Document:

<PAGE>
                                                                 EXHIBIT 10.DD.1

                                 AMENDMENT NO. 2

                                     TO THE

                                 $1,200,000,000

            SENIOR SECURED INTERIM TERM CREDIT AND SECURITY AGREEMENT

                           Dated as of April 30, 2003

                  THIS AMENDMENT NO. 2 dated as of April 30, 2003 (this
"AMENDMENT NO. 2") to the $1,200,000,000 SENIOR SECURED INTERIM TERM CREDIT AND
SECURITY AGREEMENT, dated as of March 13, 2003 (as amended by Amendment No. 1 to
the $1,200,000,000 Senior Secured Interim Term Credit and Security Agreement,
dated as of March 14, 2003, the "AGREEMENT"; capitalized terms used but not
otherwise defined herein shall have the respective meanings ascribed to such
terms in the Agreement), among EL PASO CORPORATION, a Delaware corporation (the
"BORROWER"), the banks, financial institutions and other lenders listed on the
signature pages thereof (the "LENDERS"), CITICORP NORTH AMERICA, INC., a
Delaware corporation ("CNAI"), CREDIT SUISSE FIRST BOSTON, ACTING THROUGH ITS
CAYMAN ISLANDS BRANCH ("CSFB"; and, together with CNAI, the "CO-AGENTS") and
CNAI as administrative agent (the "AGENT") for the Lenders and as Collateral
Agent, evidences the agreement of the parties as follows:

                  WHEREAS, the Borrower, EPNGC, TGPC, ANR Pipeline, certain
banks and other financial institutions, as lenders, ABN AMRO Bank N.V. and CNAI
as co-document agents, Bank of America, N.A. and Credit Suisse First Boston as
co-syndication agents and JPMorgan Chase Bank, as administrative agent, have
entered into the $3,000,000,000 Revolving Credit Agreement, dated as of April
16, 2003 (the "SENIOR BANK FACILITY").

                  WHEREAS, pursuant to Section 9.15 of the Agreement, the
Borrower, the Lenders, each of the Co-Agents and the Agent have agreed to
further amend the Agreement to conform each defined term, Section, subsection,
clause and other provision thereof identified with an asterisk to the respective
defined term, Section, subsection, clause and other provision contained in the
execution version of the Senior Bank Facility.

                  NOW, THEREFORE, in consideration of the foregoing and the
respective covenants, agreements and conditions hereinafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:

                  SECTION 1. Amendments to the Agreement. The Agreement shall,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 2, hereby be amended and restated to
read in its entirety as set forth in Exhibit A attached hereto.

                  SECTION 2. Conditions of Effectiveness. This Amendment No. 2
shall become effective as of the date first above written when, and only when,
the Agent shall have received counterparts of (a) this Amendment No. 2 executed
by the Borrower and the Required Lenders or, as to any of the Lenders, advice
satisfactory to the Agent that such Lender has executed this Amendment No. 2

<PAGE>

and (b) the Consent attached hereto executed by each Subsidiary Loan Party, as
guarantor, under the Subsidiary Guaranty, dated as of March 13, 2003, among the
Guarantors (as defined therein) parties thereto in favor of the Beneficiaries
(as defined therein).

                  SECTION 3. Reference to and Effect on the Loan Documents. (a)
On and after the effectiveness of this Amendment No. 2, each reference in the
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Agreement, and each reference in the Borrower Notes and each of
the other Operative Documents to "the Credit Agreement", "the EPC Credit
Agreement", "thereunder", "thereof" or words of like import referring to the
Agreement, shall mean and be a reference to the Agreement, as amended by this
Amendment No. 2.

                  (b)      The Agreement, as amended by this Amendment No. 2, is
and shall continue to be in full force and effect and is hereby in all respects
ratified and confirmed.

                  (c)      The execution, delivery and effectiveness of this
Amendment No. 2 shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of any Lender or the Agent under the
Agreement or constitute a waiver of any provision of any of the Operative
Documents.

                  SECTION 4. Execution in Counterparts. This Amendment No. 2 may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment No. 2 by telecopier shall be effective as delivery of an originally
executed counterpart of this Amendment No. 2.

                  SECTION 5. Governing Law. This Amendment No. 2 shall be
governed by, and construed in accordance with, the laws of the State of New
York.

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 2 to be executed by their respective officers thereunto duly
authorized, as of the date first above written.

                                   EL PASO CORPORATION, as Borrower

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

<PAGE>

                                   CITICORP NORTH AMERICA, INC.,
                                   as Agent, as Co-Agent and as Collateral
                                   Agent

                                   By:      /s/ Amy Pincu
                                          -------------------------------
                                   Name:    Amy Pincu
                                   Title:   Vice President

<PAGE>

                                   CREDIT SUISSE FIRST BOSTON, ACTING
                                   THROUGH ITS CAYMAN ISLANDS BRANCH, as
                                   Co-Agent

                                   By:      /s/ James Finch
                                          -------------------------------
                                   Name:    James Finch
                                   Title:   Managing Director

                                   By:      /s/ James Moran
                                          -------------------------------
                                   Name:    James Moran
                                   Title:   Director

                     [Remainder of Signature Pages Omitted]
<PAGE>

                                                                  EXECUTION COPY

                           CONSENT TO AMENDMENT NO. 2

                                     TO THE

                $1,200,000,000 SENIOR SECURED INTERIM TERM CREDIT
                             AND SECURITY AGREEMENT

                              As of April 30, 2003

                  Reference is made to Amendment No. 2 to the $1,200,000,000
Senior Secured Interim Term Credit and Security Agreement, dated as of April 30,
2003 ("AMENDMENT NO. 2"; capitalized terms not otherwise defined herein being
used herein as defined in Amendment No. 2), among El Paso Corporation, a
Delaware corporation, the Lenders party thereto, Citicorp North America, Inc., a
Delaware corporation, as Agent for the Lenders, Collateral Agent and as Co-Agent
and Credit Suisse First Boston, acting through its Cayman Islands Branch, as
Co-Agent.

                  Each of the undersigned, each as a guarantor under the
Subsidiary Guaranty dated March 13, 2003 in favor of the Beneficiaries, as
defined therein (the "SUBSIDIARY GUARANTY"), hereby consents to the execution,
delivery and the performance of Amendment No. 2 and agrees that notwithstanding
the effectiveness of such Amendment No. 2, the Subsidiary Guaranty is, and shall
continue to be, in full force and effect and is hereby in all respects ratified
and confirmed on the effective date of Amendment No. 2, except that on and after
the effective date of Amendment No. 2, each reference to "the Agreement",
"thereunder", "thereof", "therein" or words of like import referring to the
Agreement shall mean and be a reference to the Agreement, as amended and
otherwise modified by Amendment No. 2.

                  This Consent may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Consent by telecopier shall be effective as delivery of a
manually executed counterpart of this Consent.

<PAGE>

                  This Consent to Amendment No. 2 shall be governed by, and
construed in accordance with, the laws of the State of New York.

                                    EL PASO ENERGY RATON, L.L.C.

                                    By       /s/ John J. Hopper
                                      ------------------------------------------
                                       Title: Vice President

                                    EL PASO PRODUCTION COMPANY

                                    By       /s/ John J. Hopper
                                      ------------------------------------------
                                       Title: Vice President

                                    EL PASO PRODUCTION GOM INC.

                                    By       /s/ John J. Hopper
                                      ------------------------------------------
                                       Title: Vice President

                                    EL PASO PRODUCTION HOLDING COMPANY

                                    By       /s/ John J. Hopper
                                      ------------------------------------------
                                       Title: Vice President

<PAGE>

                                    SABINE RIVER INVESTORS VI, L.L.C.

                                    By       /s/ John J. Hopper
                                      ------------------------------------------
                                       Title: Responsible Manager

                                    SABINE RIVER INVESTORS IX, L.L.C.

                                    By       /s/ John J. Hopper
                                      ------------------------------------------
                                       Title: Responsible Manager

                                    VERMEJO MINERALS CORPORATION

                                    By       /s/ John J. Hopper
                                      ------------------------------------------
                                       Title: Vice President

<PAGE>
                                                                    Exhibit A to
                                           Amendment No. 2 to the $1,200,000,000
                       Senior Secured Interim Term Credit and Security Agreement

                               U.S. $1,200,000,000

                              AMENDED AND RESTATED
                           SENIOR SECURED INTERIM TERM
                          CREDIT AND SECURITY AGREEMENT

                           Dated as of April 30, 2003

                   (amending and restating in its entirety the
              Senior Secured Interim Credit and Security Agreement
                           dated as of March 13, 2003)

                                      among

                               EL PASO CORPORATION
                                   as Borrower

                                       and

                          CITICORP NORTH AMERICA, INC.
                                       and
                 CREDIT SUISSE FIRST BOSTON, ACTING THROUGH ITS
                              CAYMAN ISLANDS BRANCH

                        as Initial Lenders and Co-Agents

                                       and

                          CITIGROUP GLOBAL MARKETS INC.
                      (FORMERLY SALOMON SMITH BARNEY INC.)

                                       and

                 CREDIT SUISSE FIRST BOSTON, ACTING THROUGH ITS
                              CAYMAN ISLANDS BRANCH

                   as Co-Lead Arrangers and Joint Book Runners

                                       and

                          CITICORP NORTH AMERICA, INC.
                        as Agent and as Collateral Agent

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               PAGE

<S>                                                                                                            <C>
ARTICLE I             DEFINITIONS AND INTERPRETATION.............................................................2

         SECTION 1.01          Certain Defined Terms.............................................................2

         SECTION 1.02          Computation of Time Periods......................................................22

         SECTION 1.03          Use of Certain Terms.............................................................22

         SECTION 1.04          Headings and References..........................................................23

         SECTION 1.05          Accounting Terms; GAAP...........................................................23

ARTICLE II            AMOUNTS AND TERMS OF THE LOAN.............................................................23

         SECTION 2.01          The Loan.........................................................................23

         SECTION 2.02          Making the Loan..................................................................23

         SECTION 2.03          Interest.........................................................................23

         SECTION 2.04          Certain Fees.....................................................................24

         SECTION 2.05          Repayment of the Loan............................................................24

         SECTION 2.06          Prepayments of the Advance.......................................................24

         SECTION 2.07          Increased Costs; Capital Adequacy, Etc...........................................26

         SECTION 2.08          Interest Rate Determination; Late Payments; Payments and Computations............26

         SECTION 2.09          Taxes............................................................................27

         SECTION 2.10          Evidence of Debt.................................................................28

         SECTION 2.11          Change of Lending Office.........................................................29

         SECTION 2.12          Sharing of Payments, Etc.........................................................29

         SECTION 2.13          Use of Proceeds..................................................................29

ARTICLE III           CONDITIONS TO LOAN........................................................................30

         SECTION 3.01          Conditions Precedent to Making the Loan..........................................30

         SECTION 3.02          Determinations Under Section 3.01................................................35

ARTICLE IV            REPRESENTATIONS AND WARRANTIES............................................................35

         SECTION 4.01          Representations and Warranties of the Borrower...................................35

ARTICLE V             COVENANTS OF THE BORROWER.................................................................39

         SECTION 5.01          Affirmative Covenants............................................................39

         SECTION 5.02          Negative Covenants...............................................................42

         SECTION 5.03          Reporting Requirements...........................................................52

ARTICLE VI            EVENTS OF DEFAULT.........................................................................55

         SECTION 6.01          Events of Default................................................................55

ARTICLE VII           GRANT OF SECURITY INTEREST, PLEDGE AND ASSIGNMENT.........................................59
</TABLE>

                                       -i-

<PAGE>

<TABLE>
<CAPTION>
                                                                                                               PAGE
<S>                                                                                                            <C>
         SECTION 7.01          Pledge and Assignment............................................................59

         SECTION 7.02          Security for Obligations.........................................................60

         SECTION 7.03          Delivery of Collateral...........................................................60

         SECTION 7.04          Borrower Remains Liable..........................................................61

         SECTION 7.05          Further Assurances...............................................................61

         SECTION 7.06          Collateral Agent Appointed Attorney-in-Fact......................................62

         SECTION 7.07          Collateral Agent May Perform.....................................................62

         SECTION 7.08          Reasonable Care..................................................................62

         SECTION 7.09          Rights, Remedies and Obligations.................................................62

         SECTION 7.10          Remedies upon Default............................................................64

         SECTION 7.11          Continuing Assignment and Security Interest......................................65

ARTICLE VIII          THE AGENT AND THE COLLATERAL AGENT........................................................65

         SECTION 8.01          Authorization and Action.........................................................65

         SECTION 8.02          Agent's and Collateral Agent's Reliance, Etc.....................................65

         SECTION 8.03          Lender Credit Decision...........................................................66

         SECTION 8.04          Indemnification of the Agents....................................................67

         SECTION 8.05          Successor Agents.................................................................67

         SECTION 8.06          Lead Arrangers...................................................................67

ARTICLE IX            MISCELLANEOUS.............................................................................67

         SECTION 9.01          Amendments, Etc..................................................................67

         SECTION 9.02          Notices, Etc.....................................................................68

         SECTION 9.03          No Waiver; Remedies..............................................................69

         SECTION 9.04          Costs and Expenses...............................................................69

         SECTION 9.05          Right of Set-off.................................................................70

         SECTION 9.06          Binding Effect...................................................................70

         SECTION 9.07          Assignments and Participations...................................................71

         SECTION 9.08          Governing Law....................................................................72

         SECTION 9.09          Execution in Counterparts........................................................73

         SECTION 9.10          Consent to Jurisdiction..........................................................73

         SECTION 9.11          Loan Facility Migration..........................................................74

         SECTION 9.12          Waiver of Jury Trial.............................................................74

         SECTION 9.13          Most Favored Nation Treatment....................................................74

         SECTION 9.14          Termination......................................................................75
</TABLE>

                                      -ii-

<PAGE>

Exhibits

Exhibit A           -      Form of Assignment and Acceptance
                           Schedule 1 to Assignment and Acceptance

Exhibit B           -      Form of Borrower Note

Exhibit C           -      Form of Subsidiary Guaranty

Exhibit D           -      Form of Opinion of Jones Day, special counsel to the
                           Borrower

Exhibit E           -      Form of Opinion of Potter Anderson & Corroon, special
                           Delaware counsel to the Borrower

Exhibit F           -      Form of Opinion of the general counsel or an
                           associate general counsel of the Borrower

Exhibit G           -      Form of Solvency Certificate of the Borrower

Schedules

Schedule 3.01(j)    -      Existing Credit Revolving Facilities of the Borrower

Schedule 5.01(k)    -      Separateness Covenants with Respect to Sabine VI and
                           Sabine IX

                                      -iv-

<PAGE>

                              AMENDED AND RESTATED
                           SENIOR SECURED INTERIM TERM
                          CREDIT AND SECURITY AGREEMENT

                           Dated as of April 30, 2003

         EL PASO CORPORATION, a Delaware corporation (the "BORROWER"), the
banks, financial institutions and other lenders listed on the signature pages
hereof (the "INITIAL LENDERS"), the additional Lenders (as hereinafter defined)
party hereto, CITICORP NORTH AMERICA, INC., a Delaware corporation ("CNAI"),
CREDIT SUISSE FIRST BOSTON, ACTING THROUGH ITS CAYMAN ISLANDS BRANCH ("CSFB";
and, together with CNAI, the "CO-AGENTS"), CNAI as administrative agent (the
"AGENT") for the Lenders and as Collateral Agent (as defined below), and CSFB
and CITIGROUP GLOBAL MARKETS INC. (formerly SALOMON SMITH BARNEY INC.) ("CGMI"),
each as a co-lead arranger and joint book runner (collectively, the "LEAD
ARRANGERS") agree as follows:

                             PRELIMINARY STATEMENTS:

1.       The Borrower and certain of its Subsidiaries were parties to a certain
         minority equity interest transaction (such transaction, the "RED RIVER
         TRANSACTION") involving, among other parties, Red River Investors
         L.L.C., a limited liability company ("RED RIVER"), whereby Red River
         purchased a membership interest in Trinity River Associates, L.L.C.
         ("TRINITY"), and Trinity made advances pursuant to the Second Amended
         and Restated Sponsor Subsidiary Credit Agreement, originally dated as
         of June 30, 1999 and amended and restated as of November 22, 1999 and
         March 29, 2002 (the "SPONSOR SUBSIDIARY CREDIT AGREEMENT"), to certain
         subsidiaries of the Borrower (such subsidiaries, the "SPONSOR
         SUBSIDIARIES").

2.       The Sponsor Subsidiaries refinanced their obligations under the Sponsor
         Subsidiary Credit Agreement (the "SPONSOR SUBSIDIARY OBLIGATIONS")
         pursuant to the Existing Credit and Security Agreement (as defined
         below).

3.       In connection therewith, the Borrower has made advances (the
         "SUBSIDIARY LOANS") to the Subsidiary Borrowers (as hereinafter
         defined), which are Subsidiaries of certain of the Sponsor
         Subsidiaries, whereby the proceeds thereof have, through intermediate
         distributions and other payments to one or more Sponsor Subsidiaries,
         been applied to refinance the Sponsor Subsidiary Obligations.

4.       The Subsidiary Borrowers (as hereinafter defined) secured their
         obligations owing to the Borrower under the Subsidiary Loans with
         substantially all of their assets (such assets being the "SUBSIDIARY
         COLLATERAL"), and the Subsidiary Loan Parties (as hereinafter defined)
         guaranteed the obligations of the Borrower under the Existing Credit
         and Security Agreement in favor of the Lenders. The foregoing
         refinancing and other transactions are referred to herein as the
         "REFINANCING TRANSACTION".

5.       The Borrower financed the Refinancing Transaction through a Senior
         Secured Interim Term Loan Facility of $1,200,000,000 (the "LOAN
         FACILITY"), which was made available to the Borrower by the Initial
         Lenders as interim financing to the Take-Out Securities (as hereinafter
         defined) and which was secured by a collateral assignment by the
         Borrower of the Subsidiary Loans and Subsidiary Collateral to
         effectively guarantee and provide credit support for, and ensure the
         Lenders against loss in respect of, the Borrower's obligations in
         respect of the Loan Facility. The

                                      -v-

<PAGE>

         Initial Lenders made available the Loan Facility on the terms and
         conditions of the Senior Secured Interim Term Credit and Security
         Agreement dated as of March 13, 2003, among the Borrower, the Initial
         Lenders, the additional Lenders, the Co-Agents, the Agent and the Lead
         Arrangers (the "ORIGINAL CREDIT AND SECURITY AGREEMENT").

6.       The Borrower and the Required Lenders entered into Amendment No. 1,
         dated as of March 14, 2003, amending the Original Credit and Security
         Agreement (the Original Credit and Security Agreement, as so amended
         and in effect immediately prior to the date hereof, the "EXISTING
         CREDIT AND SECURITY AGREEMENT").

7.       The Borrower and the Lenders desire to enter into Amendment No. 2 to
         the Existing Credit and Security Agreement in order to amend the
         Existing Credit and Security Agreement in accordance with Section 9.15
         thereof, in order to conform certain provisions contained in the
         Existing Credit and Security Agreement to the relevant provisions of
         the Senior Bank Facility.

         NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto agree that the
Existing Credit and Security Agreement is hereby amended and restated in its
entirety as follows:

                                   ARTICLE I

                         DEFINITIONS AND INTERPRETATION

                  SECTION 1.01 Certain Defined Terms. A reference to this
"AGREEMENT" is a reference to this Senior Secured Interim Term Credit and
Security Agreement, as further amended, amended and restated, supplemented or
otherwise modified from time to time. As used in this Agreement, the following
terms shall have the following meanings:

                  "ADVANCE" has the meaning set forth in Section 2.01.

                  "AFFILIATE" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.

                  "AGENT" has the meaning set forth in the recital of the
parties to this Agreement contained in the first paragraph of this Agreement.

                  "AGENT-RELATED PERSON" has the meaning set forth in Section
8.04.

                  "AGENT'S ACCOUNT" means the account designated by the Agent to
the Borrower maintained by the Agent at Citibank, 399 Park Avenue, New York, New
York 10043, or such other account as shall be notified to the Borrower by the
Agent from time to time.

                  "ALTERNATE PROGRAM" means any program providing for the sale
or other disposition of trade or other receivables entered into by the Borrower
or a Subsidiary of the Borrower which is in addition to or in replacement of the
program evidenced by Receivables Purchase and Sale Agreements (whether or not
such Receivables Purchase and Sale Agreements shall then be in effect), provided
that such program is on terms (a) substantially similar to any of the
Receivables Purchase and Sale Agreements (as modified to comply with relevant
FASB or similar policies or guidelines from time to time in effect), or (b)
customary for similar transactions on substantially similar terms as reasonably
determined by the Senior Bank Facility Administrative Agent.

                                       2
<PAGE>

                  "ANR PIPELINE" means ANR Pipeline Company, a Delaware
corporation.

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

                  "ARUBA REFINERY" means Coastal Aruba Refining Company N.V., an
Aruban company.

                  "ASSIGNED AGREEMENTS" has the meaning set forth in Section
7.01(b).

                  "ASSIGNEE" has the meaning set forth in Section 9.11.

                  "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the Agent and
consented to by the Borrower where required pursuant to the second proviso to
the definition of Eligible Assignee, in substantially the form of Exhibit A
hereto.

                  "BASE RATE" means for any day, a rate per annum (adjusted to
the nearest 1/8 of 1% or, if there is no nearest 1/8 of 1%, rounded upwards to
the next highest 1/8 of 1%) equal to the greater of (a) the Prime Rate in effect
on such day and (b) the Federal Funds Rate in effect on such day plus 1/2 of 1%.
Any change in the Base Rate due to a change in the Prime Rate or the Federal
Funds Rate shall be effective as of the opening of business on the effective day
of such change in the Prime Rate or the Federal Funds Rate, respectively;
provided, however, that in no event shall the Base Rate be less than 4.25% per
annum. For purposes of this definition, "Prime Rate" means the rate of interest
announced publicly by Citibank in New York, New York, from time to time, as
Citibank's base rate.

                  "BASE RATE MARGIN" means 3.50% per annum.

                  "BOARD OF GOVERNORS" means the Board of Governors of the
Federal Reserve System of the United States of America.

                  "BORROWER NOTE" means a promissory note of the Borrower
payable to each Initial Lender, in substantially the form of Exhibit B hereto,
evidencing the indebtedness of the Borrower to such Initial Lender resulting
from the Advance made by such Initial Lender.

                  "BSCS" means BSCS XXVII, Inc., a Delaware corporation.

                  "BUSINESS DAY" means any day of the year that is not a
Saturday, Sunday or other day on which commercial banks are authorized or
required by law to remain closed in New York, New York or Houston, Texas;
provided that when used in connection with any LIBOR Advance, the term "Business
Day" shall also exclude any day on which banks are not open for dealings in
dollar deposits in the London interbank market.

                  "BUSINESS ENTITY" means a partnership, limited partnership,
limited liability partnership, corporation (including a business trust), limited
liability company, unlimited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity.

                  "CAPITAL LEASE OBLIGATIONS" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as a

                                       3
<PAGE>

capital lease on a balance sheet of such Person under GAAP, and the amount of
such obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.

                  "CAPITALIZATION" of any Person means the sum (without
duplication) of (a) consolidated Debt of such Person and its consolidated
Subsidiaries, plus (b) the aggregate amount of Guaranties by such Person and its
consolidated Subsidiaries, plus (c) the consolidated common and preferred
stockholders' equity of such Person and its consolidated Subsidiaries, plus (d)
the cumulative amount by which stockholders' equity of such Person shall have
been reduced by reason of non-cash write downs of long-term assets from and
after the Closing Date, plus (e) in the case of the Borrower, those items
included as "preferred interests of consolidated subsidiaries" (or analogous
line item) as listed on the consolidated balance sheet of the Borrower as of
December 31, 2002 and regardless of any change thereafter in accounting
treatment thereof, plus (f) in the case of the Borrower, those items included as
"minority interests of consolidated subsidiaries" (or analogous line item) as
listed on the consolidated balance sheet of the Borrower as of December 31, 2002
and regardless of any change thereafter in accounting treatment thereof, so long
as the terms and conditions of any financing associated with any such items
referred to in clause (e) or (f) above (or successive extensions or refinancings
thereof) are not amended so as to become more restrictive to the Borrower or its
Subsidiaries than the terms and conditions of the Senior Bank Facility, and
minus (g) accumulated other comprehensive income (loss) (or analogous line
item).

                  "CASH EQUIVALENTS" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States Government or issued
by any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition
thereof; (b) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either S&P or Moody's; (c) certificates of deposit or banker's acceptances
maturing within one year from the date of acquisition thereof issued by (x) any
lender under the Senior Bank Facility or any Lender, or (y) any commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia having combined capital and surplus of not less than
$500,000,000 (any such lender or bank, a "QUALIFYING LENDER"); (d) eurodollar
time deposits having a maturity of less than one year purchased directly from
any lender under the Senior Bank Facility or any Lender (whether such deposit is
with such lender or any other lender under the Senior Bank Facility) or issued
by any Qualifying Lender; and (e) repurchase agreements and reverse repurchase
agreements with a term of not more than 14 days with any Qualifying Lender
relating to marketable direct obligations issued or unconditionally guaranteed
by the United States.

                  "CHAIN SUBSIDIARY" means any Subsidiary of the Borrower that
owns, directly or indirectly, any Equity Interests in any Subsidiary Borrower
and that is not itself a Subsidiary Borrower, which, at the date hereof, are
EPPH, Sabine VI and Sabine IX.

                  "CHAIN SUBSIDIARY DEBT" has the meaning assigned to the term
"Debt" in the Subsidiary Borrower Credit Agreement.

                  "CHAIN SUBSIDIARY PERMITTED LIENS" has the meaning assigned to
the term "Permitted Liens" in the Subsidiary Borrower Credit Agreement.

                  "CIG" means Colorado Interstate Gas Company, a Delaware
corporation.

                  "CITIBANK" means Citibank, N.A.

                                       4
<PAGE>

                  "CLOSING DATE" means March 13, 2003.

                  "CNAI" has the meaning set forth in the recital of the parties
to this Agreement contained in the first paragraph of this Agreement.

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

                  "COLLATERAL" has the meaning set forth in Section 7.01.

                  "COLLATERAL ACCOUNT" means the "Collateral Account"
established and maintained pursuant to this Agreement and held with Citibank at
a location in the State of New York designated by the Agent to the Borrower, in
the name of, and under the sole dominion and control of, and exclusive right of
withdrawal at the direction of, the Agent and subject to the terms of this
Agreement.

                  "COLLATERAL AGENCY AGREEMENT" means the Collateral Agency
Agreement, dated as of the date hereof, among the Borrower, the Agent, the
Subsidiary Loan Parties and CNAI, appointing CNAI as collateral agent, pursuant
to the terms thereof.

                  "COLLATERAL AGENT" has the meaning assigned to the term
"Collateral Agent" in the Collateral Agency Agreement.

                  "COLLECTION DATE" means the date, after the Closing Date, on
which all amounts in respect of principal, interest, fees and, to the extent
due, all other amounts owing hereunder by the Borrower shall have been paid or
repaid in full; provided, however, that if, after any payment that would
otherwise have constituted "payment in full" of any such amount, such payment or
any part thereof is deemed to be fraudulent or preferential, set aside or
required to be paid to a trustee, receiver or similar Person by a court of
competent jurisdiction at any time during the one-year period following such
payment in the case of any fraudulent conveyance, or during the 90-day period
following such payment in the case of any preference or otherwise, then the
amount of such payment or such part thereof shall be reinstated and outstanding
or unpaid as if such payment or part thereof had not occurred unless such
payment or such part thereof shall have been discharged in bankruptcy.

                  "COMMITMENT" means the amount committed by each Initial Lender
set forth opposite such Initial Lender's name on the signature pages to this
Agreement.

                  "COMMITMENT LETTER" means the Commitment Letter dated as of
February 24, 2003 among CGMI, CSFB, CNAI and the Borrower.

                  "CONSOLIDATED TAXES" has the meaning set forth in Section
5.01(n).

                  "CONTINGENT GUARANTY" has the meaning set forth in the
definition of "Guaranty".

                  "CONTROL" means, at any time of determination, the possession,
directly or indirectly, at such time, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. "CONTROLLING" and
"CONTROLLED" have meanings correlative thereto.

                  "CONVERTIBLE SECURITIES" means securities that may be
converted, at the election of the issuer or holder thereof, into interests in
preferred or common equity of the issuer thereof or of another Business Entity.

                                       5
<PAGE>

                  "CREDIT PARTY" means any Senior Bank Facility Borrower and any
Senior Bank Facility Guarantor, as applicable.

                  "CREDIT RELATED PARTY" means the Borrower, each Pipeline
Company Borrower, each Senior Bank Facility Guarantor and each Restricted
Subsidiary that is not a Project Financing Subsidiary.

                  "DEBT" means, as to any Person, all Indebtedness of such
Person other than (a) any Project Financing of such Person, (b) in the case of
the Borrower or a Subsidiary of the Borrower, any liabilities of the Borrower or
such Subsidiary, as the case may be, under any Alternate Program, or any
document executed by the Borrower or such Subsidiary, as the case may be, in
connection therewith, (c) in the case of the Borrower or a Subsidiary of the
Borrower, any obligations of the Borrower or a Subsidiary of the Borrower with
respect to lease payments for the headquarters building of the Borrower located
in Houston, Texas, (d) to the extent paid on or prior to the fifth Business Day
after the due date therefor, the aggregate amount of all Senior Bank Facility LC
Disbursements that have not yet been reimbursed by or on behalf of such Person
and all unpaid, non-contingent obligations of such Person to reimburse a bank or
other Person in respect of amounts paid under a letter of credit or similar
instrument, and (e) any item referred to in clause (e) or (f) of the definition
of Capitalization notwithstanding any change in the accounting treatment thereof
after December 31, 2002.

                  "DEFAULT" means any event or condition which constitutes an
Event of Default or which upon notice, lapse of time or both would, unless cured
or waived, become an Event of Default.

                  "DISPOSITION" means with respect to any asset or property of
any Person, any sale, transfer or other disposition of ownership thereof by such
Person, including any casualty with respect thereto or condemnation thereof or
foreclosure thereon (but shall not include the granting or existence of a Lien
permitted under the Senior Bank Facility, or the granting or existence of any
other encumbrance not prohibited under the Senior Bank Facility, with respect
thereto, or the issuance by such Person of indebtedness or equity). "DISPOSE"
shall have a correlative meaning.

                  "DISTRIBUTIONS" means any distribution or dividend or return
of capital or any other distribution, payment or delivery of property or cash,
or the redemption, retirement, purchase or acquisition, directly or indirectly,
of any Equity Interest now or hereafter outstanding (or any warrants for or
options in respect of any such interest) or the setting aside of any funds for
any of the foregoing purposes.

                  "DOLLARS" or "$" refers to lawful money of the United States
of America.

                  "EBITDA" means, for the applicable period and applicable
Pipeline Company Borrower, the sum of (a) net income (or net loss), (b) interest
expense, (c) income tax expense, (d) depreciation expense, (e) amortization
expense, (f) all extraordinary non-cash losses otherwise deducted from the
determination of net income (or net loss) for such period (other than any such
non-cash losses that require an accrual or reserve for cash charges for any
future period and any write-downs or write-offs of accounts receivable), less
all extraordinary non-cash gains otherwise added in the determination of net
income (or net loss) for such period, and (g) all non-recurring losses or
expenses deducted from the determination of net income (or net loss) for such
period to the extent such losses or expenses were funded from capital
contributions from any holder of Equity Interests in such Pipeline Company
Borrower, in each case of such Pipeline Company Borrower and its consolidated
Subsidiaries, determined on a consolidated basis in accordance with GAAP for
such period. For all purposes hereunder, the calculation of EBITDA for EPNGC
shall not include or reflect any effect of the settlement relating to the
Western energy crisis that was announced in a press release of the Borrower on
March 21, 2003.

                                       6
<PAGE>

                  "EL PASO EXISTING 364-DAY FACILITY" means the $3,000,000,000
364-Day Revolving Credit and Competitive Advance Facility Agreement, dated as of
May 15, 2002, among the Borrower, EPNGC, TGPC, the several banks and financial
institutions from time to time parties thereto, JPMorgan Chase Bank, a New York
banking corporation, as administrative agent and CAF advance agent, ABN AMRO
Bank, N.V., and Citibank, N.A. as co-documentation agents, and Bank of America,
N.A. and Credit Suisse First Boston, as co-syndication agents, as the same was
amended or modified from time to time prior to the Senior Bank Facility
Effective Date.

                  "EL PASO EXISTING 3-YEAR FACILITY" means the Amended and
Restated $1,000,000,000 3-Year Revolving Credit and Competitive Advance Facility
Agreement, dated as of August 4, 2000 (as amended and restated as of June 27,
2002 and as further amended and restated as of the Senior Bank Facility
Effective Date), among the Borrower, EPNGC, TGPC, El Paso CGP Company, a
Delaware corporation, the banks and other lenders parties thereto, JPMorgan
Chase Bank, a New York banking corporation, as administrative agent and CAF
advance agent , Citibank, N.A. and ABN AMRO Bank, N.V. as co-documentation
agents, and Bank of America, N.A., as syndication agent, as the same may be
amended, supplemented or modified from time to time.

                  "ELECTRON TRANSACTION" means the issuance of 8.625% Guaranteed
Senior Unsecured Notes due 2003 by Limestone Electron Trust, a Delaware special
purpose statutory business trust created under the laws of the State of Delaware
("LIMESTONE"), and Limestone Electron, Inc., a Delaware corporation and
wholly-owned subsidiary of Limestone (the "LIMESTONE CO-ISSUER"), in an
aggregate principal amount of one billion dollars ($1,000,000,000) pursuant to
the Indenture dated as of March 27, 2000 among Limestone, the Co-Issuer and The
Bank of New York (as successor to United States Trust Company of New York), as
Indenture Trustee, and the Second Supplemental Indenture dated as of April 26,
2002 among Limestone, the Co-Issuer, The Bank of New York, as Indenture Trustee
and the Borrower, as Guarantor.

                  "ELIGIBLE ASSIGNEE" means:

                  (a)      a Lender;

                  (b)      an Affiliate of a Lender or a Related Fund of a
         Lender;

                  (c)      a commercial bank organized under the laws of the
         United States (or any State thereof) that is a member of the Federal
         Reserve System;

                  (d)      a savings and loan association or savings bank
         organized under the laws of the United States, or any State thereof,
         and having total assets in excess of $1,000,000,000 (or the equivalent
         thereof);

                  (e)      a commercial bank organized under the laws of any
         other country that is a member of the OECD or has concluded special
         lending arrangements with the International Monetary Fund associated
         with its General Arrangements to Borrow, or a political subdivision of
         any such country, and having total assets in excess of $1,000,000,000
         (or the equivalent thereof);

                  (f)      the central bank of any country that is a member of
         the OECD;

                  (g)      a finance company, insurance company, mutual fund,
         pension plan or fund or other financial institution or fund (whether a
         corporation, partnership, limited liability company, trust or other
         Business Entity) that is engaged in making, purchasing or otherwise
         investing in

                                       7
<PAGE>

         commercial loans in the ordinary course of its investment business
         having assets in excess of $100,000,000; and

                  (h)      other financial institutions or institutional
         lenders;

provided that none of the Borrower or any Affiliate of the Borrower shall
qualify as an Eligible Assignee, and provided further that the Agent and, after
the completion of syndication as determined by the Lead Arrangers, in their sole
discretion, and so long as no Event of Default shall have occurred and be
continuing, the Borrower shall have consented to any such Person becoming an
"Eligible Assignee" hereunder except with respect to clauses (a) and (b) above
(such consent of the Agent or the Borrower not to be unreasonably withheld or
delayed).

                  "ENVIRONMENTAL LAWS" means all laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
regulating or imposing liability or standards of conduct concerning protection
of the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.

                  "EPC SECURED OBLIGATIONS" has the meaning specified in Section
7.02.

                  "EPGOM" means El Paso Production GOM Inc., a Delaware
corporation.

                  "EPN UNITS" means any of the Series A Common Units and Series
C Units issued by El Paso Energy Partners, L.P., a Delaware limited partnership,
that are owned by any Credit Party.

                  "EPNGC" means El Paso Natural Gas Company, a Delaware
corporation.

                  "EPPC" means El Paso Production Company, a Delaware
corporation.

                  "EPPC NOTES" means each of the two promissory notes for
$500,000,000 issued by EPPC in favor of Sabine VII and Sabine VIII,
respectively, under the Red River Transaction.

                  "EPPH" means El Paso Production Holding Company, a Delaware
corporation and its successors.

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

                  "EQUITY INTERESTS" means any capital stock, partnership, joint
venture, member or limited liability or unlimited liability company interest,
beneficial interest in a trust or similar entity, or other equity interest in
another Person of whatever nature.

                  "ERISA" means the Employee Retirement Income Security Act of
1974 and the regulations promulgated and rulings issued thereunder.

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

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

                  "EURODOLLAR RESERVE PERCENTAGE" of any Lender for any Interest
Period for any LIBOR Advance means the reserve percentage applicable during such
Interest Period (or if more than one such

                                       8
<PAGE>

percentage shall be so applicable, the daily average of such percentages for
those days in such Interest Period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of Governors
of the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for such Lender with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities having
a term equal to such Interest Period.

                  "EVENT OF DEFAULT" has the meaning specified in Section 6.01.

                  "EXCLUDED TAXES" means, with respect to the Agent, any Lender,
the Collateral Agent or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) income, franchise or
similar taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located, and (c) in the case
of a Foreign Lender, any withholding tax that is imposed on amounts payable to
such Foreign Lender (i) at the time such Foreign Lender becomes a party to this
Agreement (or designates a new Lending Office), or is attributable to such
Foreign Lender's failure to comply with Section 2.09, except to the extent that
such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new Lending Office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to
Section 2.09(a) or (ii) that is attributable to such Foreign Lender's failure to
comply with Section 2.09(e).

                  "EXISTING CREDIT AND SECURITY AGREEMENT" has the meaning set
forth in Preliminary Statement (6).

                  "FACILITY FEE" means a fee payable to the Agent for the
account of the Lenders in an amount equal to 2% per annum of the average daily
aggregate outstanding principal amount of the Loan from time to time from the
date hereof until the Termination Date.

                  "FASB" means the Financial Accounting Standards Board.

                  "FEDERAL FUNDS RATE" means, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.

                  "FEE LETTER" means the fee letter, dated as of February 24,
2003, among CNAI, CSFB, CGMI and the Borrower setting out the details in respect
of certain fees to be paid by the Borrower, as amended.

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

                  "FERC ELIGIBLE ASSET" means assets or other properties that
are or will become eligible for rate coverage under the regulations promulgated
by FERC.

                  "FOREIGN LENDER" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is located. For
purposes of this definition, the United States of

                                       9
<PAGE>

America, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.

                  "GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time.

                  "GEMSTONE TRANSACTION" means the issuance of 7.71% Guaranteed
Senior Unsecured Notes due 2004 by Gemstone Investor Limited, a Cayman Islands
limited liability company ("GEMSTONE"), and Gemstone Investor, Inc., a Delaware
corporation and wholly-owned subsidiary of Gemstone (the "GEMSTONE CO-ISSUER"),
in a aggregate principal amount of nine hundred and fifty million dollars
($950,000,000), pursuant to the Indenture dated as of May 9, 2002 among
Gemstone, the Co-Issuer and The Bank of New York and the Borrower, as Guarantor.

                  "GOVERNMENTAL AUTHORITY" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.

                  "GUARANTY", "GUARANTEED" and "GUARANTEEING" each means any act
by which any Person assumes, guarantees, endorses or otherwise incurs direct or
contingent liability in connection with, or agrees to purchase or otherwise
acquire or otherwise assures a creditor against loss in respect of, any Debt, or
any Project Financing of any Person other than the Borrower or any of its
consolidated Subsidiaries (excluding (a) any liability by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business, (b) any liability in connection with obligations of
the Borrower or any of its consolidated Subsidiaries, including obligations
under any conditional sales agreement, equipment trust financing or equipment
lease, and (c) any such act in connection with a Project Financing that either
(i) guarantees to the provider of such Project Financing or any other Person
performance of the acquisition, improvement, installation, design, engineering,
construction, development, completion, maintenance or operation of, or otherwise
affects any such act in respect of, all or any portion of the project that is
financed by such Project Financing or performance by a Project Financing
Subsidiary of certain obligations to Persons other than the provider of such
Project Financing, except during any period, and then only to the extent, that
such guaranty is a guaranty of payment of such Project Financing (other than a
guaranty of payment of the type referred to in subclause (ii) below) or (ii) is
contingent upon, or the obligation to pay or perform under which is contingent
upon, the occurrence of any event other than or in addition to the passage of
time or any Project Financing becoming due (any such act referred to in this
clause (c) being a "CONTINGENT GUARANTY")).

                  "GUARANTY REDUCTION EVENT" means, with respect to any
Disposition, merger, consolidation or liquidation, the occurrence of a reduction
of the amount (comparing such amount available immediately prior to giving
effect to the applicable Disposition, merger, consolidation or liquidation with
such amount available immediately after giving effect to such Disposition,
merger, consolidation or liquidation) of the aggregate maximum liability under
Sections 2.01(a) and (b) of the Subsidiary Guarantee Agreement (as defined in
the Senior Bank Facility) with respect to the Credit Parties involved in the
applicable Disposition, merger, consolidation or liquidation.

                  "HAZARDOUS MATERIALS" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature, in each case
above to the extent regulated pursuant to any Environmental Law.

                                       10
<PAGE>

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

                  "INDEMNIFIED COSTS" has the meaning set forth in Section 8.04.

                  "INDEMNIFIED PARTY" has the meaning set forth in Section
9.04(d).

                  "INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.

                  "INITIAL LENDERS" has the meaning set forth in the recital of
the parties to this Agreement contained in the first paragraph of this
Agreement.

                  "INTERCREDITOR AGREEMENT" has the meaning assigned to the term
"Security and Intercreditor Agreement" under the Senior Bank Facility.

                  "INTEREST PERIOD" means the period commencing on the Closing
Date and ending on March 31, 2003, and, thereafter, each subsequent period
commencing on the last day of the immediately preceding Interest Period and
ending on the last Business Day of the next calendar month, of each year;
provided, however, that, in the case of any Interest Period that commences
before the Scheduled Maturity Date and would otherwise end on a date occurring
after the Scheduled Maturity Date, such Interest Period shall end on the
Scheduled Maturity Date.

                  "LENDER" means, on and after the making of the Loan, any of
the Initial Lenders; provided, however, that on and after any assignment of any
Advance pursuant to Section 9.07 to any Eligible Assignee, such Eligible
Assignee shall be a Lender and the assigning Lender, if such assigning Lender
has assigned all of its Advances in full, shall cease to be a Lender hereunder,
and any reference herein to "the Lender" shall thereafter be construed as a
reference to "the Lenders" collectively or "a Lender" individually, as the
context requires.

                  "LENDING OFFICE" means the lending office or offices from time
to time specified by the Lender as its "Lending Office" hereunder for any LIBOR
Advance.

                  "LIBO RATE" means, for any Interest Period (or any portion
thereof), an interest rate per annum equal to the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page
3750 (or any successor page) as the London interbank offered rate for deposits
in U.S. dollars at 11:00 A.M. (London time) two Business Days before the first
day of such Interest Period for a period equal to such Interest Period (provided
that, if for any reason such rate is not available, the term "LIBO Rate" shall
mean, for any Interest Period (or any portion thereof), the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page (or any other publicly available source of similar market data
selected by the Agent) as the London interbank offered rate for deposits in U.S.
dollars at approximately 11:00 A.M. (London time) two Business Days before the
first day of such Interest Period for a period equal to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen LIBO
Page (or such other publicly available source), the applicable rate shall be the
arithmetic mean of all such rates); and provided further, however, that in no
event shall the LIBO Rate be less than 3 1/2% per annum.

                  "LIBOR ADVANCE" at any time of determination means an Advance
that bears interest at such time based upon the LIBO Rate as provided in Section
2.03(a).

                                       11
<PAGE>

                  "LIBOR MARGIN" means 4.25% per annum.

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

                  "LOAN" has the meaning set forth in Section 2.01.

                  "LOAN AMOUNT" means the aggregate amount of all Commitments of
the Lenders not to exceed $1,200,000,000.

                  "LOAN DOCUMENTS" means this Agreement, the Borrower Notes, the
Subsidiary Guaranty, the Collateral Agency Agreement and the Fee Letter.

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

                  "MATERIAL ADVERSE CHANGE" means a material adverse change in
the business, assets, operations, properties, condition (financial or
otherwise), contingent liabilities, prospects or material agreements of the
Borrower and its Subsidiaries, taken as a whole.

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

                  "MESQUITE TRANSACTION" means Indebtedness in an amount not to
exceed $600,000,000 secured by the Equity Interests in and/or the assets of
Mesquite Investors, L.L.C., a Delaware limited liability company ("MESQUITE")
and/or the assets of any direct or indirect Subsidiary of Mesquite, incurred by
the Borrower, Mesquite or another Subsidiary of the Borrower so designated by
the Borrower.

                  "MFN TRANSACTIONS" has the meaning set forth in Section 9.13.

                  "MOODY'S" means Moody's Investors Service, Inc., or any
successor that is a national statistical rating organization.

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

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

                  "MUSTANG" means Mustang Investors, L.L.C., a Delaware limited
liability company.

                  "MUSTANG TRANSACTION" means the transaction known as "PROJECT
MUSTANG" among the Borrower, certain of its Subsidiaries and Mustang pursuant to
the relevant operative documents for such transaction, including (a) obligations
of the Borrower as evidenced by that certain Amended and Restated

                                       12
<PAGE>

El Paso Agreement originally dated as of May 9, 2000, and amended and restated
through April 16, 2003, executed by the Borrower in favor of Mustang and the
other Indemnified Persons (as defined therein), and (b) the obligations of
certain such Subsidiaries as evidenced by that certain Amended and Restated
Sponsor Subsidiary Credit Agreement originally dated as of May 9, 2000, and
amended and restated through April 16, 2003, by and among Noric Holdings,
L.L.C., as borrower, each other Sponsor Subsidiary (as defined therein), as
co-obligors, Clydesdale Associates, L.P., as subordinated noteholder, Mustang,
as lender, Wilmington Trust Company, as Sponsor Subsidiary Collateral Agent (as
defined therein), and Citicorp North America, Inc., as Mustang Collateral Agent
(as defined therein), in each case as the same may be further amended.

                  "NET CASH PROCEEDS" has the meaning assigned to such term in
the Senior Bank Facility.

                  "NET WORTH" means as to any Person, as of any date of
determination, the sum of (a) the consolidated common and preferred
stockholders' equity of such Person and its consolidated Subsidiaries, plus (b)
the cumulative amount by which stockholders' equity of such Person shall have
been reduced by reason of non-cash write downs of long-term assets from and
after the Closing Date, plus (c) in the case of the Borrower, those items
included as "preferred interests of consolidated subsidiaries" (or analogous
line item) as listed on the consolidated balance sheet of the Borrower as of
December 31, 2002 and regardless of any change thereafter in accounting
treatment thereof, plus (d) in the case of the Borrower, those items included as
"minority interests of consolidated subsidiaries" (or analogous line item) as
listed on the consolidated balance sheet of the Borrower as of December 31, 2002
and regardless of any change thereafter in accounting treatment thereof, so long
as the terms and conditions of any financing associated with any such items
referred to in clause (c) or (d) above (or successive extensions or refinancings
thereof) are not amended so as to become more restrictive to the Borrower or its
Subsidiaries than the terms and conditions of the Senior Bank Facility, and
minus (e) accumulated other comprehensive income (loss) (or analogous line
item).

                  "1940 ACT" means the Investment Company Act of 1940 and any
rule, order or regulation promulgated thereunder.

                  "NORIC HOLDINGS I, L.L.C." means Noric Holdings I, L.L.C., a
Delaware limited liability company.

                  "OBLIGATION" means, with respect to any Person, any obligation
of such Person of any kind, including, without limitation, any liability of such
Person on any claim, whether or not the right of any creditor to payment in
respect of such claim is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, disputed, undisputed, legal, equitable, secured or
unsecured, and whether or not such claim is discharged, stayed or otherwise
affected by any bankruptcy. Without limiting the generality of the foregoing,
the Obligations of the Borrower under the Loan Documents include (a) the
obligation to pay principal, interest, costs, expenses, fees, attorneys' fees
and disbursements, indemnities and other amounts payable by the Borrower under
any Loan Document and (b) the obligation to reimburse any amount in respect of
any of the foregoing that the Agent or any of the Lenders, in its sole
discretion, may elect to pay or advance on behalf of the Borrower.

                  "OPERATIVE DOCUMENTS" means the Loan Documents and the
Subsidiary Loan Documents.

                  "ORGANIZATIONAL DOCUMENTS" means, with respect to any Business
Entity, any certificate of incorporation, charter, by-laws, memorandum of
association, articles of association, partnership agreement, limited liability
company agreement, certificate of limited partnership, certificate of

                                       13
<PAGE>

formation, certificate of trust, trust agreement or other agreement or
instrument under which such Business Entity is formed or organized under
Applicable Laws.

                  "ORIGINAL CREDIT AND SECURITY AGREEMENT" has the meaning set
forth in Preliminary Statement (5).

                  "OTHER TAXES" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.

                  "PAYMENT DATE" means the last Business Day of each Interest
Period.

                  "PERMITTED EXECUTION ACTIONS" has the meaning set forth in
Section 6.01(g).

                  "PERMITTED LIENS" means:

                  (a)      inchoate Liens and charges imposed by law and
         incidental to construction, maintenance, development or operation of
         properties, or the operation of business, in the ordinary course of
         business if payment of the obligation secured thereby is not yet
         overdue or if the validity or amount of which is being contested in
         good faith by the Borrower or any of its Subsidiaries;

                  (b)      Liens for Taxes, assessments, obligations under
         workers' compensation or other social security legislation or other
         requirements, charges or levies of any Governmental Authority, in each
         case not yet overdue, or which are being contested in good faith by
         appropriate proceedings;

                  (c)      Liens reserved in any oil, gas or other mineral lease
         entered into in the ordinary course of business for rent, royalty or
         delay rental under such lease and for compliance with the terms of such
         lease;

                  (d)      easements, servitudes, rights-of-way and other
         rights, exceptions, reservations, conditions, limitations, covenants
         and other restrictions that do not materially interfere with the
         operation, value or use of the properties affected thereby;

                  (e)      conventional provisions contained in any contracts or
         agreements affecting properties under which the Borrower or any of its
         Subsidiaries is required immediately before the expiration, termination
         or abandonment of a particular property to reassign to such Person's
         predecessor in title all or a portion of such Person's rights, titles
         and interests in and to all or portion of such property;

                  (f)      pledges and deposits to secure the performance of
         bids, tenders, trade or government contracts (other than for repayment
         of borrowed money), leases, licenses, statutory obligations, surety
         bonds, performance bonds, completion bonds and other obligations of a
         like kind incurred in the ordinary course of business;

                  (g)      any Lien reserved in a grant or conveyance in the
         nature of a farm-out or conditional assignment to the Borrower or any
         of its Subsidiaries entered into in the ordinary course of business on
         reasonable terms to secure undertakings of the Borrower or any such
         Subsidiary in such grant or conveyance;

                                       14
<PAGE>

                  (h)      any Lien consisting of (A) statutory landlord's liens
         under leases to which the Borrower or any of its Subsidiaries is a
         party or other Liens on leased property reserved in leases thereof for
         rent or for compliance with the terms of such leases, (B) rights
         reserved to or vested in any municipality or governmental, statutory or
         public authority to control or regulate any property of the Borrower or
         any of its Subsidiaries, or to use such property in any manner which
         does not materially impair the use of such property for the purposes
         for which it is held by the Borrower or any such Subsidiary, (C)
         obligations or duties to any municipality or public authority with
         respect to any franchise, grant, license, lease or permit and the
         rights reserved or vested in any governmental authority or public
         utility to terminate any such franchise, grant, license, lease or
         permit or to condemn or expropriate any property, and (D) zoning laws
         and ordinances and municipal regulations;

                  (i)      the creation of interests in property of the
         character commonly referred to as a "royalty interest" or "overriding
         royalty interest", production payments, farmouts, leases, subleases,
         rights of way and other easements, participations, joint venture, joint
         operating, unitization, pooling and communitization agreements, or
         other similar transactions in the ordinary course of business;

                  (j)      any judgment lien in respect of any judgment or order
         that does not constitute an Event of Default under Section 6.01(g); and

                  (k)      Liens created by, pursuant to or contemplated by any
         of the Operative Documents in favor of any Subsidiary Loan Party, the
         Borrower, the Lenders, the Agent or the Collateral Agent.

                  "PERSON" means any individual, a Business Entity, or a country
or any political subdivision thereof or any agency or instrumentality of such
country or subdivision.

                  "PIPELINE COMPANY BORROWER" means, initially, each of EPNGC,
TGPC, and ANR Pipeline and, subsequent to the Senior Bank Facility Effective
Date, if and when required pursuant to the terms of Section 2.18 of the Senior
Bank Facility, CIG.

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

                  "PROCESS AGENT" has the meaning set forth in Section 9.10(c).

                  "PROCESS AGENT AGREEMENT" means the agreement dated as of the
date hereof between the Borrower and CT Corporation System pursuant to which the
Borrower appointed CT Corporation System as its Process Agent pursuant to
Section 9.10(c) (or any agreement with any successor Process Agent as provided
therein).

                  "PROJECT FINANCING" means any Indebtedness (a) incurred to
finance or refinance the acquisition, improvement, installation, design,
engineering, construction, development, completion, maintenance or operation of,
or otherwise in respect of, all or any portion of any project, or any asset
related thereto (including, with respect to transactions in connection with the
power and gas contract restructuring business of the Borrower) and any Guaranty
with respect thereto, other than any portion of such Indebtedness or Guaranty
permitting or providing for recourse against the Borrower or any of its
Subsidiaries, other than (i) recourse to the Equity Interests in, Indebtedness
or other obligations of, or assets of, one or more Project Financing
Subsidiaries, and (ii) such recourse as exists under any Contingent Guaranty or
(b) of any Project Financing Subsidiary, or any Guaranty with respect thereto,

                                       15
<PAGE>

that is secured solely by, or recourse for which is limited solely to, the
Equity Interests in, Indebtedness or other obligations of, or assets of, one or
more Project Financing Subsidiaries.

                           "PROJECT FINANCING SUBSIDIARY" means any Subsidiary
of the Borrower whose principal purpose is to incur Project Financing, or to
become a direct or indirect partner, member or other equity participant or owner
in a Business Entity so created, and substantially all the assets of which
Subsidiary or Business Entity are limited to (a) those assets being financed (or
to be financed), or the operation of which is being financed (or to be
financed), in whole or in part by a Project Financing, (b) power contracts, gas
contracts, administrative or other related service agreements and swap
agreements related to gas or power, or (c) Equity Interests in, or Indebtedness
or other obligations of, one or more other such Subsidiaries or Business
Entities or to Indebtedness or other obligations of the Borrower or its
Subsidiaries or other Persons. For purposes of this definition, "swap agreement"
means any agreement with respect to any swap, forward, future or derivative
transaction or option or similar agreement involving, or settled by reference
to, one or more rates, currencies, commodities, equity or debt instruments or
securities, or economic, financial or pricing indices or measures of economic,
financial or pricing risk or value or any similar transaction or any combination
of these transactions.

                           "QUALIFIED SUCCESSOR AGENT" means a commercial bank
organized under the laws of the United States or of any State thereof and
which has (a) a combined capital and surplus of at least $250,000,000, (b)
ratings, at the time of its acceptance as a successor Agent, with respect to its
unsecured short-term debt securities of not lower that A-2 by S&P and P-2 by
Moody's, and (c) not, at the time of its acceptance as a successor Agent
pursuant to Section 8.05, been mentioned with negative implications in
"CreditWatch" by S&P or a similar publication list by S&P or Moody's; provided,
however, that, if any successor Agent shall have ratings with respect to its
unsecured short-term debt securities of lower than (x) P-1 by Moody's or (y) A-1
by S&P, any funds held by such Agent pursuant to the terms of the Loan Documents
shall be held in a segregated trust account established by such Agent for such
purpose; and provided, further, that so long as no Event of Default shall have
occurred and be continuing, the Borrower shall have consented to any such Person
becoming a "Qualified Successor Agent" hereunder (such consent not to be
unreasonably withheld or delayed).

                  "RATON" means El Paso Energy Raton, L.L.C., a Delaware limited
liability company.

                  "RECEIVABLES PURCHASE AND SALE AGREEMENT" means each or any
one of (a) the Receivables Purchase and Sale Agreement dated as of January 14,
1992 among EPNGC, CIESCO L.P., a New York limited partnership, Corporate Asset
Funding Company, a Delaware corporation, and Citicorp North America, Inc., as
agent, (b) the Amended and Restated Receivables Sale Agreement dated as of
December 31, 1996 among El Paso Energy Credit Corporation, Asset Securitization
Cooperative Corporation and Canadian Imperial Bank of Commerce, as
administrative agent, (c) the agreement(s) governing the receivables
securitization facility proposed to be entered into in 2003 among El Paso Energy
Finance I Company, LLC, El Paso Finance Company, Inc., TGPC, EPNGC, Southern
Natural Gas Company, the Borrower and General Electric Capital Corporation, and
(d) the agreement(s) governing the receivables securitization facility proposed
to be entered into in 2003 among the Borrower, El Paso Energy Finance II
Company, El Paso Merchant Energy, L.P., and The CIT Group/Business Credit, Inc.,
as any such agreement or facility may be amended, supplemented, restated or
otherwise modified from time to time, provided that no such amendment,
supplement, restatement or modification shall change the scope of such agreement
or facility from that of a receivables securitization transaction.

                  "RED RIVER" has the meaning set forth in Preliminary Statement
(1).

                  "RED RIVER CBI PURCHASE AGREEMENT" means the Purchase
Agreement with respect to certificates of beneficial interest issued by Rio
Grande Trust I dated as of March 29, 2002 among Rio

                                       16
<PAGE>

Grande Trust I as issuer, Westdeutsche Landesbank Girozentrale, New York Branch
(now known as WestLB AG, New York Branch), as initial holder, Whiteclay WTC,
Inc. as depositor and Wilmington Trust Company as trustee.

                  "RED RIVER CREDIT AGREEMENT" means the Second Amended and
Restated Credit and Security Agreement dated as of March 29, 2002 among Red
River, CNAI and CXC, LLC.

                  "RED RIVER TRANSACTION" has the meaning set forth in
Preliminary Statement (1).

                  "REFINANCING" means any debt, equity or Convertible Securities
offering in the bank loan or debt capital markets or otherwise, any term or
revolving loan financing, any lease or sale-leaseback transaction, in each case
to the extent the proceeds therefrom are used to repay or prepay any existing
Indebtedness of the Borrower or any of its Subsidiaries or to otherwise
refinance the Electron Transaction or the Mustang Transaction to the extent not
otherwise prohibited hereunder.

                  "REFINANCING TRANSACTION" has the meaning set forth in
Preliminary Statement (4).

                  "REGISTER" has the meaning specified in Section 9.07(c).

                  "REGULATION S-X" means Regulation S-X of the U.S. SEC, 17 CFR,
210 et seq.

                  "RELATED FUND" means any Person that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) a Person or an
Affiliate of a Person entity that administers or manages a Lender.

                  "REQUIRED LENDERS" means, at any time, those Lenders having
more than 50% of the aggregate Commitments or of the aggregate amount of the
Loan outstanding at such time.

                  "RESTRICTED EQUITY INTERESTS" has the meaning assigned to such
term under the Senior Bank Facility.

                  "RESTRICTED SUBSIDIARIES" means, collectively, each Pipeline
Company Borrower and its Subsidiaries, each Senior Bank Facility Subsidiary
Guarantor (other than the Senior Bank Facility Exempted Guarantors) and its
Subsidiaries and Bear Creek Storage Company, a Louisiana general partnership
("BEAR CREEK STORAGE"); provided, however, that (a) any such Person shall cease
to be a "Restricted Subsidiary" hereunder immediately upon any Disposition of
the Equity Interests in such Person permitted by Section 6.04 of the Senior Bank
Facility and Section 5.02 that results in such Person no longer being a direct
or indirect Subsidiary of the Borrower and (b) none of Noric Holdings I, L.L.C.
and its Subsidiaries, Noric Holdings III, L.L.C., a Delaware limited liability
company, and its Subsidiaries and Noric Holdings IV, L.L.C., a Delaware limited
liability company, and its Subsidiaries shall be considered a "Restricted
Subsidiary" hereunder until the repayment in full of the Mustang Transaction.

                  "S&P" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc., or any successor that is a national statistical
rating organization.

                  "SABINE VI" means Sabine River Investors VI, L.L.C., a
Delaware limited liability company.

                  "SABINE IX" means Sabine River Investors IX, L.L.C., a
Delaware limited liability company, and its successors.

                                       17
<PAGE>

                  "SCHEDULED MATURITY DATE" means March 11, 2005.

                  "SEC" means the United States Securities and Exchange
Commission, any successor thereto and any analogous Governmental Authority.

                  "SECURED PARTIES" has the meaning set forth in Section
7.01(a).

                  "SECURITIES" has the meaning set forth in Section 7.01(e).

                  "SENIOR BANK FACILITY" means the $3,000,000,000 Revolving
Credit Agreement dated as of April 16, 2003, among the Borrower, EPNGC, TGPC,
ANR Pipeline, the several banks and other financial institutions from time to
time parties thereto, the Senior Bank Facility Administrative Agent, Citicorp
North America, Inc. and ABN AMRO Bank N.V. as co-document agents, and Bank of
America, N.A. and Credit Suisse First Boston, as co-syndication agents (amending
and restating in its entirety the El Paso Existing 364-Day Facility), as the
same may be amended, supplemented or otherwise modified from time to time.

                  "SENIOR BANK FACILITY ADMINISTRATIVE AGENT" means JPMorgan
Chase Bank as administrative agent under the Senior Bank Facility.

                  "SENIOR BANK FACILITY BORROWER" means the Borrower and each
Pipeline Company Borrower under the Senior Bank Facility, as applicable.

                  "SENIOR BANK FACILITY COLLATERAL" has the meaning assigned to
the term "Collateral" under the Senior Bank Facility.

                  "SENIOR BANK FACILITY COLLATERAL ACCOUNT" has the meaning
assigned to the term "Collateral Account" under the Senior Bank Facility.

                  "SENIOR BANK FACILITY COLLATERAL AGENT" has the meaning
assigned to the term "Collateral Agent" under the Senior Bank Facility.

                  "SENIOR BANK FACILITY COLLATERAL PERMITTED LIENS" has the
meaning assigned to the term "Collateral Permitted Liens" under the Senior Bank
Facility.

                  "SENIOR BANK FACILITY COVERED OBLIGATIONS" has the meaning
assigned to the term "Covered Obligations" under the Senior Bank Facility.

                  "SENIOR BANK FACILITY EFFECTIVE DATE" has the meaning assigned
to the term "Effective Date" under the Senior Bank Facility.

                  "SENIOR BANK FACILITY ENFORCEMENT ACTION" has the meaning
assigned to the term "Enforcement Action" under the Senior Bank Facility.

                  "SENIOR BANK FACILITY EXEMPTED GUARANTOR" has the meaning
assigned to the term "Exempted Guarantor" under the Senior Bank Facility.

                  "SENIOR BANK FACILITY GUARANTOR" has the meaning assigned to
the term "Guarantor" under the Senior Bank Facility.

                  "SENIOR BANK FACILITY LC DISBURSEMENTS" has the meaning
assigned to the term "LC Disbursements" under the Senior Bank Facility.

                                       18
<PAGE>

                  "SENIOR BANK FACILITY LOAN DOCUMENTS" has the meaning assigned
to the term "Loan Documents" under the Senior Bank Facility.

                  "SENIOR BANK FACILITY OBLIGATIONS" has the meaning assigned to
the term "Obligations" under the Senior Bank Facility.

                  "SENIOR BANK FACILITY SECURED OBLIGATIONS" has the meaning
assigned to the term "Secured Obligations" under the Senior Bank Facility.

                  "SENIOR BANK FACILITY SECURED PARTIES" has the meaning
assigned to the term "Secured Parties" under the Senior Bank Facility.

                  "SENIOR BANK FACILITY SECURITY DOCUMENTS" has the meaning
assigned to the term "Security Documents" under the Senior Bank Facility.

                  "SENIOR BANK FACILITY SUBSIDIARY GUARANTOR" has the meaning
assigned to the term "Subsidiary Guarantor" under the Senior Bank Facility.

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

                  "SOLVENT" means, with respect to any Person as of the date of
any determination, that on such date, after giving effect to such Person's
rights and Obligations under the Operative Documents, including rights of
contribution and indemnity, (a) the fair value of the Property of such Person at
fair valuation is greater than the total liabilities, including contingent
liabilities, of such Person, (b) such Person is able to pay its debts and other
liabilities, contingent obligations, and other commitments as they mature in the
normal course of business, and (c) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's Property would constitute unreasonably small capital after giving
due consideration to current and anticipated future capital requirements and
current and anticipated future business conduct and the prevailing practice in
the industry in which such Person is engaged. In computing the amount of
contingent liabilities at any time, such liabilities shall be computed at the
amount which, in light of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

                  "SONAT INDENTURE" means the Indenture dated June 1, 1986
between the Borrower (as successor to Sonat, Inc.) and JP Morgan Chase Bank,
Trustee (as successor to Manufacturers Hanover Trust Company), including
Prospectus Supplements in relation thereto, as the same may be amended,
supplemented or modified from time to time.

                  "SPECIFIED INDENTURE DEBT" means any Debt issued pursuant to
an indenture qualified under the Trust Indenture Act of 1939, as amended, and
the principal amount of which, at the time of determination, exceeds
$50,000,000.

                  "SPONSOR SUBSIDIARIES" has the meaning set forth in
Preliminary Statement (1).

                  "SPONSOR SUBSIDIARY CREDIT AGREEMENT" has the meaning set
forth in Preliminary Statement (1).

                                       19
<PAGE>

                  "SPONSOR SUBSIDIARY OBLIGATIONS" has the meaning set forth in
Preliminary Statement (2).

                  "SPONSOR SUBSIDIARY SECURITY AGREEMENT" means the Second
Amended and Restated Sponsor Subsidiary Credit Agreement, originally dated as of
June 30, 1999, amended and restated as of November 22, 1999, amended as of
January 31, 2002 and amended and restated as of March 29, 2002, between the
Sponsor Subsidiaries and Wilmington Trust Company as collateral agent for
Trinity.

                  "SOUTHERN NATURAL GAS" means Southern Natural Gas Company, a
Delaware corporation.

                  "SUBORDINATION AGREEMENT" means the Master Subordination
Agreement as defined in the Subsidiary Borrower Credit Agreement.

                  "SUBSIDIARY" means, as to any Person (the "PARENT") at any
date, any Business Entity the accounts of which are, or are required to be,
consolidated with those of the parent in the parent's consolidated financial
statements if such financial statements were prepared in accordance with GAAP as
of such date, as well as any other Business Entity of which the shares of stock
or other Equity Interests having ordinary voting power (other than stock or such
other Equity Interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such Business Entity are at the time owned, directly or indirectly, through one
or more Subsidiaries, or both, by such Person; provided, however, that, except
for purposes of consolidation with the Borrower in accordance with GAAP (other
than for purposes of (a) the definitions of "Net Worth" and "Material Adverse
Effect" or (b) Sections 5.02(a)(ii) and 5.03(f)), in no event shall El Paso
Energy Partners, L.P. or any of its direct or indirect Subsidiaries be deemed to
be a Subsidiary of the Borrower for any other purpose of this Agreement or any
other Operative Document.

                  "SUBSIDIARY BORROWER" means each of EPPC, EPGOM and, until the
date (if any) on which such Person shall cease to be a "Subsidiary Borrower"
under, and in accordance with, the Subsidiary Borrower Credit Agreement, Vermejo
and Raton.

                  "SUBSIDIARY BORROWER CREDIT AGREEMENT" means the Credit
Agreement dated as of the date hereof among the Subsidiary Loan Parties, the
Borrower, as lender, and CNAI, as loan administrator, as the same may be
amended, amended and restated or otherwise modified from time to time in
accordance with the terms thereof.

                  "SUBSIDIARY BORROWER NOTES" has the meaning assigned to the
term "Notes" in the Subsidiary Borrower Credit Agreement.

                  "SUBSIDIARY BORROWER PLEDGE AGREEMENT" means the Pledge
Agreement dated as of the date hereof made by each of the Subsidiary Loan
Parties (except Sabine IX) in favor of the Collateral Agent (as defined
therein), as the same may be amended, amended and restated or otherwise modified
from time to time in accordance with the terms thereof.

                  "SUBSIDIARY BORROWER SECURITY AGREEMENT" means the Security
Agreement dated as of the date hereof among the Subsidiary Loan Parties and the
Collateral Agent (as defined therein), as collateral agent for the secured
parties, as the same may be amended, amended and restated or otherwise modified
from time to time in accordance with the terms thereof.

                  "SUBSIDIARY COLLATERAL" has the meaning assigned to the term
"Collateral" in the Subsidiary Borrower Credit Agreement.

                                       20
<PAGE>

                  "SUBSIDIARY DEFAULT NOTICE" has the meaning set forth in
Section 7.09(f).

                  "SUBSIDIARY GUARANTY" means a Guaranty dated as of the date
hereof made by the Subsidiary Loan Parties as guarantors in favor of the
Beneficiaries (as defined therein) in substantially the form of Exhibit C
hereto, as the same may be amended, amended and restated or otherwise modified
from time to time in accordance with the terms thereof.

                  "SUBSIDIARY LOAN DOCUMENTS" has the meaning given to the term
"Loan Documents" in the Subsidiary Borrower Credit Agreement.

                  "SUBSIDIARY LOAN PARTY" means each Chain Subsidiary and each
Subsidiary Borrower.

                  "SUBSIDIARY LOANS" has the meaning set forth in Preliminary
Statement (3).

                  "TAKE-OUT SECURITIES" means debt securities or a syndicated
loan facility of the Borrower or the Subsidiary Borrowers or one or more of
their respective Affiliates.

                  "TAXES" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.

                  "TERMINATION DATE" means the earlier of (i) the Scheduled
Maturity Date and (ii) the date on which the outstanding Loan has been repaid in
full pursuant to the terms of this Agreement.

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

                  "TGPC" means Tennessee Gas Pipeline Company, a Delaware
corporation.

                  "TRINITY" has the meaning set forth in Preliminary Statement
(1).

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

                  "VERMEJO" means Vermejo Minerals Corporation, a Delaware
corporation, and its successors.

                  "VOLUNTARY BANKRUPTCY" means, with respect to any Person: (a)
(i) the inability of such Person generally to pay its debts as such debts become
due, (ii) the failure of such Person generally to pay

                                       21
<PAGE>

its debts as such debts become due or (iii) an admission in writing by such
Person of its inability to pay its debts generally or a general assignment by
such Person for the benefit of creditors; (b) the filing of any petition by such
Person seeking to adjudicate it a bankrupt or insolvent, or seeking for itself
any liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of such Person or its debts under any
Applicable Law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking, consenting to, or acquiescing in the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for such Person or for any substantial part of its property or the
filing of an answer or other pleading admitting or failing to contest the
allegations of a petition filed against it in any proceeding of the foregoing
nature; or (c) action taken by such Person to authorize any of the actions set
forth above.

                  "WIC" means Wyoming Interstate Company Ltd., a Colorado
Limited Partnership.

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

                  SECTION 1.02 Computation of Time Periods. In this Agreement in
the computation of periods of time from a specified date to a later specified
date, the word "FROM" means "from and including" and the words "TO", "THROUGH"
and "UNTIL" each mean "to but excluding".

                  SECTION 1.03 Use of Certain Terms. Unless the context of this
Agreement requires otherwise, the plural includes the singular, the singular
includes the plural, and "INCLUDING" has the inclusive meaning of "including
without limitation". The words "HEREOF", "HEREIN", "HEREBY", "HEREUNDER", and
other similar terms of this Agreement refer to this Agreement as a whole and not
exclusively to any particular provision of this Agreement. All pronouns and any
variations thereof shall be deemed to refer to masculine, feminine, or neuter,
singular or plural, as the identity of the Person or Persons may require.

                  SECTION 1.04 Headings and References. Section and other
headings are for reference only, and shall not affect the interpretation or
meaning of any provision of or to this Agreement. Unless otherwise provided,
references to Articles, Sections, Schedules, and Exhibits shall be deemed
references to Articles, Sections, Schedules, and Exhibits of or to this
Agreement. Whether or not specified herein or therein, references in this
Agreement to this Agreement and to any other Operative Document or any other
agreement include this Agreement and the other Operative Documents and
agreements as the same may be modified, amended, restated or supplemented from
time to time pursuant to the provisions hereof or thereof as permitted by the
Operative Documents. Whether or not specified herein, a reference to any law,
rule, order or regulation (as the case may be) shall mean that law, rule, order
or regulation (as the case may be), as it may be amended, modified or
supplemented from time to time, and any successor law, rule, order or regulation
(as the case may be). A reference to a Person includes the successors and
assigns of such Person, but such reference shall not increase, decrease or
otherwise modify in any way the provisions in this Agreement and the other
Operative Documents governing the assignment of rights and obligations under or
the binding effect of any provision of this Agreement.

                  SECTION 1.05 Accounting Terms; GAAP. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Agent that the Borrower requests an amendment
to any provision hereof to eliminate the effect of any change occurring after
the date hereof in GAAP or in the application thereof on the operation of or
calculation of compliance with such provision (or if the Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in

                                       22
<PAGE>

effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith.

                                   ARTICLE II

                          AMOUNTS AND TERMS OF THE LOAN

                  SECTION 2.01 The Loan. On the terms and conditions hereinafter
set forth, each Initial Lender shall make available to the Borrower a single
advance on the Closing Date in an amount not to exceed its Commitment (each such
advance, an "ADVANCE", and, collectively, the "LOAN"). Amounts borrowed
hereunder and repaid or prepaid may not be reborrowed.

                  SECTION 2.02 Making the Loan. Upon the satisfaction of the
applicable conditions precedent set forth in Section 3.01, before 12:00 P.M.
(New York City time) on the Closing Date, each Initial Lender shall make an
Advance to the Borrower by depositing the proceeds thereof in immediately
available funds to the Agent's Account.

                  SECTION 2.03 Interest. (a) The Borrower shall pay to the
Lenders interest on the unpaid principal amount of the Advances on each Payment
Date, accruing from the date of the making of the Advances until such principal
amount shall be paid in full, at the following rate per annum:

                  (i)      from the Closing Date through March 23, 2003, the
         Advances shall bear interest at a rate per annum equal to 7.75%;

                  (ii)     thereafter, for the remainder of the first Interest
         Period, the Advances shall bear interest at a rate per annum equal to
         the sum of the LIBO Rate for a one-week Interest Period plus the LIBOR
         Margin; and

                  (iii)    thereafter, for any Interest Period (or portion
         thereof) the Advances shall bear interest at a rate per annum equal to
         the sum of the LIBO Rate for such Interest Period (or portion thereof)
         plus the LIBOR Margin;

provided, however, that if (A) the introduction of or any change in or in the
interpretation of any law or regulation shall make it unlawful, or any central
bank or other governmental authority asserts that it is unlawful, for a Lender
to obtain funds in the London interbank market during such Interest Period (or
portion thereof), (B) the LIBO Rate will not adequately reflect the cost to any
Lender of maintaining its Advances during such Interest Period (or portion
thereof) at the LIBO Rate, (C) the LIBO Rate cannot be determined or (D) any
Event of Default shall occur and be continuing, then the interest rate
applicable to the Advances shall be the sum of the Base Rate then in effect plus
the Base Rate Margin.

                  (b)      Overdue Interest. If the Borrower fails to pay any
amount due and payable under this Agreement or any other Loan Document on the
date such amount is due, then the Borrower shall pay interest on such overdue
amount, from the date such amount shall be due until the date such amount shall
be paid in full, at a rate per annum equal to, (i) with regard to the principal
amount of any Advance, 2% above the rate otherwise applicable to the principal
amount of such Advance, and (ii) with regard to any other amount, 2% above the
applicable Base Rate plus the Base Rate Margin, in each case payable in arrears
on the date such amount shall be paid in full and on demand.

                  (c)      Additional Cost for Eurodollar Reserves. If any
Lender shall determine in good faith that reserves under regulations of the
Board of Governors of the Federal Reserve System are required to be maintained
by it in respect of, or a portion of its costs of maintaining reserves under
such

                                       23
<PAGE>

regulations is properly attributable to, one or more of its Advances, the
Borrower shall pay to such Lender additional interest on the unpaid principal
amount of each such Advance to it (other than any such additional interest
accruing to a particular Lender in respect of periods prior to the 30th day
preceding the date notice of such interest is given by such Lender as provided
in this Section 2.03), payable on the same day or days on which interest is
payable on such Advance, at an interest rate per annum equal at all times during
each Interest Period for such Advance to the excess of (i) the rate obtained by
dividing the LIBO Rate for such Interest Period by a percentage equal to 100%
minus the Eurodollar Reserve Percentage, if any, for such Lender for such
Interest Period over (ii) the LIBO Rate for such Interest Period. The amount of
such additional interest (if any) shall be determined by each Lender, and such
Lender shall furnish written notice of the amount of such additional interest to
the Borrower and the Agent, which notice shall be conclusive and binding for all
purposes, absent manifest error.

                  SECTION 2.04 Certain Fees. (a) The Borrower shall pay the
Facility Fee in arrears on each Payment Date during the term of this Agreement
and on the Termination Date.

                  (b)      The Borrower shall pay certain other fees pursuant to
the terms of the Fee Letter.

                  SECTION 2.05 Repayment of the Loan. On each of (a) the last
Business Day of June 2004, and (b) the last Business day of September 2004, the
Borrower shall repay a principal amount equal to $300,000,000 of the then
outstanding Loan. The outstanding principal balance of the Loan shall be repaid
in full by the Borrower on the Scheduled Maturity Date.

                  SECTION 2.06 Prepayments of the Advance. (a) Optional. The
Borrower may, at any time, prepay the outstanding principal amount of the Loan
in whole or in part, together with accrued interest, fees and any other amounts
payable under this Agreement to the date of such prepayment on the principal
amount prepaid; provided, however, that (i) each partial prepayment shall be in
an aggregate principal amount of not less than $1,000,000 and (ii) in the event
of any such prepayment on a day other than the last day of an Interest Period,
the Borrower shall pay to the Agent for the account of the affected Lender or
Lenders, on the last day of such Interest Period, any amount owing pursuant to
Section 9.04(c) in connection with such prepayment.

                  (b)      Mandatory. The Borrower shall prepay principal
amounts outstanding under the Loan, together with accrued interest to the date
of such prepayment on the principal amount so prepaid, on the date of receipt of
the following and in the amounts set forth below:

                  (i)      100% of the proceeds of each optional or mandatory
         prepayment or repayment in respect of the principal amount of the
         Subsidiary Loans (including as a result of the issuance of the Take-Out
         Securities),

                  (ii)     100% of the net cash proceeds of (A) all equity or
         equity-linked offerings or sales of Equity Interests by or of any Chain
         Subsidiary, and (B) such offerings by the Borrower or its Affiliates
         that are exchangeable into Equity Interests of any Subsidiary Loan
         Party, excluding in each case of clause (A) and (B), net cash proceeds
         of any capital contribution to any Subsidiary Loan Party by existing
         holders of Equity Interests thereof,

                  (iii)    100% of the net cash proceeds of issuances of
         Indebtedness of any Chain Subsidiary (including as a result of the
         issuance of the Take-Out Securities),

                  (iv)     100% of the net cash proceeds of incurrences or
         issuances of Indebtedness of the Borrower or that are primarily based
         on the credit of the Borrower, excluding Indebtedness permitted to be
         incurred pursuant to Section 5.02(b) (other than clause (v) thereof);
         and

                                       24
<PAGE>

                  (v)      100% of the net cash proceeds of the Take-Out
         Securities (to the extent not otherwise covered by clauses (i) through
         (iv) above).

                  (c)      Notice. Each prepayment shall be accompanied by
written notice to the Agent of the provision of Section 2.06(a) or 2.06(b) under
which such prepayment is to be made, and identifying the source of the proceeds
of such prepayment.

                  (d)      Price. Notwithstanding any other provision of this
Agreement, any optional or mandatory prepayment of the principal amount of the
Loan made by the Borrower shall be credited against the unpaid principal amount
thereof as follows:

                  (i)      if made during the period commencing on the Closing
         Date and ending on the day 120 days after the Closing Date, shall be
         made at 99.25% of the aggregate amount of the Loans being prepaid;

                  (ii)     if made during the period commencing on the day 121
         days after the Closing Date and ending on the day 240 days after the
         Closing Date, shall be made at 99.75% of the aggregate amount of the
         Loans being prepaid; and

                  (iii)    commencing with prepayments made on the day 241 days
         after the Closing Date, each prepayment of principal shall be made at
         100.0% of the aggregate amount of the Loans being prepaid.

                  (iv)     No Lender shall have the right to decline a
         prepayment hereunder.

                  SECTION 2.07 Increased Costs; Capital Adequacy, Etc. (a) If,
due to either (i) the introduction after the date of this Agreement of or any
change after the date of this Agreement (including any change by way of
imposition or increase of reserve requirements or assessments other than those
referred to in the definition of "EURODOLLAR RESERVE PERCENTAGE") in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request issued or made after the date of this Agreement from or by
any central bank or other governmental authority (whether or not having the
force of law), in each case above, there shall be any increase in the cost to
any Lender of agreeing to make, fund or maintain, or of making, funding or
maintaining, Advances, then the Borrower shall from time to time, upon demand by
such Lender (with a copy of such demand to the Agent), pay to the Agent for the
account of such Lender additional amounts sufficient to reimburse such Lender
for all such increased costs (except those costs incurred more than 60 days
prior to the date of such demand; for the purposes hereof any cost or expense
allocable to a period prior to the publication or effective date of such an
introduction, change, guideline or request shall be deemed to be incurred on the
later of such publication or effective date). Each Lender agrees to use its best
efforts promptly to notify the Borrower of any event referred to in clause (i)
or (ii) above, provided that the failure to give such notice shall not affect
the rights of any Lender under this Section 2.07(a) (except as otherwise
expressly provided above in this Section 2.07(a)). A certificate as to the
amount of such increased cost, submitted to the Borrower and the Agent by such
Lender, shall be conclusive and binding for all purposes, absent manifest error.
Each Lender agrees to use its best efforts (including a reasonable effort to
change its Lending Office or to transfer its affected Advances to an affiliate
of such Lender) to avoid, or minimize the amount of, any demand for payment from
the Borrower under this Section 2.07(a).

                  (b)      If either (i) the introduction of or any change in or
in the interpretation of any law or regulation or (ii) compliance by any Lender
with any guideline or request from any central bank or other governmental
authority (whether or not having the force of law) affects or would affect the
amount of capital required or expected to be maintained by such Lender or any
corporation controlling such

                                       25
<PAGE>

Lender and such Lender determines that the amount of such capital is increased
as a result of such Lender's obligations under this Agreement, then, within ten
days after demand, and delivery to the Borrower of the certificate referred to
in the last sentence of this subsection (b) by such Lender (with a copy of such
demand to the Agent), the Borrower shall pay to the Agent for the account of
such Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender or such corporation in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's
obligations hereunder (except any such increase in capital incurred more than,
or compensation attributable to the period before, 90 days prior to the date of
such demand; provided, that, for the purposes of this subsection (b), any
increase in capital allocable to, or compensation attributable to, a period
prior to the publication or effective date of any such introduction, change,
guideline or request shall be deemed to be incurred on the later of such
publication or effective date). Each Lender agrees to use its best efforts
promptly to notify the Borrower of any event referred to in clause (i) or (ii)
above, provided that the failure to give such notice shall not affect the rights
of any Lender under this subsection (b) (except as otherwise expressly provided
above in this subsection (b)). A certificate in reasonable detail as to the
basis for, and the amount of, such compensation submitted to the Borrower by
such Lender shall, in the absence of manifest error, be conclusive and binding
for all purposes hereunder.

                  (c)      In the event that any Lender shall change its Lending
Office and such change results (at the time of such change) in increased costs
to such Lender, the Borrower shall not be liable to such Lender for such
increased costs incurred by such Lender to the extent, but only to the extent,
that such increased costs shall exceed the increased costs which such Lender
would have incurred if the Lending Office of such Lender had not been so
changed, but, subject to subsection (a) above and to Section 2.08, nothing
herein shall require any Lender to change its Lending Office for any reason.

                  SECTION 2.08 Interest Rate Determination; Late Payments;
Payments and Computations. (a) The Borrower shall make each payment hereunder
not later than 1:00 P.M. (New York City time) on the day when due in U.S.
dollars to the Agent at the Agent's Account in same day funds. Any payment
received after 1:00 P.M. (New York City time) on the day when due shall be
applied on the next following Business Day.

                  (b)      All computations of interest and fees hereunder shall
be made on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) elapsed (except that where
interest is calculated by reference to the Base Rate, the computation of
interest hereunder shall be made on the basis of a year of 365 days or 366 days,
as applicable). Each determination by the Agent of an interest rate hereunder
shall be conclusive and binding for all purposes, absent manifest error.

                  (c)      Whenever any payment hereunder shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest or fees, as the case may
be; provided, however, in the case of any payment of any LIBOR Advance, if such
extension would cause payment to be made in the next following calendar month,
such payment shall be made on the immediately preceding Business Day.

                  SECTION 2.09 Taxes. (a) Any and all payments by or on account
of any obligation of the Borrower hereunder or under the Borrower Notes shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower shall be required by law to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.09) the applicable Indemnified Party receives an amount

                                       26
<PAGE>

equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.

                  (b)      In addition, the Borrower agrees to pay any Other
Taxes to the relevant Governmental Authority in accordance with applicable law.

                  (c)      The Borrower will indemnify each Indemnified Party,
within 10 days after written demand therefor, for the full amount of Indemnified
Taxes or Other Taxes paid by such Indemnified Party on or with respect to any
payment by or on account of any obligation of the Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or attributable to amounts payable
under this Section 2.09) and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes
or Other Taxes were correctly or legally asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Borrower by the Agent or any Lender (with respect to itself or any of its
Affiliates) shall be conclusive absent manifest error.

                  (d)      As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Agent.

                  (e)      Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the law of the United States, or of
the jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall
deliver to the Borrower (with a copy to the Agent), at the time or times
prescribed by applicable law, such properly completed and executed documentation
prescribed by applicable law or reasonably requested by the Borrower as will
permit such payments to be made without withholding or at a reduced rate.

                  (f)      The Agent or a Lender shall determine if, in its
reasonable discretion, it has received a refund of any Indemnified Taxes or
Other Taxes as to which it has been indemnified by a Borrower or with respect to
which the Borrower has paid additional amounts pursuant to this Section 2.09. If
it determines that it has received any such refund, it shall pay over such
refund to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.09 with respect to
the Indemnified Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Agent or such Lender and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided, that the Borrower, upon the request of the Agent or such
Lender, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Agent or such Lender in the event the Agent or such Lender is
required to repay such refund to such Governmental Authority. This Section shall
not be construed to require the Agent or any Lender to make available its tax
returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.

                  (g)      If the Borrower is required to pay any additional
amount to any Indemnified Party or any Governmental Authority for the account of
any Indemnified Party pursuant to this Section 2.09, then such Indemnified Party
shall use reasonable efforts to designate a different Lending Office for funding
or booking its Loans hereunder or to assign its rights and obligations hereunder
to another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to this Section 2.09 in the future and (ii) would not subject
such Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to

                                       27
<PAGE>

such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

                  (h)      Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower and each Indemnified Party contained in this Section 2.09 shall survive
the payment in full of all principal of and interest on the Loan and under the
Borrower Notes.

                  (i)      Any other provision of this Agreement to the contrary
notwithstanding, any amounts which are payable by the Borrower under this
Section 2.09 shall not be payable under Section 2.07.

                  SECTION 2.10 Evidence of Debt. (a) Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from the Loan, including
the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.

                  (b)      The Borrower agrees that, on or before the Closing
Date, it shall execute and deliver to each Initial Lender who shall so request a
Borrower Note, in substantially the form of Exhibit B hereto, payable to the
order of such Initial Lender (or its nominee) in a principal amount equal to
such Initial Lender's Commitment.

                  (c)      The Register maintained by the Agent pursuant to
Section 9.07(c) shall include a control account, in which shall be recorded (i)
the date and amount of each Advance made hereunder and the Lender to whom the
Advance is owing, (ii) the terms of each Assignment and Acceptance delivered to
and by it, (iii) the amount of any principal and interest due and payable or to
become due and payable from the Borrower to each Lender hereunder, and (iv) the
amount of any sum received by the Agent from the Borrower hereunder and
distributed to each Lender hereunder.

                  (d)      The entries made in the Register shall be, to the
extent permitted by applicable law, prima facie evidence of the existence and
amounts of the obligations of the Borrower therein recorded conclusive and
binding for all purposes, absent manifest error.

                  SECTION 2.11 Change of Lending Office. The Lender agrees that,
upon the occurrence of any event giving rise to the operation of Section 2.03(c)
or 2.07 with respect to such Lender, such Lender will use reasonable efforts
(consistent with the internal policies of and legal and statutory restrictions
applicable to such Lender) to select a jurisdiction for the Lending Office of
such Lender or change the jurisdiction of such Lending Office so as to avoid the
need for or reduce the amount of any amounts accruing under 2.03(c) or Section
2.07; provided that no such selection, change of the jurisdiction of such
Lending Office or assignment shall be made if, in the reasonable judgment of
such Lender, such selection, change or assignment would be disadvantageous to
such Lender.

                  SECTION 2.12 Sharing of Payments, Etc. If any Lender shall
obtain at any time any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise, other than as a result of an
assignment pursuant to Section 9.07) (a) on account of Obligations due and
payable to such Lender hereunder and under the Borrower Notes at such time in
excess of its ratable share (according to the proportion of (i) the amount of
such Obligations due and payable to such Lender at such time to (ii) the
aggregate amount of the Obligations due and payable to all Lenders hereunder and
under the Borrower Notes at such time) of payments on account of the Obligations
due and payable to all Lenders hereunder and under the Borrower Notes at such
time obtained by all the Lenders at such time or (b) on account of Obligations
owing (but not due and payable) to such Lender hereunder and under the

                                       28
<PAGE>

Borrower Notes at such time in excess of its ratable share (according to the
proportion of (i) the amount of such Obligations owing to such Lender at such
time to (ii) the aggregate amount of the Obligations owing (but not due and
payable) to all Lenders hereunder and under the Borrower Notes at such time) of
payments on account of the Obligations owing (but not due and payable) to all
Lenders hereunder and under the Borrower Notes at such time obtained by all of
the Lenders at such time, such Lender shall forthwith purchase from the other
Lenders such interests or participating interests in the Obligations due and
payable or owing to them, as the case may be, as shall be necessary to cause
such purchasing Lender to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each other
Lender shall be rescinded and such other Lender shall repay to the purchasing
Lender the purchase price to the extent of such Lender's ratable share
(according to the proportion of (i) the purchase price paid to such Lender to
(ii) the aggregate purchase price paid to all Lenders) of such recovery,
together with an amount equal to such Lender's ratable share (according to the
proportion of (i) the amount of such other Lender's required repayment to (ii)
the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. The Borrower agrees that any Lender so purchasing an
interest or participating interest from another Lender pursuant to this Section
2.12 may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off) with respect to such interest or
participating interest, as the case may be, as fully as if such Lender were the
direct creditor of the Borrower in the amount of such interest or participating
interest, as the case may be.

                  SECTION 2.13 Use of Proceeds. The Borrower shall use the
proceeds of the Loan only to make the Subsidiary Loans pursuant to the
Subsidiary Borrower Credit Agreement.

                                  ARTICLE III

                               CONDITIONS TO LOAN

                  SECTION 3.01 Conditions Precedent to Making the Loan. The
obligation of the Initial Lenders to make the Loan hereunder is subject to the
following conditions precedent being satisfied or waived on or prior to the
Closing Date:

                  (a)      The Agent and the Lead Arrangers shall be satisfied
         with the structure of the transactions contemplated hereby and by the
         Subsidiary Loans and all related tax (including tax-sharing
         arrangements involving Chain Subsidiaries and Subsidiary Loan Parties),
         legal and accounting matters, and that the transactions contemplated
         hereby and by the Subsidiary Loans will not violate or conflict with
         the terms of any material contractual provision, including, without
         limitation, the El Paso Existing 364-Day Facility, binding upon the
         Borrower or any of its Affiliates.

                  (b)      The Agent's and the Lead Arrangers' completion of,
         and satisfaction in all respects with, the results of their ongoing due
         diligence investigation of the business, assets, operations,
         properties, condition (financial or otherwise) (including, without
         limitation, the liquidity of the Borrower and its Subsidiaries),
         contingent liabilities, prospects and material agreements of the
         Borrower and its Subsidiaries, including, without limitation, the
         Subsidiary Borrowers and their respective Subsidiaries.

                  (c)      The Agent shall have received the following
         documents, each dated as of the Closing Date (other than the documents
         described in clauses (ii) and (iii)), and duly executed by the
         respective party or parties thereto, and otherwise in form and
         substance satisfactory to the Initial Lenders and the Agent (it being
         understood that all such documents shall have been

                                       29
<PAGE>

         delivered in the form agreed as of the Closing Date), and (except for
         the documents listed in clauses (ii) and (iii) below), in the number of
         copies necessary to provide the Initial Lenders and the Agent each with
         original counterparts of such documents plus three additional original
         counterparts:

                              (i)   this Agreement;

                             (ii)   the Borrower Notes made payable to the
                  Initial Lenders;

                            (iii)   the Subsidiary Borrower Notes payable to the
                  Borrower as lender thereunder;

                             (iv)   the Subsidiary Guaranty;

                              (v)   the Subsidiary Borrower Credit Agreement;

                             (vi)   the Subsidiary Borrower Security Agreement;

                            (vii)   the Subsidiary Borrower Pledge Agreement;

                           (viii)   the Mortgages;

                             (ix)   the Transfer Letters;

                              (x)   the Account Control Agreements;

                             (xi)   the Collateral Agency Agreement;

                            (xii)   the Subordination Agreement;

                           (xiii)   stock certificates and certificates of
                  membership interest required in connection with the Subsidiary
                  Borrower Pledge Agreement and stock powers (or assignments
                  separate from certificate, as applicable) executed in blank
                  for each such stock certificate or certificate of membership
                  interest;

                            (xiv)   evidence reasonably satisfactory to the
                  Agent that the Borrower has satisfied the insurance
                  requirements set forth in the Subsidiary Borrower Credit
                  Agreement;

                             (xv)   a solvency certificate of the Chief
                  Financial Officer of the Borrower, in substantially the form
                  of Exhibit G hereto;

                            (xvi)   documents, agreements and other evidence
                  satisfactory to the Collateral Agent in its sole discretion
                  that legal and beneficial title to all Collateral Oil and Gas
                  Properties (as defined in the Subsidiary Borrower Credit
                  Agreement) is held by each Subsidiary Borrower pledging such
                  assets, and such Collateral Oil and Gas Properties are free
                  and clear of all Liens other than Chain Subsidiary Permitted
                  Liens;

                           (xvii)   to the extent requested by the Collateral
                  Agent, true, correct and complete copies of the material
                  agreements described on Schedule 4.21 to the Subsidiary
                  Borrower Credit Agreement;

                                       30
<PAGE>

                           (xviii)  proper financing statements (Form UCC-1)
                  with the Borrower as debtor and the Collateral Agent as
                  secured party, covering the Collateral;

                           (xix)    proper financing statements (Form UCC-1)
                  with each Subsidiary Borrower as debtor and the Collateral
                  Agent as secured party, covering the Subsidiary Collateral;

                           (xx)     evidence that all other actions requested by
                  the Collateral Agent to be taken on or prior to the Closing
                  Date to perfect and protect the Liens created hereby and by
                  the other Operative Documents shall have been taken;

                           (xxi)    duly executed copies of UCC-3 termination
                  statements for each of Sabine VI, Sabine VII, Sabine VIII and
                  Sabine IX, each as debtor, and Wilmington Trust Company, as
                  collateral agent for Trinity, in each case evidencing the
                  release and termination by Wilmington Trust Company, as
                  collateral agent for Trinity, of its security interest in all
                  of the collateral pledged by each of Sabine VI, Sabine VII,
                  Sabine VIII and Sabine IX under the Sponsor Subsidiary
                  Security Agreement;

                           (xxii)   certificates of an authorized officer or the
                  secretary or an assistant secretary of the Borrower and each
                  Subsidiary Loan Party certifying the names and true signatures
                  of officers of the Borrower or such Subsidiary Loan Party
                  authorized to sign this Agreement and the other Operative
                  Documents to which the Borrower or such Subsidiary Loan Party
                  is a party;

                           (xxiii)  copies, certified as of the date of this
                  Agreement by an authorized officer or the secretary or an
                  assistant secretary of the Borrower and each Subsidiary Loan
                  Party, of (A) the resolutions of the board of directors or
                  other managing body of each of the Borrower or such Subsidiary
                  Loan Party approving the Operative Documents to which it or
                  any other Subsidiary Loan Party is a party, (B) the
                  Organizational Documents of the Borrower and such Subsidiary
                  Loan Party, and (C) all other documents, if any, evidencing
                  other necessary governing action and governmental approvals,
                  if any, with respect to the Operative Documents to which the
                  Borrower or such Subsidiary Loan Party is a party;

                           (xxiv)   favorable opinions (excluding
                  non-consolidation opinions (other than those with respect to
                  Noric Holdings I, L.L.C., Sabine VI and Sabine IX)) of Jones
                  Day, special counsel to the Borrower, in substantially the
                  form of Exhibit E hereto;

                           (xxv)    a favorable opinion of the general counsel
                  or an associate general counsel for the Borrower, in
                  substantially the form of Exhibit F hereto;

                           (xxvi)   a favorable opinion of Shearman & Sterling,
                  counsel for the Agent; (xxvii) original executed counterparts
                  of each other Operative Document;

                           (xxviii) an executed copy of the Payout Agreement
                  dated as of March 13, 2003, among Trinity, Red River, Sabine
                  River Investors, L.L.C., a Delaware limited liability company,
                  the Class A, Class B and Class C Members of Red River, CNAI,
                  CXC, LLC, a Delaware limited liability company, Wilmington
                  Trust Company, the Borrower and other parties party thereto,
                  evidencing, among other things, (x) the payment in full by the
                  Sponsor Subsidiaries of their obligations under the Sponsor
                  Subsidiary Credit Agreement

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<PAGE>

                  and (y) the release by Wilmington Trust Company as collateral
                  agent for Trinity of its security interest in all of the
                  collateral securing the Sponsor Subsidiary Obligations;

                           (xxix)   evidence satisfactory to the Collateral
                  Agent that, to the extent there is any amount outstanding
                  under the EPPC Notes after EPPC has repaid the principal and
                  any accrued interest thereunder with its portion of the
                  proceeds of the Subsidiary Loans, such amount shall have been,
                  or will be on the Closing Date, converted into additional
                  Equity Interests of Sabine IX in EPPC; and

                           (xxx)    the cancelled EPPC Notes.

                  (d)      The Agent and the Lead Arrangers shall be satisfied
         that all conditions precedent to the funding of the Subsidiary Loans
         set forth in Section 2.13 of the Subsidiary Borrower Credit Agreement,
         including preparation of the Mortgages and other security documents for
         filing with respect to substantially all of the collateral securing the
         Subsidiary Loans, shall have been met, and the Agent and the Lead
         Arrangers shall be satisfied as to the plan for timely filing such
         instruments within ten days of the Closing Date.

                  (e)      To the extent not filed with the SEC prior to the
         Closing Date, the Agent and the Lead Arrangers shall have received a
         draft of the Borrower's Form 10-K filing for the fiscal year of 2002,
         and the Agent and the Lead Arrangers shall be satisfied with the
         matters disclosed in such Form 10-K filing and the financial statements
         included therein.

                  (f)      The Agent and the Lead Arrangers shall have received
         (1) the fiscal year 2000 and 2001 audited consolidated financial
         statements and quarterly unaudited consolidated financial statements
         for the first three fiscal quarters of fiscal year 2002, of (A) the
         Borrower and its consolidated Subsidiaries on a consolidated basis, and
         (B) Sabine VI, Sabine VII, Sabine VIII and Sabine IX on a combined
         basis, and (2) other pro forma financial statements as reasonably
         required by the Co-Agents.

                  (g)      The Agent and the Lead Arrangers shall be satisfied,
         in their sole discretion, that the Borrower shall be able to comply
         with the requirements of Sections 5.01(i) and 5.01(j).

                  (h)      The Lead Arrangers, the Agent, the Co-Agents and the
         Initial Lenders shall be satisfied with the terms of the financing,
         Refinancing, amendment or waiver that, in each case, has become
         effective from January 1, 2003 to the Closing Date, of each material
         debt financing transaction of the Borrower (or that is primarily based
         on the credit of the Borrower) in an aggregate principal amount
         (individually or in a series of related transactions) of $100,000,000
         or more per transaction, and of the Electron Transaction (but excluding
         Project Financings).

                  (i)      The Lead Arrangers shall have received and be
         reasonably satisfied with a plan of development and an operating budget
         for the Subsidiary Borrowers.

                  (j)      The Agent, Co-Agents, Lead Arrangers and the Initial
         Lenders shall have received a certificate of the chief financial
         officer of the Borrower certifying that (i) no default has occurred and
         is continuing under each of the Borrower's existing revolving credit
         facilities listed on Schedule 3.01(j) and (ii) setting forth
         computations demonstrating that (x) the Borrower was in compliance with
         the financial covenants set forth in each of the Borrower's existing
         credit facilities listed on Schedule 3.01(j) as of December 31, 2002
         and (y) the Borrower will be in compliance with the financial covenants
         under each of its revolving credit facilities listed on Schedule
         3.01(j) after giving effect to (A) the transactions contemplated
         hereby, (B) the

                                       32
<PAGE>

         Refinancing transactions of debt and equity contemplated with respect
         to the Electron Transaction, and (C) the issuance of debt securities by
         ANR Pipeline and Southern Natural Gas, and based on the projections for
         such period previously delivered to the Lead Arrangers as of, and for
         the periods ended, March 31, 2003, June 30, 2003, September 30, 2003
         and December 31, 2003.

                  (k)      The Organizational Documents of each Subsidiary
         Borrower shall be amended in form and substance satisfactory to the
         Agent and the Lead Arrangers to provide for the requirement of the
         affirmative vote of an independent director for voluntary bankruptcy or
         merger.

                  (l)      There shall not have occurred (i) a Material Adverse
         Change, since December 31, 2001, except as disclosed in the Borrower's
         10-Q and 8-K filings, and materials relating to proxies, in each case
         filed with the SEC prior to March 10, 2003 (other than any material
         adverse development or material adverse change in any matter disclosed
         therein), or (ii) any circumstance, change or condition in the loan
         syndication, financial, banking or capital markets generally
         (including, without limitation, as the result of any declaration of war
         or commencement or escalation of military action occurring after March
         10, 2003 involving the United States of America) that, in the Agent's
         and the Lead Arrangers' commercially reasonable judgment could
         reasonably be expected to materially impair (x) the syndication of the
         Loan or (y) any public or private offering of debt securities or bank
         loan facilities by the Borrower or any of its Affiliates proposed to be
         issued, placed or sold in connection with a future Refinancing of the
         Loan.

                  (m)      All necessary material governmental and third-party
         approvals in connection with the transactions contemplated hereby and
         by the other Operative Documents and otherwise referred to herein shall
         have been received, except for such governmental and third party
         approvals that, pursuant to the provisions hereof or the other
         Operative Documents, are not required to be obtained on or prior to the
         Closing Date.

                  (n)      No litigation by any entity (private or governmental)
         shall be pending or, to the Borrower's knowledge, threatened with
         respect to this Agreement or any other Operative Document or any
         documentation executed in connection therewith that the Agent or the
         Initial Lenders shall determine could reasonably be expected to have a
         Material Adverse Effect on the Borrower and its Subsidiaries taken as a
         whole.

                  (o)      All fees and reasonable out-of-pocket costs and
         expenses, including, without limitation, reasonable legal fees and
         expenses (and other compensation expressly provided for hereby or by
         the Fee Letter) payable to the Initial Lenders, the Lead Arrangers, the
         Co-Agents, the Agent and the Collateral Agent required to be paid by
         the Borrower hereunder shall have been paid to the extent due.

                  (p)      The Agent shall have received such other approvals,
         opinions or documents as the Agent and the Initial Lenders may
         reasonably request.

                  (q)      On the Closing Date, the following statements shall
         be true (and the Borrower shall be deemed to represent and warrant on
         the Closing Date that such statements are true):

                           (i)      the representations and warranties of the
                  Borrower contained in each Loan Document to which it is a
                  party are correct in all material respects on and as of the
                  Closing Date, before and after giving effect to the Loan to be
                  made on the Closing Date and to the application of the
                  proceeds thereof, as though made on and as of such date

                                       33
<PAGE>

                  (except to the extent that such representations and warranties
                  relate solely to an earlier date (in which case such
                  representations and warranties shall have been true and
                  accurate on and as of such earlier date));

                           (ii)     the representations and warranties of each
                  Subsidiary of the Borrower contained in each Loan Document to
                  which it is a party are correct in all material respects on
                  and as of the Closing Date, before and after giving effect to
                  the transactions contemplated thereby, as though made on and
                  as of such date (except to the extent that such
                  representations and warranties relate solely to an earlier
                  date (in which case such representations and warranties shall
                  have been true and accurate on and as of such earlier date));
                  and

                           (iii)    the representations and warranties of each
                  Subsidiary Loan Party contained in each Subsidiary Loan
                  Document to which it is a party are correct in all material
                  respects on and as of the Closing Date, before and after
                  giving effect to the transactions contemplated thereby, as
                  though made on and as of such date (except to the extent that
                  such representations and warranties relate solely to an
                  earlier date (in which case such representations and
                  warranties shall have been true and accurate on and as of such
                  earlier date)); and

                           (iv)     no event has occurred and is continuing, or
                  would result from the making of the Loan to be made on the
                  Closing Date or from the application of the proceeds thereof,
                  that constitutes an Event of Default or an "Event of Default"
                  under the Subsidiary Borrower Credit Agreement.

                  (r)      On the Closing Date, the following events shall have
         or will contemporaneously have occurred (and the Borrower shall be
         deemed to represent and warrant on the Closing Date that on the Closing
         Date such events shall have or will simultaneously have occurred):

                           (i)      the Borrower shall have made or shall
                  simultaneously make the Subsidiary Loans from the proceeds of
                  the Loan, and

                           (ii)     the debt and equity financing under the Red
                  River Transaction shall have been repaid or retired in full
                  (subject to the survival of indemnities pursuant to the terms
                  thereof).

                  SECTION 3.02 Determinations Under Section 3.01. For the
purposes of determining compliance with the conditions specified in Section 3.01
each of the Initial Lenders shall be deemed to have consented to, approved or
accepted or to be satisfied with each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to
any such Initial Lender unless an officer of the Agent responsible for the
transactions contemplated by this Agreement shall have received notice from any
such Initial Lender on or prior to the Closing Date, specifying its objection
thereto.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  SECTION 4.01 Representations and Warranties of the Borrower.
The Borrower represents and warrants as follows as of the Closing Date:

                                       34
<PAGE>

                  (a)      Organization; Powers. The Borrower is a corporation
         duly incorporated, validly existing and in good standing under the laws
         of the State of Delaware. Each Subsidiary Loan Party is a Business
         Entity duly incorporated or formed, validly existing and, if
         applicable, in good standing in the jurisdiction of its incorporation
         or formation. Each of the Borrower and each Subsidiary Loan Party
         possesses all corporate, limited liability company or other applicable
         Business Entity powers and other authorizations and licenses necessary
         to engage in its business and operations as now conducted, the failure
         to obtain or maintain which would have a Material Adverse Effect.

                  (b)      Authorization of Operative Documents. The execution,
         delivery and performance by the Borrower and each Subsidiary Loan Party
         of each Operative Document to which it is a party are within its
         applicable Business Entity powers, have been duly authorized by all
         necessary applicable Business Entity action, and do not contravene (i)
         such Person's organizational documents or (ii) any material contractual
         restriction binding on or affecting the Borrower or any Subsidiary Loan
         Party.

                  (c)      Governmental Approvals. No authorization or approval
         or other action by, and no notice to or filing with, any Governmental
         Authority or regulatory body is required for the due execution,
         delivery and performance by the Borrower or any Subsidiary Loan Party
         of any Operative Document to which it is a party, except those
         necessary to comply with laws, rules, regulations and orders required
         in the ordinary course to comply with the ongoing obligations of such
         Person under Sections 5.01(a) and 5.01(b), as applicable.

                  (d)      Binding Obligations; Enforceability. This Agreement
         constitutes, and the other Operative Documents when delivered pursuant
         to this Agreement or the Subsidiary Borrower Credit Agreement shall
         constitute, the legal, valid and binding obligations of the Borrower
         and each Subsidiary Loan Party that is a party thereto, as applicable,
         enforceable against such Person in accordance with their respective
         terms, except as may be limited by any applicable bankruptcy,
         insolvency, reorganization, moratorium or similar laws affecting
         creditors' rights generally or by general principles of equity.

                  (e)      Financial Condition. (i) The consolidated balance
         sheet of the Borrower and its consolidated Subsidiaries as at December
         31, 2001 and the related consolidated statements of income and cash
         flows of the Borrower and its consolidated Subsidiaries for the fiscal
         year then ended, reported on by PricewaterhouseCoopers LLP, independent
         public accountants, copies of which have been furnished or otherwise
         made available to the Agent and the Initial Lenders prior to the date
         hereof, fairly present the consolidated financial condition of the
         Borrower and its consolidated Subsidiaries as at such date and the
         consolidated results of the operations of the Borrower and its
         consolidated Subsidiaries for the period ended on such date, all in
         accordance with GAAP consistently applied, and from December 31, 2001
         through the Closing Date there has been no Material Adverse Change in
         such condition or operations, except as disclosed in the Borrower's
         10-Q and 8-K filings, and materials relating to proxies, in each case
         filed with the SEC prior to March 10, 2003 (other than any material
         adverse development or material adverse change in any matter disclosed
         therein).

                  (ii)     The unaudited consolidated balance sheet of the
         Borrower and its consolidated Subsidiaries as of September 30, 2002,
         and the related consolidated statements of income and cash flows of the
         Borrower and its consolidated Subsidiaries for the three months then
         ended, certified by the chief financial officer of the Borrower, copies
         of which have been furnished or otherwise made available to the Agent
         and the Initial Lenders prior to the date hereof, fairly present the
         consolidated results of operations of the Borrower and its consolidated
         Subsidiaries

                                       35
<PAGE>

         for the three months then ended, all in accordance with GAAP
         consistently applied (except as approved by the chief financial officer
         of the Borrower and as disclosed therein) and subject to normal year
         end audit adjustments.

                  (f)      Compliance with Laws, Etc. The Borrower and each of
         its Subsidiaries is in compliance with all laws, rules, regulations and
         orders of any governmental authority applicable to it or its property
         except where the failure to comply, individually or in the aggregate,
         would not in the reasonable judgment of the Borrower be expected to
         result in a Material Adverse Effect, provided that any alleged failure
         to comply with such laws, rules, regulations and orders that are
         disclosed in the Borrower's 8-Ks, 10-Qs or 10-Ks, or materials relating
         to proxies, in each case filed with the SEC prior to the Closing Date
         shall not be deemed at any time to be expected to have a Material
         Adverse Effect.

                  (g)      Litigation. There is no action, suit or proceeding
         pending, or to the knowledge of the Borrower threatened, against or
         involving the Borrower or any Subsidiary Loan Party in any court, or
         before any arbitrator of any kind, or before or by any Governmental
         Authority, existing as of the Closing Date which, in the reasonable
         judgment of the Borrower (taking into account the exhaustion of all
         appeals), would have a Material Adverse Effect, provided that any such
         action, suit or proceeding that has been disclosed in the Company's
         8-Ks, 10-Qs or 10-Ks, or materials relating to proxies, in each case
         filed with the SEC prior to the Closing Date shall not be deemed at any
         time to be expected to have a Material Adverse Effect or which purports
         to affect the legality, validity or enforceability of any Operative
         Document.

                  (h)      Taxes. Each of Borrower and each Subsidiary Loan
         Party has duly filed all tax returns required to be filed by it, and
         has duly paid and discharged all taxes, assessments and governmental
         charges upon it or against its properties now due and payable, the
         failure to file or pay which, as applicable, would have a Material
         Adverse Effect, unless and to the extent only that the same are being
         contested in good faith and by appropriate proceedings by the Borrower
         or such Subsidiary Loan Party, as applicable.

                  (i)      Title to Property. Each of the Borrower and each
         Subsidiary Loan Party has good title to its respective properties and
         assets, free and clear of all mortgages, liens and encumbrances, except
         for mortgages, liens and encumbrances (including covenants,
         restrictions, rights, easements and minor irregularities in title)
         which do not materially interfere with the business or operations of
         such Person as presently conducted or which are permitted by Section
         5.02(a) and except that no representation or warranty is being made
         with respect to Margin Stock.

                  (j)      ERISA. (i) No Termination Event has occurred or is
         reasonably expected to occur with respect to any Plan which, with the
         giving of notice or lapse of time, or both, would constitute an Event
         of Default under Section 6.01(h).

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

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

                                       36
<PAGE>

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

                           (v)      Neither the Borrower nor any ERISA Affiliate
                  has received any notification that any Multiemployer Plan is
                  in reorganization, insolvent or has been terminated, within
                  the meaning of Title IV of ERISA, and no Multiemployer Plan is
                  reasonably expected to be in reorganization, to become
                  insolvent or to be terminated within the meaning of Title IV
                  or ERISA, the effect of which reorganization, insolvency or
                  termination would be the occurrence of an Event of Default
                  under Section 6.01(j).

                  (k)      Investment Company; Holding Company. (i) Neither the
         Borrower, nor any Subsidiary Loan Party is an "investment company" or a
         "company" controlled by an "investment company" within the meaning of
         the Investment Company Act of 1940, as amended.

                           (ii)     Neither the Borrower, nor any Subsidiary
                  Loan Party, is a "holding company" or a "subsidiary company"
                  of a "holding company" within the meaning of the Public
                  Utility Holding Company Act of 1935, as amended.

                  (l)      Status. No Subsidiary Loan Party or Chain Subsidiary
         is a Credit Related Party (excluding EPPC), Material Subsidiary or
         "Restricted Subsidiary" (as defined in the Sonat Indenture) (excluding
         EPPC under the Sonat Indenture), or is owned directly by the Borrower
         (except EPPH).

                  (m)      Compliance with Covenant. The Borrower has the
         ability to fully comply with the requirements of Section 5.01(i) and
         5.01(j).

                  (n)      Chain Subsidiary Assets. No Chain Subsidiary owns any
         material assets other than Equity Interests in, or Indebtedness of,
         another Chain Subsidiary and/or a Subsidiary Loan Party.

                  (o)      Ownership. The Borrower owns, directly or indirectly,
         100% of the Equity Interests in, and all Indebtedness of, each
         Subsidiary Loan Party (other than trade payables in the ordinary course
         of business).

                  (p)      Solvency. The Borrower is, individually and together
         with all of its consolidated Subsidiaries, Solvent.

                  (q)      Security Interest, Perfection, Etc. All filings and
         other actions necessary or desirable to perfect and protect the
         security interest in the Collateral created hereunder have been duly
         made or taken and are in full force and effect, and this Agreement
         creates in favor of the Collateral Agent for the benefit of the Lenders
         a valid and, together with such filings and other actions, perfected
         first priority (subject to Permitted Liens) security interest in the
         Collateral, securing the payment of the EPC Secured Obligations, and
         all filings and other actions necessary or desirable to perfect and
         protect such security interest have been duly taken. The Borrower is
         the legal and beneficial owner of the Collateral free and clear of any
         Lien, except for the liens and security interests created or permitted
         under the Loan Documents.

