty's provision of a valuation or indicative
price at our request as an offer to enter into or terminate the relevant
transaction at that value or price, unless the value or price is identified by
the counterparty as firm or binding.

THIS BRIEF STATEMENT DOES NOT PURPORT TO DISCLOSE ALL THE RISKS AND OTHER
MATERIAL CONSIDERATIONS ASSOCIATED WITH OTC DERIVATIVE TRANSACTIONS. YOU SHOULD
NOT CONSTRUE THIS GENERIC DISCLOSURE STATEMENT AS BUSINESS, LEGAL, TAX OR
ACCOUNTING ADVICE OR AS MODIFYING APPLICABLE LAW. YOU SHOULD CONSULT YOUR OWN
BUSINESS, LEGAL, TAX AND ACCOUNTING ADVISERS WITH RESPECT TO PROPOSED OTC
DERIVATIVE TRANSACTIONS AND YOU SHOULD REFRAIN FROM ENTERING INTO ANY OTC
DERIVATIVE TRANSACTION UNLESS YOU HAVE FULLY UNDERSTOOD THE TERMS AND RISKS OF
THE TRANSACTION, INCLUDING THE EXTENT OF YOUR POTENTIAL RISK OF LOSS.

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