                                       37
<PAGE>

                  (r)      Assigned Agreements. Except as effected or
         contemplated by the Operative Documents, none of the Assigned
         Agreements to which the Borrower is a party has been amended or
         otherwise modified, and each such Assigned Agreement, to the Borrower's
         knowledge, is in full force and effect. The Borrower is not, and to the
         best of its knowledge, no other party to any Assigned Agreement is, in
         default in any material respect of its obligations under any Assigned
         Agreement.

                  (s)      Chief Place of Business, Etc. The chief place of
         business and chief executive office of the Borrower are located at the
         address specified for the Borrower in Section 9.02. The exact legal
         name of the Borrower is "El Paso Corporation". For purposes of Section
         9-307 of the UCC, the Borrower is a registered organization located in
         Delaware, its jurisdiction of organization.

                  (t)      Margin Stock. The borrowings by the Borrower under
         this Agreement and the application of the proceeds thereof as provided
         herein will not violate Regulation T, U or X of the Board of Governors
         of the Federal Reserve System.

                  (u)      Collateral. This Agreement is effective to create in
         favor of the Collateral Agent, for the benefit of the Secured Parties a
         fully perfected Lien on, and security interest in, all right, title and
         interest of the Borrower in the Collateral prior and superior in right
         to any other Person, other than any Liens in favor of any depositary
         bank or securities intermediary holding the Collateral Account created
         pursuant to customary account documentation or arising by operation of
         law. To the extent delivery of the Collateral to the Collateral Agent
         is required for perfection of such security interest or control of such
         Collateral, such delivery has occurred.

                  All representations and warranties made by the Borrower
herein, and in any other Loan Document delivered pursuant hereto, shall survive
the making of the Loan and the execution and delivery to the Lenders of the Loan
Documents.

                                   ARTICLE V

                            COVENANTS OF THE BORROWER

                  SECTION 5.01 Affirmative Covenants. Until the Collection Date,
the Borrower will, unless otherwise consented to in writing by the Agent and the
Required Lenders:

                  (a)      Preservation of Existence. Preserve and maintain, and
         cause each other Credit Related Party and each Subsidiary Loan Party to
         preserve and maintain, its (i) existence, (ii) rights (organizational
         and statutory), and (iii) material franchises, except in the case of
         each such Person as otherwise permitted by Section 5.02(d) or 5.02(e)
         and except that nothing herein shall prevent any change in Business
         Entity form of the Borrower, any other Credit Related Party or any
         Subsidiary Loan Party.

                  (b)      Compliance with Laws. Comply, and cause each other
         Credit Related Party and each Subsidiary Loan Party to comply, in all
         material respects with all applicable laws, rules, regulations and
         orders (including all Environmental Laws and laws requiring payment of
         all taxes, assessments and governmental charges imposed upon it or upon
         its property except to the extent contested in good faith by
         appropriate proceedings) the failure to comply with which would have a
         Material Adverse Effect.

                                       38
<PAGE>

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

                  (d)      Books and Records. Keep, and cause each of its
         Subsidiaries to keep, proper books of record and account, in which full
         and correct entries shall be made of all its respective financial
         transactions and the assets and business of the Borrower and each of
         its Subsidiaries, as applicable, in accordance with GAAP either (i)
         consistently applied or (ii) applied in a changed manner provided such
         change shall have been disclosed to the Agent and shall have been
         consented to by the accountants which (as required by Section 5.03)
         report on the financial statements of the Borrower and its consolidated
         Subsidiaries for the fiscal year in which such change shall have
         occurred.

                  (e)      Maintenance of Properties. Maintain and preserve, and
         cause each other Credit Related Party and each Subsidiary Loan Party to
         maintain and preserve, all of its properties that are used in the
         conduct of its business in good working order and condition, ordinary
         wear and tear excepted, to the extent that any failure to do so would
         have a Material Adverse Effect.

                  (f)      Maintenance of Insurance. Maintain, and cause each
         other Credit Related Party and each Subsidiary Loan Party to maintain,
         insurance with responsible and reputable insurance companies or
         associations in such amounts and covering such risks as is usually
         carried by companies engaged in similar businesses and owning similar
         properties in the same general areas in which the Borrower, such other
         Credit Related Party or such Subsidiary Loan Party (as applicable)
         operates.

                  (g)      Amendment of Senior Bank Facility. Exercise its best
         commercially reasonable efforts to amend the Senior Bank Facility and
         those other facilities having covenant and/or default provisions
         substantially similar to those in the Senior Bank Facility to permit
         the incurrence and existence of Indebtedness owing to third parties by
         the Subsidiary Loan Parties and the grant of Liens and Guaranties in
         connection therewith.

                  (h)      New Issuances of Debt Securities and Syndicated
         Loans. Exercise its best commercially reasonable efforts to effect as
         promptly as practicable one or more debt capital markets or syndicated
         loan issuances in an aggregate amount sufficient to refinance the
         aggregate principal amount outstanding under the Loan.

                  (i)      Delivery of Financial Statements under Regulation
         S-X. Deliver, as soon as available, but no later than April 30, 2003,
         to the Lead Arrangers and the Lenders (A) the fiscal year 2002 annual
         audited financial statements with respect to (i) the Borrower and its
         consolidated Subsidiaries and (ii) EPPH and its consolidated
         Subsidiaries, and (B) condensed and consolidating financial statements
         for fiscal years 2000, 2001 and 2002 of EPPH, EPPC, Vermejo, Raton and
         EPGOM, in each case prepared in accordance with Regulation S-X (if
         required thereby) and (C) any other financial statements required by
         Regulation S-X; provided that, for purposes of clause (A)(ii)
         consolidated Subsidiaries to be included in the financial statements
         are EPPC and its consolidated Subsidiaries and EPGOM and its
         consolidated Subsidiaries and, to the extent required by Regulation
         S-X, other Subsidiaries of the Borrower.

                                       39
<PAGE>

                  (j)      Delivery of Financial Statements, Etc. for Take-Out
         Securities. Deliver, as soon as available, but no later than May 15,
         2003, to the Lead Arrangers and the Lenders all financial statements
         and other data to be included in a prospectus or offering memorandum
         for the Take-Out Securities (including, with respect to the Borrower
         and its consolidated Subsidiaries and EPPH and its consolidated
         Subsidiaries (and to the extent required by Regulation S-X, EPPC, EPGOM
         and other Subsidiaries of the Borrower), all audited financial
         statements, all unaudited financial statements (which shall have been
         reviewed by the independent accountants as provided in Statement on
         Auditing Standards No. 71) and all appropriate pro forma financial
         statements prepared in accordance with, or reconciled to, GAAP and
         prepared in accordance with Regulation S-X, and all other data
         (including selected financial data) that the SEC would require in a
         registered public offering of the Take-Out Securities, and arrange for
         the delivery of a customary comfort letter in connection therewith
         reasonably satisfactory to the Take-Out Bankers (as defined in the
         Commitment Letter).

                  (k)      Separateness of Sabines and Noric Holdings I, L.L.C.
         Perform the covenants set forth on Schedule 5.01(k) hereto with respect
         to the separateness each of Sabine VI and Sabine IX, and cause Noric
         Holdings I, L.L.C. to perform its separateness covenants required to be
         performed by it pursuant to the Mustang Transaction, and not permit
         Sabine VI or Sabine IX to dispose of its respective interest in any of
         the Subsidiary Borrowers to any other Affiliate of the Borrower or any
         third party.

                  (l)      Ownership. Cause each Subsidiary Loan Party and, so
         long as Noric Holdings I, L.L.C. is owned in whole or in part by any
         Subsidiary Loan Party, cause Noric Holdings I, L.L.C., to be a direct
         (in the case of EPPH only) or indirect wholly-owned Subsidiary of the
         Borrower.

                  (m)      Certain Payments. Cause each Subsidiary Loan Party to
         make all payments due to the Borrower by such Subsidiary Loan Party
         under the Operative Documents to the Collateral Account.

                  (n)      Income Tax Liabilities. Pay, or cause to be paid by
         any Subsidiary Loan Party, all Taxes based on the net income of such
         Subsidiary Loan Party to the extent that such Subsidiary Loan Party is
         included in a consolidated, combined, unitary or any similar Tax return
         with the Borrower or with any other Subsidiary Loan Party, as the case
         may be (the "CONSOLIDATED TAXES"); provided, however, that neither the
         Borrower nor any of its Subsidiary Loan Parties shall be required to
         pay or discharge any such Tax, assessment, charge or claim that is
         being contested in good faith and by proper proceedings and as to which
         appropriate reserves are being maintained, unless and until any Lien
         resulting therefrom attaches to its property and becomes enforceable
         against its other creditors.

                  (o)      Independent Directors. Cause BSCS or any other
         designee specified in writing by the Collateral Agent and reasonably
         acceptable to the Borrower to be elected as the independent director of
         each Subsidiary Loan Party.

                  (p)      Further Assurances. (i) Promptly upon request by the
         Agent, or any Lender through the Agent, correct, and cause each of its
         Subsidiaries promptly to correct, any material defect or error that may
         be discovered in any Loan Document or in the execution, acknowledgment,
         filing or recordation thereof, and

                           (ii)     promptly upon request by the Agent, or any
                  Lender through the Agent, do, execute, acknowledge, deliver,
                  record, re-record, file, re-file, register and re-register

                                       40
<PAGE>

                  any and all such further acts, deeds, conveyances, pledge
                  agreements, mortgages, deeds of trust, trust deeds,
                  assignments, financing statements and continuations thereof,
                  termination statements, notices of assignment, transfers,
                  certificates, assurances and other instruments as the Agent,
                  or any Lender through the Agent, may reasonably require from
                  time to time in order to (A) carry out more effectively the
                  purposes of the Loan Documents, (B) to the fullest extent
                  permitted by applicable law, subject any Subsidiary Loan
                  Party's or any of its Subsidiaries' properties, assets, rights
                  or interests to the Liens now or hereafter intended to be
                  covered by any of the Collateral Documents, (C) perfect and
                  maintain the validity, effectiveness, perfection and priority
                  of any of the Liens intended to be created hereunder and (D)
                  assure, convey, grant, assign, transfer, preserve, protect and
                  confirm more effectively unto the Lenders the rights granted
                  or now or hereafter intended to be granted to the Lenders
                  under any Loan Document or under any other instrument executed
                  in connection with any Loan Document to which the Borrower or
                  any of its Subsidiaries is or is to be a party, and cause each
                  of its Subsidiaries to do so.

                  (q)      MFN Amendment. Within 30 days of any request to
         amend, restate, supplement or otherwise modify the Operative Documents
         as a result of the exercise of the Co-Agents' rights, on behalf of the
         Lenders, under Section 9.13 hereof, amend, restate, supplement or
         otherwise modify the Operative Documents, and cause its applicable
         Subsidiaries to do so, in form and substance reasonably satisfactory to
         the Co-Agents on behalf of the Lenders; provided, that the Co-Agents,
         on behalf of the Lenders, may extend the time for performance of this
         covenant in their sole discretion.

                  (r)      Security Interests in Senior Bank Facility
         Collateral. Execute and deliver, and cause each Senior Bank Facility
         Subsidiary Guarantor to execute and deliver, to the Senior Bank
         Facility Collateral Agent (i) such guaranties or supplements,
         amendments and joinders to the Credit Party Guarantee (as defined in
         the Senior Bank Facility) and such supplements, amendments and joinders
         to the Senior Bank Facility Security Documents, in each case in form
         and substance reasonably satisfactory to the Senior Bank Facility
         Collateral Agent and as the Senior Bank Facility Collateral Agent deems
         necessary or advisable in order to ensure that the applicable Senior
         Bank Facility Guarantor guarantees, as primary obligor and not as
         surety, the full and punctual payment when due of the Senior Bank
         Facility Secured Obligations and that the Company Secured Obligations
         (as defined in the Senior Bank Facility) together with each such
         Guaranty of the Senior Bank Facility Subsidiary Guarantors are secured
         by a valid, perfected and enforceable first-priority security interest
         (subject only to Senior Bank Facility Collateral Permitted Liens)
         granted to the Senior Bank Facility Collateral Agent for the benefit of
         the Senior Bank Facility Secured Parties over all of the Senior Bank
         Facility Collateral owned by the Borrower or such Senior Bank Facility
         Subsidiary Guarantor as security for the Senior Bank Facility Secured
         Obligations, and (ii) deliver, or cause to be delivered, to the Senior
         Bank Facility Collateral Agent such opinions of counsel and other
         related documents as may be reasonably requested by the Senior Bank
         Facility Collateral Agent with respect to the requirements of Section
         5.07 of the Senior Bank Facility.

                  SECTION 5.02 Negative Covenants. Until the Collection Date,
unless the Required Lenders shall otherwise consent in writing:

                  (a)      Liens, Etc.

                           (i)      Liens on Collateral. The Borrower shall not,
                  and shall not permit any Subsidiary to, create, assume, incur
                  or suffer to exist, any Liens upon or with respect to any of
                  the Collateral or any of the Equity Interests of the Borrower
                  in EPPH, except any

                                       41
<PAGE>

                  Liens securing the EPC Secured Obligations or any other
                  Obligations of the Borrower or its Subsidiaries under the
                  Operative Documents, other than any Liens in favor of any
                  depositary bank or securities intermediary holding the
                  Collateral Account created pursuant to customary account
                  documentation or arising by operation of law or any ERISA, tax
                  and other inchoate Liens arising by operation of law.

                           (ii)     Ratable Liens on Specified Indenture Debt.
                  The Borrower shall not, and shall not permit any Subsidiary of
                  the Borrower (other than Southern Natural Gas and its
                  Subsidiaries that are not Restricted Subsidiaries) to, create,
                  assume, incur, or suffer to exist, any Lien securing Debt that
                  would require the Borrower or any of its Subsidiaries to
                  equally and ratably secure such Debt with any Specified
                  Indenture Debt of the Borrower or any consolidated Subsidiary
                  of the Borrower, without in any such case, making effective
                  provision whereby the Senior Bank Facility Covered Obligations
                  shall be secured equally and ratably with, or prior to, such
                  Specified Indenture Debt so long as such Specified Indenture
                  Debt shall be so secured.

                           (iii)    Borrower Liens and Restricted Subsidiary
                  Liens. The Borrower shall not permit any Restricted Subsidiary
                  to create, assume, incur or suffer to exist any Lien on any
                  property or asset of such Restricted Subsidiary except for:

                                    A.       Liens on the Equity Interests in,
                           or Indebtedness or other obligations of, or assets
                           of, any Project Financing Subsidiary (or any Equity
                           Interests in, or Indebtedness or other obligations
                           of, any Business Entity that is directly or
                           indirectly owned by any Project Financing Subsidiary)
                           securing the payment of a Project Financing and
                           related obligations;

                                    B.       Permitted Liens;

                                    C.       Liens created by any Alternate
                           Program or any document executed by any Senior Bank
                           Facility Borrower or any Subsidiary of a Senior Bank
                           Facility Borrower in connection therewith;

                                    D.       Liens (other than Liens with
                           respect to the Collateral) securing Debt or
                           liabilities under Guaranties permitted pursuant to
                           Section 5.02(v);

                                    E.       Liens granted by any Pipeline
                           Company Borrower in existence on the Senior Bank
                           Facility Effective Date, plus any successive renewals
                           or extension of such Liens, and any grant of a Lien,
                           in connection with any successive refinancing,
                           extension or renewal of the Debt or any liability
                           under any Guaranty secured by such Liens, provided
                           that the aggregate principal amount of the Debt or
                           any liability under any Guaranty (and any successive
                           refinancing, extension or renewal thereof) secured by
                           such Liens does not increase from that amount
                           outstanding at the time of such renewal, extension or
                           grant of the Lien or such refinancing and any such
                           successive renewal, extension or grant of the Lien
                           does not encumber any additional property or assets
                           of such Pipeline Company Borrower (except as
                           contemplated by clause (H) below;

                                    F.       Liens permitted by Section 2.18 of
                           the Senior Bank Facility with respect to the Mustang
                           Production Interests (as defined in the Senior Bank
                           Facility);

                                       42
<PAGE>

                                    G.       Liens created under or permitted by
                           the Senior Bank Facility Security Documents; and

                                    H.       Liens on products and proceeds
                           (including dividends, distributions, interest and
                           like payments on or with respect to, and insurance
                           and condemnation proceeds and rental, lease,
                           licensing and similar proceeds) of, and property
                           evidencing or embodying, or constituting rights or
                           other general intangibles directly relating to or
                           arising out of, and accessions and improvements to,
                           property or assets subject to Liens permitted by this
                           Section 5.02(a).

                  (b)      Indebtedness. Notwithstanding Section 5.02(c) to the
         contrary (but subject to Sections 5.02(f) and (l)), the Borrower shall
         not incur after the Closing Date, or permit any Subsidiary Loan Party
         or any Credit Related Party to incur after the Closing Date, any
         Indebtedness, or Guaranties of any Indebtedness or reimbursement
         obligations in respect of letters of credit (other than those issued in
         the ordinary course of business) except for:

                           (i)      any Refinancing of the Electron Transaction,
                  the Mustang Transaction and/or the Mesquite Transaction and,
                  in each case, Guaranties in respect thereof,

                           (ii)     Indebtedness under the Senior Bank Facility
                  and the El Paso Existing 3-Year Facility in an aggregate
                  principal amount of not more than $4,000,000,000 at any time
                  outstanding and Guaranties of such Indebtedness,

                           (iii)    Convertible Securities,

                           (iv)     the Take-Out Securities,

                           (v)      Refinancings of existing Indebtedness and of
                  other Indebtedness described in clauses (i) through (xi)
                  hereof that do not shorten the maturity thereof, and
                  Guaranties of such Indebtedness, provided that, in each case,
                  the principal amount of such Indebtedness shall not be
                  increased in excess of related transaction costs,

                           (vi)     Project Financings,

                           (vii)    reimbursement obligations in respect of
                  letters of credit required to be posted in the ordinary course
                  of business of the Borrower and its Subsidiaries or any
                  Guaranty in respect thereof,

                           (viii)   non-financial Guarantees and indemnities,

                           (ix)     Indebtedness with respect to any Alternate
                  Program, in an aggregate principal amount not to exceed
                  $400,000,000 at any time outstanding, and Guaranties of such
                  Indebtedness;

                           (x)      Indebtedness with respect to inventory
                  monetization and product forward sale transactions with
                  respect to the Aruba Refinery in an aggregate principal amount
                  not to exceed $275,000,000 at any time outstanding and
                  Guaranties of such Indebtedness; and

                                       43
<PAGE>

                           (xi)     incurrences of Indebtedness or reimbursement
                  obligations in respect of letters of credit (and Guaranties of
                  such Indebtedness and such reimbursement obligations) not
                  otherwise permitted under this Section 5.02(b) aggregating an
                  amount incurred pursuant to this clause not to exceed
                  $300,000,000 in an aggregate principal amount outstanding at
                  any time (after giving effect to any such incurrence and to
                  the payment of any such Indebtedness on or prior to the date
                  of such incurrence).

                  (c)      Consolidated Debt to Capitalization. Subject to
         Section 5.02(b), the Borrower shall not permit the ratio of (i) the sum
         of (x) the aggregate amount of consolidated Debt of the Borrower and
         its consolidated Subsidiaries (without duplication of amounts under
         this clause (i) and determined as to all of the foregoing entities on a
         consolidated basis), plus (y) the aggregate amount of consolidated
         Guaranties of the Borrower and its consolidated Subsidiaries (without
         duplication of amounts under this clause (i) and determined as to all
         of the foregoing entities on a consolidated basis), to (ii)
         Capitalization of the Borrower and its consolidated Subsidiaries
         (without duplication and determined as to all of the foregoing entities
         on a consolidated basis) to exceed 0.75 to 1.0.

                  (d)      Disposition of Property or Assets.

                           (i)      The Borrower shall not, and shall not permit
                  any Subsidiary of the Borrower to, Dispose of any interest in
                  any asset or property constituting Senior Bank Facility
                  Collateral or Restricted Equity Interests, except for (A)
                  Dispositions by the applicable Credit Party, at any time and
                  from time to time, of Senior Bank Facility Collateral
                  constituting all or any part of the EPN Units for fair market
                  value on an arms-length basis in a cash transaction so long as
                  an amount equal to 100% of the Net Cash Proceeds of such sale
                  shall be deposited into the Senior Bank Facility Collateral
                  Account pursuant to the terms and provisions of the
                  Intercreditor Agreement, (B) any Disposition that is the
                  result of any casualty or condemnation of Senior Bank Facility
                  Collateral or Restricted Equity Interests or any order
                  (whether or not having the force of law) of the FERC or any
                  other Governmental Authority with respect to such Senior Bank
                  Facility Collateral or Restricted Equity Interests, so long as
                  an amount equal to 100% of the Net Cash Proceeds of such
                  Disposition shall be deposited in the Senior Bank Facility
                  Collateral Account pursuant to the terms and provisions of the
                  Intercreditor Agreement, (C) a Disposition of the Equity
                  Interests in WIC, in accordance with the terms and provisions
                  of Section 2.18 of the Senior Bank Facility, (D) a Disposition
                  of the Equity Interests in CIG in connection with any
                  foreclosure sale or other liquidation proceeding or action
                  instituted pursuant to the terms and provisions of the Mustang
                  Transaction and (E) Dispositions of Senior Bank Facility
                  Collateral or Restricted Equity Interests permitted by Section
                  5.02(e).

                           (ii)     The Borrower shall not, and shall not permit
                  any other Credit Related Party to, Dispose of any property or
                  asset, provided that this Section 5.02(d)(ii) shall not apply
                  to:

                                    A.       Dispositions of property or assets
                           (other than Dispositions of Senior Bank Facility
                           Collateral or Restricted Equity Interests or
                           Dispositions that result from any casualty or
                           condemnation of any property or assets of any
                           Restricted Subsidiary or any order (whether or not
                           having the force of law) of the FERC or any other
                           Governmental Authority) by Restricted Subsidiaries
                           not otherwise permitted pursuant to any other
                           provision of this Section 5.02(d), provided that (x)
                           any such Disposition is conducted on an arms-length
                           basis and

                                       44
<PAGE>

                           the consideration therefor shall not include any
                           Equity Interests or any Indebtedness, and (y) if the
                           Net Cash Proceeds of such Disposition exceed
                           $5,000,000 on an individual basis or $10,000,000 in
                           the aggregate during any fiscal year of the Borrower,
                           an amount equal to such Net Cash Proceeds shall be
                           applied to the Senior Bank Facility Covered
                           Obligations pursuant to the terms and provisions of
                           the Intercreditor Agreement;

                                    B.       Dispositions not otherwise
                           permitted pursuant to any other provision of this
                           Section 5.02 (other than clause (A) above) and that
                           result from any casualty or condemnation of any
                           property or assets of any Restricted Subsidiary or
                           any order (whether or not having the force of law) of
                           the FERC or any other Governmental Authority,
                           provided that if the Net Cash Proceeds of insurance,
                           or Net Cash Proceeds from such condemnation or any
                           such Disposition pursuant to any such order or
                           received in connection with such Disposition exceed
                           $5,000,000 on an individual basis or $10,000,000 in
                           the aggregate during any fiscal year of the Borrower,
                           an amount equal to such Net Cash Proceeds shall be
                           applied to the Senior Bank Facility Covered
                           Obligations pursuant to the terms and provisions of
                           the Intercreditor Agreement;

                                    C.       Dispositions of obsolete or worn
                           out property or assets (or property or assets no
                           longer useful in the business of the relevant Credit
                           Related Party) in the ordinary course of business and
                           leases or subleases of unused office or other space
                           entered into by any Credit Related Party on an
                           arms-length basis and in the ordinary course of
                           business;

                                    D.       Dispositions of any receivables and
                           related rights pursuant to any Alternate Program;

                                    E.       Dispositions of any Project
                           Financing Subsidiary and/or all or any part of any
                           such Project Financing Subsidiary's assets or
                           property;

                                    F.       Dispositions of any assets or
                           property for fair market value to any Credit Related
                           Party provided that no Guaranty Reduction Event
                           occurs as a result thereof;

                                    G.       Dispositions permitted by, and
                           subject to the terms of, Section 5.02(d)(i),
                           Dispositions permitted by Section 2.18 of the Senior
                           Bank Facility and Dispositions permitted by Section
                           5.02(e);

                                    H.       the Disposition of EPEC Realty,
                           Inc.;

                                    I.       Dispositions of inventory in the
                           ordinary course of business;

                                    J.       Dispositions constituting licenses
                           of intellectual property in the ordinary course of
                           business;

                                    K.       Dispositions of cash or Cash
                           Equivalents (other than cash or Cash Equivalents
                           constituting Senior Bank Facility Collateral under
                           the Intercreditor Agreement or an amount equal to the
                           proceeds of any Disposition permitted pursuant to
                           clauses (A) and (B) above in excess of the applicable

                                       45
<PAGE>

                           threshold amounts specified therein, which cash or
                           Cash Equivalents shall be Disposed of pursuant to the
                           terms and provisions of the Intercreditor Agreement);

                                    L.       Dispositions of Indebtedness or
                           instruments or other obligations that are received as
                           consideration for any Disposition of property or
                           assets (other than Dispositions permitted pursuant to
                           clauses (A) and (B) above, the consideration for
                           which is not permitted to include any Equity
                           Interests or Indebtedness);

                                    M.       Dispositions of investments
                           (including Equity Interests and Indebtedness or
                           instruments or other obligations) that are received
                           in connection with the bankruptcy or reorganization
                           of suppliers, customers or other Persons, or in
                           settlement of, or pursuant to any judgment or other
                           order in respect of, delinquent obligations of, or
                           litigation proceedings or other disputes with, or
                           from exercises of rights or remedies against, any
                           such Persons; or

                                    N.       Dispositions by the Borrower or any
                           Senior Bank Facility Exempted Guarantor of any
                           property or assets that do not constitute Senior Bank
                           Facility Collateral or Restricted Equity Interests.

                           (iii)    The Borrower shall not, and shall not permit
         any Subsidiary of the Borrower to, Dispose of the Equity Interests in
         any of its Subsidiaries if such Disposition will result in the Borrower
         owning, directly or indirectly, less than 100% of the Equity Interests
         in the Senior Bank Facility Subsidiary Guarantors.

                           (iv)     The Borrower shall not, and shall not permit
         any other Credit Related Party (other than the Senior Bank Facility
         Exempted Guarantors) to, Dispose of (in a single or related series of
         transactions) assets constituting all or substantially all of the
         consolidated assets of such Credit Related Party and its Subsidiaries
         taken as a whole, provided that this Section 5.02(d)(iv) shall not
         apply to any transaction permitted by Section 5.02(d)(i), Section
         5.02(d)(ii)(B), 5.02(d)(ii)(F), 5.02(d)(ii)(G) or 5.02(d)(ii)(M) or
         Section 5.02(e).

         (e)      Mergers. The Borrower shall not, and shall not permit any
other Credit Related Party to, merge or consolidate with, or liquidate into, any
Person, except that, provided no Senior Bank Facility Event of Default has
occurred and is continuing (both before and immediately after giving effect to
any merger, consolidation or liquidation permitted below), (i) any Credit
Related Party (other than the Borrower) in addition to mergers, consolidations
and liquidations provided for in clauses (ii) and (iii) below, may merge or
consolidate with, or liquidate into, any other Credit Related Party (other than
the Borrower), provided that (A) no Guaranty Reduction Event occurs as a result
thereof, (B) the continuing or surviving Credit Related Party unconditionally
assumes by written agreement satisfactory to the Senior Bank Facility
Administrative Agent all of the performance and payment obligations of the other
Credit Related Party and (C) the Lien under the Senior Bank Facility Security
Documents in favor of the Senior Bank Facility Collateral Agent on any Senior
Bank Facility Collateral owned by any applicable Senior Bank Facility Subsidiary
Guarantor immediately prior to such merger, consolidation or liquidation remains
effective and perfected immediately thereafter with no loss of relative priority
to any other class of creditor from that existing immediately prior to such
merger, consolidation or liquidation, (ii) any Senior Bank Facility Exempted
Guarantor may merge or consolidate with, or liquidate into, any other Senior
Bank Facility Exempted Guarantor or other Business Entity that is not a Credit
Related Party, provided that the (A) surviving Business Entity is, directly or
indirectly, a wholly-

                                       46
<PAGE>

owned Subsidiary of the Borrower, remains a Senior Bank Facility Subsidiary
Guarantor and, if the Senior Bank Facility Exempted Guarantor is not the
continuing or surviving Business Entity, the continuing or surviving Business
Entity unconditionally assumes by written agreement satisfactory to the Senior
Bank Facility Administrative Agent all of the obligations of such Senior Bank
Facility Exempted Guarantor under the Senior Bank Facility Loan Documents to
which the applicable Senior Bank Facility Exempted Guarantor is a party and (B)
the Lien under the Senior Bank Facility Security Documents in favor of the
Senior Bank Facility Collateral Agent on any Senior Bank Facility Collateral
owned by the applicable Senior Bank Facility Exempted Guarantor immediately
prior to such merger, consolidation or liquidation remains effective and
perfected immediately thereafter with no loss of relative priority to any other
class of creditor from that existing immediately prior to such merger,
consolidation or liquidation, and (iii) the Borrower may merge or consolidate
with, or liquidate into, any Business Entity other than a Credit Related Party,
provided that (A) (x) the Borrower is the continuing or surviving Business
Entity or (y) the continuing or surviving Business Entity is organized under the
laws of the United States or a State thereof and unconditionally assumes by
written agreement satisfactory to the Agent all of the performance and payment
obligations of the Borrower under the Loan Documents, and (B) the Lien under the
Senior Bank Facility Collateral Documents in favor of the Senior Bank Facility
Collateral Agent on any Senior Bank Facility Collateral owned by the Borrower
immediately prior to such merger, consolidation or liquidation remains effective
and perfected immediately thereafter with no loss of relative priority to any
other class of creditor (either contractually, by structural subordination or
otherwise) from that existing immediately prior to such merger, consolidation or
liquidation.

         (f)      E&P Issuances. Unless otherwise approved by the Co-Agents, in
their sole discretion, the Borrower shall not issue in the institutional loan or
bond capital markets, or permit any of its Subsidiaries or Mustang to issue in
the institutional loan or bond capital markets, (i) Indebtedness, the credit of
which is primarily based on hydrocarbon exploration and production properties,
or (ii) production payments or overriding interests in hydrocarbon exploration
and production properties.

         (g)      Restricted Payments. The Borrower shall not declare or pay any
dividends, purchase, redeem, retire, defease or otherwise acquire for value any
of its Equity Interests, return any capital to its stockholders, partners or
members, make any distribution of assets, Equity Interests, obligations or
securities to its stockholders, partners or members, or permit any of its
Subsidiaries to do any of the foregoing with respect to such Subsidiary, or
permit any of its Subsidiaries to purchase, redeem, retire, defease or otherwise
acquire for value any Equity Interests in the Borrower (excluding from the
foregoing any Refinancing of the Mustang Transaction the Electron Transaction or
the Gemstone Transaction, whereby Equity Interests of the investment vehicle in
such transaction are redeemed or purchased), except that:

                  (i)      so long as no Event of Default shall have occurred
         and be continuing at the time of any action described in this clause
         (i) or would result therefrom, the Borrower may (x) declare and pay
         dividends and distributions payable in common stock of the Borrower and
         in cash not to exceed current levels in the case of cash dividends, and
         (y) except to the extent that the net cash proceeds thereof are
         required to be applied to the mandatory prepayment of the Loan,
         purchase, redeem, retire, defease or otherwise acquire shares of its
         capital stock with the proceeds received contemporaneously from the
         issue of new shares of its capital stock with equal or inferior voting
         powers, designations, preferences and rights equal or inferior to those
         of the capital stock so purchased, redeemed, retired, defeased or
         otherwise acquired, and

                                       47
<PAGE>

                           (ii)     any Subsidiary may declare and pay
                  Distributions to the Borrower and any other Subsidiary of the
                  Borrower;

         provided that the restrictions set forth in this Section 5.02(g) shall
         not apply to (x) transactions under employee benefit and/or executive
         compensation plans consistent with past practices of the Borrower and
         its Subsidiaries and (y) inter-company reorganizations; provided
         further that the Borrower shall be permitted to make payments otherwise
         restricted by this Section 5.02(g) together with payments otherwise
         restricted by Section 5.02(h) in an aggregate cumulative amount from
         the Closing Date not to exceed $150,000,000.

                  (h)      Prepayments, Etc., of Indebtedness. (i) The Borrower
         shall not, or permit any Credit Related Party or any Subsidiary Loan
         Party to, prepay, redeem, purchase, defease or otherwise satisfy prior
         to the scheduled maturity thereof in any manner, or make any payment in
         violation of any subordination terms of, any Indebtedness, except for:

                                    A.       the prepayment of the Loan in
                           accordance with the terms of this Agreement,

                                    B.       exchanges of Indebtedness for
                           Equity Interests in the Borrower or any Subsidiary of
                           the Borrower other than any Subsidiary Loan Party.

                                    C.       prepayments of Indebtedness to the
                           extent necessary to complete an asset sale made
                           solely from (and only to the extent of) the net cash
                           proceeds of such sale,

                                    D.       any prepayment, redemption,
                           purchase or defeasance of Indebtedness made with a
                           debt obligation, the maturity of which is not shorter
                           and the principal amount of which is not greater than
                           the maturity or principal amount, as the case may be,
                           of the underlying obligation, and

                                    E.       regularly scheduled or required
                           repayments or redemptions of Indebtedness.

                           (ii)     The Borrower shall not amend, modify or
                  change in any manner any term or condition of any Debt to
                  shorten the tenor thereof, or permit any of its Subsidiaries
                  that is a Credit Related Party or a Subsidiary Loan Party, to
                  do any of the foregoing (other than to prepay any Indebtedness
                  payable to the Borrower).

Notwithstanding the foregoing, (i) the restrictions set forth in this Section
5.02(h) shall not apply to (x) any Indebtedness that is within 90 days of its
scheduled maturity date or (y) any Refinancing permitted to be incurred pursuant
to Section 5.02(b); and (ii) the Borrower shall be permitted to make payments
otherwise restricted by this Section 5.02(h) together with payments otherwise
restricted by Section 5.02(g), in an aggregate cumulative principal amount from
the Closing Date not to exceed $150,000,000.

                  (i)      Chain Subsidiary Bankruptcy. The Borrower shall not
         consent to, vote for, or otherwise cause or permit (or permit any of
         its Affiliates, to consent to, or vote for, or otherwise cause or
         permit) any Chain Subsidiary voluntarily to take any action of the type
         referred to in clause (a)(iii) or (b), or clause (c) insofar as such
         clause (c) refers to clause (a)(iii) or (b), of the definition of
         "Voluntary Bankruptcy".

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<PAGE>

                  (j)      Credit Related Parties and Subsidiaries. The Borrower
         shall not permit at any time any Chain Subsidiary to be:

                           (i)      a Credit Related Party; or

                           (ii)     directly owned by the Borrower (other than
                  EPPH).

                  (k)      Chain Subsidiary Liens. Notwithstanding Section
         5.02(a) to the contrary, the Borrower shall not, nor shall it permit
         any Chain Subsidiary to, create, assume or suffer to exist, any Liens
         upon or with respect to any Equity Interests or any assets of such
         Chain Subsidiary (other than, in the case of the Borrower, Permitted
         Liens, or, in the case of any such Chain Subsidiary, Chain Subsidiary
         Permitted Liens).

                  (l)      Chain Subsidiary Indebtedness. Notwithstanding
         Section 5.02(b) to the contrary, the Borrower shall not permit any
         Chain Subsidiary to incur, create, assume or suffer to exist any
         Indebtedness and any Guaranties of Indebtedness other than (x)
         Indebtedness under the Operative Documents and Guaranties of such
         Indebtedness and (y) Indebtedness owing to a Subsidiary Loan Party as
         permitted by the Subsidiary Borrower Credit Agreement and Guaranties of
         such Indebtedness.

                  (m)      Chain Subsidiary Equity Issuances. The Borrower shall
         not permit any Chain Subsidiary to issue any Equity Interests to any
         Person other than the holders of Equity Interests on the Closing Date
         (which for the avoidance of doubt shall include any such issuance to
         any such Person as the result of any capital contribution).

                  (n)      Chain Subsidiary, Subsidiary Creation or Acquisition.
         The Borrower shall not permit any Chain Subsidiary to create or acquire
         any Subsidiary after the Closing Date.

                  (o)      Chain Subsidiary Negative Pledges. The Borrower shall
         not permit any Chain Subsidiary to enter into or suffer to exist any
         agreement prohibiting or restricting the creation or assumption of any
         Lien upon any of its property or assets except for such agreements (i)
         in favor of the Borrower under the Subsidiary Loan Documents or (ii) in
         favor of the Lenders.

                  (p)      Chain Subsidiary Taxes. The Borrower shall not permit
         any Chain Subsidiary to pay consolidated income taxes exceeding its
         independent income tax liability, other than in accordance with
         existing tax sharing arrangements or other tax sharing arrangements
         that are reasonably satisfactory to the Agent and the Required Lenders.

                  (q)      Amendment of Chain Subsidiary, Organizational
         Documents, Etc. The Borrower shall not amend, modify or change in any
         manner, or permit any Subsidiary to amend, modify or change in any
         manner, any term or condition of any Organizational Document of any
         Chain Subsidiary, or permit any independent director to be elected to
         the board of directors of any Chain Subsidiary other than BSCS or any
         other Person designated in writing by the Collateral Agent.

                  (r)      Equity Interests in Chain Subsidiaries. The Borrower
         shall not, and shall not permit any Subsidiary to, sell, lease, or
         otherwise transfer any of the Equity Interests in any of its
         Subsidiaries if such sale will result in the Borrower owning less than
         100% of the direct Equity Interests of EPPH or owning, directly or
         indirectly, less than 100% of the Equity Interests of the Chain
         Subsidiaries.

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<PAGE>

                  (s)      Equity Interests in EPPH. The Borrower shall at all
         times own directly 100% of Equity Interests in EPPH.

                  (t)      Amendment, Etc., of Subsidiary Loan Documents. The
         Borrower shall not cancel or terminate any Subsidiary Loan Document or
         consent to or accept any cancellation or termination thereof, amend,
         modify or change in any manner any term or condition of any Subsidiary
         Loan Document or give any agreement, consent, waiver or approval
         thereunder, waive any default under or any breach of any term or
         condition of any Subsidiary Loan Document or agree in any manner to any
         other amendment, modification or change of any term or condition of any
         Subsidiary Loan Document, other than any such amendment, supplement,
         consent, approval, change, waiver or modification that is ministerial
         or immaterial or non-substantive in nature, not adverse to the Lenders
         and has been consented to by the Collateral Agent as directed by the
         Agent; provided, however, that notwithstanding the foregoing to the
         contrary, without the prior written consent of each Lender, no
         amendment waiver, modification, supplement or consent shall be
         effective that amends, waives, modifies, supplements, or consents to
         any departure from, any provision of any Subsidiary Loan Document in
         any way that would:

                           (i)      reduce the amount of principal or interest
                  that is payable on account of any Subsidiary Loan made under
                  the Subsidiary Borrower Credit Agreement or any portion
                  thereof, or delay any scheduled date for payment thereof; or

                           (ii)     reduce fees payable by the Subsidiary
                  Borrowers to the Collateral Agent which relate to payments to
                  the Lenders or delay the dates on which such fees are payable;
                  or

                           (iii)    reduce any rights expressly granted to the
                  Lenders to receive any other amounts payable under the
                  Subsidiary Loan Documents, or delay any scheduled date for
                  payment thereof; or

                           (iv)     amend, modify or waive any Event of Default
                  (as defined in the applicable Subsidiary Loan Documents); or

                           (v)      subject such Lender to any increased or
                  additional obligations thereunder or in connection therewith;
                  or

                           (vi)     release, modify, subordinate or impair the
                  pledge, assignment and security interests provided for in the
                  applicable Subsidiary Loan Document, or

                           (vii)    release any guarantor of any obligations
                  under the Subsidiary Loan Documents from its guarantee
                  obligations thereunder or consent to the assignment by any
                  such guarantor of any of such obligations to any other Person,
                  or

                           (viii)   delay the scheduled date of any payment
                  under the Subsidiary Borrower Credit Agreement or modify any
                  provision of any mandatory prepayment under Section 2.04 of
                  the Subsidiary Borrower Credit Agreement.

                  (u)      [Intentionally Omitted.]

                  (v)      Additional Restrictions on Incurrence of Debt by
         Restricted Subsidiaries. The Borrower shall not permit any Restricted
         Subsidiary (other than the Pipeline Company Borrowers) to incur or be
         or become liable for any Debt or any liability under Guaranties other

                                       50
<PAGE>

         than (i) any Debt owing by such Restricted Subsidiary to another
         Restricted Subsidiary, or to the Borrower or a Senior Bank Facility
         Exempted Guarantor in respect of reimbursement of amounts paid for the
         account of, or attributable to, such Restricted Subsidiary to the
         extent that the obligation the payment of which gave rise to such
         reimbursement obligation does not constitute Debt, (ii) such Debt or
         liability under Guaranties of such Restricted Subsidiary existing as of
         the Senior Bank Facility Effective Date; provided that each such
         Restricted Subsidiary shall be permitted to successively refinance,
         extend or renew such Debt and liabilities under Guaranties, or replace,
         in whole or in part, any of the foregoing at any time and from time to
         time with new Debt and/or liabilities under Guaranties, so long as,
         after giving effect thereto, the sum of the aggregate principal amount
         of such new Debt and the aggregate principal amount of Debt guaranteed
         under such new Guaranties outstanding from time to time does not exceed
         $100,000,000 with respect to the Restricted Subsidiaries, (iii)
         pursuant to the Senior Bank Facility Loan Documents and (iv) as
         contemplated by Section 2.18 of the Senior Bank Facility.

                  (w)      No Impairment of Collateral. The Borrower shall not
         impair in any material respect the interest or rights of the Borrower
         in the Collateral.

                  (x)      Limitation on the Ability of Pipeline Company
         Borrowers to Incur Debt. The Borrower shall not permit any Pipeline
         Company Borrower to incur or become liable for any Debt or any
         liability under Guaranties if, immediately after giving effect to such
         Debt or liability under such Guaranties and the receipt and application
         of any proceeds thereof (or of any Debt so guaranteed) or value
         received in connection therewith, (i) the ratio of Debt and liabilities
         under Guaranties, without duplication, of the applicable Pipeline
         Company Borrower and its consolidated Subsidiaries to EBITDA of such
         Pipeline Company Borrower and its consolidated Subsidiaries, in each
         case on a consolidated basis for the applicable Pipeline Company
         Borrower and its consolidated Subsidiaries, for the then most recently
         completed four quarter period for which financial statements have been
         delivered as required by Section 5.08 of the Senior Bank Facility would
         exceed 5 to 1, or (ii) the proceeds of any such Debt (or of the
         underlying Debt guaranteed by any such Guaranty) would be used for any
         purpose other than (A) the funding of working capital of the applicable
         Pipeline Company Borrower, (B) the successive refinancing of Debt of
         such Pipeline Company Borrower in existence as of the Senior Bank
         Facility Effective Date, (C) the funding by the applicable Pipeline
         Company Borrower of capital expenditures or investments in FERC
         Eligible Assets other than any investment in (x) any Equity Interest in
         any other Person, (y) all or substantially all of a business conducted
         by any other Person, or (z) all or substantially all of the assets
         constituting a business division or other stand-alone business unit of
         any other Person, provided that the use of the proceeds of such Debt as
         permitted under this clause (C) shall include (1) the reimbursement of
         letters of credit, (2) the repayment of Senior Bank Facility
         Obligations and (3) the reimbursement of expenditures out of operating
         cash flow of such Pipeline Company Borrower, in each case, to the
         extent of the proceeds or amounts thereof that were applied to fund
         capital expenditures or investments permitted by this clause (C), or
         (D) investment in Cash Equivalents for a period of time not to exceed
         30 days; provided, however, that, for purposes of clause (ii) above, if
         the Borrower elects to cause the sale of the Equity Interests in WIC to
         be sold to CIG, then CIG (if and when it becomes a Pipeline Company
         Borrower as required by Section 2.18 of the Senior Bank Facility) shall
         be permitted to incur Debt, subject to the ratio set forth in clause
         (i) above, in an aggregate principal amount not to exceed $400,000,000
         the proceeds of which shall be used to purchase the outstanding Equity
         Interest in WIC and if the actual purchase price of such Equity
         Interests is an amount that is less than $400,000,000, then the amount
         of such incurred Debt that is equal to the excess of $400,000,000 over
         the actual purchase price of the Equity Interests in WIC may be used
         for any other general corporate purpose of CIG, including to fund a
         distribution to the Borrower of all or any portion of such excess
         amount, and in no event shall the proceeds of such Debt constitute

                                       51
<PAGE>

         Collateral or Senior Bank Facility Collateral or be subject to any
         mandatory prepayment provisions under any Operative Document.

                  SECTION 5.03 Reporting Requirements. Until the Collection
Date, the Borrower will, unless otherwise consented to in writing by the Agent
and the Lender, furnish to the Agent the following:

                  (a)      Quarterly Reports. As soon as publicly available and
         in any event within 60 days after the end of each of the first three
         fiscal quarters of each fiscal year of the Borrower or EPPH (as
         applicable), (A) a consolidated balance sheet of the Borrower and its
         consolidated Subsidiaries as of the end of such quarter, and
         consolidated statements of income and cash flows of the Borrower and
         its consolidated Subsidiaries, and (B) a consolidated balance sheet of
         EPPH and its consolidated Subsidiaries, including each of EPPC and its
         consolidated Subsidiaries and EPGOM and its consolidated Subsidiaries
         as of the end of such quarter, and consolidated statements of income
         and cash flows thereof, in each case for the period commencing at the
         end of the previous fiscal year and ending with the end of such
         quarter, certified (subject to normal year-end adjustments) as being
         fairly stated in all material respects by the chief financial officer,
         controller or treasurer of the Borrower and accompanied by a
         certificate of such officer stating (i) whether or not such officer has
         knowledge of the occurrence of any Event of Default that is continuing
         or of any event not theretofore remedied that with notice or lapse of
         time or both would constitute an Event of Default and, if so, stating
         in reasonable detail the facts with respect thereto, (ii) all relevant
         facts in reasonable detail to evidence, and the computations as to,
         whether or not the Borrower is in compliance with the requirements set
         forth in Section 5.02(c), and (iii) a listing of all Subsidiary Loan
         Parties and consolidated Subsidiaries of the Borrower showing the
         extent of its direct and indirect holdings of their equity interests.

                  (b)      Annual Reports. As soon as publicly available and in
         any event within 120 days after the end of each fiscal year of the
         Borrower or EPPH (as applicable), a copy of the annual report for such
         year for (A) the Borrower and its consolidated Subsidiaries and (B)
         EPPH and its consolidated Subsidiaries, including each of EPPC and its
         consolidated Subsidiaries and EPGOM and its consolidated Subsidiaries,
         in each case containing financial statements for such year reported on
         by PricewaterhouseCoopers LLP or other nationally recognized
         independent public accountants accompanied by a report signed by said
         accountants stating that such financial statements have been prepared
         in accordance with GAAP.

                  (c)      Annual Certificate. Within 120 days after the close
         of each fiscal year of the Borrower, a certificate of the chief
         financial officer, controller or treasurer of the Borrower stating (i)
         whether or not such chief financial officer, controller or treasurer
         has knowledge of the occurrence of any Event of Default that is
         continuing or of any event not theretofore remedied that with notice or
         lapse of time or both would constitute such an Event of Default and, if
         so, stating in reasonable detail the facts with respect thereto, (ii)
         all relevant facts in reasonable detail to evidence, and the
         computations as to, whether or not the Borrower is in compliance with
         the requirements set forth in Section 5.02(c) and (iii) a listing of
         all Subsidiary Loan Parties and consolidated Subsidiaries of the
         Borrower showing the extent of its direct and indirect holdings of
         their Equity Interests.

                  (d)      Public Reports. Promptly after the sending or filing
         thereof, copies of all publicly available reports that the Borrower or
         any Subsidiary Loan Party sends to any of its security holders and
         copies of all publicly available reports and registration statements
         that the Borrower or any Subsidiary Loan Party files with the SEC or
         any national securities exchange other than registration statements
         relating to employee benefit plans and to registrations of securities
         for selling security holders.

                                       52
<PAGE>

                  (e)      SEC Reports. The Borrower will provide annual audited
         and quarterly unaudited financial statements of the nature filed with
         the SEC for each Subsidiary Loan Party that is an SEC reporting company
         (it being agreed that electronically posting such reports and other
         information on a website established for the Lender's access shall
         constitute delivery hereunder).

                  (f)      Notice of Litigation. Promptly in writing, notice of
         all litigation and of all proceedings before any governmental or
         regulatory agencies against or involving Borrower or any Subsidiary
         Loan Party, except any litigation or proceeding that in the reasonable
         judgment of the Borrower (taking into account the exhaustion of all
         appeals) is not likely to have a material adverse effect on the
         consolidated financial condition of the Borrower and its consolidated
         Subsidiaries taken as a whole.

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

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

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

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

                           (iv)     Promptly and in any event within five
                  Business Days after receipt thereof by the Borrower or any
                  ERISA Affiliate from the sponsor of a Multiemployer Plan, a
                  copy of each notice received by the Borrower or any ERISA
                  Affiliate concerning (i) the imposition of Withdrawal
                  Liability by a Multiemployer Plan, (ii) the determination that
                  a Multiemployer Plan is, or is expected to be, in
                  reorganization or insolvent within the meaning of Title IV of
                  ERISA, (iii) the termination of a Multiemployer Plan within
                  the meaning of Title IV of ERISA, or (iv) the amount of
                  liability incurred, or expected to be incurred, by the
                  Borrower or any ERISA Affiliate in connection with any event
                  described in clause (i), (ii) or (iii) above.

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

                                       53
<PAGE>

                  (j)      Subsidiary Loan Notices. Promptly upon receipt, a
         copy of each notice, report or certification delivered by any
         Subsidiary Loan Party to the Borrower pursuant to the Subsidiary Credit
         Documents.

                  Each balance sheet and other financial statement furnished
pursuant to Sections 5.03(a) and 5.03(b) shall contain comparative financial
information that conforms to the presentation required in Forms 10-Q and 10-K,
as appropriate, under the Securities Exchange Act of 1934, as amended.

                                   ARTICLE VI

                                EVENTS OF DEFAULT

                  SECTION  6.01 Events of Default. If any of the following
events (each an "EVENT OF DEFAULT") shall occur and be continuing at any time:

                  (a)      the Borrower shall fail to pay any installment of
         principal on the Loan or the Borrower Notes when due or any interest on
         the Loan or the Borrower Notes or any other amount payable by it under
         this Agreement within five (5) Business Days after the same shall be
         due; or

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

                  (c)      the Borrower shall fail to perform or observe any
         term, covenant or agreement applicable to it contained in Section
         5.01(a)(i) (but subject to Section 5.02(e)), 5.03(g) and 5.02 of this
         Agreement or (ii) any Credit Related Party shall fail to perform or
         observe any term, covenant or agreement applicable to it contained in
         analogous provisions of the Senior Bank Facility; or

                  (d)      the Borrower shall fail to perform or observe any
         other term, covenant or agreement contained in (other than as provided
         in clauses (a) through (c) above) the Loan Documents on its part to be
         performed or observed and any such failure shall remain unremedied for
         30 days after written notice thereof shall have been given to the
         Borrower by the Agent or by any Lender with a copy to the Agent or (ii)
         any Senior Bank Facility Borrower shall fail to perform or observe any
         other term, covenant or agreement contained in the Senior Bank Facility
         Loan Documents (other than as provided in clause (c)(ii) above) on its
         part to be performed or observed and any such failure shall remain
         unremedied for 30 days after written notice thereof shall have been
         given to such Senior Bank Facility Borrower by the Senior Bank Facility
         Administrative Agent or by any Senior Bank Facility Lender with a copy
         to the Senior Bank Facility Administrative Agent; or

                  (e)      the Borrower, any Subsidiary Loan Party or any Credit
         Related Party shall fail to pay any Debt or Guaranty (excluding Debt
         and Guarantees incurred pursuant hereto) of such Person in an aggregate
         principal amount of $200,000,000 or more, at such time, or any
         installment of principal thereof or interest or premium thereon, when
         due (whether by scheduled maturity, required prepayment, acceleration,
         demand or otherwise) and such failure shall continue after the
         applicable grace period, if any, specified in the agreement or
         instrument relating to such Debt or Guaranty; or any other default
         under any agreement or instrument relating to any such Debt in such
         aggregate principal amount or any Senior Bank Facility Covered
         Obligation (excluding Debt and Guarantees incurred pursuant to the
         Operative Documents or the Senior Bank Facility Loan Documents), or any
         other event (other than an exercise of voluntary

                                       54
<PAGE>

         prepayment or voluntary purchase option or analogous right), shall
         occur and shall continue after the applicable grace period, if any,
         specified in such agreement or instrument, if the effect of such
         default or event is to accelerate the maturity of such Debt in such
         aggregate principal amount or such Senior Bank Facility Covered
         Obligation; or any such Debt in such aggregate principal amount or such
         Senior Bank Facility Covered Obligation shall be required to be prepaid
         (other than by a regularly scheduled required prepayment), prior to the
         stated maturity thereof, as a result of either (x) any default under
         any agreement or instrument relating to any such Debt in such aggregate
         principal amount or such Senior Bank Facility Covered Obligation, or
         (y) the occurrence of any other event (other than an exercise of
         voluntary prepayment or voluntary purchase option or analogous right or
         an issuance or Disposition of Equity Interests or other assets, or an
         incurrence or issuance of Indebtedness or other obligations, giving
         rise to a repayment or prepayment obligation in respect of such Debt or
         such Senior Bank Facility Covered Obligation) the effect of which would
         otherwise be to accelerate the maturity of such Debt in such aggregate
         principal amount or such Senior Bank Facility Covered Obligation;
         provided, however, that with respect to the Senior Bank Facility
         Covered Obligations in respect of either of the Coastal Petrochemical
         Underlying Transaction (as defined in the Senior Bank Facility) or the
         Harbortown Underlying Transaction (as defined in the Senior Bank
         Facility), an Event of Default under this paragraph (e) shall not occur
         until the Borrower shall have failed to pay an amount properly demanded
         in respect of the related Company Project Support Document (as defined
         in the Senior Bank Facility) for the Coastal Petrochemical Underlying
         Transaction or the Harbortown Underlying Transaction, as applicable,
         and such failure shall have continued for three Business Days after
         such demand; or

                  (f)      (i) the Borrower or any Subsidiary Loan Party or any
         Credit Related Party shall (A) generally not pay its debts as such
         debts become due, or (B) admit in writing its inability to pay its
         debts generally, or (C) make a general assignment for the benefit of
         creditors; or (ii) any proceeding shall be instituted or consented to
         by the Borrower or any Subsidiary Loan Party or any Credit Related
         Party seeking to adjudicate it a bankrupt or insolvent, or seeking
         liquidation, winding up, reorganization, arrangement, adjustment,
         protection, relief, or composition of it or its debts under any law
         relating to bankruptcy, insolvency or reorganization or relief of
         debtors, or seeking the entry of an order for relief or the appointment
         of a receiver, trustee, or other similar official for it or for any
         substantial part of its property; or (iii) any such proceeding shall
         have been instituted against the Borrower or any Subsidiary Loan Party
         or any Credit Related Party and either such proceeding shall not be
         stayed or dismissed for 60 consecutive days or any of the actions
         referred to above sought in such proceeding (including the entry of an
         order for relief against it or the appointment of a receiver, trustee,
         custodian or other similar official for it or any substantial part of
         its property) shall occur; or (iv) the Borrower or any Subsidiary Loan
         Party or any Credit Related Party shall take any corporate action to
         authorize any of the actions set forth above in this subsection (f); or

                  (g)      any judgment or order for the payment of money in an
         aggregate amount in excess of $100,000,000 shall be rendered against
         the Borrower or any Subsidiary Loan Party or any other Credit Related
         Party or any combination thereof and the same shall remain undischarged
         for a period of 30 consecutive days during which execution (other than
         any enforcement proceedings consisting of the mere obtaining and filing
         of a judgment lien or obtaining of a garnishment or similar order so
         long as no foreclosure, levy or similar process in respect of such
         judgment lien, or payment over in respect of such garnishment or
         similar order, has commenced and is continuing or has been completed
         (collectively, the "PERMITTED EXECUTION ACTIONS")) shall not be
         effectively stayed, or any action, other than a Permitted Execution
         Action, shall be legally taken by a judgment creditor to attach or levy
         upon any property or assets of the Borrower or any Subsidiary Loan
         Party or any other Credit Related Party to enforce any such

                                       55
<PAGE>

         judgment or order; provided, however, that with respect to any such
         judgment or order that is subject to the terms of one or more
         settlement agreements that provide for the obligations thereunder to be
         paid or performed over time, such judgment or order shall not be deemed
         hereunder to be undischarged unless and until the Borrower or any
         Subsidiary Loan Party or any other Credit Related Party shall have
         failed to pay any amounts due and owing thereunder (payment of which
         shall not have been stayed) for a period of 30 consecutive days after
         the respective final due dates for the payment of such amounts; or

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

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

                  (j)      any event of default shall occur under any agreement
         or instrument relating to or evidencing any Debt now or hereafter
         existing of the Borrower or any Subsidiary Loan Party or any Credit
         Related Party as the result of any change in control of the Borrower;
         or

                  (k)      any of the guarantees contained in any Credit Party
         Guarantee (as defined in the Senior Bank Facility), or any other
         material provision of any Senior Bank Facility Loan Document, shall
         cease, for any reason, to be valid and binding upon or enforceable
         against any Credit Party that is a party thereto, or any such Credit
         Party shall so assert in writing, provided that if such invalidity or
         unenforceability is of a nature so as to be amenable to cure within
         five Business Days and if, within one Business Day after the Borrower
         receives notice from the Senior Bank Facility Administrative Agent or
         the Senior Bank Facility Collateral Agent or otherwise becomes aware
         that such material provision is not valid or is unenforceable as
         aforesaid, the Borrower delivers written notice to the Senior Bank
         Facility Administrative Agent that the applicable Credit Party intends
         to cure such invalidity or unenforceability as soon as possible, then
         an Event of Default shall not exist pursuant to this paragraph (k)
         unless the Borrower or the

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<PAGE>

         relevant Credit Party shall fail to deliver or cause to be delivered an
         amendment or other modification, or other agreement or undertaking,
         having the same economic effect as the invalid or unenforceable
         provision within four Business Days after the delivery of such written
         notice of intent; or

                  (l)      any Senior Bank Facility Security Document shall for
         any reason fail or cease to create a valid and enforceable Lien on any
         Senior Bank Facility Collateral stated to be covered thereby or, except
         as permitted by the Senior Bank Facility Loan Documents, such Lien
         shall fail or cease to be a perfected and first-priority (subject only
         to Senior Bank Facility Collateral Permitted Liens) Lien, or any Credit
         Related Party shall so state in writing and, if such invalidity or lack
         of perfection or priority relates solely to Senior Bank Facility
         Collateral with an aggregate value of $1,000,000 or less and such
         invalidity or lack of perfection or priority is such so as to be
         amenable to cure without material disadvantage to the position of the
         Senior Bank Facility Administrative Agent, the Senior Bank Facility
         Collateral Agent and the other Senior Bank Facility Secured Parties,
         such invalidity or lack of perfection or priority shall not be cured
         within 10 days of the earlier of such Credit Related Party so stating
         in writing or delivery of notice thereof by the Senior Bank Facility
         Administrative Agent or the Senior Bank Facility Collateral Agent to
         the Borrower (or such shorter period as shall be specified by the
         Senior Bank Facility Administrative Agent or the Senior Bank Facility
         Collateral Agent and is reasonable under the circumstances); or

                  (m)      any default under any agreement or instrument
         relating to any Senior Bank Facility Covered Obligation (excluding Debt
         and Guarantees incurred pursuant hereto), or any other event (other
         than an exercise of voluntary prepayment or voluntary purchase option
         or analogous right), shall occur and shall continue after the
         applicable grace period, if any, specified in such agreement or
         instrument, if the effect of such default or event is to accelerate the
         maturity of such Senior Bank Facility Covered Obligation; or any such
         Senior Bank Facility Covered Obligation shall be required to be prepaid
         (other than by a regularly scheduled required prepayment), prior to the
         stated maturity thereof, as a result of either (x) any default under
         any agreement or instrument relating to any such Senior Bank Facility
         Covered Obligation, or (y) the occurrence of any other event (other
         than an exercise of voluntary prepayment or voluntary purchase option
         or analogous right or an issuance or Disposition of Equity Interests or
         other assets, or an incurrence or issuance of Indebtedness or other
         obligations, giving rise to a repayment or prepayment obligation in
         respect of such Senior Bank Facility Covered Obligation) the effect of
         which would otherwise be to accelerate the maturity of such Senior Bank
         Facility Covered Obligation if, as a result thereof or with respect
         thereto, the holder of (or the agent for the holders of) such Senior
         Bank Facility Covered Obligation shall take any Senior Bank Facility
         Enforcement Action not permitted by the Intercreditor Agreement or the
         Borrower shall agree to provide, or enter into any negotiation with a
         view to providing, any additional collateral, or any optional
         prepayment of such Senior Bank Facility Covered Obligation, or any fee
         or other monetary consideration for any amendment, consent, waiver or
         other modification with respect to such payment default; provided,
         however, that with respect to the Senior Bank Facility Covered
         Obligations in respect of either of the Coastal Petrochemical
         Underlying Transaction (as defined in the Senior Bank Facility) or the
         Harbortown Underlying Transaction (as defined in the Senior Bank
         Facility), an Event of Default under this paragraph (m) shall not occur
         until the Borrower shall have failed to pay an amount properly demanded
         in respect of the related Company Project Support Document (as defined
         in the Senior Bank Facility) for the Coastal Petrochemical Underlying
         Transaction or the Harbortown Underlying Transaction, as applicable,
         and such failure shall have continued for three Business Days after
         such demand; or

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<PAGE>

                  (n)      any material provision of any Operative Document to
         which the Borrower, or any Subsidiary Loan Party is a party in whole or
         in material part shall for any reason cease to be the legal, valid and
         binding obligations of the Borrower or such Subsidiary Loan Party, as
         the case may be, or the validity of any such agreement shall be
         contested in writing by the Borrower or any such Subsidiary Loan Party,
         or the Borrower or any such Subsidiary Loan Party shall in writing deny
         liability under this Agreement, any Borrower Note or any such other
         Operative Document; or

                  (o)      the Agent shall at any time not have a valid and
         perfected first priority security interest in the Collateral (other
         than as a result of the action or inaction of the Agent or as a result
         of Permitted Liens); or

                  (p)      the Borrower fails, for any reason, to maintain its
         rightful ownership title to the Subsidiary Loans or the Subsidiary
         Borrower Notes, except as expressly permitted under the terms of any
         Operative Document (except as expressly contemplated under any
         Operative Document); or

                  (q)      the Borrower fails to beneficially own (directly or
         indirectly) 100% of the voting equity interests in any Chain Subsidiary
         or Subsidiary Loan Party, except as otherwise provided in the Operative
         Documents; or

                  (r)      an Event of Default (as defined in the Subsidiary
         Borrower Credit Agreement) has occurred and is continuing after the
         expiration of any applicable grace periods;

then, and in any such event, the Agent shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the Loan
and the Borrower Notes, all interest thereon and all other amounts payable under
this Agreement to be forthwith due and payable, whereupon the Loan and the
Borrower Notes, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrowers;
provided, however, that if an Event of Default under subsection (f) of this
Section 6.1 (except under clause (i)(A) thereof) shall occur, the Loan and the
Borrower Notes, all interest thereon and all other amounts payable under this
Agreement shall automatically become and be forthwith due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.

                                  ARTICLE VII

                GRANT OF SECURITY INTEREST, PLEDGE AND ASSIGNMENT

                  SECTION 7.01 Pledge and Assignment. The Borrower hereby
irrevocably pledges, transfers and assigns to the Collateral Agent for its
benefit and the benefit of the Co-Agents, the Lead Arrangers, the Lenders and
each other Indemnified Party (collectively, the "SECURED PARTIES"), and grants
to the Collateral Agent for its benefit and the benefit of the other Secured
Parties, a security interest in, all right, title and interest of the Borrower
(whether now owned or hereafter acquired) in, to and under the following
(collectively, the "COLLATERAL"):

                  (a)      the Subsidiary Loans made pursuant to the Subsidiary
         Borrower Credit Agreement and all distributions, monies, instruments
         and other property or assets from time to time received, receivable or
         otherwise distributable or distributed in respect of or in exchange for
         any or all of the Subsidiary Loans (including, without limitation, the
         proceeds of the repayment of

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<PAGE>

         all or any portion of the Subsidiary Loans (and any certificates or
         instruments in respect thereof) and proceeds of collateral securing
         such Subsidiary Loans);

                  (b)      all promissory notes evidencing the Subsidiary Loans,
         the Subsidiary Borrower Credit Agreement, the Subsidiary Borrower
         Security Agreement, the Subsidiary Borrower Pledge Agreement, the
         mortgages and other instruments and agreements evidencing or securing
         the obligations under the Subsidiary Loans (collectively, the "ASSIGNED
         AGREEMENTS"), including, without limitation, whether now existing or
         hereafter acquired or arising, (i) all rights of the Borrower to
         receive monies and other property or assets due and to become due to
         the Borrower under or pursuant to any of the Assigned Agreements,
         including, without limitation, indemnity payments, (ii) all claims of
         the Borrower for damages arising out of or for breach of or default
         under the Assigned Agreements, (iii) all rights of the Borrower to
         receive proceeds of any insurance, indemnity, warranty or guaranty with
         respect to the Assigned Agreements and (iv) all rights of the Borrower
         to perform thereunder and to compel performance and otherwise exercise
         all rights and/or remedies thereunder (including, without limitation,
         the right (subject to Section 7.09(d)) to request that actions be taken
         under the Subsidiary Credit Documents and the right (subject to Section
         7.09(f)) to deliver a Subsidiary Default Notice);

                  (c)      the Collateral Account and all funds held therein and
         all certificates and instruments, if any, from time to time
         representing or evidencing the Collateral Account, and all interest,
         dividends, cash, instruments and other property from time to time
         received, receivable or otherwise distributed in respect of or in
         exchange for any or all funds from time to time in the Collateral
         Account;

                  (d)      all cash equivalents from time to time in the
         Collateral Account and all certificates and instruments, if any, from
         time to time representing or evidencing such cash equivalents, and all
         interest, earnings and proceeds in respect thereof;

                  (e)      all promissory notes issued to or held by the
         Borrower made by the Subsidiary Borrowers, including notes evidencing
         the Subsidiary Loans (collectively, the "SECURITIES"), or any other
         Indebtedness of the Subsidiary Borrowers not evidenced by any of such
         promissory notes; and

                  (f)      all proceeds of the foregoing.

                  SECTION 7.02 Security for Obligations. This Agreement secures
the payment of all Obligations of the Borrower now or hereafter existing or
incurred under, arising out of or in connection with this Agreement, whether for
principal, interest, fees, expenses, indemnities or otherwise (all such
obligations of the Borrower being the "EPC SECURED OBLIGATIONS").

                  SECTION 7.03 Delivery of Collateral. (a) All instruments and
certificates representing or evidencing the Collateral shall be delivered to and
held by or on behalf of the Collateral Agent on behalf of itself and the other
Secured Parties pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank and undated, all in form and substance satisfactory to the
Collateral Agent. If the Borrower shall acquire (by purchase or otherwise) any
additional certificated Securities (or certificates or instruments representing
such Securities) issued by any Subsidiary Borrower at any time or from time to
time on or after the date the Loan is made, the Borrower will forthwith pledge
and deposit such Securities (or certificates or instruments representing such
Securities) as security with the Collateral Agent and deliver to the Collateral
Agent, and the Collateral Agent shall accept under this Agreement, certificates
or instruments therefor, duly endorsed in blank by the Borrower or such other
instruments of transfer as are acceptable to

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<PAGE>

the Collateral Agent, and promptly thereafter deliver to the Collateral Agent a
certificate executed by an authorized officer of the Borrower describing such
Securities and certifying that the same have been duly pledged and delivered to
the Collateral Agent.

                  (b)      The Collateral Agent shall have the right, at any
time in its discretion after the occurrence and during the continuance of an
Event of Default and without notice to the Borrower, to transfer to or to
register in the name of the Collateral Agent or any of its nominees as pledged
hereunder any or all of such Collateral, subject to the rights specified in
Section 7.09. Promptly after any such transfer or registration, the Collateral
Agent shall give notice thereof to the Borrower, but the failure to give such
notice shall not affect any of the rights or remedies of the Collateral Agent
hereunder. The Collateral Agent shall have the right at any time to exchange
instruments or certificates representing or evidencing such Collateral for
instruments or certificates of smaller or larger denominations, subject to the
terms thereof.

                  SECTION 7.04 Borrower Remains Liable. Anything herein to the
contrary notwithstanding, (a) the Borrower shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Collateral Agent of any of the rights hereunder shall not release the Borrower
from any of its duties or obligations under the contracts and agreements
included in the Collateral, and (c) neither the Collateral Agent nor the Agent
nor any Lender shall have any obligation or liability under the contracts and
agreements included in the Collateral by reason of this Agreement, nor shall any
such Person be obligated to perform any of the obligations or duties of the
Borrower thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder, except as otherwise provided in Section 7.08 hereof.

                  SECTION 7.05 Further Assurances. (a) The Borrower agrees that
at any time and from time to time, at the expense of the Borrower, the Borrower
will promptly execute and deliver, all further instruments and documents, and
take all further action that the Collateral Agent may reasonably request, in
order to perfect and protect any assignment and security interest granted or
purported to be granted hereby or to enable the Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, the Borrower will, upon the
reasonable request of the Collateral Agent, (i) execute and deliver to the
Collateral Agent such financing or continuation statements or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Collateral Agent may reasonably request, in order to
perfect and preserve the security interests granted or purported to be granted
hereby and (ii) deliver to the Collateral Agent promptly upon receipt thereof
all instruments representing or evidencing any of the Collateral duly endorsed
and accompanied by duly executed instruments of transfer or assignment, all in
form and substance reasonably satisfactory to the Collateral Agent.

                  (b)      The Borrower hereby authorizes the Collateral Agent
to file one or more financing or continuation statements, and amendments
thereto, relating to all or any part of the Collateral without the signature of
the Borrower where permitted by law. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.

                  (c)      The Borrower will not, without the prior written
consent of the Collateral Agent (after having given the Collateral Agent not
less than 30 days' prior written notice thereof and after having executed and
delivered to the Collateral Agent such further instruments and documents in
connection therewith as may be requested by the Collateral Agent pursuant to
this Section 7.05) change its name, move or transfer from the location specified
in Section 9.02 hereof (or any subsequent location) its

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principal place of business or chief executive office, or the location of the
Borrower's books and records with respect to the Collateral.

                  SECTION 7.06 Collateral Agent Appointed Attorney-in-Fact. The
Borrower hereby irrevocably appoints the Collateral Agent the Borrower's
attorney-in-fact, with full authority in the place and stead of the Borrower and
in the name of the Borrower or otherwise, from time to time in the Collateral
Agent's discretion, upon the occurrence and during the continuance of an Event
of Default, to take any action and to execute any instrument that the Collateral
Agent, in its reasonable judgment, may deem necessary or advisable to accomplish
the purposes of this Agreement, including, without limitation, to make demand on
the Borrower or any Affiliate of any thereof for all amounts due under each
Assigned Agreement to which it is a party, to receive, endorse and collect all
instruments made payable to the Borrower representing any payment or other
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same, and to file any claims or take any action or institute
any proceedings that the Collateral Agent, in its reasonable judgment, may deem
necessary or desirable for the collection of any of the Collateral or otherwise
to enforce compliance with the terms and conditions of each Assigned Agreement
or the rights of the Collateral Agent with respect to any of the Collateral.

                  SECTION 7.07 Collateral Agent May Perform. If the Borrower
fails to perform any agreement contained herein, the Collateral Agent may itself
perform, or cause the performance of, such agreement, and the expenses of the
Collateral Agent incurred in connection therewith shall be payable by the
Borrower under Section 9.04.

                  SECTION 7.08 Reasonable Care. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon it to exercise any such powers. The
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which an ordinary person
accords its own property, it being understood that none of the Collateral Agent
or any Lender shall have any responsibility for taking any necessary steps to
preserve rights against any parties with respect to any Collateral other than,
with respect to the Collateral Agent, (a) the safe custody of any Collateral in
its possession, (b) the filing of continuation statements on Form UCC-3 or
UCC-4, as applicable, in each jurisdiction, and with the filing offices, in
which financing statements on Form UCC-1 are filed as contemplated by Section
3.01(b)(ii) and Section 3.02(b)(ii), in each case within six months prior to the
fifth anniversary of the filing of any such Form UCC-1 statements, (c) the
accounting for monies actually received by it hereunder and (d) the application
of monies in accordance with this Agreement.

                  SECTION 7.09 Rights, Remedies and Obligations. (a) The
Borrower agrees, and has irrevocably instructed each other party to each of the
Assigned Agreements to which it is a party, that all payments due or to become
due to the Borrower under or in connection with such Assigned Agreement shall be
made directly to the Collateral Account in accordance with Section 7.09(h)
hereof.

                  (b)      All payments received by the Borrower under or in
connection with the Assigned Agreements contrary to the provisions of this
Agreement shall be received in trust for the benefit of the Collateral Agent on
behalf of itself, the Lender and the Collateral Agent in accordance with their
respective interests therein, shall be segregated from other funds of the
Borrower, and shall forthwith be paid over to the Collateral Agent in the same
form as so received (with any necessary endorsement).

                  (c)      The Borrower shall not be entitled to elect to
receive any payment made pursuant to the Subsidiary Credit Agreement in assets
other than cash, unless the Collateral Agent and each Lender have given their
prior written consent, which consent shall be given in each such party's sole
discretion. Unless otherwise agreed in writing by the Collateral Agent and each
Lender, if the Borrower has not

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<PAGE>

deposited sufficient funds into the Collateral Account to redeem any non-cash
assets distributed or to be distributed pursuant to the Subsidiary Loan
Agreement, on the second Business Day after any such liquidation distribution
has been made, the Collateral Agent shall liquidate such non-cash assets
promptly upon the receipt thereof.

                  (d)      The Collateral Agent shall have the exclusive right:

                  (i)      to direct the disbursement or other disposition,
         pursuant to the terms hereof, of funds deposited to or otherwise held
         in the Collateral Account from time to time;

                  (ii)     to deliver any notices, instructions or directions to
         the Collateral Agent that the Borrower is entitled to provide pursuant
         to the Subsidiary Loan Documents; and

                  (iii)    to exercise and enforce any and all rights of the
         Borrower under the Subsidiary Loan Documents (subject to Section
         7.09(f) below).

                  (e)      The Borrower agrees that it will not, without the
prior written consent of the Collateral Agent and the Required Lenders, file or
join in the filing of a petition for the commencement of proceedings under the
federal bankruptcy laws with respect to any Subsidiary Loan Party.

                  (f)      Until the Collection Date, and regardless of whether
any Event of Default shall have occurred and notwithstanding the pledge
hereunder by the Borrower of the Subsidiary Loans and its rights under the
Subsidiary Credit Agreement and the other Subsidiary Loan Documents, and
notwithstanding any other provision in any other Operative Document, the
Collateral Agent shall be entitled, in its own right and without consent from
the Borrower, to deliver a notice of the occurrence of an "Event of Default"
under the Subsidiary Loan Documents (such notice, a "SUBSIDIARY DEFAULT NOTICE")
pursuant to Section 7.02 of the Subsidiary Borrower Credit Agreement in the
manner and with the effect provided therein; provided, however, that the
Collateral Agent shall deliver such Subsidiary Default Notice upon the written
instructions of the Required Lenders in accordance with Section 9.01 hereof; and
provided further, however, that the Borrower shall have no right to rescind any
such Subsidiary Default Notice without the prior written consent of the
Collateral Agent and the Required Lenders and any notice of rescission delivered
without such consent shall not be effective.

                  (g)      The Collateral Agent shall establish the Collateral
Account with Citibank. The Collateral Account shall be in the name of the
Collateral Agent and will be subject to the sole dominion and control of the
Collateral Agent. The Collateral Account shall be subject to Applicable Laws,
and applicable regulations of any competent banking or governmental authority,
as may now or hereafter be in effect.

                  (h)      All amounts received by the Borrower with respect to
the Collateral on any account whatsoever shall be deposited directly into the
Collateral Account. On or prior to the Closing Date, the Borrower shall give to
each Subsidiary Loan Party and the Subsidiary Collateral Agent written notice
(such notice to be in form and substance satisfactory to the Collateral Agent)
irrevocably instructing such Subsidiary Loan Party and the Subsidiary Collateral
Agent, respectively, that all payments due to the Borrower under or in respect
of the Subsidiary Credit Agreement or other Subsidiary Loan Documents and all
other payments due to the Borrower under or in respect of the Subsidiary Loans
shall be deposited directly into the Collateral Account.

                  (i)      The Collateral Agent shall apply all amounts
deposited in the Collateral Account or otherwise received or realized from the
Collateral to the payment of the Borrower's obligations in respect of the Loans
as follows:

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<PAGE>

                  (i)      First, to the Collateral Agent, an amount equal to
         the sum of the aggregate amount of costs, expenses and indemnified
         amounts hereunder that are then due and payable to the Collateral Agent
         for its own account;

                  (ii)     Second, to the Agent, an amount equal to the sum of
         the aggregate amount of costs and expenses and indemnified amounts that
         are then due and payable to the Agent for its account;

                  (iii)    Third, to the Agent for the ratable account, in
         accordance with their respective interests, of the Lenders, in each
         case to whom costs, expenses and indemnified amounts hereunder are then
         due and payable, an amount equal to the aggregate amount of such costs,
         expenses and indemnified amounts hereunder;

                  (iv)     Fourth, to the Agent for the ratable account of the
         Lenders, an amount equal to the aggregate amount of accrued and unpaid
         interest and Facility Fee then due and payable;

                  (v)      Fifth, to the Agent for the ratable account, in
         accordance with their respective interests, of the Lenders, as a
         repayment of the outstanding principal amount of the Loan, an amount
         equal to the lesser of (A) the balance of such funds and (B) the
         aggregate outstanding principal amount of the Advances; and

                  (vi)     Sixth, on the Collection Date only, to the Borrower,
         the balance, if any, of such funds as directed by the Borrower.

                  SECTION 7.10 Remedies upon Default. If any Event of Default
shall have occurred and be continuing:

                  (a)      The Collateral Agent may exercise in respect of the
         Collateral, in addition to other rights and remedies provided for
         herein or otherwise available to it, all of the rights and remedies of
         a secured party under the UCC in effect in the State of New York at
         that time (whether or not the New York UCC applies to the Collateral at
         issue) to the fullest extent permitted under applicable law, and the
         Collateral Agent may also, without notice except as specified below,
         sell the Collateral or any part thereof in one or more parcels at
         public or private sale, or at any of the Collateral Agent's offices or
         elsewhere, for cash, on credit or for future delivery, and upon such
         other terms as the Collateral Agent may deem commercially reasonable.
         The Borrower agrees that, to the extent notice of sale shall be
         required by law, at least ten days' notice to the Borrower of the time
         and place of any public sale or the time after which any private sale
         is to be made shall constitute reasonable notification. The Collateral
         Agent shall not be obligated to make any sale of Collateral or any part
         thereof regardless of notice of sale having been given. The Collateral
         Agent may adjourn any public or private sale from time to time by
         announcement at the time and place fixed therefor, and such sale may,
         without further notice, be made at the time and place to which it was
         so adjourned.

                  (b)      Any cash held by the Collateral Agent as Collateral
         and all cash proceeds received by the Collateral Agent in respect of
         any sale of, collection from, or other realization upon, all or any
         part of the Collateral shall be paid promptly after receipt thereof in
         whole or in part by the Collateral Agent pursuant to Section 7.09(i).

                  (c)      Subject to the other provisions of this Agreement,
         all rights of the Borrower to deliver any notices under or exercise any
         voting rights or other discretionary or consensual rights under any
         Assigned Agreement shall cease, and all such rights shall thereupon
         become vested in

                                       63
<PAGE>

         the Collateral Agent who shall thereupon have the sole right to
         exercise such voting and other consensual rights until such time as the
         EPC Secured Obligations have been paid in full. Notwithstanding the
         foregoing provisions, unless and until an Event of Default shall have
         occurred and be continuing, the Borrower may perform its obligations
         under the Assigned Agreements and may take any other actions in respect
         of such Assigned Agreements in any lawful manner not inconsistent with
         the provisions of this Agreement or any Assigned Agreement.

                  SECTION 7.11 Continuing Assignment and Security Interest.
This Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the payment in full of the EPC
Secured Obligations on the Termination Date, (b) be binding upon the Borrower
and its successors and assigns, and (c) inure, together with the rights and
remedies of the Collateral Agent hereunder, to the benefit of the Collateral
Agent, the Agent and the Lender and their respective successors, transferees and
assigns. Upon the payment in full of the EPC Secured Obligations on the
Collection Date, the Borrower shall be entitled to the return, upon its request
and at its expense, of such of the Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof and the Collateral Agent will
execute and deliver such instruments, including UCC termination statements, as
the Borrower may reasonably request to confirm the release and discharge of the
Lien hereunder.

                                  ARTICLE VIII

                       THE AGENT AND THE COLLATERAL AGENT

                 SECTION 8.01 Authorization and Action. (a) Each Lender hereby
appoints and authorizes CNAI, as the Agent and the Collateral Agent hereunder,
to take such action as Agent and Collateral Agent on its behalf and to exercise
such powers and discretion under this Agreement and the other Operative
Documents as are delegated to the Agent and the Collateral Agent by the terms
hereof and thereof, together with such powers and discretions as are reasonably
incidental thereto.

                  (b)      As to any matters not expressly provided for by the
Loan Documents or the other Operative Documents, including enforcement or
collection of the Debt resulting from the Loan and enforcement of this
Agreement, the Agent and the Collateral Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Required Lenders, and such instructions
shall be binding upon the Agent and the Collateral Agent; provided, however,
that the Agent or the Collateral Agent shall not be required to take any action
that exposes it to personal liability or that is contrary to this Agreement or
the other Operative Documents or applicable law.

                  (c)      The Agent agrees to give to each Lender prompt notice
of each notice and copies of all other documents given to it by the Borrower and
the Collateral Agent pursuant to the terms of this Agreement or the other
Operative Documents, and agrees to give the Collateral Agent, if not the same
Person as the Agent, prompt notice of each notice and copies of all other
documents given to it by the Borrower or any Lender pursuant to the terms of
this Agreement. The Collateral Agent, if not the same Person as the Agent,
agrees to give to the Agent prompt notice of each notice and copies of all other
documents given to it by the Borrower or any Lender pursuant to the terms
hereof. The Collateral Agent agrees to deliver to each Lender prompt notice with
respect to any notice to the Borrower regarding any Borrowing Base (as defined
in the Subsidiary Borrower Credit Agreement) determination.

                  SECTION 8.02 Agent's and Collateral Agent's Reliance, Etc.
Neither the Agent, the Collateral Agent or any of their respective directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with the Loan Documents or the

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other Operative Documents except for its or their own gross negligence, fraud or
willful misconduct, and each Lender agrees that it will not assert or seek to
assert any claim it might have against any of them in violation of this
provision. Without limiting the generality of the foregoing:

                  (a)      the Agent may treat the Lender that made an Advance
         as the holder of the Debt resulting therefrom until the Agent receives
         and accepts an Assignment and Acceptance entered into by such Lender,
         as assignor, and an Eligible Assignee, as assignee, as provided in
         Section 9.07 hereof;

                  (b)      the Agent and the Collateral Agent may consult with
         legal counsel (including counsel for the Borrower), independent public
         accountants and other experts selected by them and shall not be liable
         for any action taken or omitted to be taken in good faith by it in
         accordance with the advice of such counsel, accountants or experts;

                  (c)      neither the Agent nor the Collateral Agent makes any
         warranty or representation to any Lender or shall be responsible to any
         Lender for any statements, warranties or representations made in or in
         connection with the Loan Documents or the other Operative Documents;

                  (d)      neither the Agent nor the Collateral Agent shall have
         any duty to ascertain or to inquire as to the performance or observance
         of any of the terms, covenants or conditions of any Loan Document or
         the other Operative Documents on the part of the Borrower or any
         Subsidiary Loan Party or to inspect the property (including the books
         and records) of the Borrower or any Subsidiary Loan Party;

                  (e)      neither the Agent nor the Collateral Agent shall be
         responsible to any Lender for the due execution, legality, validity,
         enforceability, genuineness, sufficiency or value of any Loan Document
         or the other Operative Documents or any other instrument or document
         furnished pursuant hereto or thereto;

                  (f)      neither the Agent nor the Collateral Agent shall be
         liable under or in respect of any Loan Document or the other Operative
         Documents by acting upon any notice, consent, certificate or other
         instrument or writing (which may be by telegram, telecopy, cable or
         telex) believed by it to be genuine and signed or sent by the proper
         party or parties;

                  (g)      neither the Agent nor the Collateral Agent makes any
         representation or warranty or shall have any responsibility concerning
         the value or validity of the Collateral or the validity or the
         perfection of the pledge thereof; and

                  (h)      the Agent may assume that no Default or Event of
         Default has occurred and is continuing unless it has, in its capacity
         as Agent hereunder, actual knowledge or actual notice to the contrary.

                  SECTION 8.03 Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Agent or the Collateral
Agent and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently and without reliance upon
the Agent or the Collateral Agent and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement.

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<PAGE>

                  SECTION 8.04 Indemnification of the Agents. Each Lender
severally agrees to indemnify each of the Agent, the Collateral Agent and any of
their respective directors, officers, agents or employees (each, an
"AGENT-RELATED PERSON") (to the extent not promptly reimbursed by the Borrower)
from and against such Lender's ratable share of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against such Agent-Related Person in any way
relating to or arising out of the Operative Documents in connection with any
action taken or omitted by such Agent-Related Person under the Operative
Documents (collectively, the "INDEMNIFIED COSTS"); provided, however, that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Agent-Related Person's gross negligence or willful
misconduct as found in a final, non-appealable judgment by a court of competent
jurisdiction. Without limitation of the foregoing, each Lender agrees to
reimburse each Agent-Related Person promptly upon demand for its ratable share
of any costs and expenses (including, without limitation, fees and expenses of
counsel) payable by the Borrower under Section 9.04, to the extent that such
Agent-Related Person is not promptly reimbursed for such costs and expenses by
the Borrower. In the case of any investigation, litigation or proceeding giving
rise to any Indemnified Costs, this Section 8.04 applies whether any such
investigation, litigation or proceeding is brought by the Lender or any other
Person.

                  SECTION 8.05 Successor Agents. Each of the Agent and the
Collateral Agent (each for purposes only of this Section 8.05, an "AGENT") may
resign at any time (effective when such Agent shall be discharged, as provided
below) by giving written notice thereof to the Lenders and the Borrower. Upon
any such resignation, the Required Lenders shall have the right to appoint a
successor Agent, which shall be a Qualified Successor Agent. If no successor
Agent shall have been so appointed by the Required Lenders and shall have
accepted such appointment, within 30 days after the retiring Agent's giving of
notice of resignation, then the retiring Agent may, on behalf of the Required
Lenders appoint a successor Agent, which shall be a Qualified Successor Agent.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
and upon the execution and filing or recording of such financing statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, such successor Agent shall succeed to and become vested with all
the rights, powers, discretion, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations under the
Loan Documents and the other Operative Documents. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article VIII and the
other provisions of this Agreement applicable to the Agent shall be binding on
and inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under the Loan Documents and the other Operative Documents.

                  SECTION 8.06 Lead Arrangers. Neither Lead Arranger shall have
any obligation to the Lenders under this Agreement.

                                   ARTICLE IX

                                  MISCELLANEOUS

                  SECTION  9.01 Amendments, Etc. Subject to the other provisions
of this Agreement, no amendment, waiver, modification or supplement of any
provision of this Agreement or any other Loan Document, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Borrower, the Agent and the Required
Lenders, and then such amendment, waiver, modification, supplement or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that without the prior written consent of
each Lender, no amendment waiver, modification, supplement or consent
(including, without

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limitation, any consent or waiver by the Collateral Agent with respect to the
Subsidiary Loan Documents) shall be effective that amends, waives, modifies,
supplements, or consents to any departure from, any provision of this Agreement
in any way which would:

                  (a)      reduce the amount of principal or interest that is
         payable on account of any Advance or portion thereof, or delay any
         scheduled date for payment thereof; or

                  (b)      reduce fees payable by the Borrower to the Agent
         which relate to payments to the Lenders or delay the dates on which
         such fees are payable; or

                  (c)      reduce any rights expressly granted to the Lenders to
         receive any other amounts payable under this Agreement, or delay any
         scheduled date for payment thereof; or

                  (d)      subject such Lender to any increased or additional
         Obligations hereunder or in connection herewith; or

                  (e)      amend or waive any provision contained in this
         Section 9.01 or in the proviso to Section 5.02(t);

                  (f)      release, modify or impair the pledge, assignment and
         security interests provided for in this Agreement;

                  (g)      amend the definition of Required Lenders;

                  (h)      subordinate any Lien of the Collateral Agent for the
         benefit of the Secured Parties or the Subsidiary Secured Parties as
         defined in the Subsidiary Borrower Credit Agreement to any other Lien;

                  (i)      consent to any assignment or transfer of the
         Borrower's or any Subsidiary Loan Parties' rights and obligations under
         any Loan Document or otherwise release the Borrower or any Subsidiary
         Loan Party from its obligations under any Loan Document; or

                  (j)      amend the provisions of Section 7.09(c).

                  SECTION 9.02 Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including telecopy
communication) and mailed, telecopied or delivered:

                  (a)      if to the Borrower, to its address at El Paso
         Corporation, 1001 Louisiana Street, Houston, Texas, 77002, Attention:
         Chief Financial Officer;

                  (b)      if to CNAI, to its address at 1200 Smith Street,
         Suite 2000, Houston, Texas, 77002, Attention: Carol Rooney; with copies
         to CGMI at 388 Greenwich Street, New York, NY 10013;

                  (c)      if to CSFB, to its address at 11 Madison Avenue, New
         York, New York 10010, Attention: James Moran, telephone (212) 325-9176,
         fax (212) 743-1878; with a copy to Credit Suisse First Boston LLC, 1100
         Louisiana Street, Houston, Texas 77002, Attention: Paul Davis,
         telephone (713) 890-1407, fax (713) 890 1500;

                  (d)      as to any other Lender at the address specified in
         the Assignment and Acceptance pursuant to which it became a Lender;

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                  (e)      if to the Agent, to its address at 1200 Smith Street,
         Suite 2000, Houston, Texas, 77002, Attention: Carol Rooney;

                  (f)      if to the Collateral Agent, to its address at 1200
         Smith Street, Suite 2000, Houston, Texas, 77002, Attention: Carol
         Rooney; or

                  (g)      as to each party, at such other address as shall be
         designated by such party in a written notice to the other parties. Any
         such notices and communications shall be deemed to be delivered, given,
         and received for all purposes as of the date so delivered, if delivered
         personally, or otherwise as of the date on which the same was received
         or when the appropriate answerback or other evidence of receipt is
         given, if telecopied or otherwise transmitted, respectively (if a
         Business Day or, if not, on the next succeeding Business Day).

                  SECTION 9.03 No Waiver; Remedies. No failure on the part of
the Borrower, any Lender or the Agent or the Collateral Agent exercise, and no
delay in exercising, any right hereunder or under any Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.

                  SECTION 9.04 Costs and Expenses. (a) The Borrower will
reimburse all reasonable out-of-pocket expenses (including, without limitation,
expenses incurred in connection with due diligence and fees and expenses of
counsel) (i) of the Agent, the Collateral Agent, the Co-Agents and the Lead
Arrangers incurred by them in connection with the preparation, syndication,
execution, administration (including, without limitation, all costs and expenses
incurred by the Collateral Agent in connection with establishing and maintaining
the Collateral Account), waiver and modification of the this Agreement and the
other Operative Documents and (ii) of the Agent and the Lenders incurred by them
in connection with the enforcement of this Agreement and the other Operative
Documents. The Borrower, upon presentation of a statement of account, shall
reimburse such amounts, whether or not the transactions contemplated herein are
consummated or the Operative Documents are executed and delivered.

                  (b)      The indemnities set forth in this Section 9.04 shall
be in addition to any other obligations or liabilities of the Borrower hereunder
or at common law or otherwise; provided, however, that the indemnities set forth
in this Section 9.04 shall not apply with respect to Taxes and liabilities with
respect thereto, for which the exclusive remedy of the Lender and the Agent and
the Collateral Agent against the Borrower shall be pursuant to Section 2.09
hereof. Without prejudice to the survival of any other obligation of the
Borrower under this Agreement, but subject to the foregoing, the indemnities and
obligations contained in this Section 9.04 shall survive the payment in full of
the principal of and interest on the Loan or any other termination of this
Agreement.

                  (c)      If any payment of principal of any LIBOR Advance is
made by the Borrower to or for the account of any Lender other than on the last
day of the Interest Period for such Advance, as a result of a payment pursuant
to Section 2.06, acceleration of the maturity of the Borrower Notes pursuant to
Section 6.01 or for any other reason, or if the Borrower fails to make any
payment or prepayment of an Advance for which a notice of prepayment has been
given or that is otherwise required to be made, whether pursuant to Section
2.04, 2.06 or 6.01 or otherwise, the Borrower shall, upon demand by the affected
Lender (with a copy of such demand to the Agent), pay to the Agent for the
account of the Lender any amounts required to compensate such Lender for any
additional losses, costs or expenses that it may reasonably incur as a result of
such payment or such failure to pay or prepay, as the case may be, including,
without limitation, any loss (including loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Lender to fund or maintain such Advance.

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<PAGE>

                  (d)      The Borrower agrees to indemnify, defend and save and
hold harmless the Agent, each Lender and each of their Affiliates and their
respective officers, directors, employees, agents and advisors (each, an
"INDEMNIFIED PARTY") from and against, and shall pay within ten days after
demand therefor, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation or proceeding or
preparation of a defense in connection therewith) (i) the Loan Facility, the
actual or proposed use of the proceeds of the Advances, the Operative Documents
or any of the transactions contemplated thereby, including, without limitation,
any acquisition or proposed acquisition of all or any portion of the Equity
Interests in or debt securities or substantially all of the assets of the
Borrower or any of its Subsidiaries or (ii) the actual or alleged presence of
hazardous materials on any property of the Borrower or any Subsidiary Loan Party
or any of its Subsidiaries or any environmental action relating in any way to
the Borrower or any Subsidiary Loan Party or any of its Subsidiaries], except to
the extent such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful misconduct. In the
case of an investigation, litigation or other proceeding to which the indemnity
in this Section 9.04(d) applies, such indemnity shall be effective whether or
not such investigation, litigation or proceeding is brought by the Borrower or
any Subsidiary Loan Party, its directors, shareholders or creditors or an
Indemnified Party, whether or not any Indemnified Party is otherwise a party
thereto and whether or not the transactions contemplated hereunder or under the
other Operative Documents are consummated. The Borrower also agrees not to
assert any claim against the Agent, any Lender or any of their Affiliates, or
any of their respective officers, directors, employees, agents and advisors, on
any theory of liability, for special, indirect, consequential or punitive
damages arising out of or otherwise relating to the Loan Facility, the actual or
proposed use of the proceeds of the Advances, the Operative Documents or any of
the transactions contemplated by the Operative Documents.

                  SECTION 9.05 Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making of the request
or the granting of the consent specified by Section 6.01 hereof to authorize the
Agent to declare the Loan due and payable pursuant to the provisions of Section
6.01 hereof each Lender is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set-off and otherwise apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by such Lender to or for the
credit or the account of the Borrower (other than any deposits held in the
Collateral Account, which deposits the parties to this Agreement acknowledge are
specifically excluded from the Lender's set-off rights provided for in this
Section 9.05) against any and all of the Obligations of the Borrower now or
hereafter existing under this Agreement and although such obligations may be
unmatured. Each Lender agrees promptly to notify the Borrower after any such
set-off and application; provided, however, that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
each Lender under this Section 9.05 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that such Lender may
have.

                  SECTION 9.06 Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower, the Agent, the Lead
Arrangers, the Co-Agents and the Collateral Agent and when the Agent shall have
been notified by the Initial Lenders that the Initial Lenders have executed it
and thereafter shall be binding upon and inure to the benefit of the Borrower,
the Agent, the Collateral Agent, the Lead Arrangers, the Co-Agents and the
Lenders and their respective successors and assigns; provided, however, that the
obligations of the Lenders under Article II hereof shall not become effective
until satisfaction by the Borrower or waiver by each Lender of each of the
conditions set forth in Section 3.01 hereof; and provided further that the
Borrower shall not have the right to assign its rights or obligations hereunder
or any interest herein without the prior written consent of the affected Lender.

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                  SECTION 9.07 Assignments and Participations. (a) Each Lender
may assign to one or more banks or other financial institutions all or a portion
of its rights and obligations under this Agreement (including all or a portion
of the Advances owing to it and the Borrower Notes, if any, held by it);
provided, however, that (i) each such assignment shall be of a constant, and not
a varying, percentage of all such Lender's rights and obligations under this
Agreement, (ii) the amount of the Commitment or Advances (as the case may be) of
the assigning Lender being assigned to an assignee pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event (except in the case of an
assignment to an existing Lender, an Affiliate of any Lender, a Related Fund of
any Lender or an assignment which will result in a group of Lenders which are
managed by the same Person holding a Commitment or Advances (as the case may be)
of not less than $1,000,000) be less than $1,000,000 (or, if less, the entire
Commitment or Advances (as the case may be) of the assigning Lender) and shall
be an integral multiple of $1,000,000, (iii) each such assignment shall be to an
Eligible Assignee, and (iv) the parties to each such assignment shall execute
and deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with any Borrower Notes subject to such
assignment and a processing and recordation fee of $3,500, and shall send to the
Borrower an executed counterpart of such Assignment and Acceptance. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, (A) the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder and (B) the assigning Lender thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto).

                  (b)      By executing and delivering an Assignment and
Acceptance, each Lender assignor thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or any Subsidiary Loan Party or the performance or observance by
any thereof of any of its obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 5.01 or 5.03 and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such assignee
confirms that it is (subject to any approval required in the definition of
"Eligible Assignee") an Eligible Assignee; (vi) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.

                  (c)      The Agent shall maintain at its address referred to
in Section 9.02 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register (which register may be in

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electronic form) for the recordation of the names and addresses of the Lenders
and the Commitment of, and principal amount of the Advances owing to, each
Lender from time to time (the "REGISTER"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is recorded
in the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower at any reasonable
time and from time to time upon reasonable prior notice. Upon the acceptance of
any Assignment and Acceptance for recordation in the Register, and if any
assignee under this Section 9.07 shall not be a Lender at the time of the
assignment, it also shall deliver to the Agent such administrative details as
the Agent may reasonably require.

                  (d)      Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee representing that it is an
Eligible Assignee, together with any Borrower Notes subject to such assignment,
the Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit A hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five Business Days
after its receipt of such notice and its receipt of an executed counterpart of
such Assignment and Acceptance, the Borrower, at its own expense, shall execute
and deliver to the Agent in exchange for the surrendered Borrower Notes, if any,
and to the extent requested, new Borrower Notes to the order of such Eligible
Assignee (or its nominee) in an amount equal to the amount of loans acquired
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained a loan hereunder, new Borrower Notes, if requested, payable to the
order of the assigning Lender in an amount equal to the loan retained by it
hereunder. Such new Borrower Notes, if any, shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Borrower
Notes, if any, shall be dated the Closing Date and shall otherwise be in
substantially the form of Exhibit A.

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

                  (f)      Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower.

                  (g)      Anything in this Agreement to the contrary
notwithstanding, any Lender may at any time create a security interest in all or
any portion of its rights under this Agreement (including the Advances owing to
it) and the Borrower Notes issued to it hereunder in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System (or any

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successor regulation) and the applicable operating circular of such Federal
Reserve Bank. Any Lender which is a fund may also create such a security
interest in favor of any holders of obligations owed or securities issued by
such Lender or to any trustee for or other representatives of such holders. No
consent of either the Agent or the Borrower shall be necessary with respect to
such security interest.

                  SECTION 9.08 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York.

                  SECTION 9.09 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

                  SECTION 9.10 Consent to Jurisdiction. (a) The Borrower, on
behalf of itself and its successors and assigns and in respect of its property,
hereby irrevocably agrees, to the fullest extent it may do so under law, in the
event it files any action, one effect of which could be to halt, enjoin, impair
or hinder the enforcement of the parties' obligations hereunder or under the
other Loan Documents, or proceedings to enforce collection on those obligations,
including, but not limited to, any proceeding under the United States Bankruptcy
Code, to file such action, and hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined, in the United
States District Court for the Southern District of New York sitting in New York
City or in such District's Bankruptcy Court, as applicable, assuming venue in
that District would be proper, or in the courts of the State of New York, First
Department sitting in New York County. The Borrower, on behalf of itself and its
successors and assigns, hereby irrevocably waives, to the fullest extent it may
do so under law, the defense of an inconvenient forum to such action or
proceeding. To the fullest extent permitted by applicable law, the Borrower, on
behalf of itself and its successors and assigns, hereby irrevocably agrees to
elect in favor of filing in or transferring to the United States District Court
for the Southern District of New York, assuming that venue in such district
would otherwise be proper, to the extent it has any control over the choice of a
district for the filing or transfer of a case under the United States Bankruptcy
Code for any of its Affiliates as debtor. In the event an Affiliate of the
Borrower or any of its Affiliates is the subject of a separate case under the
United States Bankruptcy Code, in a court other than the Bankruptcy Court for
the Southern District of New York, the Borrower, on behalf of itself and its
successors and assigns, hereby irrevocably agrees to the fullest extent
permitted by applicable law to seek a transfer to the latter district, assuming
venue in such district would otherwise be proper. In the event that a bankruptcy
court enters a motion to consolidate multiple cases filed by the Borrower or any
of its Affiliates, the Borrower also agrees to the fullest extent permitted by
applicable law to seek a transfer of the consolidated case to the latter
district, assuming venue in such district would otherwise be proper. The
execution of this Agreement is expressly conditioned on the willingness and
intention of the Borrower to enforce the provisions of this Section 9.10. In
addition, the Borrower warrants that it is subject to no preexisting obligations
that would interfere with its adherence to the foregoing provisions of this
Section 9.10 and additionally warrants that it will not enter into other
agreements that in any way compromise its ability to adhere to these provisions
without the express written consent of the Lender.

                  (b)      Any legal action or proceeding with respect to this
Agreement or any other Loan Document may be brought in the courts of the State
of New York located in the County of New York or of the United States for the
Southern District of New York, and, by execution and delivery of this Agreement,
the Borrower hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Nothing herein shall affect the right of the Agent, the Collateral Agent
or the Lender to bring any legal action or proceeding with respect to this
Agreement or any other Loan Document against the Borrower in the courts of any
other jurisdiction. To the fullest

                                       72
<PAGE>
extent permitted by applicable law, the Borrower hereby irrevocably waives any
objection that it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Loan Document brought in the courts referred to in
subsection (a) of this Section 9.10 and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.

                  (c)      The Borrower hereby irrevocably appoints CT
Corporation System with offices on the date hereof at 111 Eighth Avenue, 13th
Floor, New York, NY 10011 (or any successor, provided that such successor shall
be located in New York City and engaged in the business of acting as a process
agent and shall be a company of national recognition, and provided further that
notice of such successor agent shall be promptly given to the Collateral Agent
and the Agent by the Borrower, the "PROCESS AGENT") as its designee, appointee
and agent to receive, accept and acknowledge on its behalf and its property
service of copies of the summons and complaint and any other process that may be
served in any action or proceeding under subsection (a) or (b) of this Section
9.10. Such service may be made by delivering a copy of such process to the
Borrower in care of the Process Agent at the Process Agent's address and the
Borrower hereby authorizes and directs the Process Agent to accept such service
on its behalf. As an alternative method of service, the Borrower also
irrevocably consents to the service of any and all process in any such action or
proceeding by the delivering of copies of such process to the Borrower at its
address specified in Section 9.02 hereof. To the fullest extent permitted by
applicable law, the Borrower agrees that a non-appealable final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.

                  SECTION 9.11 Loan Facility Migration. To facilitate the
placement of the Take-Out Securities, the Co-Agents understand that the Borrower
intends to cause the proposed amendment and restatement of the Senior Bank
Facility to provide that (a) the obligations of the Borrower under the Loan
Facility may be assigned to and assumed by EPPH, another Chain Subsidiary or a
newly-created entity held by a Chain Subsidiary, in each case as approved by the
Co-Agents (such assignee referred to herein as the "ASSIGNEE"); (b) the interest
of the Borrower in the Collateral may be assigned contemporaneously to the
Assignee (subject to the liens and security interests arising under the Loan
Facility); and (c) the Borrower may guarantee the obligations of the Assignee
under the Loan Facility that are assumed by the Assignee. At the mutual
agreement of the Borrower and the Co-Agents, at any time after giving effect to
such amendment and restatement of the Senior Bank Loan Facility (if such
amendments occur), the Borrower (x) shall assign to the Assignee, and shall
cause the Assignee to assume, all of the obligations of the Borrower under the
Loan Facility; (y) shall assign to the Assignee all of the Borrower's interest
in the Collateral; and (z) shall guarantee the obligations of the Assignee under
the Loan Facility. Following such assignment and assumption, the Assignee shall
surrender to the Subsidiary Borrowers the notes evidencing the Subsidiary Loans
in exchange for new notes payable to the order of the Assignee.

                  SECTION 9.12 Waiver of Jury Trial. The Borrower, the Agent,
the Collateral Agent and the Lender each hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to any of the Loan
Documents, the Loan or the actions of the Agent, the Collateral Agent or the
Lender in the negotiation, administration, performance or enforcement thereof.

                  SECTION 9.13 Most Favored Nation Treatment. Each Lender and
each Lead Arranger shall have the benefit of "most favored nation" treatment
with respect to the Senior Bank Facility and the Refinancing of the Electron
Transaction (collectively, the "MFN TRANSACTIONS"), whether such MFN
Transactions close prior to or after the Closing Date. Each Co-Agent, on behalf
of the Lenders, shall have the individual right (exercised by written notice to
the Borrower) to cause the Operative Documents to be

                                       73
<PAGE>

amended, restated, supplemented or otherwise modified to reflect the terms and
conditions of the MFN Transactions in their sole discretion. The foregoing shall
not apply to pricing terms after the completion of the successful syndication of
the Loan Facility (defined as may be separately agreed among the Borrower and
the Lead Arrangers). "Most-favored nation" treatment shall not require the
Lenders to accept any term or condition of any MFN Transaction, including,
without limitation, any term or condition that is less favorable to the Lenders
than those that exist on the Closing Date. This Section 9.13 shall not apply to
any conforming changes to be made to the provisions of this Agreement as
contemplated under Section 9.15 of the Existing Credit and Security Agreement.

                  SECTION 9.14 Termination. Upon payment in full of all of the
Obligations of the Borrower under this Agreement on the Termination Date, (a)
this Agreement shall terminate (other than obligations under this Agreement
which are expressly stated to survive such termination) and (b) the Collateral
and the Subsidiary Collateral shall be released from the Liens created by the
Loan Documents and the other Operative Documents, and all Obligations (other
than those expressly stated to survive such termination) of the Borrower and the
Subsidiary Loan Parties under the Loan Documents and the other Operative
Documents shall terminate, in each case without delivery of any instrument or
performance of any act by any Person. In addition, the Agent shall, from time to
time after the Termination Date and at the sole expense of the Borrower, deliver
such statements of termination as the Borrower may reasonably request to
evidence the termination of this Agreement and the other Operative Documents and
the release of the Liens created hereby and thereby.

                                       74
<PAGE>

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

                                             EL PASO CORPORATION

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

                                       75
<PAGE>

                                             CITICORP NORTH AMERICA, INC.,
                                             as Agent and as Collateral Agent

                                             By: /s/ Amy K. Pincu
                                                ---------------------
                                                Name:  Amy K. Pincu
                                                Title: Vice President

<PAGE>

                                             Co-Agents:

                                             CITICORP NORTH AMERICA, INC.

                                             By: /s/ Amy K. Pincu
                                                ---------------------
                                                Name:  Amy K. Pincu
                                                Title: Vice President

                                             CREDIT SUISSE FIRST BOSTON, ACTING
                                             THROUGH ITS CAYMAN ISLANDS BRANCH

                                             By: /s/ James Finch
                                                ------------------------
                                                Name:  James Finch
                                                Title: Managing Director

                                             By: /s/ James Moran
                                                ------------------
                                                Name:  James Moran
                                                Title: Director

<PAGE>

                                             Lead Arrangers:
                                             ---------------

                                             CITIGROUP GLOBAL MARKETS INC.
                                             (formerly SALOMON SMITH BARNEY
                                             INC.)

                                             By: /s/ David Friedman
                                                ------------------------
                                                Name:  David Friedman
                                                Title: Managing Director

                                             CREDIT SUISSE FIRST BOSTON, ACTING
                                             THROUGH ITS CAYMAN ISLANDS BRANCH

                                             By: /s/ James Finch
                                                ------------------------
                                                Name:  James Finch
                                                Title: Managing Director

                                             By: /s/ James Moran
                                                ------------------
                                                Name:  James Moran
                                                Title: Director

<PAGE>
                                             Initial Lenders (as of March 13,
                                             2003):

         $448,250,000.00                     CITICORP NORTH AMERICA, INC.

                                             By: /s/ Amy K. Pincu
                                                ---------------------
                                                Name:  Amy K. Pincu
                                                Title: Vice President

         $470,750,000.00                     CREDIT SUISSE FIRST BOSTON, ACTING
                                             THROUGH ITS CAYMAN ISLANDS BRANCH

                                             By: /s/ James Finch
                                                ------------------------
                                                Name:  James Finch
                                                Title: Managing Director

                                             By: /s/ James Moran
                                                ------------------
                                                Name:  James Moran
                                                Title: Director

<PAGE>

         $35,000,000.00                      ABLECO FINANCE LLC

                                             By: /s/ Mark A. Neporent
                                                ----------------------------
                                                Name:  Mark A. Neporent
                                                Title: Senior Vice President

<PAGE>

         $65,000,000.00                      AP FUNDING LP

                                             By: A3 Fund Management LLC

                                             Its General Partner

                                             By: /s/ Mark A. Neporent
                                                -----------------------
                                                Name:  Mark A. Neporent
                                                Title: Vice President

<PAGE>

         $15,000,000.00                      MANCHESTER SECURITIES CORP.

                                             By: /s/ Elliot Greenberg
                                                -----------------------
                                                Name:  Elliot Greenberg
                                                Title: Vice President

<PAGE>

         $12,000,000.00                      FIR TREE RECOVERY MASTER FUND, L.P.

                                             By: /s/ David Sultan
                                                -------------------
                                                Name:  David Sultan
                                                Title: Director

         $18,000,000.00                      FIR TREE VALUE PARTNERS, LDC

                                             By: /s/ David Sultan
                                                -------------------
                                                Name:  David Sultan
                                                Title: Director

<PAGE>

         $10,000,000.00                      FOOTHILL INCOME TRUST II, L.P.
                                             By FIT II GP, LLC, Its General
                                                Partner

                                             By: /s/ Dennis R. Ascher
                                                -----------------------
                                                Name:  Dennis R. Ascher
                                                Title: Managing Member

<PAGE>

         $5,000,000.00                       FERNWOOD ASSOCIATES, LP

                                             By: /s/ Thomas P. Burger
                                                -----------------------
                                                Name:  Thomas P. Burger
                                                Title: General Partner

<PAGE>

         $10,000,000.00                      CONTINENTAL CASUALTY COMPANY

                                             By: /s/ Marilou R. McGirr
                                                ------------------------
                                                Name:  Marilou R. McGirr
                                                Title: Vice President

<PAGE>

         $2,000,000.00                       LONGACRE MASTER FUND LTD.

                                             By: /s/ Vladimir Jelisavcic
                                                --------------------------
                                                Name:  Vladimir Jelisavcic
                                                Title: Director

<PAGE>

         $1,000,000.00                       401(k) SAVINGS PLAN OF THE CHASE
                                             MANHATTAN BANK AND CERTAIN
                                             AFFILIATED COS.
                                             By: MacKay Shields LLC
                                             Its: Investment Advisor

                                             By  /s/ Robert A. Nisi
                                                ----------------------
                                                Name:  Robert A. Nisi
                                                Title: General Counsel

         $1,000,000.00                       MACKAY SHIELDS LONG/SHORT FUND, LP
                                             By: MacKay Shields LLC
                                             Its: Investment Advisor

                                             By  /s/ Robert A. Nisi
                                                ----------------------
                                                Name:  Robert A. Nisi
                                                Title: General Counsel

         $4,000,000.00                       MACKAY SHIELDS LONG/SHORT FUND
                                             (MASTER) LP
                                             By: MacKay Shields LLC
                                             Its: Investment Advisor

                                             By  /s/ Robert A. Nisi
                                                ----------------------
                                                Name:  Robert A. Nisi
                                                Title: General Counsel

         $5,000,000.00                       NATIONS MASTER INVESTMENT TRUST
                                             By: MacKay Shields LLC
                                             Its: Investment Advisor

                                             By  /s/ Robert A. Nisi
                                                ----------------------
                                                Name:  Robert A. Nisi
                                                Title: General Counsel

<PAGE>

         $9,000,000.00                       THE MAINSTAY FUNDS ON BEHALF OF ITS
                                             HIGH YIELD CORPORATE BOND FUND
                                             SERIES
                                             By: MacKay Shields LLC
                                             Its: Investment Advisor

                                             By  /s/ Robert A. Nisi
                                                ----------------------
                                                Name:  Robert A. Nisi
                                                Title: General Counsel

<PAGE>

         $8,500,000.00                       MARINER LDC

                                             By  /s/ Charles Howe, II
                                                -----------------------
                                                Name:  Charles Howe, II
                                                Title: Director

         $10,000,000.00                      TRILOGY PORTFOLIO COMPANY, LLC

                                             By  /s/ Charles Howe, II
                                                -----------------------
                                                Name:  Charles Howe, II
                                                Title: Treasurer

         $4,000,000.00                       CASPIAN CAPITAL PARTNERS, L.P.

                                             By  /s/ Charles Howe, II
                                                -----------------------
                                                Name:  Charles Howe, II
                                                Title: Treasurer

         $2,500,000.00                       MARINER OPPORTUNITY FUND, LP

                                             By  /s/ Charles Howe, II
                                                -----------------------
                                                Name:  Charles Howe, II
                                                Title: Treasurer

<PAGE>
         $15,000,000.00                      SOF INVESTMENTS, L.P.

                                             By  /s/ Marc R. Lisker
                                                ----------------------
                                                Name:  Marc R. Lisker
                                                Title: General Counsel

<PAGE>

         $3,000,000.00                       REDWOOD MASTER FUND, LTD

                                             By  /s/ Jonathan Koletch
                                                -----------------------
                                                Name:  Jonathan Koletch
                                                Title: Director

<PAGE>

         $25,000,000.00                      STARK EVENT TRADING LTD.

                                             By  /s/ Colin Lancaster
                                                ----------------------
                                                Name:  Colin Lancaster
                                                Title: General Counsel

<PAGE>

         $10,000,000.00                      THE TRAVELERS INSURANCE COMPANY

                                             By  /s/ Allen Cantrell
                                                -------------------------
                                                Name:  Allen Cantrell
                                                Title: Investment Officer

<PAGE>

         $5,000,000.00                       UBS AG STAMFORD BRANCH

                                             By  /s/ Anthony N. Joseph
                                                --------------------------
                                                Name:  Anthony N. Joseph
                                                Title: Associate Director,
                                                       Banking Products
                                                       Services, US

                                             By  /s/ Jennifer L. Poccia
                                                --------------------------
                                                Name:  Jennifer L. Poccia
                                                Title: Associate Director,
                                                       Banking Products
                                                       Services, US

<PAGE>

         $2,000,000.00                       THE PRESIDENT AND FELLOWS OF
                                             HARVARD COLLEGE
                                             By: Whippoorwill Associates,
                                                Incorporated
                                             Its: Agent and Authorized Signatory

                                             By  /s/ Shelley F. Greenhaus
                                                ---------------------------
                                                Name:  Shelley F. Greenhaus
                                                Title: Managing Director

<PAGE>

         $4,000,000.00                       YORK CAPITAL MANAGEMENT

                                             By  /s/ Doug Silverman
                                                ---------------------
                                                Name:  Doug Silverman
                                                Title: Associate<PAGE>

                                                                   EXHIBIT 10.GG

                                                                  CONFORMED COPY

                              U.S. $753,085,340.10

            AMENDED AND RESTATED SPONSOR SUBSIDIARY CREDIT AGREEMENT

                       Originally Dated as of May 9, 2000

   Amended and Restated as of December 15, 2000, June 29, 2001, July 19, 2002

            and as further Amended and Restated as of April 16, 2003

                                      among

                             NORIC HOLDINGS, L.L.C.,

                                  as borrower,

                                       and

                  THE OTHER SPONSOR SUBSIDIARIES PARTY HERETO,

                                 as co-obligors,

                           MUSTANG INVESTORS, L.L.C.,

                          as Sponsor Subsidiary Lender,

                                       and

                          CLYDESDALE ASSOCIATES, L.P.,

                          as Subordinated Note Holder,

                                       and

                            WILMINGTON TRUST COMPANY,

                     as Sponsor Subsidiary Collateral Agent,

                                       and

                         CITICORP NORTH AMERICA, INC.,

                           as Mustang Collateral Agent

Sponsor Subsidiary Credit Agreement

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                        Page
<S>                                                                                                     <C>
                   ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

Section 1.01. Certain Defined Terms..............................................................          2
Section 1.02. Computation of Time Periods........................................................          3
Section 1.03. No Presumption Against Any Party...................................................          3
Section 1.04. Use of Certain Terms...............................................................          3
Section 1.05. Headings and References............................................................          4
Section 1.06. Accounting Terms...................................................................          4
Section 1.07. Balance in Cash Reserve............................................................          4
Section 1.08. Face Value Amount..................................................................          4
Section 1.09. Supplements to Schedules...........................................................          5
Section 1.10. E&P Assets - Interest Coverage.....................................................          5
Section 1.11. Sponsor Subsidiary Notices.........................................................          6
Section 1.12. Material Adverse Effect............................................................          6

                  ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES

Section 2.01. The Advances.......................................................................          6
Section 2.02. [Intentionally omitted]............................................................          6
Section 2.03. Interest...........................................................................          6
Section 2.04. Repayment of Advances..............................................................          7
Section 2.05. Prepayment of Advances.............................................................          7
Section 2.06. Payments and Computations; Additional Amounts......................................          9
Section 2.07. Taxes; Additional Financing Costs..................................................          9
Section 2.08. Evidence of Indebtedness...........................................................         11
Section 2.09. E&P Assets - E&P Borrowing Base Determinations.....................................         12
Section 2.10. Collateral Shortfall...............................................................         16
Section 2.11. Adjustments to Energy Investment Loan Values.......................................         17

                       ARTICLE III CONDITIONS TO ADVANCES

Section 3.01. Conditions Precedent to Making the Initial Advance.................................         18
Section 3.02. Conditions Precedent to Making the Additional Advances.............................         23
Section 3.03. Conditions Precedent to Third Restatement on July 19, 2002.........................         24
Section 3.04. Conditions Precedent to Amending and Restating this Agreement on
                 April 16, 2003..................................................................         39

                    ARTICLE IV REPRESENTATIONS AND WARRANTIES

Section 4.01. Representations and Warranties with Respect to Each Sponsor
                Subsidiary.......................................................................         35
Section 4.02. Representations and Warranties with Respect to Energy Investments
                and Controlled Businesses........................................................         41
</TABLE>

Sponsor Subsidiary Credit Agreement

                                       i

<PAGE>

<TABLE>
<S>                                                                                                       <C>
Section 4.03. Representations and Warranties with Respect to E&P Assets..........................         43
Section 4.04. Timing of Representations and Warranties with respect to Operative
                Documents........................................................................         45

                   ARTICLE V COVENANTS OF SPONSOR SUBSIDIARIES

Section 5.01. Affirmative Covenants with Respect to Sponsor Subsidiaries.........................         45
Section 5.02. Negative Covenants with Respect to Sponsor Subsidiaries............................         49
Section 5.03. Refinancing of the Controlled Business Debt........................................         55
Section 5.04. Financial Covenants................................................................         56
Section 5.05. Certain Negative Covenants with respect to Lipizzan and Noric LP...................         58
Section 5.06. A-Loans and Total Cash Collateral Amount...........................................         60
Section 5.07. Appraisals of Energy Investments...................................................         61
Section 5.08. Affirmative Covenants with Respect to Controlled Businesses........................         62
Section 5.09. Negative Covenants with Respect to Each Controlled Business........................         64
Section 5.10. Covenants with Respect to E&P Participation Agreements and
                Production Payment Agreements....................................................         73
Section 5.11. Application of Amounts on Deposit in the Proceeds Account..........................         75

                          ARTICLE VI EVENTS OF DEFAULT

Section 6.01. Events of Default..................................................................         76
Section 6.02. Termination and Liquidation Event..................................................         81

              ARTICLE VII ADMINISTRATION, SETTLEMENT AND COLLECTION

Section 7.01. Maintaining the Cash Reserves and Operating Accounts...............................         82
Section 7.02. Deposit of Funds into the Sponsor Subsidiary Cash Reserve, the Noric
                Holdings I Cash Reserve, the Noric Holdings III Deposit Account
                and Noric Holdings IV Cash Reserve...............................................         84
Section 7.03. Permitted Investments..............................................................         86
Section 7.04. Transfers from the Cash Reserves...................................................         88
Section 7.05. Transfers from the Sponsor Subsidiary Operating Account............................         93
Section 7.06. Subsisting Event of Default or Incipient Event.....................................         94
Section 7.07. Transfers from the Cash Reserves and the Sponsor Subsidiary
                Operating Account in Respect of Payments on the Maturity Date and
                Application of Proceeds of Collateral Pursuant to the Sponsor
                Subsidiary Security Agreement....................................................         94

                        ARTICLE VIII THE COLLATERAL AGENT

Section 8.01. Authorization and Action...........................................................         95
Section 8.02. Sponsor Subsidiary Collateral Agent's Reliance, Etc................................         96
Section 8.03. Mustang Credit Decision............................................................         96
Section 8.04. Fee ...............................................................................         97
</TABLE>

Sponsor Subsidiary Credit Agreement

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                      <C>
      ARTICLE IX ASSIGNMENTS; ACCESSION OF ADDITIONAL SPONSOR SUBSIDIARIES;
                       ACQUISITIONS OF TRANSACTION ASSETS

Section 9.01. No Assignment by any Sponsor Subsidiary............................................         97
Section 9.02. Additional Sponsor Subsidiaries and Acquisitions of Transaction Assets.............         97
Section 9.03. Permitted Assignment by Mustang....................................................         97

                            ARTICLE X INDEMNIFICATION

Section 10.01. Indemnities by Sponsor Subsidiaries...............................................         97
Section 10.02. Survival of Indemnification Obligations...........................................         99
Section 10.03. Limitations on Indemnification Obligations........................................         99
Section 10.04. Payments..........................................................................         99
Section 10.05. Procedural Requirements...........................................................         99

                            ARTICLE XI MISCELLANEOUS

Section 11.01. Amendments, Etc...................................................................        101
Section 11.02. Notices, Etc......................................................................        101
Section 11.03. No Waiver, Remedies...............................................................        102
Section 11.04. Costs and Expenses................................................................        102
Section 11.05. Right of Setoff...................................................................        103
Section 11.06. Binding Effect....................................................................        104
Section 11.07. Governing Law.....................................................................        104
Section 11.08. Execution in Counterparts.........................................................        104
Section 11.09. Non-Recourse Liability............................................................        104
Section 11.10. WAIVER OF JURY TRIAL..............................................................        104
Section 11.11. Authorization of Noric Holdings as Sponsor Subsidiaries' Agent....................        104
Section 11.12. Consent to Jurisdiction...........................................................        105
Section 11.13. Permitted Disclosure..............................................................        105
Section 11.14. No Novation, Etc..................................................................        105
</TABLE>

SCHEDULES

Schedule I                 Acquisition/Accession Procedures Schedule
Schedule 3.04(b)           Legal Opinions
Schedule 5.09(d)(A)        Oil and Gas Properties held by CIG Controlled
                           Business as at the Fourth Restatement Date

EXHIBITS

EXHIBIT A                  Form of E&P Participation Agreement
EXHIBIT B-1                Form of El Paso A-Loan Note
EXHIBIT B-2                Form of El Paso Affiliate A-Loan Note
EXHIBIT C-1                Form of El Paso Demand Loan (El Paso)
EXHIBIT C-2                Form of El Paso Demand Loan (El Paso Affiliates)
EXHIBIT D                  Form of E&P Borrowing Base Report

Sponsor Subsidiary Credit Agreement

                                      iii

<PAGE>

EXHIBIT E                  Hedge Agreements Trade Confirmations

EXHIBIT F                  Form of Sponsor Subsidiary Subordinated Note
EXHIBIT G                  Subordination Provisions
EXHIBIT 5.01(r)            Form of Monthly Report to be delivered Under
                           Section 5.01(r)
EXHIBIT 5.03(b)            Form of El Paso Undertaking
EXHIBIT 5.07(f)            Form of Compliance Certificate to be delivered Under
                           Section 5.07(f)
EXHIBIT 7.04(f)            Form of Compliance Certificate to be delivered Under
                           Section 7.04(f)
EXHIBIT 7.04(g)            Form of Compliance Certificate to be delivered Under
                           Section 7.04(g)

Sponsor Subsidiary Credit Agreement

                                       iv

<PAGE>

            AMENDED AND RESTATED SPONSOR SUBSIDIARY CREDIT AGREEMENT

                  THIS AMENDED AND RESTATED SPONSOR SUBSIDIARY CREDIT AGREEMENT
Originally Dated as of May 9, 2000, Amended and Restated as of December 15,
2000, June 29, 2001, and July 19, 2002, and as further Amended and Restated as
of April 16, 2003 among NORIC HOLDINGS, L.L.C., a Delaware limited liability
company ("NORIC HOLDINGS"), as borrower, each other Sponsor Subsidiary listed on
the signature pages hereof and each other Additional Sponsor Subsidiary that
executes a Sponsor Subsidiary Accession Agreement, MUSTANG INVESTORS L.L.C., a
Delaware limited liability company ("MUSTANG"), as lender, WILMINGTON TRUST
COMPANY, a Delaware banking corporation ("WILMINGTON"), as collateral agent for
Mustang and Clydesdale (as defined below) (the "SPONSOR SUBSIDIARY COLLATERAL
AGENT") and CITICORP NORTH AMERICA, INC., as collateral agent under the Mustang
Credit and Security Agreement (in such capacity, the "MUSTANG COLLATERAL AGENT")
and CLYDESDALE ASSOCIATES, L.P., a Delaware limited partnership or any successor
holder of the Sponsor Subsidiary Subordinated Note (as defined below), as the
Subordinated Note Holder.

                             PRELIMINARY STATEMENTS:

                  (1)      Noric Holdings, the other Sponsor Subsidiaries,
Clydesdale (as lender thereunder) and the Sponsor Subsidiary Collateral Agent
entered into that certain Sponsor Subsidiary Credit Agreement, originally dated
as of May 9, 2000, as amended and restated as of December 15, 2000 and June 29,
2001 and as further amended and restated as of July 19, 2002 among, inter alia,
Noric Holdings, the other Sponsor Subsidiaries, Clydesdale and the Sponsor
Subsidiary Collateral Agent (the "ORIGINAL SPONSOR SUBSIDIARY CREDIT
AGREEMENT"). As of the date hereof, prior to giving effect to the Redemption,
Withdrawal and Consent Agreement, Original Advances in the aggregate principal
amount of $983,085,340.10 (NINE HUNDRED EIGHTY-THREE MILLION, EIGHTY-FIVE
THOUSAND, THREE HUNDRED FORTY DOLLARS AND TEN CENTS) were outstanding under the
Original Sponsor Subsidiary Credit Agreement (the "ORIGINAL OUTSTANDING
ADVANCES").

                  (2)      Pursuant to the Redemption, Withdrawal and Consent
Agreement, Clydesdale redeemed and retired in full Mustang's Clydesdale Class B
Limited Partnership Interest in accordance with Section 7.4 of the Clydesdale
Partnership Agreement (as defined in the Original Sponsor Subsidiary Credit
Agreement) and Distributed to Mustang in kind, as consideration for the
redemption and retirement of Mustang's Clydesdale Class B Limited Partnership
Interest, (a) a senior undivided interest in all of Clydesdale's rights, title
and interest in and to the Original Outstanding Advances under the Original
Sponsor Subsidiary Credit Agreement in the unpaid aggregate principal amount of
$753,085,340.10 (Seven hundred FIFTY-THREE MILLION, EIGHTY-FIVE THOUSAND, THREE
HUNDRED FORTY DOLLARS AND TEN CENTS), together with all amounts (including all
accrued and unpaid interest) owing in respect of such principal amount, (b) all
of Clydesdale's rights, title and interest in and to the Original Sponsor
Subsidiary Credit Agreement to the extent relating to the Original Outstanding
Advances Distributed as described in clause (a) above, and (c) a senior
undivided interest in the Sponsor Subsidiary Security Agreement and the
Collateral thereunder (such interests and other property so Distributed to
Mustang being the "SENIOR DEBT").

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<PAGE>

                  (3)      The remaining undivided interest in the $230,000,000
(TWO HUNDRED THIRTY MILLION DOLLARS) aggregate principal amount of the Original
Outstanding Advances not Distributed pursuant to the Redemption, Withdrawal and
Consent Agreement as described in Paragraph (2) above shall be subordinated at
all times to the Senior Debt on, and otherwise subject to, the terms set forth
in Exhibit G of the Sponsor Subsidiary Credit Agreement (such remaining Original
Outstanding Advances being the "Sponsor Subsidiary Subordinated Debt"). The
Sponsor Subsidiary Subordinated Debt shall be evidenced by a promissory note
(the "Sponsor Subsidiary Subordinated Note"), which shall be issued in favor of
Clydesdale, shall have an original principal amount equal to $230,000,000 (TWO
HUNDRED THIRTY MILLION DOLLARS), shall be in the form of Exhibit F attached to
this Agreement and shall be secured by a subordinated security interest in the
Collateral described in clause (c) of Paragraph (2) above.

                  (4)      It is a condition precedent to the effectiveness of
the fourth amendment and restatement of this Agreement, and Noric Holdings, each
other Sponsor Subsidiary, Mustang, Clydesdale and the Sponsor Subsidiary
Collateral Agent have agreed, that the Sponsor Subsidiaries shall jointly and
severally issue to Clydesdale one or more Sponsor Subsidiary Subordinated Notes
obligating each Sponsor Subsidiary on a joint and several basis to pay the full
amount of the Sponsor Subsidiary Subordinated Debt, and it has been agreed by
Noric Holdings, each other Sponsor Subsidiary, Mustang and Clydesdale that, with
respect to the Sponsor Subsidiary Subordinated Debt, the terms of the Sponsor
Subsidiary Subordinated Note shall supersede the terms of the Original Sponsor
Subsidiary Credit Agreement and shall supersede all rights of Clydesdale and all
obligations of each Sponsor Subsidiary under the Original Sponsor Subsidiary
Credit Agreement with respect to the Sponsor Subsidiary Subordinated Debt, it
being understood and expressly acknowledged that this Agreement shall hereafter
cease to inure to the benefit of Clydesdale, other than (in each of the
following cases, in respect of the portion of the Original Outstanding Advances
constituting Sponsor Subsidiary Subordinated Debt) with respect to accrued
interest, fees and expenses, and indemnification provisions and other
Obligations accrued and owing under the terms of the Original Sponsor Subsidiary
Credit Agreement on or prior to the date hereof or arising in the case of
indemnification under the terms of the Original Sponsor Subsidiary Credit
Agreement.

         (5)      Now, therefore, the parties hereto hereby agree to amend and
restate the Original Sponsor Subsidiary Credit Agreement, and the Original
Sponsor Subsidiary Credit Agreement is hereby amended and restated, in its
entirety to read as follows:

                                   ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

                  Section 1.01. Certain Defined Terms. (a) Words and expressions
defined in the Definitions Agreement dated as of April 16, 2003 among El Paso,
Noric Holdings, the Sponsor Subsidiaries, Mustang, Clydesdale and the other
parties thereto or, if not defined therein, in Exhibit A to the Amended and
Restated El Paso Agreement, dated as of the date of this Agreement, made by El
Paso Corporation, shall have the same meanings in this Agreement unless
otherwise defined herein. A reference to this "AGREEMENT" is a reference to this
Amended

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<PAGE>

and Restated Sponsor Subsidiary Credit Agreement, as amended, supplemented or
modified from time to time.

                  (b)      Unless the context otherwise clearly requires,
references in Section 3.01 to documents, schedules, etc., are to such documents
and other items as in effect as of the Closing Date, capitalized terms used in
such Section 3.01 have the respective meanings assigned thereto in the May 9,
2000 Sponsor Subsidiary Credit Agreement (as defined in Section 3.01) and
references therein to actions "hereby" taken or to be taken in the future and
the like are historical references to actions taken on the Closing Date.

                  (c)      Unless the context otherwise clearly requires,
references in Section 3.02 to documents, schedules, etc., are to such documents
and other items as in effect on the date of an Advance referred to in the
introductory paragraph of Section 3.02, capitalized terms used in such Section
3.02 have the respective meanings assigned thereto in the Original Sponsor
Subsidiary Credit Agreement and references therein to actions "hereby" taken or
to be taken in the future and the like are historical references to actions
taken on the date of an Advance referred to in Section 3.02.

                  (d)      Unless the context otherwise clearly requires,
references in Section 3.03 to documents, schedules, etc., are to such documents
and other items as in effect on the Third Restatement Date (as defined in
Section 3.03), capitalized terms used in such Section 3.03 have the respective
meanings assigned thereto in the Sponsor Subsidiary Credit Agreement as in
effect on the date of the Third Restatement Date (as defined in Section 3.01)
and references therein to actions "hereby" taken or to be taken in the future
and the like are historical references to actions taken on the Third Restatement
Date.

                  Section 1.02. Computation of Time Periods. In this Agreement,
in the computation of periods of time from a specified date to a later specified
date, the words "FROM" and "COMMENCING ON" mean "from and including" and the
words "TO", "THROUGH", "UNTIL" and "ENDING ON" each mean "to but excluding".

                  Section 1.03. No Presumption Against Any Party. Neither this
Agreement nor any uncertainty or ambiguity herein shall be construed against any
particular party, whether under any rule of construction or otherwise. On the
contrary, this Agreement has been reviewed by each party and its counsel and
shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of all parties
hereto.

                  Section 1.04. Use of Certain Terms. Unless the context of this
Agreement requires otherwise, the plural includes the singular, the singular
includes the plural, and "INCLUDING" has the inclusive meaning of "including
without limitation". Subject to Sections 1.01(b), (c) and (d), the words
"HEREOF", "HEREIN", "HEREBY", "HEREUNDER" and other similar terms of this
Agreement refer to this Agreement as a whole and not exclusively to any
particular provision of this Agreement. All pronouns and any variations thereof
shall be deemed to refer to masculine, feminine, or neuter, singular or plural,
as the identity of the Person or Persons may require.

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<PAGE>

                  Section 1.05. Headings and References. Section and other
headings are for reference only, and shall not affect the interpretation or
meaning of any provision of or to this Agreement. Unless otherwise provided,
references to Articles, Sections, Schedules, and Exhibits shall be deemed to be
references to Articles, Sections, Schedules, and Exhibits of or to this
Agreement. Whether or not stated herein or therein, references to this Agreement
and to any other Operative Document or any other agreement include this
Agreement and the other Operative Documents and agreements as the same may be
modified, amended, restated or supplemented from time to time pursuant to the
provisions hereof or thereof as permitted by the Operative Documents. Whether or
not stated herein, a reference to any law or Applicable Law shall mean that law
or Applicable Law as it may be amended, modified or supplemented from time to
time, and any successor law or Applicable Law. A reference to a Person includes
the successors and assigns of such Person, but such reference shall not
increase, decrease or otherwise modify in any way the provisions in this
Agreement governing the assignment of rights and obligations under or the
binding effect of any provision of this Agreement.

                  Section 1.06. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with, and
certificates of compliance with covenants shall be based upon, GAAP.

                  Section 1.07. Balance in Cash Reserve. A reference in this
Agreement to a "BALANCE IN", the "BALANCE OF", an "AMOUNT ON DEPOSIT IN" or
words to similar effect with respect to the Sponsor Subsidiary Cash Reserve, the
Noric Holdings I Cash Reserve or the Noric Holdings IV Cash Reserve at any time
is a reference to the aggregate value of:

                  (a)      the cash balance standing to the credit of the
         Sponsor Subsidiary Cash Reserve, the Noric Holdings I Cash Reserve or
         the Noric Holdings IV Cash Reserve, as the case may be, at that time;
         and

                  (b)      the face value amount of all Permitted Investments
         held in or made from funds on deposit in the Sponsor Subsidiary Cash
         Reserve, the Noric Holdings I Cash Reserve or the Noric Holdings IV
         Cash Reserve, as the case may be, at that time. Any Investments that
         are not Permitted Investments or are in default at such time (after
         giving effect to any grace period provided for under clause (a) of the
         definition of El Paso Event) shall be deemed to have no value.

                  Section 1.08. Face Value Amount. A reference in this Agreement
to the "FACE VALUE AMOUNT" of any Permitted Investment at any time is a
reference to:

                  (a)      where the Permitted Investment is a Cash Equivalent,
         the face value of such Cash Equivalent less any unamortized discount at
         such time; or

                  (b)      where the Permitted Investment is an El Paso Demand
         Loan, the outstanding principal amount of such El Paso Demand Loan at
         that time.

                  Section 1.09. Supplements to Schedules. Parts I, II, III, IV,
V, IX and X of Schedule I to the Sponsor Subsidiary Security Agreement shall
automatically be supplemented by Parts I, II, III, IV, V, IX and X,
respectively, of any Transaction Asset Schedule attached to a Sponsor Subsidiary
Accession Agreement or to a Sponsor Subsidiary Security Agreement

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<PAGE>

Supplement on the applicable Acquisition/Accession Date, whereupon any reference
in any Operative Document to such Schedule shall be a reference to each such
Schedule as supplemented in accordance with this Section 1.09.

                  Section 1.10. E&P Assets - Interest Coverage. (a) E&P
Participation Property. For the purposes of Section 6.01(f), if at the time of
testing the ratio in Section 6.01(f) any E&P Participation Property with respect
to any E&P Asset has been held by a Sponsor Subsidiary, Noric or Noric LP, as
the case may be, for less than four complete Fiscal Quarters, the aggregate net
cash received by the relevant Sponsor Subsidiary, Noric or Noric LP, as the case
may be, in respect of such E&P Participation Property for the most recently
completed four Fiscal Quarters shall be equal to the aggregate net cash received
by such Sponsor Subsidiary, Noric or Noric LP, as the case may be, in respect of
such E&P Participation Property for such number of complete Fiscal Quarters
since the Closing Date or the applicable Acquisition/Accession Date, as the case
may be, multiplied by a fraction of which the numerator is four and the
denominator is the number of complete Fiscal Quarters that have elapsed since
the Closing Date or the applicable Acquisition/Accession Date, as the case may
be.

                  (b)      Production Payments. (i) For purposes of calculating
the amount under clause (x) of Section 6.01(f)(i), if at the time of testing the
ratio in Section 6.01(f) any Subject Interest has been held by any Counterparty
to any Production Payment Agreement for less than four complete Fiscal Quarters,
the aggregate cash revenues from such Subject Interest for the most recently
completed four Fiscal Quarters shall be deemed equal to the cash revenues from
such Subject Interest (without regard to the respective Production Payment)
minus all operating expenses, capital expenditures and Taxes attributable to
such Subject Interest for such number of complete Fiscal Quarters since the date
of acquisition of such Subject Interest by such Counterparty to such Production
Payment Agreement, multiplied by a fraction of which the numerator is four and
the denominator is the number of complete Fiscal Quarters that have elapsed
since the date of acquisition of such Subject Interest by such Counterparty to
such Production Payment Agreement.

                  (ii)     For purposes of calculating the amount under clause
(y) of Section 6.01(f)(i), if at the time of testing the ratio in Section
6.01(f) any increased portion of the Scheduled Quantities listed on Schedule 1
to any Production Payment Conveyance for the most recently completed four Fiscal
Quarters has been included on such Schedule 1 for less than four complete Fiscal
Quarters, the aggregate cash received by Lipizzan in respect of the Production
Payment granted pursuant to such Production Payment Conveyance for the most
recently completed four Fiscal Quarters shall be deemed equal to (A) the
aggregate cash received by Lipizzan in respect of such portion of the Scheduled
Quantities for such number of complete Fiscal Quarters since the date such
Scheduled Quantities were included on such Schedule 1, multiplied by a fraction
of which the numerator is four and the denominator is the number of complete
Fiscal Quarters that have elapsed since the date such Scheduled Quantities were
included on such Schedule 1, plus (B) all other cash received by Lipizzan in
respect of the Production Payment granted pursuant to such Production Payment
Conveyance for the most recently completed four Fiscal Quarters.

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                                       5

<PAGE>

                  Section 1.11. Sponsor Subsidiary Notices. Any notice, request
or information required hereunder to be provided by a specified Sponsor
Subsidiary (other than in Article III hereof) may be provided by any Sponsor
Subsidiary on behalf of any or all Sponsor Subsidiaries.

                  Section 1.12. Material Adverse Effect. A reference in this
Agreement to a "MATERIAL ADVERSE EFFECT" on the business, operations,
performance, properties or financial condition (or any specified subset thereof)
of any Controlled Business means a "material adverse effect" on the business,
operations, performance, properties or financial condition (or any specified
subset thereof) of the issuer of any Energy Investment, and the related
Intermediate Holders and Underlying Businesses, taken as a whole on a
consolidated basis.

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES

                  Section 2.01. The Advances. (a) On the terms and conditions
set forth in the Original Sponsor Subsidiary Credit Agreement, Clydesdale made
an advance to Noric Holdings on the Closing Date in a principal amount of
$280,000,000 and Clydesdale subsequently made an advance to Noric Holdings on
December 15, 2000 in a principal amount of $950,000,000 (such advances the
"ORIGINAL Advances"). A portion of the Original Advances in an aggregate
principal amount of $753,085,340.10 (the "ADVANCES") constituting the Senior
Debt will be subject to the terms and provisions of this Agreement. The
remaining $230,000,000 of the Original Advances shall not constitute Obligations
outstanding under this Agreement, will constitute Sponsor Subsidiary
Subordinated Debt and will be evidenced solely by and be payable solely in
accordance with the terms of the Sponsor Subsidiary Subordinated Note. Neither
Mustang nor Clydesdale shall have any obligation to make further Advances under
this Agreement.

                  (b)      Amounts borrowed hereunder and repaid or prepaid may
not be reborrowed.

                  (c)      Each Sponsor Subsidiary shall be jointly and
severally liable for the repayment of the principal amount of, and for the
payment of interest and all other amounts in respect of, each Advance made to
Noric Holdings hereunder, and each Sponsor Subsidiary shall be jointly and
severally liable for all Obligations hereunder as a primary obligor and not as a
surety.

                  Section 2.02. [Intentionally omitted].

                  Section 2.03. Interest. (a) The Sponsor Subsidiaries shall
jointly and severally pay interest on the unpaid principal amount of the
Advances outstanding, until the principal amount thereof shall be paid in full,
at a rate per annum at all times during each Interest Period equal to the
Funding Rate for such Interest Period. Interest shall be payable on the Payment
Date next succeeding the last day of each Interest Period.

                  (b)      Mustang (or the Mustang Collateral Agent on Mustang's
behalf) shall notify Noric Holdings of the Funding Rate for any Interest Period
(or portion thereof) three

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                                       6

<PAGE>

Business Days prior to the Payment Date for such Interest Period. A notice by
Mustang or the Mustang Collateral Agent to Noric Holdings of the Funding Rate
shall be binding on each Sponsor Subsidiary absent manifest error.

                  Section 2.04. Repayment of Advances. The Sponsor Subsidiaries
shall jointly and severally repay on the Maturity Date the principal amount of
all Advances then outstanding in full.

                  Section 2.05. Prepayment of Advances. (a) Voluntary. A Sponsor
Subsidiary may, upon at least five Business Days' notice to Mustang stating the
proposed date and the aggregate principal amount of the prepayment, and, if such
notice is given, such Sponsor Subsidiary shall, prepay the outstanding principal
amount of the Advances in whole or in part together with all other amounts
required to be paid pursuant to Section 2.06(c) in connection with such
prepayment; provided that each partial prepayment shall be in an aggregate
principal amount of not less than $1,000,000.

                  (b)      Mandatory.

                  (i)      Disposition of Controlled Business upon Merger or
Consolidation. If any Controlled Business enters into any transaction of
consolidation or merger with or into any other Person (other than a merger
permitted pursuant to Section 5.09(c)), then such merger or consolidation shall
be treated as a Disposition of such Controlled Business, and on the effective
date of such consolidation or merger the Sponsor Subsidiaries shall prepay the
Advances in a principal amount equal to the Energy Investment Loan Value
applicable to such Controlled Business, together with all other amounts required
to be paid pursuant to Section 2.06(c) in connection with such prepayment.

                  (ii)     Disposition of Energy Investments. Upon a Disposition
of any Energy Investment by a Sponsor Subsidiary (whether to El Paso, an
Affiliate of El Paso or any other Person), the Sponsor Subsidiaries shall
forthwith on the effective date of such Disposition, prepay Advances in a
principal amount equal to the Energy Investment Loan Value of such Energy
Investment, together with all other amounts required to be paid pursuant to
Section 2.06(c) in connection with such prepayment.

                  (iii)    Disposition of Assets of Underlying Businesses.
Except in the case of any Disposition permitted by Section 5.09(d)(C),
5.09(d)(D) (but subject to the proviso set forth at the end of Section 5.09(d))
or 5.09(d)(G), if all or substantially all of the assets of, or Equity Interests
in, any Intermediate Holder or Underlying Business relating to an Energy
Investment (other than a Publicly Traded Investment) are Disposed of (whether to
El Paso, an Affiliate of El Paso or any other Person) at any time after the
Closing Date or the Acquisition/Accession Date of such Energy Investment (as
applicable), then the Sponsor Subsidiaries shall forthwith on the effective date
of such Disposition, prepay Advances in a principal amount equal to the Energy
Investment Loan Value of the Energy Investment to which such Intermediate Holder
or Underlying Business relates, together with all other amounts required to be
paid pursuant to Section 2.06(c) in connection with such prepayment.

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<PAGE>

                  (iv)     Excess Distribution. On the date of each Distribution
by an Underlying Business, the Sponsor Subsidiaries shall prepay Advances in a
principal amount equal to the Excess Distribution (if any) calculated as of such
date, together with all other amounts required to be paid pursuant to Section
2.06(c) in connection with such prepayment.

                  (v)      A-Loans. (A) If El Paso or any Affiliate of El Paso
prepays any principal under any A-Loan Note, the Sponsor Subsidiaries shall
forthwith prepay Advances in a principal amount equal to the principal amount of
such prepayment, together with all other amounts required to be paid pursuant to
Section 2.06(c) in connection with such prepayment.

                  (B)      If the Sponsor Subsidiaries prepay Advances (other
than in accordance with clause (A) above), then El Paso or any Affiliate of El
Paso that is an obligor under an A-Loan Note shall (x) be deemed to have prepaid
the principal amount outstanding under such A-Loan Note in the principal amount
of such prepayment of Advances by the Sponsor Subsidiaries and (y) pay interest
accrued on the principal deemed to have been so prepaid under such A-Loan Note
in accordance with the terms thereof; provided that the amount described in
clause (x) above shall be deemed to be distributed to El Paso or such Affiliate
of El Paso and the outstanding principal amount of the A-Loan Notes shall be
reduced by the principal amount of such deemed prepayment.

                  (vi)     E&P Borrowing Base Reductions. The Sponsor
Subsidiaries shall prepay Advances in a principal amount equal to the amount,
and at the times, specified in Section 2.10, Section 5.11 and Section 7.04(i)(A)
or (B), together with all other amounts required to be paid pursuant to Section
2.06(c) in connection with such prepayment.

                  (vii)    Minimum Outstanding Principal Amount of Advances. If,
as a result of any voluntary or mandatory prepayment under this Section 2.05,
the outstanding principal balance of the remaining Advances would be less than
$50,000,000, then the Sponsor Subsidiaries shall on the date of such voluntary
or mandatory prepayment prepay the Advances in full together with all other
amounts required to be paid pursuant to Section 2.06(c) in connection with such
prepayment.

                  (viii)   El Paso RA Event. For so long as the senior unsecured
long-term debt credit ratings of El Paso are lower than BBB- by S&P and Baa3 by
Moody's (an "EL PASO RA EVENT"), then the Sponsor Subsidiaries shall prepay the
Advances in a principal amount equal to:

                  (A)      the Net Cash Proceeds from any Dispositions described
         in Sections 5.02(d)(C)(3) and (4), 5.05(a)(C) and (D) and 5.09(d)(C)
         and (D) and the Disposition Value of the E&P Assets Disposed of
         pursuant to Section 5.05(a)(E) and (F) and occurring during the
         continuance of an El Paso RA Event; provided that such prepayment of
         the Advances shall be made at the earlier of (x) the next Payment Date
         following any such Disposition and (y) any date, following the initial
         occurrence of such El Paso RA Event and thereafter following the making
         of any prepayment under this clause (A), on which the aggregate amount
         of Net Cash Proceeds from all such Dispositions described in Sections
         5.02(d)(C)(3) and (4), 5.05(a)(C) and (D) and 5.09(d)(C) and (D) and
         the Disposition Value of the E&P Assets from all such Dispositions
         described in Sections

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                                       8

<PAGE>

         5.05(a)(E) and (F), in each case not theretofore so applied to prepay
         the Advances, is at least $5,000,000; and

                  (B)      an amount equal to the lesser of (a) $100,000,000 or
         (b) the remaining outstanding aggregate principal amount of the
         Advances on each Payment Date from and including the Payment Date
         occurring on May 7, 2003 through and including February 7, 2005;

in each case together with all other amounts required to be paid pursuant to
Section 2.06(c) in connection with such prepayment.

                  Section 2.06. Payments and Computations; Additional Amounts.
(a) Mustang Operating Account. Each Sponsor Subsidiary shall make each payment
hereunder, irrespective of any right of setoff or counterclaim, no later than
10:00 a.m. (New York City time) on the day when due in immediately available
Dollars. Each payment to Mustang shall be made to the Operating Account (as
defined in the Mustang Credit and Security Agreement) or, after the Mustang Debt
Collection Date, to the Account (as defined in the Mustang Administration
Agreement). Each payment to any other Person shall be made to such account as
such Person shall direct in writing.

                  (b)      Calculation. All computations of interest hereunder
shall be made on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) elapsed (except where the
Equity Amount and the Notified Amount are calculated by reference to the Base
Rate (as defined in the Mustang Credit and Security Agreement), in which case
the computation of interest hereunder shall be made on the basis of a year of
365 days or 366 days, as applicable). Each determination by Mustang of an
interest rate hereunder shall be conclusive and binding for all purposes, in the
absence of manifest error.

                  (c)      Additional Amounts. All payments of principal under
this Agreement (whether on prepayment or otherwise) shall be made together with
(without duplication) all accrued interest to the date of such payment or
prepayment on the principal amount paid or prepaid, any accrued and unpaid fees
to the date of such payment or prepayment, expenses and indemnities and other
Obligations of the Sponsor Subsidiaries (including any interest on the principal
amount paid or prepaid) owing hereunder.

                  (d)      Notice. Each payment under this Agreement shall be
accompanied by written notice by Noric Holdings identifying the nature of the
payment.

                  Section 2.07. Taxes; Additional Financing Costs.

                  (a) Taxes.

                                    (i)      Any and all payments by or on
                  account of any obligation of any Sponsor Subsidiary hereunder
                  shall be made free and clear of and without deduction for any
                  Indemnified Taxes and Other Taxes; provided that if a Sponsor
                  Subsidiary shall be required to deduct any Indemnified Taxes
                  or Other Taxes from such payments, then (a) the sum payable
                  shall be increased as necessary so that, after making all
                  required deductions (including deductions applicable to

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<PAGE>

                  additional sums payable under this Section 2.07), Mustang
                  receives an amount equal to the sum it would have received had
                  no such deductions been made, (b) such Sponsor Subsidiary
                  shall make such deductions, and (c) such Sponsor Subsidiary
                  shall pay the full amount deducted to the relevant
                  Governmental Authority in accordance with Applicable Law.

                                    (ii)     In addition, the Sponsor
                  Subsidiaries shall jointly and severally pay any Other Taxes
                  to the relevant Governmental Authority in accordance with
                  Applicable Law.

                                    (iii)    Each Sponsor Subsidiary shall
                  jointly and severally indemnify Mustang, within 10 days after
                  written demand therefor, for the full amount of any
                  Indemnified Taxes or Other Taxes paid by Mustang on or with
                  respect to any payment by or on account of any obligation of
                  any Sponsor Subsidiary hereunder (including Indemnified Taxes
                  or Other Taxes imposed or asserted on or attributable to
                  amounts payable under this Section 2.07(a)) and any penalties,
                  interest and reasonable expenses arising therefrom or with
                  respect thereto, whether or not such Indemnified Taxes or
                  Other Taxes were correctly or legally imposed or asserted by
                  the relevant Governmental Authority. A certificate as to the
                  amount of such payment or liability delivered to Noric
                  Holdings by Mustang (or the Mustang Collateral Agent) shall be
                  conclusive absent manifest error.

                                    (iv)     As soon as practicable after any
                  payment of Indemnified Taxes or Other Taxes by a Sponsor
                  Subsidiary to a Governmental Authority, Noric Holdings shall
                  deliver to Mustang and the Mustang Collateral Agent the
                  original or a certified copy of a receipt issued by such
                  Governmental Authority evidencing such payment, a copy of the
                  return reporting such payment or other evidence of such
                  payment reasonably satisfactory to Mustang and the Mustang
                  Collateral Agent.

                                    (v)      Any Foreign Person that is entitled
                  to an exemption from or reduction of withholding tax under the
                  law of the United States, or of the jurisdiction in which the
                  Sponsor Subsidiaries are located, or any treaty to which such
                  jurisdiction is a party, with respect to payments under this
                  Agreement shall deliver to the Sponsor Subsidiaries (with a
                  copy to the Administrative Agent), at the time or times
                  prescribed by applicable law, such properly completed and
                  executed documentation prescribed by applicable law or
                  reasonably requested by the Sponsor Subsidiaries as will
                  permit such payments to be made without withholding or at a
                  reduced rate.

                                    (vi)     Mustang (or the Mustang Collateral
                  Agent on its behalf) shall, in its reasonable discretion,
                  determine if it has received a refund of any Taxes or Other
                  Taxes as to which it has been indemnified by a Sponsor
                  Subsidiary or with respect to which a Sponsor Subsidiary has
                  paid additional amounts pursuant to this Section 2.07(a). If
                  it determines that it has received any such refund, it shall
                  pay over such refund to the applicable Sponsor Subsidiary or

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<PAGE>

                  Sponsor Subsidiaries (but only to the extent of indemnity
                  payments made, or additional amounts paid, by each such
                  Sponsor Subsidiary under this Section 2.07(a) with respect to
                  the Taxes or Other Taxes giving rise to such refund), net of
                  all out-of-pocket expenses of Mustang and without interest
                  (other than any interest paid by the relevant Governmental
                  Authority with respect to such refund); provided, that each
                  Sponsor Subsidiary agrees that, upon the request of Mustang
                  (or the Mustang Collateral Agent on its behalf), it will repay
                  to Mustang the amount that Mustang paid over to such Sponsor
                  Subsidiary (plus any penalties, interest or other charges
                  imposed by the relevant Governmental Authority) in the event
                  that Mustang is required to repay such refund to such
                  Governmental Authority. Subject to Section 11.13, this Section
                  shall not be construed to require Mustang or the Mustang
                  Collateral Agent to make available its tax returns (or any
                  other information relating to its taxes which it deems
                  confidential) to any Sponsor Subsidiary or any other Person.

                  (b)      Additional Financing Costs.

                  (i)      The Sponsor Subsidiaries shall jointly and severally
         from time to time, upon demand or deemed demand by Mustang to Noric
         Holdings as set forth in clause (ii), pay to Mustang additional amounts
         sufficient to reimburse Mustang for all Additional Financing Costs and
         Transaction Costs in accordance with clause (ii).

                  (i)      Mustang may deliver to Noric Holdings on behalf of
         the Sponsor Subsidiaries written notice with supporting documents
         therefor certifying in reasonable detail the nature of, and if
         applicable, the method of computation of, Additional Financing Costs or
         Transaction Costs, calculated on an After-Tax Basis with respect to
         Mustang. Mustang shall specify whether such Additional Financing Costs
         or Transaction Costs will be recurring, and, if known, the duration of
         such recurrence. Recurring amounts claimed shall be paid on each
         specified recurrence without further notice by Mustang. Subject to the
         next sentence, such notice shall specify whether Mustang requests the
         amount claimed to be paid on the immediately following Payment Date
         (for which no less than 2 Business Days prior notice shall be required)
         after the initial occurrence or after each specified recurrence or,
         with respect to claims for amounts other than recurring amounts, on a
         day other than a Payment Date (for which no less than 6 Business Days
         prior notice shall be required). Notwithstanding the foregoing, any
         Additional Financing Costs or Transaction Costs arising by reason of
         the late receipt of principal of or interest on the Advances shall in
         all cases be payable upon demand. Mustang shall notify Noric Holdings
         on behalf of the Sponsor Subsidiaries if any such recurring cost ceases
         to be recurring (or if the amount thereof decreases) promptly after
         becoming aware thereof and agrees to refund any excess payment received
         in respect of such ceased or reduced recurring costs.

                  Section 2.08. Evidence of Indebtedness. Mustang shall
maintain, or shall cause the Mustang Collateral Agent or the Mustang
Administrative Agent to maintain, an account or accounts evidencing the
indebtedness of each Sponsor Subsidiary to Mustang resulting from the Advances,
including the amounts of principal and interest payable and paid to Mustang from
time to time hereunder.

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                                       11

<PAGE>

                  Section 2.09. E&P Assets - E&P Borrowing Base Determinations.
The E&P Borrowing Base of all E&P Participation Property and the Production
Payments shall be determined from time to time in the manner described in this
Section 2.09.

                  (a)      Initial E&P Borrowing Base Determination. The E&P
         Borrowing Base shall be $506,600,000 during the period from the Third
         Restatement Date until the E&P Borrowing Base is determined or
         redetermined pursuant to this Section 2.09. The portion of the E&P
         Borrowing Base attributable to the E&P Participation Property shall be
         $61,600,000 and the portion of the E&P Borrowing Base attributable to
         the Production Payments shall be $445,000,000.

                  (b)      Scheduled E&P Borrowing Base Determinations. A
         determination of the E&P Borrowing Base (each, an "E&P BORROWING BASE
         DETERMINATION") shall be made once during each calendar year in
         accordance with this Section 2.09(b).

                           (i)      No later than March 1 of each calendar year,
                  Noric Holdings shall deliver a Reserve Report dated as of the
                  Reserve Report Date to the Calculation Agent, with a copy to
                  Mustang; provided that Noric Holdings shall have the right to
                  prepare such Reserve Report on a pro forma basis, reflecting
                  the Proved Reserves attributable to the E&P Assets (including,
                  for this purpose, Subject Interests relating to any Production
                  Payment) to be acquired and/or Disposed of prior to the
                  effectiveness of the E&P Borrowing Base to be determined based
                  on such pro forma Reserve Report.

                           (ii)     No later than 30 days after the date of
                  delivery of the Reserve Report pursuant to clause (i) above,
                  the Calculation Agent on behalf of Mustang shall deliver to
                  Noric Holdings a copy of a draft E&P Borrowing Base Report. In
                  making its determination of such draft E&P Borrowing Base
                  Report the Calculation Agent shall, not later than 10 Business
                  Days prior to the delivery of such draft E&P Borrowing Base
                  Report to Noric Holdings, consult in good faith with the
                  Designated Representative and shall consult in good faith with
                  the Designated Representative through the remainder of the
                  process of establishing an E&P Borrowing Base pursuant to this
                  Section 2.09.

                           (iii)    No later than 10 days after the date of
                  delivery of the draft E&P Borrowing Base Report pursuant to
                  clause (ii) above, Noric Holdings shall deliver to the
                  Calculation Agent, with a copy to Mustang, its written
                  comments and adjustments to the draft E&P Borrowing Base
                  Report.

                           (iv)     No later than 5 days after the date of
                  delivery of Noric Holdings' written comments and adjustments
                  to the draft E&P Borrowing Base Report pursuant to clause
                  (iii) above (during which period the Calculation Agent shall
                  consult in good faith with the Designated Representative), the
                  Calculation Agent on behalf of Mustang shall deliver to Noric
                  Holdings the final E&P Borrowing Base Report (the date of
                  delivery of such final report, the "FINAL BORROWING BASE
                  REPORT DELIVERY DATE") containing the Calculation Agent's
                  recommendation for the E&P Borrowing Base (the "E&P BORROWING
                  BASE RECOMMENDATION"). The

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<PAGE>

                  E&P Borrowing Base Recommendation shall (A) take into account
                  the projected cash flows from Proved Reserves only, (B) ignore
                  any rights or benefits of any Person other than a Sponsor
                  Subsidiary, Noric or Noric LP, as the case may be, under any
                  Hedge Agreement permitted by the Operative Documents and (C)
                  be determined in accordance with the Calculation Agent's
                  normal and customary oil and gas lending criteria.

                           (v)      No later than 15 days after the Final
                  Borrowing Base Report Delivery Date (during which period the
                  Calculation Agent shall consult in good faith with the
                  Designated Representative), the Calculation Agent with the
                  agreement of Mustang shall furnish written notice to Noric
                  Holdings of the E&P Borrowing Base Determination, which shall
                  contain the determination of the new E&P Borrowing Base.

                           (vi)     Such new E&P Borrowing Base shall become
                  effective, at Noric Holdings' discretion and upon delivery by
                  Noric Holdings of written notice to the Calculation Agent, on
                  any date (the "E&P BORROWING BASE EFFECTIVE DATE") from, and
                  including, the date of the notice to Noric Holdings under
                  clause (v) above to, and including, the date falling 60 days
                  after the date of such notice (the "OUTSIDE DATE"; it being
                  understood that if Noric Holdings does not deliver such
                  written notice to the Calculation Agent, the E&P Borrowing
                  Base Effective Date shall be the Outside Date) and shall
                  remain effective during the period from such date to the
                  effective date of the next change to the E&P Borrowing Base
                  occurring thereafter pursuant to this Section 2.09 (such
                  period being the "E&P BORROWING BASE PERIOD"). The E&P
                  Borrowing Base in effect during any E&P Borrowing Base Period
                  is referred to as the "CURRENT E&P BORROWING BASE").

                           (vii)    During each E&P Borrowing Base Period, (A)
                  the "REDETERMINATION THRESHOLD" for such E&P Borrowing Base
                  Period shall be an amount equal to 10% of the Current E&P
                  Borrowing Base, (B) the "ADJUSTED REDETERMINATION THRESHOLD"
                  for such E&P Borrowing Base Period shall be an amount equal to
                  the Redetermination Threshold for such E&P Borrowing Base
                  Period minus the Disposition Value of all Relevant Assets
                  which have been Disposed of during the Threshold Adjustment
                  Period for such E&P Borrowing Base Period, and (C) the
                  "THRESHOLD ADJUSTMENT PERIOD" for such E&P Borrowing Base
                  Period shall be a period starting from the Reserve Report Date
                  in respect of the Current E&P Borrowing Base and ending on the
                  E&P Borrowing Base Effective Date for such E&P Borrowing Base
                  Period.

                           (viii)   Notwithstanding anything to the contrary
                  contained herein, in the event the Reserve Report used to
                  determine a new E&P Borrowing Base was prepared on a pro forma
                  basis, a new E&P Borrowing Base shall not become effective
                  until any proposed acquisition reflected in such Reserve
                  Report has been completed (including, without limitation, the
                  completion of any amendment, filing, recordation and other
                  actions required in connection with such acquisition). If an
                  E&P Borrowing Base shall fail to become effective due to the
                  failure of one or more proposed acquisitions reflected in such
                  Reserve Report to be completed

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                                       13

<PAGE>

                  prior to or on the Outside Date relating to such E&P Borrowing
                  Base, the E&P Borrowing Base shall be adjusted by the
                  Calculation Agent by subtracting therefrom the aggregate
                  amount of the portion of the E&P Borrowing Base attributable
                  to the Relevant Asset in connection with each of such proposed
                  acquisitions, and such adjusted E&P Borrowing Base shall
                  become effective on the Outside Date.

                  (c)      Optional Redeterminations of the E&P Borrowing Base.
         (i) In addition to the annual E&P Borrowing Base Determination pursuant
         to Section 2.09(b), redeterminations of the E&P Borrowing Base (each an
         "E&P BORROWING BASE REDETERMINATION") may be made from time to time
         upon notice (each a "REDETERMINATION NOTICE") under Section 2.09(d) and
         Section 2.09(e), and subject to this Section 2.09(c).

                           (ii)     An E&P Borrowing Base Redetermination shall
                  become effective on the E&P Borrowing Base Effective Date
                  applicable thereto and shall remain effective during the
                  period from such date to the effective date of the next change
                  to the E&P Borrowing Base occurring thereafter pursuant to
                  this Section 2.09.

                  (d)      E&P Borrowing Base Redeterminations - Annual Option.
         (i) Mustang may, not more than once per calendar year, deliver to Noric
         Holdings and the Calculation Agent a Redetermination Notice under this
         Section 2.09(d)(i) (and identifying this Section 2.09(d)(i)), following
         which the E&P Borrowing Base shall be determined in accordance with the
         procedure set forth in Section 2.09(b) above; provided that the
         reference to "March 1" in Section 2.09(b)(i) shall be construed as a
         reference to the date falling 30 days after the date of delivery of the
         Redetermination Notice.

                           (ii)     Noric Holdings may, not more than once per
                  calendar year, deliver a Redetermination Notice to Mustang and
                  the Calculation Agent under this Section 2.09(d)(ii) (and
                  identifying this Section 2.09(d)(ii)), following which the E&P
                  Borrowing Base shall be determined pursuant to the procedure
                  set forth in Section 2.09(b) above; provided that the
                  reference to "March 1" in Section 2.09(b)(i) shall be
                  construed as a reference to the date of delivery of the
                  Redetermination Notice.

                  (e)      E&P Borrowing Base Redeterminations - Acquisitions
         and Dispositions. If any Sponsor Subsidiary, Lipizzan, Noric or Noric
         LP, (as the case may be):

                           (i)      acquires any E&P Asset (including as a
                  result of a proportional increase thereof); or

                           (ii)     Disposes of any E&P Assets (or any portion
                  thereof),

                  (the E&P Assets so acquired or Disposed of, the "RELEVANT
                  ASSETS"), and:

                           (A)      the PV-10 Value of the Relevant Assets
                  acquired, together with that of any other Relevant Assets
                  acquired by any Sponsor Subsidiary, Lipizzan, Noric or Noric
                  LP, during the current E&P Borrowing Base Period equals or

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                                       14

<PAGE>

                  exceeds the Redetermination Threshold for such current E&P
                  Borrowing Base Period; or

                           (B)      the Disposition Value of the Relevant Assets
                  Disposed of, together with that of any other Relevant Assets
                  Disposed of by any Sponsor Subsidiary, Lipizzan, Noric or
                  Noric LP, during the current E&P Borrowing Base Period equals
                  or exceeds the Adjusted Redetermination Threshold for such
                  current E&P Borrowing Base Period,

         then Mustang or Noric Holdings may deliver a Redetermination Notice to
         the other under this Section 2.09(e) (and identifying this Section
         2.09(e)), following which the E&P Borrowing Base shall be redetermined
         in accordance with the procedure set forth in Section 2.09(b) above;
         provided that Noric Holdings may, at its discretion, prepare a new
         Reserve Report to be dated as of the date of delivery of such
         Redetermination Notice and in contemplation of the occurrence of
         acquisitions and/or Dispositions that will result in an option to
         deliver a Redetermination Notice as provided above, on a pro forma
         basis reflecting the Proved Reserves attributable to the E&P Assets to
         be acquired and/or Disposed of and deliver such Reserve Report to the
         Calculation Agent, with a new E&P Borrowing Base becoming effective at
         the later of (x) the date on which all of such proposed acquisitions
         are completed (including, without limitation, the completion of any
         amendment, filing, recordation and other actions required in connection
         with such acquisitions) and (y) the new E&P Borrowing Base Effective
         Date determined in accordance with the procedure set forth in Section
         2.09(b) above (it being agreed that the date referred to in this clause
         (y) may be contemporaneous with the date referred to in clause (x)
         above); and provided further that, in making such redetermination, the
         reference to "March 1" in Section 2.09(b)(i) shall be construed as a
         reference to (1) the date of delivery of the Redetermination Notice
         (where Noric Holdings delivers such Redetermination Notice) and (2) the
         date falling 30 days after the date of delivery of the Redetermination
         Notice (where Mustang delivers such Redetermination Notice).

                  For the purposes of the calculation to be made pursuant to the
         immediately preceding paragraph:

                           (1)      subject to paragraph (2) below, any Relevant
                  Assets acquired by Noric Holdings I and then transferred to
                  Noric by way of a capital contribution shall only be
                  considered to have been acquired by Noric;

                           (2)      any Relevant Asset that is acquired by Noric
                  (including pursuant to paragraph (1) above) and then
                  transferred to Noric LP, as the case may be, by way of a
                  capital contribution shall only be considered to have been
                  acquired by Noric LP;

                           (3)      any Relevant Asset that is transferred by
                  Noric Holdings I to Noric or Noric to Noric LP by way of a
                  capital contribution shall not be considered as a Disposition
                  of such Relevant Asset;

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                                       15

<PAGE>

                           (4)      any Relevant Asset acquired by Noric
                  Holdings IV and then transferred to Lipizzan by way of a
                  capital contribution shall only be considered to have been
                  acquired by Lipizzan; and

                           (5)      any Relevant Asset that is transferred by
                  Noric Holdings IV to Lipizzan by way of a capital contribution
                  shall not be considered as a Disposition of such Relevant
                  Asset.

                  (f)      Scheduled Quantity Adjustments. The Scheduled
         Quantities under any Production Payment Conveyance may, upon the
         request of Noric Holdings or Mustang, be adjusted on each E&P Borrowing
         Base Determination and each E&P Borrowing Base Redetermination. Such
         adjustment, if any, shall be agreed to by the Counterparty to such
         Production Payment Conveyance and shall be determined together with the
         new E&P Borrowing Base on the same terms and conditions and following
         the procedure set forth in Section 2.09(b) above; provided that the E&P
         Borrowing Base Report shall contain, in addition to the recommendation
         to the new E&P Borrowing Base, a recommendation of the new Scheduled
         Quantities under such Production Payment Conveyance and the written
         notice delivered by the Calculation Agent to Noric Holdings referred to
         in clause (v) of Section 2.09(b) shall contain the determination of
         such new Scheduled Quantities. The new Scheduled Quantities under such
         Production Payment Conveyance shall become effective on the E&P
         Borrowing Base Effective Date relating to such E&P Borrowing Base
         Determination or E&P Borrowing Base Redetermination and upon execution
         and delivery of an amendment to such Production Payment Conveyance
         reflecting the new Scheduled Quantities.

                  (g)      Further Assurance. Each Sponsor Subsidiary shall, and
         Noric Holdings I in its capacity as the Noric Class A Member shall
         cause Noric and Noric LP to, and Noric Holdings IV in its capacity as
         the Lusitano Member shall cause Lusitano as the Lipizzan General
         Partner to, provide all documents and other information reasonably
         necessary to enable each E&P Borrowing Base Determination, E&P
         Borrowing Base Redetermination and adjustment of the Scheduled
         Quantities to be completed in accordance with this Section 2.09.

                  Section 2.10. Collateral Shortfall. The following provisions
shall apply in respect of each annual E&P Borrowing Base Determination made
pursuant to Section 2.09(b).

                  If, following any such annual E&P Borrowing Base
Determination, the Energy Investment Exposure exceeds the Aggregate Energy
Investment Loan Value Amount at such time (after giving effect to such annual
E&P Borrowing Base Determination) (such excess, the "COLLATERAL SHORTFALL
AMOUNT"), then the Sponsor Subsidiaries shall on the E&P Borrowing Base
Effective Date either:

                           (i)      (A)      prepay Advances from amounts
                  standing to the credit of the Sponsor Subsidiary Cash Reserve,
                  the Noric Holdings I Cash Reserve and/or the Noric Holdings IV
                  Cash Reserve at such time in an aggregate principal amount
                  equal to the lesser of (1) the Collateral Shortfall Amount and
                  (2) the excess of (I) the credit balance of the Sponsor
                  Subsidiary Cash Reserve, the Noric Holdings I

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<PAGE>

                  Cash Reserve and the Noric Holdings IV Cash Reserve over (II)
                  the sum of (w) the Noric Holdings I Required Cash Reserve
                  Balance at such time, (x) the Noric Holdings IV Required Cash
                  Reserve Balance at such time, (y) the Sponsor Subsidiary
                  Required Energy Investment Cash Reserve Balance at such time
                  and (z) the Total Cash Collateral Amount at such time; and

                                    (B)      pay, or make a deemed payment of,
                  additional Cash Collateral Amounts to the Sponsor Subsidiary
                  Cash Reserve, the Noric Holdings I Cash Reserve and/or the
                  Noric Holdings IV Cash Reserve in an aggregate principal
                  amount equal to the difference between the Collateral
                  Shortfall Amount and the amounts pre-paid pursuant to clause
                  (i)(A); or

                           (ii)     pay, or make a deemed payment of, additional
                  Cash Collateral Amounts to the Sponsor Subsidiary Cash
                  Reserve, the Noric Holdings I Cash Reserve and/or the Noric
                  Holdings IV Cash Reserve in an aggregate principal amount
                  equal to the Collateral Shortfall Amount;

provided that, with respect to clause (a)(i)(A) above, such prepayment of
Advances shall be required and, with respect to clause (a)(i)(B) and clause
(a)(ii) above, such payment of additional Cash Collateral Amounts shall be
required only if the outstanding principal balance of the remaining Advances at
such time shall be greater than the sum of (x) the Aggregate Energy Investment
Loan Value Amount, (y) the new E&P Borrowing Base and (z) the Total Cash
Collateral Amount at such time.

                  Section 2.11. Adjustments to Energy Investment Loan Values.
(a) Noric Holdings may at any time deliver a written request to Mustang for an
approval to an increase in the Energy Investment Loan Value of any Energy
Investment (with respect to any Energy Investment, such increased amount being,
the "REVISED ENERGY INVESTMENT LOAN VALUE" of such Energy Investment). Noric
Holdings may not deliver more than two such requests per year, however each
request may request an increase in the Energy Investment Loan Value of any
number of Energy Investments. Such request shall be accompanied by such
documents and evidence necessary to support the request for such increase.

                  (b)      Mustang shall no later than the applicable Energy
Investment Loan Value Voting Date advise Noric Holdings in writing as to whether
it agrees to the Revised Energy Investment Loan Value for each Energy Investment
the subject of such request.

                  (c)      If Mustang agrees to the Revised Energy Investment
Loan Value for any Energy Investment the subject of such request, then as from
the applicable Energy Investment Loan Value Voting Date the Energy Investment
Loan Value Amount for such Energy Investment shall be deemed to be the Revised
Energy Investment Loan Value for such Energy Investment and shall remain
effective during the period from such date to the effective date of the next
change to the Energy Investment Loan Value for such Energy Investment occurring
thereafter pursuant to this Section 2.11.

                  (d)      Each Energy Investment Loan Value shall be from time
to time:

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                                       17

<PAGE>

                           (i)      decreased by the amount of the Energy
                  Investment Loan Value attributable to any Energy Investment
                  Disposed of pursuant to Section 5.02(d)(B); and

                           (ii)     decreased by the amount of the Energy
                  Investment Loan Value attributable to the Disposition pursuant
                  to Section 5.09(d)(B) of all or substantially all of the
                  assets of, or Equity Interests in, any Intermediate Holder or
                  Underlying Business (other than any Intermediate Holder or
                  Underlying Business relating to a Publicly Traded Investment
                  and other than any Disposition permitted under Section
                  5.09(d)(G)) relating to such Energy Investment.

                  (e)      The Aggregate Energy Investment Loan Value Amount
shall be $500,000,000 during the period from the Fourth Restatement Date until
the effective date of the next change of an Energy Investment Loan Value for any
Energy Investment pursuant to this Section 2.11.

                                  ARTICLE III

                             CONDITIONS TO ADVANCES

                  Section 3.01. Conditions Precedent to Making the Initial
Advance. The agreement of Clydesdale to make the Initial Advance on the Closing
Date was subject to the following conditions precedent being satisfied on or
prior to the Closing Date:

                  (a)      In the case of El Paso and its Consolidated
         Subsidiaries, since December 31, 1999, nothing shall have occurred that
         will have resulted in a Material Adverse Effect (adopting for the
         purposes of this Section 3.01(a) the definition of "Material Adverse
         Effect" set forth in clause (b) of the definition thereof in Exhibit A
         to the Clydesdale Partnership Agreement as in effect on May 9, 2000
         (the "MAY 9, 2000 CLYDESDALE PARTNERSHIP AGREEMENT").

                  (b)      Clydesdale shall have received the following
         documents, each dated as of the Closing Date (other than the documents
         described in clause (b)(iv)) and duly executed by the respective party
         or parties thereto, and otherwise in form and substance reasonably
         satisfactory to Clydesdale and (except for any El Paso Demand Note,
         A-Loan Note, B-Loan Note (as defined in the Sponsor Subsidiary Credit
         Agreement as in effect on May 9, 2000 (the "MAY 9, 2000 SPONSOR
         SUBSIDIARY CREDIT AGREEMENT"), the Convertible Note (as defined in the
         May 9, 2000 Sponsor Subsidiary Credit Agreement) and any document
         listed in clauses (b)(ii) and (b)(iv)) in four original counterparts:

                           (i)      Each Operative Document.

                           (ii)     Duly executed copies of proper financing
                  statements (Form UCC-1) under the UCC (or its equivalent) of
                  all jurisdictions that may be necessary or advisable in order
                  to perfect and protect the Liens created by the Sponsor
                  Subsidiary Security Agreement.

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<PAGE>

                           (iii)    Evidence that all other actions to the
                  extent necessary to perfect and protect the Liens created by
                  the Sponsor Subsidiary Security Agreement have been taken.

                           (iv)     Certificates of the Secretary of State of
                  the State of Delaware with respect to Noric, Appaloosa, Noric
                  Holdings, Noric Holdings I, Noric Holdings II, each other
                  Sponsor Subsidiary, El Paso, each Counterparty to each E&P
                  Participation Agreement and Assignment of Receivables (as
                  defined in the May 9, 2000 Sponsor Subsidiary Credit
                  Agreement), each Issuer of any A-Loan Note, B-Loan Note (as
                  defined in the May 9, 2000 Sponsor Subsidiary Credit
                  Agreement), Convertible Note (as defined in the May 9, 2000
                  Sponsor Subsidiary Credit Agreement) and El Paso Demand Note
                  and the Intermediate Lessee (as defined in the May 9, 2000
                  Sponsor Subsidiary Credit Agreement) (each dated on or a
                  recent date prior to the Closing Date), in each case,
                  attaching the certificate of formation or charter of such
                  Person and each amendment thereto on file in such office and
                  certifying that (A) such certificate of formation or charter
                  is a true and complete copy thereof, (B) such amendments are
                  the only amendments to such certificate of formation or
                  charter on file in such office, (C) such Person has paid all
                  franchise taxes to the date of such certificate, and (D) such
                  Person is duly formed and in good standing under the laws of
                  Delaware.

                           (v)      Certificates of each of Appaloosa, Noric,
                  Noric Holdings, Noric Holdings I, Noric Holdings II, each
                  other Sponsor Subsidiary, El Paso, each Counterparty to each
                  E&P Participation Agreement and Assignment of Receivables (as
                  defined in the May 9, 2000 Sponsor Subsidiary Credit
                  Agreement), each issuer of any A-Loan Note, B-Loan Note (as
                  defined in the May 9, 2000 Sponsor Subsidiary Credit
                  Agreement), Convertible Note (as defined in the May 9, 2000
                  Sponsor Subsidiary Credit Agreement) and El Paso Demand Note
                  and the Intermediate Lessee (as defined in the May 9, 2000
                  Sponsor Subsidiary Credit Agreement), signed on behalf of each
                  such Person by a managing member, President, Vice President,
                  Treasurer, Assistant Treasurer, Secretary, Deputy Corporate
                  Secretary, Assistant Secretary or Deputy Treasurer of each
                  such Person (the statements made in which certificate shall be
                  true and correct on and as of the Closing Date), certifying as
                  to:

                                    (A)      the absence of any amendments to
                           the charter or certificate of formation of such
                           Person since the date of the certificate referred to
                           in Section 3.01(b)(iv),

                                    (B)      with respect to El Paso, Appaloosa,
                           each Counterparty to each E&P Participation Agreement
                           and Assignment of Receivables (as defined in the May
                           9, 2000 Sponsor Subsidiary Credit Agreement), each
                           issuer of any A-Loan Note, B-Loan Note (as defined in
                           the May 9, 2000 Sponsor Subsidiary Credit Agreement),
                           Convertible Note (as defined in the May 9, 2000
                           Sponsor Subsidiary Credit Agreement) and El Paso
                           Demand Note and the Intermediate Lessee (as defined
                           in the May 9, 2000

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<PAGE>

                           Sponsor Subsidiary Credit Agreement), a true and
                           correct copy of the by-laws of such Person as in
                           effect on the Closing Date,

                                    (C)      the due incorporation or formation
                           and good standing of such Person as a corporation or
                           limited liability company, as the case may be, under
                           the laws of the jurisdiction of its organization, and
                           the absence of any proceeding for the dissolution or
                           liquidation of such Person,

                                    (D)      in the case of each such Person,
                           that attached thereto is a true and complete copy of
                           resolutions duly adopted by the board of directors,
                           executive (or other) committee of the board of
                           directors, board of managers, managing member or
                           manager, as applicable, of such Person authorizing
                           the execution, delivery and performance of the
                           Operative Documents to which it is or is to be a
                           party,

                                    (E)      in the case of each such Person,
                           that such resolutions have not been revoked, annulled
                           or modified in any manner and are in full force and
                           effect,

                                    (F)      in the case of each such Person,
                           the incumbency and specimen signature of each officer
                           or managing member, as applicable, of such Person
                           executing the Operative Documents described in clause
                           (D) above, and a certification of another officer or
                           an authorized representative of such Person or of a
                           managing member of such Person, as applicable, as to
                           the signature of the officers signing certificates
                           referred to in this subclause (v),

                                    (G)      no Liquidating Event, Termination
                           Event, Notice Event, Event of Default, or Incipient
                           Event has occurred and is continuing or would result
                           from the making of the Initial Advance,

                                    (H)      in the case of Noric Holdings and
                           Noric Holdings I, Noric Holdings and Noric Holdings I
                           have each made or are simultaneously making all
                           capital contributions required to be made by Noric
                           Holdings and Noric Holdings I on the Closing Date
                           pursuant to the Clydesdale Partnership Agreement,

                                    (I)      in the case of Noric Holdings I,
                           Noric Holdings I has made or is simultaneously making
                           all capital contributions required to be made by
                           Noric Holdings I on the Closing Date pursuant to the
                           Noric Company Agreement, and

                                    (J)      in the case of Appaloosa, Appaloosa
                           has made or is simultaneously making all capital
                           contributions required to be made by it on the
                           Closing Date pursuant to the Clydesdale Partnership
                           Agreement and Appaloosa, as the Clydesdale General
                           Partner, will simultaneously cause Clydesdale to make
                           all capital contributions required to be made by

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                                       20

<PAGE>

                           Clydesdale on the Closing Date pursuant to the Noric
                           Company Agreement.

                           (vi)     The legal opinions described in Schedule
                  3.01(b)(vi) to the May 9, 2000 Sponsor Subsidiary Credit
                  Agreement.

                           (vii)    A certificate of Appaloosa certifying that,
                  on the Closing Date and after giving effect to the use of
                  proceeds and the other transactions contemplated by the
                  Operative Documents on the Closing Date: (A) Appaloosa is the
                  Clydesdale General Partner, each of Noric Holdings and Noric
                  Holdings I is a Clydesdale Class A Limited Partner and Mustang
                  is the Clydesdale Class B Limited Partner and (B) Appaloosa's,
                  Noric Holdings', Noric Holdings I's and Mustang's Capital
                  Account under and as defined in the Clydesdale Partnership
                  Agreement (after giving effect to all allocations required to
                  be made through the Closing Date and the making of additional
                  capital contributions to Clydesdale in respect of Appaloosa's
                  Clydesdale General Partnership Interest, Noric Holdings'
                  Clydesdale Class A Limited Partnership Interest, Noric
                  Holdings I's Class A Limited Partnership Interest and
                  Mustang's Clydesdale Class B Limited Partnership Interest) is
                  not less than $5,000,000, $25,000,000, $25,000,000 and
                  $250,000,000, respectively.

                           (viii)   A certificate of Noric Holdings I certifying
                  that, on the Closing Date and after giving effect to the use
                  of proceeds and the other transactions contemplated by the
                  Operative Documents on the Closing Date: (A) Noric Holdings I
                  is the Noric Class A Member and Clydesdale is the Noric Class
                  B Member and (B) Noric Holdings I and Clydesdale have made all
                  capital contributions required to be made by Noric Holdings I
                  and Clydesdale, respectively, to Noric on the Closing Date
                  pursuant to the terms of the Noric Company Agreement.

                           (ix)     A copy of each notice by Noric Holdings
                  required pursuant to Section 7.01(b) and Section 7.02(b)
                  hereof.

                           (x)      Any other documents referred to in Exhibit 5
                  to the Acquisition/Accession Procedures Schedule relating to
                  any Transaction Assets contributed on the Closing Date.

                           (xi)     Certificates from Noric Holdings and Noric
                  Holdings I certifying that, on or prior to the Closing Date,
                  Noric Holdings and Noric Holdings I have received capital
                  contributions from their respective members in amounts not
                  less than $25,000,000 and $25,000,000, respectively.

                           (xii)    Such other certificates, documents and
                  opinions as Clydesdale may reasonably request.

                  (c)      Appaloosa shall be the Clydesdale General Partner,
         Noric Holdings and Noric Holdings I shall each be a Clydesdale Class A
         Limited Partner, Noric Holdings I shall be the Noric Class A Member,
         Mustang shall be the Clydesdale Class B Limited

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                                       21

<PAGE>

         Partner and Clydesdale shall be the Noric Class B Member and each such
         Person shall have made all capital contributions to Clydesdale and
         Noric (as applicable) required by the terms of the Clydesdale
         Partnership Agreement and the Noric Company Agreement, as applicable.

                  (d)      All agreements related to, and the capital and legal
         structure of, Appaloosa, Noric, the Sponsor Subsidiaries and any
         Intermediate Lessee (as defined in the May 9, 2000 Sponsor Subsidiary
         Credit Agreement) (including, but not limited to, the Operative
         Documents) and all organizational documents shall be reasonably
         satisfactory to Clydesdale.

                  (e)      All necessary governmental and third-party approvals
         in connection with the Transactions shall have been received, except
         for such governmental and third party approvals that, pursuant to the
         provisions hereof or the Operative Documents, are not required to be
         obtained on or prior to the Closing Date.

                  (f)      No litigation by any entity (private or governmental)
         shall be pending, or to Noric Holdings' knowledge threatened, against
         or involving (i) Noric, Clydesdale, any Sponsor Subsidiary, any
         Intermediate Holder, any Underlying Business or any Counterparty to any
         E&P Participation Agreement or any Assignment of Receivables (as
         defined in the May 9, 2000 Sponsor Subsidiary Credit Agreement) or
         affecting any of their respective properties, assets, rights or
         businesses or (ii) any E&P Participation Agreement, any Assignment of
         Receivables (as defined in the May 9, 2000 Sponsor Subsidiary Credit
         Agreement), any E&P Participation Property or any underlying property
         or affecting any of the rights of any party thereto, or owner thereof,
         in each case in any court, or before any arbitrator of any kind, or
         before or by any governmental body which, in the reasonable judgment of
         Clydesdale (taking into account the exhaustion of all appeals) would
         have a Material Adverse Effect or which purports to affect the
         legality, validity, binding effect or enforceability of any Operative
         Document.

                  (g)      All fees and reasonable out-of-pocket costs and
         expenses, including reasonable legal fees and expenses (and other
         compensation contemplated hereby) payable to the Sponsor Subsidiary
         Collateral Agent, required to be paid by the Sponsor Subsidiaries
         hereunder shall have been paid to the extent due.

                  (h)      Clydesdale shall be reasonably satisfied with all
         legal issues including tax and regulatory matters relating to the
         Operative Documents and the Transactions.

                  (i)      Evidence that the Sponsor Subsidiary Cash Reserve,
         the Noric Cash Reserve, the Clydesdale Operating Account and the
         Sponsor Subsidiary Operating Account have been established.

                  (j)      On the Closing Date, the following statements shall
         be true (and acceptance by Noric Holdings of the proceeds of the
         Initial Advance on the Closing Date shall constitute a representation
         and warranty by Noric Holdings that on the Closing Date such statements
         are true):

Sponsor Subsidiary Credit Agreement

                                       22

<PAGE>

                           (i)      the representations and warranties of each
                  El Paso Party contained in each Operative Document to which it
                  is a party are correct in all material respects on and as of
                  the Closing Date, before and after giving effect to the
                  Initial Advance and to the application of the proceeds
                  therefrom, as though made on and as of such date (except to
                  the extent that such representations and warranties relate
                  solely to an earlier date (in which case such representations
                  and warranties shall have been correct in all material
                  respects on and as of such earlier date));

                           (ii)     no event has occurred and is continuing, or
                  would result from the making of the Initial Advance or from
                  the application of the proceeds therefrom, that constitutes a
                  Liquidating Event, Termination Event, Notice Event, Event of
                  Default or Incipient Event; and

                           (iii)    the proceeds of the Initial Advance will be
                  used solely to make A-Loans and B-Loans (as defined in the May
                  9, 2000 Sponsor Subsidiary Credit Agreement).

                  (k)      Lord Securities shall have been appointed as (i) an
         independent member of each Sponsor Subsidiary pursuant to the terms of
         each Sponsor Subsidiary Company Agreement, (ii) an independent director
         of Appaloosa and (iii) an independent member of the Intermediate Lessee
         (as defined in the May 9, 2000 Sponsor Subsidiary Credit Agreement).

                  (l)      The aggregate principal amount of A-Loans to be made
         on the Closing Date is equal to $231,711,000, and the aggregate
         principal amount of B-Loans (as defined in the May 9, 2000 Sponsor
         Subsidiary Credit Agreement) to be made on the Closing Date is equal to
         $48,289,000.

                  Section 3.02. Conditions Precedent to Making the Additional
Advances. Pursuant to the Original Sponsor Subsidiary Credit Agreement (and
subject to Section 1.01(b) of this Agreement) Clydesdale was authorized to make
Additional Advances from time to time subject to the following conditions:

                  (a)      On the date of the notice referred to in Section
         2.02(b)(i) and on such Capital Contribution Date, the following
         statements shall be true (and acceptance by Noric Holdings of the
         proceeds of an Additional Advance on the applicable Capital
         Contribution Date shall constitute a representation and warranty by
         Noric Holdings that on each such date such statements are true):

                           (i)      the representations and warranties of each
                  El Paso Party contained in each Operative Document to which it
                  is a party are correct in all material respects on and as of
                  each such date, before and after giving effect to such
                  Additional Advance and to the application of the proceeds
                  therefrom, as though made on and as of each such date (except
                  to the extent that such representations and warranties relate
                  solely to an earlier date (in which case such representations
                  and warranties shall have been correct in all material
                  respects on and as of such earlier date));

Sponsor Subsidiary Credit Agreement

                                       23

<PAGE>

                           (ii)     no event has occurred and is continuing, or
                  would result from the making of such Additional Advance or
                  from the application of the proceeds therefrom, that
                  constitutes a Liquidating Event, Termination Event, Notice
                  Event, Event of Default or Incipient Event; and

                           (iii)    the proceeds of such Additional Advance will
                  be used solely to make additional A-Loans.

                  (b)      Evidence that the aggregate principal amount of the
         A-Loans on such Additional Advance Date is at least equal to the
         aggregate principal amount of the Advances outstanding on such
         Additional Advance Date.

                  (c)      Each of Appaloosa, Noric Holdings, Noric Holdings I
         and Mustang shall have made all capital contributions to Clydesdale
         required by the terms of the Clydesdale Partnership Agreement on such
         Additional Advance Date.

                  (d)      Any other documents referred to in Exhibit 5 to the
         Acquisition/Accession Procedures Schedule relating to any Transaction
         Assets contributed on such Additional Advance Date.

                  (e)      All fees and reasonably out-of-pocket costs and
         expenses, including reasonable legal fees and expenses, required to be
         paid by the Sponsor Subsidiaries hereunder shall have been paid to the
         extent due.

                  (f)      Unless waived by Clydesdale, certified copies of the
         resolutions of the Board of Directors of El Paso authorizing the
         transactions contemplated on such Capital Contribution Date, and of all
         documents evidencing other necessary corporate action and government
         approvals, if any, with respect to the transactions contemplated on
         such Capital Contribution Date.

                  (g)      Such other certificates, documents and opinions as
         Clydesdale may reasonably request.

                  Section 3.03. Conditions Precedent to Third Restatement on
July 19, 2002. The Original Sponsor Subsidiary Agreement was amended and
restated most recently as of July 19, 2002 (the "THIRD RESTATEMENT DATE"), the
effectiveness of which amendment and restatement was subject to, and took effect
upon, the following conditions precedent being satisfied on or prior to such
date:

                  (a)      In the case of El Paso and its Consolidated
         Subsidiaries, since December 31, 2001, nothing shall have occurred that
         will have resulted in a Material Adverse Effect (adopting for the
         purposes of this Section 3.03(a) the definition of "Material Adverse
         Effect" set forth in clause (b) of the definition thereof in Exhibit A
         to the Clydesdale Partnership Agreement in effect on the Third
         Restatement Date).

                  (b)      Clydesdale shall have received the following
         documents, each dated as of the Third Restatement Date (other than the
         documents described in clause (b)(iii)) and duly executed by the
         respective party or parties thereto, and otherwise in form and

Sponsor Subsidiary Credit Agreement

                                       24

<PAGE>

         substance reasonably satisfactory to Clydesdale and (except for any
         A-Loan Note and any document listed in clause (b)(iii)) in four
         original counterparts:

                           (i)      The Original Sponsor Subsidiary Credit
                  Agreement.

                           (ii)     A replacement A-Loan Note dated the Third
                  Restatement Date (to be delivered against receipt of the then
                  existing A-Loan Note and the then existing B-Loan Note (as
                  defined in the Original Sponsor Subsidiary Credit Agreement).

                           (iii)    Certificates of the Secretary of State of
                  the State of Delaware with respect to (without duplication)
                  Lusitano, Lipizzan, El Paso Production Oil & Gas USA, El Paso
                  Oil & Gas Resources and El Paso Energy Raton, L.L.C, in each
                  case, certifying that (A) such Person has paid all franchise
                  taxes to the date of such certificate and (B) such Person is
                  duly formed and in good standing under the laws of its state
                  of formation or incorporation and attaching the certificate of
                  formation or certificate of limited partnership and each
                  amendment thereto on file in such office and certifying, (1)
                  such certificate of formation or certificate of limited
                  partnership is a true and complete copy thereof and (2) such
                  amendments are the only amendments to such certificate of
                  formation or certificate of limited partnership on file in
                  such office.

                           (iv)     Certificates of each of (without
                  duplication) Appaloosa, Noric, Noric LP, Palomino, Paso Fino,
                  Noric Holdings, Noric Holdings I, Noric Holdings III, Noric
                  Holdings IV, each other Sponsor Subsidiary, Lusitano,
                  Lipizzan, El Paso, each Counterparty to each E&P Participation
                  Agreement, El Paso Production Oil & Gas USA, El Paso Oil & Gas
                  Resources, El Paso Energy Raton, L.L.C, each issuer of any
                  A-Loan Note and El Paso Demand Note, signed on behalf of each
                  such Person by a managing member, President, Vice President,
                  Treasurer, Assistant Treasurer, Secretary, Deputy Corporate
                  Secretary, Assistant Secretary or Deputy Treasurer of each
                  such Person or its managing member or general partner, as
                  applicable (the statements made in which certificate shall be
                  true and correct on and as of the Third Restatement Date),
                  certifying as to:

                                    (A)      the absence of any amendments to
                           the charter, certificate of formation or certificate
                           of limited partnership of such Person since the date
                           of the certificate referred to in Section 3.01(b)(iv)
                           (or since December 15, 2000 in the case of Noric LP,
                           Palomino or Paso Fino or since June 19, 2001 in the
                           case of Noric Holdings III) and with respect to
                           Lusitano, Lipizzan, El Paso Production Oil & Gas USA,
                           El Paso Oil & Gas Resources and El Paso Energy Raton,
                           L.L.C, the absence of any amendments to the
                           certificate of formation or certificate of limited
                           partnership of such Person since the date of the
                           certificate referred to in Section 3.03(b)(iii),

                                    (B)      with respect to (without
                           duplication) El Paso, Appaloosa, each Counterparty to
                           each E&P Participation Agreement, each issuer of

Sponsor Subsidiary Credit Agreement

                                       25

<PAGE>

                           any A-Loan Note and El Paso Demand Note, the absence
                           of any amendments to the by-laws of such Person since
                           delivery of such by-laws under Section 3.01(b)(v)(B),
                           with respect to El Paso Energy Raton, L.L.C., a true
                           and correct copy of its company agreement and, with
                           respect to each Counterparty to any Production
                           Payment Agreement, a true and correct copy of the
                           partnership agreement of such Person,

                                    (C)      the due incorporation or formation
                           and good standing of such Person as a corporation,
                           limited partnership or limited liability company, as
                           the case may be, under the laws of the jurisdiction
                           of its organization, and the absence of any
                           proceeding for the dissolution or liquidation of such
                           Person,

                                    (D)      in the case of each such Person,
                           that attached thereto is a true and complete copy of
                           resolutions duly adopted by the board of directors,
                           executive (or other) committee of the board of
                           directors, board of managers, managing member,
                           general partner or manager, as applicable, of such
                           Person authorizing the execution, delivery and
                           performance of the Operative Documents to which it is
                           or is to be a party as amended and restated as of the
                           Third Restatement Date,

                                    (E)      in the case of each such Person,
                           that such resolutions, or if no resolutions are
                           delivered as described in clause (D) above such
                           resolutions as were previously delivered under
                           Section 3.01 with respect to such Person, have not
                           been revoked, annulled or modified in any manner and
                           are in full force and effect,

                                    (F)      in the case of each such Person,
                           the incumbency and specimen signature of each officer
                           of such Person or of a managing member or general
                           partner of such Person, as applicable, executing the
                           Operative Documents described in clause (D) above,
                           and a certification of another officer or an
                           authorized representative of such Person or of a
                           managing member or general partner of such Person, as
                           applicable, as to the signature of the officers
                           signing certificates referred to in this subclause
                           (v), and

                                    (G)      no Liquidating Event, Termination
                           Event, Notice Event, Event of Default, or Incipient
                           Event has occurred and is continuing or would result
                           from the amendment and restatement of this Agreement
                           and the other transactions contemplated on the Third
                           Restatement Date.

                           (v)      The Sponsor Subsidiary Security Agreement,
                  as amended and restated as of the Third Restatement Date.

                           (vi)     The El Paso Guaranty, as amended and
                  restated as of the Third Restatement Date.

Sponsor Subsidiary Credit Agreement

                                       26

<PAGE>

                           (vii)    The El Paso Agreement, as amended and
                  restated as of the Third Restatement Date.

                           (viii)   The Clydesdale Partnership Agreement, as
                  amended and restated as of the Third Restatement Date.

                           (ix)     The Noric Holdings Company Agreement, as
                  amended and restated as of the Third Restatement Date.

                           (x)      The Noric Holdings I Company Agreement, as
                  amended and restated as of the Third Restatement Date.

                           (xi)     The Noric Holdings III Company Agreement, as
                  amended and restated as of the Third Restatement Date.

                           (xii)    The Noric Holdings IV Company Agreement.

                           (xiii)   The Noric Company Agreement, as amended and
                  restated as of the Third Restatement Date.

                           (xiv)    The Noric LP Partnership Agreement, as
                  amended and restated as of the Third Restatement Date.

                           (xv)     The Lusitano Company Agreement.

                           (xvi)    The Lipizzan Partnership Agreement.

                           (xvii)   The Notice Agreement, as amended and
                  restated as of the Third Restatement Date.

                           (xviii)  Each Production Payment Conveyance in
                  sufficient counterparts for recording in all appropriate
                  jurisdictions.

                           (xix)    Each Production and Delivery Agreement in
                  sufficient counterparts for recording in all appropriate
                  jurisdictions.

                           (xx)     Financing statements for filing in each
                  appropriate jurisdiction in order to perfect the security
                  interests granted under each Production and Delivery
                  Agreement.

                           (xxi)    A Liquidation Indemnity with respect to each
                  of Noric Holdings IV, Lusitano and Lipizzan.

                           (xxii)   The Mustang Company Agreement, as amended
                  and restated as of the Third Restatement Date.

                           (xxiii)  The Sponsor Subsidiary Consent.

                           (xxiv)   Amendment No. 2 to the Administration
                  Agreement.

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                                       27

<PAGE>

                           (xxv)    A copy of each notice required pursuant to
                  Section 7.01(b) and Section 7.02(b).

                           (xxvi)   The legal opinions described in Schedule
                  3.03(b) of the Sponsor Subsidiary Credit Agreement as amended
                  and restated as of the Third Restatement Date.

                           (xxvii)  A certificate of Noric Holdings IV
                  certifying that, on the Third Restatement Date and after
                  giving effect to the use of proceeds and the other
                  transactions contemplated by the Operative Documents on the
                  Third Restatement Date: (A) Noric Holdings IV is the Lusitano
                  Member and the Lipizzan Limited Partner, (B) Lusitano is the
                  Lipizzan General Partner and (C) Noric Holdings IV has made
                  all capital contributions required to be made by Noric
                  Holdings IV to Lipizzan on the Third Restatement Date pursuant
                  to the terms of the Lipizzan Partnership Agreement.

                           (xxviii) The Engage Letter.

                           (xxix)   Such other certificates, documents and
                  opinions as Clydesdale may reasonably request.

                  (c)      Evidence that all other actions to the extent
         necessary or desirable, in the judgment of Clydesdale, to perfect and
         protect the Liens created by the Sponsor Subsidiary Security Agreement
         have been taken, including, without limitation, the delivery of copies
         of proper Financing Statements (Form UCC-1 and/or UCC-3) with respect
         to the financing statements filed in connection with the Sponsor
         Subsidiary Security Agreement.

                  (d)      All agreements related to, and the capital and legal
         structure of, Appaloosa, Noric, Noric LP, Palomino, Paso Fino, the
         Sponsor Subsidiaries, Lusitano and Lipizzan (including, but not limited
         to, the Operative Documents) and all organizational documents shall be
         reasonably satisfactory to Clydesdale.

                  (e)      All necessary governmental and third-party approvals
         in connection with the transactions contemplated hereby and by the
         other Operative Documents on the Third Restatement Date or otherwise
         referred to herein shall have been received, except for such
         governmental and third-party approvals that, pursuant to the provisions
         hereof or the Operative Documents, are not required to be obtained on
         or prior to the Third Restatement Date.

                  (f)      No litigation by any entity (private or governmental)
         shall be pending, or to Noric Holdings' knowledge threatened, against
         or involving (i) Noric, Noric LP, Palomino, Paso Fino, Clydesdale, any
         Sponsor Subsidiary, Lusitano, Lipizzan, any Underlying Business or any
         Counterparty to any E&P Participation Agreement or any Production
         Payment Agreement or affecting any of their respective properties,
         assets, rights or businesses or (ii) any E&P Participation Agreement,
         any Production Payment Agreement, any E&P Participation Property, any
         Production Payment Interests or any underlying property or affecting
         any of the rights of any party thereto, or owner thereof,

Sponsor Subsidiary Credit Agreement

                                       28

<PAGE>

         in each case in any court, or before any arbitrator of any kind, or
         before or by any governmental body which, in the reasonable judgment of
         Clydesdale (taking into account the exhaustion of all appeals), would
         have a Material Adverse Effect or which purports to affect the
         legality, validity, binding effect or enforceability of any Operative
         Document.

                  (g)      All fees and reasonable out-of-pocket costs and
         expenses, including reasonable legal fees and expenses (and other
         compensation contemplated hereby) payable to the Sponsor Subsidiary
         Collateral Agent, required to be paid by the Sponsor Subsidiaries
         hereunder shall have been paid to the extent due.

                  (h)      Clydesdale shall be reasonably satisfied with all
         legal issues including tax and regulatory matters relating to the
         Operative Documents and the Transactions.

                  (i)      On the Third Restatement Date, the following
         statements shall be true (and each Sponsor Subsidiary hereby represents
         as of the Third Restatement Date that such statements are true):

                           (i)      the representations and warranties of each
                  El Paso Party contained in each Operative Document to which it
                  is a party are correct in all material respects on and as of
                  the Third Restatement Date, before and after giving effect to
                  the amendment of this Agreement as of such date, as though
                  made on and as of such date (except to the extent that such
                  representations and warranties relate solely to an earlier
                  date (in which case such representations and warranties shall
                  have been correct in all material respects on and as of such
                  earlier date)); and

                           (ii)     no event has occurred and is continuing, or
                  would result from the amendment and restatement of this
                  Agreement as of such Date, that constitutes a Liquidating
                  Event, Termination Event, Notice Event, Event of Default or
                  Incipient Event.

                  (j)      Lord Securities shall have been appointed as an
         independent member of Noric Holdings IV pursuant to the terms of the
         Noric Holdings IV Company Agreement.

                  (k)      Evidence that all of the B-Loans (as defined in the
         Original Sponsor Subsidiary Credit Agreement) outstanding immediately
         prior to the Third Restatement Date have been converted to A-Loans.

                  (l)      Evidence that the aggregate principal amount of the
         A-Loans on the Third Restatement Date is at least equal to the
         aggregate principal amount of the Advances outstanding on the Third
         Restatement Date.

                  (m)      Evidence that, immediately after the Third
         Restatement Date, the Sponsor Subsidiaries shall be in compliance with
         the requirements of Section 5.04(b).

                  Section 3.04. Conditions Precedent to Amending and Restating
this Agreement on April 16, 2003. The fourth amendment and restatement of this
Agreement as of April 16, 2003 (the "FOURTH RESTATEMENT DATE") is subject to,
and shall take effect upon, the following conditions precedent being satisfied
on or prior to such date:

Sponsor Subsidiary Credit Agreement

                                       29

<PAGE>

                  (a)      There shall not have occurred a Material Adverse
         Effect (as defined in clause (b) of the definition thereof), since
         December 31, 2002, except as disclosed in El Paso's 10-K, 10-Q and 8-K
         filings, and materials relating to proxies, in each case filed with the
         United States Securities and Exchange Commission prior to the Fourth
         Restatement Date (other than any material adverse development or
         material adverse change in any matter disclosed therein).

                  (b)      Mustang shall have received the following documents,
         each dated as of the Fourth Restatement Date and duly executed by the
         respective party or parties thereto, and otherwise in form and
         substance reasonably satisfactory to Mustang and (except for any A-Loan
         Note and any document listed in clause (b)(iii)) in four original
         counterparts:

                           (i)      This Agreement, as amended and restated as
                  of the Fourth Restatement Date.

                           (ii)     A replacement A-Loan Note dated the Fourth
                  Restatement Date (to be delivered against receipt of the then
                  existing A-Loan Note (as defined in the Original Sponsor
                  Subsidiary Credit Agreement) in an amount equal to the sum of
                  (i) the aggregate principal amount of Advances outstanding on
                  the Fourth Restatement Date and (ii) the aggregate principal
                  amount of the Sponsor Subsidiary Subordinated Debt.

                           (iii)    A copy, certified as true and correct, of
                  the Sponsor Subsidiary Subordinated Note, in the principal
                  amount of $230,000,000.

                           (iv)     Certificates of the Secretary of State of
                  the State of Delaware with respect to (without duplication)
                  each Sponsor Subsidiary, each Sponsor Subsidiary Member,
                  Noric, Palomino, Paso Fino, Noric LP, Lipizzan, Lusitano,
                  Clydesdale, Appaloosa and El Paso in each case, certifying
                  that (A) such Person has paid all franchise taxes to the date
                  of such certificate and (B) such Person is duly formed and in
                  good standing under the laws of its state of formation or
                  incorporation and attaching the certificate of incorporation,
                  the certificate of formation or certificate of limited
                  partnership and each amendment thereto on file in such office
                  and certifying, (1) such certificate of incorporation,
                  certificate of formation or certificate of limited partnership
                  is a true and complete copy thereof and (2) such amendments
                  are the only amendments to such certificate of incorporation,
                  certificate of formation or certificate of limited partnership
                  on file in such office.

                           (v)      Certificates of (without duplication) each
                  Sponsor Subsidiary, each Sponsor Subsidiary Member, Noric,
                  Palomino, Paso Fino, Noric LP, Lipizzan, Lusitano, Clydesdale,
                  Appaloosa and El Paso and each issuer of any A-Loan Note and
                  each issuer of any El Paso Demand Note, signed on behalf of
                  each such Person by a managing member, President, Vice
                  President, Treasurer, Assistant Treasurer, Secretary, Deputy
                  Corporate Secretary, Assistant Secretary or Deputy Treasurer
                  of each such Person or its managing member or general partner,
                  as

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                  applicable (the statements made in which certificate shall be
                  true and correct on and as of the Fourth Restatement Date),
                  certifying as to:

                                    (A)      The absence of any amendments to
                           the charter, certificate of incorporation,
                           certificate of formation or certificate of limited
                           partnership of such Person, (i) in the case of
                           Palomino, Paso Fino and Noric LP, since December 15,
                           2000, (ii) in the case of Noric Holdings III, since
                           June 19, 2001, (iii) in the case of Noric Holdings
                           IV, Lusitano and Lipizzan, since the date of the
                           certificates referred to in Section 3.03(b)(iii),
                           (iv) in the case of El Paso Noric Investments I,
                           L.L.C., El Paso Noric Investments III, L.L.C., and El
                           Paso Noric Investments IV, L.L.C., since the date of
                           the certificates referred to in Section 3.04(b)(iv),
                           and (v) in any other case, since the date of the
                           certificates referred to in Section 3.01(b)(iv),

                                    (B)      With respect to (without
                           duplication) El Paso, each issuer of any A-Loan Note
                           and each issuer of any El Paso Demand Note, the
                           absence of any amendments to the by-laws of such
                           Person since delivery of such by-laws under Section
                           3.01(b)(v)(B),

                                    (C)      The due incorporation or formation
                           and good standing of such Person as a corporation,
                           limited partnership or limited liability company, as
                           the case may be, under the laws of the jurisdiction
                           of its organization, and the absence of any
                           proceeding for the dissolution or liquidation of such
                           Person,

                                    (D)      In the case of each such Person,
                           that attached thereto is a true and complete copy of
                           resolutions duly adopted by the board of directors,
                           executive (or other) committee of the board of
                           directors, board of managers, managing member,
                           general partner or manager, as applicable, of such
                           Person authorizing the execution, delivery and
                           performance of the Operative Documents to which it is
                           or is to be a party, as amended and restated as of
                           the Fourth Restatement Date, and that such
                           resolutions have not been revoked, annulled or
                           modified in any manner and are in full force and
                           effect,

                                    (E)      In the case of each such Person,
                           the incumbency and specimen signature of each officer
                           of such Person or of a managing member or general
                           partner of such Person, as applicable, executing the
                           Operative Documents described in clause (D) above,
                           and a certification of another officer or an
                           authorized representative of such Person or of a
                           managing member or general partner of such Person, as
                           applicable, as to the signature of the officers
                           signing certificates referred to in this subclause
                           (E), and

                                    (F)      No Liquidating Event, Termination
                           Event, Notice Event, Event of Default, or Incipient
                           Event has occurred and is continuing or

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<PAGE>

                           would result from the amendment and restatement of
                           this Agreement and the consummation of the other
                           transactions contemplated to occur on the Fourth
                           Restatement Date.

                           (vi)     The Sponsor Subsidiary Security Agreement,
                  as amended and restated as of the Fourth Restatement Date.

                           (vii)    The El Paso Guaranty, as amended and
                  restated as of the Fourth Restatement Date.

                           (viii)   The El Paso Agreement, as amended and
                  restated as of the Fourth Restatement Date.

                           (ix)     The Clydesdale Partnership Agreement, as
                  amended and restated as of the Fourth Restatement Date.

                           (x)      The Noric Holdings Company Agreement, as
                  amended and restated as of the Fourth Restatement Date.

                           (xi)     The Noric Holdings I Company Agreement, as
                  amended and restated as of the Fourth Restatement Date.

                           (xii)    The Noric Holdings III Company Agreement, as
                  amended and restated as of the Fourth Restatement Date.

                           (xiii)   The Noric Holdings IV Company Agreement, as
                  amended and restated as of the Fourth Restatement Date.

                           (xiv)    The Noric Company Agreement, as amended and
                  restated as of the Fourth Restatement Date.

                           (xv)     The Noric LP Partnership Agreement, as
                  amended and restated as of the Fourth Restatement Date.

                           (xvi)    The Lusitano Company Agreement, if amended
                  and restated as of the Fourth Restatement Date.

                           (xvii)   The Lipizzan Partnership Agreement, if
                  amended and restated as of the Fourth Restatement Date.

                           (xviii)  The Notice Agreement, as amended and
                  restated as of the Fourth Restatement Date.

                           (xix)    The Palomino Company Agreement, if amended
                  and restated as of the Fourth Restatement Date.

                           (xx)     Mustang Company Agreement, as amended and
                  restated as of the Fourth Restatement Date.

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<PAGE>

                           (xxi)    The Mustang Credit and Security Agreement,
                  as amended and restated as of the Fourth Restatement Date.

                           (xxii)   The Sponsor Subsidiary Consent.

                           (xxiii)  All required consents under the Mustang
                  Company Agreement, as amended and restated as of the Fourth
                  Restatement Date, and under the Mustang Credit and Security
                  Agreement.

                           (xxiv)   The Paso Fino Company Agreement, if amended
                  and restated as of the Fourth Restatement Date.

                           (xxv)    The Definitions Agreement.

                           (xxvi)   The Redemption, Withdrawal and Consent
                  Agreement.

                           (xxvii)  The Intercreditor Agreement.

                           (xxviii) A copy of each notice required pursuant to
                  Section 7.01(b) and Section 7.02(b).

                           (xxix)   The legal opinions described in Schedule
                  3.04(b).

                           (xxx)    [Intentionally omitted].

                           (xxxi)   [Intentionally omitted].

                           (xxxii)  Such other certificates, documents and
                  opinions as Mustang may reasonably request.

                  (c)      Evidence that all (i) the Noric Class B Membership
         Interests, the Noric Holdings I Cash Reserve and the Noric Holdings III
         Deposit Account have been subjected to the Lien of the Sponsor
         Subsidiary Security Agreement and (ii) actions to the extent necessary
         or desirable, in the judgment of Mustang, to perfect and protect the
         Liens created by the Sponsor Subsidiary Security Agreement have been
         taken, including without limitation, the delivery of copies of proper
         UCC-3 amendments with respect to the financing statements filed in
         connection with the Sponsor Subsidiary Security Agreement in order to
         reflect the pledge of the Noric Class B Membership Interests, the Noric
         Holdings I Cash Reserve and the Noric Holdings III Deposit Account to
         the Sponsor Subsidiary Collateral Agent.

                  (d)      All agreements related to, and the capital and legal
         structure of, Noric, Noric LP, Palomino, Paso Fino, the Sponsor
         Subsidiaries, Lusitano and Lipizzan (including, but not limited to, the
         Operative Documents) and all organizational documents of such Persons
         shall be reasonably satisfactory to Mustang.

                  (e)      Evidence that all necessary governmental and
         third-party approvals in connection with the transactions contemplated
         hereby and by the other Operative

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<PAGE>

         Documents on the Fourth Restatement Date or otherwise referred to
         herein shall have been received, except for such governmental and third
         party approvals that, pursuant to the provisions hereof or the
         Operative Documents, are not required to be obtained on or prior to the
         Fourth Restatement Date.

                  (f)      Except as disclosed in El Paso's 10-K, 10-Q and 8-K
         filings, and materials relating to proxies, in each case filed with the
         United States Securities and Exchange Commission prior to the Fourth
         Restatement Date, no litigation by any entity (private or governmental)
         shall be pending or, to Noric Holdings' knowledge, threatened against
         (i) any El Paso Party, any withdrawing Sponsor Subsidiary Member, any
         Underlying Business or any Counterparty to any E&P Participation
         Agreement or any Production Payment Agreement or affecting any of their
         respective properties, assets, rights or businesses or (ii) any E&P
         Participation Agreement, any Production Payment Agreement, any E&P
         Participation Property, any Production Payment Interests or any
         underlying property or affecting any of the rights of any party
         thereto, or owner thereof, in each case in any court, or before any
         arbitrator of any kind, or before or by any governmental body which, in
         the reasonable judgment of Mustang (taking into account the exhaustion
         of all appeals) would have a Material Adverse Effect or which purports
         to affect the legality, validity, binding effect or enforceability of
         any Operative Document.

                  (g)      All fees and reasonable out-of-pocket costs and
         expenses, including reasonable legal fees and expenses (and other
         compensation contemplated hereby) payable to the Sponsor Subsidiary
         Collateral Agent, required to be paid by the Sponsor Subsidiaries
         hereunder shall have been paid to the extent invoiced and due.

                  (h)      Mustang shall be reasonably satisfied with all legal
         issues including tax and regulatory matters relating to the Operative
         Documents and the Transactions.

                  (i)      On the Fourth Restatement Date, the representations
         and warranties of each El Paso Party contained in each Operative
         Document to which it is a party are correct in all material respects on
         and as of the Fourth Restatement Date, before and after giving effect
         to the amendment and restatement of this Agreement as of such date, as
         though made on and as of such date (except to the extent that such
         representations and warranties relate solely to an earlier date (in
         which case such representations and warranties shall have been correct
         in all material respects on and as of such earlier date)).

                  (j)      Evidence that each Transfer of Interests shall have
         occurred.

                  (k)      Evidence that, immediately after the Fourth
         Restatement Date, the Sponsor Subsidiaries shall be in compliance with
         the requirements of Section 5.04(a) and (b).

                  (l)      Evidence that the Noric Holdings I Cash Reserve and
         the Noric Holdings III Deposit Account have been established.

                  (m)      Evidence that any and all amounts standing to the
         credit of the Noric Cash Reserve (as defined in the Original Sponsor
         Subsidiary Credit Agreement) and the Noric LP Cash Reserve (as defined
         in the Original Sponsor Subsidiary Credit Agreement), and

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<PAGE>

         all existing Permitted Investments thereof, in accordance with the
         Original Sponsor Subsidiary Credit Agreement have been transferred to
         the Noric Holdings I Cash Reserve.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  Section 4.01. Representations and Warranties with Respect to
Each Sponsor Subsidiary. Each Sponsor Subsidiary represents and warrants as
follows in respect of itself and, in the case of Noric Holdings I only, in
respect of each of Noric, Palomino, Paso Fino and Noric LP, and, in the case of
Noric Holdings IV only, in respect of each of Lusitano and Lipizzan:

                  (a)      Due Formation. Each such Sponsor Subsidiary,
         Lusitano, Lipizzan, Noric, Palomino, Paso Fino or Noric LP (as the case
         may be) is duly formed, validly existing and in good standing under the
         laws of the State of Delaware. Each such Sponsor Subsidiary, Lusitano,
         Lipizzan, Noric, Palomino, Paso Fino or Noric LP (as the case may be)
         has all requisite limited liability company or limited partnership
         powers to carry on its business as now conducted and all governmental
         licenses, authorizations, consents and approvals required in each case
         to carry on its business as now conducted, except for such governmental
         licenses, authorizations, consents and approvals of which the failure
         to obtain could not reasonably be expected to have a Material Adverse
         Effect.

                  (b)      Authorization of Agreements. Each such Sponsor
         Subsidiary, Lusitano, Lipizzan, Noric, Palomino, Paso Fino or Noric LP
         (as the case may be) has the limited liability company or limited
         partnership (as the case may be) power and authority to execute and
         deliver each Operative Document to which it is a party and to perform
         its obligations thereunder. The execution, delivery and performance by
         each such Sponsor Subsidiary, Lusitano, Lipizzan, Noric, Palomino, Paso
         Fino or Noric LP (as the case may be) of each Operative Document to
         which it is a party have been duly authorized by all necessary limited
         liability company or limited partnership action (as the case may be).

                  (c)      Enforceability. Each Operative Document to which each
         such Sponsor Subsidiary, Lusitano, Lipizzan, Noric, Palomino, Paso Fino
         or Noric LP (as the case may be) is a party constitutes the legal,
         valid and binding obligation of such Sponsor Subsidiary, Lusitano,
         Lipizzan, Noric, Palomino, Paso Fino or Noric LP (as the case may be)
         and is enforceable against such Sponsor Subsidiary, Lusitano, Lipizzan,
         Noric, Palomino, Paso Fino or Noric LP (as the case may be) in
         accordance with its terms, except as the enforceability thereof may be
         limited by the effect of any applicable bankruptcy, insolvency,
         reorganization, moratorium or similar laws affecting creditors' rights
         generally and by general principles of equity.

                  (d)      Compliance with Applicable Laws. Each such Sponsor
         Subsidiary, Lusitano, Lipizzan, Noric, Palomino, Paso Fino or Noric LP
         (as the case may be) is in compliance with all Applicable Laws
         applicable to it and all licensing requirements of all Governmental
         Authorities the violation of which could reasonably be expected to have
         a

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                                       35

<PAGE>

         Material Adverse Effect, and none of such Sponsor Subsidiary, Lusitano,
         Lipizzan, Noric, Palomino, Paso Fino or Noric LP (as the case may be)
         is the subject of any outstanding or threatened citation, order, or
         investigation by any Governmental Authority that could reasonably be
         expected to have a Material Adverse Effect.

                  (e)      No Conflict with Restrictions; No Default. The
         execution, delivery and performance by such Sponsor Subsidiary,
         Lusitano, Lipizzan, Noric, Palomino, Paso Fino or Noric LP (as the case
         may be) of each Operative Document to which such Sponsor Subsidiary,
         Lusitano, Lipizzan, Noric, Palomino, Paso Fino or Noric LP (as the case
         may be) is a party does not (i) contravene or constitute a breach or
         default under (A) any provision of Applicable Law (including Regulation
         T, U, or X issued by the Board of Governors of the Federal Reserve
         System) applicable to such Sponsor Subsidiary, Lusitano, Lipizzan,
         Noric, Palomino, Paso Fino or Noric LP (as the case may be), (B) the
         Organizational Documents of such Sponsor Subsidiary, Lusitano,
         Lipizzan, Noric, Palomino, Paso Fino or Noric LP (as the case may be),
         (C) any judgment, injunction, order, decree or agreement binding upon
         it, (D) any contract, loan agreement, indenture, mortgage, deed of
         trust, lease or other agreement or instrument binding upon or with
         respect to such Sponsor Subsidiary, Lusitano, Lipizzan, Noric,
         Palomino, Paso Fino or Noric LP (as the case may be), or (E) any of the
         properties of such Sponsor Subsidiary, Lusitano, Lipizzan, Noric,
         Palomino, Paso Fino or Noric LP (as the case may be), or (ii) result in
         the creation or imposition of any Lien on any of the assets of such
         Sponsor Subsidiary, Lusitano, Lipizzan, Noric, Palomino, Paso Fino or
         Noric LP (as the case may be), except for Permitted Liens. None of such
         Sponsor Subsidiary, Noric, Lusitano, Lipizzan, Palomino, Paso Fino or
         Noric LP (as the case may be) is in violation of any such Applicable
         Law, or in breach of or in default under any such contract, loan
         agreement, indenture, mortgage, deed of trust, lease or other agreement
         or instrument, except for any violation, breach or default which could
         not reasonably be expected to have a Material Adverse Effect.

                  (f)      Authorizations. (i) The execution, delivery and
         performance by such Sponsor Subsidiary, Lusitano, Lipizzan, Noric,
         Palomino, Paso Fino or Noric LP (as the case may be) of each Operative
         Document to which such Sponsor Subsidiary, Lusitano, Lipizzan, Noric,
         Palomino, Paso Fino or Noric LP (as the case may be) is a party and the
         consummation of the Transactions;

                           (ii)     the grant by such Sponsor Subsidiary of the
                  Liens pursuant to the Sponsor Subsidiary Security Agreement;

                           (iii)    the perfection or maintenance of the Liens
                  created pursuant to the Sponsor Subsidiary Security Agreement
                  (including the first priority nature thereof, subject to
                  Permitted Liens); and

                           (iv)     the exercise by the Sponsor Subsidiary
                  Collateral Agent or the Mustang Collateral Agent or Mustang of
                  their respective rights under the Operative Documents or the
                  remedies in respect of the Collateral pursuant thereto (other
                  than any consents, approvals, notices or filings that may be
                  required under the Securities Act and Article 9 of the UCC (or
                  its equivalent) as in effect in the

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                                       36

<PAGE>

                  relevant jurisdiction in connection with the perfection of the
                  security interests in or with foreclosure on, and Disposition
                  of, the Collateral and other than any consents, approvals,
                  notices or filings that may be required under any securities
                  laws or FERC regulations of general applicability in
                  connection with the Disposition of the Collateral), in each
                  case do not require any action by or in respect of (including
                  any license or permit), or filing with, any Governmental
                  Authority or any other Person that has not been obtained or
                  made and that is not in full force and effect, except for the
                  filing of financing statements and any continuation statements
                  with respect to filings under the UCC (or its equivalent) in
                  relevant jurisdictions permitted by the provisions of the
                  Operative Documents to be performed or filed at a later date
                  and such consents, authorizations, approvals, actions, notices
                  and filings as (1) have been obtained, made, taken or given
                  are in full force and effect and copies of which have been
                  furnished to Mustang, the Sponsor Subsidiary Collateral Agent
                  and the Mustang Collateral Agent or (2) are not yet required
                  to be obtained, made, taken or given under the terms of the
                  Operative Documents to which such Sponsor Subsidiary,
                  Lusitano, Lipizzan, Noric, Palomino, Paso Fino or Noric LP (as
                  the case may be) is a party.

                  (g)      No Material Adverse Effect; Litigation. Except as
         disclosed in El Paso's 10-K, 10-Q and 8-K filings, and materials
         relating to proxies, in each case filed with the United States
         Securities and Exchange Commission prior to the Fourth Restatement Date
         (other than any material adverse change in any matter disclosed
         therein), there is (i) no action, suit or proceeding pending, or to
         such Sponsor Subsidiary's knowledge threatened, against or involving
         such Sponsor Subsidiary, Lusitano, Lipizzan, Noric, Palomino, Paso Fino
         or Noric LP (as the case may be) or affecting any of such Person's
         properties, assets, rights or businesses (excluding, for the purposes
         of this representation and warranty, any Intermediate Holder or
         Underlying Business relating to any Energy Investment) in any court, or
         before any arbitrator of any kind, or before or by any governmental
         body or (ii) any other event with respect to such Sponsor Subsidiary,
         Lusitano, Lipizzan, Noric, Palomino, Paso Fino or Noric LP (as the case
         may be) that, in either case, in such Sponsor Subsidiary's reasonable
         judgment (taking into account, in the case of proceedings described in
         clause (i) above, the exhaustion of all appeals), would have a Material
         Adverse Effect or which purports to affect the legality, validity,
         binding effect or enforceability of any Operative Document.

                  (h)      Investment Company Act; Public Utility Holding
         Company Act. None of such Sponsor Subsidiary, Lusitano, Lipizzan,
         Noric, Palomino, Paso Fino or Noric LP (as the case may be) is an
         "investment company" within the meaning of the Investment Company Act.
         None of such Sponsor Subsidiary, Lusitano, Lipizzan, Noric, Palomino,
         Paso Fino or Noric LP (as the case may be) is a "holding company" or a
         "subsidiary company" of a "holding company" within the meaning of the
         Public Utility Holding Company Act of 1935.

                  (i)      No Event. No Incipient Event, Event of Default,
         Liquidating Event, Termination Event or Notice Event has occurred and
         is continuing or would result from entering in to the fourth amendment
         and restatement of this Agreement.

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<PAGE>

                  (j)      El Paso Company. Such Sponsor Subsidiary, Lusitano,
         Lipizzan, Noric, Palomino, Paso Fino or Noric LP (as the case may be)
         is an El Paso Company.

                  (k)      No Prior Activities. Since the date of its formation,
         none of such Sponsor Subsidiary, Lusitano, Lipizzan, Noric, Palomino,
         Paso Fino or Noric LP (as the case may be) has engaged in any activity
         other than that contemplated by the Operative Documents or entered into
         any commitment or incurred any Indebtedness other than pursuant to, or
         as permitted under, the Operative Documents to which it is a party.

                  (l)      Purpose. Such Sponsor Subsidiary was formed to carry
         out the activities set forth in its Sponsor Subsidiary Company
         Agreement and, except in connection therewith (and except as
         contemplated by the Operative Documents), it has no significant assets
         or liabilities. Noric was formed to carry out the activities set forth
         in the Noric Company Agreement and, except in connection therewith (and
         except as contemplated by the Operative Documents), Noric has no
         significant assets or liabilities. Each of Palomino and Paso Fino was
         formed to carry out the activities set forth in the Palomino Company
         Agreement and Paso Fino Company Agreement, respectively, and, except in
         connection therewith (and except as contemplated by the Operative
         Documents), neither Palomino nor Paso Fino has any significant assets
         or liabilities. Noric LP was formed to carry out the activities set
         forth in the Noric LP Partnership Agreement and, except in connection
         therewith (and except as contemplated by the Operative Documents),
         Noric LP has no significant assets or liabilities. Each of Lusitano and
         Lipizzan was formed to carry out the activities set forth in the
         Lusitano Company Agreement and Lipizzan Partnership Agreement,
         respectively, and, except in connection therewith (and except as
         contemplated by the Operative Documents), neither Lusitano nor Lipizzan
         has any significant assets or liabilities.

                  (m)      Collateral. (i) All of the existing Collateral
         pledged by it pursuant to the Sponsor Subsidiary Security Agreement is
         owned legally and beneficially by it free and clear of all Liens,
         except for Permitted Liens.

                           (ii)     The Sponsor Subsidiary Credit Agreement and
                  the pledge and/or assignment of the Collateral created
                  pursuant to the Sponsor Subsidiary Security Agreement together
                  with the financing statements to be filed with respect
                  thereto, the Sponsor Subsidiary Collateral Agent's taking and
                  maintaining possession of all instruments and certificates
                  representing or evidencing the Collateral, the registration of
                  any Collateral constituting uncertificated securities on the
                  books of the issuer thereof in the name of the Sponsor
                  Subsidiary Collateral Agent and the other actions taken by it
                  in accordance with Section 4 of the Sponsor Subsidiary
                  Security Agreement and the filing of the financing statements
                  referred to in Section 3.01(b)(ii) and 3.04(c) of this
                  Agreement, create valid and enforceable perfected security
                  interests in and Liens on such Collateral, securing the
                  payment of all Obligations purported to be secured thereby.

                           (iii)    Such security interests are first priority,
                  subject to Permitted Liens.

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<PAGE>

                           (iv)     No effective financing statement or other
                  instrument similar in effect covering all or any part of the
                  Collateral is on file in any recording office, except such as
                  may have been filed in favor of the Sponsor Subsidiary
                  Collateral Agent relating to this Agreement.

                           (v)      It has no trade names.

                           (vi)     Such Sponsor Subsidiary does not own any
                  securities that are not Collateral.

                           (vii)    Schedule I to the Sponsor Subsidiary
                  Security Agreement and each Transaction Asset Schedule (other
                  than Parts IX and X thereof) are true, correct and complete in
                  all material respects.

                  (n)      Agreement Collateral. (i) None of the Assigned
         Agreements has been amended or otherwise modified (except, in the case
         of each Assigned Agreement other than an Operative Document, any
         modifications made on or before the Closing Date) except as disclosed
         in Schedule I to the Sponsor Subsidiary Security Agreement or Schedule
         I to the Noric Company Agreement or as disclosed in any Transaction
         Asset Schedule, and as otherwise permitted by the Operative Documents,
         and each Assigned Agreement is in full force and effect.

                           (ii)     It is not and, to the best of its knowledge,
                  no other party to any Assigned Agreement is, in default of its
                  material obligations under any Assigned Agreement.

                           (iii)    None of the Agreement Collateral (as defined
                  in the Sponsor Subsidiary Security Agreement) is evidenced by
                  a promissory note or other instrument or chattel paper (each
                  within the meaning of the UCC) that has not been delivered to
                  the Sponsor Subsidiary Collateral Agent pursuant to Section 4
                  of the Sponsor Subsidiary Security Agreement.

                           (iv)     Each party to the Assigned Agreements to
                  which such Sponsor Subsidiary is a party other than the
                  Sponsor Subsidiaries and the other parties to the Operative
                  Documents has executed and delivered to such Sponsor
                  Subsidiary a consent, in substantially the form of Exhibit A
                  to the Sponsor Subsidiary Security Agreement, to the
                  assignment of the Assigned Agreement to the Sponsor Subsidiary
                  Collateral Agent pursuant to the Sponsor Subsidiary Security
                  Agreement.

                  (o)      Location; Registered Office. Such Sponsor
         Subsidiary's location (for purposes of Section 9-307 of the UCC) and
         its chief place of business and chief executive office are located at
         the address specified for Noric Holdings in Section 2.7 of the Noric
         Holdings Company Agreement.

                  (p)      Tort Claims. Neither it nor any of its officers or
         directors nor any Responsible Officer of El Paso has actual knowledge
         of any facts, circumstances, conditions or occurrences that could
         reasonably be anticipated to form the basis of any

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                                       39

<PAGE>

         tort claim against any Sponsor Subsidiary, Lusitano, Lipizzan, Noric,
         Palomino, Paso Fino, Noric LP, Mustang or any Counterparty to any E&P
         Participation Agreement or any Production Payment Agreement, or any
         Sponsor Subsidiary Property, Lusitano Property, Lipizzan Property,
         Noric Property, Palomino Property, Paso Fino Property, Noric LP
         Property, Mustang Property, E&P Participation Property, Production
         Payment Interest or Subject Interest that individually or in the
         aggregate could reasonably be expected to have a Material Adverse
         Effect.

                  (q)      A-Loans. As of the Fourth Restatement Date, the
         aggregate outstanding principal amount of all A-Loans made by all
         Sponsor Subsidiaries equals the sum of (i) the outstanding principal
         amount of all Advances made hereunder to all Sponsor Subsidiaries as of
         such date and (ii) the aggregate outstanding principal amount of
         Sponsor Subsidiary Subordinate Debt as of such date.

                  (r)      Assets. None of such Sponsor Subsidiary, Lusitano,
         Lipizzan, Noric, Palomino, Paso Fino or Noric LP (as the case may be)
         has any material assets other than Permitted Assets.

                  (s)      Taxes. Such Sponsor Subsidiary, Lusitano, Lipizzan,
         Noric, Palomino, Paso Fino or Noric LP (as the case may be) has filed
         and paid, or caused to be filed and paid on a timely basis, all tax
         returns and Taxes (whether gains Taxes, transfer Taxes, recording fees
         or Taxes or any other Taxes) due and owing, and such other tax returns
         and Taxes that arise in connection with the Transactions, on the
         Closing Date, the Third Restatement Date and each Capital Contribution
         Date, but excluding Taxes the non-timely filing or payment of which, in
         the context of the Operative Documents, the Transactions and the rights
         and remedies of the respective parties thereto, could not reasonably be
         expected to have a Material Adverse Effect.

                  (t)      Credit Related Party and Material Subsidiaries. None
         of any Sponsor Subsidiary, Lusitano, Lipizzan, Noric, Palomino, Paso
         Fino, Noric LP, any Intermediate Holder or any Underlying Business is:

                           (i)      a Credit Related Party or a Restricted
                  Subsidiary; or

                           (ii)     directly owned by El Paso.

                  (u)      E&P Assets. (i) All of each E&P Asset held by such
         Sponsor Subsidiary, Lipizzan, Noric or Noric LP (as the case may be)
         has been Freely Transferred to it.

                           (ii)     All of each E&P Asset held by such Sponsor
                  Subsidiary, Lipizzan, Noric or Noric LP (as the case may be)
                  is Freely Transferable.

                           (iii)    Each E&P Asset held by such Sponsor
                  Subsidiary, Lipizzan, Noric or Noric LP (as the case may be)
                  is an Eligible Investment.

                           (iv)     All of the rights and obligations of EPPC
                  under each Hedge Agreement the subject of each trade
                  confirmation attached as Exhibit E hereto

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<PAGE>

                  have been validly assigned and delegated to Noric or Noric LP,
                  as the case the case may be, free and clear of any Liens.

                  (v)      Compliance with Financial Covenants. It is in
         compliance with the requirements of Section 5.04 of this Agreement.

                  Section 4.02. Representations and Warranties with Respect to
Energy Investments and Controlled Businesses. Each Sponsor Subsidiary represents
and warrants as follows with respect to (x) each Energy Investment owned by it
and (y) each Controlled Business which is a direct or indirect Subsidiary of
such Sponsor Subsidiary, subject in the case of this clause (y) to Part VI of
the Transaction Asset Schedule with respect to each such Controlled Business:

                  (a)      Energy Investments. After giving effect to the
         Transactions on the Closing Date and each Acquisition/Accession Date:

                           (i)      Schedule I to the Sponsor Subsidiary
                  Security Agreement and each Transaction Asset Schedule
                  together set forth as of each such date a complete and
                  accurate list of each Energy Investment (including each
                  Intermediate Holder (if any) and each Underlying Business
                  relating to each such Energy Investment) owned by each Sponsor
                  Subsidiary.

                           (ii)     Each such Schedule sets forth as of each
                  such date for each such Energy Investment each outstanding
                  class of Investment with respect to each Intermediate Holder
                  (if any) and each Underlying Business related thereto and the
                  percentage of such class of such Investment held directly, or
                  indirectly through one or more Intermediate Holders (if any),
                  by each Sponsor Subsidiary.

                           (iii)    Each such Energy Investment has been duly
                  authorized and validly issued by the issuer thereof.

                           (iv)     Each such Energy Investment is fully paid
                  and nonassessable and is not subject to any mandatory capital
                  call or similar obligation, except as otherwise described in
                  Schedule I to the Sponsor Subsidiary Security Agreement and
                  each Transaction Asset Schedule.

                           (v)      Each Energy Investment held by such Sponsor
                  Subsidiary has been Freely Transferred to it.

                           (vi)     Each Energy Investment held by such Sponsor
                  Subsidiary is Freely Transferable (it being understood that
                  the Pre-approved Energy Investment is subject to Section 4.14
                  (Change of Control) of the Indenture dated as of June 15, 1990
                  between Colorado Interstate Gas Company, a Delaware
                  corporation and Texas Commerce Bank National Association, a
                  national banking association, as trustee).

                           (vii)    Each Energy Investment is an Eligible
                  Investment.

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<PAGE>

                           (viii)   Part V of Schedule I to the Sponsor
                  Subsidiary Security Agreement and Part V of each Transaction
                  Asset Schedule together set forth all Material Agreements with
                  respect to each Energy Investment.

                  (b)      Due Formation. Each Controlled Business is duly
         incorporated or formed, validly existing and in good standing under the
         laws of the jurisdiction of its incorporation or formation. Each
         Controlled Business possesses all corporate, limited liability company
         or other applicable Business Entity powers and other authorizations and
         licenses necessary to engage in its business and operations as now
         conducted, the failure to obtain or maintain which would have a
         Material Adverse Effect.

                  (c)      Authorization of Material Agreements. Part V of
         Schedule I to the Sponsor Subsidiary Security Agreement and Part V of
         each Transaction Asset Schedule, as applicable, with respect to each
         Controlled Business sets forth all Material Agreements with respect to
         such Controlled Business. The execution, delivery and performance by
         each Controlled Business of each Material Agreement to which it is a
         party are or were within its corporate, limited liability company or
         other applicable Business Entity powers, have been duly authorized by
         all necessary corporate, limited liability company or other applicable
         Business Entity action, and do not contravene (i) its Organizational
         Documents, (ii) any Applicable Law, except to the extent that such
         contravention would not have a Material Adverse Effect or (iii) any
         material contractual restriction binding on or affecting it.

                  (d)      Governmental Approvals. No authorization or approval
         or other action by, and no notice to or filing with, any Governmental
         Authority is required for the due execution, delivery and performance
         by each Controlled Business of each Material Agreement to which it is a
         party, except filings necessary to comply with Applicable Laws in the
         ordinary course to enable the Sponsor Subsidiaries to comply with the
         ongoing obligations set forth in Sections 5.08 and 5.09 and under such
         Material Agreements and to perfect security interests.

                  (e)      Enforceability. Each Material Agreement to which each
         Controlled Business is a party constitutes the legal, valid and binding
         obligation of such Controlled Business, enforceable against such
         Controlled Business in accordance with its terms, except as may be
         limited by any applicable bankruptcy, insolvency, reorganization,
         moratorium or similar laws affecting creditors' rights generally or by
         general principles of equity.

                  (f)      Compliance with Laws, Etc. Each Controlled Business
         is in compliance with all laws, rules, regulations and orders of any
         Governmental Authority applicable to it or its property, except where
         the failure to so comply, individually or in the aggregate, would not
         in the reasonable judgment of such Sponsor Subsidiary be expected to
         result in a Material Adverse Effect.

                  (g)      Litigation. There is no action, suit or proceeding
         pending, or to the knowledge of such Sponsor Subsidiary threatened,
         against or involving any Controlled Business in any court, or before
         any arbitrator of any kind, or before or by any

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<PAGE>

         governmental body, which, in the reasonable judgment of such Sponsor
         Subsidiary (taking into account the exhaustion of all appeals), would
         have a Material Adverse Effect, or which purports to affect the
         legality, validity, binding effect or enforceability of any Material
         Agreement.

                  (h)      Taxes. Each Controlled Business has duly filed all
         tax returns required to be filed, and has duly paid and discharged all
         taxes, assessments and governmental charges upon it or against its
         properties due and payable on the Closing Date, each Additional Advance
         Date or the Acquisition/Accession Date with respect to such Controlled
         Business (as applicable), the failure to pay which would have a
         Material Adverse Effect, unless and to the extent only that the same
         are being contested by any such Person in good faith and by appropriate
         proceedings.

                  (i)      Title to Property. Each Controlled Business has good
         title to its properties and assets, free and clear of all mortgages,
         liens and encumbrances, except for mortgages, liens and encumbrances
         (including covenants, restrictions, rights, easements and minor
         irregularities in title) which do not materially interfere with the
         business or operations of such Controlled Business as presently
         conducted or which are permitted by Section 5.09(a) and except that no
         representation or warranty is made with respect to Margin Stock.

                  (j)      Investment Company; Holding Company. (i) No
         Controlled Business is an "investment company" within the meaning of
         the Investment Company Act of 1940.

                           (ii)     No Controlled Business is a "holding
         company" or a "subsidiary company" of a "holding company" within the
         meaning of the Public Utility Holding Company Act of 1935.

                  Section 4.03. Representations and Warranties with Respect to
E&P Assets. Noric Holdings represents and warrants on the date of delivery of
each Reserve Report pursuant to Section 2.09(b), Section 2.09(d) and Section
2.09(e) that (provided that the representations and warranties to be made under
clauses (b) and (c) below shall only be made with respect to each Reserve Report
prepared by Noric Holdings):

                  (a)      the information (excluding any projections or
         estimates) contained in such Reserve Report and any other information
         delivered therewith is true and correct in all material respects as of
         the date of the Reserve Report;

                  (b)      any projections set forth in such Reserve Report and
         the estimates of the Proved Reserves attributable to the E&P
         Participation Properties and the Subject Interests, respectively, set
         forth therein were made in good faith and arrived at after due and
         careful consideration and are believed by the Sponsor Subsidiaries to
         have been fair and reasonable as of the date of such Reserve Report and
         no Sponsor Subsidiary is aware of anything which has occurred since the
         date of such Reserve Report which would render the foregoing statements
         in this clause inaccurate or misleading in any material respect;

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<PAGE>

                  (c)      all of the assumptions upon which such projections
         and such estimates were predicated are outlined in such Reserve Report
         and are believed by the Sponsor Subsidiaries to have been fair and
         reasonable as of the date of such Reserve Report and the Sponsor
         Subsidiaries are not aware of anything which has occurred since the
         date of such Reserve Report which would render the foregoing statements
         in this clause inaccurate or misleading in any material respect;

                  (d)      after giving effect to all Liens permitted under
         Section 4.2.3 of the applicable E&P Participation Agreement and all
         lessor's royalties, overriding royalties, production payments, net
         profit interests and other similar burdens on, or payable from,
         production, the Sponsor Subsidiaries, Noric and/or Noric LP (as the
         case may be) own the net interests in production attributable to each
         E&P Participation Property the subject of such E&P Participation
         Agreement reflected in such Reserve Report, except for Dispositions
         permitted by this Agreement.

                  (e)      the ownership by the Sponsor Subsidiaries, Noric
         and/or Noric LP (as the case may be) of the Conveyed Interests (as
         defined in any E&P Participation Agreement) relating to an E&P
         Participation Property shall not obligate any such Person to bear costs
         and expenses relating to the maintenance, development and operations of
         such E&P Participation Property in an amount in excess of the working
         interest of such E&P Participation Property set forth in such Reserve
         Report;

                  (f)      except as set forth in any certificate delivered
         pursuant to Section 5.4(b)(vi) of the El Paso Agreement, on a net basis
         there are no material gas imbalances, take or pay prepayments, or other
         prepayments, in each case with respect to any E&P Participation
         Property evaluated in such Reserve Report which would require any
         Sponsor Subsidiary, Noric or Noric LP (as the case may be) to deliver
         hydrocarbons produced from such E&P Participation Property at some
         future time without then or thereafter receiving payment therefor;

                  (g)      after giving effect to all Permitted Encumbrances (as
         defined in each Production Payment Conveyance) and all lessor's
         royalties, overriding royalties, production payments, net profit
         interests and other similar burdens on, or payable from production
         (other than the relevant Production Payment), each Counterparty to such
         Production Payment Conveyance owns the net interests in the production
         attributable to each Subject Interest (and the wells attributable
         thereto) reflected in such Reserve Report and Lipizzan owns each
         Production Payment reflected in such Reserve Report, except for
         Dispositions permitted by this Agreement.

                  (h)      the ownership by each Counterparty to any Production
         Payment Agreement of the Subject Interests related thereto shall not
         obligate such Counterparty to such Production Payment Agreement to bear
         costs and expenses relating to the maintenance, development and
         operations of such Subject Interests (and the wells attributable
         thereto) in an amount in excess of the working interest of such Subject
         Interests or wells set forth in such Reserve Report; and

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<PAGE>

                  (i)      except as set forth in any certificate delivered
         pursuant to Section 5.4(b)(vi) of the El Paso Agreement, on a net basis
         there are no material gas imbalances, take or pay prepayments, or other
         prepayments, in each case with respect to any Subject Interest or any
         Production Payment evaluated in such Reserve Report which would require
         any Counterparty to any Production Payment Agreement or Lipizzan (as
         the case may be) to deliver hydrocarbons produced from or attributable
         to such Subject Interests or such Production Payment at some future
         time without then or thereafter receiving payment therefor.

                  Section 4.04. Timing of Representations and Warranties with
respect to Operative Documents(a). (a) On the date of execution of each E&P
Participation Agreement or Novation Agreement, the Sponsor Subsidiary party
thereto and, in the case of each Novation Agreement, Noric Holdings I on behalf
of Noric or Noric LP, as the case may be, shall be deemed to repeat the
representations set forth in Section 4.01 (other than the representations and
warranties in Section 4.01(i), Section 4.01(k), Section 4.01(m), Section 4.01(r)
or Section 4.01(t)); provided that, any reference therein to an Operative
Document shall be construed as a reference to such E&P Participation Agreement
or Novation Agreement, as the case may be.

                  (b)      On the date of execution of each Production Payment
Agreement Noric Holdings IV, on its behalf and on behalf of Lipizzan, as the
case may be, shall be deemed to repeat the representations set forth in Section
4.01 (other than the representations and warranties in Section 4.01(i), Section
4.01(k), Section 4.01(m), Section 4.01(r) or Section 4.01(t)); provided that,
any reference therein to an Operative Document shall be construed as a reference
to such Production Payment Agreement.

                                   ARTICLE V

                        COVENANTS OF SPONSOR SUBSIDIARIES

                  Section 5.01. Affirmative Covenants with Respect to Sponsor
Subsidiaries. Until the Debt Collection Date, each Sponsor Subsidiary will at
all times, unless otherwise consented to in writing by Mustang:

                  (a)      Compliance with Laws, Etc. Comply with, and cause its
         properties to be maintained and used in accordance with, all Applicable
         Laws applicable to it or its properties, except where the failure to do
         so could not reasonably be expected to have a Material Adverse Effect.

                  (b)      Payment of Taxes, Etc. Pay and discharge before the
         same shall become delinquent (i) all taxes, assessments and
         governmental charges or levies imposed upon it or upon its property and
         (ii) all lawful claims, which, in each case, if unpaid, might by law
         become a Lien upon its property; provided that such Sponsor Subsidiary
         shall not be required to pay or discharge any such tax, assessment,
         governmental charge, levy or claim that is being contested in good
         faith and by proper proceedings and as to which appropriate reserves
         are being maintained in accordance with GAAP, unless and until any

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<PAGE>

         Lien resulting therefrom attaches to its property and becomes
         enforceable against its other creditors.

                  (c)      Preservation of Existence, Etc. Preserve and maintain
         its existence as a limited liability company and its rights (charter
         and statutory) and authority, except that Noric Holdings I (i) may
         convert into a corporation under state law with the consent of Mustang
         and the Mustang Collateral Agent, which consent shall not be
         unreasonably withheld, and shall be conditioned on the execution of
         documents reasonably requested by the Mustang Collateral Agent or (ii)
         may elect to be taxed as a corporation.

                  (d)      Inspection Rights. Upon reasonable notice, at any
         reasonable time during normal business hours and not more often than is
         reasonable under the circumstances, permit Mustang, the Sponsor
         Subsidiary Collateral Agent, the Mustang Collateral Agent or any agents
         or representatives thereof to examine the records and books of account
         of such Sponsor Subsidiary and to discuss the affairs, finances and
         accounts of such Sponsor Subsidiary with any officer of such Sponsor
         Subsidiary and to disclose to Mustang, the Mustang Collateral Agent and
         the Sponsor Subsidiary Collateral Agent or any agents or
         representatives thereof any and all financial statements and other
         information of any kind relating to such Sponsor Subsidiary and, after
         prior notice to Noric Holdings, to discuss the affairs, finances and
         accounts of such Sponsor Subsidiary with its independent certified
         public accountants and permit such accountants to disclose to Mustang,
         the Sponsor Subsidiary Collateral Agent or the Mustang Collateral Agent
         any and all financial statements and other information of any kind that
         they may have with respect to such Sponsor Subsidiary. The Sponsor
         Subsidiaries jointly and severally shall assume or pay all reasonable
         costs and expenses associated with any such examination, discussion or
         copying; provided that, except (i) during the existence of -------- an
         Event of Default, Incipient Event, Notice Event, Termination Event or
         Liquidating Event or (ii) where Mustang acting in good faith reasonably
         believes there to be a reasonable expectation that an Event of Default,
         Incipient Event, Notice Event, Termination Event or Liquidating Event
         has occurred and is continuing, the Sponsor Subsidiaries shall only be
         liable for the costs and expenses of one such examination or discussion
         per Fiscal Year.

                  (e)      Keeping of Books. Keep complete, proper and separate
         books of record and account, including a record of all costs and
         expenses incurred, all charges made, all credits made and received, and
         all income derived in connection with the operation of the business of
         such Sponsor Subsidiary, all in accordance with GAAP, in each case to
         the extent necessary to enable such Sponsor Subsidiary to comply with
         the periodic reporting requirements of this Agreement.

                  (f)      Performance of Documents. Subject to Section 5.02(f),
         (i) perform and observe in all material respects all of the terms and
         provisions of, and obligations under, each Operative Document and each
         Assigned Agreement to be performed or observed by it (including, in
         respect of Noric Holdings I, causing Noric to take the Noric Required
         Actions, in respect of Noric Holdings IV taking all Noric Holdings IV
         Required Actions and, in respect of each Sponsor Subsidiary, taking the
         Sponsor Subsidiary Required Actions), (ii) maintain, to the extent it
         has the capacity to do so, each such Operative Document to which such
         Sponsor Subsidiary is a party and each Assigned Agreement to

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<PAGE>

         which it is a party in full force and effect, (iii) promptly enforce in
         all material respects its rights under each such Operative Document and
         Assigned Agreement in accordance with its terms (subject to the terms
         of Article VI hereof), (iv) take all such action to such end (not in
         violation of its Organizational Documents) as may be from time to time
         reasonably requested by Mustang, the Mustang Collateral Agent or the
         Sponsor Subsidiary Collateral Agent, and (v) upon request of Mustang,
         make to each other party to each Operative Document to which such
         Sponsor Subsidiary is a party or a beneficiary such demands and
         requests for information and reports or for action as such Sponsor
         Subsidiary is entitled to make under such Operative Document.

                  (g)      Maintenance of Licenses and Permits. Maintain all
         licenses and permits necessary to own its properties and to conduct its
         activities in accordance with all Applicable Laws applicable to it or
         its properties, except for such failures as could not reasonably be
         expected to result in a Material Adverse Effect.

                  (h)      Search Reports. Promptly following the Closing Date
         and each Acquisition/Accession Date, deliver to Mustang, in form and
         substance reasonably satisfactory to Mustang, certified copies of
         reflective searches, or equivalent reports, listing all effective
         financing statements filed in the jurisdictions referred to in Section
         3.01(b)(ii) that name such Sponsor Subsidiary as debtor, together with
         copies of such other financing statements.

                  (i)      Maintenance of Insurance. Maintain, or cause to be
         maintained, insurance with responsible and reputable insurance
         companies or associations in such amounts and covering such risks as is
         usually carried by entities engaged in similar businesses owning
         similar properties in the same general areas in which such Sponsor
         Subsidiary operates.

                  (j)      Further Assurance. (i) Promptly upon request by
         Mustang, correct any material defect or error that may be discovered in
         any Operative Document to which it is a party or in the execution,
         acknowledgment, filing or recording thereof.

                           (ii)     Promptly upon request by Mustang, the
                  Sponsor Subsidiary Collateral Agent or the Mustang Collateral
                  Agent, do, execute, acknowledge, deliver, record, re-record,
                  file, re-file, register and re-register any and all such
                  further acts, deeds, conveyances, pledge agreements,
                  mortgages, deeds of trust, trust deeds, assignments, financing
                  statements and continuations thereof, termination statements,
                  notices of assignment, transfers, certificates, assurances and
                  other instruments as Mustang, the Sponsor Subsidiary
                  Collateral Agent or the Mustang Collateral Agent may
                  reasonably require from time to time in order to (A) carry out
                  more effectively the purposes of the Sponsor Subsidiary Credit
                  Documents, (B) to the fullest extent permitted by Applicable
                  Law, subject such Sponsor Subsidiary's properties, assets,
                  rights or interests to the Liens now or hereafter intended to
                  be covered by such Sponsor Subsidiary Credit Documents, (C)
                  perfect and maintain the validity, effectiveness and priority
                  (subject to Permitted Liens) of the Sponsor Subsidiary Credit
                  Documents and any of the Liens intended to be created
                  thereunder, and (D) assure, convey, grant, assign, transfer,
                  preserve, protect and confirm more effectively unto Mustang
                  the rights

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<PAGE>

                  granted or now or hereafter purported to be granted to Mustang
                  under any Sponsor Subsidiary Credit Document or under any
                  other instrument executed in connection with any Sponsor
                  Subsidiary Credit Document to which such Sponsor Subsidiary is
                  or is to be a party.

                  (k)      Controlled Businesses. Exercise (and use all
         reasonable efforts to cause each of its Affiliates to exercise) all of
         the rights and remedies of such Sponsor Subsidiary and each of its
         Affiliates under each document, instrument or agreement evidencing or
         relating to such Sponsor Subsidiary's interest in any Controlled
         Business:

                           (i)      to comply in all material respects with all
                  Applicable Laws (including all Environmental Laws and
                  Environmental Permits) binding on each Controlled Business,
                  except to the extent that non-compliance would not reasonably
                  be expected to have a Material Adverse Effect;

                           (ii)     to comply in all respects with all
                  contractual obligations binding on each Controlled Business,
                  except to the extent non-compliance would not reasonably be
                  expected to have a Material Adverse Effect; and

                           (iii)    to operate and maintain each Controlled
                  Business in accordance with prudent industry practice.

                  (l)      Purpose. Apply the proceeds of the Advances solely
         for the purpose of making A-Loans.

                  (m)      Maintenance of Title to Assets. Maintain legal and
         beneficial title to each of its assets, including each Transaction
         Asset, except to the extent permitted by Section 5.02(d) below.

                  (n)      [Intentionally omitted].

                  (o)      [Intentionally omitted].

                  (p)      Equity Interests. (i) In the case of Noric Holdings I
         only (subject to the provisions of the Noric Company Agreement and the
         other Operative Documents), (A) take all action necessary to maintain
         its Noric Class A Membership Interest and its Noric Class B Membership
         Interest in full force and effect and (B) cause Noric to (1) take all
         action necessary to maintain its Palomino Membership Interest and its
         Paso Fino Membership Interest and (2) to cause each of Palomino and
         Paso Fino to take all actions necessary to maintain its Noric LP
         General Partnership Interest and its Noric LP Limited Partnership
         Interest, respectively, in full force and effect.

                           (ii)     In the case of Noric Holdings IV only, (A)
                  take all action necessary to maintain its Lusitano Membership
                  Interest and its Lipizzan Limited Partnership Interest in full
                  force and effect and (B) cause Lusitano to take all actions
                  necessary to maintain its Lipizzan General Partnership
                  Interest in full force and effect.

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<PAGE>

                  (q)      Eligible Investments. Maintain each Transaction Asset
         and each Intermediate Holder (if any) and Underlying Business with
         respect to each Energy Investment (except any Publicly Traded
         Investment and any Intermediate Holder or Underlying Business with
         respect thereto) as an Eligible Investment.

                  (r)      Monthly Reports. Beginning with the month of April,
         2003, within five Business Days after the end of each month, a monthly
         cash reserve report substantially in the form attached hereto as
         Exhibit 5.01(r) will be delivered by the Sponsor Subsidiary Collateral
         Agent to Mustang, the Mustang Collateral Agent and El Paso.

                  Section 5.02. Negative Covenants with Respect to Sponsor
Subsidiaries. Until the Debt Collection Date, each Sponsor Subsidiary will not
at any time without the written consent of Mustang:

                  (a)      Liens, Etc. Create, incur, assume or suffer to exist
         any Lien on or with respect to any of its properties or assets of any
         character (including the Collateral) whether now owned or hereafter
         acquired, or assign any accounts or other right to receive income;
         excluding, however, from the operation of the foregoing restrictions
         any Permitted Lien.

                  (b)      Indebtedness. Create, incur, assume or suffer to
         exist any Indebtedness other than Indebtedness created, incurred or
         assumed:

                           (i)      of the type described in clause (i) of the
                  definition of "Indebtedness" constituting Sponsor Subsidiary
                  Expenses incurred in the ordinary course of business;

                           (ii)     under any Hedge Agreement permitted by
                  Section 5.02(o);

                           (iii)    under any Operative Document to which such
                  Sponsor Subsidiary is a party;

                           (iv)     constituting Sponsor Subsidiary Subordinated
                  Debt; provided that the principal amount of such Sponsor
                  Subsidiary Subordinated Debt shall not exceed $230,000,000,
                  nor shall any Sponsor Subsidiary be permitted to prepay or
                  repay any principal thereof; and provided further, that the
                  per annum interest rate on the Sponsor Subsidiary Subordinated
                  Debt shall equal the Funding Rate; the Sponsor Subsidiary
                  Subordinated Debt shall at all times be evidenced by a Sponsor
                  Subsidiary Subordinated Note in the form attached hereto as
                  Exhibit F; and the Sponsor Subsidiary Subordinated Debt shall
                  be subject to provisions contained in Exhibit G attached
                  hereto, which shall provide (inter alia) that the holder of
                  the Sponsor Subsidiary Subordinated Debt shall agree that,
                  except as set forth in Exhibit G, it may not (A) cancel or
                  otherwise fully discharge any of the Sponsor Subsidiary
                  Subordinated Debt, (B) convert or exchange any of the Sponsor
                  Subsidiary Subordinated Debt into or for any other debt or
                  equity interest or equity rights, or subordinate any of the
                  Sponsor Subsidiary Subordinated Debt to any Debt of any
                  Sponsor Subsidiary other than the Advances without the prior
                  written consent of the Sponsor Subsidiary Collateral Agent
                  (acting at the direction

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<PAGE>

                  of Mustang), (C) permit the terms of any of the Subordinated
                  Debt to be changed or (D) at any time accept any prepayment of
                  the principal thereof or forgive the Sponsor Subsidiary
                  Subordinated Debt; or

                           (v)      intercompany Investments resulting from
                  deposits of funds into the Noric Holdings I Cash Reserve among
                  Noric Holdings I, Noric, Palomino, Paso Fino and Noric LP and
                  into the Noric Holdings IV Cash Reserve among Noric Holdings
                  IV, Lusitano and Lipizzan.

                  (c)      Mergers, Etc. Enter into any transaction of
         consolidation or merger with or into any other Person, except (A) if
         immediately prior to or contemporaneous with such consolidation or
         merger all Advances are repaid in full together with all accrued
         interest, all amounts required to be paid pursuant to Section 2.06(c),
         all Indemnified Amounts and other amounts payable under the Sponsor
         Subsidiary Credit Documents, (B) any consolidation or merger of one
         Sponsor Subsidiary with or into another Sponsor Subsidiary, (C) if such
         Sponsor Subsidiary does not have (directly or indirectly) any
         Transaction Assets, any interest in any A-Loans, or any other material
         assets or rights of the kind described in Section 1 of the Sponsor
         Subsidiary Security Agreement, such Sponsor Subsidiary may consolidate
         with or merge into any other Subsidiary of El Paso (other than another
         Sponsor Subsidiary), or (D) any merger by Noric, Palomino, Paso Fino or
         Noric LP into Noric Holdings I (with Noric Holdings I as the surviving
         entity) in accordance with the terms of the Noric Company Agreement.

                  (d)      Acquisitions, Sales, Etc., of Assets. (i) Enter into
         any partnership, joint venture or sale and leaseback transaction, (ii)
         purchase or otherwise acquire (in one or a series of related
         transactions) any portion of the property or assets of any Person or
         (iii) Dispose of, or grant any option with respect to, directly or
         indirectly (or agree to any of the foregoing at any future time), all
         or any portion of its property or assets (including any of the
         Collateral), except that:

                           (A)      Permitted Investments may be acquired and
                  Disposed of in the ordinary course of business and subject to
                  and in accordance with the terms of Section 7.03;

                           (B)      Energy Investments may be (x) Disposed of in
                  whole but not in part or (y) acquired; provided that:

                                    (1)      In each case, no Liquidating Event,
                           Termination Event, Notice Event, Event of Default or
                           Incipient Event has occurred and is continuing or
                           would result from such acquisition or Disposition and
                           the Sponsor Subsidiaries, Lipizzan, Noric and Noric
                           LP shall be in compliance with Section 5.04 on a pro
                           forma basis as of the last date of the calculation of
                           the covenants in Section 5.04 (in the case of a
                           Disposition, after giving effect to any payment,
                           including any deemed payment, of Cash Collateral
                           Amounts to the Sponsor Subsidiary Cash Reserve);

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<PAGE>

                                    (2)      On the effective date of a
                           Disposition, the Sponsor Subsidiaries prepay the
                           Advances in accordance with Section 2.05(b)(ii); and

                                    (3)      Any acquisition of an Energy
                           Investment shall be effected in accordance with the
                           Acquisition/Accession Procedures Schedule;

                           (C)      E&P Assets constituting E&P Participation
                  Properties may be acquired or Disposed of from time to time,
                  in each case subject to Section 2.09(e); provided that:

                                    (1)      In each case, no Liquidating Event,
                           Termination Event, Notice Event, Event of Default or
                           Incipient Event has occurred and is continuing or
                           would result from such acquisition or Disposition;

                                    (2)      Any acquisition of an E&P Asset
                           constituting E&P Participation Properties shall be
                           effected in accordance with the Acquisition/Accession
                           Procedures Schedule;

                                    (3)      Starting from the Third Restatement
                           Date, Relevant Assets may be Disposed of if the
                           aggregate Disposition Value of such Relevant Assets
                           to be Disposed of (together with the Disposition
                           Value of all Relevant Assets Disposed of by any
                           Sponsor Subsidiary, Noric LP and Lipizzan during the
                           current E&P Borrowing Base Period) does not exceed
                           the Adjusted Redetermination Threshold for such E&P
                           Borrowing Base Period; and

                                    (4)      Starting from the Third Restatement
                           Date, Relevant Assets may be Disposed of if the
                           aggregate Disposition Value of such Relevant Assets
                           to be Disposed of (together with the Disposition
                           Value of all Relevant Assets Disposed of by any
                           Sponsor Subsidiary, Noric LP and Lipizzan during the
                           current E&P Borrowing Base Period) exceeds the
                           Adjusted Redetermination Threshold for such E&P
                           Borrowing Base Period; provided that the Net Cash
                           Proceeds from any such Disposition in excess of such
                           Adjusted Redetermination Threshold shall be deposited
                           by the Sponsor Subsidiary in the Sponsor Subsidiary
                           Cash Reserve and shall be applied pursuant to Section
                           7.04(i)(A) or (B);

                  provided that for so long as an El Paso RA Event has occurred
                  and is continuing at the time of any such Disposition
                  described in clauses (3) and (4) above, such Sponsor
                  Subsidiary shall apply the Net Cash Proceeds from any such
                  Disposition to prepay the Advances in accordance with Section
                  2.05(b)(viii)(A);

                           (D)      Noric Holdings IV may from time to time (i)
                  acquire E&P Assets constituting Production Payment Interests
                  solely for the purpose of transferring such Production Payment
                  Interests to Lipizzan (which transfer shall not be a
                  Disposition for purposes of Section 5.02(d)(C)) or (ii)
                  Dispose of E&P Assets

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<PAGE>

                  constituting Production Payment Interests solely in connection
                  with a Disposition by Lipizzan of such Production Payment
                  Interests; and

                           (E)      Equity Interests in the CIG Excluded
                  Subsidiary, or any Intermediate Holder or Underlying Business,
                  may be acquired and Disposed of in connection with a
                  Distribution under Section 5.02(j)(iii).

                  (e)      Investments, Acquisitions of Transaction Assets, Etc.
         Make or hold any Investment except:

                           (i)      in the case of Noric Holdings and Noric
                  Holdings I, for its acquisition and holding of a Clydesdale
                  Class A Limited Partnership Interest;

                           (ii)     in the case of Noric Holdings I, for its
                  acquisition and holding of the Noric Class A Membership
                  Interest and the Noric Class B Membership Interest, and
                  additional equity contributions in Noric in accordance with
                  Section 5.2 and Section 5.3 of the Noric Company Agreement;

                           (iii)    subject to Section 5.02(d) above, any
                  Investment in Permitted Assets of such Sponsor Subsidiary;

                           (iv)     the making and holding of Permitted
                  Investments in accordance with the terms of Section 7.03;
                  provided that such Sponsor Subsidiary may only maintain any
                  defaulted Cash Equivalent for a reasonable period after the
                  occurrence of such default to Dispose of such Cash Equivalent
                  in an orderly fashion or to diligently pursue collection or
                  enforcement thereof;

                           (v)      the making of any capital contribution in
                  respect of an Energy Investment with the proceeds of equity
                  capital contributions by the equity holders of such Sponsor
                  Subsidiary;

                           (vi)     the payment, including any deemed payment,
                  of any Cash Collateral Amounts to the Sponsor Subsidiary Cash
                  Reserve, the Noric Holdings I Cash Reserve and/or the Noric
                  Holdings IV Cash Reserve;

                           (vii)    in the case of Noric Holdings IV, for its
                  acquisition and holding of the Lusitano Membership Interest
                  and the Lipizzan Limited Partnership Interest, and additional
                  equity contributions in Lipizzan in accordance with Sections
                  4.2 and 4.3 of the Lusitano Company Agreement and Sections 5.2
                  and 5.3 of the Lipizzan Partnership Agreement;

                           (viii)   any other Investments resulting solely from
                  the Transfers of Interests; and

                           (ix)     Investments Permitted under Section
                  5.02(b)(v).

                  (f)      Amendment, Etc., of Operative Documents. (i) Cancel
         or terminate any Operative Document to which it is a party;

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<PAGE>

                           (ii)     consent to or accept any cancellation or
                  termination of any Operative Document to which it is a party;

                           (iii)    forgive any obligation under, or amend,
                  modify or change in any manner any term or condition of any
                  Operative Document to which it is a party;

                           (iv)     give any consent, waiver or approval under
                  any Operative Document to which it is a party;

                           (v)      waive any default under or any breach of any
                  term or condition of any Operative Document to which it is a
                  party;

                           (vi)     agree in any manner to any other amendment,
                  modification or change of any term or condition of any
                  Operative Document to which it is a party; or

                           (vii)    in the case of Noric Holdings IV, deliver to
                  El Paso Production Oil & Gas USA and /or El Paso Oil & Gas
                  Resources, the notice described in the Engage Letter,

         provided that this Section 5.02(f) shall not prohibit any Disposition
         of an E&P Asset permitted under Section 5.02(d), any amendment
         permitted under Section 5.10(b) or any action expressly contemplated in
         the Transfers of Interests.

                  (g)      Negative Pledge. Enter into or suffer to exist any
         agreement prohibiting or conditioning the creation or assumption of any
         Lien upon any of its property or assets other than (i) any such
         agreement in favor of the Sponsor Subsidiary Collateral Agent, the
         Mustang Collateral Agent and Mustang or (ii) as provided in the other
         Operative Documents.

                  (h)      Subsidiaries. Establish, create or acquire any direct
         Subsidiary (other than with respect to Distributions permitted under
         Section 5.02(j)(iii)) that holds all or any part, directly or
         indirectly, of any Transaction Asset unless 100% of the Equity
         Interests of such Subsidiary (or at least 65% if such Subsidiary is not
         organized under the laws of the United States or any state thereof) is
         pledged to the Sponsor Subsidiary Collateral Agent pursuant to the
         Sponsor Subsidiary Security Agreement and such Sponsor Subsidiary has
         taken all actions reasonably requested thereunder in respect of further
         assurances in connection with such pledge.

                  (i)      Nature of Activities. Engage in any activity other
         than as set forth in Section 2.6 of the Sponsor Subsidiary Company
         Agreement of such Sponsor Subsidiary or possess Sponsor Subsidiary
         Property or assign rights to Sponsor Subsidiary Property for other than
         a purpose described in Section 2.6 of such Sponsor Subsidiary Company
         Agreement, other than any assignment by way of security pursuant to the
         Sponsor Subsidiary Credit Documents.

                  (j)      Distributions. Declare or pay any Distributions;
         provided that:

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<PAGE>

                           (i)      a Sponsor Subsidiary may make Distributions
                  constituting or in respect of Excluded Payments;

                           (ii)     if no Incipient Event or Event of Default,
                  Notice Event, Termination Event or Liquidating Event shall
                  have occurred and be continuing or shall result therefrom, the
                  Sponsor Subsidiaries may Distribute (w) on each Payment Date
                  cash from the Sponsor Subsidiary Cash Reserve, the Noric
                  Holdings I Cash Reserve and the Noric Holdings IV Cash Reserve
                  in an amount equal to the amount permitted to be so
                  Distributed pursuant to Section 7.04(a)(7), (x) on each Cash
                  Collateral Amount Distribution Date, cash from the Total Cash
                  Collateral Amount in the Sponsor Subsidiary Cash Reserve, the
                  Noric Holdings I Cash Reserve and the Noric Holdings IV Cash
                  Reserve in an aggregate amount equal to the aggregate amount
                  permitted to be so Distributed pursuant to Section 7.04(g),
                  and (y) from time to time, cash from the Sponsor Subsidiary
                  Cash Reserve, the Noric Holdings I Cash Reserve and the Noric
                  Holdings IV Cash Reserve in an aggregate amount equal to the
                  aggregate amount permitted to be so Distributed pursuant to
                  Sections 7.04(f), (h), (i) and (k), as applicable; and

                           (iii)    a Sponsor Subsidiary may make Distributions
                  constituting Equity Interests in the CIG Excluded Subsidiary,
                  Intermediate Holder or Underlying Business to the extent a
                  Disposition of such Equity Interests is permitted under
                  Section 5.09(d)(C) or (G).

                  (k)      Sponsor Subsidiary Member Transactions. Purchase,
         redeem, retire, defease or otherwise acquire any part of the interest
         of any Sponsor Subsidiary Member in any Sponsor Subsidiary.

                  (l)      Reimbursement. Reimburse any holder of an Equity
         Interest in any Sponsor Subsidiary for any liability, loss, cost or
         expense other than as expressly provided for in or contemplated by the
         Operative Documents.

                  (m)      Employees. Have any employees.

                  (n)      Affiliate Transactions. Enter into any transaction or
         series of related transactions (including making any loan or advance or
         giving any credit) with any of its Affiliates, including El Paso or any
         of its Affiliates, other than:

                           (i)      any Hedge Agreement permitted under Section
                  5.02(o);

                           (ii)     the transactions contemplated by the
                  Operative Documents to which it is a party; and

                           (iii)    any transaction or series of transactions
                  expressly required or permitted, or on terms expressly
                  required or permitted, under the Operative Documents to which
                  it is a party and, if applicable, upon the terms required for
                  such transaction or series of transactions under the relevant
                  Operative Document.

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<PAGE>

                  (o)      Hedge Agreements. Enter into any Hedge Agreement
         without the prior written consent of Mustang, except Hedge Agreements
         with Approved Hedge Counterparties designed to hedge against
         fluctuations in oil and gas prices incurred in the ordinary course of
         business and consistent with prudent business practice so long as the
         aggregate volume of oil and/or gas (as applicable) hedged under each
         such Hedge Agreement does not materially exceed the projected actual
         production of oil and/or gas (as applicable) from Proved Reserves of
         all of the E&P Participation Properties for such period based on the
         most recent Reserve Report;

                  (p)      El Paso Demand Loans. Make any Investment in El Paso
         or any Affiliate of El Paso to be evidenced by, or acquire by purchase
         or contribution, any El Paso Demand Loan except to the extent permitted
         by Section 7.03 and unless at the time of such making or acquisition
         (i) the borrowing evidenced by the El Paso Demand Loan has been duly
         authorized by all required corporate action, such action has been duly
         certified by the secretary or an assistant secretary of El Paso or such
         Affiliate, and such certification has been delivered to it, together
         with certificates as to incumbency and due authorization of the
         officers of El Paso or such Affiliate authorized to execute and deliver
         such El Paso Demand Loan (which certified action may be one so taken
         and certification may be one so delivered before that Investment or
         acquisition if the certified action remains in effect at the time of,
         and is applicable to, that acquisition) and (ii) such El Paso Demand
         Loan is the legal, valid and binding obligation of El Paso or the
         Affiliate of El Paso (as applicable) enforceable against El Paso or
         such Affiliate of El Paso in accordance with its terms. The making or
         acquisition of any Demand Loan shall constitute a representation by the
         Sponsor Subsidiaries that this Section 5.02(p) has been satisfied and
         that the matters referred to in subclauses (i) and (ii) above are true
         and correct as of the date of such making or acquisition.

                  Section 5.03. Refinancing of the Controlled Business Debt.
Each Sponsor Subsidiary shall, unless otherwise consented to in writing by
Mustang:

                  (a)      Cause each Controlled Business owned by such Sponsor
         Subsidiary that has Controlled Business Debt to use its commercially
         reasonable efforts to refinance all such Controlled Business Debt on or
         prior to the occurrence of any CBD Maturity Event with respect to such
         Controlled Business Debt on arm's length terms and conditions
         reasonably acceptable to Mustang; provided that no Sponsor Subsidiary
         shall be in breach of this Section 5.03(a) if El Paso contributes to
         the capital of such Controlled Business indirectly through such Sponsor
         Subsidiary on or prior to any CBD Maturity Event with respect to the
         Controlled Business Debt of such Controlled Business sufficient cash to
         pay any such Controlled Business Debt on or prior to the occurrence of
         any CBD Maturity Event with respect to such Controlled Business Debt
         and such Controlled Business pays such Controlled Business Debt in full
         on or prior to any such CBD Maturity Event.

                  (b)      Deliver to Mustang prior to the Acquisition/Accession
         Date on which any Sponsor Subsidiary that owns any Controlled Business
         that has Controlled Business Debt accedes to the Sponsor Subsidiary
         Credit Documents an undertaking by El Paso in favor of Mustang (in the
         form of Exhibit 5.03(b) hereto and otherwise in form and substance

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<PAGE>

         reasonably acceptable to Mustang) to contribute to the capital of such
         Controlled Business indirectly through such Sponsor Subsidiary
         sufficient cash to pay any Controlled Business Debt of such Controlled
         Business on or prior to the occurrence of any CBD Maturity Event with
         respect to such Controlled Business Debt, together with customary legal
         opinions with respect thereto and in form and substance reasonably
         satisfactory to Mustang. The execution and delivery of such undertaking
         of El Paso to Mustang and the delivery of such opinions are conditions
         precedent to the accession of any such Sponsor Subsidiary to the
         Sponsor Subsidiary Credit Documents.

                  Section 5.04. Financial Covenants. Until the Debt Collection
Date, the Sponsor Subsidiaries shall:

                  (a)      Energy Investments - Fixed Charge Coverage. Maintain,
         at all times that the Energy Investment Exposure exceeds $0, as of the
         date of each Compliance Certificate with respect to each Fiscal Quarter
         (beginning with respect to the Fiscal Quarter ending on September 30,
         2001) and Fiscal Year pursuant to Section 5.4 of the El Paso Agreement
         (each such date a "COVERAGE TEST DATE") a ratio of:

                           (i)      the sum of (A) for all Controlled
                  Businesses, the aggregate EBITDA (excluding EBITDA
                  attributable to the CIG Excluded Subsidiary) for the most
                  recently completed four Fiscal Quarters for the Underlying
                  Businesses of all Controlled Businesses owned by the Sponsor
                  Subsidiaries at the end of such Fiscal Quarter and (B) for all
                  Publicly Traded Investments, the aggregate distributions on
                  the equity securities of all Publicly Traded Investments
                  received by the Sponsor Subsidiaries during the most recently
                  completed four Fiscal Quarters less the aggregate amount of
                  all Maintenance Capital Expenditures payable during the most
                  recently completed four Fiscal Quarters for the Underlying
                  Businesses relating to such Controlled Businesses, other than
                  Maintenance Capital Expenditures that were funded from capital
                  contributions made by El Paso or an Affiliate of El Paso
                  (other than a Sponsor Subsidiary or any Intermediate Holder
                  relating to such Controlled Business),

         to

                           (ii)     the sum of (A) the Energy Investment
                  Notional Amortization (after giving effect to any payment,
                  including any deemed payment, of Cash Collateral Amounts to
                  the Sponsor Subsidiary Cash Reserve, the Noric Holdings I Cash
                  Reserve and/or the Noric Holdings IV Cash Reserve) computed as
                  of the Coverage Test Date and (B) interest payable during the
                  most recently completed four Fiscal Quarters on all Controlled
                  Business Debt, Refinanced Controlled Business Debt and CIG
                  Existing Debt outstanding as of the Coverage Test Date,

         greater than 1.3 to 1.

                  (b)      Energy Investments - Loan to Value. Maintain, at all
         times that the Energy Investment Exposure exceeds $0, as of each
         Coverage Test Date and the date of each Disposition of an Energy
         Investment or a Disposition (other than in accordance with

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<PAGE>

         Section 5.09(d)(G)) of all or substantially all of the assets of or
         Equity Interests in any Intermediate Holder or Underlying Business
         (after giving effect to such Disposition and 2.05(b) hereof) a ratio
         of:

                           (A)      the sum of (A) the Energy Investment
                  Exposure on such date (after giving effect to any payment,
                  including any deemed payment, of Cash Collateral Amounts to
                  the Sponsor Subsidiary Cash Reserve, the Noric Holdings I Cash
                  Reserve and/or the Noric Holdings IV Cash Reserve on such
                  date) and (B) the Controlled Business Debt, Refinanced
                  Controlled Business Debt and the CIG Existing Debt on such
                  date,

         to

                           (B)      the aggregate Carrying Value of all Energy
                  Investments (excluding all Energy Investments, or the Energy
                  Investments relating to the assets or Equity Interests,
                  Disposed of) on such date,

         of not more than 0.7 to 1.

                  (c)      Required Cash Reserve Amounts. (i) Maintain on
         deposit in the Noric Holdings I Cash Reserve at the end of each Fiscal
         Quarter an amount (such amount, the "NORIC HOLDINGS I REQUIRED CASH
         RESERVE BALANCE") equal to the lesser of (x) 20% of the portion of the
         E&P Borrowing Base attributable to the E&P Participation Properties at
         such time and (y) the sum of all of the Noric Holdings I Required Cash
         Reserve Increases for all previously completed Fiscal Quarters,
         including such Fiscal Quarter.

                           (ii)     Maintain on deposit in the Sponsor
                  Subsidiary Cash Reserve and/or the Noric Holdings IV Cash
                  Reserve at the end of each Fiscal Quarter an aggregate amount
                  at least equal to the sum of (1) Sponsor Subsidiary Required
                  Energy Investment Cash Reserve Balance and (2) an amount (such
                  amount, the "NORIC HOLDINGS IV REQUIRED CASH RESERVE BALANCE")
                  equal to the lesser of (x) 20% of the portion of the E&P
                  Borrowing Base attributable to the Production Payments at such
                  time and (y) the sum of all of the Noric Holdings IV Required
                  Cash Reserve Increases for all previously completed Fiscal
                  Quarters, including such Fiscal Quarter.

                  (d)      Calculations. In determining compliance with Section
         5.04(a), "EBITDA" and "net income" of any Energy Investment or
         Underlying Business shall only include the portion thereof equal to the
         aggregate percentage interest of the Underlying Business owned directly
         or indirectly by the Sponsor Subsidiaries.

                  (e)      E&P Borrowing Base Determinations and Revised Energy
         Investment Loan Values. In addition to being tested on each Coverage
         Test Date and each other specific date referred to herein and the
         Acquisition/Accession Procedures Schedule, the financial covenants in
         Sections 5.04(a) and (b) shall be tested on each E&P Borrowing Base
         Effective Date and each Energy Investment Loan Value Voting Date. If
         any ratio in Section 5.04(a) or (b) shall fail to be met on any such
         date, the Sponsor Subsidiaries shall be deemed to have failed to comply
         with the covenant under such Sections.

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<PAGE>

                  (f)      Energy Investment Exposure and Energy Investment Loan
         Amount. Cause (by prepaying the Advance or by making a payment,
         including a deemed payment, of a Cash Collateral Amount), at all times
         that the Energy Exposure exceeds $0, as of each Coverage Test Date, the
         Energy Investment Exposure on such date not to exceed the Aggregate
         Energy Investment Loan Value Amount on such date.

                  Section 5.05. Certain Negative Covenants with respect to
Lipizzan and Noric LP. Except as otherwise permitted under the Noric Company
Agreement, Noric Holdings I shall cause Noric LP not to, and, except as
otherwise permitted under the Lipizzan Partnership Agreement, Noric Holdings IV
shall cause Lipizzan not to, at any time without the written consent of Mustang:

                  (a)      Acquisitions, Sales, Etc., of Assets. (x) Enter into
         any partnership, joint venture or sale and leaseback transaction, (y)
         purchase or otherwise acquire (in one or a series of related
         transactions) any portion of the property or assets of any Person or
         (z) Dispose of, or grant any option with respect to, directly or
         indirectly (or agree to any of the foregoing at any future time), all
         or any portion of its property or assets, except that interests in E&P
         Assets constituting E&P Participation Properties may be acquired or
         Disposed of from time to time by Noric LP and interests in Production
         Payment Interests may be acquired or Disposed of from time to time by
         Lipizzan in connection with acquisitions or Dispositions by any
         Counterparty to any Production Payment Agreement of Subject Interests
         burdened by a Production Payment, in each case subject to Section
         2.09(e); provided that:

                           (A)      In each case, no Liquidating Event,
                  Termination Event, Notice Event, Event of Default or Incipient
                  Event has occurred and is continuing or would result from such
                  acquisition or Disposition;

                           (B)      Any acquisition of an E&P Asset shall be
                  effected in accordance with the Acquisition/Accession
                  Procedures Schedule;

                           (C)      Starting from the Third Restatement Date,
                  Relevant Assets may be Disposed of by Noric LP if the
                  aggregate Disposition Value of such Relevant Assets to be
                  Disposed of (together with the Disposition Value of all
                  Relevant Assets Disposed of by any Sponsor Subsidiary, Noric
                  LP and Lipizzan during the current E&P Borrowing Base Period)
                  does not exceed the Adjusted Redetermination Threshold for
                  such E&P Borrowing Base Period;

                           (D)      Starting from the Third Restatement Date,
                  Relevant Assets may be Disposed of by Noric LP if the
                  aggregate Disposition Value of such Relevant Assets to be
                  Disposed of (together with the Disposition Value of all
                  Relevant Assets Disposed of by any Sponsor Subsidiary, Noric
                  LP and Lipizzan during the current E&P Borrowing Base Period)
                  exceeds the Adjusted Redetermination Threshold for such E&P
                  Borrowing Base Period; provided that the Net Cash Proceeds
                  from any such Disposition in excess of such Adjusted
                  Redetermination Threshold shall be deposited by Noric LP
                  and/or Noric Holdings I in the Noric

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<PAGE>

                  Holdings I Cash Reserve and shall be applied pursuant to
                  Section 7.04(i)(A) or (B);

         provided that if, at the time of any Disposition described in clauses
         (C) or (D) above, an El Paso RA Event has occurred and is continuing,
         the Sponsor Subsidiaries shall, and shall cause Noric LP to, apply the
         Net Cash Proceeds from any such Disposition to prepay the Advances in
         accordance with Section 2.05(b)(viii)(A);

                           (E)      Starting from the Third Restatement Date,
                  Relevant Assets may be Disposed of by Lipizzan if the
                  aggregate Disposition Value of such Relevant Assets to be
                  Disposed of (together with the Disposition Value of all
                  Relevant Assets Disposed of by any Sponsor Subsidiary, Noric
                  LP and Lipizzan during the current E&P Borrowing Base Period)
                  does not exceed the Adjusted Redetermination Threshold for
                  such E&P Borrowing Base Period;

                           (F)      Starting from the Third Restatement Date,
                  Relevant Assets may be Disposed of by Lipizzan if the
                  aggregate Disposition Value of such Relevant Assets to be
                  Disposed of (together with the Disposition Value of all
                  Relevant Assets Disposed of by any Sponsor Subsidiary, Noric
                  LP and Lipizzan during the current E&P Borrowing Base Period)
                  exceeds the Adjusted Redetermination Threshold for such E&P
                  Borrowing Base Period; provided that the amount of the
                  Disposition Value of any such Relevant Assets Disposed of by
                  Lipizzan in excess of such Adjusted Redetermination Threshold
                  shall be deposited by Lipizzan and/or Noric Holdings IV in the
                  Noric Holdings IV Cash Reserve and shall be applied pursuant
                  to Section 7.04(i)(A) or (B); and

                           (G)      As condition to any Disposition by Lipizzan
                  under clauses (E) and (F) above (including Dispositions under
                  Section 5.10(a)(ii)(C) and Section 5.10(b)(iii)) Lipizzan
                  shall receive from the applicable Counterparty to a Production
                  Payment Agreement the Disposition Value of the Relevant Asset
                  Disposed of; provided that any amount received pursuant to
                  clause (E) above shall be deposited in the Noric Holdings IV
                  Cash Reserve and may be invested in Permitted Investments and
                  any amount received pursuant to clause (F) above shall be
                  applied as described in such clause (F);

         provided that if, at the time of any Disposition described in clauses
         (E) or (F) above, an El Paso RA Event has occurred and is continuing,
         the Sponsor Subsidiaries shall, and shall cause Lipizzan to, prepay the
         Advances in accordance with Section 2.05(b)(viii)(A) in an amount equal
         to the Disposition Value of such Relevant Assets.

                  (b)      Permitted Investments. Make or hold any Investment
         except:

                  (i) subject to Section 5.05(a) above, any Investment in
         Permitted Assets of Noric LP and Lipizzan, as the case may be; and

                  (ii)     in the case of Noric LP, Cash Equivalents and El Paso
         Demand Loans; provided that an El Paso Demand Loan may be made only if
         after giving effect to the making of such El Paso Demand Loan the
         aggregate of the amounts on deposit in the

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         Sponsor Subsidiary Cash Reserve, the Noric Holdings I Cash Reserve
         and/or the Noric Holdings IV Cash Reserve is greater than or equal to
         the sum of the Dispositions Reserve Amount and the Sponsor Subsidiary
         Minimum Monthly Cash Balance for the then-applicable month (subject to
         Section 7.04(k) below).

                  Section 5.06. A-Loans and Total Cash Collateral Amount. (a)
A-Loans. Each Sponsor Subsidiary shall ensure that the aggregate principal
amount of all A-Loans outstanding at any time is equal to the sum of (i) the
aggregate principal amount of the Advances outstanding at that time and (ii) the
aggregate principal amount of the Sponsor Subsidiary Subordinated Debt.

                  (b)      Payments of Cash Collateral Amounts. Subject to
compliance with clause (a) above and pursuant to clauses (c) and (d) below, the
Sponsor Subsidiaries may, on each date specified below, pay or make a deemed
payment of a Cash Collateral Amount to the Sponsor Subsidiary Cash Reserve, the
Noric Holdings I Cash Reserve and/or the Noric Holdings IV Cash Reserve in order
to ensure compliance with the covenants in Section 5.04:

                  (i)      each Coverage Test Date;

                  (ii)     each Appraisal Date;

                  (iii)    the date of any change in the Energy Investment Loan
         Value of any Energy Investment;

                  (iv)     on the date of Disposition of any Transaction Asset
         pursuant to Sections 5.02(d) and 5.05(a) or the Disposition of all or
         substantially all of the assets of, or Equity Interests in, any
         Intermediate Holder or Underlying Business pursuant to Section
         5.09(d)(B);

                  (v)      the date referred to in Section 5.07(f);

                  (vi)     the date of any prepayment pursuant to Section 2.05;

                  (vii)    each E&P Borrowing Base Effective Date; and

                  (viii)   each Acquisition/Accession Date.

                  (c)      Cash Collateral Amounts. Subject to Section 5.06(b),
each Sponsor Subsidiary Member shall have the right to make a cash capital
contribution to the Sponsor Subsidiary Cash Reserve, the Noric Holdings I Cash
Reserve and/or the Noric Holdings IV Cash Reserve in an amount necessary for all
El Paso Parties obligated under Section 5.04 to comply with the financial
covenants in Section 5.04 (each such cash capital contribution being a "CASH
COLLATERAL AMOUNT").

                  (d)      Deemed Cash Collateral Amounts. Notwithstanding
anything to the contrary in clause (c) above and subject to Section 5.06(b),
each Sponsor Subsidiary Member shall have the right to make a deemed payment of
a Cash Collateral Amount to the Sponsor Subsidiary Cash Reserve, the Noric
Holdings I Cash Reserve and/or the Noric Holdings IV Cash Reserve in an amount
specified by El Paso up to an aggregate amount, if any, by which the

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balance of the Sponsor Subsidiary Cash Reserve, the Noric Holdings I Cash
Reserve and the Noric Holdings IV Cash Reserve exceeds the sum of (i) the
Sponsor Subsidiary Required Energy Investment Cash Reserve Balance, (ii) the
Noric Holdings I Required Cash Reserve Balance, (iii) the Noric Holdings IV
Required Cash Reserve Balance, (iv) the Total Cash Collateral Amount (taking
into account all other Cash Collateral Amounts deemed paid under this Section
5.06(d)), (in the case of clauses (i) through (iv) each as in effect immediately
prior to such deemed payment), (v) the Dispositions Reserve Amount and (vi) the
Sponsor Subsidiary Minimum Monthly Cash Balance; provided that no portion of
such excess amount invested in El Paso Demand Loans (after giving effect to any
payment thereof on or prior to the date of such deemed payment of Cash
Collateral Amounts) shall be used to make such deemed payment of such Cash
Collateral Amount.

                  Section 5.07. Appraisals of Energy Investments. (a) An
Appraisal of each Energy Investment shall be undertaken by the Appraiser on the
occurrence of each Appraisal Event.

                  (b)      Each Sponsor Subsidiary shall co-operate with the
Appraiser, Mustang and the Agent to ensure that each Appraisal is timely
completed in accordance with the provisions of this Section 5.07. Each Sponsor
Subsidiary shall promptly following the occurrence of an Appraisal Event,
provide the Appraiser with access to all documents, records and other
information necessary for the Appraiser to complete the Appraisal in accordance
with this Section 5.07.

                  (c)      Noric Holdings shall, on the date of each Appraisal
Event with respect to a Publicly Traded Investment, deliver a certificate to
Mustang, the Sponsor Subsidiary Collateral Agent and the Mustang Collateral
Agent certifying the revised Carrying Value of such Publicly Traded Investment.
Absent manifest error, the revised Carrying Value of such Publicly Traded
Investment shall be deemed to be the value set forth in such certificate.

                  (d)      An Appraisal of an Energy Investment (other than an
Appraisal pursuant to clause (c) above and Section 5.04(c)(ii)) shall be
completed as soon as reasonably practicable after the occurrence of the relevant
Appraisal Event, but in any event within 30 days after the date of occurrence of
such Appraisal Event (or, if such 30th day is not a Business Day, the next
succeeding Business Day) (the date of completion of such Appraisal, the
"APPRAISAL DATE").

                  (e)      If an Appraisal of an Energy Investment pursuant to
clause (d) above is not completed within 30 days after the date of occurrence of
the Appraisal Event giving rise to the Appraisal (or if such 30th day is not a
Business Day, the next succeeding Business Day), then the value of such Energy
Investment shall be deemed to be $0 until the next Appraisal Date for such
Energy Investment.

                  (f)      Within 5 Business Days after each Appraisal Date, a
Responsible Officer of El Paso shall deliver to Mustang a Compliance
Certificate, substantially in the form attached hereto as Exhibit 5.07(f),
showing the pro forma calculations of the financial covenants in Sections
5.04(a), (b) and (f) in sufficient detail as of the date of such Compliance
Certificate, together with copies of any such Appraisals; provided that such pro
forma calculations shall use the newly appraised Carrying Values of all Energy
Investments and the EBITDA of such Energy

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Investments as of date of the financial statements reflected in the last
Compliance Certificate delivered pursuant to Section 5.4 of the El Paso
Agreement. For the purposes of this clause (f), an Appraisal of each Publicly
Traded Investment shall be undertaken on the date of such Compliance Certificate
to enable calculation of such financial covenants.

                  Section 5.08. Affirmative Covenants with Respect to Controlled
Businesses. At all times until the Debt Collection Date, each Sponsor Subsidiary
will, unless otherwise consented to in writing by Mustang, with respect to each
Controlled Business relating to each Energy Investment owned by such Sponsor
Subsidiary (but subject to Part VII of the Transaction Asset Schedule with
respect to each such Controlled Business):

                  (a)      Compliance with Applicable Laws, Etc. Cause such
         Controlled Business to comply with, and its properties to be maintained
         and used in accordance with, all Applicable Laws applicable to it or
         its properties, except where the failure to do so could not reasonably
         be expected to have a Material Adverse Effect.

                  (b)      Payment of Taxes, Etc. Cause such Controlled Business
         to pay and discharge, before the same shall become delinquent, (i) all
         taxes, assessments and governmental charges or levies imposed upon it
         or upon its property and (ii) all lawful claims which, if unpaid, might
         by law become a Lien upon its property; provided that such Controlled
         Business shall not be required to pay or discharge any such tax,
         assessment, governmental charge, levy or claim that is being contested
         in good faith and by proper proceedings and as to which appropriate
         reserves are being maintained in accordance with GAAP, unless and until
         any Lien resulting therefrom attaches to its property and becomes
         enforceable against its other creditors.

                  (c)      Preservation of Existence, Etc. Except as otherwise
         permitted under Section 5.09(c) below, cause such Controlled Business
         to preserve and maintain its existence as a corporation, limited
         liability company or other applicable Business Entity and its rights
         (charter and statutory) and authority.

                  (d)      Inspection Rights. Upon reasonable, and in any event
         at least three Business Days', prior notice and during normal business
         hours and not more often than is reasonable under the circumstances,
         permit Mustang, the Sponsor Subsidiary Collateral Agent or the Mustang
         Collateral Agent or, in each case, any agents or representatives
         thereof to examine the records and books of account of such Controlled
         Business, and to discuss the affairs, finances and accounts of such
         Controlled Business with any officer of such Sponsor Subsidiary or its
         managing member and to disclose to such Person any and all financial
         statements and other information of any kind relating to such
         Controlled Business and, after prior notice to such Sponsor Subsidiary,
         to discuss the affairs, finances and accounts of such Sponsor
         Subsidiary with its independent certified public accountants and permit
         such accountants to disclose to such Person any and all financial
         statements and other information of any kind that they may have with
         respect to such Controlled Business. The Sponsor Subsidiaries jointly
         and severally shall assume or pay all reasonable costs and expenses
         associated with any such examination, discussion or copying; provided
         that, except (i) during the existence of an Event of Default or
         Incipient Event, Notice Event, Termination Event or Liquidating Event
         or (ii) where Mustang

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         acting in good faith reasonably believes there to be a reasonable
         expectation that an Event of Default, Incipient Event, Notice Event,
         Termination Event or Liquidating Event has occurred and is continuing,
         the Sponsor Subsidiaries shall only be liable for the costs and
         expenses of one such examination or discussion per Fiscal Year.

                  (e)      Keeping of Books. Cause such Controlled Business to
         keep complete, proper and separate books of record and account,
         including a record of all costs and expenses incurred, all charges
         made, all credits made and received, and all income derived in
         connection with the operation of the business of such Controlled
         Business, all in accordance with GAAP, in each case to the extent
         necessary to enable such Sponsor Subsidiary to comply with the periodic
         reporting requirements of this Agreement.

                  (f)      Performance of Documents. Cause such Controlled
         Business to:

                           (i)      perform and observe in all material respects
                  all of the terms and provisions of each Material Agreement to
                  be performed or observed by it;

                           (ii)     maintain, to the extent it has the capacity
                  to do so, each such Material Agreement to which such
                  Controlled Business is a party; provided that such Sponsor
                  Subsidiary may terminate, or permit a Controlled Business to
                  terminate, a Material Agreement if prior to or
                  contemporaneously with such termination a replacement or
                  substitute agreement is entered into, the terms (including the
                  financial terms) of which are not materially less favorable to
                  such Sponsor Subsidiary or Controlled Business, as the case
                  may be, than the terminated Material Agreement, and such
                  Sponsor Subsidiary delivers to Mustang, the Sponsor Subsidiary
                  Collateral Agent and the Mustang Collateral Agent a revised
                  Transaction Asset Schedule reflecting such termination and
                  replacement or substitution;

                           (iii)    promptly enforce to the extent it is
                  commercially reasonable to do so in all material respects each
                  such Material Agreement in accordance with its terms (subject
                  to the terms of Article VI hereof);

                           (iv)     take all such action to such end (not in
                  violation of its Organizational Documents) as may be from time
                  to time reasonably requested by Mustang or (in the case of any
                  Material Agreement relating to a Controlled Business held by a
                  Sponsor Subsidiary) the Sponsor Subsidiary Collateral Agent or
                  the Mustang Collateral Agent; and

                           (v)      upon the request of Mustang, make to each
                  other party to each such Material Agreement such demands and
                  requests for information and reports or for action as such
                  Controlled Business is entitled to make under such Material
                  Agreement.

                  (g)      Maintenance of Licenses and Permits. Cause such
         Controlled Business to maintain all licenses and permits necessary to
         own its properties and to conduct its activities in accordance with all
         Applicable Laws applicable to it or its properties, except

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         for such failures as could not reasonably be expected to result in a
         Material Adverse Effect.

                  (h)      Maintenance of Insurance. Cause such Controlled
         Business to maintain or cause to be maintained, insurance with
         responsible and reputable insurance companies or associations in such
         amounts and covering such risks as is usually carried by companies
         engaged in similar businesses and owning similar properties in the same
         general areas in which such Controlled Business operates.

                  (i)      Maintenance of Title to Assets. Cause such Controlled
         Business to maintain legal and beneficial title to each of its assets,
         except as otherwise permitted under Section 5.09(d) below.

                  (j)      Transactions with Affiliates. Cause such Controlled
         Business to conduct all transactions otherwise permitted under the
         Operative Documents with any of its Affiliates, including El Paso and
         any of its Affiliates:

                           (i)      on terms required for any such transaction
                  under the Operative Documents; or

                           (ii)     otherwise on terms that are fair and
                  reasonable and that provide for exchanges of fair
                  consideration and reasonably equivalent value between or among
                  the parties thereto.

                  Section 5.09. Negative Covenants with Respect to Each
Controlled Business. At any time until the Debt Collection Date, each Sponsor
Subsidiary will not, without the written consent of Mustang with respect to each
Controlled Business held by such Sponsor Subsidiary (but subject to Part VII of
the Transaction Asset Schedule with respect to each such Controlled Business):

                  (a)      Liens, Etc. Permit such Controlled Business to
         create, incur, assume or suffer to exist any Lien on or with respect to
         any of its properties or assets of any character whether now owned or
         hereafter acquired, or assign any accounts or other right to receive
         income, excluding, however, from the operation of the foregoing
         restrictions:

                           (i)      Liens to secure the performance of tenders,
                  bids, leases, trade contracts (not for borrowed money),
                  regulatory or statutory obligations, surety or appeal bonds,
                  tender or performance and return of money bonds, bankers'
                  acceptances, government contracts or other obligations of a
                  like nature incurred in the ordinary course of business;

                           (ii)     Liens to secure any purchase money
                  Indebtedness permitted by Section 5.09(b)(iv) below and
                  covering only the property acquired by such Indebtedness,
                  accessions thereto and the proceeds thereof;

                           (iii)    Liens arising out of any conditional sale or
                  other title retention agreement permitted by Section
                  5.09(b)(v) below and covering only the property subject
                  thereto and the proceeds thereof;

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                           (iv)     Liens to secure any Indebtedness under any
                  capital lease permitted by Section 5.09(b)(vi) below and
                  covering only the property subject thereto and the proceeds
                  thereof;

                           (v)      Liens for taxes, assessments or governmental
                  charges or claims that are not yet delinquent or that are
                  being contested in good faith by appropriate proceedings
                  promptly instituted and diligently concluded; provided that
                  any reserve or other appropriate provision as shall be
                  required in conformity with GAAP shall have been made
                  therefor;

                           (vi)     Liens arising by operation of law of
                  landlords and carriers, warehousemen, mechanics, suppliers,
                  sellers, materialmen, or repairmen, or other similar Liens, in
                  each case arising in the ordinary course of business and with
                  respect to amounts not yet delinquent or that are being
                  contested in good faith by appropriate legal proceedings
                  promptly instituted and diligently conducted and for which a
                  reserve or other appropriate provision, if any, as shall be
                  required in conformity with GAAP shall have been made;

                           (vii)    Liens incurred or deposits made in the
                  ordinary course of business in connection with workers'
                  compensation, unemployment insurance and other types of social
                  security;

                           (viii)   easements, rights-of-way, municipal and
                  zoning and building ordinances and similar charges,
                  encumbrances, title defects or other irregularities,
                  governmental restrictions on the use of property or conduct of
                  business, and Liens in favor of governmental authorities and
                  public utilities, that do not materially interfere with the
                  ordinary course of business of such Controlled Business;

                           (ix)     leases or subleases granted to other Persons
                  that do not materially interfere with the ordinary course of
                  business of such Controlled Business;

                           (x)      any interest or title of a lessor in the
                  property subject to any capital lease or operating lease
                  permitted by Section 5.09(b) below and the proceeds thereof;

                           (xi)     any option or other agreement to purchase
                  any asset of such Controlled Business the purchase, sale or
                  other disposition of which is not prohibited by any other
                  provision of the Operative Documents;

                           (xii)    Liens arising from the rendering of an
                  interim or final judgment or order against such Controlled
                  Business; provided that the aggregate principal amount of all
                  Liens arising under any judgment or order that is not stayed
                  or dismissed within 60 days of the date thereof does not
                  exceed $50,000,000, and Liens imposed against such Controlled
                  Business in connection with any claim against such Controlled
                  Business so long as the claim is being contested in good faith
                  and does not materially and adversely affect the business and
                  operations of such Controlled Business;

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                           (xiii)   Liens securing reimbursement obligations
                  with respect to letters of credit permitted by Section
                  5.09(b)(vii) below that encumber documents and other property
                  relating to such letters of credit and the proceeds thereof;

                           (xiv)    Liens encumbering customary initial deposits
                  and margin deposits;

                           (xv)     royalties, overriding royalties,
                  reversionary interests and similar burdens with respect to the
                  Oil and Gas Properties of any CIG Controlled Business to the
                  extent such burdens do not reduce such CIG Controlled
                  Business' net interest in production in its Oil and Gas
                  Properties below the interests as at the Third Restatement
                  Date and do not operate to deprive such CIG Controlled
                  Business of any material right in respect of its Oil and Gas
                  Properties;

                           (xvi)    operator's Liens incidental to the
                  maintenance, development or operation of the Oil and Gas
                  Properties of any CIG Controlled Business in each case arising
                  in the ordinary course of business securing amounts not yet
                  delinquent or that are being contested in good faith by
                  appropriate legal proceedings promptly instituted and
                  diligently conducted and for which a reserve or other
                  appropriate provision, if any, as shall be required in
                  conformity with GAAP shall have been made; or

                           (xvii)   Liens extending, renewing or replacing any
                  of the foregoing Liens; provided that the principal amount of
                  the Indebtedness or other obligation secured by such Lien is
                  not increased or the maturity thereof shortened and such Lien
                  is not extended to cover any additional Indebtedness,
                  obligations or property, other than like obligations and the
                  substitution of like property (or categories of property to
                  the extent the terms of the Lien being extended, renewed or
                  replaced, extended to or covered such categories of property)
                  or the proceeds of the property subject thereto.

                  (b)      Indebtedness. Permit such Controlled Business to
         create, incur, assume or suffer to exist, any Indebtedness other than
         Indebtedness created, incurred or assumed for or in respect of:

                           (i)      Indebtedness of the type described in clause
                  (i) of the definition thereof constituting accounts payable
                  incurred in the ordinary course of business;

                           (ii)     Hedge Agreements designed to hedge against
                  fluctuations in interest rates or foreign exchange rates
                  incurred in the ordinary course of business and consistent
                  with prudent business practice;

                           (iii)    obligations as lessee under leases of
                  Non-Principal Property that have been or should be, in
                  accordance with GAAP, recorded as operating leases;

                           (iv)     obligations of such Controlled Business for
                  the deferred purchase price of property or services;

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                           (v)      obligations of such Controlled Business
                  created or arising under any conditional sale or other title
                  retention agreement with respect to property acquired by such
                  Controlled Business (whether or not the rights and remedies of
                  the seller or lender under such agreement in the event of
                  default are limited to repossession or sale of such property);

                           (vi)     obligations of such Controlled Business in
                  respect of Capitalized Leases;

                           (vii)    obligations, contingent or otherwise, of
                  such Controlled Business under acceptance, letter of credit or
                  similar facilities;

                           (viii)   obligations of such Controlled Business
                  evidenced by bonds, notes, debentures or other similar
                  instruments, but only to the extent that such obligations
                  relate to any of the obligations referred to in clause (iv),
                  (v) or (vii) above;

                           (ix)     obligations of other Persons of the type
                  described in clause (iv), (v), (vi), (vii) or (viii) above
                  guaranteed directly or indirectly in any manner by such
                  Controlled Business;

                           (x)      any Indebtedness of such Controlled Business
                  (not otherwise described herein) secured by any Lien permitted
                  under Section 5.09(a) above;

                           (xi)     obligations of such Controlled Business as
                  lessee under leases of Principal Property that have been or
                  should be, in accordance with GAAP, recorded as operating
                  leases;

                           (xii)    Indebtedness of any Controlled Business
                  relating to an Energy Investment owing to any other Controlled
                  Business relating to the same Energy Investment;

                           (xiii)   the Controlled Business Debt and the CIG
                  Existing Debt and any refinancings of the Debt referred to in
                  clause (i) of the definition of Controlled Business Debt
                  pursuant to Section 5.03(a) to the extent that any such
                  refinanced Debt is not subject to a CBD Maturity Condition
                  (any such refinanced Debt, the "REFINANCED CONTROLLED BUSINESS
                  DEBT"); and

                           (xiv)    in the case of any CIG Controlled Business,
                  Hedge Agreements with Approved Hedge Counterparties designed
                  to hedge against fluctuations in oil and gas prices incurred
                  in the ordinary course of business and consistent with prudent
                  business practice so long as the aggregate volume of oil
                  and/or gas (as applicable) hedged under each such Hedge
                  Agreement of a CIG Controlled Business does not materially
                  exceed the projected actual production of oil and/or gas (as
                  applicable) from proved reserves of such CIG Controlled
                  Business for such period;

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         provided that the aggregate amount of all Indebtedness of all
         Controlled Businesses relating to Energy Investments owned by the
         Sponsor Subsidiaries under or in respect of clauses (iv) to (xi)
         (inclusive) shall not at any time exceed 10% of the Aggregate Energy
         Investment Loan Value Amount at such time (taking the Indebtedness
         under clause (xi) above at the net present value of the aggregate
         amount of (without duplication) all remaining lease payments and
         liquidated damages on or in respect of all such leases discounted to
         the time of determination at a discount rate of 8% per annum).

                  (c)      Mergers, Etc. Permit such Controlled Business to
         enter into any transaction of consolidation or merger with or into any
         other Person, except (i) if the Sponsor Subsidiaries prepay the
         Advances in accordance with Section 2.05(b)(i), together with all
         amounts required to be paid pursuant to Section 2.06(c) or (ii) a
         Controlled Business may consolidate with or merge into another
         Controlled Business provided that (A) immediately before and after
         giving effect to such consolidation or merger no Notice Event,
         Termination Event, Event of Default, Liquidating Event or Incipient
         Event has occurred and is continuing and (B) the Energy Investment or
         Energy Investments, as the case may be, relating to such merged or
         consolidated Controlled Business or Controlled Businesses, as the case
         may be, are pledged, transferred and assigned to the Sponsor Subsidiary
         Collateral Agent under the Sponsor Subsidiary Security Agreement and
         such pledge, transfer and assignment is perfected in accordance with
         the terms thereof.

                  (d)      Acquisitions, Sales, Etc. of Assets. Permit such
         Controlled Business to (i) enter into any sale and leaseback
         transaction, (ii) purchase or otherwise acquire (in one or a series of
         related transactions) any portion of the property or assets of any
         Person or (iii) Dispose of, or grant any option with respect to,
         directly or indirectly (or agree to any of the foregoing at any future
         time), all or any material portion of its property or assets, except:

                           (A)      in the case of any Controlled Business:

                                    (1)      any purchase or other acquisition
                           of any property or assets by such Controlled Business
                           the purchase price of which is individually or, if
                           such property or assets are purchased in a series of
                           related transactions, in the aggregate less than
                           $5,000,000;

                                    (2)      any purchase or other acquisition
                           of property or assets by such Controlled Business
                           which would following such purchase or acquisition
                           become eligible for rate coverage under the
                           regulations promulgated by FERC; or

                                    (3)      any purchase or other acquisition
                           of Oil and Gas Properties that are within reasonable
                           proximity to the geographic location of the Oil and
                           Gas Properties listed on Schedule 5.09(d)(A), and any
                           fixtures and equipment necessary for the production,
                           maintenance and operation of any such existing or
                           acquired Oil and Gas Properties; provided that such
                           purchase or acquisition is funded from capital
                           contributions made by El

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                           Paso or an Affiliate of El Paso (other than a Sponsor
                           Subsidiary or any Intermediate Holder) through the
                           applicable Sponsor Subsidiary.

                           (B)      any Disposition of all or substantially all
                  of the assets of, or Equity Interests in, any Intermediate
                  Holder or Underlying Business relating to any Energy
                  Investment (other than a Publicly Traded Investment,
                  Dispositions described in clause (C) below and except as
                  otherwise permitted under clause (G) below); provided that:

                                    (1)      no Liquidating Event, Termination
                           Event, Notice Event, Event of Default or Incipient
                           Event has occurred and is continuing or would result
                           from such Disposition and the Sponsor Subsidiaries
                           shall be in compliance with Section 5.04 on a pro
                           forma basis as of the last date of the calculation of
                           the covenants in Section 5.04 (after giving pro forma
                           effect to any payment, including any deemed payment,
                           of Cash Collateral Amounts to the Sponsor Subsidiary
                           Cash Reserve, the Noric Holdings I Cash Reserve and
                           the Noric Holdings IV Cash Reserve on the date of
                           such Disposition and the prepayment of Advances
                           pursuant to clause (2) below); and

                                    (2)      on the effective date of a
                           Disposition, the Sponsor Subsidiaries shall prepay
                           the Advances in accordance with Section 2.05(b)(iii);

                           (C)      starting from the Third Restatement Date,
                  any Disposition of property, plant and equipment (as defined
                  under GAAP) of an Underlying Business or Equity Interests in
                  any Intermediate Holder or Underlying Business relating to any
                  Energy Investment (not subject to clause (B) above or
                  otherwise permitted under clause (G) below) if the cumulative
                  aggregate amount of Net Cash Proceeds from such Disposition
                  (together with all such other Dispositions) does not exceed
                  $15,000,000;

                           (D)      starting from the Third Restatement Date,
                  any Disposition of property, plant and equipment (as defined
                  under GAAP) of an Underlying Business or Equity Interests in
                  any Intermediate Holder or Underlying Business relating to any
                  Energy Investment (not subject to clause (B) above or
                  otherwise permitted under clause (G) below) if the cumulative
                  aggregate amount of Net Cash Proceeds from such Disposition
                  (together with all such other Dispositions) exceeds
                  $15,000,000; provided that all such Net Cash Proceeds in
                  excess of $15,000,000 shall be deposited by the Underlying
                  Business that made such Disposition into the Proceeds Account
                  of such Underlying Business and shall be applied pursuant to
                  Section 5.11;

                           (E)      any sale of current assets (as defined under
                  GAAP), other than as contemplated under clause (F) below, of
                  an Underlying Business in the ordinary course of business of
                  such Underlying Business;

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                           (F)      the limited recourse sale of accounts
                  receivable providing, by their terms, for payment within 30
                  days from the date of the original invoice, in connection with
                  the factoring or securitization thereof, which sale is
                  non-recourse to the extent customary in factoring or
                  securitization transactions (as applicable); and

                           (G)      any Disposition of all or substantially all
                  the assets of, or Equity Interests in, the CIG Excluded
                  Subsidiary; provided that (i) such Disposition shall not be
                  permitted to the extent that the CIG Excluded Subsidiary has
                  acquired assets on or after the Third Restatement Date unless
                  such assets were acquired with funds from (w) cash balances on
                  hand at the CIG Excluded Subsidiary as of the Third
                  Restatement Date, (x) EBITDA generated after the Third
                  Restatement Date by such CIG Excluded Subsidiary or (y)
                  capital contributions made by El Paso or an Affiliate of El
                  Paso (other than a Sponsor Subsidiary or any Intermediate
                  Holder relating to the CIG Excluded Subsidiary) through the
                  applicable Sponsor Subsidiary and (ii) the Net Cash Proceeds
                  from and to the extent of any such permitted Disposition may
                  be deposited, at El Paso's election, in any account of El Paso
                  or any of its Affiliates;

         provided, that if, at the time of any such Disposition described in
         clauses (C) and (D) above, an El Paso RA Event has occurred and is
         continuing, such Sponsor Subsidiary shall apply such Net Cash Proceeds
         to prepay Advances in accordance with Section 2.05(b)(viii)(A).

                  (e)      Investments. Permit such Controlled Business to make
         or hold any Investment other than:

                           (i)      demand loans to El Paso or any of its
                  Affiliates ("AFFILIATE LOANS"); provided that an Affiliate
                  Loan may only be made if (a) no Incipient Event or Event of
                  Default, Notice Event, Termination Event or Liquidating Event
                  shall have occurred and be outstanding or shall result
                  therefrom and (b) after giving effect to the making of such
                  Affiliate Loan the aggregate of the amounts on deposit in the
                  Sponsor Subsidiary Cash Reserve, the Noric Holdings I Cash
                  Reserve and/or the Noric Holdings IV Cash Reserve is greater
                  than or equal to the sum of the Dispositions Reserve Amount
                  and the Sponsor Subsidiary Minimum Monthly Cash Balance for
                  the then-applicable month and the conditions set forth in
                  Section 7.04(k) are satisfied; provided further that,
                  following the occurrence of an Event of Default and
                  acceleration of the Advances, the Sponsor Subsidiary that owns
                  such Controlled Business shall cause such Controlled Business
                  to demand repayment of such Affiliate Loan forthwith;

                           (ii)     Investments by such Controlled Business in
                  any Cash Equivalents;

                           (iii)    Investments by such Controlled Business in
                  any Indebtedness permitted under Section 5.09(b) above;

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                           (iv)     loans and advances to employees in the
                  ordinary course of the business of any such Controlled
                  Business; and

                           (v)      Investments by such Controlled Business in
                  any other CIG Controlled Business.

                  (f)      Amendment, Etc. of Material Agreements. Permit such
         Controlled Business to:

                           (i)      cancel or terminate any Material Agreement;

                           (ii)     consent to or accept any cancellation or
                  termination of any Material Agreement;

                           (iii)    amend, modify or change in any manner any
                  term or condition of any Material Agreement;

                           (iv)     give any consent, waiver or approval under
                  any Material Agreement;

                           (v)      waive any default under or any breach of any
                  term or condition of any Material Agreement; or

                           (vi)     agree in any manner to any other amendment,
                  modification or change of any term or condition of any
                  Material Agreement,

         other than (A) any amendment, supplement, cancellation, termination,
         consent, approval, waiver or modification consented to or waived by
         Mustang or (B) any amendment, supplement, cancellation, termination,
         consent, approval, waiver or modification which would not have a
         material adverse effect on the business, operations, performance,
         properties, or financial condition of any Controlled Business and
         provided that after giving effect to any such amendment, supplement,
         cancellation, termination, consent, approval, waiver or modification no
         Liquidating Event, Termination Event, Notice Event, Event of Default or
         Incipient Event shall have occurred and be continuing and the Sponsor
         Subsidiaries shall be in compliance with the financial covenants in
         Section 5.04 on a pro forma basis as of the last date of the
         calculation of the covenants in Section 5.04.

                  (g)      Negative Pledge. Permit such Controlled Business to
         enter into or suffer to exist any agreement prohibiting or conditioning
         the creation or assumption of any Lien upon any of its property or
         assets except as set forth in the Operative Documents or except in
         connection with:

                           (i)      any purchase money Indebtedness permitted by
                  Section 5.09(b)(iv) solely to the extent that the agreement or
                  instrument governing such Indebtedness prohibits a Lien on the
                  property acquired with the proceeds of such Indebtedness,
                  accessions thereto or the proceeds thereof;

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                           (ii)     any Capitalized Lease of any Controlled
                  Business permitted by Section 5.09(b)(vi) solely to the extent
                  that the agreement or instrument governing such Capitalized
                  Lease prohibits a Lien on the property subject thereto or the
                  proceeds thereof; or

                           (iii)    the Controlled Business Debt, the Refinanced
                  Controlled Business Debt or the CIG Existing Debt, as
                  applicable, solely to the extent that the agreements governing
                  such Controlled Business Debt, Refinance Controlled Business
                  Debt and CIG Existing Debt, as applicable, prohibit a Lien on
                  the property of the respective Controlled Business (including
                  property of Subsidiaries constituting Underlying Businesses
                  with respect to an Underlying Business that is the obligor on
                  any Controlled Business Debt, Refinanced Controlled Business
                  Debt or CIG Existing Debt, as applicable); provided that to
                  the extent any provision of the Loan Documents creates a Lien
                  (as defined in the agreements related to the Controlled
                  Business Debt, Refinanced Controlled Business Debt or CIG
                  Existing Debt, as applicable) on the property of any
                  Controlled Business, such Lien shall be permitted under such
                  agreements.

                  (h)      Affiliate Loans. (i) Subject to Section 5.09(e),
         permit such Controlled Business to:

                           (A)      cancel, terminate or forgive any Affiliate
                  Loan;

                           (B)      consent to or accept any cancellation,
                  forgiveness or termination of any Affiliate Loan; or

                           (C)      waive any default under or any breach of any
                  term or condition of any Affiliate Loan, other than (1) any
                  waiver consented to by Mustang or (2) any waiver which would
                  not have a Material Adverse Effect or a material adverse
                  effect on the business, operations, performance, properties,
                  or financial condition of any Controlled Business and provided
                  that after giving effect to such waiver no Liquidating Event,
                  Termination Event, Notice Event, Event of Default or Incipient
                  Event shall have occurred and be continuing and the Sponsor
                  Subsidiaries shall be in compliance with the financial
                  covenants in Section 5.04 on a pro forma basis as of the last
                  date of the calculation of covenants in Section 5.04.

                           (ii)     Permit such Controlled Business to make any
                  Investment in El Paso or any Affiliate of El Paso to be
                  evidenced by, or acquire by purchase or contribution, any
                  Affiliate Loan except to the extent permitted by Section
                  5.09(e), unless at the time of such making or acquisition (A)
                  the borrowing evidenced by the Affiliate Loan has been duly
                  authorized by all required corporate action, such action has
                  been duly certified by the secretary or an assistant secretary
                  of El Paso or such Affiliate, and such certification has been
                  delivered to it, together with certificates as to incumbency
                  and due authorization of the officers of El Paso or such
                  Affiliate authorized to execute and deliver such Affiliate
                  Loan (which certified action may be one so taken and
                  certification may be one so delivered

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                  before that Investment or acquisition if the certified action
                  remains in effect at the time of, and is applicable to, that
                  acquisition) and (B) such Affiliate Loan is the legal, valid
                  and binding obligation of El Paso or the Affiliate of El Paso
                  (as applicable) enforceable against El Paso or such Affiliate
                  of El Paso in accordance with its terms. The making or
                  acquisition of any Affiliate Loan shall constitute a
                  representation by the Sponsor Subsidiaries that this Section
                  5.09(h) has been satisfied and that the matters referred to in
                  subclauses (A) and (B) above are true and correct as of the
                  date of such making or acquisition.

                  (i)      Payments under Controlled Business Debt, Refinanced
         Controlled Business Debt and CIG Existing Debt. Prepay, redeem,
         purchase, defease or otherwise satisfy prior to the scheduled maturity
         thereof in any manner any Controlled Business Debt, Refinanced
         Controlled Business Debt or CIG Existing Debt, except (i) with respect
         to the Controlled Business Debt, in connection with a refinancing of
         the Controlled Business Debt in accordance with Section 5.03, (ii) with
         respect to the CIG Existing Debt, a prepayment or redemption of the CIG
         Existing Debt funded from capital contributions made by El Paso or an
         Affiliate of El Paso (other than a Sponsor Subsidiary or any
         Intermediate Holder) through the applicable Sponsor Subsidiary or and
         (iii) with respect to the CIG Existing Debt, in connection with a
         refinancing of the CIG Existing Debt to the extent that such refinanced
         CIG Existing Debt (a) has a maturity date occurring after June 15, 2007
         and (b) is not redeemable at the option of the holder, or subject to
         scheduled mandatory redemption, prior to June 15, 2007.

                  Section 5.10. Covenants with Respect to E&P Participation
Agreements and Production Payment Agreements.

                  (a)      Performance of E&P Participation Agreements and
         Production Payment Agreements. Until the Debt Collection Date, each
         Sponsor Subsidiary will, and Noric Holdings I will cause Noric and
         Noric LP to, and Noric Holdings IV will cause Lusitano as the Lipizzan
         General Partner to cause Lipizzan to, at all times, unless otherwise
         consented to in writing by Mustang:

                           (i)      perform and observe in all material respects
                  all of the terms and provisions of each E&P Participation
                  Agreement and each Production Payment Agreement to which it is
                  a party to be performed or observed by it;

                           (ii)     maintain each such E&P Participation
                  Agreement and each such Production Payment Agreement; provided
                  that (A) such Sponsor Subsidiary may terminate or assign any
                  of its rights or obligations under any E&P Participation
                  Agreement to which it is a party in connection with a
                  Disposition of an E&P Asset relating thereto in accordance
                  with Section 5.02(d), (B) Noric LP may terminate or assign any
                  of its rights or obligations under any E&P Participation
                  Agreement to which it is a party in connection with a
                  Disposition of an E&P Asset relating thereto in accordance
                  with Section 5.05(a), and (C) Lipizzan may (but shall not be
                  obligated to) assign, re-convey or release any of its rights
                  or interests in respect of any Production Payment Interest
                  (including any Liens granted under the relevant Production and
                  Delivery Agreement) to the extent

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                  attributable to a Disposition of a Subject Interest by any
                  Counterparty to a Production Payment Agreement and otherwise
                  in accordance with Section 5.05(a);

                           (iii)    promptly enforce each such E&P Participation
                  Agreement and each such Production Payment Agreement in
                  accordance with its respective terms (subject to the terms of
                  Article VI hereof and the Sponsor Subsidiary Security
                  Agreement);

                           (iv)     promptly take all action under or in respect
                  of each such E&P Participation Agreement and each such
                  Production Payment Agreement as may be from time to time
                  reasonably requested by Mustang, the Sponsor Subsidiary
                  Collateral Agent or the Mustang Collateral Agent or the
                  Mustang Collateral Agent; and

                           (v)      upon the request of Mustang, promptly make
                  to each other Counterparty to each such E&P Participation
                  Agreement and each such Production Payment Agreement such
                  demands and requests for information and reports or for action
                  as such Sponsor Subsidiary, Noric LP or Lipizzan, as the case
                  may be, is entitled to make under such E&P Participation
                  Agreement and such Production Payment Agreement (excluding,
                  prior to the occurrence of a Liquidating Event, any request by
                  a Sponsor Subsidiary, Noric or Noric LP, as the case may be,
                  pursuant to Section 5.1 of any E&P Participation Agreement to
                  convey record title to such Person of all or any part of the
                  Conveyed Interests or the Material E&P Agreement) (in each
                  case, as defined in such E&P Participation Agreement)).

                  (b)      Amendment, Etc., of E&P Participation Agreements and
         Production Payment Agreements. Until the Debt Collection Date, each
         Sponsor Subsidiary will not, and Noric Holdings I will cause Noric and
         Noric LP not to, and Noric Holdings IV will cause Lusitano as the
         Lipizzan General Partner to cause Lipizzan not to, at any time, without
         the written consent of Mustang:

                           (i)      cancel or terminate any E&P Participation
                  Agreement or any Production Payment Agreement to which it is a
                  party; provided that such Sponsor Subsidiary may cancel or
                  terminate any E&P Participation Agreement to which it is a
                  party in connection with a Disposition of an E&P Asset
                  relating thereto in accordance with Sections 5.02(d);

                           (ii)     consent to or accept any cancellation or
                  termination of any E&P Participation Agreement to which it is
                  a party; provided that (A) such Sponsor Subsidiary may cancel
                  or terminate any E&P Participation Agreement to which it is a
                  party in connection with a Disposition of an E&P Asset
                  relating thereto in accordance with Section 5.02(d) and (B)
                  Noric LP may cancel or terminate any E&P Participation
                  Agreement to which it is a party in connection with a
                  Disposition of an E&P Asset relating thereto in accordance
                  with Section 5.05(a);

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                           (iii)    forgive any obligation under, or amend,
                  modify or change in any manner any term or condition of any
                  E&P Participation Agreement or any Production Payment
                  Agreement to which it is a party, other than (A) amendments to
                  Exhibit A to any E&P Participation Agreement to reflect any
                  Disposition by such Sponsor Subsidiary or Noric LP of any
                  interest in any E&P Participation Property, (B) amendments to
                  Exhibit A to any Production Payment Agreement to reflect (x)
                  any assignment, re-conveyance or release by Lipizzan of any of
                  its rights or interests in respect of any Production Payment
                  Interest (including any Liens granted under the relevant
                  Production and Delivery Agreement) to the extent attributable
                  to a Disposition of a Subject Interest by any Counterparty to
                  a Production Payment Agreement and otherwise in accordance
                  with Section 5.05(a) or (y) any acquisition of interests in
                  Production Payment Interests in connection with acquisitions
                  by any Counterparty to a Production Payment Agreement of
                  Subject Interests burdened by a Production Payment and
                  otherwise in accordance with Section 5.05(a) and (C) any
                  amendments to Schedule 1 to any Production Payment Conveyance
                  to reflect any adjustments to the Scheduled Quantities made
                  pursuant to Section 2.09(f); provided that the form of any
                  such assignment, re-conveyance, amendment or release shall be
                  reasonably satisfactory to the Calculation Agent;

                           (iv)     give any consent, waiver or approval under
                  any E&P Participation Agreement or any Production Payment
                  Agreement to which it is a party;

                           (v)      waive any default under or any breach of any
                  term or condition of any E&P Participation Agreement or
                  Production Payment Agreement to which it is a party; or

                           (vi)     agree in any manner to any other amendment,
                  modification or change of any term or condition of any E&P
                  Participation Agreement or any Production Payment Agreement to
                  which it is a party.

                  Section 5.11. Application of Amounts on Deposit in the
Proceeds Account. The amounts deposited by any Underlying Business into the
Proceeds Account of such Underlying Business pursuant to Section 5.09(d)(D) may,
at any time, be invested by such Underlying Business in Cash Equivalents. Each
Underlying Business from time to time shall also have the right to apply any
amounts on deposit in the Proceeds Account of such Underlying Business to make
Affiliate Loans or Distributions; provided that with respect to any amounts
deposited into any Proceeds Account pursuant to Section 5.09(d)(D), such amounts
shall be held in such Proceeds Account pending a new Appraisal of the relevant
Energy Investment and, on or after the date on which a Responsible Officer of El
Paso delivers a Compliance Certificate pursuant to Section 5.07(f), may be
applied by the applicable Underlying Business to make Affiliate Loans pursuant
to Section 5.09(e) or to make Distributions to a Sponsor Subsidiary by
depositing such amounts into the Sponsor Subsidiary Cash Reserve pursuant to
Section 7.02(a)(ii) and subsequently releasing such amounts from the Sponsor
Subsidiary Cash Reserve pursuant to Section 7.04(h); provided further that,
prior to such application of such amounts, to the extent that the Energy
Investment Exposure then in effect is greater than the Aggregate Energy
Investment Loan Value Amount at such time, an amount necessary to reduce such
Energy

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Investment Exposure (x) shall have been deposited, or deemed deposited, into the
Sponsor Subsidiary Cash Reserve, the Noric Holdings I Cash Reserve and/or the
Noric Holdings IV Cash Reserve as a Cash Collateral Amount and/or (y) shall have
been applied (by the Sponsor Subsidiaries or by any Underlying Businesses
relating thereto on behalf of such Sponsor Subsidiaries) to prepay the Advances,
together with all other amounts required to be paid pursuant to Section 2.06(c)
in connection with such prepayment, in order to ensure compliance with the
financial covenant set forth in Section 5.04(f) after giving effect to such
deposit and/or prepayment.

                                   Article VI

                                EVENTS OF DEFAULT

                  Section 6.01. Events of Default. If any of the following
events (each an "EVENT OF DEFAULT") shall occur and be continuing:

                  (a)      any Sponsor Subsidiary shall fail to pay:

                           (i)      any principal of any Advance when the same
                  becomes due and payable; or

                           (ii)     any interest on any Advance or any other
                  amount payable by it under this Agreement or under any other
                  Sponsor Subsidiary Credit Document when the same becomes due
                  and payable if such failure to pay shall remain unremedied for
                  five Business Days after such amount becomes due and payable;
                  or

                  (b)      any written representation or warranty made or deemed
         made by any El Paso Party in any Operative Document, or in any
         certificate or report prepared by or furnished by or on behalf of any
         Sponsor Subsidiary pursuant to any Operative Document shall prove to
         have been incorrect in any material respect when made or deemed made;
         or

                  (c)      any Sponsor Subsidiary shall fail to perform or
         observe any term, covenant or agreement contained in Sections 5.01(m),
         5.01(p), 5.02(a), 5.02(b), 5.02(c), 5.02(d) (other than Section
         5.02(d)(C)(4) (but only with respect to the failure of the Sponsor
         Subsidiaries to deposit into the Sponsor Subsidiary Cash Reserve an
         amount equal to the Net Cash Proceeds from any Disposition described in
         Section 5.02(d)(C)(4) in an aggregate amount greater than an amount
         equal to the difference (but not less than zero) of (x) $5,000,000
         minus (y) the aggregate amount of Net Cash Proceeds from any
         Disposition described in Section 5.05(a)(D) that Noric Holdings I and
         Noric LP have failed to deposit in the Noric Holdings I Cash Reserve
         plus the aggregate amount of the Disposition Value of the Relevant
         Assets from any Disposition described in Section 5.05(a)(F) that Noric
         Holdings IV and Lipizzan have failed to deposit in the Noric Holdings
         IV Cash Reserve, in excess of the then effective Adjusted
         Redetermination Threshold)), 5.02(e), 5.02(f), 5.02(i), 5.02(m),
         5.02(o), 5.02(p), 5.03, 5.04 (excluding Section 5.04(c)(i) or
         5.04(c)(ii)), 5.05 (other than Section 5.05(a)(D) (but only with
         respect to the failure of Noric Holdings I and Noric LP to deposit into
         the Noric Holdings

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         I Cash Reserve an amount equal to the Net Cash Proceeds from any
         Disposition described in Section 5.05(a)(D) in an aggregate amount
         greater than an amount equal to the difference (but not less than zero)
         of (x) $5,000,000 minus (y) the aggregate amount of Net Cash Proceeds
         from any Disposition described in Section 5.02(d)(C)(4) that the
         Sponsor Subsidiaries have failed to deposit in the Sponsor Subsidiary
         Cash Reserve plus the aggregate amount of the Disposition Value of the
         Relevant Assets from any Disposition described in Section 5.05(a)(F)
         that Noric Holdings IV and Lipizzan have failed to deposit in the Noric
         Holdings IV Cash Reserve, in excess of the then effective Adjusted
         Redetermination Threshold) and other than Section 5.05(a)(F) (but only
         with respect to the failure of Noric Holdings IV and Lipizzan to
         deposit into the Noric Holdings IV Cash Reserve an amount equal to the
         Disposition Value of the Relevant Assets from any Disposition described
         in Section 5.05(a)(F) in an aggregate amount greater than an amount
         equal to the difference (but not less than zero) of (x) $5,000,000
         minus (y) the aggregate amount of Net Cash Proceeds from any
         Disposition described in Section 5.02(d)(C)(4) that the Sponsor
         Subsidiaries have failed to deposit in the Sponsor Subsidiary Cash
         Reserve plus the aggregate amount of Net Cash Proceeds from any
         Disposition described in Section 5.05(a)(D) that Noric Holdings I and
         Noric LP have failed to deposit in the Noric Holdings I Cash Reserve,
         in excess of the then effective Adjusted Redetermination Threshold)),
         5.06, 5.09 (other than Section 5.09(d)(D) (but only with respect to the
         failure of the Sponsor Subsidiaries to, or to cause any Controlled
         Business to, deposit into the relevant Proceeds Account any Net Cash
         Proceeds from any Dispositions described in Section 5.09(d)(D) in an
         aggregate amount greater than the first $5,000,000 in excess of
         $15,000,000) and Section 5.09(g)), 5.10(a)(ii) or 5.10(b) (but, in each
         case, subject to any provisions relating to the cure of any Default or
         Event of Default referred to therein) or Section 7.02(a), 7.03(b) or
         7.03(d) hereof or Section 19 of the Sponsor Subsidiary Security
         Agreement; or

                  (d)      any Sponsor Subsidiary shall fail to perform or
         observe any term, covenant or agreement contained in Section 5.02
         (other than as set forth in Section 6.01(c)), 5.09(d)(D) (but only with
         respect to the failure of the Sponsor Subsidiaries to, or to cause any
         Controlled Business to, deposit into the relevant Proceeds Account any
         Net Cash Proceeds from any Dispositions described in Section 5.09(d)(D)
         in an aggregate amount not greater than the first $5,000,000 in excess
         of $15,000,000), 5.09(g), 5.10(a)(iv) or 5.10(a)(v), in each case, if
         such failure shall remain unremedied for five Business Days after the
         occurrence thereof; or

                  (e)      any Sponsor Subsidiary shall fail to perform or
         observe in any material respect any other term, covenant or agreement
         contained in any Sponsor Subsidiary Credit Document (other than as set
         forth in, including giving effect to exclusions of Sections of the
         Sponsor Subsidiary Credit Agreement set forth in, Section 6.01(a),
         Section 6.01(c), Section 6.01(d), or Section 6.01(m)) on its part to be
         performed or observed, in each case, if such failure shall remain
         unremedied for 30 days following notice thereof by Mustang if such
         failure is reasonably curable; or

                  (f)      subject to Section 1.10, at any time that the E&P
         Borrowing Base exceeds $0 (but tested only as of each Coverage Test
         Date), the ratio of:

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                           (i)      the aggregate net cash received by the
                  Sponsor Subsidiaries, Lipizzan, Noric and Noric LP (without
                  double counting) in respect of each Production Payment and
                  each E&P Participation Property which is then part of any E&P
                  Asset for the most recently completed four Fiscal Quarters;
                  provided that, for the purpose of calculating this ratio with
                  respect to each Production Payment, the net cash received
                  shall be deemed to be equal to the lesser of (x) all cash
                  revenues from the Subject Interests (without regard to such
                  Production Payment) minus all operating expenses, capital
                  expenditures and Taxes paid in cash attributable to the
                  Subject Interests for such most recently completed four Fiscal
                  Quarters and (y) aggregate net cash received by Lipizzan in
                  respect of each Production Payment for such most recently
                  completed four Fiscal Quarters;

                           (ii)     E&P Notional Interest computed as of the end
                  of the most recently completed Interest Period,

         shall be less than 4.25 to 1; or

                  (g)      any judgment or order for the payment of money in
         excess of $50,000 (or the equivalent in any foreign currency) shall be
         rendered against any Sponsor Subsidiary, Lusitano, Lipizzan, Noric,
         Palomino, Paso Fino or Noric LP and either (i) any action (other than
         any enforcement proceedings consisting of the mere obtaining and filing
         of a judgment lien or obtaining of a garnishment or similar order so
         long as no foreclosure, levy or similar process in respect of such
         lien, or payment over in respect of such garnishment or similar order,
         has commenced and is continuing or has been completed) shall be legally
         taken by a judgment creditor to attach or levy upon any property or
         assets of such Person to enforce any such judgment or order or (ii)
         such judgment or order shall remain undischarged for a period of 30
         consecutive days during which a stay of enforcement of such judgment or
         order, by reason of a pending appeal, bonding or otherwise, shall not
         be in effect; or

                  (h)      any non-monetary judgment or order shall be rendered
         against any Sponsor Subsidiary, Lusitano, Lipizzan, Noric, Palomino,
         Paso Fino or Noric LP that, taking into account the exhaustion of all
         appeals, is reasonably likely to have a Material Adverse Effect, and
         there shall be any period of ten consecutive Business Days during which
         a stay of enforcement of such judgment or order, by reason of a pending
         appeal or otherwise, shall not be in effect; or

                  (i)      any provision of any Sponsor Subsidiary Credit
         Document after the delivery thereof pursuant to Section 3.01, 3.02,
         3.03 or 3.04 shall for any reason cease, in any material respect, to be
         valid and binding on or enforceable against any Sponsor Subsidiary
         party thereto, except as contemplated by any other agreement to which
         Mustang is a party and to which the Mustang Collateral Agent has
         consented; or

                  (j)      the Sponsor Subsidiary Collateral Agent shall, at any
         time after the Closing Date, not have a valid and perfected first
         priority security interest in the Collateral (other than as a result of
         Permitted Liens); or

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                  (k)      any Person who holds an Equity Interest in Lusitano,
         Lipizzan, Noric, Palomino, Paso Fino, Noric LP or any Sponsor
         Subsidiary shall transfer its interest therein so that as a result of
         any such transfer Lusitano, Lipizzan, Noric, Palomino, Paso Fino, Noric
         LP or such Sponsor Subsidiary (as applicable) is caused to be required
         to be registered as an "investment company" within the meaning of the
         Investment Company Act; or

                  (l)      (i) a Notice Event (other than any Notice Event
         resulting solely from the occurrence of an Event of Default) shall have
         occurred and ten Business Days shall have lapsed after the delivery of
         written notice of the same by Mustang or the Mustang Collateral Agent
         to the Sponsor Subsidiaries, (ii) a Sponsor Subsidiary Termination
         Event (other than under clause (b) of the definition thereof to the
         extent arising from the occurrence of a Notice Event, or resulting
         solely from the occurrence of an Event of Default, but without limiting
         the effectiveness of clause (i) above) shall have occurred, or (iii)
         the Liquidation Period with respect to Lusitano, Lipizzan, Noric,
         Palomino, Paso Fino, Noric LP or a Sponsor Subsidiary shall have
         expired or terminated; or

                  (m)      the Sponsor Subsidiaries shall fail to maintain a
         credit balance (i) in the Noric Holdings I Cash Reserve equal to at
         least the Noric Holdings I Required Cash Reserve Balance, (ii) in the
         Noric Holdings IV Cash Reserve equal to at least the Noric Holdings IV
         Required Cash Reserve Balance, and (iii) in the Sponsor Subsidiary Cash
         Reserve equal to at least the Sponsor Subsidiary Required Energy
         Investment Cash Reserve Balance and any such failure remains unremedied
         for two Business Days; or

                  (n)      any Counterparty to any E&P Participation Agreement
         shall fail to perform or observe any term, covenant or agreement
         contained in (i) Section 4.2.12, 4.2.20 or 5.1 of such E&P
         Participation Agreement, (ii) Section 4 (other than Sections 4.2.12 and
         4.2.20) of such E&P Participation Agreement and such failure shall
         remain unremedied for five Business Days after the occurrence thereof,
         or (iii) any other Section of such E&P Participation Agreement in any
         material respect and such failure shall remain unremedied for 30 days
         after the occurrence thereof; or

                  (o)      any written representation or warranty made or deemed
         made by any Counterparty in any E&P Participation Agreement or any
         Production Payment Agreement or in any certificate or report prepared
         by or furnished by or on behalf of any such Person pursuant to any E&P
         Participation Agreement or any Production Payment Agreement shall prove
         to have been incorrect in any material respect when made or deemed
         made; or

                  (p)      any provision of any E&P Participation Agreement
         after the Closing Date or the applicable Acquisition/Accession Date
         shall for any reason cease, in any material respect, to be valid and
         binding on or enforceable against any Counterparty to any E&P
         Participation Agreement; or

                  (q)      any Sponsor Subsidiary Termination Event of the kind
         described in paragraph (c) or(d) of the definition thereof shall occur;
         or

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                  (r)      any Counterparty to a Production Payment Agreement
         shall fail to perform or observe any term, covenant or agreement
         contained in (i) Section 1.08 of such Production Payment Conveyance or
         Sections 9(e) or 11(a) of such Production and Delivery Agreement, (ii)
         Section 1.07 of such Production Payment Conveyance or Section 9 (other
         than Section 9(e)) of such Production and Delivery Agreement and such
         failure shall remain unremedied for five Business Days after the
         occurrence thereof or (iii) any other Section of such Production
         Payment Agreement in any material respect and such failure shall remain
         unremedied for 30 days after the occurrence thereof; or

                  (s)      any provision of any Production Payment Agreement
         after the Third Restatement Date or the applicable
         Acquisition/Accession Date shall for any reason cease, in any material
         respect, to be valid and binding on or enforceable against any
         Counterparty to any Production Payment Agreement; or

                  (t)      any El Paso Event shall have occurred and be
         continuing;

                  (u)      an Event of Default of the type specified in Section
6.01(i) of the Mustang Credit and Security Agreement shall have occurred and be
continuing (other than as a result of the action or inaction, after any required
request for action, of Mustang,;

then, and in any such event, Mustang may by notice to Noric Holdings (in its
individual capacity and on behalf of all Sponsor Subsidiaries) declare all
Advances, all interest thereon, all amounts required to be paid pursuant to
Section 2.06(c) and all other amounts payable under this Agreement and the other
Sponsor Subsidiary Credit Documents to be forthwith due and payable, whereupon
all Advances, all such interest, amounts under Section 2.06(c) and other amounts
under the Sponsor Subsidiary Credit Documents shall become and be forthwith due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by each Sponsor Subsidiary; provided
that in the event of either (i) an actual or deemed entry of an order for relief
with respect to any Sponsor Subsidiary under the United States Bankruptcy Code
as then in effect or (ii) the occurrence of the event described in clause (s)
above, all Advances, all such interest, all such amounts under Section 2.06(c)
and all such other amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by each Sponsor Subsidiary. The Sponsor Subsidiary
Collateral Agent and Mustang shall each have, in addition to all other rights
and remedies under the Sponsor Subsidiary Credit Documents or otherwise, all
other rights and remedies provided under the UCC of each applicable jurisdiction
and other Applicable Laws, which rights shall be cumulative.

                  Without limiting the foregoing, after the occurrence of an
Event of Default:

                  (i)      Mustang may:

                           (A)      direct the Sponsor Subsidiary Collateral
                  Agent to apply all or any part of the credit balance in the
                  Sponsor Subsidiary Cash Reserve, the Noric Holdings I Cash
                  Reserve, the Noric Holdings IV Cash Reserve and the Noric
                  Holdings III Deposit Account in prepayment of any Obligations
                  of any Sponsor Subsidiary under the Sponsor Subsidiary Credit
                  Documents; and/or

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                           (B)      exercise the rights of Noric Holdings I in
                  respect of its Noric Class A Membership Interest or its Noric
                  Class B Membership Interest; and in turn Noric's rights in
                  respect of its Palomino Membership Interest and its Paso Fino
                  Membership Interest, and Palomino's and Paso Fino's rights in
                  respect of Palomino's Noric LP General Partnership Interest
                  and Paso Fino's Noric LP Limited Partnership Interest; and/or

                           (C)      exercise the rights of Noric Holdings IV in
                  respect of its Lipizzan Limited Partnership Interest and its
                  Lusitano Membership Interest; and in turn Lusitano's rights in
                  respect of its Lipizzan General Partnership Interest; and/or

                           (D)      exercise the rights of each Sponsor
                  Subsidiary under each Sponsor Subsidiary Company Agreement to
                  call for mandatory capital contributions from the Sponsor
                  Subsidiary Members in respect of the Maximum Clawback Amount;
                  and/or

                           (E)      exercise any right, remedy, power or
                  privilege of any Sponsor Subsidiary, or cause Noric or Noric
                  LP (as the case may be) to exercise any right, remedy, power
                  or privilege of Noric or Noric LP (as the case may be), under
                  or in respect of any E&P Participation Agreement to which such
                  Sponsor Subsidiary, Noric or Noric LP (as the case may be) is
                  a party; and/or

                           (F)      exercise any right, remedy, power or
                  privilege of Noric Holdings IV, or cause Lusitano or Lipizzan
                  (as the case may be) to exercise any right, remedy, power or
                  privilege of Lusitano or Lipizzan (as the case may be), under
                  or in respect of any Production Payment Agreement to which
                  Noric Holdings IV or Lipizzan (as the case may be) is a party;
                  and/or

                           (G)      exercise any right, remedy, power or
                  privilege of each Sponsor Subsidiary, or cause Lusitano,
                  Lipizzan, Noric or Noric LP to exercise any right, remedy,
                  power or privilege of Lusitano, Lipizzan, Noric or Noric LP,
                  under the El Paso Guaranty; and

                  (ii)     the Sponsor Subsidiary Collateral Agent shall make
         such demands under any letter of credit issued for the benefit of any
         Sponsor Subsidiary or any El Paso Demand Loan or Affiliate Loan and
         liquidate such other Permitted Investments as are necessary to give
         effect to the prepayment referred to in clause (i)(A) above.

                  Section 6.02. Termination and Liquidation Event. At any time
on or after the occurrence and during the continuance of any Notice Event,
Mustang may elect to cause such Notice Event to result in a Termination Event by
delivering to Noric Holdings and to each other Sponsor Subsidiary a Termination
Notice. Such Termination Notice shall be effective to cause the applicable
Notice Event to become a Termination Event on the Business Day when delivered,
if such delivery shall occur prior to 11:00 A.M. (New York time) or otherwise on
the next Business Day thereafter (unless stated to be effective on any other day
after the day of delivery) to Noric Holdings and each other Sponsor Subsidiary
(or if such delivery day or such other day is not a Business Day, the
immediately following Business Day). Mustang may

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rescind any such Termination Notice with respect to any Sponsor Subsidiary prior
to the Liquidation Start Date by delivery of a rescission notice to such Sponsor
Subsidiary.

                                  Article VII

                    ADMINISTRATION, SETTLEMENT AND COLLECTION

                  Section 7.01. Maintaining the Cash Reserves and Operating
Accounts. Until the Debt Collection Date:

                  (a)      Noric Holdings will maintain the Sponsor Subsidiary
         Cash Reserve and the Sponsor Subsidiary Operating Account with the
         Sponsor Subsidiary Collateral Agent, such accounts to be in the name of
         Noric Holdings, but subject to the sole dominion and control of the
         Sponsor Subsidiary Collateral Agent. Noric Holdings I will maintain the
         Noric Holdings I Cash Reserve with the Sponsor Subsidiary Collateral
         Agent, such account to be in the name of Noric Holdings I, but subject
         to the sole dominion and control of the Sponsor Subsidiary Collateral
         Agent. Noric Holdings III will maintain the Noric Holdings III Deposit
         Account with the Sponsor Subsidiary Collateral Agent, such account to
         be in the name of Noric Holdings III, but subject to the sole dominion
         and control of the Collateral Agent. Noric Holdings IV will maintain
         the Noric Holdings IV Cash Reserve with the Sponsor Subsidiary
         Collateral Agent, such account to be in the name of Noric Holdings IV,
         but subject to the sole dominion and control of the Sponsor Subsidiary
         Collateral Agent.

                  (b)      It shall be a term and condition of the Noric
         Holdings IV Cash Reserve, the Noric Holdings I Cash Reserve, the
         Sponsor Subsidiary Cash Reserve, the Noric Holdings III Deposit Account
         and the Sponsor Subsidiary Operating Account, and on or prior to the
         date hereof Noric Holdings IV, Noric Holdings III, Noric Holdings I and
         Noric Holdings, as the case may be, shall give to the Sponsor
         Subsidiary Collateral Agent written notice and shall obtain the Sponsor
         Subsidiary Collateral Agent's written agreement (such notice and
         agreement to be in form and substance satisfactory to the Sponsor
         Subsidiary Collateral Agent and Mustang), that notwithstanding any term
         or condition to the contrary in any other agreement relating to the
         Noric Holdings IV Cash Reserve, the Noric Holdings I Cash Reserve, the
         Sponsor Subsidiary Cash Reserve, the Noric Holdings III Deposit Account
         and/or the Sponsor Subsidiary Operating Account, no amount (including
         interest on Permitted Investments held in the Noric Holdings IV Cash
         Reserve, the Noric Holdings I Cash Reserve, the Sponsor Subsidiary Cash
         Reserve and/or the Sponsor Subsidiary Operating Account) shall be paid
         or released from the Noric Holdings IV Cash Reserve, the Noric Holdings
         I Cash Reserve, the Sponsor Subsidiary Cash Reserve, the Noric Holdings
         III Deposit Account and/or the Sponsor Subsidiary Operating Account to
         or for the account of, or withdrawn by or for the account of, Noric
         Holdings IV, Noric Holdings III, Noric Holdings I, Noric Holdings, any
         other Sponsor Subsidiary, or any other Person other than pursuant to
         instructions originated by the Sponsor Subsidiary Collateral Agent,
         which shall in turn act at the direction of Mustang, and without the
         need for further consent by Noric Holdings IV,

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         Noric Holdings III, Noric Holdings I, Noric Holdings, any other Sponsor
         Subsidiary, or any other Person.

                  (c)      Mustang (or the Mustang Collateral Agent) shall give
         all necessary directions to the Sponsor Subsidiary Collateral Agent to
         effect the following investments, payments or withdrawals under this
         Section 7.01 and the Sponsor Subsidiary Collateral Agent may rely on
         such directions as certifying that the requirements of the Operative
         Documents have been met with respect to such investments, payments and
         withdrawals:

                           (i)      with respect to the Noric Holdings IV Cash
                  Reserve, the Noric Holdings I Cash Reserve and the Sponsor
                  Subsidiary Cash Reserve:

                                    (A)      amounts standing to the credit of
                           the Noric Holdings IV Cash Reserve, the Noric
                           Holdings I Cash Reserve and the Sponsor Subsidiary
                           Cash Reserve may be invested in Permitted Investments
                           in accordance with Section 7.03; provided that the
                           Total Cash Collateral Amount shall not be invested in
                           El Paso Demand Loans; and

                                    (B)      withdrawals may be made from the
                           Noric Holdings IV Cash Reserve, the Noric Holdings I
                           Cash Reserve and the Sponsor Subsidiary Cash Reserve
                           in accordance with Sections 7.04, 7.06 and 7.07;

                           (ii)     with respect to the Sponsor Subsidiary
                  Operating Account:

                                    (A)      Noric Holdings may invest amounts
                           standing to the credit of the Sponsor Subsidiary
                           Operating Account in Permitted Investments in
                           accordance with Section 7.03; and

                                    (B)      withdrawals may be made from the
                           Sponsor Subsidiary Operating Account in accordance
                           with Sections 7.05, 7.06 and 7.07; and

                           (iii)    with respect to the Noric Holdings III
                  Deposit Account: any and all amounts standing to the credit of
                  the Noric Holdings III Deposit Account shall be transferred to
                  the Sponsor Subsidiary Cash Reserve on each Business Day. Any
                  Permitted Investments of such transferred amounts made from
                  the Sponsor Subsidiary Cash Reserve shall not prejudice the
                  ability of El Paso to reflect Noric Holding III's ownership of
                  such amounts on El Paso's books and records for financial
                  accounting purposes.

                  The Sponsor Subsidiary Cash Reserve, the Noric Holdings I Cash
Reserve, the Noric Holdings IV Cash Reserve, the Noric Holdings III Deposit
Account and the Sponsor Subsidiary Operating Account shall be subject to
Applicable Laws and applicable regulations of any competent banking authority,
as may now or hereafter be in effect.

                  Each Sponsor Subsidiary shall have an undivided interest in
the Sponsor Subsidiary Cash Reserve to the extent of any funds deposited by or
on behalf of such Sponsor Subsidiary in the Sponsor Subsidiary Cash Reserve.

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                  Each Sponsor Subsidiary hereby acknowledges and agrees that
the Sponsor Subsidiary Collateral Agent has sole dominion and control of the
Sponsor Subsidiary Cash Reserve, the Noric Holdings I Cash Reserve, the Noric
Holdings III Deposit Account, the Noric Holdings IV Cash Reserve and the Sponsor
Subsidiary Operating Account. Each Sponsor Subsidiary agrees not to take any
action inconsistent with the preceding sentence.

                  To the extent that El Paso or its Affiliates have arranged to
have letters of credit issued for the benefit of any Sponsor Subsidiary in
respect of any obligations owing to such Sponsor Subsidiary by El Paso or such
Affiliates, the Sponsor Subsidiary Collateral Agent shall be entitled to draw
under such letters of credit in compliance therewith.

                  Section 7.02. Deposit of Funds into the Sponsor Subsidiary
Cash Reserve, the Noric Holdings I Cash Reserve, the Noric Holdings III Deposit
Account and Noric Holdings IV Cash Reserve. (a) Noric Holdings IV shall deposit,
or shall cause to be deposited, into the Noric Holdings IV Cash Reserve (or, in
the case of interest on El Paso Demand Loans, in the Sponsor Subsidiary Cash
Reserve) forthwith upon receipt thereof all amounts received by it or payable to
it on any account whatsoever (including, in the case of any Disposition referred
to in clause (ii)(2) below, received by or payable to Lipizzan), Noric Holdings
III shall deposit, or shall cause to be deposited, into the Noric Holdings III
Deposit Account (or, in the case of interest on El Paso Demand Loans, in the
Sponsor Subsidiary Cash Reserve) forthwith upon receipt thereof all amounts
received by it or payable to it on any account whatsoever (or, in the case of
any Disposition referred to in clause (ii)(3) below, received by or payable to
any Intermediate Holder or Underlying Business), Noric Holdings I shall deposit,
or shall cause to be deposited, into the Noric Holdings I Cash Reserve (or, in
the case of interest on El Paso Demand Loans, in the Sponsor Subsidiary Cash
Reserve) forthwith upon receipt thereof all amounts received by it or payable to
it on any account whatsoever (including, in the case of any disposition referred
to in clause (ii)(1) below, received by or payable to Noric or Noric LP) and
each other Sponsor Subsidiary shall deposit, or shall cause to be deposited,
into the Sponsor Subsidiary Cash Reserve forthwith upon receipt thereof all
amounts received by it or payable to it on any account whatsoever, including
without limitation:

                  (i)      any payment of interest under the A-Loan Notes and
         any prepayment of principal of the A-Loan Notes described in Section
         2.05(b)(v);

                  (ii)     (1) the Net Cash Proceeds from the Disposition of any
         Energy Investments owned by any Sponsor Subsidiary and of any E&P Asset
         constituting E&P Participation Properties owned by any Sponsor
         Subsidiary, Noric and Noric LP, (2) the Disposition Value of any E&P
         Asset constituting a Production Payment Interest Disposed of by
         Lipizzan, (3) Net Cash Proceeds from any Disposition described in
         Section 5.09(d)(B) and any Disposition occurring under the
         circumstances described in the last proviso of Section 5.09(d) and (4)
         all amounts Distributed from the Proceeds Accounts pursuant to Section
         5.11;

                  (iii)    (1) in the case of Noric Holdings I, any Distribution
         in respect of its Noric Class A Membership Interest or its Noric Class
         B Membership Interest after the Liquidation Start Date, and (2) in the
         case of Noric Holdings IV, any Distribution in respect of its Lusitano
         Membership Interest or Lipizzan Limited Partnership Interest;

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                  (iv)     (1) any proceeds of Sponsor Subsidiary Property,
         Noric Property or Noric LP Property distributable to Noric Holdings I
         as the Noric Class A Member and Noric Class B Member, in each case,
         after the Liquidation Start Date and (2) any proceeds of Sponsor
         Subsidiary Property or Lipizzan Property distributable to Noric
         Holdings IV as the Lusitano Member or the Lipizzan Limited Partner;

                  (v)      the proceeds of any Distribution made by any
         Intermediate Holder or Underlying Business (other than to another
         Underlying Business); provided that a Distribution made by any
         Intermediate Holder shall not be required to be deposited into the
         Sponsor Subsidiary Cash Reserve to the extent that a capital
         contribution in the amount of such Distribution is made by any Sponsor
         Subsidiary Member of Noric Holdings III pursuant to Section 5.2(a)(vi)
         of the Noric Holdings III Company Agreement and such capital
         contribution is deposited into the Sponsor Subsidiary Cash Reserve on
         or before the date such Distribution is made;

                  (vi)     the proceeds of any capital contribution made by any
         Sponsor Subsidiary Member pursuant to the terms of the Sponsor
         Subsidiary Company Agreement of the Sponsor Subsidiary of which it is a
         member (including any such capital contribution made to permit any
         Sponsor Subsidiary to comply with its payment obligations hereunder);

                  (vii)    any payments of principal of and interest on any El
         Paso Demand Loan or any other Permitted Investment;

                  (viii)   any amount received by a Sponsor Subsidiary under or
         in respect of any E&P Participation Agreement to which such Sponsor
         Subsidiary is a party; and

                  (ix)     any payments of Cash Collateral Amounts made pursuant
         to Section 5.06(b);

but excluding (A) principal payments on the A-Loans (but including any amount
representing the prepayment of principal of the A-Loan Notes described in
Section 2.05(b)(v)), (B) the proceeds of the Advances deposited into the Sponsor
Subsidiary Operating Account in accordance with Section 2.02(c) of the Original
Sponsor Subsidiary Credit Agreement, and (C) Excluded Payments.

                  (b)      On or prior to the date hereof, (i) Noric Holdings
shall give to El Paso written notice (such notice to be in form and substance
satisfactory to Mustang) irrevocably instructing El Paso and its Affiliates that
all amounts payable by El Paso and its Affiliates to any Sponsor Subsidiary
under the A-Loan Notes (other than principal under the A-Loan Notes, except any
prepayment of principal of the A-Loan Notes described in Section 2.05(b)(v)),
the El Paso Demand Notes, and each E&P Participation Agreement (including under
the El Paso Guaranty with respect to any of the foregoing) shall be deposited
directly into the Sponsor Subsidiary Cash Reserve, (ii) Noric Holdings I shall
cause Noric and Noric LP to give to El Paso and its Affiliates written notice
(such notice to be in form and substance satisfactory to Mustang) irrevocably
instructing El Paso and its Affiliates that all amounts payable by El Paso and
its Affiliates to Noric or Noric LP under any El Paso Demand Note and each E&P
Participation

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Agreement (including under the El Paso Guaranty and the El Paso Agreement with
respect to any of the foregoing) shall be deposited directly into the Noric
Holdings I Cash Reserve and (iii) Noric Holdings IV shall cause Lusitano as the
Lipizzan General Partner to cause Lipizzan to give to El Paso and to each
Counterparty to any Production Payment Agreement written notice (such notice to
be in form and substance satisfactory to Mustang) irrevocably instructing El
Paso and such Counterparty that all amounts payable by El Paso, such
Counterparty and their respective Affiliates to Lipizzan under any Production
Payment Agreement and any El Paso Hydrocarbon Sales Contract (including under
the El Paso Guaranty and the El Paso Agreement with respect to any of the
foregoing) shall be deposited directly into the Noric Holdings IV Cash Reserve.

                  (c)      Noric Holdings shall cause the Sponsor Subsidiary
Collateral Agent to promptly notify Noric Holdings and Mustang of any such
deposit made pursuant to this Section 7.02 and to provide to Noric Holdings and
Mustang quarterly reports of holdings and transactions in the Sponsor Subsidiary
Cash Reserve, the Noric Holdings I Cash Reserve and the Noric Holdings IV Cash
Reserve and monthly reports of deposits to the Sponsor Subsidiary Cash Reserve,
the Noric Holdings I Cash Reserve and/or the Noric Holdings IV Cash Reserve
pursuant to Section 7.04(k).

                  Section 7.03. Permitted Investments. (a) The Sponsor
Subsidiary Collateral Agent (at the direction of the Mustang Collateral Agent)
may from time to time invest amounts on deposit in the Sponsor Subsidiary Cash
Reserve, the Noric Holdings I Cash Reserve, the Noric Holdings IV Cash Reserve
and the Sponsor Subsidiary Operating Account in Permitted Investments in
accordance with this Section 7.03; provided, that the Total Cash Collateral
Amount shall not be invested in El Paso Demand Loans.

                  (b)      Amounts on deposit in the Sponsor Subsidiary Cash
Reserve, the Noric Holdings I Cash Reserve and the Noric Holdings IV Cash
Reserve shall not be invested in other Permitted Investments (and no Sponsor
Subsidiary shall make any further El Paso Demand Loans) if a Liquidating Event,
Termination Event, Notice Event, Event of Default or Incipient Event has
occurred and is continuing or would result therefrom.

                  (c)      Amounts on deposit in the Sponsor Subsidiary Cash
Reserve, the Noric Holdings I Cash Reserve and the Noric Holdings IV Cash
Reserve shall not be invested in new (as opposed to existing) Permitted
Investments consisting of El Paso Demand Loans unless, subject to Section
7.04(k), after giving effect to the making of such El Paso Demand Loan, the
aggregate of the amounts on deposit in the Sponsor Subsidiary Cash Reserve, the
Noric Holdings I Cash Reserve and/or the Noric Holdings IV Cash Reserve is
greater than or equal to the sum of the Dispositions Reserve Amount and the
Sponsor Subsidiary Minimum Monthly Cash Balance for the then-applicable month.
For purposes of this Section 7.03, El Paso Demand Loans constituting Permitted
Investments (as defined in the Original Sponsor Subsidiary Credit Agreement) of
Noric LP and Noric existing prior to the Fourth Restatement Date may be
transferred to Noric Holdings I on the Fourth Restatement Date and shall
thereafter constitute Permitted Investments consisting of El Paso Demand Loans
of amounts on deposit in the Noric Holdings I Cash Reserve.

                  (d)      If a Liquidating Event shall occur, the Sponsor
Subsidiaries shall forthwith demand repayment of each El Paso Demand Loan.

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                  (e)      [Intentionally Omitted].

                  (f)      Any Permitted Investment (other than any El Paso
Demand Loan) made from amounts on deposit in the Sponsor Subsidiary Cash
Reserve, the Noric Holdings I Cash Reserve, the Noric Holdings IV Cash Reserve
or the Sponsor Subsidiary Operating Account shall be made in the name of the
Sponsor Subsidiary Collateral Agent.

                  (g)      Mustang (or the Mustang Collateral Agent) shall give
notice of any such Permitted Investment to the Sponsor Subsidiary Collateral
Agent promptly after the making of such Permitted Investment.

                  (h)      The Sponsor Subsidiary Collateral Agent (at the
direction of Mustang or the Mustang Collateral Agent), in the case of clause (i)
below, and at the direction of the Sponsor Subsidiary Liquidator, in the case of
clause (ii) below), shall liquidate, convert or call in, or demand payment of,
any Permitted Investment prior to its maturity:

                  (i)      if the proceeds of such liquidation, conversion or
         calling in or demand are necessary for any payment required to be made
         by the Sponsor Subsidiary Collateral Agent in accordance with the
         provisions of Section 7.04 or Section 7.05; or

                  (ii)     pursuant to an exercise by the Sponsor Subsidiary
         Collateral Agent of the rights and remedies available under the Sponsor
         Subsidiary Credit Documents.

                  (i)      Mustang (or the Mustang Collateral Agent) will give
all necessary directions to the Sponsor Subsidiary Collateral Agent to effect
the investments made pursuant to this Section 7.03.

                  (j)      Interest and proceeds from or in respect of any
Permitted Investment may be invested or reinvested in additional Permitted
Investments and, if not so invested or reinvested, shall be deposited and held
in the Sponsor Subsidiary Cash Reserve (in the case of any Permitted Investment
made from amounts on deposit in the Sponsor Subsidiary Cash Reserve or the
Sponsor Subsidiary Operating Account or in the case of interest on El Paso
Demand Loans from amounts on deposit in the Noric Holdings I Cash Reserve and/or
the Noric Holdings IV Cash Reserve), the Noric Holdings I Cash Reserve (in the
case of any Permitted Investment made from amounts on deposit in the Noric
Holdings I Cash Reserve) or the Noric Holdings IV Cash Reserve (in the case of
any Permitted Investment made from amounts on deposit in the Noric Holdings IV
Cash Reserve), all as directed by Mustang or the Mustang Collateral Agent.

                  (k)      The Sponsor Subsidiary Collateral Agent at the
direction of the Mustang Collateral Agent to the extent reasonably practicable,
may dispose of Permitted Investments in the Sponsor Subsidiary Cash Reserve, the
Noric Holdings I Cash Reserve, the Noric Holdings IV Cash Reserve and the
Sponsor Subsidiary Operating Account so as to minimize any loss on such
Permitted Investments, but in no event shall the Sponsor Subsidiary Collateral
Agent be liable for any losses incurred as the result of any sale or disposition
of Permitted Investments, and each party hereto hereby releases the Sponsor
Subsidiary Collateral Agent from any liability arising out of, or in connection
with, any investment or liquidation or conversion made by it hereunder,

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except where such liability arises from the Sponsor Subsidiary Collateral
Agent's gross negligence or willful misconduct.

                  Section 7.04. Transfers from the Cash Reserves. (a) Transfers
in Respect of Periodic Payments from the Cash Reserves. Subject to Section 7.06
and the other provisions referred to in this Section 7.04 on each Payment Date
Mustang (or the Mustang Collateral Agent) shall direct the Sponsor Subsidiary
Collateral Agent to make the following transfers from funds in the Sponsor
Subsidiary Cash Reserve and, to the extent additional amounts are required,
funds in the Noric Holdings I Cash Reserve and/or the Noric Holdings IV Cash
Reserve (except in the case of clauses (1) to (5) (inclusive) below, free from
any Lien under the Sponsor Subsidiary Credit Documents) to the following
accounts, such transfers to be applied in the following order of priority:

                  (1)      First, to the Sponsor Subsidiary Operating Account in
         respect of Excluded Payments (to the extent not paid);

                  (2)      Second, to the Sponsor Subsidiary Operating Account,
         such amount as is necessary to pay Sponsor Subsidiary Expenses (except
         any Sponsor Subsidiary Expenses specified in clause (6) below) then due
         or that are scheduled to become due within 30 days thereafter;

                  (3)      Third, to the Sponsor Subsidiary Operating Account,
         such amount as is necessary to meet capital calls with respect to
         Energy Investments;

                  (4)      Fourth, [Intentionally Omitted];

                  (5)      Fifth, to the Sponsor Subsidiary Operating Account,
         such amount as represents capital contributions received from Sponsor
         Subsidiaries in respect of the obligation of Noric Holdings I to make
         mandatory capital contributions under Section 5.3 of the Noric Company
         Agreement so as to meet the obligation of Noric Holdings I to make such
         mandatory capital contributions;

                  (6)      Sixth, to the Mustang Operating Account such amount
         as is necessary to satisfy the Obligations of the Sponsor Subsidiaries
         under the Operative Documents payable on that Payment Date (including
         any mandatory prepayments), such transfer in turn to be applied to the
         Obligations of the Sponsor Subsidiaries in the following order of
         priority (without duplication):

                           (i)      First, to the aggregate amount of fees and
                  other amounts then due and payable to the Sponsor Subsidiary
                  Collateral Agent under the Sponsor Subsidiary Credit
                  Documents;

                           (ii)     Second, to accrued and unpaid interest then
                  due and payable under this Agreement;

                           (iii)    Third, to any Indemnified Amount then due
                  and payable under Section 10;

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                           (iv)     Fourth, to any prepayment of principal under
                  Section 2.05 (if any) to be made on such Payment Date; and

                           (v)      Fifth, to any other payment to be made by
                  the Sponsor Subsidiaries under the Operative Documents on the
                  Payment Date; and

                  (7)      Seventh, provided no Incipient Event, Event of
         Default, Notice Event, Termination Event or Liquidating Event shall
         have occurred and be continuing or would result therefrom to the Noric
         Holdings Member or such other Person or account as Noric Holdings
         directs an amount equal to the sum of (A) the balance (if any) standing
         to the credit of the Sponsor Subsidiary Cash Reserve, (B) the balance
         (if any) standing to the credit of the Noric Holdings IV Cash Reserve,
         and (C) the balance (if any) standing to the credit of the Noric
         Holdings I Cash Reserve on such Payment Date, less the sum of:

                           (x)      the Noric Holdings IV Required Cash Reserve
                  Balance, the Noric Holdings I Required Cash Reserve Balance
                  and the Sponsor Subsidiary Required Energy Investment Cash
                  Reserve Balance, in each case as of the end of the Fiscal
                  Quarter preceding such Payment Date;

                           (y)      the Total Cash Collateral Amount (subject to
                  Section 7.04(g) below); and

                           (z)      the Dispositions Reserve Amount and the
                  Sponsor Subsidiary Minimum Monthly Cash Balance for the
                  then-applicable month (subject to Section 7.04(k) below).

         provided that the balance in the Sponsor Subsidiary Cash Reserve, the
         Noric Holdings I Cash Reserve and in the Noric Holdings IV Cash Reserve
         shall not in any circumstances be reduced to below $0.

                  (b)      Transfers from the Cash Reserves in Respect of
Sponsor Subsidiary Expenses, Noric Expenses, Palomino Expenses, Paso Fino
Expenses, Noric LP Expenses, Lusitano Expenses and Lipizzan Expenses Otherwise
than on a Payment Date. Subject to Section 7.06 and so long as no Incipient
Event, Event of Default, Notice Event, Termination Event or Liquidating Event
would result therefrom, Mustang (or the Mustang Collateral Agent) may from time
to time (other than on a Payment Date), at Noric Holdings' request, direct the
Sponsor Subsidiary Collateral Agent to transfer funds in the Sponsor Subsidiary
Cash Reserve and, to the extent additional amounts are required, funds in Noric
Holdings I Cash Reserve and/or the Noric Holdings IV Cash Reserve to the Sponsor
Subsidiary Operating Account such amount as is necessary to pay Sponsor
Subsidiary Expenses, Noric Expenses, Palomino Expenses, Paso Fino Expenses,
Noric LP Expenses, Lusitano Expenses and Lipizzan Expenses then due or that are
scheduled to become due within 30 days thereafter; provided that, (i) to the
extent funds are required to be applied from the Noric Holdings I Cash Reserve
to pay Noric Expenses, Palomino Expenses, Paso Fino Expenses and Noric LP
Expenses, such payments shall be made directly from funds in the Noric Holdings
I Cash Reserve with no intermediate transfer to the Sponsor Subsidiary Operating
Account and (ii) to the extent funds are required to be applied from the Noric
Holdings IV Cash Reserve to pay Lusitano Expenses and Lipizzan

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Expenses, such payments shall be made directly from funds in the Noric Holdings
IV Cash Reserve with no intermediate transfer to the Sponsor Subsidiary
Operating Account.

                  (c)      Transfers from the Cash Reserves in Respect of
Prepayments of Principal Under Section 2.05 Otherwise than on a Payment Date.
Subject to Section 7.06, on the date (other than a Payment Date) of each
prepayment under Section 2.05, Mustang (or the Mustang Collateral Agent) shall
direct the Sponsor Subsidiary Collateral Agent to transfer funds in the Sponsor
Subsidiary Cash Reserve and, to the extent additional amounts are required,
funds in the Noric Holdings I Cash Reserve and/or the Noric Holdings IV Cash
Reserve to the Mustang Operating Account such amount as is necessary to satisfy
the Obligations of the Sponsor Subsidiaries under this Agreement in respect of
that prepayment (including amounts payable under Section 2.06(c) in respect of
such prepayment), such transfer to be applied to the Obligations of the Sponsor
Subsidiaries in the following order of priority (without duplication):

                  (1)      First, to the aggregate amount of fees and other
         amounts then due and payable to the Sponsor Subsidiary Collateral Agent
         under the Sponsor Subsidiary Credit Documents;

                  (2)      Second, to the payment of Additional Financing Costs
         then required to be paid pursuant to Section 8.04 of the Mustang Credit
         and Security Agreement;

                  (3)      Third, to the payment of accrued and unpaid interest
         then due and payable under this Agreement in respect of such
         prepayment; and

                  (4)      Fourth, to the prepayment of principal under Section
         2.05.

                  (d)      Transfers from the Cash Reserves in Respect of
Excluded Payments Otherwise than on a Payment Date. Mustang (or the Mustang
Collateral Agent) may, upon Noric Holdings' request, from time to time (other
than on a Payment Date) direct the Sponsor Subsidiary Collateral Agent to
transfer funds in the Sponsor Subsidiary Cash Reserve and, to the extent
additional amounts are required, funds in the Noric Holdings I Cash Reserve
and/or the Noric Holdings IV Cash Reserve to the Sponsor Subsidiary Operating
Account such amount as is represented by Excluded Payments (to the extent not
paid).

                  (e)      Transfers from the Cash Reserves in Respect of
Capital Contributions Otherwise than on a Payment Date. Mustang (or the Mustang
Collateral Agent) may, upon Noric Holdings' request, from time to time direct
the Sponsor Subsidiary Collateral Agent to transfer funds in the Sponsor
Subsidiary Cash Reserve and, to the extent additional amounts are required,
funds in the Noric Holdings I Cash Reserve and/or the Noric Holdings IV Cash
Reserve to the Sponsor Subsidiary Operating Account such amount as represents
the proceeds of capital contributions received from Sponsor Subsidiary Members
in respect of capital calls made in respect of the Energy Investments, capital
contributions pursuant to the Sponsor Subsidiary Company Agreements, in respect
of Noric Holdings, mandatory capital calls under Section 4.3 of the Lusitano
Company Agreement and Section 5.3 of the Lipizzan Partnership Agreement and
mandatory capital calls under Section 5.3 of the Noric Company Agreement and
Section 5.3 of the Noric LP Partnership Agreement.

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                  (f)      Transfers from the Cash Reserves in Respect of
Distributions in Excess of the Sponsor Subsidiary Minimum Monthly Cash Balance.
Subject to Section 7.04(k), Mustang shall, upon Noric Holdings's request, from
time to time direct the Sponsor Subsidiary Collateral Agent to transfer funds in
the Sponsor Subsidiary Cash Reserve, the Noric Holdings I Cash Reserve and/or
the Noric Holdings IV Cash Reserve (free of any Lien under the Sponsor
Subsidiary Credit Documents) to any Sponsor Subsidiary Member or such other
Person or account as Noric Holdings directs an aggregate amount equal to the
amount (if any) by which the aggregate amount on deposit in the Sponsor
Subsidiary Cash Reserve, Noric Holdings I Cash Reserve and/or the Noric Holdings
IV Cash Reserve after giving effect to any prepayment made pursuant to Section
2.10 is in excess of the sum of the Dispositions Reserve Amount and the Sponsor
Subsidiary Minimum Monthly Cash Balance for the then-applicable month; provided
that such transfers shall be permitted only upon delivery by a Responsible
Officer of El Paso of a Compliance Certificate substantially in the form
attached hereto as Exhibit 7.04(f) showing the amount to be so transferred and
certifying that, immediately prior to and after giving effect to such transfer,
all of the requirements to Section 7.04(k) have been met.

                  (g)      Transfers from the Total Cash Collateral Amount in
the Cash Reserves. Subject to Section 7.06 and provided that no Incipient Event,
Event of Default, Notice Event, Termination Event, or Liquidating Event shall
have occurred and be continuing or would result therefrom Noric Holdings shall
have the right to direct the Sponsor Subsidiary Collateral Agent to make
transfers from the Total Cash Collateral Amount in the Sponsor Subsidiary Cash
Reserve, the Noric Holdings I Cash Reserve and/or the Noric Holdings IV Cash
Reserve to a Sponsor Subsidiary Member or such other Person or account as Noric
Holdings directs in an amount not exceeding the balance of the Total Cash
Collateral Amount on (A) any date on which (w) any prepayment of the principal
amount of Advances is made in accordance with Section 2.05, (x) any increase of
the E&P Borrowing Base becomes effective pursuant to the terms of this Agreement
as a result of the acquisition of additional Subject Interests pursuant to a
Production Payment Conveyance, or (y) any increase of the E&P Borrowing Base
occurs as a result of an E&P Borrowing Base Redetermination of E&P Assets based
on the most recent Reserve Report (other than with respect to new Participation
Properties included in a pro forma Reserve Report) or (z) any increase of the
Aggregate Energy Investments Loan Value Amount becomes effective pursuant to
Section 2.11 of this Agreement (B) each Coverage Test Date and (C) the date
referred to in Section 5.07(f) (each such date being a "CASH COLLATERAL AMOUNT
DISTRIBUTION DATE"); provided that such transfers shall be permitted upon
delivery by a Responsible Officer of El Paso of a Compliance Certificate
substantially in the form attached hereto as Exhibit 7.04(g), showing the amount
of the Total Cash Collateral Amount to be so transferred and the calculation of
the financial covenant set forth in Section 5.04(f).

                  (h)      Transfers from the Sponsor Subsidiary Cash Reserve in
Respect of Distributions from the Proceeds Accounts. Subject to Sections 7.04(k)
and 7.06 and pursuant to Section 5.11, Mustang (or the Mustang Collateral Agent)
shall, upon Noric Holdings' request, from time to time direct the Sponsor
Subsidiary Collateral Agent to Distribute from the Sponsor Subsidiary Cash
Reserve any amounts deposited into the Sponsor Subsidiary Cash Reserve pursuant
to Section 7.02(a)(ii)(4) if, at any such time, Affiliate Loans are permitted to
be made pursuant to Section 5.09(e).

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                  (i)      Transfer from the Cash Reserves in Respect of Net
Cash Proceeds and Disposition Value. The amounts deposited by any Sponsor
Subsidiary into the Sponsor Subsidiary Cash Reserve pursuant to Section
5.02(d)(C)(4), the amounts deposited by Noric Holdings I, Noric or Noric LP into
the Noric Holdings I Cash Reserve pursuant to Section 5.05(a)(D) and the amounts
deposited by Noric Holdings IV or Lipizzan into the Noric Holdings IV Cash
Reserve pursuant to Section 5.05(a)(F) may, at any time, be invested by Noric
Holdings I and Noric Holdings IV, as the case may be, in Cash Equivalents. Noric
Holdings, Noric Holdings I and Noric Holdings IV from time to time shall also
have the right, subject to clauses (A) and (B) below, to apply any amounts on
deposit in the Sponsor Subsidiary Cash Reserve, the Noric Holdings I Cash
Reserve and the Noric Holdings IV Cash Reserve, as the case may be, to make El
Paso Demand Loans or Distributions; provided that:

                           (A)      with respect to any amounts deposited into
                  the Sponsor Subsidiary Cash Reserve pursuant to Section
                  5.02(d)(C)(4), into the Noric Holdings I Cash Reserve pursuant
                  to Section 5.05(a)(D) and into the Noric Holdings IV Cash
                  Reserve pursuant to Section 5.05(a)(F), such amounts shall be
                  held in the Sponsor Subsidiary Cash Reserve, the Noric
                  Holdings I Cash Reserve or the Noric Holdings IV Cash Reserve,
                  as the case may be, pending an E&P Borrowing Base
                  Redetermination pursuant to Section 2.09(e) (or, in the
                  absence of such redetermination, a redetermination pursuant to
                  Section 2.09(b)) and, on or after the E&P Borrowing Base
                  Effective Date occurring after any Disposition referred to in
                  Sections 5.02(d)(C)(4), 5.05(a)(D) and 5.05(a)(F), may be
                  applied by Noric Holdings, Noric Holdings I and Noric Holdings
                  IV, as the case may be, to make El Paso Demand Loans or
                  Distributions; provided that, prior to such application of
                  such amounts, to the extent there is any Collateral Shortfall
                  Amount, the amount necessary to cure such Collateral Shortfall
                  Amount (x) shall have been deposited, or deemed deposited,
                  into the Sponsor Subsidiary Cash Reserve, the Noric Holdings I
                  Cash Reserve and/or the Noric Holdings IV Cash Reserve as a
                  Cash Collateral Amount and/or (y) shall have been applied to
                  prepay the Advances in accordance with Section 2.05(b)(v) in
                  order to ensure compliance with the financial covenant set
                  forth in Section 5.04(f) after giving effect to such deposit
                  and/or prepayment;

                           (B)      notwithstanding anything to the contrary
                  contained in clause (A) above, if the new E&P Borrowing Base
                  that will become effective on the next E&P Borrowing Base
                  Effective Date has been determined on the basis of a pro forma
                  Reserve Report, Noric Holdings, Noric Holdings I and Noric
                  Holdings IV, as the case may be, may apply, immediately prior
                  to or contemporaneously with such new E&P Borrowing Base
                  becoming effective, (1) the Net Cash Proceeds from any
                  Disposition referred to in Sections 5.02(d)(C)(4) and
                  5.05(a)(D) and (2) an amount not to exceed the aggregate
                  Disposition Value of the Relevant Assets from any Disposition
                  described in Section 5.05(a)(F), as the case may be, solely to
                  complete the proposed acquisition of the Relevant Assets
                  reflected in such pro forma Reserve Report and in an aggregate
                  amount not to exceed the PV-10 Value of such Relevant Assets
                  to be acquired; provided that (x) the new E&P Borrowing Base
                  shall become effective, in accordance with Section 2.09(e),
                  immediately after or contemporaneously with the completion of
                  such acquisition, (y) to the

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                  extent there is any Collateral Shortfall Amount, the amount
                  necessary to cure such Collateral Shortfall Amount (A) shall
                  have been deposited, or deemed deposited, into the Sponsor
                  Subsidiary Cash Reserve, the Noric Holdings I Cash Reserve
                  and/or the Noric Holdings IV Cash Reserve as a Cash Collateral
                  Amount and/or (B) shall have been applied to prepay the
                  Advances in accordance with Section 2.05(b)(v) in order to
                  ensure compliance with the financial covenant set forth in
                  Section 5.04(f) after giving effect to such deposit and/or
                  prepayment, and (z) on or after such new E&P Borrowing Base
                  Effective Date, the remaining balance, if any, of the Net Cash
                  Proceeds from any Disposition referred to in Sections
                  5.02(d)(C)(4) and 5.05(a)(D) and the remaining balance, if
                  any, of the Disposition Value of the Relevant Assets from any
                  Disposition described in Section 5.05(a)(F) may be applied by
                  Noric Holdings, Noric Holdings I and Noric Holdings IV, as the
                  case may be, to make El Paso Demand Loans or Distributions;
                  and

                           (C)      the conditions set forth in Section 7.04(k)
                  are satisfied.

                  (j)      Application of Total Cash Collateral Amount. The
Total Cash Collateral Amount in the Sponsor Subsidiary Cash Reserve, the Noric
Holdings I Cash Reserve and/or Noric Holdings IV Cash Reserve may be applied at
any time to prepay Advances in accordance with Section 2.05(a).

                  (k)      Transfers from the Sponsor Subsidiary Cash Reserve,
the Noric Holdings I Cash Reserve and the Noric Holdings IV Cash Reserve in
Respect of Amounts in Excess of the Sponsor Subsidiary Minimum Monthly Cash
Balance. (i) The following conditions must be satisfied on any date of
determination prior to the making of any El Paso Demand Loan pursuant to Section
7.03 or Section 7.04(i), any Distribution pursuant to Section 7.04(f), Section
7.04(h) or Section 7.04(i) and any Affiliate Loan pursuant to Section 7.04(h):
(w) immediately prior to and immediately after the making of all such
Distributions, El Paso Demand Loans and Affiliate Loans on such date of
determination (but after giving effect to all prepayments of Advances and
payments of Cash Collateral Amounts made on or prior to such date of
determination) no Collateral Shortfall Amount exists, (x) immediately prior to
and immediately after the making of all such Distributions, El Paso Demand Loans
and Affiliate Loans on such date of determination each Sponsor Subsidiary would
be in compliance with the requirements of Section 5.04(c) determined as of the
immediately preceding Coverage Test Date (or, if applicable, the Coverage Test
Date occurring on such date of determination); (y) any transfer of the Total
Cash Collateral Amount shall be made only in accordance with Section 7.04(g) and
(z) no Incipient Event or Event of Default, Notice Event, Termination Event or
Liquidating Event shall have occurred and be continuing or would result from the
making of any of such Distributions, El Paso Demand Loans and/or Affiliate
Loans.

                  (ii)     Amounts on deposit in any Cash Reserve at any time
shall be available to satisfy the Sponsor Subsidiary Minimum Monthly Cash
Balance only if such amounts are invested in cash or Cash Equivalents at such
time.

                  Section 7.05. Transfers from the Sponsor Subsidiary Operating
Account. (a) Excluded Payments. Mustang may from time to time, upon Noric
Holdings' request, direct the

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<PAGE>

Sponsor Subsidiary Collateral Agent to transfer from the Sponsor Subsidiary
Operating Account (free from any Lien under the Sponsor Subsidiary Credit
Documents) to such account or Person as Noric Holdings designates such amount as
is represented by Excluded Payments (to the extent not paid).

                  (b)      Sponsor Subsidiary Expenses. Mustang may from time to
time, upon request from Noric Holdings, direct the Sponsor Subsidiary Collateral
Agent to transfer from the Sponsor Subsidiary Operating Account (free from any
Lien under the Sponsor Subsidiary Credit Documents) to such account or Person as
Noric Holdings designates such amounts as are necessary to pay Sponsor
Subsidiary Expenses when due.

                  (c)      Energy Investments Capital Calls. Mustang may from
time to time, upon Noric Holdings' request, direct the Sponsor Subsidiary
Collateral Agent to transfer from the Sponsor Subsidiary Operating Account (free
from any Lien under the Sponsor Subsidiary Credit Documents) to such account or
Person as Noric Holdings designates such amounts as are necessary to meet
capital calls with respect to Energy Investments to the extent such funds have
been transferred to the Sponsor Subsidiary Operating Account pursuant to Section
7.04(e).

                  (d)      [Intentionally Omitted].

                  (e)      [Intentionally Omitted].

                  Section 7.06. Subsisting Event of Default or Incipient Event.
Notwithstanding anything to the contrary set forth in Section 7.04 or Section
7.05, if Mustang provides notice to the Sponsor Subsidiary Collateral Agent of
the occurrence and continuance of an Event of Default, Notice Event, Termination
Event or Incipient Event, and until such time as the Sponsor Subsidiary
Collateral Agent receives notice from Mustang that such Event of Default, Notice
Event, Termination Event or Incipient Event no longer continues, the Sponsor
Subsidiary Collateral Agent shall (and each Sponsor Subsidiary agrees not to
take any action inconsistent with any such action by the Sponsor Subsidiary
Collateral Agent) hold all funds in the Sponsor Subsidiary Cash Reserve, the
Noric Holdings I Cash Reserve, the Noric Holdings IV Cash Reserve and the
Sponsor Subsidiary Operating Account for application, following and during the
continuance of an Event of Default, pursuant to Section 13 of the Sponsor
Subsidiary Security Agreement and Section 7.07 hereof, as directed by Mustang.
Mustang shall promptly notify the Sponsor Subsidiary Collateral Agent and the
Mustang Collateral Agent if any Incipient Event, Notice Event, Termination Event
or Event of Default ceases to exist or is waived.

                  Section  7.07. Transfers from the Cash Reserves and the
Sponsor Subsidiary Operating Account in Respect of Payments on the Maturity Date
and Application of Proceeds of Collateral Pursuant to the Sponsor Subsidiary
Security Agreement. Subject to Section 13 of the Sponsor Subsidiary Security
Agreement, on:

                  (a)      the Maturity Date;

                  (b)      receipt by the Sponsor Subsidiary Collateral Agent of
         any proceeds of Collateral upon and after any sale of, collection from,
         or other realization upon, all or any part of the Collateral pursuant
         to the exercise of remedies available to the Sponsor Subsidiary
         Collateral Agent under the Sponsor Subsidiary Security Agreement; or

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<PAGE>

                  (c)      receipt by the Sponsor Subsidiary Collateral Agent of
         any proceeds of any Disposition of Sponsor Subsidiary Property after
         the Liquidation Start Date,

the Sponsor Subsidiary Collateral Agent shall (and each Sponsor Subsidiary
agrees not to take any action inconsistent with such action by the Sponsor
Subsidiary Collateral Agent) direct the Sponsor Subsidiary Collateral Agent to
transfer (free from any Lien under the Sponsor Subsidiary Credit Documents) to
the Mustang Operating Account all amounts on deposit in the Sponsor Subsidiary
Cash Reserve, the Noric Holdings I Cash Reserve, the Noric Holdings IV Cash
Reserve and the Sponsor Subsidiary Operating Account and such proceeds, such
transfer to be applied to the Obligations of the Sponsor Subsidiaries in the
following order of priority (without duplication):

                  (1)      First, to the aggregate amount of fees and other
         amounts then due and payable to the Sponsor Subsidiary Collateral Agent
         under this Agreement;

                  (2)      Second, to accrued and unpaid interest then due and
         payable under this Agreement;

                  (3)      Third, to the repayment of principal of the Advances;

                  (4)      Fourth, to any other payment to be made by the
         Sponsor Subsidiaries on such date; and

                  (5)      Fifth, the balance (if any) to Noric Holdings.

                                  Article VIII

                              THE COLLATERAL AGENT

                  Section 8.01. Authorization and Action. Each of Mustang and
Clydesdale and each Sponsor Subsidiary hereby appoints and authorizes Wilmington
as the Sponsor Subsidiary Collateral Agent hereunder to take such action as
Sponsor Subsidiary Collateral Agent on its respective behalf (and on behalf of
any subsequent holder of Advances or of Sponsor Subsidiary Subordinated Notes)
and to exercise such powers under this Agreement and the other Sponsor
Subsidiary Credit Documents as are expressly delegated to the Sponsor Subsidiary
Collateral Agent by the terms hereof and thereof. As to any matters not
expressly provided for by the Sponsor Subsidiary Credit Documents, including
enforcement or collection of the Indebtedness resulting from the Advances and
enforcement of this Agreement, the Sponsor Subsidiary Collateral Agent shall not
be required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of Mustang and the Mustang
Collateral Agent and such instructions shall be binding upon Mustang; provided
that the Sponsor Subsidiary Collateral Agent shall not be required to take any
action that exposes it to personal liability or that is contrary to this
Agreement or Applicable Law. The Sponsor Subsidiary Collateral Agent agrees to
give to Mustang and the Mustang Collateral Agent prompt notice of each notice
and copies of all other documents (if any) given to it by the Sponsor
Subsidiaries pursuant to the terms of this Agreement and the other Sponsor
Subsidiary Credit Documents.

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                  Section 8.02. Sponsor Subsidiary Collateral Agent's Reliance,
Etc. Neither the Sponsor Subsidiary Collateral Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with the Sponsor Subsidiary Credit
Documents, except for its or their own gross negligence, fraud or willful
misconduct, and each party hereto agrees that it will not assert or seek to
assert any claim it might have against any of them in violation of this
provision. Without limiting the generality of the foregoing:

                  (a)      the Sponsor Subsidiary Collateral Agent may consult
         with legal counsel (including counsel for any Sponsor Subsidiary),
         independent public accountants and other experts selected by it and
         shall not be liable for any action taken or omitted to be taken in good
         faith by it in accordance with the advice of such counsel, accountants
         or experts;

                  (b)      the Sponsor Subsidiary Collateral Agent makes no
         warranty or representation to Mustang and shall not be responsible to
         Mustang for any statements, warranties or representations made in or in
         connection with the Sponsor Subsidiary Credit Documents;

                  (c)      the Sponsor Subsidiary Collateral Agent shall have no
         duty to ascertain or to inquire as to the performance or observance of
         any of the terms, covenants or conditions of any Sponsor Subsidiary
         Credit Document on the part of any Sponsor Subsidiary or to inspect the
         property (including the books and records) of any Sponsor Subsidiary;

                  (d)      the Sponsor Subsidiary Collateral Agent shall not be
         responsible for the due execution, legality, validity, enforceability,
         genuineness, sufficiency, or value of any Operative Document or any
         other instrument or document furnished pursuant hereto or thereto;

                  (e)      the Sponsor Subsidiary Collateral Agent shall not be
         liable under or in respect of any Operative Document by acting upon any
         notice, consent, certificate or other instrument or writing (which may
         be by telecopy or e-mail) believed by it to be genuine and signed or
         sent by the proper party or parties;

                  (f)      the Sponsor Subsidiary Collateral Agent shall not be
         liable for any losses incurred as the result of any sale or disposition
         of Permitted Investments or the transfer of any funds pursuant to the
         terms hereof; and

                  (g)      the Sponsor Subsidiary Collateral Agent makes no
         representation or warranty and shall have no responsibility concerning
         the value or validity of the Collateral or the validity or the
         perfection of the pledge thereof nor concerning Liens thereon, except
         as expressly set forth in Section 6.5 of the Sponsor Subsidiary
         Collateral Agent Agreement.

                  Section 8.03. Mustang Credit Decision. Mustang acknowledges
that it has, independently and without reliance upon the Sponsor Subsidiary
Collateral Agent and based on such documents and information as it has deemed
appropriate, made its own credit analysis and

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<PAGE>

decision to enter into this Agreement. Mustang also acknowledges that it will,
independently and without reliance upon the Sponsor Subsidiary Collateral Agent
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.

                  Section 8.04. Fee. The Sponsor Subsidiaries shall jointly and
severally pay the Sponsor Subsidiary Collateral Agent an annual fee in the
amount set out in and pursuant to the terms of the Sponsor Subsidiary Collateral
Agent Fee Letter.

                                   Article IX

   ASSIGNMENTS; ACCESSION OF ADDITIONAL SPONSOR SUBSIDIARIES; ACQUISITIONS OF
                               TRANSACTION ASSETS

                  Section 9.01. No Assignment by any Sponsor Subsidiary. No
Sponsor Subsidiary may assign or otherwise transfer any of its rights or
obligations under this Agreement.

                  Section 9.02. Additional Sponsor Subsidiaries and Acquisitions
of Transaction Assets. An El Paso Company may become an additional Sponsor
Subsidiary and an existing Sponsor Subsidiary may acquire a Transaction Asset in
accordance with the provisions of the Acquisition/Accession Procedures Schedule
(Schedule I). The terms of the Acquisition/Accession Procedures Schedule shall
be incorporated herein as if set out herein in full.

                  Section 9.03. Permitted Assignment by Mustang. After the
occurrence of a Liquidating Event, Mustang may assign or otherwise transfer any
or all of its rights or obligations under this Agreement to any Person; provided
that such assignment shall only be valid if the assignee's ownership of an
interest in an Advance, and any interest thereon payable by a Sponsor
Subsidiary, is reflected in the books of such Sponsor Subsidiary.

                                   Article X

                                 INDEMNIFICATION

                  Section 10.01. Indemnities by Sponsor Subsidiaries. Each
Sponsor Subsidiary jointly and severally agrees, to the fullest extent permitted
by Applicable Law, to indemnify and hold harmless each Indemnified Person on an
After-Tax Basis from and against any and all claims, damages, liabilities and
expenses (including fees and disbursements of counsel and claims, damages,
liabilities and expenses relating to environmental matters) other than Taxes or
Other Taxes (except in the case of the Sponsor Subsidiary Collateral Agent) (all
of the foregoing to the extent not expressly excluded being collectively
referred to as the "INDEMNIFIED AMOUNTS") for which any of them may become
liable or which may be incurred or realized by or asserted against any such
Indemnified Person, in each case in connection with or arising out of or by
reason of any investigation, litigation, or proceeding, whether or not any
Indemnified Person is a party thereto, arising out of, related to or in
connection with this Agreement, any Sponsor Subsidiary Credit Document, any
Operative Document, or any Assigned Agreement, or the use

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of proceeds of any Advance, including any and all Indemnified Amounts relating
to, growing out of or resulting from:

                  (i)      reliance on any representation or warranty or
         statement made or deemed made by any El Paso Party in any Operative
         Document that shall have been incorrect in any material respect when
         made or deemed made;

                  (ii)     the failure by any El Paso Party to comply with any
         Applicable Law with respect to any Operative Document or Assigned
         Agreement, or the nonconformity of any Operative Document or Assigned
         Agreement with any such Applicable Law;

                  (iii)    the failure to vest in the Sponsor Subsidiary
         Collateral Agent a valid and perfected first priority security interest
         in the Collateral (subject to Permitted Liens);

                  (iv)     the failure to have filed, or any delay in filing,
         financing statements or other similar instruments or documents under
         the UCC (or its equivalent) of any applicable jurisdiction or other
         Applicable Laws with respect to any Collateral;

                  (v)      any dispute, claim, offset or defense of any party to
         any Operative Document or Assigned Agreement to the payment of any
         amount owing to any Sponsor Subsidiary under the provisions thereof
         (including a defense based on such payment or the related Operative
         Document or Assigned Agreement not being a legal, valid and binding
         obligation of such Person enforceable against it in accordance with its
         terms);

                  (vi)     any failure by any El Paso Party to perform any duty
         or obligation (other than a payment obligation) under any Operative
         Document or Assigned Agreement or any failure by any Intermediate
         Holder or Underlying Business to perform any duty or obligation under
         any Assigned Agreement;

                  (vii)    any investigation, litigation or proceeding in
         respect of any Operative Document or Assigned Agreement or arising out
         of or related to the use of the proceeds of any Advance; or

                  (viii)   (A) any petition or proceeding (x) seeking or
         asserting or (y) a court ordering, in any case or proceeding under the
         United States Bankruptcy Code involving El Paso, any El Paso Party or
         any other Subsidiary of El Paso, as debtor, that the assets and
         liabilities of Lusitano, Lipizzan, Noric, Palomino, Paso Fino, Noric LP
         or any Sponsor Subsidiary be consolidated substantively with the assets
         and liabilities of El Paso, any El Paso Party (other than Lusitano,
         Lipizan, Noric, Palomino, Paso Fino, Noric LP or any Sponsor
         Subsidiary) or any other Subsidiary of El Paso (other than Lusitano,
         Lipizzan, Noric, Palomino, Paso Fino, Noric LP or any Sponsor
         Subsidiary) and (B) defending against any petition, proceeding or order
         referred to in clause (A) above; it being agreed that upon the
         occurrence of an event described in clause (A)(y) above which is or
         becomes a final judgment or order, the Indemnified Persons involved
         shall be entitled to recover from the Sponsor Subsidiaries, as
         liquidated damages for Indemnified Amounts under such clause (A) (but
         without prejudice to amounts recoverable under clause (B) above or any
         other provision of the Operative Documents), and not as a penalty, an
         aggregate amount equal to the outstanding principal amount of the
         Advances,

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<PAGE>

         together with all interest accrued and unpaid thereon to such date in
         addition to all other Indemnified Amounts hereunder.

                  Section 10.02. Survival of Indemnification Obligations. All
indemnities provided for in this Agreement shall survive the termination of this
Agreement.

                  Section 10.03. Limitations on Indemnification Obligations. The
indemnities provided in Section 10.01 shall be subject to the following
limitations:

                  (a)      Limitation by Law. Such sections shall be enforced
         only to the maximum extent permitted by Applicable Law.

                  (b)      Misconduct, Etc. No Indemnified Person shall be
         indemnified or held harmless for and no Sponsor Subsidiary shall have
         any liability for or in respect of, any Expenses with respect to such
         Indemnified Person to the extent caused by or resulting from (i) the
         actual fraud, willful misconduct, bad faith or gross negligence of such
         Indemnified Person or any of its Related Persons or (ii) any inaccuracy
         in, or breach of, any written certification, representation or warranty
         made by such Indemnified Person or any of its Related Persons in any
         Operative Document or in any written report or certification required
         hereunder or under any other Operative Document (unless and to the
         extent such inaccuracy or breach is attributable to any written
         information provided by El Paso or its Affiliates), in each case under
         this clause (iii) (A) if, but only if, such certification,
         representation or warranty is made as of a specific date, as of the
         date as of which the facts stated therein were certified, represented
         or warranted and (B) in all other cases, as of any date or during any
         period to which such certification, representation or warranty may be
         applicable.

                  (c)      No Duplication. Indemnified Amounts under this
         Article X shall be without duplication of any amounts payable under
         indemnification provisions of any other Operative Document or other
         agreement or any amounts actually paid thereunder.

                  (d)      Limitation with Respect to Production Payments. No
         Indemnified Person shall be indemnified or held harmless for any
         insufficiency in the quantity of Hydrocarbons produced from the Subject
         Lands (as defined in each Production Payment Agreement) and
         attributable to the Subject Interests.

                  Section 10.04. Payments. Any amounts subject to the
indemnification provisions of this Article X shall be paid by each Sponsor
Subsidiary within two Business Days following demand therefor, accompanied, as
may be appropriate in the context, by supporting documentation in reasonable
detail. Payment shall be made to the bank account or at another location as such
Indemnified Person shall designate in writing or as is expressly required under
any Operative Document the obligations under which are the subject of any such
payment, not later than 10:00 AM (New York time) on the date for such payment in
immediately available funds.

                  Section 10.05. Procedural Requirements. (a) Notice of Claims.
Any Indemnified Person that proposes to assert a right to be indemnified under
this Article X will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such

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Indemnified Person in respect of which a claim is to be made against any Sponsor
Subsidiary under this Article X (an "INDEMNIFIED PROCEEDING"), or the incurrence
or realization of Indemnified Amounts in respect of which a claim is to be made
against any Sponsor Subsidiary under this Article X, notify Noric Holdings of
the commencement of such Indemnified Proceeding or of such incurrence or
realization, enclosing a copy of all relevant documents, including all papers
served and claims made, but the omission so to notify Noric Holdings promptly of
any such Indemnified Proceeding or incurrence or realization shall not relieve
(x) any Sponsor Subsidiary from any liability that it may have to such
Indemnified Person under this Article X or otherwise, except, as to each Sponsor
Subsidiary's liability under this Article X, to the extent, but only to the
extent, that such Sponsor Subsidiary shall have been prejudiced by such
omission, or (y) any other indemnitor from liability that it may have to any
Indemnified Person under the Operative Documents.

                  (b)      Defense of Proceedings. In case any Indemnified
Proceeding shall be brought against any Indemnified Person and it shall notify
Noric Holdings of the commencement thereof, the Sponsor Subsidiaries together
shall be entitled to participate in, and to assume the defense of, such
Indemnified Proceeding with counsel reasonably satisfactory to such Indemnified
Person and, after notice from Noric Holdings to such Indemnified Person of such
Sponsor Subsidiary's election so to assume the defense thereof and the failure
by such Indemnified Person to object to such counsel within ten Business Days
following its receipt of such notice, no Sponsor Subsidiary shall be liable to
such Indemnified Person for legal or other expenses incurred after such notice
of election to assume such defense except as provided below and except for the
reasonable costs of investigating, monitoring or cooperating in such defense
subsequently incurred by such Indemnified Person reasonably necessary in
connection with the defense thereof. Such Indemnified Person shall have the
right to employ its counsel in any such Indemnified Proceeding, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless:

                  (i)      the employment of counsel by such Indemnified Person
         at the expense of the Sponsor Subsidiaries has been authorized in
         writing by Noric Holdings;

                  (ii)     such Indemnified Person shall have reasonably
         concluded in its good faith (which conclusion shall be determinative
         unless a court determines that conclusion was not reached reasonably
         and in good faith) that there is or may be a conflict of interest
         between a Sponsor Subsidiary and such Indemnified Person in the conduct
         of the defense of such Indemnified Proceeding or that there are or may
         be one or more different or additional defenses, claims, counterclaims,
         or causes of action available to such Indemnified Person (it being
         agreed that in any case referred to in this clause (ii) the Sponsor
         Subsidiaries shall not have the right to direct the defense of such
         Indemnified Proceeding on behalf of the Indemnified Person);

                  (iii)    the Sponsor Subsidiaries shall not have employed
         Jones, Day, Reavis and Pogue, or other counsel reasonably acceptable to
         the Indemnified Person, to assume the defense of such Indemnified
         Proceeding within a reasonable time after notice of the commencement
         thereof (provided that this clause shall not be deemed to constitute a
         waiver of any conflict of interest which may arise with respect to any
         such counsel); or

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<PAGE>

                  (iv)     any counsel employed by the Sponsor Subsidiaries
         shall fail to timely commence or maintain the defense of such
         Indemnified Proceeding;

in each of which cases the fees and expenses of counsel for such Indemnified
Person shall be at the expense of the Sponsor Subsidiaries jointly and
severally; provided that without the prior written consent of such Indemnified
Person, no Sponsor Subsidiary shall settle or compromise, or consent to the
entry of any judgment in, any pending or threatened Indemnified Proceeding,
unless such settlement, compromise or consent or related judgment includes an
unconditional release of such Indemnified Person from all liability for Expenses
arising out of such claim, action, investigation, suit or other legal
proceeding. No Indemnified Person shall settle or compromise, or consent to the
entry of any judgment in, any pending or threatened Indemnified Proceeding in
respect of which any payment would result hereunder or under the Operative
Documents without the prior written consent of El Paso, such consent not to be
unreasonably withheld or delayed. Only one counsel shall be retained by all
Indemnified Persons with respect to any Indemnified Proceeding, unless counsel
for any Indemnified Person reasonably concludes in good faith (which conclusion
shall be determinative unless a court determines that conclusion was not reached
reasonably and in good faith) that there is or may be a conflict of interest
between such Indemnified Person and one or more other Indemnified Persons in the
conduct of the defense of such Indemnified Proceeding or that there are or may
be one or more different or additional defenses, claims, counterclaims, or
causes of action available to such Indemnified Person (it being agreed that in
any case referred to in this sentence such Indemnified Person may retain
separate counsel together with all other Indemnified Persons subject to the same
conflict of interest or sharing such additional defenses, claims, counterclaims
or causes of action).

THE FOREGOING INDEMNITIES SHALL EXPRESSLY INCLUDE ANY INDEMNIFIED AMOUNTS
ATTRIBUTABLE TO THE ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE OF ANY INDEMNIFIED
PERSON.

                                   ARTICLE XI

                                  MISCELLANEOUS

                  Section 11.01. Amendments, Etc. No amendment, waiver,
modification or supplement of any provision of this Agreement or any other
Sponsor Subsidiary Credit Document, nor consent to any departure by any Sponsor
Subsidiary therefrom, shall in any event be effective unless the same shall be
in writing and signed by Noric Holdings and Mustang; provided that if the
amendment, waiver, modification, or supplement relates to the rights or
obligations of the Sponsor Subsidiary Collateral Agent under this Agreement,
then the consent of the Sponsor Subsidiary Collateral Agent also shall be
required. Such amendment, waiver, modification, supplement or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

                  Section 11.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including telecopy
communication) and mailed, telecopied or delivered:

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                                      101

<PAGE>

                           (a)      if to any Sponsor Subsidiary, to such
         Sponsor Subsidiary c/o Wilmington Trust Company, 1100 North Market
         Street, Rodney Square North, Wilmington, DE 19890 - 1600, Attention:
         Corporate Trust Administration, Facsimile No.: 302-651-8882, with a
         copy to El Paso at the address set forth in the El Paso Agreement;

                           (b)      if to Mustang, c/o Wilmington Trust Company
         at Rodney Square North, 1100 North Market Street, Wilmington, Delaware
         19890-1600, Attention: Corporate Trust Administration, Facsimile No.:
         (302) 651-8882 with a copy to Citicorp North America, Inc., as Mustang
         Collateral Agent, 388 Greenwich Street, New York, New York 10013,
         Attention: Global Maximization Unit, Facsimile: (212) 816-0262 with
         copies to Citibank, N.A., 1200 Smith Street, Houston, Texas 77002,
         Attention: Amy Pincu, Relationship Manager, El Paso Corporation,
         Facsimile: (713) 654-2849 and to Capital Structuring, Citibank, N.A.,
         Attention: Elliot Conway, Managing Director, Capital Structuring,
         Facsimile (212) 816-0636;

                           (c)      if to the Sponsor Subsidiary Collateral
         Agent, c/o Wilmington Trust Company at Rodney Square North, 1100 North
         Market Street, Wilmington, Delaware 19890-1600, Attention: James
         Hanley, Facsimile No.: (302) 651-8882, with a copy to Citicorp North
         America, Inc., as Mustang Collateral Agent, 388 Greenwich Street, New
         York, New York 10013, Attention: Global Maximization Unit, Facsimile:
         (212) 816-0262 with copies to Citibank, N.A., 1200 Smith Street,
         Houston, Texas 77002, Attention: Amy Pincu, Relationship Manager, El
         Paso Corporation, Facsimile: (713) 654-2849 and to Capital Structuring,
         Citibank, N.A., Attention: Elliot Conway, Managing Director, Capital
         Structuring, Facsimile (212) 816-0636;

                           (d)      if to Clydesdale, at Appaloosa Holdings
         Company, c/o Wilmington Trust Company, 1100 North Market Street, Rodney
         Square North, Wilmington, DE 19890 - 1600, Attention: Corporate Trust
         Administration, Facsimile No.: 302-651-8882, with a copy to El Paso at
         the address set forth in the El Paso Agreement;

or at such other address as shall be designated by such party in a written
notice to the other parties. Any such notices and communications shall be deemed
to be delivered, given, and received for all purposes as of the date so
delivered, if delivered personally, or otherwise as of the date on which the
same was received (if a Business Day or, if not, on the next succeeding Business
Day).

                  Section 11.03. No Waiver, Remedies. No failure on the part of
Mustang, the Sponsor Subsidiary Collateral Agent or the Mustang Collateral Agent
to exercise, and no delay in exercising, any right hereunder or under any other
Sponsor Subsidiary Credit Document shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

                  Section 11.04. Costs and Expenses. (a) Each Sponsor Subsidiary
jointly and severally agrees to pay pursuant to Section 7.04:

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<PAGE>

                  (i)      all reasonable costs and expenses of the Sponsor
         Subsidiary Collateral Agent and Mustang, in connection with the
         administration, modification and amendment of any Sponsor Subsidiary
         Credit Document (including (A) all due diligence, transportation,
         computer, duplication, appraisal, audit, insurance, consultant, search,
         filing, rating agency and recording fees and expenses, (B) the
         preservation of, or the sale (other than any registration under the
         securities laws with respect thereto) of, collection from, or other
         realization upon, any of the Collateral, (C) the enforcement of any of
         the rights of the Sponsor Subsidiary Collateral Agent or Mustang under
         any Sponsor Subsidiary Credit Document and (D) the reasonable fees and
         expenses of counsel for the Sponsor Subsidiary Collateral Agent and
         Mustang with respect to advising such Person as to its rights and
         responsibilities, or the perfection, protection, or preservation of
         rights or interests, under any Sponsor Subsidiary Credit Document, with
         respect to negotiations with any Sponsor Subsidiary or with other
         creditors of any Sponsor Subsidiary arising out of any Incipient Event
         or Event of Default or with Mustang or El Paso arising out of any
         Notice Event, Termination Event or Liquidating Event or any events or
         circumstances that may give rise to an Incipient Event or Event of
         Default or a Notice Event, Termination Event or Liquidating Event and
         with respect to presenting claims in or otherwise participating in or
         monitoring any bankruptcy, insolvency or other similar proceeding
         involving creditors' rights generally and any proceeding ancillary
         thereto with respect to any Sponsor Subsidiary, Mustang or El Paso);
         and

                  (ii)     all reasonable out-of-pocket costs and expenses of
         the Sponsor Subsidiary Collateral Agent and Mustang in connection with
         the enforcement of any Sponsor Subsidiary Credit Document, whether in
         any action, suit or litigation, any bankruptcy, insolvency or other
         similar proceeding affecting creditors' rights generally or otherwise
         (including the reasonable fees and expenses of counsel for Mustang with
         respect thereto), subject, in each case to the limitations set forth in
         Section 10.03.

                  (b)      If the Sponsor Subsidiaries fail to pay when due any
costs, expenses or other amounts payable by them under any Sponsor Subsidiary
Credit Document, including fees and expenses of counsel and indemnities, but
excluding principal and interest payments and commitment fees, such amount may
be paid on behalf of the Sponsor Subsidiaries by Mustang, in its sole
discretion.

                  (c)      The indemnities set forth in Article X and this
Section 11.04 shall be in addition to any other obligations or liabilities of
any Sponsor Subsidiary hereunder or at common law or otherwise; provided that
the indemnities set forth in Article X and this Section 11.04 shall not apply
with respect to Relevant Taxes and liabilities with respect thereto, for which
the exclusive remedy of Mustang and the Sponsor Subsidiary Collateral Agent
against each Sponsor Subsidiary shall be pursuant to Section 2.07 hereof.
Without prejudice to the survival of any other obligation of any Sponsor
Subsidiary under this Agreement, but subject to the foregoing, the indemnities
and obligations contained in Article X and this Section 11.04 shall survive the
payment in full of the principal of and interest on the Advances or the
termination of this Agreement.

                  Section 11.05. Right of Setoff. On and after the Liquidation
Start Date, Mustang is hereby authorized at any time and from time to time, to
the fullest extent permitted by

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                                      103

<PAGE>

Applicable Law, to setoff and otherwise apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by Mustang to or for the credit or the account of
any Sponsor Subsidiary against any and all of the Obligations of any Sponsor
Subsidiary now or hereafter existing under this Agreement and although such
obligations may be unmatured. The rights of Mustang under this Section are in
addition to other rights and remedies (including other rights of setoff) that
Mustang may have.

                  Section 11.06. Binding Effect. This Agreement shall become
effective when it shall have been executed by each Sponsor Subsidiary party
hereto on the date of this Agreement, Mustang, the Mustang Collateral Agent,
Clydesdale, and the Sponsor Subsidiary Collateral Agent and thereafter shall be
binding upon and inure to the benefit of each Sponsor Subsidiary (including each
Additional Sponsor Subsidiary pursuant to Section 9.02 hereof and the terms of
the Acquisition/Accession Procedures Schedule), Mustang and the Designated
Representative and their respective successors and assigns and each other
Indemnified Person.

                  Section 11.07. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York.

                  Section 11.08. Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

                  Section 11.09. Non-Recourse Liability. No recourse shall be
had against the principal amount of (as distinguished from any interest payable
on) any A-Loan (other than in respect of any prepayment of principal of the
A-Loan Notes described in Section 2.05(b)(v)).

                  Section 11.10. WAIVER OF JURY TRIAL. EACH SPONSOR SUBSIDIARY,
THE SPONSOR SUBSIDIARY COLLATERAL AGENT, MUSTANG, THE MUSTANG COLLATERAL AGENT
AND CLYDESDALE EACH HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THE SPONSOR SUBSIDIARY CREDIT
DOCUMENTS, THE ADVANCES OR ACTIONS OF THE SPONSOR SUBSIDIARY COLLATERAL AGENT OR
MUSTANG IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

                  Section 11.11. Authorization of Noric Holdings as Sponsor
Subsidiaries' Agent. Each Sponsor Subsidiary (other than Noric Holdings) hereby
(a) appoints Noric Holdings as its agent to take all actions, do all things, and
exercise all discretions, in each case for and on behalf of such Sponsor
Subsidiary, that are expressly delegated to Noric Holdings under the Operative
Documents and/or that such Sponsor Subsidiary is entitled to take, do or
exercise, under the Sponsor Subsidiary Credit Documents or any other Operative
Document and (b) authorizes Noric Holdings, for and on behalf of such Sponsor
Subsidiary, to execute and deliver all

Sponsor Subsidiary Credit Agreement

                                      104

<PAGE>

certificates and notices to be delivered by such Sponsor Subsidiary under the
Sponsor Subsidiary Credit Documents or any other Operative Document.

                  Section 11.12. Consent to Jurisdiction. (a) Each Sponsor
Subsidiary hereby irrevocably submits to the jurisdiction of any New York State
or Federal court sitting in New York City and any appellate court from any
thereof in any action or proceeding by Mustang or any other Indemnified Person
(each such Person, a "CLAIMANT") in respect of, but only in respect of, any
claims or causes of action arising out of or relating to any Sponsor Subsidiary
Credit Document (such claims and causes of action, collectively, being
"PERMITTED CLAIMS"), and each Sponsor Subsidiary hereby irrevocably agrees that
all Permitted Claims may be heard and determined in such New York State court or
in such Federal court. Each Sponsor Subsidiary hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any aforementioned court in
respect of Permitted Claims. Each Sponsor Subsidiary hereby irrevocably appoints
CT Corporation System (the "PROCESS AGENT"), with an office on the date hereof
at 111 8th Avenue, New York, New York 10011, as its agent to receive on behalf
of such Person and its property service of copies of the summons and complaint
and other process which may be served on a Claimant in any such action or
proceeding in any aforementioned court in respect of Permitted Claims. Such
service may be made by delivering a copy of such process to a Sponsor Subsidiary
by courier and by certified mail (return receipt requested), fees and postage
prepaid, both (i) in care of the Process Agent at the Process Agent's above
address and (ii) at El Paso's address specified pursuant to Section 6.2 of the
El Paso Agreement, and each Sponsor Subsidiary hereby irrevocably authorizes and
directs the Process Agent to accept such service on its behalf. Each Sponsor
Subsidiary agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.

                  Nothing in this Section 11.12 shall affect the right of any
Claimant to serve legal process in any other manner permitted by law or affect
any right otherwise existing of any Claimant to bring any action or proceeding
against any Sponsor Subsidiary or its property in the courts of other
jurisdictions or (ii) shall be deemed to be a general consent to jurisdiction in
any particular court or a general waiver of any defense or a consent to
jurisdiction of the courts expressly referred to in subsection (a) above in any
action or proceeding in respect of any claim or cause of action other than
Permitted Claims.

                  Section 11.13. Permitted Disclosure. Notwithstanding any other
provision of this Agreement, the parties to this Agreement hereby agree that
each party (and each employee, representative, or other agent of each party) may
disclose to any and all persons, without limitation of any kind, the U.S. tax
treatment and U.S. tax structure of the transaction and all materials of any
kind (including opinions or other tax analyses) that are provided to the
taxpayer, relating to such U.S. tax treatment and U.S. tax structure, other than
any information for which nondisclosure is reasonably necessary in order to
comply with applicable securities laws.

                  Section 11.14. No Novation, Etc. Nothing contained herein
shall be deemed a novation or a repayment of or new advances of any obligations
of any of the Sponsor Subsidiaries hereunder.

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                                      105

<PAGE>

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

                                             MUSTANG INVESTORS, L.L.C.

                                             By: Dongola, Inc.,
                                                 as its managing member

                                                 By: /s/ James A. Hanley
                                                     --------------------------
                                                     Name:  James A. Hanley
                                                     Title: Vice President

Sponsor Subsidiary Credit Agreement

<PAGE>

                                  SPONSOR SUBSIDIARIES

                                  NORIC HOLDINGS, L.L.C.

                                  By: Shetland Holdings Company, as its class A
                                      member

                                       By: /s/ John J. Hopper
                                           -------------------------------------
                                           Name:  John J. Hopper
                                           Title: Vice President and Treasurer

Sponsor Subsidiary Credit Agreement

<PAGE>

                             NORIC HOLDINGS I, L.L.C.

                             By: El Paso Noric Investments I, L.L.C., as its
                                 managing member

                             By:  /s/ John J. Hopper
                                ------------------------------------------
                                Name:  John J. Hopper
                                Title: Vice President

Sponsor Subsidiary Credit Agreement

<PAGE>

                                  NORIC HOLDINGS III, L.L.C.

                                  By: El Paso Noric Investments III, L.L.C.,
                                      as its sole class A member

                                  By: /s/ Teresa L. Mc Donald
                                      ---------------------------------------
                                      Name:  Teresa L. McDonald
                                      Title: Vice President

Sponsor Subsidiary Credit Agreement

<PAGE>

                             NORIC HOLDINGS IV, L.L.C.

                             By: El Paso Noric Investments IV, L.L.C., as its
                                 managing member

                             By: /s/ John J. Hopper
                                -------------------------------------------
                                 Name:  John J. Hopper
                                 Title: Vice President

Sponsor Subsidiary Credit Agreement

<PAGE>

                              SPONSOR SUBSIDIARY COLLATERAL AGENT;

                              WILMINGTON TRUST COMPANY,
                              not in its individual capacity, but solely in its
                              capacity as Sponsor Subsidiary Collateral Agent

                              By: /s/ James A. Hanley
                                  ------------------------------------------
                                  Name:  James A. Hanley
                                  Title: Financial Services Officer

Sponsor Subsidiary Credit Agreement

<PAGE>

                                  MUSTANG COLLATERAL AGENT

                                  CITICORP NORTH AMERICA, INC., as Mustang
                                  Collateral Agent

                                  By: /s/ Amy Pincu
                                      -----------------------------------------
                                      Name:  Amy Pincu
                                      Title: Vice President

Sponsor Subsidiary Credit Agreement

<PAGE>

                                  CLYDESDALE

                                  CLYDESDALE ASSOCIATES, L.P.

                                  By: Appaloosa Holdings Company,
                                      as its general partner

                                  By: /s/ John J. Hopper
                                      ------------------------------------------
                                      Name:  John J. Hopper
                                      Title: Vice President and Treasurer

Sponsor Subsidiary Credit Agreement

<PAGE>

                                                                       EXHIBIT G
                                                           TO SPONSOR SUBSIDIARY
                                                                CREDIT AGREEMENT

                              TERMS AND CONDITIONS
        OF SUBORDINATION OF DEBT PERMITTED BY SECTION 5.02(b)(iv) OF THE
                      SPONSOR SUBSIDIARY CREDIT AGREEMENT

Sponsor Subsidiary Credit Agreement

<PAGE>

                                                                SCHEDULE 3.04(b)
                                                           TO SPONSOR SUBSIDIARY
                                                                CREDIT AGREEMENT

                                 LEGAL OPINIONS

         1.       Favorable opinion of Dewey Ballantine LLP, special counsel to
                  the Borrower and the Equity Participants.

         2.       Favorable opinion of Potter Anderson & Corroon LLP, special
                  Delaware counsel to the Sponsor Subsidiaries and the Borrower.

         3.       Favorable opinions of Jones Day, special counsel to El Paso,
                  in respect of the Sponsor Subsidiaries and El Paso.

         4.       Favorable opinion of the general counsel or associate general
                  counsel of El Paso.

Sponsor Subsidiary Credit Agreement

<PAGE>

                                                                 EXHIBIT 5.07(f)
                                                           TO SPONSOR SUBSIDIARY
                                                                CREDIT AGREEMENT

[DATE]

To:      Mustang Investors, L.L.C.

         Copies to those Persons listed on the attached Schedule I

                  Reference is made to the Amended and Restated Sponsor
Subsidiary Credit Agreement (the "SPONSOR SUBSIDIARY CREDIT AGREEMENT"),
originally dated as of May 9, 2000 as amended and restated as of December 15,
2000, June 29, 2001, July 19, 2002 and as further amended and restated as of
April 16, 2003 among Noric Holdings, the other Sponsor Subsidiaries party
thereto and Mustang Investors, L.L.C. Capitalized terms used and not defined
herein have the respective meanings ascribed thereto in the Sponsor Subsidiary
Credit Agreement.

                  I, [name of officer], [title of officer] of El Paso (the
"COMPANY"), hereby certify that I am a Responsible Officer of the Company duly
authorized to execute this Compliance Certificate, and I further certify that:

         (1)      No Incipient Event, Event of Default, Liquidating Event,
                  Sponsor Subsidiary Termination Event or Notice Event has
                  occurred and is continuing [or specify nature of Incipient
                  Event, Event of Default, Liquidating Event, Sponsor Subsidiary
                  Termination Event or Notice Event and action that Sponsor
                  Subsidiaries propose taking with respect to such event].

         (2)      Attached hereto as Schedule II are the true and correct pro
                  forma calculations, as of the date hereof and in accordance
                  with Section 5.07(f) of the Sponsor Subsidiary Credit
                  Agreement, of the financial covenants set forth under Section
                  5.04(a), (b) and (f) of the Sponsor Subsidiary Credit
                  Agreement.

         (3)      Attached hereto as Schedule III are true and correct copies of
                  the Appraisals referred to in Section 5.07 of the Sponsor
                  Subsidiary Credit Agreement.

IN WITNESS WHEREOF, I have hereunto set my hand as of the date first above
written.

                                            By  ______________________________
                                            Name:
                                            Title:

Sponsor Subsidiary Credit Agreement

<PAGE>

                                                                      SCHEDULE I

                             SCHEDULE OF ADDRESSEES

Mustang Investors, L.L.C.
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890 - 1600
Attention: Corporate Trust Department
Facsimile No.: 302-427-4749

Rio Grande Trust II
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890 - 1600
Attention: Corporate Trust Department
Facsimile No.: 302-651-8882

Citicorp North America, Inc.
as Administrative Agent
388 Greenwich Street
New York, NY 10013
Attention: Global Maximization Unit
Facsimile No.: 212-816-0262

Copy to:
Citibank Delaware
Disclosure Unit
Two Penns Way
Suite 200
New Castles, DE 19720
Attention: Sue Ann Leighty
Facsimile No.: (212) 994-0961

Capital Structuring
Citibank, N.A.
388 Greenwich Street
37th Floor
New York, NY 10013
Attention: Elliot Conway, Managing Director, Capital Structuring
Facsimile No.: 212-816-0636

Citibank, N.A.
1200 Smith Street
Suite 2000
Houston, TX 77002
Attention: Amy Pincu, Relationship Manager, El Paso Corporation
Facsimile No.: 713-654-2849

Sponsor Subsidiary Credit Agreement

<PAGE>

                                                                 EXHIBIT 7.04(f)
                                                           TO SPONSOR SUBSIDIARY
                                                                CREDIT AGREEMENT

[DATE]

To:      Mustang Investors, L.L.C.

         Copies to those Persons listed on the attached Schedule I

                  Reference is made to the Amended and Restated Sponsor
Subsidiary Credit Agreement (the "SPONSOR SUBSIDIARY CREDIT AGREEMENT"),
originally dated as of May 9, 2000 as amended and restated as of December 15,
2000, June 29, 2001 and July 19, 2002 and as further amended and restated as of
April 16, 2003, among Noric Holdings, the other Sponsor Subsidiaries party
thereto, Mustang Investors, L.L.C. and certain other parties named therein.
Capitalized terms used and not defined herein have the respective meanings
ascribed thereto in the Sponsor Subsidiary Credit Agreement.

                  I, [name of officer], [title of officer] of El Paso (the
"COMPANY"), hereby certify that I am a Responsible Officer of the Company duly
authorized to execute this Compliance Certificate, and I further certify that:

         (1)      Immediately prior and immediately after the making of the
                  transfer set forth in (4) below (but after giving effect to
                  all prepayments of Advances and payments of Cash Collateral
                  Amounts made on or prior to the date hereof) no Collateral
                  Shortfall Amount exists.

         (2)      Immediately prior and immediately after the making of the
                  transfer set forth in (4) below each Sponsor Subsidiary is in
                  compliance with the requirements of Section 5.04(c) of the
                  Sponsor Subsidiary Credit Agreement determined as of the
                  Coverage Test Date immediately prior to (or, if applicable,
                  occurring on) the date hereof.

         (3)      No Incipient Event, Event of Default, Liquidating Event,
                  Sponsor Subsidiary Termination Event or Notice Event has
                  occurred and is continuing or would result from the making of
                  the transfer set forth in (4) below.

         (4)      The amount to be transferred pursuant to Section 7.04(f) of
                  the Sponsor Subsidiary Credit Agreement on the date hereof is
                  $_____________.

IN WITNESS WHEREOF, I have hereunto set my hand as of the date first above
written.

                                               By  ____________________________
                                               Name:
                                               Title:

Sponsor Subsidiary Credit Agreement

<PAGE>

                                                                      SCHEDULE I

                             SCHEDULE OF ADDRESSEES

Mustang Investors, L.L.C.
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890 - 1600
Attention: Corporate Trust Department
Facsimile No.: 302-427-4749

Rio Grande Trust II
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890 - 1600
Attention: Corporate Trust Department
Facsimile No.: 302-651-8882

Citicorp North America, Inc.
as Administrative Agent
388 Greenwich Street
New York, NY 10013
Attention: Global Maximization Unit
Facsimile No.: 212-816-0262

Copy to:
Citibank Delaware
Disclosure Unit
Two Penns Way
Suite 200
New Castles, DE 19720
Attention: Sue Ann Leighty
Facsimile No.: (212) 994-0961

Capital Structuring
Citibank, N.A.
388 Greenwich Street
37th Floor
New York, NY 10013
Attention: Elliot Conway, Managing Director, Capital Structuring
Facsimile No.: 212-816-0636

Citibank, N.A.
1200 Smith Street
Suite 2000
Houston, TX 77002
Attention: Amy Pincu, Relationship Manager, El Paso Corporation
Facsimile No.: 713-654-2849

Sponsor Subsidiary Credit Agreement

<PAGE>

                                                                 EXHIBIT 7.04(g)
                                                           TO SPONSOR SUBSIDIARY
                                                                CREDIT AGREEMENT

[DATE]

To:      Mustang Investors, L.L.C.

         Copies to those Persons listed on the attached Schedule I

                  Reference is made to the Amended and Restated Sponsor
Subsidiary Credit Agreement (the "SPONSOR SUBSIDIARY CREDIT AGREEMENT"),
originally dated as of May 9, 2000 as amended and restated as of December 15,
2000, June 29, 2001 and July 19, 2002 and as further amended and restated as of
April 16, 2003, among Noric Holdings, the other Sponsor Subsidiaries party
thereto, Mustang Investors, L.L.C. and certain other parties named therein.
Capitalized terms used and not defined herein have the respective meanings
ascribed thereto in the Sponsor Subsidiary Credit Agreement.

                  I, [name of officer], [title of officer] of El Paso (the
"COMPANY"), hereby certify that I am a Responsible Officer of the Company duly
authorized to execute this Compliance Certificate, and I further certify that:

         (1)      No Incipient Event, Event of Default, Liquidating Event,
                  Sponsor Subsidiary Termination Event or Notice Event has
                  occurred and is continuing or would result from the transfer
                  set forth in (3) below.

         (2)      Attached hereto as Schedule II are true and correct
                  calculations demonstrating compliance with the financial
                  covenant set forth in Section 5.04(f) of the Sponsor
                  Subsidiary Credit Agreement as of the date hereof.

         (3)      The amount of the Total Cash Collateral Amount to be
                  transferred pursuant to Section 7.04(g) of the Sponsor
                  Subsidiary Credit Agreement is $_____________.

IN WITNESS WHEREOF, I have hereunto set my hand as of the date first above
written.

                                              By  _____________________________
                                              Name:
                                              Title:

Sponsor Subsidiary Credit Agreement

<PAGE>

                                                                      SCHEDULE I

                       SCHEDULE OF ADDITIONAL ADDRESSEES

Mustang Investors, L.L.C.
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890 - 1600
Attention: Corporate Trust Department
Facsimile No.: 302-427-4749

Rio Grande Trust II
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890 - 1600
Attention: Corporate Trust Department
Facsimile No.: 302-651-8882

Citicorp North America, Inc.
as Administrative Agent
388 Greenwich Street
New York, NY 10013
Attention: Global Maximization Unit
Facsimile No.: 212-816-0262

Copy to:
Citibank Delaware
Disclosure Unit
Two Penns Way
Suite 200
New Castles, DE 19720
Attention: Sue Ann Leighty
Facsimile No.: (212) 994-0961

Capital Structuring
Citibank, N.A.
388 Greenwich Street
37th Floor
New York, NY 10013
Attention: Elliot Conway, Managing Director, Capital Structuring
Facsimile No.: 212-816-0636

Citibank, N.A.
1200 Smith Street
Suite 2000
Houston, TX 77002
Attention: Amy Pincu, Relationship Manager, El Paso Corporation
Facsimile No.: 713-654-2849

Sponsor Subsidiary Credit Agreement

<PAGE>

                                                             SCHEDULE 5.09(d)(A)
                                                           TO SPONSOR SUBSIDIARY
                                                                CREDIT AGREEMENT

                         OIL AND GAS PROPERTIES HELD BY
            CIG CONTROLLED BUSINESS AS AT THE THIRD RESTATEMENT DATE

Sponsor Subsidiary Credit Agreement
<PAGE>

                                                                  CONFORMED COPY

                  ---------------------------------------------
                           FIFTH AMENDED AND RESTATED
                                EL PASO AGREEMENT
                 -----------------------------------------------

                       ORIGINALLY DATED AS OF MAY 9, 2000,
                          AS AMENDED AND RESTATED AS OF
                        DECEMBER 15, 2000, JUNE 29, 2001,
                       NOVEMBER 7, 2001 AND JULY 19, 2002
                             AND FURTHER AMENDED AND
                          RESTATED AS OF APRIL 16, 2003

El Paso Agreement

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                     PAGE
<S>                                                                                                                  <C>
..SECTION 1 Defined Terms; Rules of Construction...................................................................     2

         1.1.     Definitions.....................................................................................     2

         1.2.     Use of Certain Terms............................................................................     2

         1.3.     Accounting Terms................................................................................     2

         1.4.     No Presumption Against Any Party................................................................     2

         1.5.     Headings and References.........................................................................     3

SECTION 2 Representations and Warranties.........................................................................      3

         2.1.     Due Formation...................................................................................     3

         2.2.     Authorization...................................................................................     3

         2.3.     Governmental Approvals; No Conflicts............................................................     4

         2.4.     Binding Obligations; Enforceability.............................................................     4

         2.5.     Accounts .......................................................................................     4

         2.6.     Compliance with Laws and Agreements.............................................................     4

         2.7.     Litigation......................................................................................     4

         2.8.     Taxes...........................................................................................     5

         2.9.     Properties......................................................................................     5

         2.10.    ERISA    .......................................................................................     5

         2.11.    [Intentionally Omitted].........................................................................     6

         2.12.    Investment Company; Holding Company.............................................................     6

         2.13.    El Paso Parties.................................................................................     6

         2.14.    Priority .......................................................................................     6

         2.15.    No Default......................................................................................     6
</TABLE>

El Paso Agreement

<PAGE>

<TABLE>
<S>                                                                                                                   <C>
         2.16.    Disclosure......................................................................................     6

         2.17.    Representations of El Paso Parties..............................................................     7

         2.18.    Federal Reserve Regulations.....................................................................     7

SECTION 3 Performance Guarantee and Indemnification..............................................................      7

         3.1.     Subsidiary Guaranties...........................................................................     7

         3.2.     General Indemnities.............................................................................    10

         3.3.     Survival of Indemnification Obligations.........................................................    14

         3.4.     Limitations on Indemnification Obligations......................................................    15

         3.5.     Procedural Requirements.........................................................................    15

         3.6.     Limitation With Respect to Production Payments..................................................    17

         3.7.     Waiver of Fiduciary Duty........................................................................    17

SECTION 4 Payments................................................................................................    17

         4.1.     Payments .......................................................................................    17

         4.2.     Taxes    .......................................................................................    17

SECTION 5 El Paso Covenants.......................................................................................    19

         5.1.     Separate Existence..............................................................................    19

         5.2.     Affirmative Covenants...........................................................................    24

         5.3.     Negative Covenants..............................................................................    27

         5.4.     Reporting Requirements..........................................................................    33

SECTION 6 Miscellaneous...........................................................................................    39

         6.1.     Amendments......................................................................................    39

         6.2.     Addresses for Notices...........................................................................    39

         6.3.     No Waiver; Cumulative Remedies..................................................................    40

         6.4.     Waiver of Jury Trial............................................................................    41

         6.5.     Jurisdiction, Etc...............................................................................    41
</TABLE>

                                       ii

El Paso Agreement

<PAGE>

<TABLE>
<S>                                                                                                                   <C>
         6.6.     Assignment......................................................................................    41

         6.7.     Governing Law...................................................................................    41

         6.8.     Counterparts....................................................................................    41

         6.9.     Survival of Representations, Warranties and Indemnities; Entire Agreement.......................    42

         6.10.    Severability....................................................................................    42

         6.11.    Scope of Third-Party Beneficiaries..............................................................    43

         6.12.    Obligations Absolute............................................................................    43

         6.13.    Waiver..........................................................................................    44

         6.14.    Subrogation.....................................................................................    44

         6.15.    Termination.....................................................................................    44

         6.16.    Permitted Disclosure............................................................................    44
</TABLE>

EXHIBIT A                           DEFINITIONS

EXHIBIT B                           FORM OF COMPLIANCE CERTIFICATES

SCHEDULE 2.8                        SPONSOR SUBSIDIARIES INCLUDED IN TAX RETURN

SCHEDULE 5.4(B)                     FORM OF OPERATING REPORT

                                      iii

El Paso Agreement

<PAGE>

                                EL PASO AGREEMENT

                  EL PASO AGREEMENT, originally dated as of May 9, 2000, as
amended and restated as of December 15, 2000, June 29, 2001, November 7, 2001
and July 19, 2002 and as further amended and restated as of April 16, 2003 (as
amended, amended and restated, or otherwise modified from time to time, this
"AGREEMENT"), by El Paso Corporation (formerly known as El Paso Energy
Corporation), a Delaware corporation ("EL PASO"), in favor of Mustang Investors,
L.L.C., a Delaware limited liability company ("MUSTANG"), and the other
Indemnified Persons (as defined below).

                  PRELIMINARY STATEMENTS

                  A.       El Paso is, through one or more wholly owned
subsidiaries, the owner of 100% of the member interests of each of Noric
Holdings, Noric Holdings I, Noric Holdings III, Noric Holdings IV and Appaloosa.
Appaloosa is the Clydesdale General Partner and controls Clydesdale. Noric
Holdings is the Clydesdale Class A Limited Partner and Noric Holdings I is the
Noric Class A Member. Noric is the Palomino Member and the Paso Fino Member and
Noric controls Palomino and Paso Fino. Palomino is the Noric LP General Partner
and controls Noric LP. Noric Holdings IV is the Lipizzan Limited Partner and the
Lusitano Member and controls Lusitano. Lusitano is the Lipizzan General Partner
and controls Lipizzan.

                  B.       On the date hereof, (a) Noric Holdings I's Clydesdale
Class A Limited Partnership Interest will be redeemed in full and (b) Clydesdale
will transfer to Noric Holdings I the Noric Class B Membership Interest.

                  C.       Pursuant to the Redemption, Withdrawal and Consent
Agreement dated as of April 16, 2003, Clydesdale will redeem and retire in full
Mustang's Clydesdale Class B Limited Partnership Interest and Distribute to
Mustang in kind, as consideration for such redemption and retirement,
Clydesdale's rights, title and interest in and to the Original Outstanding
Advances under the Original Sponsor Subsidiary Credit Agreement in the unpaid
aggregate principal amount of $753,085,340.10.

                  D.       El Paso, Appaloosa, Noric Holdings, Noric Holdings I
and other Sponsor Subsidiaries desire Mustang to become the lender in respect of
the Advances in accordance with the Sponsor Subsidiary Credit Agreement.

                  D.       Mustang shall enter into the Redemption, Withdrawal
and Consent Agreement and the Sponsor Subsidiary Credit Agreement only on the
condition, among others, that El Paso provides certain assurances set forth in
this Agreement.

                  In consideration of the premises, and intending to be legally
bound by this Agreement, El Paso agrees as follows:

El Paso Agreement

<PAGE>

                                   SECTION 1

                      DEFINED TERMS; RULES OF CONSTRUCTION

                  1.1.     Definitions. (a)       As used in this Agreement,
capitalized terms defined in the preamble and other Sections of this Agreement
and Exhibit A to this Agreement shall have the meanings set forth therein and
capitalized terms used herein (including in the Preliminary Statements) but not
otherwise defined herein shall have the meanings set forth in the Definitions
Agreement dated as of April 16, 2003 by and among El Paso, Noric Holdings, the
other Sponsor Subsidiaries, Mustang, Clydesdale and the other parties thereto.

         (b)      Defined terms used in this Agreement and defined by reference
to the El Paso New Revolving Facility (including defined terms used in such
defined terms) shall have the meaning set forth in the El Paso New Revolving
Facility dated as of April 16, 2003, provided that any amendments to such terms
shall be effective for purposes of this Agreement only if such amendments are
expressly consented to by Mustang and the Administrative Agent (as defined in
the El Paso New Revolving Facility).

         (c)      Unless otherwise specified, subject to clause (b) above,
defined terms used in Section 5.3, but not defined herein or in the Definitions
Agreement, shall be deemed to have the meaning set forth in the El Paso New
Revolving Facility.

                  1.2.     Use of Certain Terms. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "FROM" means "FROM AND INCLUDING" and the words "TO" and "UNTIL" mean
"to but excluding". Unless the context of this Agreement requires otherwise, the
plural includes the singular, the singular includes the plural, and "INCLUDING"
has the meaning of "including without limitation". The words "HEREOF", "HEREIN",
"HEREBY", "HEREUNDER", and other similar terms of this Agreement refer to this
Agreement as a whole and not exclusively to any particular provision of this
Agreement. All pronouns and any variations thereof shall be deemed to refer to
the masculine, feminine or neuter, or singular or plural, forms thereof, as the
identity of the Person or Persons may require.

                  1.3.     Accounting Terms. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if El Paso notifies Mustang, the Mustang Administrative Agent and the
Equity Investors that El Paso requests an amendment to any provision hereof to
eliminate the effect of any change occurring after the date hereof in GAAP or in
the application thereof on the operation of or calculation of compliance with
such provision (or if the Mustang Administrative Agent notifies El Paso that the
Majority Instructing Group request an amendment to the provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

                  1.4.     No Presumption Against Any Party. Neither this
Agreement nor any uncertainty or ambiguity herein shall be construed against any
particular party, whether under

El Paso Agreement

                                       2

<PAGE>

any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by each of the parties and their counsel and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties hereto.

                  1.5.     Headings and References. Section and other headings
are for reference only, and shall not affect the interpretation or meaning of
any provision of this Agreement. Unless otherwise provided, references to
Articles, Sections, Schedules and Exhibits shall be deemed references to
Articles and Sections of, and Schedules and Exhibits to, this Agreement. Whether
or not specified herein or therein, references to this Agreement and any other
Operative Document include this Agreement and the other Operative Documents as
the same may be modified, amended, restated or supplemented from time to time
pursuant to the provisions hereof or thereof as permitted by the Operative
Documents. References to any other agreement or contract are to such agreement
or contract as amended, modified or supplemented from time to time in accordance
with the terms hereof (if applicable) and thereof. Whether or not specified
herein, a reference to any law shall mean that law as it may be amended,
modified or supplemented from time to time, and any successor law. A reference
to a Person includes the successors and assigns of such Person, but such
reference shall not increase, decrease or otherwise modify in any way the
provisions in this Agreement governing the assignment of rights and obligations
under or the binding effect of any provision of this Agreement, including
Section 6.6.

                                   SECTION 2

                         REPRESENTATIONS AND WARRANTIES

                  El Paso hereby represents and warrants on and as of the
Closing Date, the Syndication Date, the Fourth Restatement Date and, with
respect to Section 2.16 only, the date of any Offering Materials as follows (it
being understood that, on any of the above dates, El Paso shall not be deemed to
be remaking representations and warranties as of any earlier date):

                  2.1.          Due Formation. El Paso is a Business Entity duly
formed, validly existing and in good standing under the laws of the State of
Delaware. Each El Paso Party (other than Clydesdale, Appaloosa, Noric or any
Sponsor Subsidiary or any Subsidiary of any of the foregoing) (each such El Paso
Party, other than those excluded in the immediately preceding parenthetical
clause, a "RELEVANT EL PASO PARTY") is duly organized or formed, validly
existing and, if applicable, in good standing in the jurisdiction of its
organization or formation. Each of El Paso and the Relevant El Paso Parties
possesses all applicable Business Entity powers and other authorizations and
licenses necessary to engage in its business and operations as now conducted,
the failure to obtain or maintain which would have a Material Adverse Effect.

                  2.2.     Authorization. The execution, delivery and
performance by each of El Paso and the Relevant El Paso Parties of each
Operative Document to which it is a party are within its applicable Business
Entity powers, have been duly authorized by all necessary applicable Business
Entity action, and do not contravene (i) its Organizational Documents or (ii)
any law or any material contractual restriction binding on or affecting it.

El Paso Agreement

                                       3

<PAGE>

                  2.3.     Governmental Approvals; No Conflicts. No
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority is required for the due execution, delivery and
performance by each of El Paso and the Relevant El Paso Parties of each
Operative Document to which it is a party, except those necessary to comply with
laws, rules, regulations and orders required in the ordinary course to comply
with the ongoing obligations of El Paso under Sections 5.2 and 5.3 and of the
Relevant El Paso Parties under the Operative Documents.

                  2.4.     Binding Obligations; Enforceability. Each Operative
Document to which any of El Paso and the Relevant El Paso Parties is a party
constitutes the legal, valid and binding obligations of such Person, enforceable
against such Person in accordance with its terms, except as may be limited by
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors rights generally or by general principles of equity.

                  2.5.     Accounts. The consolidated balance sheet of El Paso
and its consolidated Subsidiaries as at December 31, 2002 and the related
consolidated statements of income and cash flows of El Paso and its consolidated
Subsidiaries for the fiscal year then ended, reported on by
PricewaterhouseCoopers LLP, independent public accountants, copies of which have
been furnished to Mustang and the Mustang Collateral Agent prior to the Fourth
Restatement Date, fairly present the consolidated financial condition of El Paso
and its consolidated Subsidiaries as at such date and the consolidated results
of the operations of El Paso and its consolidated Subsidiaries for the period
ended on such date, all in accordance with GAAP consistently applied.

                  2.6.     Compliance with Laws and Agreements. Each of El Paso
and the Relevant El Paso Parties is in compliance with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property, except where the failure to comply, individually or in the aggregate,
would not, in the reasonable judgment of El Paso, be expected to result in a
Material Adverse Effect, provided that the alleged failures to comply with such
laws, rules, regulations, and orders that are disclosed in any 10-K, 8-K, or
10-Q filed by El Paso or any of its Subsidiaries with the SEC prior to the
Fourth Restatement Date shall not be deemed at any time by the parties to the
Operative Documents to be expected to have a Material Adverse Effect for any
purposes hereof or of the other Operative Documents.

                  2.7.     Litigation. There is no action, suit or proceeding
pending, or to the knowledge of El Paso threatened, against or involving El Paso
or any Relevant El Paso Party or Credit Related Party in any court, or before
any arbitrator of any kind, or before or by any Governmental Authority, existing
as of the Fourth Restatement Date that in the reasonable judgment of El Paso
(taking into account the exhaustion of all appeals) would have a Material
Adverse Effect (provided that any such action, suit, or proceeding disclosed in
any 10-K, 8-K, or 10-Q filed by El Paso or any of its Subsidiaries with the SEC
prior to the Fourth Restatement Date shall not be deemed at any time by the
parties to the Operative Documents to be expected to have a Material Adverse
Effect for any purposes hereof or of the other Operative Documents) or which
purports to affect the legality, validity, binding effect or enforceability of
any Operative Document.

El Paso Agreement

                                       4

<PAGE>

                  2.8.     Taxes. El Paso, each Relevant El Paso Party and each
Credit Related Party has duly filed all tax returns required to be filed by it,
and has duly paid and discharged all taxes, assessments and governmental charges
upon it or against its properties now due and payable, the failure to file or
pay which, as applicable, would have a Material Adverse Effect, unless and to
the extent only that the same are being contested by any such Person in good
faith and by appropriate proceedings. Each Sponsor Subsidiary that is eligible
to be included in the U.S. federal income tax consolidated return of El Paso
will elect to be so included. The Sponsor Subsidiaries listed on Schedule 2.8
hereto were included in the U.S. federal income tax consolidated return of El
Paso for the 2000 and 2001 Fiscal Years.

                  2.9.     Properties. El Paso, each Relevant El Paso Party and
each Credit Related Party has good title to its respective properties and
assets, free and clear of all mortgages, liens and encumbrances, except for (a)
Liens granted pursuant to the Sponsor Subsidiary Security Agreement and the
Sponsor Subsidiary Collateral Agent Agreement, (b) other mortgages, liens and
other encumbrances (including covenants, restrictions, rights, easements and
minor irregularities in title) that do not materially interfere with the
business or operations of such Person as presently conducted or that are
permitted by Section 5.3(a) or permitted under the Sponsor Subsidiary Credit
Agreement, (c) Liens granted pursuant to the Security Documents (as defined in
the El Paso New Revolving Facility) and (d) Liens permitted by Section 6.01 of
the El Paso New Revolving Facility (as such Section 6.01 is in effect on the
date hereof), and except that no representation or warranty is made with respect
to Margin Stock other than the EPN Units pledged as Collateral (as defined in
Appendix A-1 to the Security and Intercreditor Agreement).

                  2.10.    ERISA. (a) No ERISA Termination Event has occurred or
is reasonably expected to occur with respect to any Plan which, with the giving
of notice or lapse of time, or both, would constitute an El Paso Event under
clause (i) of the definition thereof.

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

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

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

                  (e)      Neither El Paso nor any ERISA Affiliate has received
any notification that any Multiemployer Plan is in reorganization, insolvent or
has been terminated, within the meaning of Title IV of ERISA, and no
Multiemployer Plan is reasonably expected to be in

El Paso Agreement

                                       5

<PAGE>

reorganization, to be insolvent or to be terminated within the meaning of Title
IV of ERISA, the effect of which reorganization, insolvency or termination would
be the occurrence of an El Paso Event under clause (i) of the definition
thereof.

                  2.11.    [Intentionally Omitted].

                  2.12.    Investment Company; Holding Company. Neither El Paso
nor any El Paso Party is (a) an "investment company" or a "company" controlled
by an "investment company" within the meaning of the Investment Company Act of
1940 or (b) a "holding company" or a "subsidiary company" of a "holding company"
within the meaning of the Public Utility Holding Company Act of 1935.

                  2.13.    El Paso Parties.

                  (a)      The Mustang El Paso Member is a wholly owned
Subsidiary of El Paso;

                  (b)      Each Sponsor Subsidiary Member is an El Paso Company;

                  (c)      None of Noric, Palomino, Paso Fino, Noric LP,
Lusitano, Lipizzan, any Sponsor Subsidiary, any Intermediate Holder or any
Underlying Business is:

                  (i)      a Sonat Restricted Subsidiary; or

                  (ii)     directly owned by El Paso.

                  2.14.    Priority. The obligations of El Paso and any
Affiliate of El Paso under or in respect of the El Paso Demand Loans, Affiliate
Loans and interest on the A-Loans (including any guarantee by El Paso of El Paso
Demand Loans and A-Loans made to Affiliates of El Paso pursuant to the El Paso
Guaranty) and under Section 3 of this Agreement rank in priority of payment pari
passu with all other senior unsecured Debt of El Paso or such Affiliate of El
Paso (as applicable).

                  2.15.    No Default. No Event of Default, Notice Event,
Liquidating Event, Sponsor Subsidiary Termination Event or Incipient Event has
occurred and is continuing.

                  2.16.    Disclosure. El Paso hereby represents and warrants on
and as of the Closing Date, the Syndication Date, the Fourth Restatement Date,
each Capital Contribution Date, each Acquisition/Accession Date or the date of
any Offering Materials (each, a "RELEVANT DATE"), as the case may be (it being
understood that, on any of the above dates, El Paso shall not be deemed to be
remaking representations and warranties as of any earlier date):

                  (a)      Subject to the Disclosure Qualification, all
         information that has been made available to the Administrative Agent,
         CXC, the Lenders, the APA Purchasers and the Equity Investors (and the
         members of the Equity Investors or their agents (it being agreed that
         Citibank, N.A. and its Affiliates are not agents of the Equity
         Investors)) by El Paso or any of its directors, officers, employees,
         agents, advisors or representatives (all of the foregoing,
         collectively, "REPRESENTATIVES") prior to such Relevant Date in
         connection with the Operative Documents and the transactions
         contemplated by the Operative

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         Documents, in each case taken as a whole and as modified or
         supplemented from time to time prior to such Relevant Date, was
         complete and correct in all material respects on such Relevant Date and
         did not on such Relevant Date contain any untrue statement of a
         material fact or omit to state a material fact necessary in order to
         make the statements contained therein not misleading in any material
         respect in light of the circumstances under which such statements were
         made.

                  (b)      Any historical financial data provided by El Paso or
         its Affiliates or any of their respective Representatives to the
         Administrative Agent, CXC, the Lenders, the APA Purchasers and the
         Equity Investors (and the members of the Equity Investors or their
         agents) prior to such Relevant Date in connection with the transactions
         contemplated by the Operative Documents was prepared in accordance with
         GAAP then in effect (or with appropriate reconciliation to such GAAP if
         required by Applicable Law or requested by the Administrative Agent or
         the Equity Investors) and fairly presented the financial condition and
         results of operations of El Paso (subject to year end audit
         adjustments) as of the dates and for the periods applicable thereto,
         except as otherwise disclosed therein or in the footnotes thereto or as
         otherwise disclosed in writing to the Administrative Agent and the
         Equity Investors.

                  (c)      All financial projections that were prepared by El
         Paso or its Representatives and made available to the Administrative
         Agent, CXC, the Lenders, the APA Purchasers and the Equity Investors
         (and the members of the Equity Investors or their agents) prior to such
         Relevant Date in connection with the transactions contemplated by the
         Operative Documents were prepared in good faith based upon assumptions
         believed by El Paso to be reasonable in the circumstances (it being
         understood that such projections are subject to significant
         uncertainties and contingencies, many of which are beyond El Paso's
         control, and that no assurance can be given that the projections will
         be realized).

                  2.17.    Representations of El Paso Parties. All of the
written representations made by any El Paso Party in any Operative Document on
any Relevant Date or any certificate delivered on any Relevant Date pursuant to
any Operative Document were, and on any future Relevant Date will be, true and
correct in all material respects on such Relevant Date, other than any such
representations or warranties that, by their terms, refer to a specific date
other than any such date, in which case as of such specific date.

                  2.18.    Federal Reserve Regulations. The Advances under the
Sponsor Subsidiary Credit Agreement and the application of the proceeds thereof
as provided therein will not violate Regulation T, U or X of the Board of
Governors.

                                   SECTION 3

                    PERFORMANCE GUARANTEE AND INDEMNIFICATION

                  3.1.             Subsidiary Guaranties. Subject to Section
3.6, El Paso hereby absolutely, unconditionally and irrevocably guarantees, for
the benefit of the Indemnified Persons, the following Obligations:

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                  (a)      Sponsor Subsidiary Obligations. The due and punctual
         payment, performance and observance by each Sponsor Subsidiary of each
         of its Obligations under each Operative Document to which it is a
         party, including its obligations in respect of the payment of
         principal, interest and other amounts owing under the Amended and
         Restated Sponsor Subsidiary Credit Agreement, the obligations of Noric
         Holdings I as the Noric Class A Member and the Noric Class B Member
         under the Noric Company Agreement, and (in the case of Noric Holdings
         IV) the obligations of Noric Holdings IV as the Lipizzan Limited
         Partner under the Lipizzan Partnership Agreement and as the Lusitano
         Member under the Lusitano Company Agreement, including, in each case,
         any obligation to make mandatory Capital Contributions pursuant to the
         Noric Company Agreement, the Lusitano Company Agreement or the Lipizzan
         Partnership Agreement, as applicable (such Obligations, the "SPONSOR
         SUBSIDIARY OBLIGATIONS").

                  (b)      Sponsor Subsidiary Member Obligations. The due and
         punctual payment, performance and observance by each Sponsor Subsidiary
         Member of each of its Obligations under the Sponsor Subsidiary Company
         Agreement of the Sponsor Subsidiary of which it is a member and each
         other Operative Document to which such Sponsor Subsidiary Member is a
         party, including the obligations of each Sponsor Subsidiary Member
         under Section 4 of each such Sponsor Subsidiary Company Agreement and
         the obligation of each Sponsor Subsidiary Member to make Capital
         Contributions (as defined in each Sponsor Subsidiary Company Agreement)
         pursuant to each such Sponsor Subsidiary Company Agreement (the
         "SPONSOR SUBSIDIARY MEMBER OBLIGATIONS").

                  (c)      Appaloosa Obligations. Appaloosa's agreement not to
         exercise its rights as the Clydesdale General Partner to dissolve
         Clydesdale pursuant to the Clydesdale Partnership Agreement prior to
         the 90th day following the day after the Fourth Restatement Date (the
         "APPALOOSA OBLIGATIONS").

                  (d)      Clydesdale Obligations. Subject to the Redemption,
         Withdrawal and Consent Agreement and the other Operative Documents, the
         due and punctual performance by Clysdesdale with respect to its
         obligations in favor of any Indemnified Person ("CLYDESDALE
         OBLIGATIONS").

                  (e)      E&P Asset Counterparty Obligations. The due and
         punctual payment, performance and observance by each Counterparty to
         each E&P Participation Agreement and each Production Payment Agreement
         of each of its Obligations under each E&P Participation Agreement and
         each Production Payment Agreement to which it is a party and each other
         Operative Document to which it is a party (the "E&P ASSET COUNTERPARTY
         OBLIGATIONS").

                  (f)      Hydrocarbon Sales Contract Obligations. The due and
         punctual payment, performance and observance by each El Paso Party
         party to each El Paso Hydrocarbon Sales Contract of each of its
         Obligations under each El Paso Hydrocarbon Sales Contract to which it
         is a party and each other Operative Document to which it is a party
         (the "HYDROCARBON SALES CONTRACT OBLIGATIONS").

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<PAGE>

                  (g)      Noric Obligations. The due and punctual performance
         and observance by Noric of each of its Obligations under each Operative
         Document to which it is a party, including each obligation under
         Section 7.1 and Section 7.2 of the Noric Company Agreement, the
         obligations of Noric as the Palomino Member under the Palomino Company
         Agreement and the obligations of Noric as the Paso Fino Member under
         the Paso Fino Company Agreement, including any obligation to make
         mandatory Capital Contributions pursuant to the Palomino Company
         Agreement or the Paso Fino Company Agreement, as applicable (such
         Obligations, the "NORIC OBLIGATIONS").

                  (h)      Palomino Obligations. The due and punctual
         performance and observance by Palomino of each of its Obligations under
         each Operative Document to which it is a party, including the
         obligations of Palomino as the Noric LP General Partner under the Noric
         LP Partnership Agreement, including any obligation to make mandatory
         Capital Contributions pursuant to the Noric LP Partnership Agreement
         (such Obligations, the "PALOMINO OBLIGATIONS").

                  (i)      Paso Fino Obligations. The due and punctual
         performance and observance by Paso Fino of each of its Obligations
         under each Operative Document to which it is a party, including the
         obligations of Paso Fino as the Noric LP Limited Partner under the
         Noric LP Partnership Agreement, including any obligation to make
         mandatory Capital Contributions pursuant to the Noric LP Partnership
         Agreement (such Obligations, the "PASO FINO OBLIGATIONS").

                  (j)      Noric LP Obligations. The due and punctual
         performance and observance by Noric LP of each of its Obligations under
         each Operative Document to which it is a party (such Obligations, the
         "NORIC LP OBLIGATIONS").

                  (k)      Lusitano Obligations. The due and punctual
         performance and observance by Lusitano of each of its Obligations under
         each Operative Document to which it is a party, including the
         obligations of Lusitano as the Lipizzan General Partner under the
         Lipizzan Partnership Agreement, including any obligation to make
         mandatory capital contributions pursuant to the Lipizzan Partnership
         Agreement (such Obligations, the "LUSITANO OBLIGATIONS").

                  (l)      Lipizzan Obligations. The due and punctual
         performance and observance by Lipizzan of each of its Obligations under
         each Operative Document to which it is a party (such Obligations, the
         "LIPIZZAN OBLIGATIONS").

                  (m)      Sponsor Subsidiary Subordinated Note Holder
         Obligations. The due and punctual performance by any holder of the
         Sponsor Subsidiary Subordinated Note with respect to its obligations
         under the Sponsor Subsidiary Subordinated Note, including, without
         limitation, those obligations related to the subordination of the
         Sponsor Subsidiary Subordinated Note in accordance with Exhibit G to
         the Sponsor Subsidiary Credit Agreement (the "SPONSOR SUBSIDIARY
         SUBORDINATED NOTE HOLDER OBLIGATIONS").

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<PAGE>

                  (n)      Sponsor Subsidiary Note Obligations. The due and
         punctual performance by any Sponsor Subsidiary with respect to its
         obligations under the Sponsor Subsidiary Subordinated Note (the
         "SPONSOR SUBSIDIARY NOTE OBLIGATIONS").

                  3.2.     General Indemnities. Subject to Sections 3.4 and 3.7,
El Paso agrees to the fullest extent permitted by Applicable Law to indemnify
and hold harmless each Indemnified Person for and against, and to pay on an
After-Tax Basis, all Expenses (the Expenses on an After-Tax Basis being referred
to collectively as the "INDEMNIFIED AMOUNTS") that may be incurred or realized
by or asserted against such Indemnified Person relating to, growing out of or
resulting from:

                  (a)      Sponsor Subsidiary Obligations. Any breach by any
         Sponsor Subsidiary of any Sponsor Subsidiary Obligation; or

                  (b)      Sponsor Subsidiary Member Obligations. Any breach by
         any Sponsor Subsidiary Member of any Sponsor Subsidiary Member
         Obligation; or

                  (c)      Appaloosa Obligations. Any breach by Appaloosa of any
         Appaloosa Obligation; or

                  (d)      Clydesdale Obligations. Any breach by Clydesdale of
         any Clydesdale Obligation; or

                  (e)      Sponsor Subsidiary Note Obligations. Any breach by
         any Sponsor Subsidiary of any Sponsor Subsidiary Note Obligations; or

                  (f)      E&P Asset Counterparty Obligations. Any breach by any
         Counterparty to an E&P Participation Agreement or a Production Payment
         Agreement of any E&P Asset Counterparty Obligation; or

                  (g)      El Paso Hydrocarbon Sales Contract Obligations. Any
         breach by any El Paso Party party to an El Paso Hydrocarbon Sales
         Contract of any Hydrocardon Sales Contract Obligations; or

                  (h)      El Paso Obligations. Any breach by El Paso or any El
         Paso Party in the performance or observance of each of its covenants
         and obligations under this Agreement and each other Operative Document
         to which it is a party (other than any such breach expressly covered in
         another subsection of this Section 3.2); or

                  (i)      Noric Obligations. Any breach by Noric of any Noric
         Obligation; or

                  (j)      Palomino Obligations. Any breach by Palomino of any
         Palomino Obligation, including any failure by the Palomino Member to
         cause Palomino to comply with any Palomino Obligation; or

                  (k)      Paso Fino Obligations. Any breach by Paso Fino of any
         Paso Fino Obligation, including any failure by the Paso Fino Member to
         cause Paso Fino to comply with any Paso Fino Obligation; or

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<PAGE>

                  (l)      Noric LP Obligations. Any breach by Noric LP of any
         Noric LP Obligation, including any failure by Palomino or Paso Fino to
         cause Noric LP to comply with any Noric LP Obligation; or

                  (m)      Lusitano Obligations. Any breach by Lusitano of any
         Lusitano Obligation, including any failure by Noric Holdings IV to
         cause Lusitano to comply with any Lusitano Obligation; or

                  (n)      Lipizzan Obligations. Any breach by Lipizzan of any
         Lipizzan Obligation, including any failure by Lusitano or Noric
         Holdings IV to cause Lipizzan to comply with any Lipizzan Obligation;
         or

                  (o)      Sponsor Subsidiary Subordinated Note Holder
         Obligations. Any breach by the Sponsor Subsidiary Subordinated Note
         Holder of any Sponsor Subsidiary Subordinated Note Holder Obligation;
         or

                  (p)      Representations and Warranties. Any inaccuracy in, or
         any breach of, any written certification, representation or warranty
         made or deemed made:

                           (i)      by El Paso in this Agreement or by El Paso
                  or any El Paso Party or other Affiliate of El Paso (or any
                  officer or other authorized representative thereof) to or for
                  the benefit of any Indemnified Person or any Sponsor
                  Subsidiary in any Operative Document to which El Paso, any El
                  Paso Party or any such Affiliate is a party; or

                           (ii)     by El Paso or any El Paso Party or any other
                  Affiliate of El Paso (or any officer or other authorized
                  representative thereof) in any written report or certification
                  required hereunder or under any Operative Document to which El
                  Paso, any El Paso Party or any such Affiliate is a party,

         in each case in the case of clauses (i) and (ii) above (A) if but only
         if such certification, representation or warranty is made as of a
         specific date, as of the date as of which the facts stated therein were
         certified, represented or warranted and (B) in all other cases, as of
         any date or during any period to which such certification,
         representation or warranty may be applicable; or

                  (q)      Investigations; Litigation; Proceedings; Enforcement.
         (i) Enforcement of this Agreement or any other Operative Document to
         which an El Paso Party is a party and (ii) any investigation,
         litigation or proceeding, whether or not such Indemnified Person is a
         party thereto, that:

                           (A)      relates to, grows out of or results from any
                  action or omission, or alleged action or omission, by or on
                  behalf of or attributable to El Paso or any El Paso Party
                  (whether relating to any Sponsor Subsidiary or otherwise) in
                  the performance or observance of its obligations under or in
                  relation to the Operative Documents or the transactions
                  contemplated thereby; and

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<PAGE>

                           (B)      would not have resulted in Indemnified
                  Amounts incurred or realized by or asserted against such
                  Indemnified Person but for their being a party to, or a direct
                  or indirect participant in, or having a relationship described
                  in the definition of "INDEMNIFIED PERSON" to a party to, or a
                  direct or indirect participant in, the Operative Documents or
                  any of the transactions contemplated thereby; or

                  (r)      Substantive Consolidation. (i) Any petition or
         proceeding (x) seeking or asserting or (y) a court ordering, in any
         case or proceeding under the United States Bankruptcy Code involving El
         Paso, any El Paso Party or any other Subsidiary of El Paso, as debtor,
         that the assets and liabilities of Noric, Palomino, Paso Fino, Noric
         LP, Lusitano, Lipizzan or any Sponsor Subsidiary be consolidated
         substantively with the assets and liabilities of El Paso, any El Paso
         Party (other than Noric, Palomino, Paso Fino, Noric LP, Lusitano,
         Lipizzan or any Sponsor Subsidiary) or any other Subsidiary of El Paso
         (other than Noric, Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan or
         any Sponsor Subsidiary) and (ii) defending against any petition,
         proceeding or order referred to in clause (i) above; it being agreed
         that upon the occurrence of an event described in clause (i)(y) above
         which is or becomes a final judgment or order, the Indemnified Persons
         involved shall be entitled to recover from El Paso, as liquidated
         damages for Indemnified Amounts under such clause (i) (but without
         prejudice to amounts recoverable under clause (ii) above or any other
         provision of the Operative Documents) and not as a penalty, an
         aggregate amount equal to the Unrecovered Value (as defined in the
         Mustang Credit and Security Agreement) and all other accrued and unpaid
         payments owing to Mustang pursuant to the Sponsor Subsidiary Credit
         Agreement through the date of payment in full of such amount in
         addition to all other Indemnified Amounts hereunder; provided that all
         payments made pursuant to clause (i) shall be deemed to reduce the
         outstanding principal amount of the Advances, interest accrued thereon
         and other amounts owing in respect of the Sponsor Subsidiary Advances
         by such amount, as if such amounts had been paid by the Sponsor
         Subsidiaries under the Sponsor Subsidiary Credit Agreement; or

                  (s)      ERISA. Any liability or other Indemnified Amounts
         that Noric or any Sponsor Subsidiary may incur in connection with any
         Plan or Multiemployer Plan or otherwise under Title IV of ERISA; or

                  (t)      Expenses. Any amendment, supplement, modification,
         consent or waiver of, to or under any Operative Document (to the extent
         not otherwise reimbursed pursuant to any Operative Document); or

                  (u)      Freely Transferable Transaction Assets. Any portion
         of any Transaction Asset not being Freely Transferable at the time of
         any attempted Disposition thereof by the Sponsor Subsidiary Collateral
         Agent, the Noric Liquidator, the Noric LP Liquidator or the Lipizzan
         Liquidator, as the case may be (other than the Pre-Approved Energy
         Investment to the extent that it is subject to Section 4.14 (Change of
         Control) of the Indenture dated as of June 15, 1990 between Colorado
         Interstate Gas Company, a Delaware corporation and Texas Commerce Bank
         National Association, a national banking association, as trustee); or

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<PAGE>

                  (v)      Environmental Liabilities. The actual or alleged
         release, discharge or presence of Hazardous Materials on or from any
         property of any Intermediate Holder, any Underlying Business, any
         Sponsor Subsidiary, Noric, Palomino, Paso Fino, Noric LP, Lusitano,
         Lipizzan or any other El Paso Party, or on any E&P Participation
         Property or any Subject Interest, or any Environmental Action relating
         in any way to any such Person or property; or

                  (w)      Casualty, Etc. Any casualty, theft, personal injury,
         tort or other liability to a third party arising under or in connection
         with or attributable to any E&P Participation Property, Subject
         Interest or Energy Investment or any Intermediate Holder or Underlying
         Business relating thereto; or

                  (x)      Fraudulent Transfer or Conveyance. Any transfer,
         pledge or conveyance by any Sponsor Subsidiary to the extent found in
         any bankruptcy, insolvency, receivership or other similar proceeding to
         be a "fraudulent transfer" or "fraudulent conveyance" or "fraudulent
         preference"; or

                  (y)      Consolidated Tax Liability. Any Consolidated Taxes
         paid by any Sponsor Subsidiary with respect to any taxable period for
         which such Sponsor Subsidiary was a member of the El Paso consolidated
         group (including, without limitation, by reason of the application of
         Treasury Regulation Section 1.1502-6 or any similar provision of state,
         local or foreign tax law or regulation). If the Equity Interests of any
         Subsidiary of any Sponsor Subsidiary and any assets directly or
         indirectly held by any such Subsidiary (including any assets held by
         any partnership in which the Sponsor Subsidiary is a partner) are sold
         following a Liquidating Event, the benefits of this Section 3.2(y)
         shall inure to the purchaser of such shares or assets with respect to
         any such taxable period for which such Sponsor Subsidiary was a member
         of the El Paso consolidated group; or

                  (z)      E&P Participation Agreements and Production Payment
         Agreements. (i) Any repudiation or purported repudiation by any
         Counterparty (whether such Counterparty is in Bankruptcy or otherwise)
         of any E&P Participation Agreement or any Production Payment Agreement,
         (ii) any rejection or attempted rejection by any trustee in bankruptcy
         or any other Person of any E&P Participation Agreement or any
         Production Payment Agreement in the Bankruptcy of any Counterparty or
         any avoidance of any transfer of rights and/or interests or other
         property under any such Operative Document in any such Bankruptcy, or
         (iii) any E&P Participation Agreement or any Production Payment
         Agreement is not, or is asserted by any Counterparty or other party
         thereto not to be, the legal, valid and binding obligation of such
         Counterparty or other party thereto, enforceable in accordance with its
         terms against such Counterparty or other party thereto, including by
         reason of a lack of certainty of contract or subject matter; or

                  (aa)     E&P Participation Agreements. Without limiting the
         provisions of paragraph (z) above, any failure of an E&P Participation
         Agreement to convey to the relevant Sponsor Subsidiary, Noric or Noric
         LP, as the case may be, all of the net economic benefits and rights,
         and the legal and beneficial interest, of the Counterparty to such E&P
         Participation Agreement in the underlying E&P Participation Property,
         or to assign to such Sponsor Subsidiary, Noric or Noric LP, as the case
         may be, all of the rights

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<PAGE>

         under the Material E&P Agreements (as defined in such E&P Participation
         Agreement); or

                  (bb)     Perfection. Any failure to (x) perfect any Lien or
         other interest in any E&P Asset or (y) file, record or register any E&P
         Participation Agreement or any Production Payment Agreement or the
         interest of any Sponsor Subsidiary, Lipizzan, Noric or Noric LP, as the
         case may be, under any E&P Participation Agreement or any Production
         Payment Agreement with any Governmental Authority; or

                  (cc)     Qualification to Do Business. Any failure by any
         Sponsor Subsidiary, Lipizzan, Noric or Noric LP to qualify to do
         business in any state or other jurisdiction in which such Sponsor
         Subsidiary, Lipizzan, Noric or Noric LP, as the case may be, would not
         be required to qualify to do business but for its owning an E&P Asset.

                  El Paso hereby agrees that damages arising as a result of any
matter indemnified under Section 3.2(z) or (aa) (or under Section 3.2(bb) or
(cc), if any failure referred to therein directly or indirectly has any of the
effects described in Section 3.2(z) or (aa)) relating to an E&P Asset (or a
Sponsor Subsidiary's, Lipizzan's, Noric's or Noric LP's interest in any E&P
Participation Property, any Production Payment or any Subject Interest), or
under Section 3.2(p) resulting from a breach or inaccuracy of a representation
or warranty under Section 4.03 of the Sponsor Subsidiary Credit Agreement in
respect of an E&P Asset (or a Sponsor Subsidiary's, Lipizzan's, Noric's or Noric
LP's interest in any E&P Participation Property, any Production Payment or any
Subject Interest), are difficult to ascertain as at the date hereof and
accordingly El Paso agrees that a reasonable forecast of such damages would be
an amount, determined as at the Liquidation Start Date, equal to the discounted
present value of the Proved Reserves set forth in the most recent Reserve Report
with respect to such E&P Asset (or such Sponsor Subsidiary's, Lipizzan's,
Noric's or Noric LP's interest in such E&P Participation Property, in such
Production Payment or in such Subject Interest) upon which an E&P Borrowing Base
Determination or E&P Borrowing Base Redetermination was made determined using
the standardized methodology prescribed by the Securities and Exchange
Commission for the calculation of the discounted present value of Proved
Reserves for Securities and Exchange Commission reporting purposes (commonly
known as the "PV-10").

                  3.3.     Survival of Indemnification Obligations. All
indemnities provided for in this Agreement shall survive (without duplication)
the Transfer of any Clydesdale Partnership Interest, any Transfer of Interests,
or the Transfer of any Noric Membership Interest, any Palomino Membership
Interest, any Paso Fino Membership Interest, any Noric LP Partnership Interest,
any Lusitano Membership Interest, any Lipizzan Partnership Interest or any
Sponsor Subsidiary Membership Interest, any Transfer of the Advances or any
interest therein, or the liquidation of any holder of the Sponsor Subsidiary
Subordinated Note, Clydesdale, Noric, Palomino, Paso Fino, Noric LP, Lusitano,
Lipizzan or any Sponsor Subsidiary. After any such Transfer or liquidation, the
provisions of Section 3.2 shall inure to the benefit of each Indemnified Person
with respect to Indemnified Amounts arising in respect of the period during
which the partner, member or shareholder or other holder of an Equity Interest
(as applicable) who has Transferred its Clydesdale Partnership Interest, Noric
Membership Interest, Palomino Membership Interest, Paso Fino Membership
Interest, Noric LP Partnership Interest, any Lusitano Membership Interest, any
Lipizzan Partnership Interest or Sponsor Subsidiary

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<PAGE>

Membership Interest (as applicable) was a partner or member of any holder of the
Sponsor Subsidiary Subordinated Note, or a holder of the Sponsor Subsidiary
Advances (or any interest therein), Clydesdale, Noric, Palomino, Paso Fino,
Noric LP, Lusitano, Lipizzan or any Sponsor Subsidiary, as applicable (including
with respect to actions taken or omitted to be taken, and events occurring and
circumstances existing, during such period).

                  3.4.     Limitations on Indemnification Obligations. The
indemnities provided in Section 3.2 shall be subject to the following
limitations:

                  (a)               Limitation by Law. Such Sections shall be
         enforced only to the maximum extent permitted by Applicable Law.

                  (b)      Misconduct, Etc. No Person shall be indemnified or
         held harmless for, and El Paso shall have no liability for or in
         respect of, any Expenses with respect to such Person to the extent
         caused by or resulting from (i) the actual fraud, willful misconduct,
         bad faith or gross negligence of such Person or any of its Related
         Persons or (ii) any inaccuracy in, or breach of, any written
         certification, representation or warranty made by such Person or any of
         its Related Persons in any Operative Document or in any written report
         or certification required hereunder or under any other Operative
         Document (unless and to the extent such inaccuracy or breach is
         attributable to any written information provided by El Paso or its
         Affiliates), in each case under this clause (ii) (A) if, but only if,
         such certification, representation or warranty is made as of a specific
         date, as of the date as of which the facts stated therein were
         certified, represented or warranted and (B) in all other cases, as of
         any date or during any period to which such certification,
         representation or warranty may be applicable or (iii) any failure by
         such Person or any other Person to comply with any requirement under or
         pursuant to Section 6111(d) of the Code.

                  (c)      No Duplication. Indemnified Amounts under Section 3.2
         shall be without duplication of any amounts payable and actually paid
         under indemnification provisions of any other Operative Document or
         other agreement.

                  3.5.     Procedural Requirements. (a) Notice of Claims. Any
Indemnified Person that proposes to assert a right to be indemnified under this
Section 3 will, promptly after receipt of notice of commencement of any action,
suit or proceeding against such Indemnified Person in respect of which a claim
is to be made against El Paso under this Section 3 (an "INDEMNIFIED
PROCEEDING"), or the incurrence or realization of Indemnified Amounts in respect
of which a claim is to be made against El Paso under this Section 3, notify El
Paso of the commencement of such Indemnified Proceeding or of such incurrence or
realization, enclosing a copy of all relevant documents, including all papers
served and claims made, but the omission so to notify El Paso promptly of any
such Indemnified Proceeding or incurrence or realization shall not relieve (i)
El Paso from any liability that it may have to such Indemnified Person under
this Section 3 or otherwise, except, as to El Paso's liability under this
Section 3, to the extent, but only to the extent, that El Paso shall have been
prejudiced by such omission or (ii) any other indemnitor from liability that it
may have to any Indemnified Person under the Operative Documents.

El Paso Agreement

                                       15

<PAGE>

                  (b)      Defense of Proceedings. In case any Indemnified
Proceeding shall be brought against any Indemnified Person and it shall notify
El Paso of the commencement thereof, El Paso shall be entitled to participate
in, and to assume the defense of, such Indemnified Proceeding with counsel
reasonably satisfactory to such Indemnified Person, and, after notice from El
Paso to such Indemnified Person of El Paso's election so to assume the defense
thereof and the failure by such Indemnified Person to object to such counsel
within ten Business Days following its receipt of such notice, El Paso shall not
be liable to such Indemnified Person for legal or other expenses incurred after
such notice of election to assume such defense except as provided below and
except for the reasonable costs of investigating, monitoring or cooperating in
such defense subsequently incurred by such Indemnified Person reasonably
necessary in connection with the defense thereof. Such Indemnified Person shall
have the right to employ its counsel in any such Indemnified Proceeding, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless:

                  (i)      the employment of counsel by such Indemnified Person
         at the expense of El Paso has been authorized in writing by El Paso;

                  (ii)     such Indemnified Person shall have reasonably
         concluded in its good faith (which conclusion shall be determinative
         unless a court determines that conclusion was not reached reasonably
         and in good faith) that there is or may be a conflict of interest
         between El Paso and such Indemnified Person in the conduct of the
         defense of such Indemnified Proceeding or that there are or may be one
         or more different or additional defenses, claims, counterclaims, or
         causes of action available to such Indemnified Person (it being agreed
         that in any case referred to in this clause (ii) El Paso shall not have
         the right to direct the defense of such Indemnified Proceeding on
         behalf of the Indemnified Person);

                  (iii)    El Paso shall not have employed Jones Day, or other
         counsel reasonably acceptable to the Indemnified Person, to assume the
         defense of such Indemnified Proceeding within a reasonable time after
         notice of the commencement thereof (provided, however, that this clause
         shall not be deemed to constitute a waiver of any conflict of interest
         which may arise with respect to any such counsel); or

                  (iv)     any counsel employed by El Paso shall fail to timely
         commence or maintain the defense of such Indemnified Proceeding,

in each of which cases the fees and expenses of counsel for such Indemnified
Person shall be at the expense of El Paso; provided that without the prior
written consent of such Indemnified Person, El Paso shall not settle or
compromise, or consent to the entry of any judgment in, any pending or
threatened Indemnified Proceeding, unless such settlement, compromise or consent
or related judgment includes an unconditional release of such Indemnified Person
from all liability for Expenses arising out of such claim, action,
investigation, suit or other legal proceeding. No Indemnified Person shall
settle or compromise, or consent to the entry of any judgment in, any pending or
threatened Indemnified Proceeding in respect of which any payment would result
hereunder or under the other Operative Documents without the prior written
consent of El Paso, such consent not to be unreasonably withheld or delayed.
Only one counsel shall be retained by all Indemnified Persons with respect to
any Indemnified Proceeding, unless counsel for any

El Paso Agreement

                                       16

<PAGE>

Indemnified Person reasonably concludes in good faith (which conclusion shall be
determinative unless a court determines that conclusion was not reached
reasonably and in good faith) that there is or may be a conflict of interest
between such Indemnified Person and one or more other Indemnified Persons in the
conduct of the defense of such Indemnified Proceeding or that there are or may
be one or more different or additional defenses, claims, counterclaims, or
causes of action available to such Indemnified Person (it being agreed that in
any case referred to in this sentence such Indemnified Person may retain
separate counsel together with all other Indemnified Persons subject to the same
conflict of interest or sharing such additional defenses, claims, counterclaims
or causes of action).

SUBJECT TO SECTION 3.4, THE FOREGOING INDEMNITIES SHALL EXPRESSLY INCLUDE ANY
INDEMNIFIED AMOUNTS ATTRIBUTABLE TO THE ORDINARY, SOLE OR CONTRIBUTORY
NEGLIGENCE OF ANY INDEMNIFIED PERSON.

                  3.6.     Limitation With Respect to Production Payments. El
Paso does not guarantee that the quantity of Hydrocarbons produced from the
Subject Lands (as defined in each Production Payment Agreement) and attributable
to the Subject Interests will be sufficient to satisfy and discharge the
Production Payments and El Paso shall have no liability to indemnify or hold
harmless any Indemnified Person for any such insufficiency in the quantity of
Hydrocarbons produced from the Subject Lands and attributable to the Subject
Interests; provided, however, the foregoing does otherwise restrict or limit any
of El Paso's guarantees, indemnities, representations or other obligations under
this Agreement that are related to the Production Payment Interests, including
El Paso's Obligations under Sections 3.1(e), 3.1(f), 3.2(f), 3.2(g), 3.2(z),
3.2(bb) and 5.4(b)(vii).

                  3.7.     Waiver of Fiduciary Duty. El Paso hereby agrees that
the Class B Member of each Sponsor Subsidiary shall not be bound by a fiduciary
duty to act in the best interests of such Sponsor Subsidiary or any holder of
any interest therein, but shall be entitled to vote in a manner and to take
actions which it shall determine, in its sole discretion, to be in the best
interests of Mustang and the members and creditors of Mustang and shall be fully
indemnified and held harmless in so voting or acting in accordance with this
Section 3.

                                    SECTION 4

                                    PAYMENTS

                  4.1.     Payments. All payments to be made by El Paso under
Section 3 shall be paid by El Paso within two Business Days following demand
therefor, accompanied, as may be appropriate in the context, by supporting
documentation in reasonable detail. Payment shall be made to the bank account or
at another location as such Indemnified Person shall designate in writing or as
is expressly required under any Operative Document the obligations under which
are the subject of any such payment, not later than 10:00 AM (New York time) on
the date for such payment in immediately available funds.

                  4.2.     Taxes. (a)        Any and all payments by El Paso
hereunder shall be made, in accordance with Section 4.1, free and clear of and
without deduction for any Indemnified Taxes

El Paso Agreement

                                       17

<PAGE>

or Other Taxes, provided that if El Paso shall be required to deduct any
Indemnified Taxes or Other Taxes from such payment, then, (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
4.2) the Indemnified Person receives an amount equal to the sum it would have
received had no such deductions been made, (ii) El Paso shall make such
deductions, and (iii) El Paso shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.

                  (b)      In addition, El Paso shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.

                  (c)      El Paso shall indemnify each Indemnified Person,
within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by such Indemnified Person on or with
respect to any payment by or on account of any obligation of El Paso hereunder
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section 4.2) and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to El Paso by such Indemnified
Person shall be conclusive absent manifest error.

                  (d)      As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by El Paso to a Governmental Authority, El Paso
shall deliver to the relevant Indemnified Person the original or a certified
copy of a receipt issued by such Governmental Authority evidencing such payment,
a copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the relevant Indemnified Person.

                  (e)       Any Indemnified Person that is organized under the
laws of a jurisdiction other than that in which El Paso is located (it being
understood that the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction) and
that is entitled to an exemption from or reduction of withholding tax under the
law of the United States, or of the jurisdiction in which El Paso is located, or
any treaty to which such jurisdiction is a party, with respect to payments under
this Agreement shall deliver to El Paso (with a copy to the Mustang Collateral
Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law or reasonably
requested by El Paso as will permit such payments to be made without withholding
or at a reduced rate.

                  (f)      Each relevant Indemnified Person shall determine if,
in its reasonable discretion, it has received a refund of any Taxes or Other
Taxes as to which it has been indemnified by El Paso or with respect to which El
Paso has paid additional amounts pursuant to this Section 4.2. If it determines
that it has received any such refund, it shall pay over such refund to El Paso
(but only to the extent of indemnity payments made, or additional amounts paid,
by El Paso under this Section 4.2 with respect to the Taxes or Other Taxes
giving rise to such refund), net of all out-of-pocket expenses of such
Indemnified Person and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund); provided, that El
Paso, upon the request of such Indemnified Person agrees to repay the amount
paid over to El Paso (plus any penalties, interest or other charges imposed by
the

El Paso Agreement

                                       18

<PAGE>

relevant Governmental Authority) to such Indemnified Person in the event that
such Indemnified Person is required to repay such refund to such Governmental
Authority. Subject to Section 6.16, this Section shall not be construed to
require any Indemnified Person to make available its tax returns (or any other
information relating to its taxes which it deems confidential) to El Paso or any
other Person.

                  (g)      Without prejudice to the survival of any other
agreement of El Paso hereunder, the agreements and obligations of El Paso and
each Indemnified Person contained in this Section 4.2 shall survive the payment
in full of principal and interest owing under the Sponsor Subsidiary Credit
Agreement.

                  (h)      Any other provision of this Agreement to the contrary
notwithstanding, any amounts which are payable by El Paso under this Section 4.2
shall not be payable under Section 3.

                                   SECTION 5

                                EL PASO COVENANTS

                  5.1.     Separate Existence. El Paso hereby covenants and
agrees that, so long as Mustang, or its successors and assigns (other than El
Paso or any Subsidiary of El Paso), holds an interest in the Advances and such
Advances remain unpaid, El Paso will, and will cause each of the El Paso
Companies (including the El Paso Parties), Noric, Palomino, Paso Fino, Noric LP,
Lusitano, Lipizzan and each Sponsor Subsidiary to, comply with the following
undertakings (except for such non-compliance that, in the aggregate, is not
material):

                  (i)      El Paso, the El Paso Companies (other than Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and any Sponsor
         Subsidiary) will maintain their books, financial records and accounts,
         including checking and other bank accounts and custodian and other
         securities safekeeping accounts, separate and distinct from those of
         Noric, Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan or any Sponsor
         Subsidiary, as the case may be.

                  (ii)     El Paso and the El Paso Companies (other than Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and any Sponsor
         Subsidiary) will maintain their books, financial records and accounts
         (including inter-entity transaction accounts) in a manner so that it
         will not be difficult or costly to segregate, ascertain or otherwise
         identify their assets and liabilities separate and distinct from the
         assets and liabilities of Noric, Palomino, Paso Fino, Noric LP,
         Lusitano, Lipizzan or any Sponsor Subsidiary, as the case may be.

                  (iii)    El Paso and the El Paso Companies (other than Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and any Sponsor
         Subsidiary), on the one hand, will not commingle any of their assets,
         funds, liabilities or business functions with the assets, funds,
         liabilities or business functions of Noric, Palomino, Paso Fino, Noric
         LP, Lusitano, Lipizzan or any Sponsor Subsidiary, as the case may be,
         on the other hand.

El Paso Agreement

                                       19

<PAGE>

                  (iv)     El Paso and the El Paso Companies (other than Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and any Sponsor
         Subsidiary) will each observe all requisite corporate procedures and
         formalities, including the holding of periodic and special meetings of
         partners, shareholders and boards of directors, the recordation and
         maintenance of minutes of such meetings, and the recordation and
         maintenance of resolutions adopted at such meetings.

                  (v)      Each of Noric, Palomino, Paso Fino, Noric LP,
         Lusitano, Lipizzan, and each Sponsor Subsidiary will observe all
         requisite organizational procedures and formalities, including the
         holding of meetings of members and boards of managers as required by
         the Noric Company Agreement, the Palomino Company Agreement, the Paso
         Fino Company Agreement, the Noric LP Partnership Agreement, the
         Lusitano Company Agreement, the Lipizzan Partnership Agreement and the
         Sponsor Subsidiary Company Agreements, as applicable, the recordation
         and maintenance of minutes of such meetings, and the recordation of and
         maintenance of resolutions adopted at such meetings.

                  (vi)     None of El Paso and the El Paso Companies (other than
         Noric, Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and any
         Sponsor Subsidiary) will be consensually merged or consolidated with
         Noric, Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan or any Sponsor
         Subsidiary, as the case may be (other than, with respect to Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and any Sponsor
         Subsidiary, for financial reporting purposes, and with respect to any
         Sponsor Subsidiary, for tax purposes). None of El Paso and the El Paso
         Companies will be consensually merged or consolidated with Mustang for
         any purpose.

                  (vii)    El Paso will include in its consolidated financial
         statements footnotes that clearly disclose, among other things, the
         separate existence and identity of Noric, Palomino, Paso Fino, Noric
         LP, Lusitano, Lipizzan and each Sponsor Subsidiary from El Paso and its
         other Subsidiaries, and that Noric, Palomino, Paso Fino, Noric LP,
         Lusitano, Lipizzan and each Sponsor Subsidiary has separate assets and
         liabilities. Mustang will not be consolidated with El Paso for the
         purposes of El Paso's consolidated financial statements.

                  (viii)   All transactions, agreements and dealings between El
         Paso and the El Paso Companies (other than Noric, Palomino, Paso Fino,
         Noric LP, Lusitano, Lipizzan and any Sponsor Subsidiary), on the one
         hand, and Noric, Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan or
         any Sponsor Subsidiary, as the case may be, on the other hand
         (including transactions, agreements and dealings pursuant to which the
         assets or property of one is used or to be used by the other), will
         reflect the separate identity and legal existence of each entity.

                  (ix)     Transactions between Noric, Palomino, Paso Fino,
         Noric LP, Lusitano, Lipizzan or any Sponsor Subsidiary, on the one
         hand, and any third parties, on the other hand, will be conducted in
         the name of Noric, Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan or
         such Sponsor Subsidiary (as applicable) as an entity separate and
         distinct from El Paso or any El Paso Company (other than Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and any Sponsor
         Subsidiary).

El Paso Agreement

                                       20

<PAGE>

                  (x)      Except as otherwise specified in the Operative
         Documents Noric, Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and
         each Sponsor Subsidiary, on the one hand, will pay its liabilities and
         losses from its respective assets, and El Paso and the El Paso
         Companies (other than Noric, Palomino, Paso Fino, Noric LP, Lusitano,
         Lipizzan and any Sponsor Subsidiary), on the other hand, will pay their
         liabilities and losses from their respective assets.

                  (xi)     Representatives and agents of Noric, Palomino, Paso
         Fino, Noric LP, Lusitano, Lipizzan or any Sponsor Subsidiary (whether
         or not they are "loaned" employees of El Paso or any El Paso Company
         (other than Noric, Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan
         and the Sponsor Subsidiaries)) will, when purporting to act on behalf
         of Noric, Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan or any
         Sponsor Subsidiary (as applicable), hold themselves out to third
         parties as being representatives or agents, as the case may be, of
         Noric, Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan or such
         Sponsor Subsidiary (as applicable) and, to the extent such items are
         used, will utilize business cards, letterhead, purchase orders,
         invoices and the like of Noric, Palomino, Paso Fino, Noric LP,
         Lusitano, Lipizzan or such Sponsor Subsidiary (as applicable).

                  (xii)    Except as otherwise specified in the Operative
         Documents, each of Noric, Palomino, Paso Fino, Noric LP, Lusitano,
         Lipizzan and the Sponsor Subsidiaries will compensate all consultants,
         independent contractors and agents from its own funds for services
         provided to it by such consultants, independent contractors and agents.

                  (xiii)   To the extent that Noric, Palomino, Paso Fino, Noric
         LP, Lusitano, Lipizzan or any Sponsor Subsidiary, on the one hand, and
         El Paso or any of the El Paso Companies (other than Noric, Palomino,
         Paso Fino, Noric LP, Lusitano, Lipizzan and any Sponsor Subsidiary), on
         the other hand, jointly contract or do business with vendors or service
         providers or share overhead expenses, the costs and expenses incurred
         in so doing will be fairly and nonarbitrarily allocated between or
         among such entities, with the result that each such entity bears its
         fair share of all such costs and expenses. To the extent that Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan or any Sponsor
         Subsidiary, on the one hand, and El Paso or any of the El Paso
         Companies (other than Noric, Palomino, Paso Fino, Noric LP, Lusitano,
         Lipizzan and any Sponsor Subsidiary), on the other hand, contracts or
         does business with vendors or service providers where the goods or
         services are wholly or partially for the benefit of the other, then the
         costs incurred in so doing will be fairly and nonarbitrarily allocated
         to the entity for whose benefit the goods or services are provided,
         with the result that each such entity bears its fair share of all such
         costs, except to the extent otherwise provided in the Operative
         Documents.

                  (xiv)    Each Sponsor Subsidiary will have annual financial
         statements prepared in accordance with GAAP (in the case of Noric
         Holdings I, including Noric, Palomino, Paso Fino and Noric LP on a
         consolidated basis, in the case of Noric Holdings IV, including
         Lusitano and Lipizzan on a consolidated basis and, in the case of all
         Sponsor Subsidiaries, on a combined basis), separate from El Paso and
         the El Paso Companies (other than Noric, any Subsidiary of Noric,
         Lusitano, Lipizzan and any Sponsor

El Paso Agreement

                                       21

<PAGE>

         Subsidiary); provided that El Paso may consolidate Noric, any
         Subsidiary of Noric, Lusitano, Lipizzan and any Sponsor Subsidiary for
         El Paso's financial reporting purposes.

                  (xv)     None of El Paso and the El Paso Companies (other than
         Noric, Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and the
         Sponsor Subsidiaries) will make any inter-entity loans, advances,
         guarantees, extensions of credit or contributions of capital to, from
         or for the benefit of Noric, Palomino, Paso Fino, Noric LP, Lusitano,
         Lipizzan or any Sponsor Subsidiary, as the case may be, without proper
         documentation and accounting in accordance with GAAP and only in
         accordance with, or as contemplated by, the provisions of the Noric
         Company Agreement, the Palomino Company Agreement, the Paso Fino
         Company Agreement, the Noric LP Partnership Agreement, the Lusitano
         Company Agreement, the Lipizzan Partnership Agreement or the relevant
         Sponsor Subsidiary Company Agreement, as the case may be, and the other
         Operative Documents.

                  (xvi)    El Paso and the El Paso Companies (other than Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and the Sponsor
         Subsidiaries) will not refer to Noric, Palomino, Paso Fino, Noric LP,
         Lusitano, Lipizzan or any Sponsor Subsidiary, as the case may be, as a
         department or division of El Paso or any of the El Paso Companies
         (other than Noric, Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan
         and any Sponsor Subsidiary) and will not otherwise refer to Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan or any Sponsor
         Subsidiary, as the case may be, in a manner inconsistent with its
         status as a separate and distinct legal entity. In addition Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and the Sponsor
         Subsidiaries will hold itself out as separate and distinct from El Paso
         and the El Paso Companies (other than Noric, Palomino, Paso Fino, Noric
         LP, Lusitano, Lipizzan and the Sponsor Subsidiaries).

                  (xvii)   El Paso shall (A) cause Lord Securities to be an
         independent member of each Sponsor Subsidiary and (B) for a period of
         90 days from the day after the Fourth Restatement Date cause Lord
         Securities to be elected as an independent director of Appaloosa at any
         election of the board of directors of Appaloosa occurring during such
         period.

                  (xviii)  Except with respect to the granting of Liens
         permitted hereunder by the members of the Sponsor Subsidiaries in
         interests in the Sponsor Subsidiaries securing obligations of such
         members in favor of creditors of El Paso or any of its Affiliates, El
         Paso and the El Paso Companies (other than Noric, Palomino, Paso Fino,
         Noric LP, Lusitano, Lipizzan and the Sponsor Subsidiaries) will not
         hold out the credit of Noric, Palomino, Paso Fino, Noric LP, Lusitano,
         Lipizzan or the Sponsor Subsidiaries as being available to satisfy the
         obligations of El Paso or the El Paso Companies (other than Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and the Sponsor
         Subsidiaries).

                  (xix)    El Paso and the El Paso Companies (other than Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan or the Sponsor
         Subsidiaries) will not acquire the obligations or securities of Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan or

El Paso Agreement

                                       22

<PAGE>

         the Sponsor Subsidiaries (except as contemplated by or permitted under
         the Operative Documents).

                  (xx)     El Paso and the El Paso Companies (other than Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and the Sponsor
         Subsidiaries) will not use stationery, invoices, and checks bearing the
         name of Noric, Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan or any
         Sponsor Subsidiaries, except in their respective capacities as general
         partners or managers or managing members of any such Persons.

                  (xxi)    El Paso and the El Paso Companies (other than Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and the Sponsor
         Subsidiaries) will not pledge their respective assets for the benefit
         of Noric, Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan or any
         Sponsor Subsidiary (except as contemplated by or permitted under the
         Operative Documents).

                  (xxii)   El Paso and the El Paso Companies (other than Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and the Sponsor
         Subsidiaries) will correct any known misunderstanding regarding their
         respective identities as separate from the identity of Noric, Palomino,
         Paso Fino, Noric LP, Lusitano, Lipizzan and each Sponsor Subsidiary.

                  (xxiii)  None of El Paso and the El Paso Companies (other than
         Noric, Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and the
         Sponsor Subsidiaries) will use the separate existence of Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan or any Sponsor
         Subsidiary to abuse creditors or to perpetrate a fraud, injury, or
         injustice on creditors.

                  (xxiv)   All transactions between El Paso and the El Paso
         Companies (other than Noric, Palomino, Paso Fino, Noric LP, Lusitano,
         Lipizzan and the Sponsor Subsidiaries), on the one hand, and each of
         Noric, Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and each
         Sponsor Subsidiary, on the other, are, and will be, duly authorized and
         documented, and recorded accurately in the appropriate books and
         records of such entities. All such transactions will be made in good
         faith and without any intent to hinder, delay, or defraud creditors.

                  (xxv)    No El Paso Company (including Noric, Palomino, Paso
         Fino, Noric LP, Lusitano, Lipizzan and each Sponsor Subsidiary) has
         entered into the transactions contemplated by this Agreement or any
         Operative Document to which it is a party in contemplation of
         insolvency or with a design to prefer one or more creditors of such
         Person to the exclusion in whole or in part of others in violation of
         Applicable Law or with an intent to hinder, delay or defraud any of its
         creditors.

                  (xxvi)   The assets of each El Paso Company (including Noric,
         Palomino, Paso Fino, Noric LP, Lusitano, Lipizzan and each Sponsor
         Subsidiary) are intended to be sufficient to pay the ongoing business
         expenses of each such respective entity as they are incurred and to
         discharge all of their respective liabilities.

                  (xxvii)  El Paso shall cause any Sponsor Subsidiary Member to
         appoint a Sponsor Subsidiary Liquidator in compliance with, and to the
         extent required by Section 11.9 of

El Paso Agreement

                                       23

<PAGE>

         each Sponsor Subsidiary Company Agreement or, in the case of Noric
         Holdings IV, Section 12.9 of the Noric Holdings IV Company Agreement.

                  (xxviii) El Paso shall cause Noric Holdings or the Noric Class
         A Member to appoint a Noric Liquidator in compliance with, and to the
         extent required by, Section 12.4 of the Noric Company Agreement.

                  (xxix)   El Paso shall cause Noric to appoint a Palomino
         Liquidator in accordance with, and to the extent required by, Section
         10.4 of the Palomino Company Agreement.

                  (xxx)    El Paso shall cause Noric to appoint a Paso Fino
         Liquidator in accordance with, and to the extent required by, Section
         10.4 of the Paso Fino Company Agreement.

                  (xxxi)   El Paso shall cause Palomino to appoint a Noric LP
         Liquidator in accordance with, and to the extent required by, Section
         11.4 of the Noric LP Partnership Agreement.

                  (xxxii)  El Paso shall cause Noric Holdings IV to appoint a
         Lusitano Liquidator in accordance with, and to the extent required by,
         Section 10.4 of the Lusitano Company Agreement.

                  (xxxiii) El Paso shall cause Lusitano to appoint a Lipizzan
         Liquidator in accordance with, and to the extent required by, Section
         11.4 of the Lipizzan Partnership Agreement.

                  5.2.     Affirmative Covenants. El Paso hereby covenants and
agrees that, until the Debt Collection Date, it will:

                  (a)      Preservation of Existence. Preserve and maintain, and
         cause each Relevant El Paso Party and each Credit Related Party to
         preserve and maintain, its (a) existence, (b) rights (organizational
         and statutory) and (c) material franchises, except as otherwise
         permitted by Section 5.3(d) or 5.3(e) and except that nothing herein
         shall prevent any change in Business Entity form of El Paso or any
         Credit Related Party.

                  (b)      Compliance with Laws. Comply, and cause each Relevant
         El Paso Party and each other Credit Related Party to comply, in all
         material respects with all applicable laws, rules, regulations and
         orders (including all Environmental Laws and laws requiring payment of
         all taxes, assessments and governmental charges imposed upon it or upon
         its property except to the extent contested in good faith by
         appropriate proceedings) the failure to comply with which would have a
         Material Adverse Effect.

                  (c)      Visitation Rights. At any reasonable time and from
         time to time, permit Mustang, the Mustang Administrative Agent, the
         Collateral Agent and the Equity Investors, or any agents or
         representatives thereof, to visit and inspect any of the properties of
         and examine and make copies of and abstracts from any financial and
         operating records and books of account of El Paso or any Relevant El
         Paso Party or any of El Paso's other Subsidiaries (other than any
         holder of the Sponsor Subsidiary Subordinated Note, Noric, Palomino,
         Paso Fino, Noric LP, Lusitano, Lipizzan and the

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<PAGE>

         Sponsor Subsidiaries), and to discuss the affairs, finances and
         accounts of El Paso or any Relevant El Paso Party or any of El Paso's
         other Subsidiaries (other than any holder of the Sponsor Subsidiary
         Subordinated Note, Noric, Palomino, Paso Fino, Noric LP, Lusitano,
         Lipizzan and the Sponsor Subsidiaries) with any of their respective
         officers, all at such reasonable times (i.e., during normal business
         hours, at reasonable intervals and upon reasonable notice) and, other
         than during the continuance of any Incipient Event, Event of Default,
         Notice Event, Termination Event or Liquidating Event, at such
         reasonable intervals as such Person or any agents or representatives of
         such Person may reasonably request for purposes related to the
         Operative Documents. In addition, any such Person may discuss the
         affairs, finances and accounts of El Paso or any Relevant El Paso Party
         or any of El Paso's Subsidiaries (other than any holder of the Sponsor
         Subsidiary Subordinated Note, Noric, Palomino, Paso Fino, Noric LP,
         Lusitano, Lipizzan and the Sponsor Subsidiaries) with their respective
         independent certified public accountants at reasonable intervals and
         with the knowledge of El Paso where feasible and provided that the
         Chief Financial Officer or Treasurer of El Paso will be given a
         reasonable opportunity to be present at any such discussion; provided
         that the Chief Financial Officer or Treasurer of El Paso shall be
         deemed to have been given a reasonable opportunity to be present at any
         such discussion if the Chief Financial Officer or Treasurer is given 2
         Business Days' prior notice of such discussion. El Paso shall assume or
         pay all reasonable costs and expenses associated with any such
         discussion, inspection or examination; provided, however, that prior to
         the occurrence of a Notice Event, El Paso shall only be liable for
         costs and expenses associated with any such discussion, inspection or
         examination once per Fiscal Year.

                  (d)      Books and Records. Keep, and cause each of its
         Subsidiaries (other than Noric, Palomino, Paso Fino, Noric LP,
         Lusitano, Lipizzan and the Sponsor Subsidiaries) and each Relevant El
         Paso Party to keep, proper books of record and account, in which full
         and correct entries shall be made of all its respective financial
         transactions and the assets and business of El Paso, each of its
         Subsidiaries (other than Noric, Palomino, Paso Fino, Noric LP,
         Lusitano, Lipizzan and the Sponsor Subsidiaries) and each Relevant El
         Paso Party, as applicable, in accordance with GAAP either (i)
         consistently applied or (ii) applied in a changed manner provided such
         change shall have been disclosed to the Mustang Administrative Agent,
         Mustang and the Equity Investors and shall have been consented to by
         the accountants which (as required by Section 5.4(b)) report on the
         financial statements of El Paso and its Subsidiaries for the fiscal
         year in which such change shall have occurred.

                  (e)      Maintenance of Properties. Maintain and preserve, and
         cause each other Credit Related Party and each Relevant El Paso Party
         to maintain and preserve, all of its properties which are used in the
         conduct of its business in good working order and condition, ordinary
         wear and tear excepted, to the extent that any failure to do so would
         have a Material Adverse Effect.

                  (f)      Maintenance of Insurance. Maintain, and cause each
         other Credit Related Party and each Relevant El Paso Party to maintain,
         insurance with responsible and reputable insurance companies or
         associations in such amounts and covering such risks as is usually
         carried by companies engaged in similar businesses and owning similar

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<PAGE>

         properties in the same general areas in which El Paso, such Credit
         Related Party or such Relevant El Paso Party operates.

                  (g)      El Paso Companies. Cause each Relevant El Paso Party
         to be an El Paso Company.

                  (h)      Turnover. To the extent that El Paso is making any
         payment that, pursuant to the Operative Documents, is required to be
         paid into the Sponsor Subsidiary Cash Reserve, the Noric Holdings IV
         Cash Reserve, the Noric Holdings I Cash Reserve, the Noric Holdings III
         Deposit Account or the Sponsor Subsidiary Operating Account, as the
         case may be, make such payment into the Sponsor Subsidiary Cash
         Reserve, the Noric Holdings IV Cash Reserves, the Noric Holdings I Cash
         Reserve, the Noric Holdings III Deposit Account or the Sponsor
         Subsidiary Operating Account, as the case may be. To the extent that
         any El Paso Company is making any payment that, pursuant to the
         Operative Documents, is required to be paid into the Sponsor Subsidiary
         Cash Reserve, the Noric Holdings IV Cash Reserves, the Noric Holdings I
         Cash Reserve, the Noric Holdings III Deposit Account or the Sponsor
         Subsidiary Operating Account, as the case may be, cause such El Paso
         Company to direct that such payment be so paid into the Sponsor
         Subsidiary Cash Reserve, the Noric Holdings IV Cash Reserve, the Noric
         Holdings I Cash Reserve, the Noric Holdings III Deposit Account or the
         Sponsor Subsidiary Operating Account, as the case may be.

                  (i)      Income Tax Liabilities. Pay, or cause to be paid by
         any Relevant El Paso Party, all Taxes based on net income of the
         Sponsor Subsidiaries, Lusitano, Lipizzan, Noric, Palomino, Paso Fino or
         Noric LP to the extent that such Sponsor Subsidiaries, Lusitano,
         Lipizzan, Noric, Palomino, Paso Fino or Noric LP are included in a
         consolidated, combined, unitary or any similar Tax return with El Paso
         or with any Relevant El Paso Party (the "CONSOLIDATED TAXES").

                  (j)      Sponsor Subsidiary Liquidator Notices. Upon the
         occurrence of a Liquidating Event, El Paso will (i) contribute to the
         capital of the Sponsor Subsidiaries or, at El Paso's sole option waive
         repayment of, those amounts receivable from such Sponsor Subsidiaries
         in respect of Consolidated Taxes as may be specified in the notice from
         any Sponsor Subsidiary Liquidator and (ii) cause those Sponsor
         Subsidiaries that the relevant Sponsor Subsidiary Liquidator may
         request to make the election provided in Code Section 754, provided
         that the relevant Sponsor Subsidiary Company Agreement permits such
         election to be made and that such Sponsor Subsidiary is classified as a
         partnership for U.S. federal income tax purposes.

                  (k)      Insurance Proceeds. Forthwith upon receipt of the
         proceeds from any insurance relating to the E&P Assets, deposit such
         proceeds into the Sponsor Subsidiary Cash Reserve (where such E&P Asset
         is held by a Sponsor Subsidiary), the Noric Holdings I Cash Reserve
         (where such E&P Asset is held by Noric or Noric LP) or the Noric
         Holdings IV Cash Reserve (where such E&P Asset is held by Lipizzan).

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<PAGE>

                  5.3.     Negative Covenants. El Paso hereby covenants and
agrees that, until the Debt Collection Date:

                  (a)      Relevant Liens. (i) El Paso shall not, and shall not
         permit any of its Subsidiaries to, create, assume, incur, or suffer to
         exist, any Relevant Liens upon or with respect to any of the Relevant
         Collateral or any of the Restricted Equity Interests (in each case
         other than (A) Relevant Collateral Permitted Liens and (B) with respect
         to the Restricted Equity Interests in CIG, Relevant Liens or other
         encumbrances granted in favor of the Sponsor Subsidiary Secured Parties
         pursuant to the Operative Documents), or any Lien with respect to the
         Equity Interests in Noric Holdings I, Noric Holdings III or Noric
         Holdings IV unless such Lien is subject to the terms and provisions of
         the Intercreditor Agreement.

                  (ii)     El Paso shall not permit any Restricted Subsidiary to
         create, assume, incur or suffer to exist any Relevant Lien on any
         property or asset of such Restricted Subsidiary except for:

                           (A)      Relevant Liens on the Equity Interests in,
                  or Relevant Indebtedness or other obligations of, or assets
                  of, any Project Financing Subsidiary (or any Equity Interests
                  in, or Relevant Indebtedness or other obligations of, any
                  Business Entity which are directly or indirectly owned by any
                  Project Financing Subsidiary) securing the payment of a
                  Project Financing and related obligations;

                           (B)      Permitted Relevant Liens;

                           (C)      Relevant Liens created by any Alternate
                  Program or any document executed by any Borrower or any
                  Subsidiary of a Borrower in connection therewith;

                           (D)      Relevant Liens (other than Relevant Liens
                  with respect to the Relevant Collateral) securing Debt or
                  liabilities under Guaranties permitted pursuant to Section
                  5.3(c) or permitted pursuant to Section 6.03(b) of the El Paso
                  New Revolving Facility;

                           (E)      Relevant Liens granted by any Pipeline
                  Company Borrower in existence on the Fourth Restatement Date,
                  plus any successive renewals or extensions of such Relevant
                  Liens, and any grant of a Relevant Lien, in connection with
                  any successive refinancing, extension or renewal of the Debt
                  or any liability under any Guaranty secured by such Relevant
                  Liens, provided that the aggregate principal amount of the
                  Debt or any liability under any Guaranty (and any successive
                  refinancing, extension or renewal thereof) secured by such
                  Relevant Liens does not increase from that amount outstanding
                  at the time of such renewal, extension or grant of the
                  Relevant Lien or such refinancing and any such successive
                  renewal, extension or grant of the Relevant Lien does not
                  encumber any additional property or assets of such Pipeline
                  Company Borrower (except as contemplated by clause (G) below);

El Paso Agreement

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<PAGE>

                           (F)      Liens created under or permitted by the
                  Sponsor Subsidiary Security Agreement, the Sponsor Subsidiary
                  Credit Agreement or the Security Documents (as defined in the
                  El Paso New Revolving Facility); and

                           (G)      Relevant Liens on products and proceeds
                  (including dividends, distributions, interest and like
                  payments on or with respect to, and insurance and condemnation
                  proceeds and rental, lease, licensing and similar proceeds)
                  of, and property evidencing or embodying, or constituting
                  rights or other general intangibles directly relating to or
                  arising out of, and accessions and improvements to, property
                  or assets subject to Relevant Liens permitted by this Section
                  5.3(a).

                  (b)      Consolidated Debt and Guarantees to Capitalization.
         El Paso shall not permit the ratio of (i) the sum of (A) the aggregate
         amount of consolidated Debt of El Paso and its consolidated
         Subsidiaries (without duplication of amounts under this clause (i) and
         determined as to all of the foregoing entities on a consolidated
         basis), plus (B) the aggregate amount of consolidated Guaranties of El
         Paso and its consolidated Subsidiaries (without duplication of amounts
         under this clause (i) and determined as to all of the foregoing
         entities on a consolidated basis), to (ii) Capitalization of El Paso
         and its Subsidiaries (without duplication and determined as to all of
         the foregoing entities on a consolidated basis) to exceed 0.75 to 1.

                  (c)      Debt, Etc. (i) El Paso shall not permit any Pipeline
         Company Borrower to incur or become liable for any Debt or any
         liability under Guaranties if, immediately after giving effect to such
         Debt or liability under such Guaranties and the receipt and application
         of any proceeds thereof (or of any Debt so guaranteed) or value
         received in connection therewith, (A) the ratio of Debt and liabilities
         under Guaranties, without duplication, of the applicable Pipeline
         Company Borrower and its consolidated Subsidiaries to Relevant EBITDA
         of such Pipeline Company Borrower and its consolidated Subsidiaries, in
         each case on a consolidated basis for the applicable Pipeline Company
         Borrower and its consolidated Subsidiaries, for the then most recently
         completed four quarter period for which financial statements have been
         delivered as required by Sections 5.4(a)(i) and (a)(ii) would exceed 5
         to 1, and (B) the proceeds of any such Debt (or of the underlying Debt
         guaranteed by any such Guaranty) would be used for any purpose other
         than (w) the funding of working capital of the applicable Pipeline
         Company Borrower, (x) the successive refinancing of Debt of such
         Pipeline Company Borrower in existence as of the Fourth Restatement
         Date, (y) the funding by the applicable Pipeline Company Borrower of
         capital expenditures or investments in FERC Eligible Assets other than
         any investment in (I) any Equity Interest in any other Person, (II) all
         or substantially all of a business conducted by any other Person, or
         (III) all or substantially all of the assets constituting a business
         division or other stand-alone business unit of any other Person,
         provided that the use of the proceeds of such Debt as permitted under
         this clause (y) shall include (1) the reimbursement of letters of
         credit, (2) the repayment of Loans under and as defined in the El Paso
         New Revolving Facility and (3) the reimbursement of expenditures out of
         operating cash flow of such Pipeline Company Borrower, in each case, to
         the extent of the proceeds or amounts thereof that were applied to fund
         capital expenditures or investments permitted by this clause (y), or

El Paso Agreement

                                       28

<PAGE>

         (z) investment in Relevant Cash Equivalents for a period of time not to
         exceed 30 days; and

                  (ii)     El Paso shall not permit any Restricted Subsidiary
         (other than the Pipeline Company Borrowers) to incur or be or become
         liable for any Debt or any liability under Guaranties other than (A)
         any Debt owing by such Restricted Subsidiary to another Restricted
         Subsidiary, or to El Paso or an Exempted Guarantor in respect of
         reimbursement of amounts paid for the account of, or attributable to,
         such Restricted Subsidiary to the extent that the obligation the
         payment of which gave rise to such reimbursement obligation does not
         constitute Debt, (B) such Debt or liability under Guaranties of such
         Restricted Subsidiary existing as of the Fourth Restatement Date;
         provided that each such Restricted Subsidiary shall be permitted to
         successively refinance, extend or renew such Debt and liabilities under
         Guaranties, or replace, in whole or in part, any of the foregoing at
         any time and from time to time with new Debt and/or liabilities under
         Guaranties, so long as the aggregate principal amount of such new Debt
         and the aggregate principal amount of Debt guaranteed under such new
         Guaranties outstanding from time to time does not exceed
         U.S.$100,000,000 with respect to the applicable Restricted Subsidiary,
         (C) pursuant to the Loan Documents (as defined in the El Paso New
         Revolving Facility) and (D) as contemplated by the Operative Documents.

                  (d)      Disposition of Property or Assets. (i) El Paso shall
         not, and shall not permit any of its Subsidiaries to, engage in a
         Relevant Disposition of any interest in any asset or property
         constituting Relevant Collateral or Restricted Equity Interests, except
         for (A) Relevant Dispositions by the applicable Credit Party, at any
         time from time to time, of Relevant Collateral constituting all or any
         part of the EPN Units for fair market value on an arms-length basis in
         a cash transaction so long as an amount equal to 100% of the Relevant
         Net Cash Proceeds of such sale shall be deposited into the Relevant
         Collateral Account pursuant to the terms and provisions of the Security
         and Intercreditor Agreement, (B) any Relevant Disposition that is the
         result of any casualty or condemnation of Relevant Collateral or
         Restricted Equity Interests (whether or not having the force of law) of
         the FERC or any other Governmental Authority with respect to such
         Relevant Collateral or restricted Equity Interests, so long as an
         amount equal to 100% of the Relevant Net Cash Proceeds of such Relevant
         Disposition shall be deposited in the Relevant Collateral Account
         pursuant to the terms and conditions of the Security and Interceditor
         Agreement, (C) a Disposition of the Equity Interests in WIC in
         accordance with the terms and provisions of the Operative Documents and
         the Loan Documents (as defined in the El Paso New Revolving Facility),
         (D) a Disposition of the Equity Interests in CIG may be Disposed of in
         connection with any foreclosure sale or other liquidation proceeding or
         action instituted pursuant to the terms and provisions of the Sponsor
         Subsidiary Credit Documents and (E) Relevant Dispositions of Relevant
         Collateral or Restricted Equity Interests permitted by Section 6.05 of
         the El Paso New Revolving Facility.

                  (ii)     Each Credit Related Party shall not engage in any
         Relevant Disposition of any property or asset; provided that this
         5.3(d) shall not apply to:

El Paso Agreement

                                       29

<PAGE>

                           (A)      Relevant Dispositions of property or assets
                  (other than Relevant Dispositions of casualty or condemnation
                  of any property or assets of any Restricted Subsidiary or any
                  order (whether or not having the force of law of the FERC or
                  any other Governmental Authority), by Restricted Subsidiaries
                  not otherwise permitted pursuant to any other provision of
                  this Section 5.3(d), provided that (x) such sale is conducted
                  on an arms-length basis and the consideration therefor shall
                  not include any Equity Interests or any Relevant Indebtedness,
                  and (y) if the Relevant Net Cash Proceeds of such Relevant
                  Disposition exceed $5,000,000 on an individual basis or
                  $10,000,000 in the aggregate during any fiscal year of El
                  Paso, an amount equal to such Relevant Net Cash Proceeds shall
                  be applied to the Covered Obligations pursuant to the terms
                  and provisions of the Security and Intercreditor Agreement;

                           (B)      Relevant Dispositions not otherwise
                  permitted pursuant to any other provision of this Section
                  5.3(d) (other than clause (A) above) and that result from any
                  casualty or condemnation of any property or assets of any
                  Restricted Subsidiary or any order (whether or not having the
                  force of law) of the FERC or any other Governmental Authority,
                  provided that if the Relevant Net Cash Proceeds of insurance,
                  or Relevant Net Cash Proceeds from such condemnation or any
                  such Relevant Disposition pursuant to any such order or
                  received in connection with such Relevant Disposition exceed
                  $5,000,000 on an individual basis or $10,000,000 in the
                  aggregate during any fiscal year of El Paso, an amount equal
                  to such Relevant Net Cash Proceeds shall be applied to the
                  Covered Obligations pursuant to the terms and provisions of
                  the Security and Intercreditor Agreement;

                           (C)      Relevant Dispositions of obsolete or worn
                  out property or assets (or property or assets no longer useful
                  in the business of the relevant Credit Related Party) in the
                  ordinary course of business and leases or subleases of unused
                  office or other space entered into by any Credit Related Party
                  on an arms-length basis and in the ordinary course of
                  business;

                           (D)      Relevant Dispositions of any receivables and
                  related rights pursuant to any Alternate Program;

                           (E)      Relevant Dispositions of any Project
                  Financing Subsidiary and/or all or any part of any such
                  Project Financing Subsidiary's assets or property;

                           (F)      Relevant Dispositions of any assets or
                  property for fair market value to any Credit Related Party
                  provided that no Guaranty Reduction Event occurs as a result
                  thereof;

                           (G)      Relevant Dispositions permitted by, and
                  subject to the terms of the proviso to, this Section 5.3(d)(i)
                  or Section 6.05 or 2.18 of the El Paso New Revolving Facility
                  or pursuant to the Operative Documents;

                           (H)      the Relevant Disposition of EPEC Realty,
                  Inc.;

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<PAGE>

                           (I)      Relevant Dispositions of inventory in the
                  ordinary course of business;

                           (J)      Relevant Dispositions constituting licenses
                  of intellectual property in the ordinary course of business;

                           (K)      Relevant Dispositions of cash or Relevant
                  Cash Equivalents (other than cash or Relevant Cash Equivalents
                  constituting Relevant Collateral under the Security and
                  Intercreditor Agreement or an amount equal to proceeds of any
                  Relevant Disposition permitted pursuant to clauses (A) and (B)
                  above, which such cash or Relevant Cash Equivalents shall be
                  disposed of pursuant to the terms and provisions of the
                  Security and Intercreditor Agreement);

                           (L)      Relevant Dispositions of Relevant
                  Indebtedness or instruments or other obligations that are
                  received as consideration for any Relevant Disposition of
                  property or assets (other than Relevant Dispositions permitted
                  pursuant to clauses (A) and (B) above, the consideration for
                  which is not permitted to include any Equity Interests or
                  Relevant Indebtedness);

                           (M)      Relevant Dispositions of investments
                  (including Equity Interests and Relevant Indebtedness or
                  instruments or other obligations) that are received in
                  connection with the bankruptcy or reorganization of suppliers,
                  customers or other Persons, or in settlement of, or pursuant
                  to any judgment or other order in respect of, delinquent
                  obligations of, or litigation proceedings or other disputes
                  with, or from exercises of rights or remedies against, any
                  such Persons; or

                           (N)      Relevant Dispositions by El Paso or any
                  Exempted Guarantor of any property or assets that do not
                  constitute Relevant Collateral or Restricted Equity Interests.

                  (iii)    El Paso shall not, and shall not permit any of its
         Subsidiaries to, engage in Relevant Dispositions of the Equity
         Interests in any of its Subsidiaries if such Relevant Disposition will
         result in El Paso owning, directly or indirectly, less than 100% of the
         Equity Interests in the Subsidiary Guarantors.

                  (iv)     Each Credit Related Party (other than the Exempted
         Guarantors) shall not engage in a Relevant Disposition of (in a single
         or related series of transactions) assets constituting all or
         substantially all of the consolidated assets of such Credit Related
         Party and its Subsidiaries taken as a whole, provided that this Section
         5.3(d)(iv) shall not apply to any transaction permitted by Section
         5.3(d)(i), Section 5.3(d)(ii)(B), (ii)(F), (ii)(G) or (ii)(M) or
         Section 5.3(e).

                  (e)      Merger, Etc. El Paso shall not, and shall not permit
         any other Credit Related Party to, merge or consolidate with, or
         liquidate into, any Person, except that, provided that no El Paso Event
         has occurred and is continuing (both before and immediately after
         giving effect to any merger, consolidation or liquidation permitted
         below), (a) any Credit Related Party (other than El Paso) in addition
         to mergers, consolidations and liquidations provided for in clauses (b)
         and (c) below, may merge or

El Paso Agreement

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<PAGE>

         consolidate with, or liquidate into, any other Credit Related Party
         (other than El Paso), provided that (i) no Guaranty Reduction Event
         occurs as a result thereof and (ii) the continuing or surviving Credit
         Related Party unconditionally assumes by written agreement satisfactory
         to the Administrative Agent (as defined in the El Paso New Revolving
         Facility) all of the performance and payment obligations of the other
         Credit Related Party and (iii) the Relevant Lien under the Security
         Documents (as defined in the El Paso New Revolving Facility) on any
         Relevant Collateral owned by any applicable Subsidiary Guarantor
         immediately prior to such merger, consolidation or liquidation remains
         effective and perfected immediately thereafter with no loss of relative
         priority to any other class of creditor from that existing immediately
         prior to such merger, consolidation or liquidation, (b) any Exempted
         Guarantor may merge or consolidate with, or liquidate into, any other
         Exempted Guarantor or other Business Entity that is not a Credit
         Related Party, provided that (i) the surviving Business Entity is,
         directly or indirectly, a wholly-owned Subsidiary of El Paso, remains a
         Subsidiary Guarantor and if the Exempted Guarantor is not the
         continuing or surviving Business Entity, the continuing or surviving
         Business Entity unconditionally assumes by written agreement
         satisfactory to the Administrative Agent (as defined in the El Paso New
         Revolving Facility) all of the obligations of such Exempted Guarantor
         under the Loan Documents (as defined in the El Paso New Revolving
         Facility) to which the applicable Exempted Guarantor is a party and
         (ii) the Relevant Lien under the Security Documents (as defined in the
         El Paso New Revolving Facility) on any Relevant Collateral owned by the
         applicable Exempted Guarantor immediately prior to such merger,
         consolidation or liquidation remains effective and perfected
         immediately thereafter with no loss of relative priority to any other
         class of creditor from that existing immediately prior to such merger,
         consolidation or liquidation, and (c) El Paso may merge or consolidate
         with, or liquidate into, any Business Entity other than a Credit
         Related Party, provided that (i)(A) El Paso is the continuing or
         surviving Business Entity or (B) the continuing or surviving Business
         Entity is organized under the laws of the United States or a State
         thereof and unconditionally assumes by written agreement satisfactory
         to the Mustang Administrative Agent all of the performance and payment
         obligations of El Paso under this Agreement and the other Operative
         Documents to which El Paso is a party and (ii) the Relevant Lien under
         the Security Documents (as defined in the El Paso New Revolving
         Facility) on any Relevant Collateral owned by El Paso immediately prior
         to such merger, consolidation or liquidation remains effective and
         perfected immediately thereafter with no loss of relative priority to
         any other class of creditor (either contractually, by structural
         subordination or otherwise) from that existing immediately prior to
         such merger, consolidation or liquidation.

                  (f)      Bankruptcy. (i) Consent to, vote for, or otherwise
         cause, collude to cause, or permit (or permit any of its Affiliates, to
         consent to, or vote for, or otherwise cause or permit) Noric, Palomino,
         Paso Fino, Noric LP, Lusitano, Lipizzan, any Sponsor Subsidiary, any
         Counterparty to an E&P Participation Agreement or any Production
         Payment Agreement or any other El Paso Party voluntarily to take any
         action of the type referred to in clause (a)(iii) or (b), or clause (c)
         insofar as such clause (c) refers to clause (a)(iii) or (b), of the
         definition of "VOLUNTARY BANKRUPTCY".

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                                       32

<PAGE>

                  (ii)     Consent to, vote for, or otherwise cause or collude
         to cause (or permit any of its Affiliates, to consent to, or vote for,
         or otherwise cause) Mustang voluntarily to take any action of the type
         referred to in clause (a)(iii) or (b), or clause (c) insofar as such
         clause (c) refers to clause (a)(iii) or (b), of the definition of
         "VOLUNTARY BANKRUPTCY".

                  (g)      Principal Subsidiaries and Material Subsidiaries.
         Permit at any time any Sponsor Subsidiary, Noric, Palomino, Paso Fino,
         Noric LP, Lusitano, Lipizzan, any Intermediate Holder, any Underlying
         Business, or Clydesdale to be:

                           (i)      a Sonat Restricted Subsidiary; or

                           (ii)     directly owned by El Paso.

                  (h)      Consolidated Taxes. Notwithstanding the El Paso
         Natural Gas Company Income Tax Provision and Settlement Policy dated
         July 1, 1992 or any successor agreement or document (with respect to
         which El Paso, on its own behalf and on behalf of any affiliated party,
         hereby waives any right to payment until the Debt Collection Date has
         occurred), permit any Sponsor Subsidiary to pay any Consolidated Taxes
         (including, without limitation, any Consolidated Taxes attributable to
         such Sponsor Subsidiary) or to pay or reimburse El Paso, any Relevant
         El Paso Party or any other El Paso Affiliate for or in respect of any
         Consolidated Taxes (including, without limitation, any Consolidated
         Taxes attributable to such Sponsor Subsidiary).

                  (i)      Holders of the Sponsor Subsidiary Subordinated Note.
         Permit the Sponsor Subsidiary Subordinated Note to be held by any
         Person that is not an El Paso Company or that is an obligor under the
         Sponsor Subsidiary Subordinated Note.

                  5.4.     Reporting Requirements. (a) El Paso hereby covenants
and agrees that, until the Debt Collection Date, it will furnish to Mustang the
following:

                  (i)      Quarterly Reports. As soon as publicly available and
         in any event within 60 days after the end of each of the first three
         fiscal quarters of each fiscal year of each of El Paso and each other
         Credit Related Party that is required to file a Form 10-Q and/or Form
         10-K with the SEC, a consolidated balance sheet of each of El Paso and
         such other Credit Related Party and its consolidated Subsidiaries as of
         the end of such quarter, and consolidated statements of income and cash
         flows of each of El Paso and such other Credit Related Party and its
         respective Subsidiaries each for the period commencing at the end of
         the previous fiscal year and ending with the end of such quarter,
         certified (subject to normal year-end adjustments and the absence of
         footnotes) as being fairly stated in all material respects by the chief
         financial officer, controller or treasurer of El Paso and, in each
         case, accompanied by a certificate of any such officer of El Paso
         stating (A) whether or not such officer has knowledge of the occurrence
         of any El Paso Event that is continuing or of any event not theretofore
         remedied that with notice or lapse of time or both would constitute an
         El Paso Event and, if so, stating in reasonable detail the facts with
         respect thereto, (B) all relevant facts in reasonable detail to
         evidence, and the computations as to, whether or not El Paso is in
         compliance with the requirements set forth in Sections 5.3(b) and
         (c)(i), and (C) a listing of all Credit Related Parties and

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<PAGE>

         consolidated Subsidiaries of El Paso showing the extent of its direct
         and indirect holdings of their stocks.

                  (ii)     Annual Reports. As soon as publicly available and in
         any event within 120 days after the end of each fiscal year of El Paso
         and each other Credit Related Party that is required to file a Form
         10-Q and/or Form 10-K with the SEC, a copy of the annual report for
         such year for each of El Paso and such other Credit Related Party and
         its respective consolidated Subsidiaries containing financial
         statements for such year reported on by PricewaterhouseCoopers LLP or
         other nationally recognized independent public accountants, accompanied
         by a report signed by said accountants stating that such financial
         statements have been prepared in accordance with GAAP.

                  (iii)    Compliance Certificate. Within 120 days after the
         close of each of El Paso's fiscal years, a certificate of the chief
         financial officer, controller or treasurer of El Paso stating (A)
         whether or not such chief financial officer, controller or treasurer
         has knowledge of the occurrence of any El Paso Event that is continuing
         or of any event not theretofore remedied that with notice or lapse of
         time or both would constitute such an El Paso Event and, if so, stating
         in reasonable detail the facts with respect thereto, (B) all relevant
         facts in reasonable detail to evidence, and the computations as to,
         whether or not El Paso is in compliance with the requirements set forth
         in Sections 5.3(b) and (c)(i) and (C) a listing of all Credit Related
         Parties and consolidated Subsidiaries of El Paso showing the extent of
         its direct and indirect holdings of their stocks.

                  (iv)     Public Reports. Promptly after the sending or filing
         thereof, copies of all publicly available reports that El Paso or any
         other Credit Related Party sends to any of its security holders and
         copies of all publicly available reports and registration statements
         that El Paso or any other Credit Related Party files with the SEC or
         any national securities exchange other than registration statements
         relating to employee benefit plans and to registrations of securities
         for selling security holders.

                  (v)      FERC Reports. Within 10 days after sending or filing
         thereof, a copy of FERC Form No. 2: Annual Report of Major Natural Gas
         Companies, sent or filed by any Credit Related Party with FERC with
         respect to each fiscal year of such Credit Related Party.

                  (vi)     Litigation. Promptly in writing, notice of all
         litigation and of all proceedings before any governmental or regulatory
         agencies against or involving El Paso or any other Credit Related
         Party, except any litigation or proceeding that in the reasonable
         judgment of El Paso (taking into account the exhaustion of all appeals)
         is not likely to have a material adverse effect on the consolidated
         financial condition of El Paso and its consolidated Subsidiaries taken
         as a whole.

                  (vii)    Notice Event, Liquidating Event, Termination Event,
         Event of Default and Incipient Event. Promptly, but in any event no
         later than three Business Days, after an executive officer of El Paso
         or a Responsible Officer of the sole member or managing member, as
         applicable, of any Sponsor Subsidiary has actual knowledge of such
         occurrence that is continuing, a notice of the occurrence of any Notice
         Event, Liquidating

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<PAGE>

         Event, Termination Event, Event of Default or Incipient Event, and a
         notice setting forth details of the actions that El Paso or the
         appropriate Subsidiary of El Paso has taken or propose to take with
         respect thereto.

                  (viii)   ERISA Termination Event. As soon as practicable and
         in any event (A) within 30 days after El Paso or any ERISA Affiliate
         knows or has reason to know that any ERISA Termination Event described
         in clause (a) of the definition of ERISA Termination Event with respect
         to any Plan has occurred and (B) within 10 days after El Paso or any
         ERISA Affiliate knows or has reason to know that any other ERISA
         Termination Event with respect to any Plan has occurred, a statement of
         the chief financial officer or treasurer of El Paso describing such
         ERISA Termination Event and the action, if any, that El Paso or such
         ERISA Affiliate proposes to take with respect thereto.

                  (ix)     Pension Benefit Guaranty Corporation Notices.
         Promptly and in any event within two Business Days after receipt
         thereof by El Paso or any ERISA Affiliate, copies of each notice
         received by El Paso or any ERISA Affiliate from the Pension Benefit
         Guaranty Corporation (or any successor) stating its intention to
         terminate any Plan or to have a trustee appointed to administer any
         Plan.

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

                  (xi)     Multiemployer Plan. Promptly and in any event within
         five Business Days after receipt thereof by El Paso or any ERISA
         Affiliate from the sponsor of a Multiemployer Plan, a copy of each
         notice received by El Paso or any ERISA Affiliate concerning (A) the
         imposition of Withdrawal Liability by a Multiemployer Plan, (B) the
         determination that a Multiemployer Plan is, or is expected to be, in
         reorganization or insolvent within the meaning of Title IV of ERISA,
         (C) the termination of a Multiemployer Plan within the meaning of Title
         IV of ERISA, or (D) the amount of liability incurred, or expected to be
         incurred, by El Paso or any ERISA Affiliate in connection with any
         event described in clause (A), (B) or (C) above.

                  (xii)    Other Information. As soon as practicable but in any
         event within 60 days of any notice of request therefor, such other
         information respecting the financial condition and results of
         operations of El Paso or any Subsidiary of El Paso as the Mustang
         Administrative Agent, any Mustang Lender or any Equity Investor may
         from time to time reasonably request.

                  (b)      Until the Debt Collection Date, El Paso will, on
behalf of all Sponsor Subsidiaries, unless otherwise consented to in writing by
the Equity Investors, the Mustang Administrative Agent and the Majority
Instructing Group, furnish to Mustang and, in the case of subsections (iv),
(viii), (ix), (x) and (xi) below, to the Sponsor Subsidiary Collateral Agent
and, in the case of subsection (vii)(C) below, to the Designated Representative:

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<PAGE>

                  (i)      Annual Reports. Within 120 days after the end of each
         Sponsor Subsidiary's Fiscal Years beginning with the Fiscal Year ending
         December 31, 2001, the following:

                           (A)      a Compliance Certificate;

                           (B)      for such Fiscal Year and with respect to all
                  of the Sponsor Subsidiaries and their respective consolidated
                  Subsidiaries on a consolidated basis, combined audited
                  consolidated (and, if more than one Intermediate Holder and/or
                  Underlying Business is directly or indirectly owned by any
                  Sponsor Subsidiary or Sponsor Subsidiaries, consolidating)
                  balance sheets as of the last day of such Fiscal Year and the
                  preceding Fiscal Year (if any) and combined audited
                  consolidated (and, if more than one Intermediate Holder and/or
                  Underlying Business is directly or indirectly owned by any
                  Sponsor Subsidiary or Sponsor Subsidiaries, consolidating)
                  income statements and statements of cash flows for such
                  periods and the notes associated with each, for all Sponsor
                  Subsidiaries and their respective consolidated Subsidiaries;
                  and

                           (C)      an Operating Report in the form of Schedule
                  5.4(b) hereto.

                  (ii)     Quarterly Reports. Beginning with the Fiscal Quarter
         ending March 31, 2001, within 60 days after the end of each Fiscal
         Quarter in respect of the first three Fiscal Quarters of each Fiscal
         Year, copies of each of the following:

                           (A)      a Compliance Certificate;

                           (B)      for such Fiscal Quarter and with respect to
                  all of the Sponsor Subsidiaries and their respective
                  consolidated Subsidiaries on a consolidated basis, combined
                  unaudited consolidated (and, if more than one Intermediate
                  Holder and/or Underlying Business is directly or indirectly
                  owned by any Sponsor Subsidiary or Sponsor Subsidiaries,
                  consolidating) balance sheets as of the last day of such
                  Fiscal Quarter and for the comparable quarter of the prior
                  year (if any) and combined unaudited consolidated (and, if
                  more than one Intermediate Holder and/or Underlying Business
                  is directly or indirectly owned by any Sponsor Subsidiary or
                  Sponsor Subsidiaries, consolidating) income statements and
                  statements of cash flows for such Fiscal Quarter and, in
                  respect of the first three Fiscal Quarters of each Fiscal
                  Year, for the Fiscal Year to date, if any, ending on the last
                  day of such Fiscal Quarter and for the comparable periods of
                  the prior Fiscal Year (if any) for such Sponsor Subsidiary or
                  Sponsor Subsidiaries and their respective consolidated
                  Subsidiaries;

                           (C)      a certification by a Responsible Officer of
                  El Paso that the statements and balance sheets described in
                  Section 5.4(b)(ii)(B) are fairly stated in all material
                  respects (subject to normal year-end adjustments);

                           (D)      an Operating Report in the form of Schedule
                  5.4(b) hereto; and

                  (iii)    [Intentionally omitted].

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<PAGE>

                  (iv)     Litigation. Promptly in writing, notice of
         all litigation and of all proceedings of the kind contemplated by
         Section 4.01(g) and Section 4.02(g) of the Sponsor Subsidiary Credit
         Agreement.

                  (v)      Dispositions and Distributions. To the extent
         reasonably practicable to do so, 5 Business Days (or such lesser period
         as may be practicable) prior notice of any proposed Disposition,
         Distribution or voluntary prepayment of any A-Loan that would give rise
         to a prepayment under Section 2.05(b)(i), (ii), (iii), (iv), (v), (vi),
         (vii) or (viii) of the Sponsor Subsidiary Credit Agreement, and, to the
         extent it is not reasonably practicable to give such prior notice, El
         Paso shall give notice of any such Disposition, Distribution or
         prepayment immediately after such Disposition, Distribution or
         prepayment.

                  (vi)     FERC Forms. Within 10 days after sending or filing
         thereof, a copy of FERC Form No. 2: Annual Report of Major Natural Gas
         Companies, sent or filed by any Sponsor Subsidiary, any Intermediate
         Holder or any Underlying Business relating to any Energy Investment
         held by any Sponsor Subsidiary to or with FERC with respect to each
         Fiscal Year.

                  (vii)    Reserve Reports. (A) On or before March 1 of each
         calendar year commencing March 1, 2001 and each other date required in
         connection with an E&P Borrowing Base Redetermination under Section
         2.09(d) and Section 2.09(e) of the Sponsor Subsidiary Credit Agreement,
         a Reserve Report. Each Reserve Report delivered in connection with an
         E&P Borrowing Base Determination under Section 2.09(b) of the Sponsor
         Subsidiary Credit Agreement shall be calculated and dated as of the
         immediately preceding December 31 and each Reserve Report delivered in
         connection with an E&P Borrowing Base Redetermination under Section
         2.09(d) or Section 2.09(e) of the Sponsor Subsidiary Credit Agreement
         shall be dated as of the date of the applicable Redetermination Notice.

                  (B)      With the delivery of each Reserve Report, a
         certificate from a Responsible Officer of El Paso confirming that the
         representations and warranties set forth in Section 4.03(a) of the
         Sponsor Subsidiary Credit Agreement are correct in all material
         respects. Such certificate shall attach details of each acquisition and
         Disposition described in Section 2.09(e) of the Sponsor Subsidiary
         Credit Agreement made since delivery of the last Reserve Report.

                  (C)      With the delivery of each Reserve Report, a
         certificate from a Responsible Officer of El Paso setting forth whether
         the total Proved Reserves from Subject Interests and E&P Participation
         Properties reflected in such Reserve Report has increased or decreased
         by more than 10% with respect to the Proved Reserves reflected in the
         Reserve Report delivered in connection with the determination of the
         E&P Borrowing Base on the date hereof or, after the Designated
         Representative has approved or consented to an E&P Borrowing Base
         following the delivery of a certificate in the affirmative pursuant to
         this clause (C), the Reserve Report relating to the E&P Borrowing Base
         most recently approved or consented to by the Designated Representative
         immediately following the delivery of a certificate in the affirmative
         pursuant to this clause (C).

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<PAGE>

                  (viii)   Notice of Redetermination Threshold. Notice of the
         attainment of the Redetermination Threshold promptly after any
         acquisition or Disposition referred to in Section 2.09(e) of the
         Sponsor Subsidiary Credit Agreement which causes such Redetermination
         Threshold to be attained.

                  (ix)     Notices Under the E&P Participation Agreements and
         Production Payment Agreements Receivables. Upon request by Mustang, a
         copy of any notice, demand or other document furnished to any Sponsor
         Subsidiary, Lipizzan, Noric or Noric LP under any E&P Participation
         Agreement or any Production Payment Agreement to which any Sponsor
         Subsidiary, Lipizzan, Noric or Noric LP is a party.

                  (x)      A-Loans. Upon request by Mustang at any time, notice
         of aggregate relative amount of the A-Loans at such time. Such notice
         may comprise a copy of the grids attached to the A-Loan Notes.

                  (xi)     E&P Participation Properties. Upon request by
         Mustang, a copy of each Exhibit A to each E&P Participation Agreement
         to which Noric, Noric LP or a Sponsor Subsidiary is a party.

                  (xii)    [Intentionally Omitted].

                  (xiii)   Production Payments. Upon request by Mustang, a copy
         of each Exhibit A to each Production Payment Agreement and Schedule 1
         to each Production Payment Conveyance.

                  (xiv)    Other Information. As promptly as is reasonably
         practicable, such other information relating to the business, financial
         condition, operations, performance or properties of any Sponsor
         Subsidiary, each Transaction Asset, each Intermediate Holder and each
         Underlying Business in the possession or control of any Sponsor
         Subsidiary, as reasonably requested in writing by Mustang (such written
         request to identify this Section 5.4(b)(xiv)).

                  (c)      El Paso shall furnish to Mustang, on behalf of
         Clydesdale, the following:

                  (i)      Annual Reports. Within 120 days after the end of each
         Fiscal Year beginning with the Fiscal Year ended December 31, 2000 and
         ending with the Fiscal Year ended December 31, 2002, the following:

                           (A)      a Compliance Certificate;

                           (B) for each Fiscal Year, audited balance sheets as
                  of the last day of such Fiscal Year and the preceding Fiscal
                  Year (if any) and audited income statements and statements of
                  cash flows for such periods and the notes associated with
                  each, for Clydesdale; and

                           (C) a statement of such Clydesdale Partner's Capital
                  Account balances at the end of the Fiscal Year and a statement
                  of the changes therein since the end of the prior Fiscal Year
                  (if any).

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<PAGE>

                  (ii)     Quarterly Reports. Within 60 days after the close of
         each Fiscal Quarter (other than the final Fiscal Quarter of any Fiscal
         Year) beginning with the first Fiscal Quarter of the Fiscal Year ended
         December 31, 2000 and ending with the Fiscal Quarter ended March 31,
         2003, the following:

                           (A)      unaudited statements of cash flows of
                  Clydesdale for such Fiscal Quarter;

                           (B)      balance sheets of Clydesdale as of the end
                  of such Fiscal Quarter and for the comparable quarter of the
                  prior Fiscal Year (if any);

                           (C) income statements of Clydesdale for such Fiscal
                  Quarter, for the year to date ending such Fiscal Quarter if
                  other than the first fiscal Quarter of the Fiscal Year and for
                  the comparable periods of the prior Fiscal Year (if any);

                           (D)      a Compliance Certificate; and

                           (E)      a certification by a Responsible Officer of
                  El Paso that the statements described in Sections
                  5.4(c)(ii)(A) and (C) and (iii) and the balance sheets
                  referred to in Section 5.4(c)(ii)(B) are fairly stated in all
                  material respects.

Each balance sheet and other financial statement furnished pursuant to Section
5.4(a)(i) or (ii) shall contain comparative financial information that conforms
to the presentation required in Forms 10-Q and 10-K, as appropriate, under the
Securities Exchange Act of 1934, as amended. The electronic posting of any
financial statements, reports, notices or other items required to be furnished
pursuant to Section 5.4 on a website providing for access by Mustang, the
Administrative Agent, the Collateral Agent, the Equity Investors and the Bank
Lenders (as such terms are defined in the Mustang Credit and Security Agreement)
shall constitute delivery for all purposes of Section 5.4 of such financial
statements, reports, notices or other items. The accounts, financial statements,
financial reports, and other financial information to be provided pursuant to
Section 5.4(b) or (c) shall be prepared in accordance with GAAP; provided that
there shall be no requirement to provide footnotes to unaudited financial
statements.

                                   SECTION 6

                                  MISCELLANEOUS

                  6.1.     Amendments. No amendment or waiver of any provision
of this Agreement, and no consent to any departure by El Paso herefrom, shall in
any event be effective unless the same shall be in writing and signed by Mustang
and El Paso. No such waiver of a provision or consent to a departure in any one
instance shall be construed as a further or continuing waiver of or consent to
subsequent occurrences, or a waiver of any other provision or consent to any
other departure. Any such amendment, waiver or consent signed by Mustang shall
be binding on all Indemnified Persons.

                  6.2.     Addresses for Notices. Any notice, payment, demand,
or communication required or permitted to be given by any provision of this
Agreement shall be in writing or by facsimile and shall be deemed to have been
delivered, given, and received for all purposes (a) if

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<PAGE>

delivered personally to the Person or to an officer of the Person to whom the
same is directed, or (b) when the same is actually received (if during the
recipient s normal business hours if during a Business Day, or, if not, on the
next succeeding Business Day), if sent by facsimile (followed by a hard copy of
the facsimiled communication sent by certified mail, postage and charges
prepaid), or by courier or delivery service or by mail, addressed as follows, or
to such other address as such Person may from time to time specify by notice, if
to El Paso, at its address at c/o El Paso Corporation, 1001 Louisiana Street,
Houston, TX 77002, Attention: Treasurer, Facsimile No.: 713-420-2708, if to
Mustang, at its address specified in Section 11.02 of the Sponsor Subsidiary
Credit Agreement, and if to any other Indemnified Person, at its address
specified by notice given in the manner provided herein to each other Person
entitled to receive notice hereunder, or, in each case, to such other address
(and with copies to such other Persons) as the Person entitled to receive notice
hereunder shall specify by notice given in the manner provided herein to the
other Persons entitled to receive notice hereunder.

                  6.3.     No Waiver; Cumulative Remedies. No failure on the
part of any Indemnified Person to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by Applicable Law.

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<PAGE>

                  6.4.     Waiver of Jury Trial. EL PASO AND, BY ACCEPTING THE
BENEFITS HEREOF, EACH INDEMNIFIED PERSON, EACH HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED
ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

                  6.5.     Jurisdiction, Etc. (a) El Paso hereby irrevocably
submits to the jurisdiction of any New York State or Federal court sitting in
New York City and any appellate court from any thereof in any action or
proceeding by any Indemnified Person in respect of, but only in respect of, any
claims or causes of action arising out of or relating to this Agreement (such
claims and causes of action, collectively, being "PERMITTED CLAIMS"), and El
Paso hereby irrevocably agrees that all Permitted Claims may be heard and
determined in such New York State court or in such Federal court. El Paso hereby
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
aforementioned court in respect of Permitted Claims. El Paso hereby irrevocably
appoints CT Corporation System (the "PROCESS AGENT"), with an office on the date
hereof at 111 8th Avenue, New York, New York 10011, as its agent to receive on
behalf of El Paso and its property service of copies of the summons and
complaint and any other process which may be served by any Indemnified Person in
any such action or proceeding in any aforementioned court in respect of
Permitted Claims. Such service may be made by delivering a copy of such process
to El Paso by courier and by certified mail (return receipt requested), fees and
postage prepaid, both (i) in care of the Process Agent at the Process Agent's
above address and (ii) at El Paso's address specified pursuant to Section 6.2,
and El Paso hereby irrevocably authorizes and directs the Process Agent to
accept such service on its behalf. El Paso agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
Applicable Law.

                  (b)      Nothing in this Section 6.5 shall affect the right of
any Indemnified Person to serve legal process in any other manner permitted by
Applicable Law or affect any right otherwise existing of any Indemnified Person
to bring any action or proceeding against El Paso or its property in the courts
of other jurisdictions or (ii) shall be deemed to be a general consent to
jurisdiction in any particular court or a general waiver of any defense or a
consent to jurisdiction of the courts expressly referred to in subsection (a)
above in any action or proceeding in respect of any claim or cause of action
other than Permitted Claims.

                  6.6.     Assignment. All covenants and other agreements and
obligations in this Agreement shall (a) be binding upon El Paso and its
successors, but El Paso may not assign its obligations hereunder without the
consent of Mustang, except pursuant to a merger or consolidation not prohibited
by Section 5.3(e), and (b) inure to the exclusive benefit of, and be enforceable
by, Mustang and any Indemnified Person.

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

                  6.8.     Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so

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<PAGE>

 executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. This agreement
may be delivered by facsimile transmission of the relevant signature pages
hereof.

                  6.9.     Survival of Representations, Warranties and
Indemnities; Entire Agreement. All representations, warranties and indemnities
and undertakings to pay costs and expenses contained herein or made by or on
behalf of El Paso, as the case may be, in connection herewith or in connection
with the Operative Documents (including, without limitation, all
representations, warranties and indemnities made by or on behalf of El Paso
prior to the Fourth Restatement Date) shall survive (a) the execution and
delivery of this Agreement, (b) the completion of the performance by (i) any
Sponsor Subsidiary of the Sponsor Subsidiary Obligations, (ii) any Sponsor
Subsidiary Member of the Sponsor Subsidiary Member Obligations, (iii) Appaloosa
of the Appaloosa Obligations, (iv) any Counterparty to an E&P Participation
Agreement or a Production Payment Agreement of the E&P Asset Counterparty
Obligations, (v) any El Paso Party of the Hydrocarbon Sales Contract
Obligations, (vi) each other El Paso Party of its Obligations under the
Operative Documents to which it is a party, (vii) Noric of the Noric
Obligations, (viii) Palomino of the Palomino Obligations, (ix) Paso Fino of the
Paso Fino Obligations, (x) Noric LP of the Noric LP Obligations, (xi) Lusitano
of the Lusitano Obligations or (xii) Lipizzan of the Lipizzan Obligations, and
(c) the Transfer (whether or not such Transfer was a permitted Transfer) by (A)
Noric Holdings of all or a portion of its Clydesdale Class A Limited Partnership
Interest or any termination of its status as a Clydesdale Class A Limited
Partner, (B) Appaloosa of all or a portion of its Clydesdale General Partnership
Interest or any termination of its status as a Clydesdale General Partner, (C)
Noric Holdings I of all or a portion of its Clydesdale Class A Limited
Partnership Interest or any termination of its status as a Clydesdale Class A
Limited Partner (D) Noric Holdings I of all or a portion of its Noric Class A
Membership Interest or any termination of its status as the Noric Class A
Member, (E) Clydesdale of all or a portion of its Noric Class B Membership
Interest or any termination of its status as the Noric Class B Member, (F) any
Sponsor Subsidiary Member of all or a portion of its interest in any Sponsor
Subsidiary or any termination of its status as a Sponsor Subsidiary Member, (G)
Noric of all or a portion of its Palomino Membership Interest or Paso Fino
Membership Interest or any termination of its status as the Palomino Member or
Paso Fino Member, (H) Palomino of all or a portion of its Noric LP General
Partnership Interest or any termination of its status as the Noric LP General
Partner, (I) Paso Fino of all or a portion of its Noric LP Limited Partnership
Interest or any termination of its status as the Noric LP Limited Partner, (J)
Noric Holdings IV of all or a portion of its Lusitano Membership Interest or
Lipizzan Limited Partner Interest or any termination of its status as the
Lusitano Member or Lipizzan Limited Partner or (K) Lusitano of all or a portion
of its Lipizzan General Partnership Interest or any termination of its status as
the Lipizzan General Partner, and may be relied upon by any Indemnified Person,
regardless of any investigation made at any time by or on behalf of any
Indemnified Person or any such assignee.

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

El Paso Agreement

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<PAGE>

                  6.11.    Scope of Third-Party Beneficiaries. This Agreement is
intended for the exclusive benefit of the Indemnified Persons and no other
Person shall have any rights hereunder, whether as a third-party beneficiary or
otherwise.

                  6.12.    Obligations Absolute. (a) To the fullest extent
permitted under Applicable Law, El Paso covenants and agrees that its
obligations hereunder will be performed strictly in accordance with the terms of
this Agreement, regardless of any Applicable Law now or hereafter in effect in
any jurisdiction affecting the ability of any El Paso Party to perform its
obligations under any Operative Document or the rights of any Indemnified Person
with respect thereto.

                  (b)      To the fullest extent permitted under Applicable Law,
any action or actions may be brought hereunder by any Indemnified Person without
the necessity of joining any prior or other Indemnified Person in such action or
actions. To the fullest extent permitted under Applicable Law, the liability of
El Paso under this Agreement shall be irrevocable, absolute and unconditional
irrespective of, and El Paso hereby irrevocably waives any defenses it may now
or hereafter have in any way relating to, any or all of the following:

                  (i)      Any change in the time, manner or place of
         performance, or in any other term, of all or any of the Obligations of
         El Paso or any El Paso Party under any other Operative Document, or any
         other amendment, supplement or waiver of or any consent to departure
         from any of the Operative Documents, including any increase in or
         modification of the Obligations of El Paso or any El Paso Party
         thereunder, or the dissolution of any of the El Paso Parties;

                  (ii)     Any change, restructuring or termination of the
         corporate, limited liability company, or partnership structure, as the
         case may be, or in the existence or ownership of any of the El Paso
         Parties;

                  (iii)    Any act or omission of any Indemnified Person or any
         prior or subsequent Indemnified Person hereunder (other than any
         written amendment or waiver of, or consent to departure from, this
         Agreement meeting the requirements of Section 6.1 and except to the
         extent contemplated by Section 3.4);

                  (iv)     Any failure of any Indemnified Person to disclose to
         El Paso any information relating to the financial condition,
         operations, properties or prospects of Noric, Palomino, Paso Fino,
         Noric LP, Lusitano, Lipizzan, Appaloosa, any Mustang El Paso Member,
         any Sponsor Subsidiary or any Sponsor Subsidiary Member now or in the
         future known to any Indemnified Person (El Paso waiving any duty on the
         part of each Indemnified Person to disclose such information);

                  (v)      Any lack of validity or unenforceability of any of
         the Sponsor Subsidiary Obligations, the Sponsor Subsidiary Member
         Obligations, the Appaloosa Obligations, the E&P Asset Counterparty
         Obligations, the Hydrocarbon Sales Contract Obligations, the Noric
         Obligations, the Palomino Obligations, the Paso Fino Obligations, the
         Noric LP Obligations, the Lusitano Obligations or the Lipizzan
         Obligations;

El Paso Agreement

                                       43

<PAGE>

                  (vi)     Any Sponsor Subsidiary Obligation, Sponsor Subsidiary
         Member Obligation, Appaloosa Obligation, E&P Asset Counterparty
         Obligation, Noric Obligation, Palomino Obligation, Paso Fino
         Obligation, Noric LP Obligation, Lusitano Obligation or Lipizzan
         Obligation being unenforceable or not allowable due to the existence of
         a Bankruptcy involving any Sponsor Subsidiary, any Sponsor Subsidiary
         Member, Appaloosa, any Counterparty to an E&P Participation Agreement
         or any Production Payment Agreement, Noric, Palomino, Paso Fino, Noric
         LP, Lusitano or Lipizzan; or

                  (vii)    Any other circumstance (including any statute of
         limitations or any existence of or reliance on any representation by
         any Indemnified Person) that might otherwise constitute a defense
         available to, or a discharge of, any of the El Paso Parties or El Paso
         or a guarantor or indemnitor generally other than payment and
         performance when due.

                  (c)      El Paso's obligations under this Agreement shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment by El Paso or any El Paso Party in satisfaction of any of the
obligations of El Paso or any El Paso Party under the Operative Documents is
rescinded or must otherwise be returned upon the insolvency, bankruptcy or
reorganization of El Paso or any El Paso Party, or any Subsidiary of such
Person, or otherwise, all as though such payment had not been made.

                  6.13.    Waiver. Subject to the provisions of Section 3, El
Paso hereby waives (to the extent it may do so under Applicable Law) promptness,
diligence, and any notice from any Indemnified Person with respect to any of El
Paso's obligations under this Agreement and any requirement that any Indemnified
Person exhaust any right or take any action against any of the El Paso Parties
or any other Person.

                  6.14.    Subrogation. Until indefeasible payment in full of
(a) El Paso's obligations hereunder, (b) the Sponsor Subsidiary Obligations, and
(c) all other obligations of any other El Paso Party under the Operative
Documents, El Paso hereby agrees that it shall not exercise any rights that it
may acquire by way of subrogation hereunder, by any payment made hereunder or
otherwise. If any amount shall be paid to El Paso on account of such subrogation
rights at any time prior to such obligations having been paid in full, such
amount shall be held in trust for the benefit of the relevant Indemnified Person
and shall forthwith be paid to such Indemnified Person to be credited and
applied to any such obligations, whether matured or unmatured, in accordance
with the terms hereof.

                  6.15.    Termination. All obligations of El Paso under Section
5.2, 5.3 and 5.4 shall automatically terminate in full on the Debt Collection
Date. Mustang hereby agrees that it shall, at El Paso's sole cost and expense,
deliver to El Paso such statements of termination as El Paso may reasonably
request to evidence any such termination pursuant to this Section.

                  6.16.    Permitted Disclosure. Notwithstanding any other
provision of this Agreement, the parties to this Agreement hereby agree that
each party (and each employee, representative, or other agent of each party) may
disclose to any and all persons, without limitation of any kind, the U.S. tax
treatment and U.S. tax structure of the transaction and all

El Paso Agreement

                                       44

<PAGE>

materials of any kind (including opinions or other tax analyses) that are
provided to the taxpayer, relating to such U.S. tax treatment and U.S. tax
structure, other than any information for which nondisclosure is reasonably
necessary in order to comply with applicable securities laws.

                      [Signatures appear on the Next Page]

El Paso Agreement

                                       45

<PAGE>

                  IN WITNESS WHEREOF, El Paso has caused this Agreement to be
duly executed and delivered by its officer or other duly authorized signatory
thereunto duly authorized as of the date first above written.

                                                     EL PASO CORPORATION

                                                     By: /s/ John J. Hopper
                                                         ----------------------
                                                         Name:  John J. Hopper
                                                         Title: Vice President

El Paso Agreement

                                       46

<PAGE>

ACKNOWLEDGED:

MUSTANG INVESTORS, L.L.C.,

By: Dongola, Inc., as its managing member

By: /s/  James A. Hanley
    -----------------------
    Name:  James A. Hanley
    Title: Vice President

El Paso Agreement

<PAGE>

                                  EXHIBIT A TO
                                EL PASO AGREEMENT

                                   DEFINITIONS

                  "ADMINISTRATIVE AGENT" has the meaning set forth in the
Mustang Credit and Security Agreement.

                  "APA PURCHASERS OFFERING MATERIALS" means any information
memorandum prepared for the prospective APA Purchasers in connection with the
syndication of the commitments under the Mustang Credit and Security Agreement,
together with any amendments, supplements or exhibits thereto and any other
materials or documents prepared for the prospective APA Purchasers in connection
with the syndication of the commitments under the Mustang Credit and Security
Agreement, in each case in form and substance approved in writing by El Paso.

                  "APA PURCHASERS" has the same meaning as "Purchaser" in the
Mustang Credit and Security Agreement.

                  "APPALOOSA OBLIGATIONS" has the meaning set forth in Section
3.1(c) of the El Paso Agreement.

                  "BORROWER" means El Paso and each Pipeline Company Borrower.

                  "CAPITALIZATION" of any Person means the sum (without
duplication) of (a) consolidated Debt of such Person and its consolidated
Subsidiaries, plus (b) the aggregate amount of Guaranties by such Person and its
consolidated Subsidiaries, plus (c) the consolidated common and preferred
stockholders' equity of such Person and its consolidated Subsidiaries, plus (d)
the cumulative amount by which stockholders' equity of such Person shall have
been reduced by reason of non-cash write downs of long-term assets from and
after the Fourth Restatement Date, plus (e) in the case of El Paso, those items
included as "preferred interests of consolidated subsidiaries" (or analogous
line item) as listed on the consolidated balance sheet of El Paso as of December
31, 2002 and regardless of any change thereafter in accounting treatment
thereof, plus (f) in the case of El Paso, those items included as "minority
interests of consolidated subsidiaries" (or analogous line item) as listed on
the consolidated balance sheet of El Paso as of December 31, 2002 and regardless
of any change thereafter in accounting treatment thereof, so long as the terms
and conditions of any financing associated with any such items referred to in
clause (e) or (f) above (or successive extensions or refinancings thereof) are
not amended so as to become more restrictive to El Paso or its Subsidiaries than
the terms and conditions of this Agreement, and minus (g) accumulated other
comprehensive income (loss) (or analogous line item).

                  "COLLATERAL AGENT" has the meaning set forth in the Mustang
Credit and Security Agreement.

                  "CREDIT PARTY" has the meaning set forth in the El Paso New
Revolving Facility.

                  "CXC" shall mean CXC, LLC a Delaware limited liability
company.

El Paso Agreement

<PAGE>

                  "DISCLOSURE QUALIFICATION" shall mean that (i) no
representation, warranty or covenant is made with respect to any information
concerning CNAI, any APA Purchaser, the Administrator, the Clydesdale Custodian,
the Sponsor Subsidiary Collateral Agent or Mustang, any other lender, collateral
agent, credit enhancer to or for, or any direct or indirect members of, Mustang
(other than any member that is an Affiliate of El Paso), or any Affiliates or
agents or other representatives of any of the foregoing, (ii) no representation,
warranty or covenant is made with respect to any Financial Projections,
Securitization Information or Third Party Information, (iii) no representation,
warranty or covenant is made with respect to the terms or effects of or any
Person's rights or obligations under any agreement or document other than the
Operative Documents to which El Paso or an Affiliate of El Paso is a party and
any documents with respect to any Transaction Assets, and (iv) any
representation, warranty or covenant that is stated to be subject to the
Disclosure Qualification in any Offering Materials is subject to the foregoing
clauses (i) to (iii) and to the additional qualifications, assumptions and
disclaimers set forth in such Offering Materials.

                  "E&P ASSET COUNTERPARTY OBLIGATIONS" has the meaning set forth
in Section 3.1(e) of the El Paso Agreement.

                  "EQUITY INVESTOR" means each "Equity Participant" under and as
defined in the Mustang Company Agreement.

                  "EQUITY INVESTORS OFFERING MATERIALS" means the information
memorandum (if any) prepared for the prospective equity investors whether such
information memorandum is prepared solely for such equity investor or for the
APA Purchaser or both, together with any amendments, supplements, or exhibits
thereto and any other materials or documents prepared for the prospective equity
investors, in connection with the sale of the Mustang Member Interests under the
Mustang Company Agreement, in each case in form and substance as approved in
writing by El Paso.

                  "EXEMPTED GUARANTOR" has the meaning set forth in the El Paso
New Revolving Facility.

                  "FERC ELIGIBLE ASSET" means assets or other properties that
are or will become eligible for rate coverage under the regulations promulgated
by FERC.

                  "FINANCIAL PROJECTIONS" shall mean (a) any forward looking
statement (as defined in Rule 175 under the Securities Act), (b) any prospective
financial statement, financial forecast or financial projection (as defined in
guidelines published by the American Institute of Certified Public Accountants)
and (c) any information under the heading "Financial Forecasts and Assumptions"
(or any summary thereof), in each case included in (including as an exhibit to)
any Offering Materials.

                  "GUARANTY REDUCTION EVENT" has the meaning set forth in the El
Paso New Revolving Facility.

                  "HYDROCARBON SALES CONTRACT OBLIGATIONS" has the meaning set
forth in Section 3.1(f) of the El Paso Agreement.

El Paso Agreement

<PAGE>

                  "INDEMNIFIED PERSON" means Mustang, the Administrative Agent,
the Mustang Collateral Agent, each Lender, each APA Purchaser, each agent for
the APA Purchasers, Lord Securities, the Residual Credit Enhancer, the Sponsor
Subsidiary Collateral Agent, the Administrator, the Clydesdale Custodian, the
Noric Custodian, any Appraiser, each Equity Investor, each holder of an interest
in any part of the Advances and any successor and permitted assignee of any such
Person (whether pursuant to an assignment for security or otherwise, but
excluding any assignee for security of any Equity Investor) and the direct and
indirect members, partners, shareholders and other equity or residual interest
holders of any of the foregoing, and each of the respective directors, officers,
trustees, managers, employees, administrators and agents of any of the
foregoing.

                  "INDEMNIFIED PROCEEDING" has the meaning set forth in Section
3.5 of the El Paso Agreement.

                  "LENDER" has the meaning set forth in the Mustang Credit and
Security Agreement.

                  "LIPIZZAN OBLIGATIONS" has the meaning set forth in Section
3.1(l) of the El Paso Agreement.

                  "LUSITANO OBLIGATIONS" has the meaning set forth in Section
3.1(k) of the El Paso Agreement.

                  "MOJAVE" means Mojave Pipeline Company, a Texas general
partnership.

                  "MOJAVE OPERATING" means Mojave Pipeline Operating Co.,
a Texas corporation and, as of the Closing Date, a Subsidiary of Mojave.

                  "MUSTANG COLLATERAL AGENT" means the "Collateral Agent" as
such term is defined in the Mustang Credit and Security Agreement.

                  "MUSTANG COMPANY AGREEMENT" means the Amended and Restated
Company Agreement of Mustang Investors, L.L.C., originally dated as of April 28,
2000, as amended and restated as of May 9, 2000, December 15, 2000 and July 19,
2002, and further amended and restated as of April 16, 2003 among Mustang
Holdings, L.L.C., each Equity Investor, Dongola, Inc., Lord Securities and the
Mustang El Paso Member.

                  "MUSTANG CREDIT AND SECURITY AGREEMENT" means the Amended and
Restated Credit and Security Agreement, originally dated as of May 9, 2000 and
amended and restated as of December 15, 2000, June 29, 2001, November 7, 2001
and July 19, 2002, and further amended and restated as of April 16, 2003 among
Mustang, CXC, as the initial SC Lender, and Citicorp North America, Inc., as
administrative agent, RCE Agent (as therein defined) and as collateral agent.

                  "MUSTANG EL PASO MEMBER" means Shetland.

                  "MUSTANG LOAN DOCUMENTS" has the same meaning as "Loan
Documents" in the Mustang Credit and Security Agreement.

El Paso Agreement

<PAGE>

                  "MUSTANG MEMBER INTEREST" has the meaning set forth for the
term "Member Interest" in the Mustang Company Agreement.

                  "NORIC LP OBLIGATIONS" has the meaning set forth in Section
3.1(j) of the El Paso Agreement.

                  "OFFERING MATERIALS" means each of the Equity Investors
Offering Materials and the APA Purchasers Offering Materials.

                  "OPERATIVE DOCUMENTS" means all of the "Operative Documents"
as defined in the Definitions Agreement and the Tax Indemnity Agreement.

                  "PALOMINO OBLIGATIONS" has the meaning set forth in Section
3.1(h) of the El Paso Agreement.

                  "PASO FINO OBLIGATIONS" has the meaning set forth in Section
3.1(i) of the El Paso Agreement.

                  "RELEVANT CASH EQUIVALENTS" means "CASH EQUIVALENTS" as
defined in the El Paso New Revolving Facility.

                  "RELEVANT COLLATERAL" means "COLLATERAL" as defined in the El
Paso New Revolving Facility.

                  "RELEVANT COLLATERAL PERMITTED LIENS" means "COLLATERAL
PERMITTED LIENS" as defined in the El Paso New Revolving Facility.

                  "RELEVANT COLLATERAL ACCOUNT" means "COLLATERAL ACCOUNT" as
defined in the El Paso New Revolving Facility.

                  "RELEVANT DATE" has the meaning set forth in Section 2.16 of
the El Paso Agreement.

                  "RELEVANT DISPOSITION" means "DISPOSITION" as defined in the
El Paso New Revolving Facility.

                  "RELEVANT EBITDA" means "EBITDA" as defined in the El Paso New
Revolving Facility.

                  "RELEVANT EL PASO PARTY" has the meaning set forth in Section
2.1 of the El Paso Agreement.

                  "RELEVANT LIENS" means "LIENS" as defined in the El Paso New
Revolving Facility.

                  "RELEVANT NET CASH PROCEEDS" means "NET CASH PROCEEDS" as
defined in the El Paso New Revolving Facility.

El Paso Agreement

<PAGE>

                  "RESIDUAL CREDIT ENHANCER" means Royal Bank of Canada or any
other provider of "Residual Credit Enhancement" (as defined in the Mustang
Credit and Security Agreement).

                  "RESPONSIBLE OFFICER" means the chief financial officer,
controller or treasurer of El Paso.

                  "RESTRICTED EQUITY INTERESTS" means the collective reference
to the Equity Interests in each of Bear Creek Storage, CIG, Mojave, Mojave
Operating and WIC so long as and until such Equity Interests have been disposed
of in a Relevant Disposition in accordance with the terms and provisions of the
Loan Documents (as defined in the El Paso New Revolving Facility) and such
Person ceases to be a direct or indirect Subsidiary of El Paso.

                  "RESTRICTED SUBSIDIARIES" has the meaning set forth in the El
Paso New Revolving Facility.

                  "SC LENDER" has the meaning set forth in the Mustang Credit
and Security Agreement.

                  "SEC" means the United States Securities and Exchange
Commission.

                  "SECURITIZATION INFORMATION" shall mean any information
included in any Offering Materials concerning (a) the Asset Purchase Agreement,
(b) the Insurance Agreement, (c) the Residual Credit Enhancement Agreement, (d)
the Administration Agreement, (e) the Mustang Credit and Security Agreement, (f)
the Investor Note (as defined in the Mustang Credit and Security Agreement), (g)
any other contract, agreement or instrument entered into in connection with the
Transactions by any other lender, credit enhancer to or for, or any direct or
indirect members of, Mustang (other than any Mustang Member that is an Affiliate
of El Paso) or (h) any Person who is a party to any of the foregoing contracts,
agreements or instruments or any of the transactions contemplated thereby, other
than any such contract, agreement or instrument (excluding any consents entered
into in connection with the Transactions) to which (1) El Paso, (2) Noric
Holdings, any other Sponsor Subsidiary, Noric, Palomino, Paso Fino, Noric LP or
Clydesdale or (3) any other Affiliate of El Paso is a party and, in each case
above in this clause (i), any Affiliates or agents or other representatives of
any such non-excluded Persons.

                  "SONAT RESTRICTED SUBSIDIARY" means a "RESTRICTED SUBSIDIARY"
as defined in the Indenture, dated as of June 1, 1986, between Sonat and
Manufacturers Hanover Trust Company.

                  "SPONSOR SUBSIDIARY MEMBER OBLIGATIONS" has the meaning set
forth in Section 3.1(b) of the El Paso Agreement.

                  "SPONSOR SUBSIDIARY OBLIGATIONS" has the meaning set forth in
Section 3.1(a) of the El Paso Agreement.

                  "SPONSOR SUBSIDIARY SUBORDINATED NOTE HOLDER OBLIGATIONS" has
the meaning set forth in Section 3.1(n) of the El Paso Agreement.

El Paso Agreement

<PAGE>

                  "SUBSIDIARY GUARANTOR" has the meaning set forth in the El
Paso New Revolving Facility.

                  "SYNDICATION DATE" means the date on which the closing of the
syndication of the commitments of the APA Purchasers occurs, as notified to El
Paso by the Administrative Agent.

                  "TAX INDEMNITY AGREEMENT" means the Amended and Restated Tax
Indemnity Agreement, originally dated as of May 9, 2000 and amended and restated
as of April 16, 2003 among El Paso and the Class A Members of Mustang.

                  "THIRD PARTY INFORMATION" shall mean any information included
in an Information Memorandum (a) that is available from generally recognized
public sources or (b) for which the source is any separately identified third
party source or any other Person not affiliated with or acting as agent or
representative for El Paso or any Affiliate of El Paso.

El Paso Agreement

<PAGE>

                                    EXHIBIT B

                         FORM OF COMPLIANCE CERTIFICATE

          [TO BE DELIVERED UNDER SECTION 5.4 OF THE EL PASO AGREEMENT]

To:      Mustang Investors, L.L.C.

         Copies to those Persons listed on the attached Schedule I

                  Reference is made to the Amended and Restated Sponsor
Subsidiary Credit Agreement (the "SPONSOR SUBSIDIARY CREDIT AGREEMENT"),
originally dated as of May 9, 2000 as amended and restated as of December 15,
2000, June 29, 2001, July 19, 2002 and as further amended and restated as of
April 16, 2003 among Noric Holdings, the other Sponsor Subsidiaries party
thereto, Mustang Investors, L.L.C. and certain other parties. Capitalized terms
used and not defined herein have the respective meanings ascribed thereto in the
Sponsor Subsidiary Credit Agreement.

                  I, [name of officer], [title of officer] of El Paso (the
"COMPANY"), hereby certify that I am a Responsible Officer of the Company duly
authorized to execute this Compliance Certificate, and I further certify that:

         (1)      No Incipient Event, Event of Default, Liquidating Event,
                  Sponsor Subsidiary Termination Event or Notice Event has
                  occurred and is continuing [or specify nature of Incipient
                  Event, Event of Default, Liquidating Event, Sponsor Subsidiary
                  Termination Event or Notice Event and action that El Paso and
                  the relevant Sponsor Subsidiary propose taking with respect to
                  such event].

         (2)      The Operating Report attached hereto as Schedule II pursuant
                  to Section 5.4(b)[(i)][(ii)] of the El Paso Agreement is true
                  and correct as of the date hereof.

         (3)      The Maximum Clawback Amount as at the end of the [Fiscal
                  Year][Fiscal Quarter] ended [date] is _____________.

         (4)      The Excess Distribution for the [Fiscal Year][Fiscal Quarter]
                  ended [date] is _____________ and attached hereto as Schedule
                  III is a true and correct calculation thereof.

         (5)      Attached hereto as Schedule IV are the true and correct
                  calculations of the financial covenants set forth under
                  Section 5.04 and Section 6.01(f) of the Sponsor Subsidiary
                  Credit Agreement.

         (6)      The aggregate principal amount of A-Loans outstanding and the
                  Total Cash Collateral Amount, each as at the Coverage Test
                  Date with respect to the [Fiscal Year][Fiscal Quarter] ended
                  [date] are $________________ and $________________,
                  respectively.

El Paso Agreement

<PAGE>

IN WITNESS WHEREOF, I have hereunto set my hand as of the date first above
written.

                                                     By  _______________________
                                                     Name:
                                                     Title:

El Paso Agreement

<PAGE>

                                                                      SCHEDULE I

                        SCHEDULE OF ADDITIONAL ADDRESSEES

                  Mustang Investors, L.L.C.
                  c/o Wilmington Trust Company
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, DE 19890 - 1600

                  Attention: Corporate Trust Administration
                  Facsimile No.: 302-651-8882

                  Rio Grande Trust II
                  c/o Wilmington Trust Company
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, DE 19890 - 1600
                  Attention: Corporate Trust Administration
                  Facsimile No.: 302-651-8882

                  Citicorp North America, Inc.
                  as Administrative Agent
                  388 Greenwich Street
                  New York, NY 10013
                  Attention: Global Maximization Unit
                  Facsimile No.: 212-816-0262

                  copy to:
                  Citibank Delaware
                  Disclosure Unit
                  Two Penns Way, Suite 200
                  New Castle, DE 19720
                  Attention: Sue Anne Leighty
                  (212) 994-0961 - fax

                  copy to:
                  Citibank, N.A.
                  1200 Smith Street
                  Suite 2000
                  Houston, TX 77002
                  Attention: Amy Pincu, Relationship Manager, El Paso
                    Corporation
                  Facsimile No.: 713-654-2849

                  Capital Structuring
                  Citibank, N.A.
                  388 Greenwich Street 37th Floor
                  New York, NY 10013
                  Attention: Elliot Conway, Managing Director, Capital
                    Structuring
                  Facsimile No.: 212-816-0636

El Paso Agreement

<PAGE>

                                                                     SCHEDULE II

                                OPERATING REPORT

       [PLEASE ATTACH THE OPERATING REPORT IN THE FORM OF SCHEDULE 5.4(B)]

El Paso Agreement

<PAGE>

                         FORM OF COMPLIANCE CERTIFICATE

   [TO BE DELIVERED UNDER SECTION 5.4(c)(i) OR (ii) OF THE EL PASO AGREEMENT]

[DATE]

To:      Mustang Investors, L.L.C.

         Copies to those Persons listed on the attached Schedule I

                  Reference is made to the Amended and Restated Sponsor
Subsidiary Credit Agreement (the "SPONSOR SUBSIDIARY CREDIT AGREEMENT"),
originally dated as of May 9, 2000 as amended and restated as of December 15,
2000, June 29, 2001, July 19, 2002 and as further amended and restated as of
April 16, 2003 among Noric Holdings, the other Sponsor Subsidiaries party
thereto, Mustang Investors, L.L.C. and certain other parties named therein.
Capitalized terms used and not defined herein have the respective meanings
ascribed thereto in the Sponsor Subsidiary Credit Agreement.

                  I, [name of officer], [title of officer] of El Paso (the
"COMPANY"), hereby certify that I am a Responsible Officer of the Company duly
authorized to execute this Compliance Certificate, and I further certify that no
Incipient Event, Event of Default, Liquidating Event, Sponsor Subsidiary
Termination Event or Notice Event has occurred and is continuing [or specify
nature of Incipient Event, Event of Default, Liquidating Event, Sponsor
Subsidiary Termination Event or Notice Event and action that Sponsor
Subsidiaries propose taking with respect to such event].

IN WITNESS WHEREOF, I have hereunto set my hand as of the date first above
written.

                                                     By  _______________________
                                                     Name:
                                                     Title:

El Paso Agreement

<PAGE>

                                                                      SCHEDULE I

                        SCHEDULE OF ADDITIONAL ADDRESSEES

                  Mustang Investors, L.L.C.
                  c/o Wilmington Trust Company
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, DE 19890 - 1600
                  Attention: Corporate Trust Administration
                  Facsimile No.: 302-651-8882

                  Rio Grande Trust II
                  c/o Wilmington Trust Company
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, DE 19890 - 1600
                  Attention: Corporate Trust Administration
                  Facsimile No.: 302-651-8882

                  Citicorp North America, Inc.
                  as Administrative Agent
                  388 Greenwich Street
                  New York, NY  10013
                  Attention: Global Maximization Unit
                  Facsimile No.: 212-816-0262

                  copy to:
                  Citibank Delaware
                  Disclosure Unit
                  Two Penns Way, Suite 200
                  New Castle, DE 19720
                  Attention: Sue Anne Leighty
                  (212) 994-0961 - fax

                  copy to:
                  Citibank, N.A.
                  1200 Smith Street
                  Suite 2000
                  Houston, TX 77002
                  Attention: Amy Pincu, Relationship Manager, El Paso
                    Corporation
                  Facsimile No.: 713-654-2849

                  Capital Structuring
                  Citibank, N.A.
                  388 Greenwich Street 37th Floor
                  New York, NY 10013
                  Attention: Elliot Conway, Managing Director, Capital
                    Structuring
                  Facsimile No.: 212-816-0636

El Paso Agreement

<PAGE>

                         FORM OF COMPLIANCE CERTIFICATE

   [TO BE DELIVERED UNDER SECTION 5.4(c)(i) OR (ii) OF THE EL PASO AGREEMENT]

[DATE]

To:      Mustang Investors, L.L.C.

         Copies to those Persons listed on the attached Schedule I

                  Reference is made to the Amended and Restated Sponsor
Subsidiary Credit Agreement (the "SPONSOR SUBSIDIARY CREDIT AGREEMENT"),
originally dated as of May 9, 2000 as amended and restated as of December 15,
2000, June 29, 2001, July 19, 2002 and as further amended and restated as of
April 16, 2003 among Noric Holdings, the other Sponsor Subsidiaries party
thereto, Mustang Investors, L.L.C. and certain other parties named therein.
Capitalized terms used and not defined herein have the respective meanings
ascribed thereto in the Sponsor Subsidiary Credit Agreement.

                  I, [name of officer], [title of officer] of El Paso (the
"COMPANY"), hereby certify that I am a Responsible Officer of the Company duly
authorized to execute this Compliance Certificate, and I further certify that no
Incipient Event, Event of Default, Liquidating Event, Sponsor Subsidiary
Termination Event or Notice Event has occurred and is continuing [or specify
nature of Incipient Event, Event of Default, Liquidating Event, Sponsor
Subsidiary Termination Event or Notice Event and action that Sponsor
Subsidiaries propose taking with respect to such event].

IN WITNESS WHEREOF, I have hereunto set my hand as of the date first above
written.

                                                     By  _______________________
                                                     Name:
                                                     Title:

El Paso Agreement

<PAGE>

                                                                      SCHEDULE I

                        SCHEDULE OF ADDITIONAL ADDRESSEES

                  Mustang Investors, L.L.C.
                  c/o Wilmington Trust Company
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, DE 19890 - 1600
                  Attention: Corporate Trust Administration
                  Facsimile No.: 302-651-8882

                  Rio Grande Trust II
                  c/o Wilmington Trust Company
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, DE 19890 - 1600
                  Attention: Corporate Trust Administration
                  Facsimile No.: 302-651-8882

                  Citicorp North America, Inc.
                  as Administrative Agent
                  388 Greenwich Street
                  New York, NY 10013
                  Attention: Global Maximization Unit
                  Facsimile No.: 212-816-0262

                  copy to:
                  Citibank Delaware
                  Disclosure Unit
                  Two Penns Way, Suite 200
                  New Castle, DE 19720
                  Attention: Sue Anne Leighty
                  (212) 994-0961 - fax

                  copy to:
                  Citibank, N.A.
                  1200 Smith Street
                  Suite 2000
                  Houston, TX 77002
                  Attention: Amy Pincu, Relationship Manager, El Paso
                    Corporation
                  Facsimile No.: 713-654-2849

                  Capital Structuring
                  Citibank, N.A.
                  388 Greenwich Street 37th Floor
                  New York, NY 10013
                  Attention: Elliot Conway, Managing Director, Capital
                    Structuring
                  Facsimile No.: 212-816-0636

El Paso Agreement

<PAGE>

                                 SCHEDULE 2.8 TO
                                EL PASO AGREEMENT

                   SPONSOR SUBSIDIARIES INCLUDED IN TAX RETURN

El Paso Agreement

<PAGE>

                             SCHEDULE 5.4(B)(XI) TO
                                EL PASO AGREEMENT

                            FORM OF OPERATING REPORT

El Paso Agreement
<PAGE>

                     AMENDED AND RESTATED GUARANTY AGREEMENT

                       Originally dated as of May 9, 2000

  Amended and Restated as of December 15, 2000 and July 19, 2002 and as further
                    Amended and Restated as of April 16,2003

                                     Made by

                               EL PASO CORPORATION
                                  as Guarantor

                                   in favor of

                     EACH SPONSOR SUBSIDIARY, NORIC, L.L.C.,
                    NORIC, L.P., AND EACH CONTROLLED BUSINESS
                                as Beneficiaries

El Paso Agreement

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section                                                                                                             Page
<S>                                                                                                                 <C>
Section 1.  Guaranty..............................................................................................    2

Section 2.  Guaranty Absolute.....................................................................................    2

Section 3.  Waivers and Acknowledgments...........................................................................    3

Section 4.  Subrogation...........................................................................................    3

Section 5.  Payments..............................................................................................    4

Section 6.  Payments Free of Withholdings.........................................................................    4

Section 7.  Governing Law.........................................................................................    5

Section 8.   Entire Guaranty......................................................................................    5

Section 9.  Execution in Counterparts.............................................................................    5

Section 10.  Amendments...........................................................................................    5

Section 11.  Further Assurances...................................................................................    5

Section 12.  Continuing Guaranty..................................................................................    5

Section 13.  No Waiver; Remedies..................................................................................    5

Section 14.  Waiver of Jury Trial.................................................................................    5

Section 15.  Jurisdiction, Etc....................................................................................    5

Section 16.  Assignment...........................................................................................    6

Section 17.  Addresses for Notices................................................................................    6

Section 18.  Severability.........................................................................................    7

Section 19.  Indemnification......................................................................................    7
</TABLE>

El Paso Agreement
<PAGE>

                                                                  CONFORMED COPY

                  AMENDED AND RESTATED GUARANTY AGREEMENT

                  AMENDED AND RESTATED GUARANTY AGREEMENT, originally dated as
of May 9, 2000, as amended and restated as of December 15, 2000 and July 19,
2002 and as further amended and restated as of April 16, 2003, made by El Paso
Corporation, a Delaware corporation ("EL PASO"), as guarantor, in favor of,
severally, each Sponsor Subsidiary, Noric, Noric LP and each Controlled Business
(each as defined in the Definitions Agreement, referred to below) (together the
"BENEFICIARIES" and each a "BENEFICIARY").

                  PRELIMINARY STATEMENTS

                  A.       Each Sponsor Subsidiary may, from time to time on or
after May 9, 2000, make (1) El Paso Demand Loans (together with the El Paso
Demand Loans referred to in Preliminary Statement B, "EL PASO AFFILIATE DEMAND
LOANS") from moneys standing to the credit of the Sponsor Subsidiary Cash
Reserve, the Noric Holdings IV Cash Reserve or the Sponsor Subsidiary Operating
Account and (2) A-Loans ("AFFILIATE A-LOANS") pursuant to the terms of the
Sponsor Subsidiary Credit Agreement, in each case to Affiliates of El Paso,
which loans are to be guaranteed by El Paso under this Guaranty Agreement.

                  B.       Each Controlled Business may, from time to time on or
after May 9, 2000, make demand loans ("AFFILIATE LOANS") to Affiliates of El
Paso pursuant to Section 5.09(e)(i) of the Sponsor Subsidiary Credit Agreement,
which Affiliate Loans are to be guaranteed by El Paso under this Guaranty
Agreement.

                  C.       All obligations of each Affiliate of El Paso under
the El Paso Affiliate Demand Loans, the Affiliate A-Loans (excluding the
obligation to repay the principal thereof), and the Affiliate Loans are referred
to herein collectively as the "COVERED OBLIGATIONS" and individually as a
"COVERED OBLIGATION".

                  D.       El Paso will receive certain direct and indirect
benefits from the incurrence of the Covered Obligations.

                  E.       It is a condition precedent to the making of the El
Paso Affiliate Demand Loans, the Affiliate A-Loans, and the Affiliate Loans that
El Paso shall have executed and delivered this Guaranty Agreement.

                  F.       Unless the context otherwise requires, capitalized
terms not defined herein have the meanings set forth in the Definitions
Agreement, dated as of April 16, 2003 (the "DEFINITIONS AGREEMENT"), among El
Paso, Noric Holdings, the Sponsor Subsidiaries, Mustang, Clydesdale and the
other parties thereto, as such agreement may be amended, amended and restated,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.

El Paso Agreement

<PAGE>

                                       2

                  NOW, THEREFORE, in consideration of the premises and as a
condition to the making of the loans in respect of the Covered Obligations, in
each case from time to time, El Paso hereby agrees as follows:

                  Section 1. Guaranty. El Paso hereby unconditionally and
irrevocably guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all obligations of each Affiliate of
El Paso now or hereafter existing in respect of each Covered Obligation, whether
for principal (other than in the case of Affiliate A-Loans), interest, fees,
expenses or otherwise (such obligations being the "GUARANTEED OBLIGATIONS"), and
agrees to pay any and all expenses (including counsel fees and expenses)
incurred by each Beneficiary or any assignee thereof in enforcing any rights
under this Guaranty Agreement. Without limiting the generality of the foregoing,
El Paso's liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and all amounts that would be owed by each Affiliate of
El Paso to each Beneficiary or any assignee thereof under the Covered
Obligations but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
such Affiliate of El Paso.

                  Section 2. Guaranty Absolute. El Paso guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Covered Obligations, regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of any
Beneficiary, the Sponsor Subsidiary Collateral Agent or Mustang with respect
thereto. The Obligations of El Paso under this Guaranty Agreement are principal
obligations, and are independent of the Guaranteed Obligations or any other
Obligations of any Beneficiary, or any Affiliate of El Paso in respect of any
Covered Obligation, and a separate action or actions may be brought and
prosecuted against El Paso to enforce this Guaranty Agreement, irrespective of
whether any action is brought against any Beneficiary or any Affiliate of El
Paso or whether any Beneficiary or any Affiliate of El Paso is joined in any
such action or actions. The liability of El Paso under this Guaranty Agreement
shall be irrevocable, absolute and unconditional irrespective of, and El Paso
hereby irrevocably waives any defenses it may now or hereafter have in any way
relating to, any or all of the following:

                  (a)      any lack of validity or enforceability of any
         Covered Obligation or any agreement or instrument relating thereto;

                  (b)      any change in the time, manner or place of payment
         of, or in any other term of, all or any of the Guaranteed Obligations
         or any other obligations of any Affiliate of El Paso in respect of any
         Covered Obligation, or any other amendment or waiver of or any consent
         to departure from any Covered Obligation, including, without
         limitation, any increase in the Guaranteed Obligations resulting from
         the extension of additional credit to any Affiliate of El Paso or
         otherwise;

                  (c)      any taking, exchange, release or non-perfection of
         any collateral, or any taking, release or amendment or waiver of or
         consent to departure from any other guaranty, for all or any of the
         Guaranteed Obligations;

                  (d)      any manner of application of collateral, or proceeds
         thereof, to all or any of the Guaranteed Obligations, or any manner of
         sale or other disposition of any collateral for all or any of the
         Guaranteed Obligations or any other obligations of any

El Paso Agreement

<PAGE>

                                       3

         Affiliate of El Paso in respect of any Covered Obligation or any other
         assets of any Affiliate of El Paso;

                  (e)      any change, restructuring or termination of the
         corporate structure or existence of any Affiliate of El Paso that is an
         obligor in respect of a Covered Obligation;

                  (f)      any failure of any Beneficiary or to disclose to any
         Affiliate of El Paso or El Paso any information relating to the
         financial condition, operations, properties or prospects of any
         Affiliate of El Paso or El Paso now or in the future known to such
         Beneficiary (El Paso waiving any duty on the part of any Beneficiary to
         disclose such information); or

                  (g)      any other circumstance (including, without
         limitation, any statute of limitations) or any existence of or reliance
         on any representation by any Beneficiary that might otherwise
         constitute a defense available to, or a discharge of, any Affiliate of
         El Paso that is an obligor in respect of a Covered Obligation, El Paso,
         or any other guarantor or surety.

This Guaranty Agreement shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by any Beneficiary or any other Person
upon the insolvency, bankruptcy or reorganization of any Beneficiary or any
Affiliate of El Paso or otherwise, all as though such payment had not been made.

                  Section 3. Waivers and Acknowledgments. (a) El Paso hereby
waives promptness, diligence, notice of acceptance and any other notice with
respect to any of the Guaranteed Obligations and this Guaranty Agreement and any
requirement that a Beneficiary protect, secure, perfect or insure any Lien or
any property subject thereto or exhaust any right or take any action against any
Affiliate of El Paso or any other Person or any collateral.

                  (b)      El Paso hereby acknowledges that this Guaranty
Agreement is continuing in nature and applies to all Guaranteed Obligations,
whether existing now or in the future.

                  (c)      El Paso acknowledges that it will receive substantial
direct and indirect benefits from this Guaranty Agreement, the Covered
Obligations and the transactions contemplated in connection herewith and
therewith and that the waivers set forth in Section 2 above and in this Section
3 are knowingly made in contemplation of such benefits.

                  Section 4. Subrogation. El Paso will not exercise any rights
that it may now or hereafter acquire against an Affiliate of El Paso that is an
obligor in respect of a Covered Obligation that arise from the existence,
payment, performance or enforcement of El Paso's obligations under this Guaranty
Agreement, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of a Beneficiary against such Affiliate of El
Paso, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from such Affiliate of El Paso, directly or indirectly, in cash
or other property or by setoff or in any other manner, payment or security on
account of such claim, remedy or right, unless and until all of the Guaranteed
Obligations and

El Paso Agreement

<PAGE>

                                       4

any other obligations of any other El Paso Party under the Operative Documents
shall have been indefeasibly paid in full. If any amount shall be paid to El
Paso in violation of the preceding sentence at any time prior to the later of
(a) the payment in full of the Guaranteed Obligations, all other amounts payable
under this Guaranty Agreement and all other obligations of any other El Paso
Party under the Operative Documents, and (b) the termination of this Guaranty
Agreement, such amount shall be held in trust for the benefit of the
Beneficiaries and shall forthwith be paid to the Sponsor Subsidiary Cash
Reserve, to the Noric Holdings IV Cash Reserve or to the Noric Holdings I Cash
Reserve (as required by Section 5 hereto in respect of the payment by El Paso to
which such amount relates), to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Guaranty Agreement, whether
matured or unmatured. If (x) El Paso shall make payment to the Beneficiaries of
all or any part of the Guaranteed Obligations and (y) this Guaranty Agreement
shall have been terminated, each Beneficiary shall, at El Paso's request and
expense, execute and deliver to El Paso appropriate documents, without recourse
and without representation or warranty, necessary to evidence the transfer by
subrogation to El Paso of an interest in the Guaranteed Obligations resulting
from such payment by El Paso.

                  Section 5. Payments. All payments to be made by El Paso under
this Guaranty Agreement shall be paid by El Paso within one Business Day
following demand therefor. Payments to a Sponsor Subsidiary or any Controlled
Business held by a Sponsor Subsidiary, shall be made to the Sponsor Subsidiary
Cash Reserve, the Noric Holdings IV Cash Reserve or the Noric Holdings I Cash
Reserve, in each case not later than 11:00 a.m. (New York time) on the date for
such payment in immediately available funds.

                  Section 6. Payments Free of Withholdings. (a) Any and all
payments by El Paso hereunder to a Beneficiary shall be made free and clear of
and without deduction for any and all present or future Taxes (other than Taxes
based on net income). If El Paso shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder to any Beneficiary, (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 6) such Beneficiary receives an amount equal to the sum it would
have received had no such deductions been made, (ii) El Paso shall make or cause
to be made such deductions and (iii) El Paso shall pay or cause to be paid the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law. If any Beneficiary receives a net credit or
refund in respect of such Taxes or amounts so paid by El Paso, it shall promptly
notify El Paso of such net credit or refund and shall promptly pay such net
credit or refund to El Paso; provided that El Paso agrees to return such net
credit or refund if such Beneficiary is required to repay it.

                  (b)      In addition, El Paso agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made by El Paso hereunder or from
the execution, delivery or performance of, or otherwise with respect to, this
Guaranty Agreement (hereinafter referred to as "OTHER TAXES").

                  (c)      El Paso will indemnify each Beneficiary for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section 6)
paid by any Beneficiary and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. This indemnification shall be
made within 30 days from the date a Beneficiary makes written demand therefor.

El Paso Agreement

<PAGE>

                                       5

                  (d)      Without prejudice to the survival of any other
agreement of El Paso hereunder, the agreement and obligations of El Paso and
each Beneficiary contained in this Section 6 shall survive the payment in full
of principal and interest owing under this Guaranty Agreement and the Sponsor
Subsidiary Credit Agreement.

                  Section 7. Governing Law. This Guaranty Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, excluding (to the greatest extent permissible by law) any rule of law that
would cause the application of laws of any jurisdiction other than the State of
New York.

                  Section 8. Entire Guaranty. This Guaranty Agreement
constitutes the sole and entire agreement of El Paso and the Beneficiaries with
respect to the subject matter hereof.

                  Section 9. Execution in Counterparts. This Guaranty Agreement
may be executed in any number of counterparts and in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
when taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Guaranty Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Guaranty Agreement.

                  Section 10. Amendments. This Guaranty Agreement may not be
amended or modified, and no provisions hereof may be waived, without the written
consent of El Paso, each Beneficiary and Mustang.

                  Section 11. Further Assurances. From and after the date of
this Guaranty Agreement, upon the request of any Beneficiary or Mustang, El Paso
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Guaranty Agreement.

                  Section 12. Continuing Guaranty. The guaranty made herein by
El Paso is a continuing guaranty and shall remain in full force and effect until
the Debt Collection Date, at which time this Guaranty Agreement shall be
terminated.

                  Section 13. No Waiver; Remedies. No failure on the part of any
Beneficiary to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

                  Section 14. Waiver of Jury Trial. EL PASO AND, BY ACCEPTING
THE BENEFITS HEREOF, EACH BENEFICIARY, EACH HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS GUARANTY
AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

                  Section 15. Jurisdiction, Etc. (a) El Paso hereby irrevocably
submits to the jurisdiction of any New York State or Federal court sitting in
New York City and any appellate

El Paso Agreement

<PAGE>

                                       6

court from any thereof in any action or proceeding by any Beneficiary in respect
of, but only in respect of, any claims or causes of action arising out of or
relating to this Guaranty Agreement (such claims and causes of action,
collectively, being "PERMITTED CLAIMS"), and El Paso hereby irrevocably agrees
that all Permitted Claims may be heard and determined in such New York State
court or in such Federal court. El Paso hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any aforementioned court in
respect of Permitted Claims. El Paso hereby irrevocably appoints CT Corporation
System (the "PROCESS AGENT"), with an office on the date hereof at 111 8th
Avenue, New York, New York 10011, as its agent to receive on behalf of El Paso
and its property service of copies of the summons and complaint and any other
process which may be served by any Beneficiary in any such action or proceeding
in any aforementioned court in respect of Permitted Claims. Such service may be
made by delivering a copy of such process to El Paso by courier and by certified
mail (return receipt requested), fees and postage prepaid, both (i) in care of
the Process Agent at the Process Agent's above address and (ii) at El Paso's
address specified pursuant to Section 6.2 of the El Paso Agreement, and El Paso
hereby irrevocably authorizes and directs the Process Agent to accept such
service on its behalf. El Paso agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.

                  (b)      Nothing in this Section 15 shall:

                  (i) affect the right of any Beneficiary to serve legal process
         in any other manner permitted by law or affect any right otherwise
         existing of any Beneficiary to bring any action or proceeding against
         El Paso or its property in the courts of other jurisdictions; or

                  (ii) be deemed to be a general consent to jurisdiction in any
         particular court or a general waiver of any defense or a consent to
         jurisdiction of the courts expressly referred to in subsection (a)
         above in any action or proceeding in respect of any claim or cause of
         action other than Permitted Claims.

                  Section 16. Assignment. This Guaranty Agreement shall (a) be
binding upon El Paso and its successors, but El Paso may not assign its
obligations hereunder without the consent of the Sponsor Subsidiaries, Noric,
Noric LP, Mustang, the Sponsor Subsidiary Collateral Agent and the Mustang
Collateral Agent except pursuant to a merger or consolidation not prohibited by
Section 5.3(e) of the El Paso Agreement, and (b) inure to the exclusive benefit
of, and be enforceable by, each Beneficiary and, in each case, by their
respective permitted successors, transferees and assigns (including any assignee
for security purposes or Person holding a security interest in any Beneficiary's
rights herein).

                  Section 17. Addresses for Notices. Any notice, payment,
demand, or communication required or permitted to be given by any provision of
this Guaranty Agreement shall be in writing or by facsimile and shall be deemed
to have been delivered, given, and received for all purposes (a) if delivered
personally to the Person or to an officer of the Person to whom the same is
directed, or (b) when the same is actually received (if during the recipient's
normal business hours if during a Business Day, or, if not, on the next
succeeding Business Day), if sent by facsimile (followed by a hard copy of the
facsimiled communication sent by certified mail, postage and charges prepaid),
or by courier or delivery service or by mail, addressed as

El Paso Agreement

<PAGE>

                                       7

follows, or to such other address as such Person may from time to time specify
by notice, if to El Paso, at its address at c/o El Paso Corporation, 1001
Louisiana Street, Houston, TX 77002, Attention: Treasurer, Facsimile No.: 713
420 2708 or if to a Sponsor Subsidiary or a Controlled Business held by a
Sponsor Subsidiary, to the address of Noric Holdings specified in the Sponsor
Subsidiary Credit Agreement or if to Noric or Noric LP, at Noric's address
specified in Section 2.7 of the Noric Company Agreement, with a copy to each
Noric Member at its address specified in Section 2.2 of the Noric Company
Agreement, or, in each case, to such other address (and with copies to such
other Persons) as the Person entitled to receive notice hereunder shall specify
by notice given in the manner provided herein to the other Persons entitled to
receive notice hereunder.

                  Section 18. Severability. Every provision of this Guaranty
Agreement that is prohibited by or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

                  Section 19. Indemnification. Without limiting any other
Obligations of El Paso or remedies of any Beneficiary under this Guaranty
Agreement, El Paso shall, to the fullest extent permitted by law, indemnify,
defend and save and hold harmless each Beneficiary from and against, and shall
pay on demand, any and all losses, liabilities, damages, costs, expenses and
charges (including the fees and disbursements of any Beneficiary's legal
counsel) suffered or incurred by such Beneficiary as a result of any failure of
any Guaranteed Obligations to be the legal, valid and binding obligations of any
Affiliate of El Paso enforceable against such Affiliate of El Paso in accordance
with their terms.

El Paso Agreement

<PAGE>

                  IN WITNESS WHEREOF, El Paso has caused this amended and
restated Guaranty Agreement to be executed by its officer thereunto duly
authorized as of the date first above written.

                                                     EL PASO CORPORATION

                                                     By: /s/  John J. Hopper
                                                         -----------------------
                                                         Name: John J. Hopper
                                                         Title:  Vice President

El Paso Agreement

<PAGE>

                                                                  CONFORMED COPY

                              DEFINITIONS AGREEMENT

                           Dated as of April 16, 2003

                                      among

                               EL PASO CORPORATION

                                       and

                             NORIC HOLDINGS, L.L.C.

                                       and

                   THE OTHER SPONSOR SUBSIDIARIES PARTY HERETO

                           MUSTANG INVESTORS, L.L.C.,

                                       and

                           CLYDESDALE ASSOCIATES, L.P.

                                       and

                         THE OTHER PARTIES NAMED HEREIN

El Paso Definitions Agreement

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                        Page
                                                                        ----
<S>                                                                     <C>
SECTION 1.       Definitions..........................................    1

SECTION 2.       Amendments, Etc......................................   81

SECTION 3.       Governing Law........................................   82

SECTION 4.       Execution in Counterparts............................   82

SECTION 5.       WAIVER OF JURY TRIAL.................................   82

SECTION 6.       Consent to Jurisdiction..............................   82

SECTION 7.       Addresses for Notices................................   82
</TABLE>

El Paso Definitions Agreement

                                       2

<PAGE>

                              DEFINITIONS AGREEMENT

                  THIS DEFINITIONS AGREEMENT (this "AGREEMENT"), dated as of
April 16, 2003, among El Paso Corporation, a Delaware corporation, Mustang
Investors, L.L.C., a Delaware limited liability company, Noric Holdings, L.L.C.,
a Delaware limited liability company, Noric Holdings I, L.L.C., a Delaware
limited liability company, Noric Holdings III, L.L.C., a Delaware limited
liability company, Noric Holdings IV, L.L.C., a Delaware limited liability
company, Noric, L.L.C., a Delaware limited liability company, Palomino, L.L.C.,
a Delaware limited liability company, Paso Fino, L.L.C., a Delaware limited
liability company, Noric, L.P., a Delaware limited partnership, Lusitano,
L.L.C., a Delaware limited liability company, Lipizzan Holdings, L.P., a
Delaware limited partnership, Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as the Sponsor Subsidiary
Collateral Agent, Citicorp North America, Inc., a Delaware corporation, El Paso
Noric Investments I, L.L.C., a Delaware limited liability company, El Paso Noric
Investments III, L.L.C., a Delaware limited liability company, El Paso Noric
Investments IV, L.L.C., a Delaware limited liability company, Clydesdale
Associates, L.P., a Delaware limited liability partnership, Appaloosa Holdings
Company, a Delaware corporation, Rio Grande Trust II, a Delaware statutory
trust, Dongola, Inc., a Delaware corporation, Shetland Holdings Company, a
Delaware corporation, BSCS XXVII, Inc., a Delaware corporation and WestLB AG
(formerly known as Westdeutsche Landesbank Girozentrale), New York Branch.

                  The parties hereto are party to various Operative Documents
(as such term is defined in the Mustang Credit and Security Agreement) in which
certain defined terms have the meanings set forth in Exhibit A to the Clydesdale
Partnership Agreement.

                  Mustang, Investors, L.L.C. is withdrawing as Class B Limited
Partner of Clydesdale and the parties hereto desire that defined terms be set
forth in a document other than the Clydesdale Partnership Agreement.

                  The Operative Documents (as such term is defined in the
Mustang Credit and Security Agreement) are being amended and restated to reflect
among other things, that defined terms have the meanings set forth in this
Agreement.

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and adequacy of which are hereby confirmed, the
parties hereto agree as follows:

                  SECTION 1. DEFINITIONS

                  "A-LOAN" means any loan made by a Sponsor Subsidiary to El
Paso or an Affiliate of El Paso evidenced by an A-Loan Note.

                  "A-LOAN NOTE" means (a) an A-Loan Promissory Note made by El
Paso in favor of a Sponsor Subsidiary in the form of Exhibit B-1 to the Sponsor
Subsidiary Credit Agreement and (b) an A-Loan Promissory Note made by an
Affiliate of El Paso in favor of a Sponsor Subsidiary in the form of Exhibit B-2
to the Sponsor Subsidiary Credit Agreement.

El Paso Definitions Agreement

<PAGE>

                  "ACCEPTABLE CREDIT ENHANCEMENT" means, with respect to the
obligations of any Person under a Hedge Agreement permitted under Section
5.02(o) of the Sponsor Subsidiary Credit Agreement or Section 7.2(l) of the
Noric Company Agreement, (a) a letter of credit supporting such obligations from
a bank or other financial institution having, at all times during the term of
such Hedge Agreement, an Acceptable Rating, (b) (i) a guarantee of such
obligations from any Person having, at all times during the term of such Hedge
Agreement, an Acceptable Rating or (ii) a guarantee of such obligations from any
Parent of such Person supported by a perfected, first priority security interest
in cash or cash equivalents pledged by such Parent to support the obligations
under such guarantee, (c) a surety bond supporting such obligations issued by an
institutional surety having, at all times during the term of such Hedge
Agreement, an Acceptable Rating, or (d) a perfected, first priority security
interest in cash or cash equivalents pledged by such Person or any Parent of
such Person or by any other Person that has, at all times during the term of
such Hedge Agreement, an Acceptable Rating, to support such obligations. For the
purposes of this definition, a Person is a "PARENT" of another Person if such
other Person is a Subsidiary of the first Person.

                  "ACCEPTABLE DEBT RATING" means, with respect to the senior
unsecured long-term debt of any Person, a published or implied rating of at
least (a) BBB- by S&P, (b) Baa3 by Moody's or (c) an equivalent investment grade
rating by any other Acceptable Rating Agency.

                  "ACCEPTABLE RATING" means, with respect to the senior
unsecured long-term debt of any Person, (a) if such debt of such Person is rated
by both S&P and Moody's, an Acceptable Debt Rating from each of S&P and Moody's
and (b) if such debt of such Person is not rated by both S&P and Moody's, an
Acceptable Debt Rating from any Acceptable Rating Agency.

                  "ACCEPTABLE RATING AGENCY" means S&P, Moody's, Duff & Phelps,
Fitch and Dominion Bond Rating Service, and any other domestic or foreign
statistical rating agency acceptable to Mustang.

                  "ACQUISITION/ACCESSION DATE" in relation to:

                  (a)      The accession of an Additional Sponsor Subsidiary to
         the Sponsor Subsidiary Credit Documents has the meaning set forth in
         Section 1(c) of the Acquisition/Accession Procedures Schedule;

                  (b)      The acquisition by an existing Sponsor Subsidiary of
         an Energy Investment has the meaning set forth in Section 2(d) of the
         Acquisition/Accession Procedures Schedule; and

                  (c)      The acquisition by an existing Sponsor Subsidiary,
         Lipizzan, Noric or Noric LP (as the case may be) of an E&P Asset has
         the meaning set forth in Section 3(c) of the Acquisition/Accession
         Procedures Schedule.

                  "ACQUISITION/ACCESSION NOTICE" means a notice in substantially
the form of Exhibit 1 to the Acquisition/Accession Procedures Schedule.

                  "ACQUISITION/ACCESSION PROCEDURES SCHEDULE" means Schedule I
to the Sponsor Subsidiary Credit Agreement.

El Paso Definitions Agreement

                                       2

<PAGE>

                  "ACT" means the Delaware Revised Uniform Limited Partnership
Act, and any successor statute, as the same may be amended from time to time.

                  "ADDITIONAL FINANCING COSTS" has the meaning set forth in the
Mustang Credit and Security Agreement.

                  "ADDITIONAL SPONSOR SUBSIDIARY" means an El Paso Company that
becomes a Sponsor Subsidiary pursuant to the Acquisition/Accession Procedures
Schedule.

                  "ADJUSTED BASIS" shall have the meaning set forth in Section
1011 of the Code.

                  "ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any
Clydesdale Partner, the deficit balance, if any, in such Clydesdale Partner's
Capital Account as of the end of the relevant Fiscal Year, after giving effect
to the following adjustments:

                  (a)      Crediting to such Capital Account any amounts which
         such Clydesdale Partner is obligated to restore pursuant to any
         provision of the Clydesdale Partnership Agreement or is deemed to be
         obligated to restore pursuant to the penultimate sentences of
         Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

                  (b)      Debiting to such Capital Account the items described
         in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-I(b)(2)(ii)(d)(5), and
         1.704-I(b)(2)(ii)(d)(6) of the Treasury Regulations.

                  The foregoing definition of "Adjusted Capital Account Deficit"
is intended to comply with the provisions of Treasury Regulations Section
I.704-I(b)(2)(ii)(d) and shall be interpreted consistently therewith.

                  "ADJUSTED REDETERMINATION THRESHOLD" has the meaning set forth
in Section 2.09(b)(vii) of the Sponsor Subsidiary Credit Agreement.

                  "ADMINISTRATION AGREEMENT" means the Administration Agreement,
dated as of May 9, 2000, between Mustang and the Administrator, as amended or
otherwise modified by Amendment No. 1 to such Administration Agreement dated as
of December 15, 2000, Amendment No. 2 to such Administration Agreement dated as
of July 19, 2002, and Amendment No. 3 to such Administration Agreement dated as
of April 16, 2003.

                  "ADMINISTRATOR" means Wilmington Trust Company, as
administrator for Mustang.

                  "ADVANCE" has the meaning set forth in Section 2.01(a) of the
Sponsor Subsidiary Credit Agreement and excludes any amount owing in respect of
the Sponsor Subsidiary Subordinated Debt or any Sponsor Subsidiary Subordinated
Note.

                  "AFFILIATE" means as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person or is a director or officer of such Person. The term "control"
(including the terms "controlled by" or "under common control with") means, with
respect to any Person, the possession, direct or indirect, of the power

El Paso Definitions Agreement

                                       3

<PAGE>

to vote 20% or more of the securities having ordinary voting power for the
election of directors of such Person or to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting
securities or by contract or otherwise. For the purpose of Sections 2, 5.2, 5.3,
5.4 and 5.5 of the El Paso Agreement only, neither a director nor any officer of
a Person, in such capacity, shall be deemed an "AFFILIATE" of such Person.

                  "AFFILIATE LOAN" has the meaning set forth in Section 5.09(e)
of the Sponsor Subsidiary Credit Agreement.

                  "AFTER-TAX BASIS" means, with respect to any payment to be
made on an "AFTER-TAX BASIS", that such payment will be increased (grossed-up)
by the payor so that, after reduction for all Taxes imposed on the recipient as
a result of the receipt or accrual of such amount (after giving effect to all
deductions or credits, if any, actually utilized by the recipient arising from
such amount), such increased payment (as so reduced) is equal to the payment
otherwise required to be made. In calculating the gross-up amount, the Tax rates
used shall be the highest marginal Tax rates in effect for (and payable by) the
payee (or in the case of a payee that is a pass-through entity for any Tax
purposes, the Persons who are required to take into account any items of income,
gain, loss, deduction or credit with respect to such entity) on the date of such
payment or accrual.

                  "AGGREGATE ENERGY INVESTMENT LOAN VALUE AMOUNT" means, at any
time of determination, the sum of the Energy Investment Loan Values of all
Energy Investments at that time.

                  "ALTERNATE PROGRAM" means any program providing for the sale
or other disposition of trade or other receivables entered into by El Paso or a
Subsidiary of El Paso that is in addition to or in replacement of the program
evidenced by any of the Receivables Purchase and Sale Agreements (whether or not
such Receivables Purchase and Sale Agreement shall then be in effect); provided
that such program is on terms (a) substantially similar to either Receivables
Purchase and Sale Agreement (as modified to comply with relevant policies of the
Financial Accounting Standards Board 140 or similar policies or guidelines from
time to time in effect) or (b) customary for similar transactions on
substantially similar terms as reasonably determined by the "Administrative
Agent" under and as defined in the El Paso New Revolving Facility.

                  "AMERICAN NATURAL RESOURCES COMPANY" means American Natural
Resources Company, a Delaware corporation.

                  "ANR" means ANR Pipeline Company, a Delaware corporation.

                  "ANR HOLDING" means El Paso ANR Investments, L.L.C., a
Delaware limited liability company.

                  "ANRS HOLDING" means El Paso ANRS Investments, L.L.C., a
Delaware limited liability company.

                  "ANR STORAGE" means ANR Storage Company, a Michigan
corporation.

El Paso Definitions Agreement

                                       4

<PAGE>

                  "APPALOOSA" means Appaloosa Holdings Company, a Delaware
corporation.

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

                  "APPLICABLE SPREAD" means for any day the rate per annum set
forth below opposite the applicable S&P Debt Rating and Moody's Debt Rating in
effect on the first day of the Interest Period within which such day falls:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
  Level                         Debt Rating                    Applicable Spread
--------------------------------------------------------------------------------
<S>                        <C>                                 <C>
Level I                    BBB- and Baa3 or above                     6.65%
--------------------------------------------------------------------------------
Level II                        BB+ and Ba1                           8.00%
--------------------------------------------------------------------------------
Level III                       BB and Ba2                           11.00%
--------------------------------------------------------------------------------
Level IV                        BB- and Ba3                          12.00%
--------------------------------------------------------------------------------
Level V                     B+ and B1 or Below                       15.00%
--------------------------------------------------------------------------------
</TABLE>

provided that (i) if the Debt Ratings do not fall within the same level, the
Applicable Spread for such day will be the percentage set forth opposite the
higher level of the Debt Ratings, (ii) in the event a Debt Rating is not
available from one of S&P or Moody's, the Applicable Spread will be based on the
Debt Rating available from the other and (iii) in the event a Debt Rating is
available from neither S&P nor Moody's, the Applicable Spread will be the
percentage set forth opposite Level V.

                  "APPRAISAL" means:

                  (a)      in the case of an Energy Investment (other than a
         Publicly Traded Investment), an appraisal by an Appraiser of the fair
         market value for such Energy Investment, the Intermediate Holder (if
         any) thereof and the Underlying Business related thereto, determined as
         follows:

                           (i)      the "fair market value" of such Energy
                  Investment shall be the estimated amount in Dollars at which
                  the relevant asset would be sold in an exchange between a
                  willing buyer and a willing seller, both knowledgeable of the
                  pertinent facts, neither party acting under any compulsion to
                  buy or sell, and with equity to both parties;

                           (ii)     the Underlying Business related to such
                  Energy Investment is valued as a going-concern;

                           (iii)    such sale is assumed to be concluded within
                  a reasonable period from the date of the relevant Appraisal
                  Event (or, in the case of an Appraisal obtained pursuant to
                  the Acquisition/Accession Procedures Schedule, the
                  Acquisition/Accession Date) for such Energy Investment,
                  Intermediate Holder

El Paso Definitions Agreement

                                       5

<PAGE>

                  and Underlying Business taking into account the nature of such
                  Energy Investment, Intermediate Holder or Underlying Business,
                  as the case may be; and

                           (iv)     such valuation shall account for any FERC
                  regulations of general applicability that restrict or
                  otherwise affect the Disposition of such Energy Investment and
                  the nature of such Energy Investment and the Intermediate
                  Holder (if any) and Underlying Business related thereto; and

                  (b)      in the case of a Publicly Traded Investment, the
         determination by the Appraiser of the Fair Market Value of such
         Publicly Traded Investment on the date of the relevant Appraisal Event.

                  "APPRAISAL DATE" has the meaning set forth in 5.07(d) of the
Sponsor Subsidiary Credit Agreement.

                  "APPRAISAL EVENT" means:

                  (a)      with respect to any Energy Investment that is a
         Publicly Traded Investment:

                           (i)      the date of the Acquisition/Accession Notice
                  with respect to such Energy Investment;

                           (ii)     the Acquisition/Accession Date with respect
                  to such Energy Investment;

                           (iii)    the occurrence of each Coverage Test Date;
                  and

                           (iv)     the date of Disposition of such Publicly
                  Traded Investment; and

                           (v)      the occurrence of any event described in
                  either clause (j) of the definition of Sponsor Subsidiary
                  Termination Event or clause (h) of the definition of El Paso
                  Event with respect to any Underlying Business or any
                  Intermediate Holder (regardless of whether such Underlying
                  Business or Intermediate Holder is a Credit Related Party);
                  provided that, for the purposes of this definition, the
                  reference to $100,000,000 in clause (h) of the definition of
                  El Paso Event shall be deemed to be a reference to
                  $20,000,000; and

                  (b)      with respect to all other Energy Investments:

                           (i)      January 1 of each Fiscal Year;

                           (ii)     the date of any Disposition described in
                  Section 5.09(d)(D) of the Sponsor Subsidiary Credit Agreement;
                  and

                           (iii)    the occurrence of any event described in
                  either clause (j) of the definition of Sponsor Subsidiary
                  Termination Event or clause (h) of the definition of El Paso
                  Event with respect to any Underlying Business or any
                  Intermediate

El Paso Definitions Agreement

                                       6

<PAGE>

                  Holder (regardless of whether such Underlying Business or
                  Intermediate Holder is a Credit Related Party); provided that,
                  for the purposes of this definition, the reference to
                  $100,000,000 in clause (h) of the definition of El Paso Event
                  shall be deemed to be a reference to $20,000,000.

                  "APPRAISER" means:

                  (a)      in relation to an Energy Investment (other than a
         Publicly Traded Investment), Deloitte & Touche or another independent
         professional appraiser appointed by Mustang (with the consent of Noric
         Holdings, not to be unreasonably withheld or delayed); and

                  (b)      in relation to a Publicly Traded Investment, prior to
         the Liquidation Start Date, Noric Holdings and, on and after the
         Liquidation Start Date, the Sponsor Subsidiary Liquidator of the
         Sponsor Subsidiary that owns such Publicly Traded Investment.

                  "APPROVED HEDGE COUNTERPARTY" means in relation to a Hedge
Agreement permitted under Sections 5.02(o) or 5.09(b)(ii) and (xiv) of the
Sponsor Subsidiary Credit Agreement or Section 7.2(l) of the Noric Company
Agreement:

                  (a)      El Paso or an Affiliate of El Paso; provided that, at
         the date of such Hedge Agreement and at all times during the term of
         such Hedge Agreement, El Paso or such Affiliate, as the case may be,
         has an Acceptable Debt Rating from both S&P and Moody's;

                  (b)      an Affiliate of El Paso; provided that, at the date
         of such Hedge Agreement and at all times during the term of such Hedge
         Agreement, El Paso has an Acceptable Debt Rating from both S&P and
         Moody's and the obligations of such Affiliate under such Hedge
         Agreement are supported by a guarantee from El Paso;

                  (c)      any other Person (i) having, at the date of such
         Hedge Agreement and at all times during the term of such Hedge
         Agreement, an Acceptable Rating or (ii) whose net obligations under
         such Hedge Agreement are, at the date of such Hedge Agreement and at
         all times during the term of such Hedge Agreement, supported by
         Acceptable Credit Enhancement; and

                  (d)      any recognized commodities exchange acting in a
         capacity as a hedge counterparty.

                  "ASSIGNED AGREEMENTS" has the meaning set forth in the Sponsor
Subsidiary Security Agreement.

                  "ASSIGNED EQUITY AGREEMENTS" has the meaning set forth in the
Sponsor Subsidiary Security Agreement.

                  "BANKRUPTCY" means, with respect to any Person, a Voluntary
Bankruptcy or an Involuntary Bankruptcy. A "VOLUNTARY BANKRUPTCY" means, with
respect to any Person: (a) (i) the inability of such Person generally to pay its
debts as such debts become due, (ii) the

El Paso Definitions Agreement

                                       7

<PAGE>

failure of such Person generally to pay its debts as such debts become due or
(iii) an admission in writing by such Person of its inability to pay its debts
generally or a general assignment by such Person for the benefit of creditors;
(b) the filing of any petition by such Person seeking to adjudicate it a
bankrupt or insolvent, or seeking for itself any liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
such Person or its debts under any Applicable Law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking, consenting to, or
acquiescing in the entry of an order for relief, or the appointment of a
receiver, trustee, custodian or other similar official for such Person or for
any substantial part of its property, or the filing of an answer or other
pleading admitting or failing to contest the allegations of a petition filed
against it, in any proceeding of the foregoing nature; or (c) action taken by
such Person to authorize any of the actions set forth above. An "INVOLUNTARY
BANKRUPTCY" means, with respect to any Person, without the consent or
acquiescence of such Person, the entering of an order for relief or approving a
petition for relief or reorganization or any other petition seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or other similar relief under any present or future bankruptcy, insolvency or
similar Applicable Law, or the filing of any such petition against such Person,
that shall not be dismissed or stayed within 60 days, or, without the consent or
acquiescence of such Person, the entering of an order appointing a trustee,
custodian, receiver or liquidator of such Person or of all or any substantial
part of the property of such Person that shall not be dismissed or stayed within
60 days. This definition is intended to supersede the definition of Bankruptcy
and similar events set forth in Sections 17-402(a)(4) and (5)of the Act or
18-304 of the Limited Liability Company Act, as applicable.

                  "BEAR CREEK STORAGE" means Bear Creek Storage Company, a
Louisiana general partnership.

                  "BUSINESS DAY" means (a) any day of the year except Saturday,
Sunday and any day on which banks are not required or authorized by law to close
in New York, New York, Wilmington, Delaware or Houston, Texas and (b) in
relation to the calculation of interest under the Sponsor Subsidiary Credit
Agreement based on the LIBO Rate, any day that is a "BUSINESS DAY" described in
clause (a) and that is also a day for trading by and between banks in the London
interbank market.

                  "BUSINESS ENTITY" means a partnership, limited partnership,
limited liability partnership, corporation (including a business trust), limited
liability company, unlimited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity.

                  "CALCULATION AGENT" means Citicorp North America, Inc. or
another independent professional adviser appointed by Mustang (with the consent
of Noric Holdings, not to be unreasonably withheld).

                  "CAPITAL ACCOUNT" means, in relation to any Clydesdale
Partner, the capital account established for such Clydesdale Partner pursuant to
Section 5.1 of the Clydesdale Partnership Agreement.

                  "CAPITAL CONTRIBUTION" means (a) with respect to any
Clydesdale Partner, the amount of money contributed to Clydesdale by such
Clydesdale Partner (or its predecessors in

El Paso Definitions Agreement

                                       8

<PAGE>

interest) with respect to the Clydesdale Partnership Interests held by such
Clydesdale Partner, (b) with respect to any Noric Member, the amount of money
and the Fair Market Value (determined as of the date of such capital
contribution) of any property (other than money) contributed to Noric by such
Noric Member (or its predecessors in interest) with respect to the Noric
Membership Interests held by such Noric Member and (c) with respect to any
Lipizzan Partner, the amount of money and the Fair Market Value (determined as
of the date of such capital contribution) of any property (other than money)
contributed to Lipizzan by such Lipizzan Partner (or its predecessors in
interest) with respect to the Lipizzan Partnership Interests held by such
Lipizzan Partner.

                  "CAPITAL CONTRIBUTION DATE" means the date for the making of
any additional Capital Contribution pursuant to Section 5.4 of the Clydesdale
Partnership Agreement.

                  "CAPITAL LEASE OBLIGATIONS" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as a capital lease on a balance sheet of such Person under GAAP,
and the amount of such obligations at any time shall be the capitalized amount
thereof as such time determined in accordance with GAAP.

                  "CAPITALIZATION" has the meaning set forth in Exhibit A to the
El Paso Agreement.

                  "CARRYING VALUE" for any Energy Investment at any time of
determination means an amount equal to:

                  (a)      if such Energy Investment is a Publicly Traded
         Investment, the Fair Market Value of such Energy Investment at the time
         such determination is made; or

                  (b)      in all other cases:

                           (i)      initially and until the first Appraisal
                  Event occurs after the contribution thereof, the Fair Market
                  Value established pursuant to the initial Appraisal for such
                  Energy Investment; and

                           (ii)     upon the occurrence of each Appraisal Event
                  and until the completion of the next Appraisal following the
                  occurrence of the next Appraisal Event, the Fair Market Value
                  of such Energy Investment as established pursuant to the
                  Appraisal to which such Appraisal Event relates,

         provided that, in each case under this clause (b), if an Appraisal is
         not completed on or within 30 days (or, if such 30th day is not a
         Business Day, the next succeeding Business Day) after the occurrence of
         the relevant Appraisal Event (other than an Appraisal pursuant to
         Section 5.07(c) of the Sponsor Subsidiary Credit Agreement), the
         Carrying Value of such Energy Investment shall be $0.

                  "CASH COLLATERAL AMOUNT" has the meaning set forth in Section
5.06(c) of the Sponsor Subsidiary Credit Agreement.

El Paso Definitions Agreement

                                       9

<PAGE>

                  "CASH COLLATERAL AMOUNT DISTRIBUTION DATE" has the meaning set
forth in Section 7.04(g) of the Sponsor Subsidiary Credit Agreement.

                  "CASH EQUIVALENTS" means cash and any of the following: (a)
amounts credited to current accounts, deposit accounts, time deposits, insured
certificates of deposit or freely marketable and transferable debt obligations
of any United States bank that is a member of the United States Federal Reserve
System and whose (or whose parent's) short-term unsecured and non-credit
enhanced debt obligations are rated at least "A-1" and "P-1" by S&P and Moody's,
respectively, or any then equivalent rating announced by S&P or Moody's,
respectively, and that is not subject to currency controls; (b) U.S. Treasury
securities or any other freely negotiable and marketable debt securities issued
by the government of the United States or any agency or instrumentality thereof
or obligations unconditionally guaranteed by the full faith and credit of the
same; and (c) any commercial paper issued in the United States by a Person whose
short-term unsecured and non-credit enhanced debt obligations are rated at least
"A-1" and "P-1" by S&P and Moody's, respectively, or any then equivalent rating
announced by S&P or Moody's, respectively (other than such commercial paper
issued by El Paso or its Affiliates); provided, however, that items described in
clauses (a) through (c) shall not constitute Cash Equivalents unless (i) such
items are denominated in Dollars, (ii) if issued by a non-governmental entity,
such items are issued by an issuer whose long-term unsecured and non-credit
enhanced debt obligations are rated at least "A-" by S&P and "A3" by Moody's, or
any then equivalent rating announced by S&P or Moody's, respectively, (iii) such
items are not issues the interest or dividend on which is exempt from Federal
income tax (or would be so exempt if the issue were held by a citizen or
resident of the United States or a domestic corporation (as defined in Section
7701(a) of the Code)) and (iv) if other than cash or demand obligations, such
items have a remaining maturity of not longer than ninety (90) days.

                  "CASH RESERVE" means, collectively, the Sponsor Subsidiary
Cash Reserve, the Noric Holdings IV Cash Reserve and the Noric Holdings I Cash
Reserve.

                  "CBD MATURITY CONDITION" means, with respect to any Debt
referred to in the definition of Controlled Business Debt, that such Debt (a)
(i) has a maturity date occurring prior to June 15, 2015 or (ii) is redeemable
at the option of the holder, or subject to scheduled mandatory redemption, prior
to June 15, 2015 and (b) (i) has a maturity date occurring on or prior to the
Debt Collection Date or (ii) is redeemable at the option of the holder, or
subject to scheduled mandatory redemption, prior to the Debt Collection Date.

                  "CBD MATURITY EVENT" means, with respect to any Controlled
Business Debt, the occurrence of any maturity date or any scheduled or optional
redemption in respect of such Controlled Business Debt.

                  "CIG" means Colorado Interstate Gas Company, a Delaware
corporation.

                  "CIG CONTROLLED BUSINESS" means each of CIG, CIG Field
Services Company, a Delaware corporation and Colorado Water Supply Company, a
Delaware corporation, to the extent that each such Business Entity is a
Subsidiary of Colorado Interstate Gas Company.

El Paso Definitions Agreement

                                       10

<PAGE>

                  "CIG EXCLUDED SUBSIDIARY" means CIG Field Services Company, a
Delaware corporation.

                  "CIG EXISTING DEBT" means Debt, in an aggregate principal
amount not to exceed $100,000,000, under (i) the Indenture, dated as of June 27,
1997, between Colorado Interstate Gas Company, a Delaware corporation and Harris
Trust and Savings Bank, as trustee, (ii) the First Supplemental Indenture, dated
as of June 27, 1997, between Colorado Interstate Gas Company, a Delaware
corporation and Harris Trust and Savings Bank, as trustee, to the Indenture
referred to in clause (i) of this definition, and (iii) any refinancings of the
Debt referred to in clauses (i) and (ii) of this definition pursuant to Section
5.09(i) of the Sponsor Subsidiary Credit Agreement.

                  "CLOSING DATE" means May 9, 2000.

                  "CLYDESDALE" means Clydesdale Associates, L.P., a Delaware
limited partnership.

                  "CLYDESDALE CLASS A LIMITED PARTNER" means any Person that is
the holder of a Clydesdale Class A Limited Partnership Interest.

                  "CLYDESDALE CLASS A LIMITED PARTNERSHIP INTEREST" means an
interest in Clydesdale described in Section 3.2(b) of the Clydesdale Partnership
Agreement.

                  "CLYDESDALE CUSTODIAN" means Wilmington Trust Company in its
capacity as custodian, or any successor thereto pursuant to the Clydesdale
Custody Agreement.

                  "CLYDESDALE CUSTODY AGREEMENT" means the Custody Agreement,
dated as of May 9, 2000, between Clydesdale and the Clydesdale Custodian.

                  "CLYDESDALE EXPENSES" means, without duplication, all
interest, costs, expenses, indemnities, fees (including reasonable attorneys'
and accountants' fees), Taxes and other payment obligations incurred or owing by
Clydesdale (excluding any liquidating distributions in respect of a Clydesdale
Partner's Capital Account pursuant to Section 12 of the Clydesdale Partnership
Agreement).

                  "CLYDESDALE GENERAL PARTNER" means any Person that is the
holder of a Clydesdale General Partnership Interest.

                  "CLYDESDALE GENERAL PARTNERSHIP INTEREST" means an interest in
Clydesdale described in Section 3.2(a) of the Clydesdale Partnership Agreement.

                  "CLYDESDALE LIMITED PARTNER" means a Clydesdale Class A
Limited Partner.

                  "CLYDESDALE LIQUIDATOR" has the meaning set forth in Section
12.9 of the Clydesdale Partnership Agreement.

                  "CLYDESDALE LIQUIDATING EVENT" has the meaning set forth in
Section 12.6 of the Clydesdale Partnership Agreement.

El Paso Definitions Agreement

                                       11

<PAGE>

                  "CLYDESDALE OPERATING ACCOUNT" has the meaning set forth in
the Clydesdale Custody Agreement.

                  "CLYDESDALE PARTNER" means a Clydesdale General Partner or a
Clydesdale Class A Limited Partner.

                  "CLYDESDALE PARTNERSHIP AGREEMENT" means the Fifth Amended and
Restated Partnership Agreement of Clydesdale Associates, L.P., originally dated
as of April 28, 2000 and amended and restated as of May 9, 2000, December 15,
2000, June 29, 2001, July 19, 2002 and April 16, 2003, among Appaloosa, Noric
Holdings, Noric Holdings I, as withdrawing Clydesdale Class A Limited Partner,
and Mustang, as withdrawing Class B limited partner.

                  "CLYDESDALE PARTNERSHIP INTEREST" means any Clydesdale General
Partnership Interest or Clydesdale Class A Limited Partnership Interest.

                  "CLYDESDALE PROPERTY" means at any time all property owned at
such time by Clydesdale, and shall include both tangible and intangible
property.

                  "CLYDESDALE TERMINATION EVENT" means the unanimous vote of the
Clydesdale Partners to dissolve, wind up and liquidate Clydesdale.

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

                  "COLLATERAL" has the meaning set forth in the Sponsor
Subsidiary Security Agreement.

                  "COLLATERAL SHORTFALL AMOUNT" has the meaning set forth in
Section 2.10 of the Sponsor Subsidiary Credit Agreement.

                  "COMPLIANCE CERTIFICATE" means a written certification that no
Incipient Event, Event of Default, Liquidating Event, Sponsor Subsidiary
Termination Event or Notice Event has occurred and is continuing or, if any such
event has occurred and is continuing, the action that El Paso, Clydesdale or the
relevant Sponsor Subsidiary (as applicable) is taking or proposes to take with
respect to such event, and:

                  (a)      in the case of a Compliance Certificate to be
         delivered under Section 5.4(b)(i) or (ii) of the El Paso Agreement, a
         written certification by a Responsible Officer of El Paso of the
         following information in substantially the form of Exhibit 5.4(b) to
         the El Paso Agreement:

                           (i)      an Operating Report;

                           (ii)     the amount of the Maximum Clawback Amount,
                  if any, as at the end of the relevant Fiscal Year or Fiscal
                  Quarter (as applicable);

                           (iii)    the Excess Distribution, if any, for such
                  Fiscal Year or Fiscal Quarter;

El Paso Definitions Agreement

                                       12

<PAGE>

                           (iv)     details of the aggregate principal amount of
                  all A-Loans outstanding and the Total Cash Collateral Amount
                  as at the Coverage Test Date with respect to such Fiscal Year
                  or Fiscal Quarter; and

                           (v)      calculations of the financial covenants in
                  Section 5.04 of the Sponsor Subsidiary Credit Agreement in
                  sufficient detail to establish compliance therewith and
                  calculations in sufficient detail establishing the absence of
                  any Event of Default under Section 6.01(f) of the Sponsor
                  Subsidiary Credit Agreement; and

                  (b)      in the case of a Compliance Certificate to be
         delivered under Section 5.07(f) of the Sponsor Subsidiary Credit
         Agreement, a written certification of a Responsible Officer of El Paso
         of pro forma calculations of the financial covenants in Sections
         5.04(a), 5.04(b) and 5.04(f) of the Sponsor Subsidiary Credit Agreement
         in sufficient detail to establish compliance therewith together with
         copies of the Appraisals referred to in Section 5.07 of the Sponsor
         Subsidiary Credit Agreement, in substantially the form of Exhibit
         5.07(f) to the Sponsor Subsidiary Credit Agreement;

                  (c)      in the case of a Compliance Certificate to be
         delivered under the proviso to 7.04(g) of the Sponsor Subsidiary Credit
         Agreement, a written certification of a Responsible Officer of El Paso
         showing (i) the amount of the Total Cash Collateral Amount to be
         transferred pursuant thereto and (ii) the calculation of the financial
         covenant set forth in Section 5.04(f) of the Sponsor Subsidiary Credit
         Agreement, in substantially the form of Exhibit 7.04(g) to the Sponsor
         Subsidiary Credit Agreement;

                  (d)      in the case of a Compliance Certificate to be
         delivered under Section 5.4(c)(i) or (ii) of the El Paso Agreement, a
         written certification of a Responsible Officer of El Paso and
         substantially in the form of Exhibit 5.04(c) to the Sponsor Subsidiary
         Credit Agreement; and

                  (e)      in the case of a Compliance Certificate to be
         delivered under Section 7.04(f) of the Sponsor Subsidiary Credit
         Agreement, a written certification of a Responsible Officer of El Paso
         (i) showing the amount to be transferred pursuant to Section 7.04(f) of
         the Sponsor Subsidiary Credit Agreement and (ii) certifying that,
         immediately prior to and after giving effect to such transfer, all of
         the requirements of Section 7.04(k) of the Sponsor Subsidiary Credit
         Agreement have been met.

                  "CONSOLIDATED" refers to the consolidation of the accounts of
El Paso and its Subsidiaries in accordance with GAAP.

                  "CONSOLIDATED TAXES" has the meaning set forth in Section
5.2(i) of the El Paso Agreement.

                  "CONTINGENT GUARANTY" has the meaning set forth in the
definition of "Guaranty" contained in this Section 1.

El Paso Definitions Agreement

                                       13

<PAGE>

                  "CONTRIBUTED VALUE" (a) of any Energy Investment, means the
value of such Energy Investment, as determined by the initial Appraisal of such
Energy Investment pursuant to the Acquisition/Accession Procedures Schedule; and

                  (b)      of any Intermediate Holder, Underlying Business or
all or substantially all of the assets of, or Equity Interests in, any
Intermediate Holder or Underlying Business, means the Contributed Value of the
Energy Investment to which such Intermediate Holder or Underlying Business or
the assets or Equity Interests thereof relates.

                  "CONTROLLED BUSINESS" means each Intermediate Holder (if any)
and Underlying Business relating to each Energy Investment (other than any
Publicly Traded Investment).

                  "CONTROLLED BUSINESS DEBT" means Debt, in an aggregate
principal amount not to exceed $180,000,000, under (i) the Indenture, dated as
of June 15, 1990, between Colorado Interstate Gas Company, a Delaware
corporation and Texas Commerce Bank National Association, a national banking
association, as trustee, and (ii) any refinancings of the Debt referred to in
clause (i) of this definition pursuant to Section 5.03(a) of the Sponsor
Subsidiary Credit Agreement to the extent that any such refinanced Debt is
subject to a CBD Maturity Condition.

                  "COUNTERPARTY" means in respect of an E&P Participation
Agreement or a Production Payment Agreement, each party to such E&P
Participation Agreement or such Production Payment Agreement (other than any
Sponsor Subsidiary, Lipizzan, Noric or Noric LP).

                  "COVERAGE TEST DATE" has the meaning set forth in Section
5.04(a) of the Sponsor Subsidiary Credit Agreement.

                  "COVERED DOCUMENTS" (a) as used in the Clydesdale Partnership
Agreement, has the meaning set forth in Section 13.1 of the Clydesdale
Partnership Agreement, (b) as used in the Noric Company Agreement, has the
meaning set forth in Section 13.1 of the Noric Company Agreement, (c) as used in
the Noric LP Partnership Agreement, has the meaning set forth in Section 12.1 of
the Noric LP Partnership Agreement and (d) as used in the Lipizzan Partnership
Agreement, has the meaning set forth in Section 12.1 of the Lipizzan Partnership
Agreement.

                  "CREDIT RELATED PARTY" means, without duplication, the
following Persons: (i) El Paso, (ii) each Pipeline Company Borrower, (iii) each
Guarantor (as defined in the El Paso New Revolving Facility) and (iv) each
Restricted Subsidiary that is not a Project Financing Subsidiary; provided, that
none of Noric Holdings, Noric Holdings I, Palomino, Paso Fino, Noric, Noric LP,
Noric Holdings III, CIG, Noric Holdings IV, Lusitano and Lipizzan shall be
considered a "Credit Related Party" under this definition until the Debt
Collection Date.

                  "CURRENT E&P BORROWING BASE" has the meaning set forth in
Section 2.09(b)(vi) of the Sponsor Subsidiary Credit Agreement.

                  "CURRENT REIMBURSEMENT OBLIGATIONS" means, with respect to any
Person, non-contingent obligations of such Person to reimburse a bank or other
Person in respect of

El Paso Definitions Agreement

                                       14

<PAGE>

amounts paid under a letter of credit or similar instrument that are paid on or
prior to the fifth Business Day after the due date therefor.

                  "CURRENT RETURN" means an amount determined for each Interest
Period (or portion thereof) equal to the product of (a) the Mustang Unrecovered
Capital at the time of determination and (b) the Current Return Rate for such
Interest Period (or portion thereof).

                  "CURRENT RETURN RATE" means, for any Interest Period, a rate
per annum equal to the sum of (i) the LIBO Rate for such period; (ii) the
Gross-Up Rate; and (iii) the Applicable Spread for such Interest Period.

                  "DEBT" means, as to any Person, all Relevant Indebtedness of
such Person other than (a) any Project Financing of such Person, (b) in the case
of El Paso or a Subsidiary of El Paso, any liabilities of El Paso or such
Subsidiary, as the case may be, under any Alternate Program, or any document
executed by El Paso or such Subsidiary, as the case may be, in connection
therewith, (c) in the case of El Paso or a Subsidiary of El Paso, any
obligations of El Paso or a Subsidiary of El Paso with respect to lease payments
for the headquarters building of El Paso located in Houston, Texas, (d) to the
extent paid on or prior to the fifth Business Day after the due date therefor,
the aggregate amount of all payments made by one or more issuing banks pursuant
to a letter of credit issued by such issuing bank pursuant to the El Paso New
Revolving Facility that have not yet been reimbursed by or on behalf of such
Person and all unpaid, non-contingent obligations of such Person to reimburse a
bank or other Person in respect of amounts paid under a letter of credit or
similar instrument, and (e) any item referred to in clause (e) or (f) of the
definition of Capitalization notwithstanding any change in the accounting
treatment thereof after December 31, 2002.

                  "DEBT COLLECTION DATE" means the day on which the aggregate
outstanding principal amount of the Advances shall have been paid in full
together with (without duplication) all accrued interest, fees, expenses and
indemnities and other Obligations then owing under the Sponsor Subsidiary Credit
Documents.

                  "DEBT RATING" means, as of any date, the rating that has been
most recently assigned by S&P or Moody's, as applicable, for any class of
long-term public senior unsecured and unguaranteed debt securities issued by El
Paso, or, if such securities are not so rated or are not outstanding, El Paso's
implied senior unsecured and unguaranteed debt rating as determined by S&P or
Moody's.

                  "DEFAULT" means any event or condition which constitutes an
Event of Default or which upon notice, lapse of time or both would, unless cured
or waived, become an Event of Default.

                  "DESIGNATED REPRESENTATIVE" has the meaning set forth in the
Mustang Company Agreement.

                  "DISPOSITION" means, with respect to any property (including
any Transaction Asset, any interest in any E&P Participation Property the
subject of an E&P Participation Agreement, any Production Payment Interest or
any Subject Interest), any sale, assignment, gift, exchange, lease, conversion,
novation, transfer, or other disposition of such property, including

El Paso Definitions Agreement

                                       15

<PAGE>

any (a) transfer by way of a capital contribution, (b) any cancellation or other
termination of an E&P Participation Agreement or re-assignment or other
re-conveyance of the rights of the relevant Sponsor Subsidiary, Noric or Noric
LP, as the case may be, under any E&P Participation Agreement to the
Counterparty under such E&P Participation Agreement and (c) any re-assignment,
release or other re-conveyance of all or any part, as the case may be, of the
rights or interests of Lipizzan in respect of a Production Payment Interest to
the Counterparty to the relevant Production Payment Agreement. "DISPOSE" and
"DISPOSED" shall have correlative meanings.

                  "DISPOSITION COSTS" means all expenses, costs, liabilities,
fees, Taxes and other amounts incurred or payable in connection with a
Disposition.

                  "DISPOSITIONS RESERVE AMOUNT" means at any time an amount
equal to the sum of (i) the excess of (x) the aggregate of the amounts described
in clauses (a) and (b) of the definition of Net Cash Proceeds notified to the
Sponsor Subsidiary Collateral Agent and the Mustang Collateral Agent at or prior
to such time over (y) the aggregate of the amounts described in clauses (a) and
(b) of the definition of Net Cash Proceeds actually paid in respect of the
obligations described in clauses (a) and (b) of the definition of Net Cash
Proceeds at or prior to such time, and (ii) the amount of Net Cash Proceeds from
any Dispositions described in Sections 5.02(d)(C)(3) and (4), 5.05(a)(C) and (D)
and 5.09(d)(C) and (D) of the Sponsor Subsidiary Credit Agreement and the
Disposition Value of E&P Assets Disposed pursuant to Section 5.05(a)(E) and (F)
of the Sponsor Subsidiary Credit Agreement occurring during the continuance of
an El Paso RA Event which, pursuant to clause (y) of the proviso to Section
2.05(b)(viii)(A) of the Sponsor Subsidiary Credit Agreement, notified to the
Sponsor Subsidiary Collateral Agent and the Mustang Collateral Agent at or prior
to such time have not been applied to prepay Advances.

                  "DISPOSITION VALUE" means:

                  (a)      with respect to Dispositions of interests in any
Production Payment attributable to Dispositions of Subject Interests burdened by
such Production Payment, the product of (x) the greater of (i) the ratio of the
projected hydrocarbon production volumes from such Subject Interests as shown in
the most recently delivered Reserve Report over the aggregate projected
hydrocarbon production volumes from all Subject Interests burdened by such
Production Payment as shown in the most recently delivered Reserve Report and
(ii) the ratio of the PV-10 Value of such Subject Interests as shown in the most
recently delivered Reserve Report over the aggregate PV-10 Value of all Subject
Interests burdened by such Production Payment as shown in the most recently
delivered Reserve Report, and (y) the aggregate PV-10 Value of such Production
Payment as shown in the most recently delivered Reserve Report; and

                  (b)      with respect to Dispositions of interests in E&P
Participation Properties, the PV-10 Value of the Disposed interests in E&P
Participation Properties.

                  "DISTRIBUTION" means, as applicable, (i) any distribution or
dividend or return of capital or any other distribution, payment, remittance or
delivery of property or cash in respect of, or the redemption, retirement,
purchase or other acquisition, directly or indirectly, of, any Clydesdale
Partnership Interest, Noric Membership Interest, Palomino Membership Interest,

El Paso Definitions Agreement

                                       16

<PAGE>

Paso Fino Membership Interest, Noric LP Partnership Interest, Lusitano
Membership Interest, Lipizzan General Partnership Interest, Lipizzan Limited
Partnership Interest or Sponsor Subsidiary Membership Interest or in respect of
any Energy Investment now or hereafter outstanding or (ii) the setting aside of
any funds for any of the foregoing purposes. "DISTRIBUTE", "DISTRIBUTED" and
"DISTRIBUTIVE" shall have correlative meanings.

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

                  "E&P ASSET" means (i) all of the right, title and interest of
any Sponsor Subsidiary, Noric or Noric LP (as the case may be) in and to all E&P
Participation Property and all other rights and interests under any E&P
Participation Agreement to which it is a party and (ii) all of the right, title
and interest of Lipizzan in and to all Production Payment Interests.

                  "E&P BORROWING BASE" means:

                  (a)      on any date prior to the effective date of the first
         E&P Borrowing Base Determination or E&P Borrowing Base Redetermination
         pursuant to Section 2.09 of the Sponsor Subsidiary Credit Agreement,
         the amount set forth in Section 2.09(a) of the Sponsor Subsidiary
         Credit Agreement; and

                  (b)      thereafter, the amount determined pursuant to an E&P
         Borrowing Base Determination or an E&P Borrowing Base Redetermination
         under Section 2.09 of the Sponsor Subsidiary Credit Agreement;

provided that the E&P Borrowing Base shall not at any time exceed 70% of the
aggregate outstanding principal amount of Advances at such time; provided
further that, if at any time the amount derived pursuant to clauses (a) and (b)
of this definition exceeds 70% of the aggregate outstanding principal amount of
Advances at such time, the E&P Borrowing Base shall be deemed to be an amount
equal to 70% of the aggregate outstanding principal amount of Advances at such
time.

                  "E&P BORROWING BASE DETERMINATION" has the meaning set forth
in Section 2.09(b) of the Sponsor Subsidiary Credit Agreement.

                  "E&P BORROWING BASE EFFECTIVE DATE" has the meaning set forth
in Section 2.09(b)(vi) of the Sponsor Subsidiary Credit Agreement.

                  "E&P BORROWING BASE PERIOD" has the meaning set forth in
Section 2.09(b) of the Sponsor Subsidiary Credit Agreement.

                  "E&P BORROWING BASE RECOMMENDATION" has the meaning set forth
in Section 2.09(b) of the Sponsor Subsidiary Credit Agreement.

                  "E&P BORROWING BASE REDETERMINATION" has the meaning set forth
in Section 2.09(c) of the Sponsor Subsidiary Credit Agreement.

El Paso Definitions Agreement

                                       17

<PAGE>

                  "E&P BORROWING BASE REPORT" means a report prepared by the
Calculation Agent in substantially the form of Exhibit D to the Sponsor
Subsidiary Credit Agreement.

                  "E&P NOTIONAL INTEREST" means at any time of determination the
amount equal to the product of a percentage equal to the per annum Funding Rate
applicable during the most recently completed Interest Period and the E&P
Borrowing Base at such time.

                  "E&P PARTICIPATION AGREEMENT" means each agreement,
substantially in the form of Exhibit A to the Sponsor Subsidiary Credit
Agreement, to which a Sponsor Subsidiary, Noric or Noric LP is a party.

                  "E&P PARTICIPATION PROPERTY" means, at any time, each oil and
gas well included as a "Subject Property" under an E&P Participation Agreement
at such time.

                  "EBITDA" means, for any period and for any Underlying
Business, the sum of (a) net income (or net loss), (b) interest expense, (c)
income tax expense, (d) depreciation expense, (e) amortization expense, (f) all
extraordinary noncash losses otherwise deducted from the determination of net
income (or net loss) for such period (other than any such noncash losses that
require an accrual or reserve for cash charges for any future period and any
write-downs or write-offs of accounts receivables) less all extraordinary
noncash gains otherwise added in the determination of net income (or net loss)
for such period, and (g) all non-recurring losses or expenses deducted from the
determination of net income (or net loss) for such period to the extent such
losses or expenses were funded from capital contributions from any holder of
Equity Interests in such Underlying Business, in each case of such Underlying
Business and its consolidated subsidiaries, determined on a consolidated basis
in accordance with GAAP for such period.

                  "ELIGIBLE INVESTMENT" means:

                  (a)      in respect of any Energy Investment, those equity and
         debt Investments with respect to which:

                           (i)      the Underlying Business and, if any, each
                  Intermediate Holder, in which any Sponsor Subsidiary directly
                  or indirectly holds an interest, is organized under the laws
                  of any Permitted Jurisdiction or political subdivision
                  thereof;

                           (ii)     such business is conducted exclusively in,
                  and the sources of its operating income are derived at least
                  95% from, any Permitted Jurisdiction and, after giving effect
                  to the contribution of such Energy Investment, Energy
                  Investments conducting business outside the United States
                  shall not have an aggregate Energy Investment Loan Value in
                  excess of 25% of the Aggregate Energy Investment Loan Value
                  Amount;

                           (iii)    the Fair Market Value of such Investment on
                  the date of its contribution shall be at least $25,000,000;

                           (iv)     the business conducted by the Underlying
                  Business related thereto shall consist primarily in the
                  provision of telecommunications services or the

El Paso Definitions Agreement

                                       18

<PAGE>

                  gathering, transmission, storage and/or processing of natural
                  gas or the non-nuclear electric power generation business, in
                  all cases primarily using proven technology, and shall
                  specifically exclude: the lines of business that El Paso
                  Merchant Energy Company currently and in the future may
                  conduct in marketing, trading and integrated risk management,
                  and other lines of business that are not typically financed by
                  major money center commercial banks; and

                           (v)      Until the Fourth Restatement Date,
                  Clydesdale and thereafter Mustang shall have determined (and
                  received all consents to such determination required under the
                  Operative Documents) at the time of its contribution or
                  acquisition the amount of the Energy Investment Loan Value for
                  such Energy Investment in its discretion; and

                           (vi)     the Intermediate Holders (if any) and the
                  Underlying Business related thereto shall have received equity
                  contributions in an amount equal to at least the amount of all
                  Indebtedness that would not be permitted Indebtedness with
                  respect to such Intermediate Holder and Underlying Business
                  under Section 5.09 of the Sponsor Subsidiary Credit Agreement
                  (after giving effect to the Transaction Asset Schedule
                  relating to such Energy Investment), and all such unpermitted
                  Indebtedness shall have been paid in full with the proceeds of
                  such equity contributions to the satisfaction of Mustang and
                  the Mustang Collateral Agent;

                  (b)      in respect of an E&P Asset, an E&P Participation
         Agreement or a Production Payment Interest:

                           (i)      under which each E&P Participation Property
                  the subject of such E&P Participation Agreement or each
                  Subject Interest relating to such Production Payment Interest,
                  as the case may be, is located exclusively in any Permitted
                  Jurisdiction or political subdivision thereof; provided that,
                  after giving effect to the contribution of all E&P Assets, E&P
                  Participation Properties and Subject Interests relating to
                  such Production Payment Interest located outside the United
                  States shall not account for more than 25% of the E&P
                  Borrowing Base for all E&P Participation Properties and
                  Production Payment Interests;

                           (ii)     the source of the operating income from each
                  such E&P Participation Property and each such Subject Interest
                  relating to such Production Payment Interest is derived at
                  least 95% from Permitted Jurisdictions;

                           (iii)    each such E&P Participation Property and
                  each such Subject Interest relating to such Production Payment
                  Interest primarily comprises Proved Producing Reserves,
                  operated and exploited using proven technology;

                           (iv)     the Counterparty under each E&P
                  Participation Agreement and each Production Payment Agreement
                  is El Paso, EPPC, El Paso Production Oil & Gas USA, El Paso
                  Oil & Gas Resources or another Affiliate of El Paso, whose
                  obligations under each E&P Participation Agreement and each
                  Production

El Paso Definitions Agreement

                                       19

<PAGE>

                  Payment Agreement to which it is a party are guaranteed under
                  the El Paso Agreement; and

                           (v)      such E&P Participation Agreement or such
                  Production Payment Agreement is the legal, valid and binding
                  obligation of the Counterparty thereto and the relevant
                  Sponsor Subsidiary party thereto, Lipizzan, Noric or Noric LP,
                  as the case may be, enforceable against such Counterparty and
                  such Sponsor Subsidiary, Lipizzan, Noric or Noric LP, as the
                  case may be, in accordance with its terms.

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

                  "EL PASO AGREEMENT" means the Fifth Amended and Restated El
Paso Agreement, originally dated as of May 9, 2000 and amended and restated as
of December 15, 2000, June 29, 2001, November 7, 2001, July 19, 2002 and April
16, 2003, executed by El Paso in favor of Mustang and the other beneficiaries
described therein.

                  "EL PASO CNG COMPANY" means El Paso CNG Company, L.L.C., a
Delaware limited liability company.

                  "EL PASO CGP" means El Paso CGP Company, a Delaware
corporation.

                  "EL PASO COMPANY" shall mean a corporation, partnership or
other Business Entity with respect to which El Paso directly, or indirectly
through one or more intermediaries, controls (a) in the case of any such
corporation (i) more than 50% of the issued and outstanding capital stock having
ordinary voting power to elect a majority of the board of directors and (ii)
issued and outstanding capital stock entitled to receive more than 50% of
dividends declared in respect of all issued and outstanding shares of capital
stock of such corporation or (b) in the case of any such partnership or other
Business Entity (i) more than 50% of the interests in such partnership or other
Business Entity (A) entitled to manage or direct the management of such entity
or (B) having voting power to elect a managing partner or member, board of
managers or any similar managing Person or body of such partnership or other
Business Entity responsible for the management of such entity and (ii) more than
50% of the interests in the capital or profits of such partnership or other
Business Entity.

                  "EL PASO DEFAULT" means any event that would constitute an El
Paso Event but for the requirement that notice be given or time elapse or both.

                  "EL PASO DEMAND LOAN" means a demand loan by Lipizzan, Noric,
Noric LP or a Sponsor Subsidiary to El Paso or an Affiliate of El Paso evidenced
by an El Paso Demand Note and, in the case of a demand loan to an Affiliate of
El Paso, guaranteed by El Paso pursuant to the El Paso Guaranty.

                  "EL PASO DEMAND NOTE" means (a) in relation to an El Paso
Demand Loan to El Paso, a note evidencing such El Paso Demand Loan in the form
of Exhibit C-1 to the Sponsor Subsidiary Credit Agreement or (b) in relation to
an El Paso Demand Loan to an Affiliate of El

El Paso Definitions Agreement

                                       20

<PAGE>

Paso, a note evidencing such El Paso Demand Loan in the form of Exhibit C-2 to
the Sponsor Subsidiary Credit Agreement.

                  "EL PASO EPN HOLDING" means El Paso EPN Investments, L.L.C., a
Delaware limited liability company, and direct owner of all of the Series C
Units issued by El Paso Energy Partners, L.P., a Delaware limited partnership.

                  "EL PASO EVENT" shall mean the occurrence and continuance of
any of the following events:

                  (a)      El Paso or any Affiliate of El Paso (as applicable)
         shall fail to pay (i) the principal of any El Paso Demand Loan or
         Affiliate Loan (including, in each case, pursuant to the El Paso
         Guaranty or any other guaranty relating thereto) after the same becomes
         due and payable or is demanded or (ii) any amount payable by it under
         the El Paso Agreement, the El Paso Guaranty or any other guaranty by El
         Paso of any obligations of any El Paso Party under the Operative
         Documents, or interest or any other amounts owing on any A-Loan (other
         than principal), El Paso Demand Loan or Affiliate Loan (including, in
         each case, pursuant to the El Paso Guaranty or any other guaranty
         relating thereto), in each case under this clause (ii) within five
         Business Days after the same becomes due and payable; or

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

                  (c)      (i) El Paso shall fail to comply with Section 5.2(a),
         Section 5.4(a)(vii) or Section 5.3 of the El Paso Agreement or (ii) (A)
         El Paso shall fail to perform or observe any other term, covenant or
         agreement contained in the El Paso Agreement or (B) El Paso or any El
         Paso Party shall fail to perform or observe any other term, covenant or
         agreement contained in any other Operative Document (other than the
         Noric Company Agreement, the Palomino Company Agreement, the Paso Fino
         Company Agreement, the Noric LP Partnership Agreement, the Lusitano
         Company Agreement, the Lipizzan Partnership Agreement, any Sponsor
         Subsidiary Company Agreement, any Production Payment Agreement or any
         E&P Participation Agreement) on its part to be performed or observed,
         in each case above if, in the case of any such term, covenant or
         agreement referred to in clause (ii)(A) or (B) above, such failure
         shall remain unremedied for 30 days after written notice thereof shall
         have been given to El Paso by Mustang or its nominee; or

                  (d)      El Paso or any other Credit Related Party shall fail
         to pay any Debt or Guaranty (excluding Debt or Guaranties evidenced by
         or incurred pursuant to any Operative Document) of El Paso or such
         other Credit Related Party in an aggregate principal amount of
         $200,000,000 or more, at such time, or any installment of principal
         thereof or interest or premium thereon, when due (whether by scheduled
         maturity, required prepayment, acceleration, demand or otherwise) and
         such failure shall continue after the applicable grace period, if any,
         specified in the agreement or instrument relating

El Paso Definitions Agreement

                                       21

<PAGE>

         to such Debt or Guaranty; or any other default under any agreement or
         instrument relating to any such Debt in such aggregate principal amount
         (excluding Debt and Guarantees incurred under any of the Operative
         Documents), or any other event (other than an exercise of voluntary
         prepayment or voluntary purchase option or analogous right), shall
         occur and shall continue after the applicable grace period, if any,
         specified in such agreement or instrument, if the effect of such
         default or event is to accelerate the maturity of such Debt in such
         aggregate principal amount; or any such Debt in such aggregate
         principal amount shall be required to be prepaid (other than by a
         regularly scheduled required prepayment), prior to the stated maturity
         thereof, as a result of either (i) any default under any agreement or
         instrument relating to any such Debt in such aggregate principal amount
         or (ii) the occurrence of any other event (other than an exercise of
         voluntary prepayment or voluntary purchase option or analogous right or
         an issuance, sale or other Relevant Disposition of Equity Interests or
         other assets, or an incurrence or issuance of Relevant Indebtedness or
         other obligations, giving rise to a repayment or prepayment obligation
         in respect of such Debt) the effect of which would otherwise be to
         accelerate the maturity of such Debt in such aggregate principal
         amount; or

                  (e)      [Intentionally omitted]

                  (f)      (i) El Paso or any other Credit Related Party shall
         (A) generally not pay its debts as such debts become due; or (B) admit
         in writing its inability to pay its debts generally; or (C) make a
         general assignment for the benefit of creditors; or (ii) any proceeding
         shall be instituted or consented to by El Paso or any other Credit
         Related Party seeking to adjudicate it a bankrupt or insolvent, or
         seeking liquidation, winding up, reorganization, arrangement,
         adjustment, protection, relief, or composition of it or its debts under
         any law relating to bankruptcy, insolvency or reorganization or relief
         of debtors, or seeking the entry of an order for relief or the
         appointment of a receiver, trustee, or other similar official for it or
         for any substantial part of its property; or (iii) any such proceeding
         shall have been instituted against El Paso or any other Credit Related
         Party and either such proceeding shall not be stayed or dismissed for
         60 consecutive days or any of the actions referred to above sought in
         such proceeding (including the entry of an order for relief against it
         or the appointment of a receiver, trustee, custodian or other similar
         official for it or any substantial part of its property) shall occur;
         or (iv) El Paso or any other Credit Related Party shall take any
         corporate action to authorize any of the actions set forth above in
         this subsection (f); or

                  (g)      Either (i) El Paso shall fail to have, directly or
         indirectly, beneficial ownership of 100% of the equity voting interest
         in any Sponsor Subsidiary at any time prior to the payment in full of
         all outstanding Advances together with interest thereon, or (ii) El
         Paso shall fail to have, directly or indirectly, 100% of the equity
         interest in Appaloosa at any time during the 90-day period commencing
         on the day following the Fourth Restatement Date, or (iii) Appaloosa
         shall cease to be the Clydesdale General Partner at any time during the
         90-day period following the Fourth Restatement Date or (iv) Clydesdale
         shall dissolve or become a debtor in a Bankruptcy within the 90-day
         period commencing on the day following the Fourth Restatement Date; or

El Paso Definitions Agreement

                                       22

<PAGE>

                  (h)      Any judgment or order for the payment of money in an
         aggregate amount in excess of $100,000,000 shall be rendered against El
         Paso, any other Credit Related Party or any combination thereof and the
         same shall remain undischarged for a period of 30 consecutive days
         during which execution (other than any enforcement proceedings
         consisting of the mere obtaining and filing of a judgment lien or
         obtaining of a garnishment or similar order so long as no foreclosure,
         levy or similar process in respect of such judgment lien, or payment
         over in respect of such garnishment or similar order, has commenced and
         is continuing or has been completed ("PERMITTED EXECUTION ACTIONS"))
         shall not be effectively stayed, or any action, other a Permitted
         Execution Action, shall be legally taken by a judgment creditor to
         attach or levy upon any property or assets of El Paso or any other
         Credit Related Party to enforce any such judgment or order; provided,
         however, that with respect to any such judgment or order that is
         subject to the terms of one or more settlement agreements that provide
         for the obligations thereunder to be paid or performed over time, an El
         Paso Event under this paragraph (h) shall not occur until El Paso or
         any other Credit Related Party shall have failed to pay an amount
         properly demanded in respect thereto, as applicable, and such failure
         shall have continued for 30 consecutive days after the respective final
         due dates for the payment of such amounts; or

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

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

El Paso Definitions Agreement

                                       23

<PAGE>

         such appointment, election or nomination required or agreed to in
         connection with, or as a result of, the completion of such tender
         offer); or

                  (k)      Any material provision of the El Paso Agreement or
         any other Operative Document shall cease, for any reason, to be valid
         and binding upon or enforceable against El Paso or any El Paso Party
         that is a party thereto, or El Paso or any such El Paso Party shall so
         assert in writing; provided that if such invalidity or unenforceability
         is of a nature so as to be amenable to cure within five Business Days
         and if, within one Business Day after El Paso receives notice from
         Mustang or the Mustang Collateral Agent or otherwise becomes aware that
         such material provision is not valid or is unenforceable as aforesaid,
         El Paso delivers written notice to Mustang that either El Paso or the
         relevant El Paso Party intends to cure such invalidity or
         unenforceability as soon as possible, then an El Paso Event shall not
         exist pursuant to this clause (k) unless El Paso or the relevant El
         Paso Party shall fail to deliver or cause to be delivered an amendment
         or other modification, or other agreement or undertaking, having the
         same economic effect as the invalid or unenforceable provision within
         four Business Days after the delivery of such written notice of intent;
         or

                  (l)      [Intentionally Omitted]

                  (m)      Any event of default shall occur under any agreement
         or instrument relating to or evidencing any Debt now or hereafter
         existing of any Credit Related Party as the result of any change in
         control of El Paso; or

                  (n)      [Intentionally Omitted]

                  (o)      The Sponsor Subsidiary Security Agreement and the
         Sponsor Subsidiary Collateral Agent Agreement shall for any reason fail
         or cease to create a valid and enforceable Lien on any Collateral
         purported to be covered thereby or, except as permitted by the
         Operative Documents, such Lien shall fail or cease to be a perfected
         and first-priority (subject only to Permitted Liens) Lien, or any El
         Paso Party shall so state in writing and, if such invalidity or lack of
         perfection or priority relates solely to Collateral with an aggregate
         value of $1,000,000 or less and such invalidity or lack of perfection
         or priority is such so as to be amenable to cure without material
         disadvantage to the position of Mustang or the Sponsor Subsidiary
         Collateral Agent, such invalidity or lack of perfection or priority
         shall not be cured within 10 days of the earlier of such El Paso Party
         so stating in writing or delivery of notice thereof by Mustang to El
         Paso (or such shorter period as shall be specified by Mustang and is
         reasonable under the circumstances);

                  (p)      Any judgment or order for the payment of money in an
         aggregate amount in excess of $10,000,000 (in the case of a
         Counterparty to an E&P Participation Agreement or a Production Payment
         Agreement) shall be rendered against such Counterparty and the same
         shall remain undischarged for a period of 30 consecutive days during
         which execution (other than in respect of any Permitted Execution
         Actions) shall not be effectively stayed, or any action, other a
         Permitted Execution Action, shall be legally taken by a judgment
         creditor to attach or levy upon any property or assets of any

El Paso Definitions Agreement

                                       24

<PAGE>

         such Counterparty to enforce any such judgment or order; provided,
         however, that with respect to any such judgment or order that is
         subject to the terms of one or more settlement agreements that provide
         for the obligations thereunder to be paid or performed over time, an El
         Paso Event under this paragraph (p) shall not occur until such
         Counterparty shall have failed to pay an amounts properly demanded in
         respect thereto, as applicable, and such failure shall have continued
         for 30 consecutive days after the respective final due dates for the
         payment of such amounts.

                  "EL PASO GUARANTY" means the Amended and Restated Guaranty
Agreement, dated as of May 9, 2000 and amended and restated as of December 15,
2000, July 19, 2002 and April 16, 2003, made by El Paso in favor of the Sponsor
Subsidiaries.

                  "EL PASO HYDROCARBON SALES CONTRACT" means any Hydrocarbon
Sales Contract (as defined in the Production and Delivery Agreement) under which
an Affiliate of El Paso purchases hydrocarbons.

                  "EL PASO NEW REVOLVING FACILITY" means the $3,000,000,000
Revolving Credit and Letter of Credit Facility Agreement, dated as of May 15,
2002 and as amended and restated as of April 16, 2003, among, inter alia, El
Paso, EPNGC, TGPC, ANR, the several banks and financial institutions from time
to time parties thereto, JPMorgan Chase Bank, a New York banking corporation, as
administrative agent, ABN AMRO Bank N.V. and Citicorp North America, Inc., as
co-document agents, Bank of America, N.A. and Credit Suisse First Boston, as
co-syndication agents, as the same may be amended, supplemented and modified
from time to time.

                  "EL PASO OIL & GAS RESOURCES" means El Paso Oil & Gas
Resources Company, L.P., a Delaware limited partnership.

                  "EL PASO PARTY" means:

                  (a)      Appaloosa;

                  (b)      Until the 91st day following the Fourth Restatement
         Date, Clydesdale;

                  (c)      Noric;

                  (d)      Palomino;

                  (e)      Paso Fino;

                  (f)      Noric LP;

                  (g)      Lusitano;

                  (h)      Lipizzan;

                  (i)      each Sponsor Subsidiary and each Sponsor Subsidiary
         Member;

El Paso Definitions Agreement

                                       25

<PAGE>

                  (j)      Shetland;

                  (k)      each Counterparty to each E&P Participation Agreement
         and each Production Payment Agreement;

                  (l)      each Affiliate of El Paso party to an El Paso
         Hydrocarbon Sales Contract;

                  (m)      any other Affiliates of El Paso that are parties to
         the Operative Documents; and

                  (n)      any holder of a Sponsor Subsidiary Subordinated Note
         that is an El Paso Company, excluding any Maker (as defined in the
         Sponsor Subsidiary Subordinated Note).

                  "EL PASO PRODUCTION INVESTMENTS" means El Paso Production
Investments, L.L.C., a Delaware limited liability company.

                  "EL PASO PRODUCTION OIL & GAS" means El Paso Production Oil &
Gas Company, a Delaware corporation.

                  "EL PASO PRODUCTION OIL & GAS USA" means El Paso Production
Oil & Gas USA, L.P., a Delaware limited liability partnership.

                  "EL PASO RA EVENT" has the meaning set forth in Section
2.05(b)(viii) of the Sponsor Subsidiary Credit Agreement.

                  "EL PASO UNDERTAKING" shall mean, when executed and delivered
to Mustang, the undertaking by El Paso in favor of Mustang in the form of
Exhibit 5.03(b) to the Sponsor Subsidiary Credit Agreement.

                  "ENERGY INVESTMENT" means at any time of determination, any
Equity Interest described in Part I, II or III of any Transaction Asset Schedule
which has not been Disposed of prior to such time of determination and which
substantially all of the assets of, or Equity Interests in, any Intermediate
Holder or Underlying Business relating thereto have not been Disposed of prior
to such time of determination.

                  "ENERGY INVESTMENT EXPOSURE" means at any time of
determination an amount equal to (a) the outstanding principal amount of the
Advances at such time less (b) the Total Cash Collateral Amount at such time
less (c) the E&P Borrowing Base in effect at such time.

                  "ENERGY INVESTMENT LOAN VALUE" means, in respect of any Energy
Investment, the loan value notified to the relevant Additional Sponsor
Subsidiary or existing Sponsor Subsidiary pursuant to the Acquisition/Accession
Procedures Schedule as the Energy Investment Loan Value for such Energy
Investment, as such loan value may from time to time be adjusted pursuant to
Section 2.11 of the Sponsor Subsidiary Credit Agreement.

El Paso Definitions Agreement

                                       26

<PAGE>

                  "ENERGY INVESTMENT LOAN VALUE VOTING DATE" means, with respect
to a request by Noric Holdings pursuant to Section 2.11 of the Sponsor
Subsidiary Credit Agreement to increase the Energy Investment Loan Value of any
Energy Investment, the date falling no later than 30 days after such request.

                  "ENERGY INVESTMENT NOTIONAL AMORTIZATION" means, at any time
of determination, an amount equal to 12% of the Energy Investment Exposure at
such time.

                  "ENGAGE LETTER" means the letter, dated as of July 19, 2002,
from El Paso Merchant Energy, L.P. (f/k/a Engage Energy US, L.P.), El Paso
Production Oil & Gas USA and El Paso Oil & Gas Resources to Lipizzan with
respect to the El Paso Hydrocarbon Sales Contract (Gas Purchase Agreement),
dated as of February 21, 1997, between Engage Energy, US, L.P. and El Paso
Production Oil & Gas Company, et al., successors to Coastal Oil & Gas
Corporation, et al.

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

                  "ENVIRONMENTAL LAWS" means all laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
regulating or imposing liability or standards of conduct concerning protection
of the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.

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

                  "EPNGC" means El Paso Natural Gas Company, a Delaware
corporation.

                  "EPNG HOLDING" means El Paso EPNG Investments, L.L.C., a
Delaware limited liability company and the direct parent of EPNGC.

                  "EPN UNITS" means any the Series A Common Units and Series C
Units issued by El Paso Energy Partners, L.P, a Delaware limited partnership,
and owned by any Credit Party (as defined in the El Paso New Revolving
Facility).

                  "EPPC" means El Paso Production Company (formerly known as
Sonat Exploration Company), a Delaware corporation.

                  "EPPGOM" means El Paso Production GOM, Inc. (formerly known as
Sonat Exploration GOM Inc.), a Delaware corporation.

El Paso Definitions Agreement

                                       27

<PAGE>

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

                  "EQUITY AMOUNT" means, for any Interest Period (or any portion
thereof), an amount equal to the aggregate amount of the Current Return and the
Fee and Expense Amount for such Interest Period (or portion thereof).

                  "EQUITY INTERESTS" means any capital stock, partnership, joint
venture, member or limited liability or unlimited liability company interest,
beneficial interest in a trust or similar entity, or other equity interest in
another person of whatever nature.

                  "EQUITY INVESTOR" means each "Participant" under and as
defined in the Mustang Company Agreement.

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

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

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

                  "EVENT OF DEFAULT" has the meaning specified in Section 6.01
of the Sponsor Subsidiary Credit Agreement.

                  "EXCESS DISTRIBUTION" means, as at any date during any Fiscal
Quarter, the amount (if any) by which (a) the cumulative Distributions received
by all Sponsor Subsidiaries in respect of all Underlying Businesses (excluding
Publicly Traded Investments) during such Fiscal Quarter through such date exceed
(b) the aggregate amount of retained earnings of all Underlying Businesses
(excluding Publicly Traded Investments) as at the end of the period to which the
most recent accounts delivered pursuant to Section 5.4(b)(i) or 5.4(b)(ii) of
the El Paso Agreement (as applicable) relate, as disclosed in the balance sheet
of such accounts.

El Paso Definitions Agreement

                                       28

<PAGE>

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

                  "EXCLUDED PAYMENTS" means any indemnification or other
payments under the Operative Documents payable to Persons other than any Sponsor
Subsidiary in its own right.

                  "EXCLUDED TAXES" means (a) with respect to any recipient of
any payment to be made by or on account of any obligation of El Paso under the
El Paso Agreement, (i) income, franchise or similar taxes imposed on (or
measured by) its net income by the United States, or by the jurisdiction under
the laws of which such recipient is organized or in which its principal office
is located or in which its applicable lending office is located, (ii) any branch
profit taxes imposed by the United States or any similar tax imposed by any
other jurisdiction in which El Paso is located and (iii) in the case of a
Foreign Indemnified Person, any withholding tax that is imposed on amounts
payable to such Foreign Indemnified Person (x) at the time such Foreign
Indemnified Person becomes a beneficiary of the El Paso Agreement (or designates
a new lending office), except to the extent that such Foreign Indemnified Person
(or its assignor, if any) was entitled, at the time of designation of a new
lending office (or assignment), to receive additional amounts from El Paso with
respect to such withholding tax pursuant to Section 4.2(a) of the El Paso
Agreement or (y) that is attributable to such Foreign Indemnified Person's
failure to comply with Section 4.2(e) of the El Paso Agreement, and (b) with
respect to any recipient of any payment to be made by or on account of any
obligation of a Sponsor Subsidiary under any of the Operative Documents, (i)
income, franchise or similar taxes imposed on (or measured by) its net income by
the United States, or by the jurisdiction under the laws of which such recipient
is organized or in which its principal office is located or in which its
applicable lending office is located, (ii) any branch profit taxes imposed by
the United States or any similar tax imposed by any other jurisdiction in which
a Sponsor Subsidiary is located and (iii) in the case of a Foreign Person, any
withholding tax that is imposed on amounts payable to such Foreign Person (i) at
the time such Foreign Person becomes a lender under or a beneficiary of the
Sponsor Subsidiary Credit Agreement (or designates a new lending office), except
to the extent that such Foreign Person (or its assignor, if any) was entitled,
at the time of designation of a new lending office (or assignment), to receive
additional amounts from a Sponsor Subsidiary with respect to such withholding
tax pursuant to Section 2.07(a)(i) of the Sponsor Subsidiary Credit Agreement or
(ii) that is attributable to such Foreign Person's failure to comply with
Section 2.07(a)(v) of the Sponsor Subsidiary Credit Agreement.

El Paso Definitions Agreement

                                       29

<PAGE>

                  "EXPENSES" means (i) any and all judgments, damages or
penalties with respect to, or amounts paid in settlement of, claims (including
negligence, strict or absolute liability, liability in tort and liabilities
arising out of violation of laws or regulatory requirements of any kind),
actions, or suits and (ii) any and all liabilities, obligations, losses, costs
and expenses (including reasonable fees and disbursements of counsel and claims,
damages, losses, liabilities and expenses relating to environmental matters),
but excluding Taxes.

                  "FAIR MARKET VALUE" for any Transaction Asset at any time of
determination means an amount equal to:

                  (a)      in the case of an Energy Investment:

                           (i)      if such Energy Investment is a Publicly
                  Traded Investment, the average of the quoted market closing
                  prices on the last five trading days for such securities
                  preceding the time of determination of such Fair Market Value;
                  or

                           (ii)     for each other Energy Investment, the fair
                  market value established pursuant to the most recent Appraisal
                  for such Energy Investment; or

                  (b)      in the case of an E&P Asset, the fair market value of
         such E&P Asset shall be the value of the Proved Producing Reserves
         attributable to the interest of Lipizzan, Noric, Noric LP or any
         Sponsor Subsidiary, as the case may be, in the E&P Participation
         Properties and the Production Payment, as the case may be, relating to
         such E&P Asset determined using the standardized methodology prescribed
         by the Securities and Exchange Commission for the calculation of the
         discounted present value of Proved Producing Reserves for Securities
         and Exchange Commission reporting purposes (commonly known as the
         "PV-10").

                  "FEDERAL" means United States federal.

                  "FEE AND EXPENSE AMOUNT" has the meaning set forth in the
Mustang Company Agreement.

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

                  "FINAL BORROWING BASE RESERVE REPORT DELIVERY DATE" has the
meaning set forth in Section 2.09(b) of the Sponsor Subsidiary Credit Agreement.

                  "FISCAL QUARTER" means (a) the period commencing on the
Closing Date and ending on June 30, 2000 and (b) any subsequent period
commencing on each of January 1, April 1, July 1 and October 1 of the last date
before the next such date.

                  "FISCAL YEAR" means (a) the period commencing on the Closing
Date and ending on December 31, 2000 and (b) any subsequent period commencing on
January 1 and ending on the next December 31.

El Paso Definitions Agreement

                                       30

<PAGE>

                  "FOREIGN INDEMNIFIED PERSON" means any Indemnified Person that
is organized under the laws of a jurisdiction other than that in which El Paso
is located. For purposes of this definition, the United States, each State
thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.

                  "FOREIGN PERSON" means any Person that is organized under the
laws of a jurisdiction other than that in which the Sponsor Subsidiaries are
located. For purposes of this definition, the United States, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.

                  "FOURTH AMENDED AND RESTATED CLYDESDALE PARTNERSHIP AGREEMENT"
means the Fourth Amended and Restated Partnership Agreement of Clydesdale
Associates, L.P., originally dated as of April 28, 2000, as amended and restated
as of May 9, 2000, December 15, 2000, June 29, 2001 and July 19, 2002, by and
among Appaloosa Holdings Company, Noric Holdings, L.L.C., Noric Holdings I,
L.L.C., Mustang Investors, L.L.C. and Clydesdale.

                  "FOURTH RESTATEMENT DATE" has the meaning set forth in Section
3.04 of the Sponsor Subsidiary Credit Agreement.

                  "FREELY TRANSFERABLE" means, with respect to any Transaction
Asset, that the Subsequent Transfer thereof will not:

                  (a)      conflict with the Organizational Documents of a
         Sponsor Subsidiary, Lipizzan, Noric or Noric LP, as the case may be,
         that owns such Transaction Asset or, in the case of an Energy
         Investment, the issuer of such Energy Investment, the applicable
         Intermediate Holders, if any, or the applicable Underlying Business;

                  (b)      constitute a violation of, or a default under, the
         applicable E&P Participation Agreement or Production Payment Agreement
         or, in the case of an Energy Investment, any Material Agreement related
         to such Energy Investment, the applicable Intermediate Holders, if any,
         or the applicable Underlying Business;

                  (c)      under the applicable E&P Participation Agreement or
         Production Payment Agreement or, in the case of any Energy Investment,
         any Material Agreement, cause the creation of, or result in, or be
         subject to any Transfer Restriction, Payment Restriction or Rights
         Restriction;

                  (d)      contravene any provisions of any Applicable Law
         (assuming, in the case of an Energy Investment, compliance with
         applicable securities laws and FERC regulations of general
         applicability);

                  (e)      under any Applicable Law (assuming, in the case of an
         Energy Investment, compliance with applicable securities laws and FERC
         regulations of general applicability), cause the creation of, or result
         in or be subject to, any Transfer Restriction, Payment Restriction or
         Rights Restriction (other than, in the case of an Energy Investment,
         under applicable securities laws and FERC regulations of general
         applicability); or

El Paso Definitions Agreement

                                       31

<PAGE>

                  (f)      require any Governmental Approval that has not been
         obtained and is not in full force and effect, necessary to authorize or
         that is otherwise required in connection with the consummation of such
         Subsequent Transfer (other than, in the case of an Energy Investment,
         filings, if any, under the HSR Act and applicable securities laws and
         the expiration of any applicable waiting period imposed thereby and
         Governmental Approvals necessary or required under FERC regulations of
         general applicability).

                  "FREELY TRANSFERRED" means, with respect to any Transaction
Asset, the transfer of such Transaction Asset to a Sponsor Subsidiary, Lipizzan,
Noric or Noric LP, as the case may be, did not:

                  (a)      conflict with the Organizational Documents of a
         Sponsor Subsidiary, Lipizzan, Noric or Noric LP, as the case may be,
         that owns such Transaction Asset or, in the case of an Energy
         Investment, the issuer of such Energy Investment, the applicable
         Intermediate Holders, if any, or the applicable Underlying Business;

                  (b)      constitute a violation of, or a default under, the
         applicable E&P Participation Agreement or Production Payment Agreement
         or, in the case of an Energy Investment, any Material Agreement related
         to such Energy Investment, the applicable Intermediate Holder, if any,
         or the applicable Underlying Business (other than any Material
         Agreement as to which waivers or consents have been obtained);

                  (c)      under the applicable E&P Participation Agreement or
         Production Payment Agreement or, in the case of any Energy Investment,
         any Material Agreement, cause the creation of, or result in, or cause
         such Transaction Asset to be subject to, any Transfer Restriction,
         Payment Restriction or Rights Restriction;

                  (d)      contravene any provisions of any Applicable Law;

                  (e)      under any Applicable Law, cause the creation of, or
         result in or cause such Transaction Asset to be subject to, any
         Transfer Restriction, Payment Restriction or Rights Restriction (other
         than, in the case of an Energy Investment, under applicable securities
         laws and FERC regulations of general applicability); or

                  (f)      require any Governmental Approval that has not been
         obtained and is not in full force and effect, to authorize or
         consummate such transfer.

                  "FUNDING RATE" means either of the following rates, as
applicable:

                  (I) with respect to any Interest Period and any payment made
on the Payment Date immediately following the end of such Interest Period, a per
annum rate equal to the product of (a) the quotient obtained by dividing 360 by
the actual number of days in such Interest Period times (b) the quotient
obtained by dividing (i) the sum of (A) the Notified Amount for such Interest
Period and (B) the Equity Amount for such Interest Period by (ii) an amount
equal to the aggregate outstanding principal amount of the Advances as of such
Payment Date (prior to giving effect to any prepayment of principal on such
Payment Date); and

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<PAGE>

         (II) with respect to any payment of interest that accompanies a payment
of principal that is made on a date other than a Payment Date, a per annum rate
equal to the product of (a) the quotient obtained by dividing 360 by the actual
number of days from the first day of the Interest Period in which such payment
is made to the date of such payment times (b) the quotient obtained by dividing
(i) the sum of (A) the Notified Amount for such portion of such Interest Period
and (B) the Equity Amount for such portion of such Interest Period by (ii) an
amount equal to the aggregate outstanding principal amount of Advances being
paid on such date; provided that if the aggregate outstanding principal amount
of Advances would be greater than or equal to $30,000,000 after giving effect to
any payment contemplated by this clause (II), then the Equity Amount shall be
deemed to be $0 for purposes of clause (II)(b)(B) of this definition; provided
further that (and, without limiting Section 2.05(b)(vii) of the Sponsor
Subsidiary Credit Agreement), if the aggregate outstanding amount of Advances
would be less than $30,000,000 after giving effect to any payment contemplated
by this clause (II), then (x) the Equity Amount for purposes of clause
(II)(b)(A) shall be calculated based on the difference between the then Mustang
Unrecovered Capital (prior to giving effect to such payment) and the remaining
aggregate outstanding amount of Advances after giving effect to any payment
contemplated by this clause (II) and (y) unless the aggregate amount of Advances
after giving effect to any payment contemplated by this clause (II) would be $0
the Fee and Expense Amount would be deemed to be $0 for purposes of clause
(II)(b)(B) of this definition.

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

         "GOVERNMENTAL APPROVAL" means any order, directive, decree, permit,
concession, grant, franchise, license, consent, authorization or validation of,
or filing, recording or registration with, any Governmental Authority pursuant
to Applicable Laws.

         "GOVERNMENTAL AUTHORITY" means the government of the United States, any
other nation or any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government; provided
that, with respect to any issuer of an Energy Investment, any Intermediate
Holder or any Underlying Business, such Governmental Authorities shall be
limited to the jurisdictions in which such Person is organized or operates.

         "GROSS ASSET VALUE" means, with respect to any asset, the asset's
Adjusted Basis, except as follows:

         (a)      The Gross Asset Values of all Clydesdale Property shall be
    adjusted to equal their respective Mark-to-Market Values on the occurrence
    of each Mark-to-Market Event; and

         (b)      The Gross Asset Value of any Clydesdale Property Distributed
    to any Clydesdale Partner shall be the Mark-to-Market Value of such asset on
    the date of such Distribution.

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<PAGE>

         "GROSS CASH PROCEEDS" means, with respect to any Disposition of any
Transaction Asset by Noric, Noric LP or a Sponsor Subsidiary (as the case may
be) or the Disposition of all or substantially all of the assets of, or Equity
Interests in, any Intermediate Holder or Underlying Business, the aggregate
amount (without reduction by reason of the fact that some of such proceeds may
be received after the time of such Disposition) of cash received or to be
received from time to time (whether as initial consideration or deferred
consideration) by or on behalf of Noric, Noric LP, such Sponsor Subsidiary,
Intermediate Holder or Underlying Business (as applicable) in connection with
such transaction.

         "GROSS INCOME" means all items of gross income and gain that are
realized by Clydesdale.

         "GROSS-UP RATE" for any Interest Period (or portion thereof) means the
rate per annum equal to the product of (a) the quotient obtained by dividing (i)
the sum of all Additional Financing Costs claimed during such Interest Period
(or portion thereof) by (ii) the outstanding principal amount of the Advances
outstanding on the date of determination and (b) the quotient obtained by
dividing (i) 30 by (ii) 970.

         "GUARANTY", "GUARANTEED" and "GUARANTEEING" each means any act by which
any Person assumes, guarantees, endorses or otherwise incurs direct or
contingent liability in connection with, or agrees to purchase or otherwise
acquire or otherwise assures a creditor against loss in respect of, any Debt or
Project Financing of any Person other than El Paso or any of its consolidated
Subsidiaries (excluding (a) any liability by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business, (b) any liability in connection with obligations of El Paso
or any of its consolidated Subsidiaries, including obligations under any
conditional sales agreement, equipment trust financing or equipment lease and
(c) any such act in connection with a Project Financing that either (i)
guarantees to the provider of such Project Financing or any other Person
performance of the acquisition, improvement, installation, design, engineering,
construction, development, completion, maintenance or operation of, or otherwise
affects any such act in respect of, all or any portion of the project that is
financed by such Project Financing or performance by a Project Financing
Subsidiary of certain obligations to Persons other than the provider of such
Project Financing, except during any period, and then only to the extent, that
such guaranty is a guaranty of payment of such Project Financing (other than a
guaranty of payment of the type referred to in subclause (ii) below) or (ii) is
contingent upon, or the obligation to pay or perform under which is contingent
upon, the occurrence of any event other than or in addition to the passage of
time or any Project Financing becoming due (any such act referred to in this
clause (c) being a "CONTINGENT GUARANTY")).

         "HAZARDOUS MATERIALS" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature, in each case above to the
extent regulated pursuant to any Environmental Law.

El Paso Definitions Agreement

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<PAGE>

         "HEDGE AGREEMENTS" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts, commodity swap and forward agreements and other
similar agreements.

         "HYDROCARBON INTEREST" means all rights, titles, interests and estates
now or hereafter acquired in and to oil and gas leases, oil, gas and mineral
leases or other liquid or gaseous hydrocarbon leases, mineral fee interests,
overriding royalty and royalty interests, operating rights, net profit
interests, production payment interests and other similar types of interests,
including any reserved or residual interest of whatever nature.

         "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.

         "INCIPIENT EVENT" means any event that, with notice or lapse of time,
or both, would constitute a Termination Event, Notice Event, Liquidating Event
or Event of Default.

         "INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than any
portion of any trade payable obligation that shall not have remained unpaid for
91 days or more from the later of (i) the original due date of such portion and
(ii) the customary payment date in the industry and relevant market for such
portion), (c) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, (d) all obligations of such Person
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (whether or not the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (e) all Capitalized
Leases, (f) all obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities, (g) all obligations of such
Person to purchase, redeem, retire, defease or otherwise acquire for value any
partnership or member or other equity interests of such Person, (h) the net
amount of all financial obligations of such Person in respect of Hedge
Agreements, (i) the net amount of all other financial obligations of such Person
under any contract or other agreement to which such Person is a party, (j) all
Indebtedness of other Persons of the type described in clauses (a) through (i)
above guaranteed directly or indirectly in any manner by such Person, or in
effect guaranteed directly or indirectly by such Person through an agreement (i)
to pay or purchase such Indebtedness or to advance or supply funds for the
payment or purchase of such Indebtedness, (ii) to purchase, sell or lease (as
lessee or lessor) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Indebtedness or to assure
the holder of such Indebtedness against loss, (iii) to supply funds to or in any
other manner invest in the debtor (including any agreement to pay for property
or services irrespective of whether such property is received or such services
are rendered) or (iv) otherwise to assure a creditor against loss, and (k) all
Indebtedness of the type described in clauses (a) through (j) above secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property (including accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for payment of such Indebtedness.

         "INDEMNIFIED AMOUNT" when used:

El Paso Definitions Agreement

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<PAGE>

         (a)      in the El Paso Agreement, shall have the meaning set forth in
    Section 3.2 of the El Paso Agreement;

         (b)      in the Clydesdale Partnership Agreement, shall have the
    meaning set forth in Section 13.1 of the Clydesdale Partnership Agreement;

         (c)      in the Sponsor Subsidiary Credit Agreement, shall have the
    meaning set forth in Section 10.01 of the Sponsor Subsidiary Credit
    Agreement;

         (d)      in the Noric Company Agreement, shall have the meaning set
    forth in Section 13.1 of the Noric Company Agreement;

         (e)      in the Noric LP Partnership Agreement, shall have the meaning
    set forth in Section 12.1 of the Noric LP Partnership Agreement; and

         (f)      in the Lipizzan Partnership Agreement, shall have the meaning
    set forth in Section 12.1 of the Lipizzan Partnership Agreement.

         "INDEMNIFIED PERSON" means (without duplication):

         (a)      as used in Section 13.1 and Section 13.2 of the Clydesdale
    Partnership Agreement and Section 13.5, Section 13.6, Section 13.7 and
    Section 14.2 of the Clydesdale Partnership Agreement (as such Sections
    relate to the indemnities under Section 13.1 or Section 13.2 of the
    Clydesdale Partnership Agreement), Mustang, the Sponsor Subsidiary
    Collateral Agent, the Mustang Collateral Agent, the Mustang Administrative
    Agent, each Mustang Lender, each Mustang Purchaser, the Administrator, the
    Clydesdale Custodian, each other Mustang Indemnified Party, any Appraiser,
    each holder of an interest in any part of the Advances and any successor and
    permitted assignee of any such Person (whether pursuant to an assignment for
    security or otherwise) and the direct and indirect members, partners,
    shareholders and other equity or residual interest holders of any of the
    foregoing, and each of the respective directors, officers, trustees,
    managers, employees, administrators and agents of any of the foregoing;

         (b)      as used in Section 13.3 of the Clydesdale Partnership
    Agreement and Section 13.5, Section 13.6, Section 13.7 and Section 14.2 of
    the Clydesdale Partnership Agreement (as such Sections relate to the
    indemnities under Section 13.3 of the Clydesdale Partnership Agreement), the
    Clydesdale Liquidator and each Sales Agent and their respective officers,
    directors, agents or employees;

         (c)      as used in the Sponsor Subsidiary Credit Agreement, Mustang,
    the Sponsor Subsidiary Collateral Agent, the Mustang Collateral Agent, the
    Mustang Administrative Agent, each Mustang Lender, each Mustang Purchaser,
    the Administrator, the Clydesdale Custodian, each other Mustang Indemnified
    Party, any Appraiser, each holder of an interest in any part of the Advances
    and any successor and permitted assignee of any such Person (whether
    pursuant to an assignment for security or otherwise), and the direct and
    indirect members, partners, shareholders, and other equity or residual
    interest holders of any of the foregoing, and each of the respective
    directors,

El Paso Definitions Agreement

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<PAGE>

    officers, trustees, managers, employees, administrators and agents of any of
    the foregoing;

         (d)      as used in Section 13.1 and Section 13.3 of the Noric Company
    Agreement and Section 13.5, Section 13.6, Section 13.7 and Section 14.2 of
    the Noric Company Agreement (as such Sections relate to the indemnities
    under Section 13.1 and Section 13.3 of the Noric Company Agreement),
    Mustang, the Sponsor Subsidiary Collateral Agent, the Mustang Collateral
    Agent, the Mustang Administrative Agent, each Mustang Lender, each Mustang
    Purchaser, the Administrator, the Clydesdale Custodian, each other Mustang
    Indemnified Party, any Appraiser, each holder of an interest in any part of
    the Advances and any successor and permitted assignee of any such Person
    (whether pursuant to an assignment for security or otherwise) and the direct
    and indirect members, partners, shareholders and other equity or residual
    interest holders of any of the foregoing and each of the respective
    directors, officer, trustees, mangers, employees, administration and agents
    of any of the foregoing;

         (e)      as used in Section 13.3 of the Noric Company Agreement, and
    Section 13.5, Section 13.6, Section 13.7 and Section 14.2 of the Noric
    Company Agreement, (as such Sections relate to the indemnities under Section
    13.3 of the Noric Company Agreement), the Noric Liquidator and each Sales
    Agent and their respective officers, directors, agents or employees;

         (f)      as used in Section 11.1 and Section 11.2 of the Palomino
    Company Agreement and Section 11.5, Section 11.6, Section 11.7 and Section
    12.2 of the Palomino Company Agreement (as such Sections relate to the
    indemnities under Section 11.1 and Section 11.2 of the Palomino Company
    Agreement), Noric, Mustang, the Sponsor Subsidiary Collateral Agent, the
    Mustang Collateral Agent, the Mustang Administrative Agent, each Mustang
    Lender, each Mustang Purchaser, the Administrator, the Clydesdale Custodian,
    each other Mustang Indemnified Party, any Appraiser, each holder of an
    interest in any part of the Advances and any successor and permitted
    assignee of any such Person (whether pursuant to an assignment for security
    or otherwise) and the direct and indirect members, partners, shareholders
    and other equity or residual interest holders of any of the foregoing and
    each of the respective directors, officer, trustees, mangers, employees,
    administration and agents of any of the foregoing;

         (g)      as used in Section 11.3 of the Palomino Company Agreement and
    Section 11.5, Section 11.6, Section 11.7 and Section 12.2 of the Palomino
    Company Agreement (as such Sections relate to the indemnities under Section
    11.3 of the Palomino Company Agreement), the Palomino Liquidator and each
    Sales Agent and their respective officers, directors, agents or employees;

         (h)      as used in Section 11.1 and Section 11.2 of the Paso Fino
    Company Agreement and Section 11.5, Section 11.6, Section 11.7 and Section
    12.2 of the Paso Fino Company Agreement (as such Sections relate to the
    indemnities under Section 11.1 and Section 11.2 of the Paso Fino Company
    Agreement), Noric, Mustang, the Sponsor Subsidiary Collateral Agent, the
    Mustang Collateral Agent, the Mustang Administrative Agent, each Mustang
    Lender, each Mustang Purchaser, the Administrator, the Clydesdale

El Paso Definitions Agreement

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<PAGE>

    Custodian, any Appraiser, each other Mustang Indemnified Party, any
    Appraiser, each holder of an interest in any part of the Advances and any
    successor and permitted assignee of any such Person (whether pursuant to an
    assignment for security or otherwise) and the direct and indirect members,
    partners, shareholders and other equity or residual interest holders of any
    of the foregoing and each of the respective directors, officer, trustees,
    mangers, employees, administration and agents of any of the foregoing;

         (i)      as used in Section 11.3 of the Paso Fino Company Agreement and
    Section 11.5, Section 11.6, Section 11.7 and Section 12.2 of the Paso Fino
    Company Agreement (as such Sections relate to the indemnities under Section
    11.3 of the Paso Fino Company Agreement), the Paso Fino Liquidator and each
    Sales Agent and their respective officers, directors, agents or employees;

         (j)      as used in Section 12.1 and Section 12.2 of the Noric LP
    Partnership Agreement and Section 12.5, Section 12.6, Section 12.7 and
    Section 13.2 of the Noric LP Partnership Agreement (as such Sections relate
    to the indemnities under Section 12.1 and Section 12.2 of the Noric LP
    Partnership Agreement), Palomino, Paso Fino, Noric, Clydesdale, Mustang, the
    Sponsor Subsidiary Collateral Agent, the Mustang Collateral Agent, the
    Mustang Administrative Agent, each Mustang Lender, each Mustang Purchaser,
    the Administrator, the Clydesdale Custodian, any Appraiser, each other
    Mustang Indemnified Party, any Appraiser, each holder of an interest in any
    part of the Advances and any successor and permitted assignee of any such
    Person (whether pursuant to an assignment for security or otherwise) and the
    direct and indirect members, partners, shareholders and other equity or
    residual interest holders of any of the foregoing and each of the respective
    directors, officer, trustees, mangers, employees, administration and agents
    of any of the foregoing;

         (k)      as used in Section 12.3 of the Noric LP Partnership Agreement
    and Section 12.5, Section 12.6, Section 12.7 and Section 13.2 of the Noric
    LP Partnership Agreement (as such Sections relate to the indemnities under
    Section 12.3 of the Noric LP Partnership Agreement), the Noric LP Liquidator
    and each Sales Agent and their respective officers, directors, agents or
    employees;

         (l)      as used in Section 11.1 and Section 11.2 of the Lusitano
    Company Agreement and Section 11.5, Section 11.6, Section 11.7 and Section
    12.2 of the Lusitano Company Agreement (as such Sections relate to the
    indemnities under Section 11.1 and Section 11.2 of the Lusitano Company
    Agreement), Clydesdale, Mustang, the Sponsor Subsidiary Collateral Agent,
    the Mustang Collateral Agent, the Mustang Administrative Agent, each Mustang
    Lender, each Mustang Purchaser, the Administrator, the Clydesdale Custodian,
    any Appraiser, each other Mustang Indemnified Party, any Appraiser, each
    holder of an interest in any part of the Advances and any successor and
    permitted assignee of any such Person (whether pursuant to an assignment for
    security or otherwise) and the direct and indirect members, partners,
    shareholders and other equity or residual interest holders of any of the
    foregoing and each of the respective directors, officer, trustees, mangers,
    employees, administration and agents of any of the foregoing;

El Paso Definitions Agreement

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<PAGE>

         (m)      as used in Section 11.3 of the Lusitano Company Agreement and
    Section 11.5, Section 11.6, Section 11.7 and Section 12.2 of the Lusitano
    Company Agreement (as such Sections relate to the indemnities under Section
    11.3 of the Lusitano Company Agreement), the Lusitano Liquidator and each
    Sales Agent and their respective officers, directors, agents or employees;

         (n)      as used in Section 12.1 and Section 12.2 of the Lipizzan
    Partnership Agreement and Section 12.5, Section 12.6, Section 12.7 and
    Section 13.2 of the Lipizzan Partnership Agreement (as such Sections relate
    to the indemnities under Section 12.1 and Section 12.2 of the Lipizzan
    Partnership Agreement), Lusitano, Clydesdale, Mustang, the Sponsor
    Subsidiary Collateral Agent, the Mustang Collateral Agent, the Mustang
    Administrative Agent, each Mustang Lender, each Mustang Purchaser, the
    Administrator, the Clydesdale Custodian, any Appraiser, each other Mustang
    Indemnified Party, any Appraiser, each holder of an interest in any part of
    the Advances and any successor and permitted assignee of any such Person
    (whether pursuant to an assignment for security or otherwise) and the direct
    and indirect members, partners, shareholders and other equity or residual
    interest holders of any of the foregoing and each of the respective
    directors, officer, trustees, mangers, employees, administration and agents
    of any of the foregoing; and

         (o)      as used in Section 12.3 of the Lipizzan Partnership Agreement
    and Section 12.5, Section 12.6, Section 12.7 and Section 13.2 of the
    Lipizzan Partnership Agreement (as such Sections relate to the indemnities
    under Section 12.3 of the Lipizzan Partnership Agreement), the Lipizzan
    Liquidator and each Sales Agent and their respective officers, directors,
    agents or employees.

         "INDEMNIFIED PROCEEDING" (a) as used in the Clydesdale Partnership
Agreement, has the meaning set forth in Section 13.7 of the Clydesdale
Partnership Agreement, (b) as used in the Sponsor Subsidiary Credit Agreement,
has the meaning set forth in Section 10.05 of the Sponsor Subsidiary Credit
Agreement, (c) as used in the Noric Company Agreement, has the meaning set forth
in Section 13.7 of the Noric Company Agreement, (d) as used in the Noric LP
Partnership Agreement, has the meaning set forth in Section 12.7 of the Noric LP
Partnership Agreement and (e) as used in the Lipizzan Partnership Agreement, has
the meaning set forth in Section 12.7 of the Lipizzan Partnership Agreement.

         "INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.

         "INDEMNITOR" (a) as used in the Clydesdale Partnership Agreement, has
the meaning set forth in Section 13.1 of the Clydesdale Partnership Agreement,
(b) as used in the Noric Company Agreement, has the meaning set forth in Section
13.1 of the Noric Company Agreement, (c) as used in the Noric LP Partnership
Agreement, has the meaning set forth in Section 12.1 of the Noric LP Partnership
Agreement and (d) as used in the Lipizzan Partnership Agreement, has the meaning
set forth in Section 12.1 of the Lipizzan Partnership Agreement.

         "INITIAL CLYDESDALE GENERAL PARTNER" means Appaloosa as the initial
general partner of Clydesdale under the Original Clydesdale Partnership
Agreement.

El Paso Definitions Agreement

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<PAGE>

         "INITIAL CLYDESDALE LIMITED PARTNER" means Noric Holdings as the
initial limited partner of Clydesdale under the Original Clydesdale Partnership
Agreement.

         "INITIAL NORIC HOLDINGS I MEMBER" means EPPC, as the initial member of
Noric Holdings I under the Original Noric Holdings I Company Agreement.

         "INITIAL NORIC HOLDINGS III MEMBER" means El Paso CNG, as the initial
member of Noric Holdings III under the Original Noric Holdings III Company
Agreement.

         "INITIAL NORIC HOLDINGS IV MEMBER" means El Paso Oil & Gas, as the
initial member of Noric Holdings IV under the Original Noric Holdings IV Company
Agreement.

         "INITIAL NORIC MEMBER" means Noric Holdings I as the initial member of
Noric under the Original Noric Company Agreement.

         "INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated as
April 16, 2003 (as amended, supplemented or otherwise modified from time to
time), among JPMorgan Chase Bank, Mustang Investors, L.L.C., Citicorp North
America, Inc., El Paso Corporation, El Paso Noric Investments I, L.L.C., El Paso
Noric Investments III, L.L.C., El Paso Noric Investments IV, L.L.C and
Wilmington Trust Company (solely in its capacity as Sponsor Subsidiary
Collateral Agent).

         "INTEREST PERIOD", as used in the Sponsor Subsidiary Credit Agreement,
means the period commencing on the Closing Date and ending on August 1, 2000,
and, thereafter, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the next succeeding first
Business Day of the next succeeding February, May, August or November, as the
case may be, of each year; provided that, in the case of any Interest Period
that commences before the Maturity Date or the Liquidation Start Date, as
applicable, and would otherwise end on a date occurring after the Maturity Date
or the Liquidation Start Date, as applicable, such Interest Period shall end on
the Maturity Date or the Liquidation Start Date, as applicable, and the duration
of each Interest Period that commences on or after the Maturity Date or the
Liquidation Start Date, as applicable, shall be initially the period commencing
on the Maturity Date or the Liquidation Start Date, as applicable, and ending on
the first Business Day of the next succeeding February, May, August or November,
as the case may be, and, thereafter, each subsequent period commencing on the
last day of the immediately preceding Interest Period and ending on the next
succeeding first Business Day of February, May, August or November, as the case
may be, of each year or of such other duration as shall be selected by Mustang
in its sole discretion, but subject to the rights of the Mustang Collateral
Agent in the Mustang Credit and Security Agreement.

         "INTERMEDIATE HOLDER" means with respect to an Energy Investment, the
Business Entity that has issued the Equity Interests that comprise such Energy
Investment, and each other Business Entity in which such Business Entity has
directly or indirectly made or holds an Investment, excluding the Underlying
Business relating to such Energy Investment. If, in relation to an Energy
Investment, the Business Entity that has issued the applicable Equity Interests
that comprise such Energy Investment is the Underlying Business relating to such

El Paso Definitions Agreement

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<PAGE>

Energy Investment, then there shall be no "Intermediate Holder" relating to such
Energy Investment.

         "INVESTMENT" in any Person means any loan or advance to such Person,
any purchase or other acquisition of any Equity Interest in or other securities
of such Person, any capital contribution to such Person or any other investment
in such Person, including any arrangement pursuant to which the Person making
such investment incurs Indebtedness of the types referred to in clauses (j) and
(k) of the definition of "INDEBTEDNESS" in respect of such Person.

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

         "INVOLUNTARY BANKRUPTCY" has the meaning set forth in the definition of
Bankruptcy.

         "LIBO RATE" means, for any Interest Period (or any portion thereof), an
interest rate per annum equal to the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any
successor page) as the London interbank offered rate for deposits in U.S.
dollars at 11:00 A.M. (London time) two Business Days before the first day of
such Interest Period for a period equal to such Interest Period (or portion
thereof); provided that, if for any reason such rate is not available, the term
"LIBO RATE" shall mean, for any Interest Period (or any portion thereof), the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page (or any other publicly available source of
similar market data selected by Mustang) as the London interbank offered rate
for deposits in U.S. dollars at approximately 11:00 A.M. (London time) two
Business Days before the first day of such Interest Period for a period equal to
such Interest Period (or portion thereof); provided if more than one rate is
specified on Reuters Screen LIBO Page (or such other publicly available source),
the applicable rate shall be the arithmetic mean of all such rates.

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

         "LIPIZZAN" means Lipizzan Holding, L.P., a Delaware limited
partnership.

         "LIPIZZAN EXPENSES" means, without duplication, all interests, costs,
expenses, indemnities, fees (including reasonable attorneys' and accountants'
fees), Disposition Costs, Taxes and other payment obligations incurred or owing
by Lipizzan (excluding any liquidating distributions).

         "LIPIZZAN GENERAL PARTNER" means any Person that is a holder of a
Lipizzan General Partnership Interest.

         "LIPIZZAN GENERAL PARTNERSHIP INTEREST" means any interest in Lipizzan
described in Section 3.2(a) of the Lipizzan Partnership Agreement.

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<PAGE>

         "LIPIZZAN LIMITED PARTNER" means any Person that is a holder of a
Lipizzan Limited Partnership Interest.

         "LIPIZZAN LIMITED PARTNERSHIP INTEREST" means any interest in the
Lipizzan described in Section 3.2(b) of the Lipizzan Partnership Agreement.

         "LIPIZZAN LIQUIDATOR" has the meaning set forth in Section 11 of the
Lipizzan Partnership Agreement.

         "LIPIZZAN PARTNER" means a Lipizzan General Partner or a Lipizzan
Limited Partner.

         "LIPIZZAN PARTNERSHIP AGREEMENT" means the Partnership Agreement of
Lipizzan, originally dated as of July 11, 2002 and amended and restated as of
July 19, 2002 and April 16, 2003, between Lusitano and Noric Holdings IV.

         "LIPIZZAN PARTNERSHIP INTEREST" means any Lipizzan General Partnership
Interest or Lipizzan Limited Partnership Interest.

         "LIPIZZAN PROPERTY" means at any time all property owned at such time
by Lipizzan, and shall include both tangible and intangible property.

         "LIQUIDATING EVENT" means a Related Companies Liquidating Event or a
Sponsor Subsidiary Liquidating Event.

         "LIQUIDATION INDEMNITY" means each of the following:

         (a)      the Liquidation Indemnity Agreement (Noric), dated as of May
    9, 2000, made by the Noric Class A Member in favor of the beneficiaries
    named therein;

         (b)      the Liquidation Indemnity Agreement (Palomino), dated as of
    December 15, 2000, made by the Palomino Member in favor of the beneficiaries
    named therein;

         (c)      the Liquidation Indemnity Agreement (Paso Fino), dated as of
    December 15, 2000, made by the Paso Fino Member in favor of the
    beneficiaries named therein:

         (d)      the Liquidation Indemnity Agreement (Noric LP), dated as of
    December 15, 2000, made by the Noric LP General Partner in favor of the
    beneficiaries named therein;

         (e)      the Liquidation Indemnity Agreement (Noric Holdings), dated as
    of May 9, 2000, made by the Noric Holdings Class A Member (as defined in the
    Noric Holdings Company Agreement) in favor of the beneficiaries named
    therein;

         (f)      the Liquidation Indemnity Agreement (Noric Holdings I), dated
    as of May 9, 2000 and amended and restated as of June 29, 2001, made by the
    Noric Holdings I Managing Member (as defined in the Noric Holdings I Company
    Agreement) in favor of the beneficiaries named therein;

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<PAGE>

         (g)      the Liquidation Indemnity Agreement (Noric Holdings IV), dated
    as of July 19, 2002, made by the Noric Holdings IV Managing Member (as
    defined in the Noric Holdings IV Company Agreement) in favor of the
    beneficiaries named therein;

         (h)      the Liquidation Indemnity Agreement (Lusitano), dated as of
    July 19, 2002, made by the Lusitano Member in favor of the beneficiaries
    named therein:

         (i)      the Liquidation Indemnity Agreement (Lipizzan), dated as of
    July 19, 2002, made by the Lipizzan General Partner in favor of the
    beneficiaries named therein; and

         (j)      any other Liquidation Indemnity Agreement executed by a
    Sponsor Subsidiary Member pursuant to the Acquisition/Accession Procedures
    Schedule.

         "LIQUIDATION PERIOD" means (a) in relation to Clydesdale, the period
commencing on the applicable Liquidation Start Date and ending on the date of
the Disposition or collection of or realization upon all of the Clydesdale
Property, (b) in relation to a Sponsor Subsidiary, the period commencing on the
applicable Liquidation Start Date and ending on the date of Disposition or
collection of or realization upon all of the Sponsor Subsidiary Property of such
Sponsor Subsidiary, (c) in relation to Noric, the period commencing on the
applicable Liquidation Start Date and ending on the date of Disposition or
collection of or realization upon all of the Noric Property, (d) in relation to
Palomino, the period commencing on the applicable Liquidation Start Date and
ending on the date of Disposition or collection of or realization upon all of
the Palomino Property, (e) in relation to Paso Fino, the period commencing on
the applicable Liquidation Start Date and ending on the date of Disposition or
collection of or realization upon all of the Paso Fino Property, (f) in relation
to Noric LP, the period commencing on the applicable Liquidation Start Date and
ending on the date of Disposition or collection of or realization upon all of
the Noric LP Property, (g) in relation to Lusitano, the period commencing on the
applicable Liquidation Start Date and ending on the date of Disposition or
collection of or realization upon all of the Lusitano Property and (h) in
relation to Lipizzan, the period commencing on the applicable Liquidation Start
Date and ending on the date of Disposition or collection of or realization upon
all of the Lipizzan Property.

         "LIQUIDATION START DATE" in relation to (a) Clydesdale, has the meaning
set forth in Section 12.6 of the Clydesdale Partnership Agreement, (b) in
relation to Noric Holdings, has the meaning set forth in Section 12.6 of the
Sponsor Subsidiary Company Agreement of such Sponsor Subsidiary, (c) with
respect to Noric Holdings I, has the meaning set forth in Section 11.4 of the
Sponsor Subsidiary Company Agreement of such Sponsor Subsidiary, (d) with
respect to Noric Holdings IV, has the meaning set forth in Section 12.6 of the
Sponsor Subsidiary Company Agreement of such Sponsor Subsidiary and (e) with
respect to Lusitano, Lipizzan, Noric, Palomino, Paso Fino or Noric LP, means the
occurrence of a Sponsor Subsidiary Termination Event.

         "LORD SECURITIES" means BSCS XXVII, Inc., a Delaware corporation.

         "LOSSES" has the meaning set forth in the definition of Profits and
Losses.

         "LUSITANO" means Lusitano, L.L.C., a Delaware limited liability
company.

El Paso Definitions Agreement

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<PAGE>

         "LUSITANO COMPANY AGREEMENT" means the company agreement of Lusitano,
originally dated as of July 11, 2002 and amended and restated as of July 19,
2002 and April 16, 2003 by Noric Holdings IV.

         "LUSITANO EXPENSES" means, without duplication, all interests, costs,
expenses, indemnities, fees (including reasonable attorneys' and accountants'
fees), Disposition Costs, Taxes and other payment obligations incurred or owing
by Lusitano (excluding any liquidating distributions).

         "LUSITANO LIQUIDATOR" has the meaning set forth in Section 10.4 of the
Lusitano Company Agreement.

         "LUSITANO MEMBER" means any Person that is a holder of a Lusitano
Membership Interest.

         "LUSITANO MEMBERSHIP INTEREST" means any interest in Lusitano pursuant
to the Lusitano Company Agreement.

         "LUSITANO PROPERTY" means at any time all property owned at such time
by Lusitano, and shall include both tangible and intangible property.

         "MAINTENANCE CAPITAL EXPENDITURES" means, for any Underlying Business
for any period, the sum of, without duplication, (a) all cash expenditures made,
directly or indirectly, by such Underlying Business or any of its subsidiaries
during such period for maintenance or replacement of equipment, fixed assets,
real property or improvements, that have been or should be, in accordance with
GAAP, reflected as property, plant or equipment on a consolidated balance sheet
of such Person plus (b) the aggregate principal of and interest on all
Indebtedness (including Obligations under Capitalized Leases) payable during
such period in connection with any such Indebtedness incurred in connection with
such property, plant or equipment. For purposes of this definition, the purchase
price of equipment that is purchased simultaneously with the trade-in of
existing equipment or with insurance proceeds shall be included in Maintenance
Capital Expenditures only to the extent of the gross amount of such purchase
price less the credit granted by the seller of such equipment for the equipment
being traded in at such time or the amount of such proceeds, as the case may be.

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

         "MARK-TO-MARKET EVENT" means the retirement in full of a Clydesdale
Partnership Interest under the Clydesdale Partnership Agreement or the
liquidation of Clydesdale within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) in connection with a Liquidating Event.

         "MARK-TO-MARKET SCHEDULE" means a schedule setting forth the
Mark-to-Market Value for each of the following as individual line items: all
Cash Equivalents and the Advances.

         "MARK-TO-MARKET VALUE" means the following as determined by the
Clydesdale General Partner (in the case of Clydesdale Property):

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<PAGE>

         (a)      In respect of the Sponsor Subsidiary Subordinated Debt, the
    Mark-to-Market Value of the Sponsor Subsidiary Subordinated Debt at any
    other time shall be equal to the net amount receivable by Clydesdale in
    respect of the Sponsor Subsidiary Subordinated Debt;

         (b)      the Mark-to-Market Value of any Cash Equivalent shall be equal
    to its face value less unamortized discount, if any, unless such Cash
    Equivalent is in default, in which case its Mark-to-Market Value shall be
    $0; and

         (c)      the Mark-to-Market Value of any other Clydesdale Property
    shall be its fair market value at the time of determination.

         "MAY 9, 2000 CLYDESDALE PARTNERSHIP AGREEMENT" has the meaning set
forth in Section 3.01 of the Sponsor Subsidiary Credit Agreement.

         "MATERIAL ADVERSE EFFECT", as used in:

         (a)      the Lusitano Company Agreement, the Lipizzan Partnership
    Agreement, the Noric Company Agreement, the Palomino Company Agreement, the
    Paso Fino Company Agreement, the Noric LP Partnership Agreement, any Sponsor
    Subsidiary Company Agreement and the Sponsor Subsidiary Credit Documents
    (except as set forth in clause (c) below), means (i) a material adverse
    effect on (x) the financial condition or operations of El Paso and its
    Consolidated Subsidiaries on a Consolidated basis or (y) the financial
    condition of any of Noric Holdings, the other Sponsor Subsidiaries,
    Clydesdale (but only for the period of 90 days following the Fourth
    Restatement Date), Lusitano, Lipizzan, Noric, Palomino, Paso Fino or Noric
    LP, (ii) a material adverse effect on the ability of any of El Paso, Noric
    Holdings, the other Sponsor Subsidiaries, Clydesdale (but only for the
    period of 90 days following the Fourth Restatement Date), Noric, Palomino,
    Paso Fino, Noric LP, Lusitano or Lipizzan to perform its obligations under
    any Operative Document to which it is a party, (iii) a material adverse
    effect on the rights or remedies of any Indemnified Person under any
    Operative Document, (iv) a material adverse effect on the rights or remedies
    of Mustang, the Sponsor Subsidiary Collateral Agent or the Mustang
    Collateral Agent under any Sponsor Subsidiary Credit Document or Assigned
    Agreement, (v) a material adverse effect on the rights, benefits, interest
    or remedies of any of Lipizzan, Noric, Noric LP or any Sponsor Subsidiary
    under or in respect of any E&P Participation Agreement or Production Payment
    Agreement to which it is a party, (vi) a material adverse effect on the
    ability of any Counterparty to any E&P Participation Agreement or any
    Production Payment Agreement to perform its obligations under any E&P
    Participation Agreement or Production Payment Agreement to which it is a
    party, (vii) a material adverse effect on the financial condition or
    operations of the issuer of any Energy Investment, and the related
    Intermediate Holder and Underlying Business, taken as a whole on a
    consolidated basis, (viii) a material adverse effect on the financial
    condition of any Counterparty to any E&P Participation Agreement or any
    Production Payment Agreement (other than any such Counterparty whose
    obligations are guaranteed by El Paso), (ix) a material adverse effect on
    the Noric Class B Membership Interest or the Noric Class A Membership
    Interest, (x) a material adverse effect on the Palomino Membership Interest,
    the Paso Fino Membership Interest,

El Paso Definitions Agreement

                                       45

<PAGE>

    the Noric LP Limited Partnership Interest or the Noric LP General
    Partnership Interest or (xi) a material adverse effect on the Lusitano
    Membership Interest, the Lipizzan Limited Partnership Interest or the
    Lipizzan General Partnership Interest;

         (b)      the El Paso Agreement (or any other Operative Document to the
    extent such other agreement expressly adopts the use of this clause (b)),
    means a material adverse effect on the financial condition or operations of
    El Paso and its consolidated Subsidiaries on a consolidated basis; and

         (c)      Sections 4.02 and 5.09 of the Sponsor Subsidiary Credit
    Agreement, means (i) a material adverse effect on the financial condition or
    operations of the issuer of any Energy Investment, and the related
    Intermediate Holder and Underlying Business, taken as a whole on a
    consolidated basis, (ii) a material adverse effect on the Noric Class B
    Membership Interest or the Noric Class A Membership Interest, (iii) a
    material adverse effect on the Palomino Membership Interest, the Paso Fino
    Membership Interest, the Noric LP General Partnership Interest or the Noric
    LP Limited Partnership Interest or (iv) a material adverse effect on the
    Lusitano Membership Interest, the Lipizzan Limited Partnership Interest or
    the Lipizzan General Partnership Interest.

         "MATERIAL AGREEMENT" means any agreement, covenant, indenture, lease,
deed, instrument or other legal obligation (other than the Operative Documents)
of or relating to each Energy Investment and any Intermediate Holder and the
Underlying Business relating thereto, the violation, termination, acceleration,
invalidity, or unenforceability of which could reasonably be likely to result in
(a) a material adverse effect on the ability of Clydesdale, Lusitano, Lipizzan,
Noric, Palomino, Paso Fino, Noric LP or any Sponsor Subsidiary to perform its
obligations under any Operative Document, (b) a material adverse effect on the
financial condition or operations of such Intermediate Holder and such
Underlying Business, taken as a whole on a consolidated basis, or (c) such
Energy Investment not being Freely Transferable.

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

         "MATURITY DATE" means February 7, 2005.

         "MAXIMUM CLAWBACK AMOUNT", in relation to an Energy Investment, means,
at any time of determination:

         (a)      where the Intermediate Holder or Underlying Business is a
    Controlled Business, the amount (if any) by which (i) the amount of retained
    earnings of such Controlled Business, as reported in the most recent balance
    sheet of such Controlled Business prior to the time of determination, is
    less than (ii) the sum of (A) the amount of retained earnings of such
    Controlled Business, as reported in the most recent balance sheet of such
    Controlled Business prior to the Acquisition/Accession Date of the Energy
    Investment relating to such Controlled Business plus (B) the amount of any
    gains from the Disposition of any property, plant and/or equipment (as
    defined under GAAP) of such

El Paso Definitions Agreement

                                       46

<PAGE>

    Controlled Business included in the amount of income of such Controlled
    Business for the period from the Acquisition/Accession Date of the Energy
    Investment relating to such Controlled Business through the time of
    determination, as reported in the accounts of such Controlled Business from
    time to time; and

         (b)      where the Energy Investment is a Publicly Traded Investment,
    the amount (if any) by which (i) the amount of the aggregate cumulative
    Distributions received by the relevant Sponsor Subsidiary from the
    Underlying Business relating to such Publicly Traded Investment for the
    period from the Acquisition/Accession Date of such Publicly Traded
    Investment through the time of determination exceeds (ii) the aggregate
    cumulative net income accrued by such Sponsor Subsidiary in respect of such
    Publicly Traded Investment for the period from such Acquisition/Accession
    Date through the time of determination,

provided that the aggregate Maximum Clawback Amount for all Energy Investments
shall not exceed the aggregate amount of funds in the Sponsor Subsidiary Cash
Reserve actually distributed pursuant to Section 7.04(a)(7) of the Sponsor
Subsidiary Credit Agreement.

         "MOODY'S" means Moody's Investors Service, Inc. and any successor
rating agency.

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

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

         "MUSTANG" means Mustang Investors, L.L.C., a Delaware limited liability
company.

         "MUSTANG ADMINISTRATION AGREEMENT" means the "ADMINISTRATION AGREEMENT"
as such term is defined in the Mustang Credit and Security Agreement.

         "MUSTANG ADMINISTRATIVE AGENT" means the "ADMINISTRATIVE AGENT" as such
term is defined in the Mustang Credit and Security Agreement.

         "MUSTANG COLLATERAL AGENT" means the "COLLATERAL AGENT" as such term is
defined in the Mustang Credit and Security Agreement.

         "MUSTANG COMPANY AGREEMENT" means the Fourth Amended and Restated
Company Agreement of Mustang Investors, L.L.C., originally dated as of May 8,
2000, and

El Paso Definitions Agreement

                                       47

<PAGE>

amended and restated as of May 9, 2000, December 15, 2000, July 19, 2002 and
April 16, 2003, among Rio Grande Trust II, a Delaware statutory trust, Dongola,
Inc., a Delaware corporation, Shetland, Lord Securities and Mustang.

         "MUSTANG CREDIT AND SECURITY AGREEMENT" means the $970,000,000 Amended
and Restated Credit and Security Agreement dated as of April 16, 2003 among
Mustang Investors, L.L.C., a Delaware limited liability company, as borrower,
CXC, LLC (formerly known as CXC Incorporated), a Delaware limited liability
company, the banks, financial institutions and other lenders listed on the
signature pages thereof and Citicorp North America, Inc., a Delaware
corporation, as agent, as administrative agent and as collateral agent
thereunder, as the same may be amended, supplemented or otherwise modified from
time to time.

         "MUSTANG DEBT COLLECTION DATE" means the "DEBT COLLECTION DATE" as such
term is defined in the Mustang Credit and Security Agreement.

         "MUSTANG INDEMNIFIED PARTIES" means the "INDEMNIFIED PARTIES" as such
term is defined in the Mustang Credit and Security Agreement.

         "MUSTANG LENDER" means a "LENDER" as such term is defined in the
Mustang Credit and Security Agreement.

         "MUSTANG LIQUIDATION AMOUNT" means "LIQUIDATION AMOUNT" as such term is
defined in the Mustang Credit and Security Agreement.

         "MUSTANG LOAN DOCUMENTS" means the "LOAN DOCUMENTS" as such term is
defined in the Mustang Credit and Security Agreement.

         "MUSTANG MANAGING MEMBER" means a "MANAGING MEMBER" as such term is
defined in the Mustang Credit and Security Agreement.

         "MUSTANG PURCHASER" means a "PURCHASER" as such term is defined in the
Mustang Credit and Security Agreement.

         "MUSTANG UNRECOVERED CAPITAL" means the "UNRECOVERED CAPITAL", as such
term is defined in the Mustang Company Agreement, of the Members of Mustang.

         "NET CASH PROCEEDS" means, with respect to any Disposition of any
Transaction Asset by Noric, Noric LP or a Sponsor Subsidiary or the Disposition
of all or substantially all of the assets of, or Equity Interests in, any
Intermediate Holder or Underlying Business or any Disposition described in
Sections 5.09(d)(C) and (D) and 5.05(a)(C) and (D) of the Sponsor Subsidiary
Credit Agreement, the Gross Cash Proceeds with respect to such Disposition after
deducting therefrom (without duplication) (a) reasonable and customary brokerage
commissions, underwriting fees and discounts, legal fees, finder's fees and
other similar fees and commissions and (b) the amount of Taxes payable in
connection with or as a result of such transaction, in each case to the extent,
but only to the extent, that the amounts so deducted are, at the time of receipt
of such cash, actually paid or payable or an obligation to pay which has been
incurred or, in the case of Taxes, that are estimated by El Paso to be payable
to a Person that is not El Paso or an Affiliate of El Paso and are properly
attributable to such transaction.

El Paso Definitions Agreement

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<PAGE>

         "NET WORTH" means as to any Person, as of any date of determination,
the sum of (a) the consolidated common and preferred stockholders' equity of
such Person and its consolidated Subsidiaries, plus (b) the cumulative amount by
which stockholders' equity of such Person shall have been reduced by reason of
non-cash write downs of long-term assets from and after the Effective Date (as
defined in the El Paso New Revolving Facility), plus (c) in the case of El Paso,
those items included as "preferred interests of consolidated subsidiaries" (or
analogous line item) as listed on the consolidated balance sheet of El Paso as
of December 31, 2002 and regardless of any change thereafter in accounting
treatment thereof, plus (d) in the case of El Paso, those items included as
"minority interests of consolidated subsidiaries" (or analogous line item) as
listed on the consolidated balance sheet of El Paso as of December 31, 2002 and
regardless of any change thereafter in accounting treatment thereof, so long as
the terms and conditions of any financing associated with any such items
referred to in clause (c) or (d) above (or successive extensions or refinancings
thereof) are not amended so as to become more restrictive to El Paso or its
Subsidiaries than the terms and conditions of the Operative Documents, and minus
(e) accumulated other comprehensive income (loss) (or analogous line item).

         "NON-PRINCIPAL PROPERTY" of a Controlled Business, means the following
property of that Controlled Business:

         (a)      motor vehicles, aircraft and watercraft;

         (b)      computer hardware and software;

         (c)      buildings and office space and fixtures thereon;

         (d)      office furniture and equipment; and

         (e)      trademarks, trade names, trade styles, trade secrets, service
    marks, logos, copyrights, patents, and patent applications.

         "NORIC" means Noric, L.L.C., a Delaware limited liability company.

         "NORIC CLASS A MEMBER" means any Person that is the holder of a Noric
Class A Membership Interest.

         "NORIC CLASS A MEMBERSHIP INTEREST" means any interest in Noric
described in Section 3.2(a) of the Noric Company Agreement.

         "NORIC CLASS B MEMBER" means any Person that is the holder of a Noric
Class B Membership Interest.

         "NORIC CLASS B MEMBERSHIP INTEREST" means any interest in Noric
described in Section 3.2(b) of the Noric Company Agreement.

         "NORIC CLASS C MEMBER" means any Person that is the holder of a Noric
Class C Membership Interest.

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<PAGE>

         "NORIC CLASS C MEMBERSHIP INTEREST" means any interest in Noric
described in Section 3.2(c) of the Noric Company Agreement.

         "NORIC COMPANY AGREEMENT" means the Fourth Amended and Restated Company
Agreement of Noric, originally dated as of April 28, 2000 and amended and
restated as of May 9, 2000, December 15, 2000, July 19, 2002 and April 16, 2003
among Clydesdale (as the withdrawing Noric Class B Member), Noric Holdings I,
Lord Securities and Noric.

         "NORIC EXPENSES" means, without duplication, all interest, costs,
expenses, indemnities, fees (including reasonable attorneys' and accountants'
fees), Disposition Costs, Taxes and other payment obligations incurred or owing
by Noric (excluding any liquidating distributions).

         "NORIC GROUP MEMBER" means each of Noric, Palomino, Paso Fino and Noric
LP.

         "NORIC HOLDINGS" means Noric Holdings, L.L.C., a Delaware limited
liability company.

         "NORIC HOLDINGS COMPANY AGREEMENT" means the amended and restated
limited liability company agreement of Noric Holdings, originally dated as of
April 28, 2000 and amended and restated as of May 9, 2000, July 19, 2002 and
April 16, 2003, made by Shetland and Lord Securities.

         "NORIC HOLDINGS I" means Noric Holdings I, L.L.C., a Delaware limited
liability company.

         "NORIC HOLDINGS I CASH RESERVE" has the meaning set forth in
Preliminary Statement G of the Sponsor Subsidiary Security Agreement.

         "NORIC HOLDINGS I COMPANY AGREEMENT" means the amended and restated
limited liability company agreement of Noric Holdings I, originally dated as of
April 28, 2000 and amended and restated as of May 9, 2000, June 29, 2001,
December 31, 2001, July 19, 2002 and April 16, 2003, made by EPPC, El Paso
Production Oil & Gas USA, El Paso Oil & Gas Resources, El Paso Raton, L.L.C.
(each as a withdrawing Noric Holdings I Class A Member), El Paso Production Oil
& Gas Company, Lord Securities and El Paso Noric Investments I, L.L.C.

         "NORIC HOLDINGS I REQUIRED CASH RESERVE BALANCE" has the meaning set
forth in Section 5.04(c)(i) of the Sponsor Subsidiary Credit Agreement.

         "NORIC HOLDINGS III" means Noric Holdings III, L.L.C., a Delaware
limited liability company.

         "NORIC HOLDINGS III DEPOSIT ACCOUNT" has the meaning set forth in
Preliminary Statement F of the Sponsor Subsidiary Security Agreement.

         "NORIC HOLDINGS III COMPANY AGREEMENT" means the amended and restated
limited liability company agreement of Noric Holdings III, originally dated as
of June 25, 2001

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<PAGE>

and amended and restated as of June 29, 2001, July 19, 2002 and April 16, 2003,
made by El Paso CNG Company (as the withdrawing Noric Holdings III Class A
Member), Lord Securities and El Paso Noric Investments, III, L.L.C.

         "NORIC HOLDINGS IV" means Noric Holdings IV, L.L.C., a Delaware limited
liability company.

         "NORIC HOLDINGS IV CASH RESERVE" has the meaning set forth in
Preliminary Statement H of the Sponsor Subsidiary Security Agreement.

         "NORIC HOLDINGS IV COMPANY AGREEMENT" means the amended and restated
limited liability company agreement of Noric Holdings IV, originally dated as of
July 11, 2002 and amended and restated as of July 19, 2002 and April 16, 2003,
made by El Paso Oil & Gas Resources, El Paso Production Oil & Gas USA (each as a
withdrawing Noric Holdings IV Class A Member), El Paso Noric Investments IV,
L.L.C. and Lord Securities.

         "NORIC HOLDINGS IV REQUIRED ACTIONS" means:

         (a)      the delivery of all notices, certificates and other documents,
the making of all determinations (including discretionary determinations), and
the taking of all discretionary and mandatory actions (including the giving of
any consent, waiver or approval or the making of any request or the demanding of
specific performance), in each case to be delivered, made or taken by Noric
Holdings IV under the Operative Documents, and the exercise of all other rights
and remedies of Lusitano or Lipizzan, as the case may be, under the Operative
Documents (other than the exercise of Lipizzan's rights under the Engage
Letter), including:

                  (i)      making demand, or enforcing any right or remedy,
         under each El Paso Demand Loan and Production Payment Agreement and the
         El Paso Guaranty in accordance with the terms thereof; and

                  (ii)     after the occurrence of a Liquidating Event, taking
         all actions reasonably necessary or advisable to allow for an orderly
         liquidation of Lusitano and

Lipizzan, and

         (b)      after the occurrence or during the continuance of an Event of
Default, a Notice Event or a Termination Event, deliver to El Paso Production
Oil & Gas USA and/or El Paso Oil & Gas Resources, the notice described in the
Engage Letter.

         "NORIC HOLDINGS IV REQUIRED CASH RESERVE BALANCE" has the meaning set
forth in Section 5.04(c)(ii) of the Sponsor Subsidiary Credit Agreement.

         "NORIC HOLDINGS IV REQUIRED CASH RESERVE INCREASE" means, for any
Fiscal Quarter, an amount equal 2.5% of the portion of the E&P Borrowing Base
attributable to the Production Payments as at the end of such Fiscal Quarter.

El Paso Definitions Agreement

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<PAGE>

         "NORIC INVESTMENTS I" means El Paso Noric Investments I, L.L.C., a
Delaware limited liability company.

         "NORIC INVESTMENTS III" means El Paso Noric Investments III, L.L.C., a
Delaware limited liability company.

         "NORIC INVESTMENTS IV" means El Paso Noric Investments IV, L.L.C., a
Delaware limited liability company.

         "NORIC INVESTMENTS I COMPANY AGREEMENT" means the company agreement of
Noric Investments I, dated as of April 16, 2003, made by El Paso Production Oil
& Gas and El Paso Production Investments.

         "NORIC INVESTMENTS III COMPANY AGREEMENT" means the company agreement
of Noric Investments III, dated as of April 16, 2003, made by El Paso CNG.

         "NORIC INVESTMENTS IV COMPANY AGREEMENT" means the company agreement of
Noric Investments IV, dated as of April 16, 2003, made by El Paso Production Oil
& Gas USA and El Paso Oil & Gas Resources.

         "NORIC LIQUIDATOR" has the meaning set forth in Section 12.4 of the
Noric Company Agreement.

         "NORIC LP" means Noric, L.P., a Delaware limited partnership.

         "NORIC LP EXPENSES" means, without duplication, all interests, costs,
expenses, indemnities, fees (including reasonable attorneys' and accountants'
fees), Disposition Costs, Taxes and other payment obligations incurred or owing
by Noric LP (excluding any liquidating distributions).

         "NORIC LP GENERAL PARTNER " means any Person that is a holder of a
Noric LP General Partnership Interest.

         "NORIC LP GENERAL PARTNERSHIP INTEREST" means any interest in Noric LP
described in Section 3.2(a) of the Noric LP Partnership Agreement.

         "NORIC LP LIMITED PARTNER " means any Person that is a holder of a
Noric LP Limited Partnership Interest.

         "NORIC LP LIMITED PARTNERSHIP INTEREST" means any interest in the Noric
LP described in Section 3.2(b) of the Noric LP Partnership Agreement.

         "NORIC LP LIQUIDATOR" has the meaning set forth in Section 11.4 of the
Noric LP Partnership Agreement.

         "NORIC LP PARTNER" means a Noric LP General Partner or a Noric LP
Limited Partner.

El Paso Definitions Agreement

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<PAGE>

         "NORIC LP PARTNERSHIP AGREEMENT" means the Third Amended and Restated
Partnership Agreement of Noric LP, originally dated as of December 14, 2001 and
amended and restated as of December 15, 2000, July 19, 2002 and April 16, 2003,
among Noric LP, Palomino and Paso Fino.

         "NORIC LP PARTNERSHIP INTEREST" means any Noric LP General Partnership
Interest or Noric LP Limited Partnership Interest.

         "NORIC LP PROPERTY" means at any time all property owned at such time
by Noric LP, and shall include both tangible and intangible property.

         "NORIC MEMBER" means a Noric Class A Member or a Noric Class B Member.

         "NORIC MEMBERSHIP INTEREST" means any Noric Class A Membership Interest
Noric Class B Membership Interest, or Noric Class C Membership Interest.

         "NORIC PROPERTY" means at any time all property owned at such time by
Noric, and shall include both tangible and intangible property.

         "NORIC REQUIRED ACTIONS" means the delivery of all notices,
certificates and other documents, the making of all determinations (including
discretionary determinations), and the taking of all discretionary and mandatory
actions (including the giving of any consent, waiver or approval or the making
of any request), in each case to be delivered, made or taken by Noric under the
Operative Documents, and the exercise of all other rights and remedies of Noric,
Palomino, Paso Fino or Noric LP, as the case may be, under the Operative
Documents, including:

         (a)      making demand, or enforcing any right or remedy, under each El
    Paso Demand Loan and E&P Participation Agreement and the El Paso Guaranty in
    accordance with the terms thereof;

         (b)      after the occurrence of a Liquidating Event, taking all
    actions reasonably necessary or advisable to allow for an orderly
    liquidation of Noric, Palomino, Paso Fino and Noric LP; and

         (c)      after the occurrence of a Liquidating Event, making a request
    pursuant to Section 5.1 of any E&P Participation Agreement to which Noric or
    Noric LP is a party for the Counterparty under such E&P Participation
    Agreement to transfer all of its right, title and interest (if any) in and
    to all or any of the Conveyed Interests and the Material E&P Agreements
    (each as defined in such E&P Participation Agreement) the subject of such
    E&P Participation Agreement to Noric or Noric LP, as the case may be.

         "NOTICE AGREEMENT" means the Notice Agreement, originally dated as of
December 15, 2000 as amended and restated as of July 19, 2002 and April 16, 2003
among El Paso, Noric Holdings, L.L.C., the Sponsor Subsidiaries, Mustang,
Clydesdale and the other parties thereto.

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<PAGE>

         "NOTIFIED AMOUNT" means, for any Interest Period (or any portion
thereof), an amount, as notified by Mustang (or the Mustang Collateral Agent) to
Noric Holdings, equal to the aggregate amount of interest payable by Mustang
pursuant to the Loan Documents for such Interest Period (or portion thereof).

         "NOTICE EVENT" means the occurrence of any of the following events:

         (a)      [Intentionally omitted]

         (b)      Noric shall fail or Noric Holdings I shall fail to cause any
    Noric Group Member:

                  (i)      to make any payment or capital contribution required
         to be made by such Noric Group Member under the Noric Company
         Agreement, the Palomino Company Agreement, the Paso Fino Company
         Agreement or the Noric LP Partnership Agreement when due if such
         failure shall remain unremedied for five Business Days after such
         payment or contribution becomes due and payable under the Noric Company
         Agreement; or

                  (ii)     in the case of Noric only, to perform or observe any
         term, covenant or agreement contained in Section 3.4, 4.8, 7.1(g),
         7.1(h), 7.1(i), 7.2(a), 7.2(b), 7.2(c), 7.2(d) (other than Section
         7.2(d)(C)(4) (but only with respect to the failure of Noric Holdings I
         and Noric LP to deposit into the Noric Holdings I Cash Reserve an
         amount equal to the Net Cash Proceeds from any Disposition described in
         Section 7.2(d)(C)(4) in an aggregate amount greater than an amount
         equal to the difference (but not less than zero) of (x) $5,000,000
         minus (y) the aggregate amount of Net Cash Proceeds from any
         Disposition described in Section 5.02(d)(C)(4) of the Sponsor
         Subsidiary Credit Agreement that the Sponsor Subsidiaries have failed
         to deposit in the Sponsor Subsidiary Cash Reserve plus the aggregate
         amount of the Disposition Value of the Relevant Assets from any
         Disposition described in Section 5.05(a)(F) of the Sponsor Subsidiary
         Credit Agreement that Noric Holdings IV and Lipizzan have failed to
         deposit in the Noric Holdings IV Cash Reserve, in excess of the then
         effective Adjusted Redetermination Threshold)), 7.2(e), 7.2(f), 7.2(h),
         7.2(i), 7.2(l), 7.3(a)(ii), 7.3(b) (but, in each case, subject to any
         provisions relating to the cure of any Notice Event referred to
         therein) or 10.1 of the Noric Company Agreement or, in the case of
         Noric LP only, to perform or observe any term, covenant or agreement
         contained in Sections 3.7, 4.3, 4.5, 8.3 or Section 9.1 of the Noric LP
         Partnership Agreement; or

                  (iii)    to perform or observe any term, covenant or agreement
         contained in Section 7.2 (other than as set forth in paragraph (ii)
         above and other than Section 7.2(n)), 7.3(a)(iv) or 7.3(a)(v) of the
         Noric Company Agreement and 4.6 of the Noric LP Partnership Agreement,
         if such failure shall remain unremedied for five Business Days after
         the occurrence thereof; or

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                                       54

<PAGE>

                  (iv)     to perform or observe in any material respect any
         other term, covenant or agreement contained in the Noric Company
         Agreement (including Section 7.2(n) of the Noric Company Agreement, but
         only to the extent the obligations referred to in Section 7.2(n) of the
         Noric Company Agreement are not covered more specifically in any other
         Section or clause of the Noric Company Agreement referred to in
         paragraph (ii) or (iii) above) on its part to be performed or observed
         if such failure shall remain unremedied for 30 days following notice
         thereof by Mustang if such failure is reasonably curable; or

         (c)      The Clydesdale General Partner has at any time during the 90
day period following the Fourth Restatement Date been grossly negligent or has
engaged in willful misconduct in managing or otherwise conducting the business
and affairs of Clydesdale; or

         (d)      Noric Holdings I has been grossly negligent or has engaged in
willful misconduct in managing or otherwise conducting the business and affairs
of Noric (including in connection with Noric's role as the Palomino Member and
the Paso Fino Member); or

         (e)      Any of the Noric LP General Partner or the Noric LP Limited
Partner has been grossly negligent or has engaged in willful misconduct in
managing or otherwise conducting the business and affairs of Noric LP; or

         (f)      A Sponsor Subsidiary Member has been grossly negligent or has
been engaged in willful misconduct in managing or otherwise conducting the
business and affairs of a Sponsor Subsidiary; or

         (g)      Any Sponsor Subsidiary Member shall fail to make any capital
contribution as required by the terms of the relevant Sponsor Subsidiary Company
Agreement if such failure shall remain unremedied for five Business Days after
such contribution becomes due and payable; or

         (h)      Any Noric Member shall fail to make any Capital Contribution
as required by the terms of the Noric Company Agreement if such failure shall
remain unremedied for five Business Days after such contribution becomes due and
payable; or

         (i)      Any Noric LP Partner shall fail to make any Capital
Contribution as required by the terms of the Noric LP Partnership Agreement if
such failure shall remain unremedied for five Business Days after such
contribution becomes due and payable; or

         (j)      [Intentionally Omitted].

         (k)      The occurrence of any Event of Default under the Sponsor
Subsidiary Credit Agreement; or

         (l)      Noric Holdings IV shall fail to, or fail to cause, as the
Lusitano Member, Lusitano to, or fail to cause Lusitano to cause, as the
Lipizzan General Partner, Lipizzan to:

                  (i)      make any payment or capital contribution required to
         be made by Noric Holdings IV or Lusitano under the Lusitano Company
         Agreement or the

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                                       55

<PAGE>

         Lipizzan Partnership Agreement when due if such failure shall remain
         unremedied for five Business Days after such payment or contribution
         becomes due and payable under the Lusitano Company Agreement or the
         Lipizzan Partnership Agreement; or

                  (ii)     in the case of Lipizzan only, perform or observe any
         term, covenant or agreement contained in Section 3.7 or 9.1 of the
         Lipizzan Partnership Agreement and, in the case of Lusitano only, to
         perform or observe any term, covenant or agreement contained in Section
         8.1 of the Lusitano Company Agreement; or

                  (iii)    perform or observe any term, covenant or agreement
         contained in Section 7.1(i), 7.1(j), 7.2(a), 7.2(b), 7.2(c), 7.2(d)
         (other than 7.2(d)(iii) (but only with respect to the failure of Noric
         Holdings IV and Lipizzan to deposit into the Noric Holdings IV Cash
         Reserve an amount equal to the Disposition Value of the Relevant Assets
         from any Disposition described in Section 7.2(d)(iii) in an aggregate
         amount greater than an amount equal to the difference (but not less
         than zero) of (x) $5,000,000 minus (y) the aggregate amount of Net Cash
         Proceeds from any Disposition described in Section 5.02(d)(C)(4) of the
         Sponsor Subsidiary Credit Agreement that the Sponsor Subsidiaries have
         failed to deposit in the Sponsor Subsidiary Cash Reserve plus the
         aggregate amount of Net Cash Proceeds from any Disposition described in
        Section 5.05(a)(D) of the Sponsor Subsidiary Credit Agreement that
         Noric LP and Noric Holdings I have failed to deposit in the Noric
         Holdings I Cash Reserve, in excess of the then effective Adjusted
         Redetermination Threshold)), 7.2(e), 7.2(f), 7.2(i), 7.2(j), 7.3(a)
         (ii), 7.3(b) (but, in each case, subject to any provisions relating to
         the cure of any Notice Event referred to therein) of the Noric Holdings
         IV Company Agreement; or

                  (iv)     perform or observe any term, covenant or agreement
         contained in Section 7.2 (other than as set forth in paragraph (ii)
         above and other than Section 7.2(m)), 7.3(a)(iv) or 7.3(a)(v) of the
         Noric Holdings IV Company Agreement, if such failure shall remain
         unremedied for five Business Days after the occurrence thereof; or

                  (v)      to perform or observe in any material respect any
         other term, covenant or agreement contained in the Noric Holdings IV
         Company Agreement (including Section 7.2(m) of the Noric Holdings IV
         Company Agreement, but only to the extent the obligations referred to
         in Section 7.2(m) of the Noric Holdings IV Company Agreement are not
         covered more specifically in any other Section or clause of the Noric
         Holdings IV Company Agreement referred to in paragraph (ii) or (iii)
         above) on its part to be performed or observed if such failure shall
         remain unremedied for 30 days following notice thereof by Mustang if
         such failure is reasonably curable; or

El Paso Definitions Agreement

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<PAGE>

                  (vi)     Any of the Lipizzan General Partner or the Lipizzan
         Limited Partner has been grossly negligent or has engaged in willful
         misconduct in managing or otherwise conducting the business and affairs
         of Lipizzan; or

                  (vii)    Any Lipizzan Partner shall fail to make any Capital
         Contribution as required by the terms of the Lipizzan Partnership
         Agreement if such failure shall remain unremedied for five Business
         Days after such contribution becomes due and payable.

         "NOVATION AGREEMENT" means each agreement under which Noric Holdings I
or any other Subsidiary of El Paso assigns all of its right, title and interest
in and to, and delegates all of its obligations under, each E&P Participation
Agreement to Noric or Noric LP and each agreement under which Noric assigns all
of its rights, title and interest in and to, and delegates all of its
obligations under, each E&P Participation Agreement to Noric LP.

         "OBLIGATION" means, with respect to any Person, any obligation of such
Person of any kind, including, without limitation, any liability of such Person
on any claim, whether or not the right of any creditor to payment in respect of
such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured or unsecured, and
whether or not such claim is discharged, stayed or otherwise affected by any
proceeding. Without limiting the generality of the foregoing, the Obligations of
each Sponsor Subsidiary under the Sponsor Subsidiary Credit Documents include
the joint and several obligations to (a) pay principal, interest, costs,
expenses, fees, attorneys' fees and disbursements, indemnities and other amounts
payable under any Sponsor Subsidiary Credit Document and (b) reimburse any
amount in respect of any of the foregoing that Mustang or the Mustang Collateral
Agent, in its sole discretion, or the Sponsor Subsidiary Collateral Agent, at
the direction of Mustang or the Mustang Collateral Agent, may elect to pay or
advance on behalf of any Sponsor Subsidiary.

         "OIL AND GAS PROPERTIES" means the Hydrocarbon Interests; the
properties now or hereafter pooled or unitized with such Hydrocarbon Interests;
all presently existing or future unitization, pooling agreements and
declarations of pooled units and the units created thereby (including without
limitation all units created under orders, regulations and rules of any
Governmental Authority having jurisdiction) which may affect all or any portion
of such Hydrocarbon Interests; all operating agreements, contracts and other
agreements which relate to any of such Hydrocarbon Interests or the production,
sale, purchase, exchange or processing of hydrocarbons from or attributable to
any such Hydrocarbon Interests; and all hydrocarbons in and under and which may
be produced and saved or attributable to such Hydrocarbon Interests, the lands
covered thereby and all rents, issues, profits, proceeds, products, revenues and
other income from or attributable to such Hydrocarbon Interests.

         "OPERATING REPORT" means a periodic report, in the form attached as
Schedule 5.4(b) to the El Paso Agreement, on the business activity of the Energy
Investments and E&P Assets, delivered pursuant to Section 5.4(b)(i) or (ii) of
the El Paso Agreement.

         "OPERATIVE DOCUMENTS" means, collectively, the Definitions Agreement,
Clydesdale Partnership Agreement (but only for the period of 90 days following
the Fourth

El Paso Definitions Agreement

                                       57

<PAGE>

Restatement Date), the Lusitano Company Agreement, the Lipizzan Partnership
Agreement, the Noric Company Agreement, the Palomino Company Agreement, the Paso
Fino Company Agreement, the certificate of limited partnership of Clydesdale
(but only for a period of 90 days following the Fourth Restatement Date), the
Noric LP Partnership Agreement, the Mustang Company Agreement, the certificate
of formation of Lusitano, the certificate of partnership of Lipizzan, the
certificate of formation of Noric, the certificate of formation of Palomino, the
certificate of formation of Paso Fino, the certificate of limited partnership of
Noric LP, the Noric Holdings Company Agreement, each other Sponsor Subsidiary
Company Agreement, the bylaws of Appaloosa, the certificate of formation of
Noric Holdings, the certificate of formation of each other Sponsor Subsidiary,
the certificate of incorporation of Appaloosa, the Clydesdale Custody Agreement
(but only for the period of 90 days following the Fourth Restatement Date), the
Notice Agreement, each Sponsor Subsidiary Credit Document, each El Paso Demand
Note, each A-Loan Note, the El Paso Agreement, the Intercreditor Agreement, the
Redemption, Withdrawal and Consent Agreement, the El Paso Guaranty, each El Paso
Undertaking, each Liquidation Indemnity, each E&P Participation Agreement, each
Novation Agreement, each Production Payment Agreement, each El Paso Hydrocarbon
Sales Contract, the Sponsor Subsidiary Consent, the Administration Agreement,
the Engage Letter, this Agreement and each Sponsor Subsidiary Subordinated Note.

         "ORGANIZATIONAL DOCUMENTS" means, with respect to any Person, any
certificate of incorporation, charter, by-laws, memorandum of association,
articles of association, partnership agreement, limited liability company
agreement, certificate of limited partnership, certificate of formation,
certificate of trust, trust agreement or other agreement or instrument under
which such Person is formed or organized under Applicable Laws.

         "ORIGINAL ADVANCES" has the meaning set forth in Section 2.01(a) of the
Sponsor Subsidiary Credit Agreement.

         "ORIGINAL CLYDESDALE PARTNERSHIP AGREEMENT" means the partnership
agreement for Clydesdale, originally dated as of April 28, 2000 and amended and
restated as of May 9, 2000, December 15, 2000, June 29, 2002 and July 19, 2002
made by Appaloosa as general partner and Noric Holdings as limited partner.

         "ORIGINAL NORIC COMPANY AGREEMENT" means the company agreement of
Noric, dated as of April 28, 2000, made by Noric Holdings I.

         "ORIGINAL NORIC HOLDINGS I COMPANY AGREEMENT" means the company
agreement of Noric Holdings I, dated as of April 28, 2000, made by EPPC.

         "ORIGINAL NORIC HOLDINGS III COMPANY AGREEMENT" means the company
agreement of Noric Holdings III, dated as of April 28, 2000, made by El Paso
CNG.

         "ORIGINAL NORIC HOLDINGS IV COMPANY AGREEMENT" means the company
agreement of Noric Holdings IV, dated as of July 19, 2002, made by El Paso Oil &
Gas.

         "ORIGINAL NORIC INVESTMENTS I COMPANY AGREEMENT" means the company
agreement of Noric Investments I, dated as of April 16, 2003, made by El Paso
Production Investments and El Paso Production Oil & Gas.

El Paso Definitions Agreement

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<PAGE>

         "ORIGINAL NORIC INVESTMENTS III COMPANY AGREEMENT" means the company
agreement of Noric Investments III, dated as of April 16, 2003, made by El Paso
CNG.

         "ORIGINAL NORIC INVESTMENTS IV COMPANY AGREEMENT" means the company
agreement of Noric Investments IV, dated as of April 16, 2003, made by El Paso
Oil & Gas Resources and El Paso Production Oil & Gas USA.

         "ORIGINAL OUTSTANDING ADVANCES" has the meaning set forth in
Preliminary Statement 1 of the Sponsor Subsidiary Credit Agreement.

         "ORIGINAL SPONSOR SUBSIDIARY CREDIT AGREEMENT" means the Third Amended
and Restated Sponsor Subsidiary Credit Agreement, originally dated as of May 9,
2000 and amended and restated as of December 15, 2000, June 29, 2001 and July
19, 2002, among Clydesdale, as lender, Noric Holdings as borrower, the other
Sponsor Subsidiaries described therein as joint and several obligors, and the
Sponsor Subsidiary Collateral Agent, as collateral agent for Clydesdale.

         "ORIGINAL SPONSOR SUBSIDIARY SECURITY AGREEMENT" means the Amended and
Restated Security Agreement, originally dated as of May 9, 2000 and amended and
restated as of June 29, 2001 and July 19 2002, among the Sponsor Subsidiaries,
Lusitano and the Sponsor Subsidiary Collateral Agent, as supplemented from time
to time by each Sponsor Subsidiary Security Agreement Supplement and each
Sponsor Subsidiary Accession Agreement.

         "OTHER TAXES" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any of the Operative Documents or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement.

         "OUTSIDE DATE" has the meaning set forth in Section 2.09(b)(vi) of the
Sponsor Subsidiary Credit Agreement.

         "PALOMINO" means Palomino, L.L.C., a Delaware limited liability
company.

         "PALOMINO COMPANY AGREEMENT" means the company agreement of Palomino,
originally dated as of December 15, 2000 by Noric, as amended by the first
amendment thereto dated as of June 29, 2001 and as further amended and restated
as of April 16, 2003.

         "PALOMINO EXPENSES" means, without duplication, all interests, costs,
expenses, indemnities, fees (including reasonable attorneys' and accountants'
fees), Disposition Costs, Taxes and other payment obligations incurred or owing
by Palomino (excluding any liquidating distributions).

         "PALOMINO MEMBER" means any Person that is a holder of a Palomino
Membership Interest.

         "PALOMINO MEMBERSHIP INTEREST " means any interest in Palomino pursuant
to the Palomino Company Agreement.

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<PAGE>

         "PALOMINO LIQUIDATOR" has the meaning set forth in Section 10.4 of the
Palomino Company Agreement.

         "PALOMINO PROPERTY" means at any time all property owned at such time
by Palomino, and shall include both tangible and intangible property.

         "PASO FINO" means Paso Fino, L.L.C., a Delaware limited liability
company.

         "PASO FINO COMPANY AGREEMENT" means the company agreement of Paso Fino,
originally dated as of December 15, 2000 by Noric, as amended by the first
amendment thereto dated as of June 29, 2001 and as further amended and restated
as of April 16, 2003.

         "PASO FINO EXPENSES" means, without duplication, all interests, costs,
expenses, indemnities, fees (including reasonable attorneys' and accountants'
fees), Disposition Costs, Taxes and other payment obligations incurred or owing
by Paso Fino (excluding any liquidating distributions).

         "PASO FINO MEMBER" means any Person that is a holder of a Paso Fino
Membership Interest.

         "PASO FINO MEMBERSHIP INTEREST " means any interest in Paso Fino
pursuant to the Paso Fino Company Agreement.

         "PASO FINO LIQUIDATOR" has the meaning set forth in Section 10.4 of the
Paso Fino Company Agreement.

         "PASO FINO PROPERTY" means at any time all property owned at such time
by Paso Fino, and shall include both tangible and intangible property.

         "PAYMENT DATE" means the fifth Business Day of each February, May,
August and November in each year, commencing August 7, 2000 or, if notification
of any amount required to determine the Funding Rate is not timely made, the
third Business Day after such notification is made; provided that, after the
Maturity Date or the Liquidation Start Date, as applicable, the Payment Date
shall be each day selected by Mustang in its sole discretion, but subject to the
rights of the Mustang Collateral Agent in the Mustang Credit and Security
Agreement.

         "PAYMENT RESTRICTION" means, with respect to any Transaction Asset, any
restriction or limitation on the rights of the holder of any Transaction Asset
to receive, or, in the case of an Energy Investment, the ability of any related
Intermediate Holder or Underlying Business to pay, any dividend, distribution,
return of capital, income, interest, principal or other payment, in respect of
such Transaction Asset.

         "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

         "PERMITTED ASSETS" means:

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<PAGE>

         (a)      with respect to Clydesdale, (i) the Sponsor Subsidiary
    Subordinated Debt, Clydesdale's rights under the Sponsor Subsidiary
    Subordinated Notes and the other Operative Documents and all proceeds
    thereof of whatever kind, (ii) the Clydesdale Operating Account and (iii)
    Permitted Investments;

         (b)      with respect to Noric, (i) Noric's rights under the Operative
    Documents and all proceeds thereof of whatever kind, (ii) Permitted
    Investments, (iii) the Noric LP Limited Partnership Interest, (iv) the
    Palomino Membership Interest, (v) the Paso Fino Membership Interest, (vi)
    E&P Assets described in clause (i) of the definition thereof and (vii)
    Noric's rights in respect of the Noric Holdings I Cash Reserve and in
    respect of the intercompany investments referred to in Section 5.02(b)(vi)
    of the Sponsor Subsidiary Credit Agreement;

         (c)      with respect to Noric Holdings, (i) a Clydesdale Class A
    Limited Partnership Interest, (ii) Transaction Assets other than E&P Assets
    described in clause (ii) of the definition thereof, (iii) Permitted
    Investments, (iv) the Sponsor Subsidiary Cash Reserve, (v) A-Loans and (vi)
    the Sponsor Subsidiary Operating Account;

         (d)      with respect to Noric Holdings I, (i) the Noric Class A
    Membership Interest, (ii) the Noric Class B Membership Interest, (iii)
    Transaction Assets other than E&P Assets described in clause (ii) of the
    definition thereof, (v) Permitted Investments, (vi) the Noric Holdings I
    Cash Reserve, (vii) the Sponsor Subsidiary Cash Reserve, (viii) A-Loans and
    (ix) the Sponsor Subsidiary Operating Account;

         (e)      with respect to Noric Holdings III, (i) an Energy Investment,
    (ii) Permitted Investments, (iii) A-Loans, (iv) the Noric Holdings III
    Deposit Account, (v) the Sponsor Subsidiary Cash Reserve and (vi) the
    Sponsor Subsidiary Operating Account;

         (f)      with respect to Noric Holdings IV, (i) the Lusitano Membership
    Interest, (ii) the Lipizzan Limited Partnership Interest, (iii) Transaction
    Assets (it being understood that the E&P Assets described in clause (ii) of
    the definition thereof, shall be Permitted Assets with respect to Noric
    Holdings IV solely for purposes of transferring such E&P Assets to
    Lipizzan), (v) Permitted Investments, (vi) the Noric Holdings IV Cash
    Reserve, (vii) A-Loans, (viii) the Sponsor Subsidiary Cash Reserve and (ix)
    the Sponsor Subsidiary Operating Account;

         (g)      with respect to any other Sponsor Subsidiary, (i) Transaction
    Assets other than E&P Assets described in clause (ii) of the definition
    thereof, (iii) Permitted Investments, (iv) A-Loans, (v) the Sponsor
    Subsidiary Cash Reserve and (vi) the Sponsor Subsidiary Operating Account;

         (h)      with respect to Palomino, (i) Palomino's rights under the
    Operative Documents and all the proceeds thereof of whatever kind and (ii)
    the Noric LP General Partnership Interest;

         (i)      with respect to Paso Fino, (i) Paso Fino's rights under the
    Operative Documents and all the proceeds thereof of whatever kind and (ii)
    the Noric LP Limited Partnership Interest;

El Paso Definitions Agreement

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<PAGE>

         (j)      with respect to Noric LP, (i) Noric LP's rights under the
    Operative Documents and all the proceeds thereof of whatever kind, (ii)
    Permitted Investments, (iii) E&P Assets other E&P Assets described in clause
    (ii) of the definition thereof and (v) Noric LP's rights in respect of the
    Noric Holdings I Cash Reserve and in respect of the intercompany investments
    referred to in Section 5.02(b)(vi) of the Sponsor Subsidiary Credit
    Agreement;

         (k)      with respect to Lusitano, (i) Lusitano's rights under the
    Operative Documents and all proceeds thereof of whatever kind, (ii) the
    Lipizzan General Partnership Interest and (iii) Lusitano's rights in respect
    of the Noric Holdings IV Cash Reserve and in respect of the intercompany
    investments referred to in Section 5.02(b)(vi) of the Sponsor Subsidiary
    Credit Agreement; and

         (l)      with respect to Lipizzan, (i) Lipizzan's rights under the
    Operative Documents and all the proceeds thereof of whatever kind, (ii) E&P
    Assets described in clause (ii) of the definition thereof and (iv)
    Lipizzan's rights in respect of the Noric Holdings IV Cash Reserve and in
    respect of the intercompany investments referred to in Section 5.02(b)(vi)
    of the Sponsor Subsidiary Credit Agreement.

         "PERMITTED EXECUTION ACTIONS" has the meaning set forth in the
definition of the term "El Paso Event."

         "PERMITTED INVESTMENTS" means:

         (a)      with respect to Clydesdale, Cash Equivalents;

         (b)      with respect to any Sponsor Subsidiary, Cash Equivalents and
    El Paso Demand Loans; and

         (c)      with respect to Noric and Noric LP, El Paso Demand Loans.

         "PERMITTED JURISDICTION" means Australia, Austria, Belgium, Canada,
Denmark, Finland, France, Germany, Ireland, Italy, Japan, The Netherlands,
Norway, Spain, Sweden, Switzerland, the United States and the United Kingdom.

         "PERMITTED LIENS" means (i) bankers' rights of setoff for uncollected
items and routine fees and expenses arising in the ordinary course of business,
(ii) Liens created by or pursuant to, or expressly permitted under, any
Operative Document, (iii) Liens for taxes and other governmental charges and
assessments (and other Liens imposed by Applicable Law) not yet delinquent or
being contested in good faith and by proper proceedings and as to which
appropriate reserves (in the good faith judgment of the relevant Person) are
being maintained, unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors, (iv) restrictions
on transfers of securities or voting under Applicable Laws and agreements, (v)
with respect to Clydesdale, restrictions on the transfer of its assets under any
Operative Document, (vi) with respect to Noric Holdings, restrictions on the
transfer of its Clydesdale Class A Limited Partnership Interest, (vii) with
respect to Noric Holdings I, restrictions on the transfer of its Clydesdale
Class A Limited Partnership Interest, Noric Class A Membership Interest or Noric
Class B Membership Interest, (viii) with respect to Noric,

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restrictions on the transfer of its Palomino Membership Interest or Paso Fino
Membership Interest or its assets under the Operative Documents, (ix) with
respect to Palomino, restrictions on the transfer of its Noric LP General
Partnership Interest, (x) with respect to Paso Fino, restrictions on the
transfer of its Noric LP Limited Partnership Interest, (xi) with respect to
Noric Holdings IV, restrictions on the transfer of the Lusitano Membership
Interest and the Lipizzan Limited Partnership Interest, (xii) with respect to
Lusitano, restrictions on the transfer of the Lipizzan General Partnership
Interest, (xiii) with respect to any Sponsor Subsidiary, Lusitano, Lipizzan,
Noric, Palomino, Paso Fino or Noric LP, restrictions on the transfer of its
assets under the Operative Documents, (xiv) restrictions on the transfer or
assignment of rights under the terms of the Assigned Agreements and (xv) rights
of first refusal, rights of first negotiation or first offer, tag-along or
co-sale rights, and other similar contractual restrictions upon the transfer of
any Energy Investment (or any portion thereof).

         "PERMITTED RELEVANT LIENS" means:

         (a)      inchoate Liens and charges imposed by law and incidental to
    construction, maintenance, development or operation of properties, or the
    operation of business, in the ordinary course of business if payment of the
    obligation secured thereby is not yet overdue or if the validity or amount
    of which is being contested in good faith by El Paso or any of its
    Subsidiaries;

         (b)      Liens for Taxes, assessments, obligations under workers'
    compensation or other social security legislation or other requirements,
    charges or levies of any Governmental Authority, in each case not yet
    overdue, or which are being contested in good faith by appropriate
    proceedings;

         (c)      Liens reserved in any oil, gas or other mineral lease entered
    into in the ordinary course of business for rent, royalty or delay rental
    under such lease and for compliance with the terms of such lease;

         (d)      easements, servitudes, rights-of-way and other rights,
    exceptions, reservations, conditions, limitations, covenants and other
    restrictions that do not materially interfere with the operation, value or
    use of the properties affected thereby;

         (e)      conventional provisions contained in any contracts or
    agreements affecting properties under which El Paso or any of its
    Subsidiaries is required immediately before the expiration, termination or
    abandonment of a particular property to reassign to such Person's
    predecessor in title all or a portion of such Person's rights, titles and
    interests in and to all or portion of the such property;

         (f)      pledges and deposits to secure the performance of bids,
    tenders, trade or government contracts (other than for repayment of borrowed
    money), leases, licenses, statutory obligations, surety bonds, performance
    bonds, completion bonds and other obligations of a like kind incurred in the
    ordinary course of business;

         (g)      any Lien reserved in a grant or conveyance in the nature of a
    farm-out or conditional assignment to El Paso or any of its Subsidiaries
    entered into in the ordinary

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    course of business on reasonable terms to secure undertakings of El Paso or
    any such Subsidiary in such grant or conveyance;

         (h)      any Lien consisting of (i) statutory landlord's liens under
    leases to which El Paso or any of its Subsidiaries is a party or other Liens
    on leased property reserved in leases thereof for rent or for compliance
    with the terms of such leases, (ii) rights reserved to or vested in any
    municipality or governmental, statutory or public authority to control or
    regulate any property of El Paso or any of its Subsidiaries, or to use such
    property in any manner which does not materially impair the use of such
    property for the purposes for which it is held by El Paso or any such
    Subsidiary, (iii) obligations or duties to any municipality or public
    authority with respect to any franchise, grant, license, lease or permit and
    the rights reserved or vested in any governmental authority or public
    utility to terminate any such franchise, grant, license, lease or permit or
    to condemn or expropriate any property, and (iv) zoning laws and ordinances
    and municipal regulations;

         (i)      the creation of interests in property of the character
    commonly referred to as a "royalty interest" or "overriding royalty
    interest", production payments, farmouts, leases, subleases, rights of way
    and other easements, participations, joint venture, joint operating,
    unitization, pooling and communitization agreements, or other similar
    transactions in the ordinary course of business; and

         (j)      any judgment lien in respect of any judgment or order that
    does not constitute an El Paso Event under clause (h) or (p) of the
    definition of the term "El Paso Event".

         "PERMITTED TRANSFER", as used in the Clydesdale Partnership Agreement,
the Lusitano Company Agreement, the Lipizzan Partnership Agreement, the Noric
Company Agreement, the Palomino Company Agreement, the Paso Fino Company
Agreement and the Noric LP Partnership Agreement means any Transfer of any
Clydesdale Partnership Interest, any Lusitano Membership Interest, any Lipizzan
Partnership Interest, any Noric Membership Interest, any Palomino Membership
Interest, any Paso Fino Membership Interest or any Noric LP Partnership Interest
as applicable, permitted by Section 10 of the Clydesdale Partnership Agreement,
Section 8.1 of the Lusitano Company Agreement, Section 9.2 of the Lipizzan
Partnership Agreement, Section 10 of the Noric Company Agreement, Section 8.1 of
the Palomino Company Agreement, Section 8.1 of the Paso Fino Company Agreement
or Section 9.2 of the Noric LP Partnership Agreement, including without
limitation the Transfers of Interests.

         "PERMITTED TRANSFEREE", as used in the Clydesdale Partnership
Agreement, the Lusitano Company Agreement, the Lipizzan Partnership Agreement,
the Noric Company Agreement, the Palomino Company Agreement, the Paso Fino
Company Agreement and the Noric LP Partnership Agreement means any Person to
which a Clydesdale Partnership Interest, a Lusitano Membership Interest, a
Lipizzan Partnership Interest, a Noric Membership Interest, a Palomino
Membership Interest, a Paso Fino Membership Interest or a Noric LP Partnership
Interest, as applicable, is Transferred pursuant to a Permitted Transfer.

El Paso Definitions Agreement

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         "PERSON" means an individual, a Business Entity, or a country or any
political subdivision thereof or any agency or instrumentality of such country
or subdivision.

         "PIPELINE COMPANY BORROWER" means each of EPNGC, TGPC and ANR.

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

         "PLEDGED DEBT" has the meaning set forth in the Sponsor Subsidiary
Security Agreement.

         "PLEDGED INTERESTS" has the meaning set forth in the Sponsor Subsidiary
Security Agreement.

         "PLEDGED SHARES" has the meaning set forth in the Sponsor Subsidiary
Security Agreement.

         "PRE-APPROVED ENERGY INVESTMENT" means 100% of the Equity Interests in
Colorado Interstate Gas Company, a Delaware corporation.

         "PRINCIPAL PROPERTY" of a Controlled Business means all property of
such Controlled Business other than Non-Principal Property.

         "PROCEEDS ACCOUNT" means a deposit or securities account to be
established by each Underlying Business with Mellon Bank or any other financial
institution reasonably acceptable to Mustang and the Mustang Collateral Agent,
with the specific account information to be provided by El Paso to Mustang and
the Mustang Collateral Agent immediately thereafter and shall, in any event,
include the Proceeds Account of Colorado Interstate Gas Company existing as of
the Fourth Restatement Date, the account information in respect of which has
been provided to Mustang and the Mustang Collateral Agent.

         "PRODUCTION AND DELIVERY AGREEMENT" means (i) the Production and
Delivery Agreement, dated as of July 1, 2002, between El Paso Production Oil &
Gas USA and Lipizzan, as same may be amended, supplemented, restated or
otherwise modified from time to time and (ii) the Production and Delivery
Agreement, dated as of July 5, 2002, between El Paso Oil & Gas Resources and
Lipizzan, as same may be amended, supplemented, restated or otherwise modified
from time to time.

         "PRODUCTION PAYMENT" means each "Production Payment" under, and as
defined in, each Production Payment Conveyance.

         "PRODUCTION PAYMENT AGREEMENTS" means each Production Payment
Conveyance and each Production and Delivery Agreement.

         "PRODUCTION PAYMENT CONVEYANCE" means (i) the Conveyance of Production
Payment, dated as of July 1, 2002, from El Paso Production Oil & Gas USA to
Lipizzan, as same may be amended, supplemented, restated or otherwise modified
from time to time and (ii) the Conveyance of Production Payment, dated as of
July 5, 2002, from El Paso Oil & Gas Resources

El Paso Definitions Agreement

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<PAGE>

to Lipizzan, as same may be amended, supplemented, restated or otherwise
modified from time to time.

         "PRODUCTION PAYMENT HYDROCARBONS" means the "Production Payment
Hydrocarbons" under, and as defined in, each Production Payment Conveyance.

         "PRODUCTION PAYMENT INTERESTS" means each Production Payment and all
other rights and interests of Lipizzan under the Production Payment Agreements.

         "PROFITS" and "LOSSES" in relation to Clydesdale means, for each Fiscal
Year, an amount equal to Clydesdale's taxable income or loss for such Fiscal
Year for Federal income tax purposes, determined in accordance with Code Section
703(a) (for this purpose, all items of income, gain, loss, or deduction required
to be stated separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:

         (a)      Any income of Clydesdale that is exempt from Federal income
    tax and not otherwise taken into account in computing Profits or Losses
    pursuant to this definition of "PROFITS" and "LOSSES" shall be added to such
    taxable income or loss;

         (b)      Any expenditures of Clydesdale described in Code Section
    705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant
    to Regulations Section 1.704-1(b)(2)(iv)(g) and not otherwise taken into
    account in computing Profits or Losses pursuant to this definition of
    "PROFITS" and "LOSSES" shall be subtracted from such taxable income or loss;

         (c)      In the event the Gross Asset Value of any Clydesdale Property
    is adjusted pursuant to clause (a) of the definition of "GROSS ASSET VALUE",
    the amount of such adjustment shall be taken into account as gain or loss
    from the Disposition of such asset for purposes of computing Profits or
    Losses;

         (d)      Gain or loss resulting from any Disposition of Clydesdale
    Property with respect to which gain or loss is recognized for Federal income
    tax purposes shall be computed by reference to the Gross Asset Value of the
    property Disposed of, notwithstanding that the Adjusted Tax Basis of such
    property differs from its Gross Asset Value;

         (e)      All Taxes paid or accrued by Clydesdale shall be treated as
    deductions in computing Profits and Losses; and

         (f)      Any items that are specially allocated pursuant to Section 6.4
    of the Clydesdale Partnership Agreement shall not be taken into account in
    computing Profits or Losses.

The amounts of the items of income, gain, loss or deduction available to be
specially allocated pursuant to Section 6.4 of the Clydesdale Partnership
Agreement shall be determined by applying rules analogous to those set forth in
clauses (a) through (e) above.

El Paso Definitions Agreement

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<PAGE>

         "PROJECT FINANCING" means any Relevant Indebtedness (a) incurred to
finance or refinance the acquisition, improvement, installation, design,
engineering, construction, development, completion, maintenance or operation of,
or otherwise in respect of, all or any portion of any project, or any asset
related thereto (including, with respect to transactions in connection with the
power and gas contract restructuring business of El Paso) and any Guaranty with
respect thereto, other than any portion of such Indebtedness or Guaranty
permitting or providing for recourse against El Paso or any of its Subsidiaries,
other than (i) recourse to the Equity Interests in, Indebtedness or other
obligations of, or assets of, one or more Project Financing Subsidiaries, and
(ii) such recourse as exists under any Contingent Guaranty or (b) of any Project
Financing Subsidiary, or any Guaranty with respect thereto, that is secured
solely by, or recourse for which is limited solely to, the Equity Interests in,
Relevant Indebtedness or other obligations of, or assets of, one or more Project
Financing Subsidiaries.

         "PROJECT FINANCING SUBSIDIARY" means any Subsidiary of El Paso whose
principal purpose is to incur Project Financing, or to become a direct or
indirect partner, member or other equity participant or owner in a Business
Entity so created, and substantially all the assets of which Subsidiary or
Business Entity are limited to (a) those assets being financed (or to be
financed), or the operation of which is being financed (or to be financed), in
whole or in part by a Project Financing, (b) power contracts, gas contracts,
administrative or other related service agreements and swap agreements related
to gas or power, or (c) Equity Interests in, or Relevant Indebtedness or other
obligations of, one or more other such Subsidiaries or Business Entities or to
Relevant Indebtedness or other obligations of El Paso or its Subsidiaries or
other Persons. For purposes of this definition, "swap agreement" means any
agreement with respect to any swap, forward future or derivative transaction or
option or similar agreement involving, or settled by reference to, one or more
rates, currencies, commodities, equity or debt instruments or securities, or
economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these
transactions.

         "PROPERTY" means any real property and improvements owned, leased,
used, operated or occupied by El Paso, any of its Subsidiaries or any El Paso
Party.

         "PROVED DEVELOPED RESERVES" means, at any time, Proved Reserves that
can be expected to be recovered through existing wells with existing equipment
and operating methods and are classified as proved developed reserves in the
most recent Reserve Report pertaining thereto.

         "PROVED PRODUCING RESERVES" means Proved Developed Reserves that are
recoverable from existing wells with current operating methods and expenses and
are producing.

         "PROVED RESERVES" means, at any time, recoverable hydrocarbon reserves
that have been proved to a high degree of certainty by analysis of the producing
history of a reservoir and/or by volumetric analysis of adequate geological and
engineering data and are classified as proved reserves in the most recent
Reserve Report.

         "PUBLICLY TRADED INVESTMENT" means an Energy Investment which is
publicly traded and which is not an Investment in a Subsidiary of a Sponsor
Subsidiary.

El Paso Definitions Agreement

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<PAGE>

                  "PV-10 VALUE" means, with respect to the value of any Subject
Interests, Production Payment, Production Payment Interests or E&P Participation
Property, the value of such Subject Interests, Production Payment, Production
Payment Interests or E&P Participation Property determined using the
standardized methodology prescribed by the Securities and Exchange Commission
for the calculation of the discounted present value of the Proved Reserves for
the Securities and Exchange Commission reporting purposes (commonly known as the
"PV-10") attributable to such Subject Interests, Production Payment, Production
Payment Interests or E&P Participation Property.

                  "QUALIFYING LENDER" has the meaning set forth in the
definition of the term "Cash Equivalents."

                  "REAL PROPERTY" means land and/or any building and any
fixtures annexed to any of the foregoing.

                  "RECEIVABLES PURCHASE AND SALE AGREEMENT" means each or any
one of (a) the Receivables Purchase and Sale Agreement dated as of January 14,
1992 among EPNGC, CIESCO L.P., a New York limited partnership, Corporate Asset
Funding Company, a Delaware corporation and Citicorp North America, Inc., as
agent, (b) the Amended and Restated Receivables Sale Agreement dated as of
December 31, 1996 among El Paso Energy Credit Corporation, Asset Securitization
Cooperative Corporation and Canadian Imperial Bank of Commerce, as
administrative agent, (c) the agreement(s) governing the receivables
securitization facility proposed to be entered into in 2003 among El Paso Energy
Finance I Company, LLC, El Paso Finance Company, Inc., TGPC, EPNGC, Southern
Natural Gas Company, El Paso and General Electric Capital Corporation, and (d)
the agreement(s) governing the receivables securitization facility proposed to
be entered into in 2003 among El Paso, El Paso Energy Finance II Company, El
Paso Merchant Energy, L.P., and The CIT Group/Business Credit, Inc., as any such
agreement or facility may be amended, supplemented, restated or otherwise
modified from time to time, provided that no such amendment, supplement,
restatement or modification shall change the scope of such agreement or facility
from that of a receivables securitization transaction.

                  "REDEMPTION, WITHDRAWAL AND CONSENT AGREEMENT" means the
Redemption, Withdrawal and Consent Agreement dated as of April 16, 2003 (as
amended, supplemented or otherwise modified from time to time), among Mustang,
Clydesdale, Appaloosa, the Sponsor Subsidiaries, Citicorp North America, Inc.
and the other parties party thereto.

                  "REDETERMINATION NOTICE" has the meaning set forth in Section
2.09(c) of the Sponsor Subsidiary Credit Agreement.

                  "REDETERMINATION THRESHOLD" has the meaning set forth in
Section 2.09(b)(vii) of the Sponsor Subsidiary Credit Agreement.

                  "REFINANCED CONTROLLED BUSINESS DEBT" has the meaning set
forth in Section 5.09(b)(xiii) of the Sponsor Subsidiary Credit Agreement.

                  "REGULATIONS" means the income tax regulations, including
temporary regulations, promulgated under the Code.

El Paso Definitions Agreement

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<PAGE>

                  "RELATED COMPANIES LIQUIDATING EVENT" means, with respect to
Lusitano, Lipizzan, Appaloosa, Noric, Palomino, Paso Fino and Noric LP, the day,
on or after the occurrence of a Sponsor Subsidiary Termination Event, specified
in written notice by Mustang or the Mustang Collateral Agent to any of the
foregoing Persons as the day of commencement of the Related Companies
Liquidation Event in respect of such Person.

                  "RELATED PERSONS" means, with respect to any Indemnified
Person, each Affiliate of such Indemnified Person and the respective officers,
directors, employees, agents and advisers of such Indemnified Person or any of
its Affiliates.

                  "RELEVANT ASSETS" has the meaning set forth in Section 2.09(e)
of the Sponsor Subsidiary Credit Agreement.

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

                  "REPRESENTATIVES" as used in the El Paso Agreement, has the
meaning set forth in Section 2.16 of the El Paso Agreement.

                  "REQUIRED CLYDESDALE PARTNERS" means all of the Clydesdale
Partners (excluding the relevant Clydesdale Partner Transferring its Clydesdale
Partnership Interest (or a portion thereof) pursuant to the terms of Section 10
of the Clydesdale Partnership Agreement).

                  "REQUIRED NORIC MEMBERS" means all Noric Members (excluding
the relevant Noric Member Transferring its Noric Membership Interest (or a
portion thereof) pursuant to the terms of Section 10 of the Noric Company
Agreement).

                  "RESERVE REPORT" means each report pertaining to the E&P
Participation Properties and each Production Payment that is delivered by Noric
Holdings to the Calculation Agent under the terms of the Sponsor Subsidiary
Credit Agreement, and such Reserve Report shall:

                  (a)      be prepared by (x) a certified independent petroleum
         engineer acceptable to the Calculation Agent, Noric Holdings and
         Mustang in respect of a Reserve Report furnished under Section 2.09(b)
         or Section 2.09(e) of the Sponsor Subsidiary Credit Agreement and (y)
         Noric Holdings in respect of a Reserve Report furnished under Section
         2.09(e) of the Sponsor Subsidiary Credit Agreement;

                  (b)      separately set forth the Proved Reserves attributable
         to the E&P Participation Properties and to the Subject Interests
         burdened by each Production Payment, together with a projection of the
         rate of production and future net income, taxes, operating expenses and
         capital expenditures with respect thereto as of the date thereof, based
         on pricing and escalation assumptions and discount factors acceptable
         to the Calculation Agent and Mustang, a separate calculation of the
         PV-10 Value of the E&P Participation Properties, the Subject Interests
         burdened by each Production Payment

El Paso Definitions Agreement

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<PAGE>

         and the Production Payments and such other information as Mustang may
         reasonably request; and

                  (c)      otherwise be in form and substance reasonably
         satisfactory to the Calculation Agent and Mustang.

                  "RESERVE REPORT DATE" means (a) December 31 of the preceding
calendar year, if a Reserve Report is delivered pursuant to Section 2.09(b)(i)
of the Sponsor Subsidiary Credit Agreement or (b) the date of delivery of the
Redetermination Notice, in all other cases under the Sponsor Subsidiary Credit
Agreement.

                  "RESPONSIBLE OFFICER" means, with respect to (a) El Paso, the
Chief Financial Officer, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of El Paso; and
(b) the trustee of a trust and any other Person, the President, any Vice
President, the Treasurer, the Controller, any Assistant Treasurer, or the
Secretary of such Person or of a managing member, manager or general partner of
such Person, in each case of clauses (a) and (b) responsible for the
administration of, or monitoring compliance with, the Sponsor Subsidiary Credit
Agreement or any other Operative Document.

                  "RESTRICTED SUBSIDIARY" has the meaning set forth in the El
Paso New Revolving Facility.

                  "REVISED ENERGY INVESTMENT LOAN VALUE" has the meaning set
forth in 2.11 of the Sponsor Subsidiary Credit Agreement.

                  "RIGHTS RESTRICTION" means, with respect to any Transaction
Asset, any material restriction or material limitation on the rights of the
holder of such Transaction Asset (other than any Payment Restriction or Transfer
Restriction).

                  "S&P" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. and any successor rating agency.

                  "SALES AGENT" as used in:

                  (a)      the Clydesdale Partnership Agreement, means any
         Person agreed to by the Clydesdale General Partner acting as agent of
         the Clydesdale Liquidator engaged to dispose of the Clydesdale Property
         pursuant to an agreement entered into by the Clydesdale Liquidator on
         behalf of Clydesdale with such Person upon terms (including
         indemnities) customary in the market at the time such Sales Agent is
         engaged for the transactions contemplated by such engagement;

                  (b)      the Lusitano Company Agreement, the Lipizzan
         Partnership Agreement, the Noric Company Agreement, the Palomino
         Company Agreement, the Paso Fino Company Agreement or the Noric LP
         Partnership Agreement, means any Person agreed to by Clydesdale acting
         as agent of the Lusitano Liquidator, the Lipizzan Liquidator, the Noric
         Liquidator, the Palomino Liquidator, the Paso Fino Liquidator or the
         Noric LP Liquidator, as the case may be, engaged to dispose of the
         Lusitano Property, Lipizzan Property, the Noric Property, the Palomino
         Property, the Paso Fino Property or the Noric

El Paso Definitions Agreement

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<PAGE>

         LP Property, as the case may be, pursuant to an agreement entered into
         by the Lusitano Liquidator, the Lipizzan Liquidator, the Noric
         Liquidator, the Palomino Liquidator, the Paso Fino Liquidator or the
         Noric LP Liquidator, as the case may be, on behalf of Lusitano,
         Lipizzan, Noric, Palomino, Paso Fino or Noric LP, as the case may be,
         with such Person upon terms (including indemnities) customary in the
         market at the time such Sales Agent is engaged for the transactions
         contemplated by such engagement; and

                  (c)      any Sponsor Subsidiary Company Agreement, has the
         meaning set forth therein.

                  "SCHEDULED QUANTITIES" has the meaning set forth in each
Production Payment Conveyance.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.

                  "SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended from time to time.

                  "SECURITY AND INTERCREDITOR AGREEMENT" means the Security and
Intercreditor Agreement dated as of April 16, 2003, among El Paso, the Pipeline
Company Borrowers party thereto, the Grantors party thereto, JPMorgan Chase
Bank, as Credit Agreement Administrative Agent, Collateral Agent, Intercreditor
Agent and Depository Bank, the 3-Year Facility Agent and each Representative
Agent party thereto (each as defined therein), as the same may be amended,
supplemented and modified from time to time.

                  "SHETLAND" means Shetland Holdings Company, a Delaware
corporation.

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

                  "SONAT" means Sonat Inc., a Delaware corporation (which
merged into El Paso on October 25, 1999, with El Paso as the surviving entity).

                  "SPONSOR SUBSIDIARY" means (a) Noric Holdings, (b) Noric
Holdings I, (c) Noric Holdings III, (d) Noric Holdings IV and (e) each
Additional Sponsor Subsidiary.

                  "SPONSOR SUBSIDIARY ACCESSION AGREEMENT" means an accession
agreement in the form of Exhibit 3 to the Acquisition/Accession Procedures
Schedule.

                  "SPONSOR SUBSIDIARY CASH RESERVE" has the meaning set forth in
Preliminary Statement D of the Sponsor Subsidiary Security Agreement.

                  "SPONSOR SUBSIDIARY COLLATERAL AGENT" means Wilmington Trust
Company, a Delaware banking corporation, in its capacity as collateral agent for
Clydesdale.

El Paso Definitions Agreement

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<PAGE>

                  "SPONSOR SUBSIDIARY COLLATERAL AGENT AGREEMENT" means the
Sponsor Subsidiary Collateral Agent Agreement, dated as of May 9, 2000, and as
further amended and restated as of April 16, 2003 between Noric Holdings (in its
own capacity and on behalf of each other Sponsor Subsidiary), Mustang and the
Sponsor Subsidiary Collateral Agent.

                  "SPONSOR SUBSIDIARY COLLATERAL AGENT FEE LETTER" means the
letter, dated as of May 9, 2000, from the Sponsor Subsidiary Collateral Agent to
Noric Holdings setting out details of the fee payable under Section 8.04 of the
Sponsor Subsidiary Credit Agreement.

                  "SPONSOR SUBSIDIARY COMPANY AGREEMENT" means any of (a) the
Noric Holdings Company Agreement and (b) the limited liability company agreement
for each other Sponsor Subsidiary, in form and substance satisfactory to
Mustang.

                  "SPONSOR SUBSIDIARY CONSENT" means each letter dated as of
April 16, 2003 from each Sponsor Subsidiary to Mustang.

                  "SPONSOR SUBSIDIARY CREDIT AGREEMENT" means the Fourth Amended
and Restated Sponsor Subsidiary Credit Agreement, originally dated as of May 9,
2000 and amended and restated as of December 15, 2000, June 29, 2001, July 19,
2002 and April 16, 2003, among Clydesdale, as Subordinated Note Holder, Mustang,
as lender, Noric Holdings as borrower, the other Sponsor Subsidiaries described
therein as joint and several obligors, the Sponsor Subsidiary Collateral Agent,
as collateral agent for Mustang and as the Mustang Collateral Agent.

                  "SPONSOR SUBSIDIARY CREDIT DOCUMENTS" means the Sponsor
Subsidiary Credit Agreement, the Sponsor Subsidiary Security Agreement, each
Sponsor Subsidiary Accession Agreement, each Sponsor Subsidiary Security
Agreement Supplement, the Sponsor Subsidiary Collateral Agent Agreement, and the
Sponsor Subsidiary Collateral Agent Fee Letter, as each such agreement may be
amended, supplemented or otherwise modified from time to time as permitted by
the terms of the Operative Documents, and any other instrument or security
evidencing an Advance or other amount owing under the Sponsor Subsidiary Credit
Agreement

                  "SPONSOR SUBSIDIARY EXPENSES" means, with respect to any
Sponsor Subsidiary, (a) any and all judgments, damages or penalties with respect
to, or amounts paid in settlement of, claims (including negligence, strict or
absolute liability, liability in tort and liabilities arising out of violation
of laws or regulatory requirements of any kind), actions or suits and (b) any
and all liabilities, obligations, losses, costs and expenses (including
reasonable fees and disbursements of counsel and claims, damages, losses,
liabilities and expenses relating to environmental matters) including Taxes.

                  "SPONSOR SUBSIDIARY LIQUIDATING EVENT" means the tenth
Business Day following the occurrence of a Sponsor Subsidiary Termination Event,
provided that a Sponsor Subsidiary Liquidating Event will not occur if the Debt
Collection Date shall have occurred during such ten - Business Day period.

                  "SPONSOR SUBSIDIARY LIQUIDATOR" with respect of any Sponsor
Subsidiary, has the meaning set forth in Exhibit A to each Sponsor Subsidiary
Company Agreement.

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<PAGE>

                  "SPONSOR SUBSIDIARY MEMBER" means each member of a Sponsor
Subsidiary, other than, in each case, Lord Securities.

                  "SPONSOR SUBSIDIARY MEMBERSHIP INTEREST" in relation to a
Sponsor Subsidiary Member means the interest of such Sponsor Subsidiary Member
in the relevant Sponsor Subsidiary.

                  "SPONSOR SUBSIDIARY MINIMUM MONTHLY CASH BALANCE" means, with
respect to each calendar month in (i) the period from February 1, 2003 to April
30, 2003 and (ii) each succeeding period of three calendar months commencing on
the first day of the month in which a Payment Date occurs and ending on the last
day of the month immediately preceding the month in which the following Payment
Date occurs, an amount equal to the following:

                           Month 1  $33,330,000;
                           Month 2  $66,660,000; and
                           Month 3  $100,000,000;

provided that, commencing with May 2003, in each month in which a Payment Date
occurs the Sponsor Subsidiary Minimum Monthly Cash Balance shall equal the
excess of (1) the sum of (a) the Sponsor Subsidiary Minimum Monthly Cash Balance
for such month and (b) the Sponsor Subsidiary Minimum Monthly Cash Balance for
the prior month, in each case calculated as provided above, over (2) an amount
equal to the principal amount of the Advances paid pursuant to Section
2.05(b)(viii)(B) of the Sponsor Subsidiary Credit Agreement in respect of such
Payment Date.

                  "SPONSOR SUBSIDIARY OPERATING ACCOUNT" has the meaning set
forth in Preliminary Statement E of the Sponsor Subsidiary Security Agreement.

                  "SPONSOR SUBSIDIARY PROPERTY" means, with respect to a Sponsor
Subsidiary at any time, all property owned at such time by such Sponsor
Subsidiary, and shall include tangible and intangible property.

                  "SPONSOR SUBSIDIARY REQUIRED ACTIONS" means:

                  (a)      after the occurrence of a Liquidating Event, taking
         all actions reasonably necessary or advisable to allow for an orderly
         liquidation of the relevant Sponsor Subsidiary;

                  (b)      making any demand or a request under, or enforcing
         any right or remedy under, each El Paso Demand Loan, E&P Participation
         Agreement and Affiliate Loan and the El Paso Guaranty in accordance
         with the terms thereof;

                  (c)      calling for and applying additional capital
         contributions from each Sponsor Subsidiary Member pursuant to the terms
         of each Sponsor Subsidiary Company Agreement to enable (i) (in the case
         of Noric Holdings) Noric Holdings to meet its and its Affiliates
         obligations to provide additional Capital Contributions under Section
         5.3 of the Clydesdale Partnership Agreement, Section 5.3 of the
         Lipizzan Partnership Agreement, Section 5.3 of the Noric Company
         Agreement and Section 5.3 of the Noric LP

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         Partnership Agreement or (ii) (in the case of each Sponsor Subsidiary)
         each Sponsor Subsidiary to meet its obligations, if any, with respect
         to the provision of any additional capital contribution under or in
         respect of any Energy Investment;

                  (d)      making demand, or enforcing any rights or remedy
         under any A-Loan for the payment of interest or principal (as
         applicable) in accordance with the terms of the A-Loan Note;

                  (e)      directing the Sponsor Subsidiary Collateral Agent to
         pay Sponsor Subsidiary Expenses from amounts, if any, on deposit in the
         Sponsor Subsidiary Cash Reserve to the extent not timely paid when the
         same are due and payable; and

                  (f)      after the occurrence of a Liquidating Event, making a
         request pursuant to Section 5.1 of any E&P Participation Agreement to
         which a Sponsor Subsidiary is a party for the Counterparty under such
         E&P Participation Agreement to transfer all of its right, title and
         interest (if any) in and to all or any of the Conveyed Interests and
         the Material E&P Agreements (each as defined in such E&P Participation
         Agreement) the subject of such E&P Participation Agreement to such
         Sponsor Subsidiary.

                  "SPONSOR SUBSIDIARY REQUIRED ENERGY INVESTMENT CASH RESERVE
BALANCE" means an amount equal to 24% of the Energy Investment Exposure.

                  "SPONSOR SUBSIDIARY SECURED PARTIES" means Mustang, each
holder of all or a portion of the Advances, each holder of a Sponsor Subsidiary
Subordinated Note, the Sponsor Subsidiary Collateral Agent and any successor and
permitted assignee of any such Person (whether pursuant to an assignment for
security or otherwise); provided that the security interest of each holder of
Sponsor Subsidiary Subordinated Note will be subject to the subordination
provisions contained in Exhibit G to the Sponsor Subsidiary Credit Agreement.

                  "SPONSOR SUBSIDIARY SECURITY AGREEMENT" means the Amended and
Restated Security Agreement, originally dated as of May 9, 2000 and amended and
restated as of June 29, 2001, July 19, 2002 and April 16, 2003, among the
Sponsor Subsidiaries, Lusitano and the Sponsor Subsidiary Collateral Agent, as
supplemented from time to time by each Sponsor Subsidiary Security Agreement
Supplement and each Sponsor Subsidiary Accession Agreement.

                  "SPONSOR SUBSIDIARY SECURITY AGREEMENT SUPPLEMENT" means an
agreement in the form of Exhibit 4 to the Acquisition/Accession Procedures
Schedule.

                  "SPONSOR SUBSIDIARY SUBORDINATED DEBT" has the meaning set
forth in the Preliminary Statement(s) of the Sponsor Subsidiary Credit
Agreement, representing a $230,000,000 subordinated interest in the Original
Advances made under the Original Sponsor Subsidiary Credit Agreement.

                  "SPONSOR SUBSIDIARY SUBORDINATED NOTE" means each subordinated
note issued by the Sponsor Subsidiaries in the form of Exhibit F attached to the
Sponsor Subsidiary Credit Agreement.

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<PAGE>

                  "SPONSOR SUBSIDIARY TERMINATION EVENT" means the occurrence of
any of the following events:

                  (a)      The occurrence of the Twentieth Anniversary; or

                  (b)      The date on which a Termination Notice becomes
         effective pursuant to Section 11.1(b) of the Sponsor Subsidiary Company
         Agreement of Noric Holdings or of Noric Holdings I or Section 12.1(b)
         of the Sponsor Subsidiary Company Agreement of Noric Holdings IV, to
         cause a Notice Event (as defined therein) to become a Termination Event
         (as defined therein); or

                  (c)      The Bankruptcy of Clydesdale or the Clydesdale
         General Partner at any time during the 90-day period commencing on the
         day after the Fourth Restatement Date or the Bankruptcy at any time of,
         Lusitano, Lipizzan, Noric, Palomino, Paso Fino, Noric LP, any Sponsor
         Subsidiary or any Counterparty to any E&P Participation Agreement or
         any Production Payment Agreement; or

                  (d)      (i) The unanimous vote of the Clydesdale Partners to
         dissolve, wind up and liquidate Clydesdale at any time during the
         90-day period commencing on the day immediately following the Fourth
         Restatement Date, (ii) the unanimous vote of the Noric Members to
         dissolve, wind up and liquidate Noric, (iii) the unanimous vote of the
         Noric LP Partners to dissolve, liquidate or wind up Noric LP, (iv) the
         unanimous vote of the Palomino Members to dissolve, liquidate or wind
         up Palomino, (v) the unanimous vote of the Paso Fino Members to
         dissolve, liquidate or wind up Paso Fino, (vi) the unanimous vote of
         the members of Noric Holdings to wind up Noric Holdings, (vii) the
         unanimous vote of the Lusitano Members to dissolve, liquidate or wind
         up Lusitano, (viii) the unanimous vote of the Lipizzan Partners to
         dissolve, liquidate or wind up Lipizzan or (ix) the unanimous vote of
         the members of any Sponsor Subsidiary (other than Noric Holdings)
         holding any Permitted Assets to wind up such Sponsor Subsidiary; or

                  (e)      The happening of any event that makes it unlawful or
         impossible to carry on the business of Lusitano, Lippizan, Noric,
         Palomino, Paso Fino, Noric LP, Noric Holdings or any other Sponsor
         Subsidiary holding any Permitted Assets, or the Delaware court of
         Chancery has entered a final decree of dissolution of Lusitano,
         Lipizzan, Noric, Palomino, Paso Fino, Noric LP, Noric Holdings or any
         other Sponsor Subsidiary holding any Permitted Assets pursuant to
         Section 17-802 of the Act or Section 18-802 of the Delaware Limited
         Liability Company Act of 1992 (or any successor statute), as amended
         from time to time; or

                  (f)      The Transfer by a Clydesdale Partner (other than
         Mustang) of all or any portion of its Clydesdale Partnership Interest
         for 90 days following the Fourth Restatement Date, transfer by a
         Lusitano Member of all or any portion of its Lusitano Membership
         Interest, a transfer by a Lipizzan Partner of all or a portion of its
         Lipizzan Partnership Interest, a transfer by a Noric Member of all or
         any portion of its Noric Membership Interest, a transfer by a Palomino
         Member of all or a portion of its Palomino Membership Interest, a
         transfer by a Paso Fino Member of all or a portion of its Paso Fino
         Membership Interest, a transfer by a Noric LP Partner of all or a
         portion of its Noric

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         LP Partnership Interest or a transfer by a Sponsor Subsidiary Member of
         all or any portion of its Sponsor Subsidiary Membership Interest
         otherwise than in accordance with the Lusitano Company Agreement, the
         Lipizzan Partnership Agreement, the Noric Company Agreement, the
         Palomino Company Agreement, the Paso Fino Company Agreement, the Noric
         LP Partnership Agreement or the Sponsor Subsidiary Company Agreement of
         the relevant Sponsor Subsidiary, respectively; or

                  (g)      [Intentionally Omitted]; or

                  (h)      [Intentionally Omitted]; or

                  (i)      [Intentionally Omitted]; or

                  (j)      (i) El Paso or any other Credit Related Party shall
         (A) generally not pay its debts as such debts become due; or (B) admit
         in writing its inability to pay its debts generally; or (C) make a
         general assignment for the benefit of creditors; or (ii) any proceeding
         shall be instituted or consented to by El Paso or any other Credit
         Related Party seeking to adjudicate it a bankrupt or insolvent, or
         seeking liquidation, winding up, reorganization, arrangement,
         adjustment, protection, relief, or composition of it or its debts under
         any law relating to bankruptcy, insolvency or reorganization or relief
         of debtors, or seeking the entry of an order for relief or the
         appointment of a receiver, trustee, or other similar official for it or
         for any substantial part of its property; or (iii) any such proceeding
         shall have been instituted against El Paso or any other Credit Related
         Party and either such proceeding shall not be stayed or dismissed for
         60 consecutive days or any of the actions referred to above sought in
         such proceeding (including the entry of an order for relief against it
         or the appointment of a receiver, trustee, custodian or other similar
         official for it or any substantial part of its property) shall occur;
         or (iv) El Paso or any other Credit Related Party shall take any
         corporate action to authorize any of the actions set forth above in
         this clause (j).

                  "SUBJECT INTERESTS" means the "Subject Interests" under, and
as defined in, each Production Payment Conveyance.

                  "SUBORDINATED NOTE HOLDER" means Clydesdale or any successor
holder of the Sponsor Subsidiary Subordinated Note.

                  "SUBSEQUENT TRANSFER" means a transfer by or on behalf of any
Sponsor Subsidiary of all or part of its rights in any Energy Investment or a
transfer by or on behalf of a Sponsor Subsidiary, Lipizzan, Noric or Noric LP,
as the case may be, of any E&P Asset, in each case for value to a third party
that is not an Affiliate of El Paso, including any such transfer by the Sponsor
Subsidiary Liquidator, the Lipizzan Liquidator, the Noric Liquidator or the
Noric LP Liquidator, as the case may be, or by or on behalf of a secured
creditor of such Sponsor Subsidiary who has a security interest in such rights
(including, without limitation, the Sponsor Subsidiary Collateral Agent).

                  "SUBSIDIARY" (a) when used (x) in any Operative Document in
reference to El Paso's Subsidiaries or El Paso's Subsidiaries or El Paso's
Consolidated Subsidiaries and (y) in the El Paso Agreement, means, as to any
Person (the "PARENT") at any date, any Business Entity

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<PAGE>

the accounts of which are, or are required to be, consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other Business Entity of which the shares of stock or other Equity Interests
having ordinary voting power (other than stock or such other Equity Interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such Business Entity are
at the time owned, directly or indirectly, through one or more Subsidiaries, or
both, by such Person; provided, however, that, except for purposes of
consolidation with El Paso in accordance with GAAP (other than for purposes of
(a) the definitions of "Net Worth" and "Material Adverse Effect" or (b) Sections
5.08(f) and 6.01(b)) of the El Paso New Revolving Facility, in no event shall El
Paso Energy Partners, L.P. or any of its direct or indirect Subsidiaries be
deemed to be a Subsidiary of El Paso for any other purpose of the El Paso
Agreement, the El Paso New Revolving Facility or any other Loan Document (as
defined in the El Paso New Revolving Facility); and

                  (b)      when used in any other Operative Document, means, as
to any Person, any corporation, partnership, joint venture, limited liability
company, trust or estate of which (or in which) more than 50% of (i) the issued
and outstanding capital stock having ordinary voting power to elect a majority
of the board of directors of such corporation (irrespective of whether at the
time capital stock of any other class or classes of such corporation shall or
might have voting power upon the occurrence of any contingency), (ii) the right
or power to direct, in the case of any entity of which such Person or any of its
Subsidiaries is a general partner, or both the beneficial ownership of and the
right or power to direct, in any other case, such limited liability company,
partnership or joint venture or (iii) the beneficial interest in such trust or
estate, is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one or
more of such Person's other Subsidiaries.

                  "TAX INDEMNITY AGREEMENT" means the Tax Indemnity Agreement,
dated as of April 16, 2003 among El Paso, Mustang and the holders of the Class A
Member Interests in Mustang party thereto.

                  "TAX MATTERS PARTNER" means the Clydesdale General Partner
when acting pursuant to its authority under Section 8.2(b) of the Clydesdale
Partnership Agreement.

                  "TAXES" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.

                  "TERMINATION EVENT" means (a) with respect to a consequence on
the Clydesdale Partnership Agreement only, a Clydesdale Termination Event, and
(b) with respect to a consequence on the Sponsor Subsidiary Credit Agreement and
other Operative Documents, a Sponsor Subsidiary Termination Event.

                  "TERMINATION NOTICE" when used with reference to the
Clydesdale Partnership Agreement, has the meaning set forth in Section 12.1(b)
of the Clydesdale Partnership Agreement and when used with reference to a
Sponsor Subsidiary Company Agreement, has the meaning set forth in Exhibit A to
such Sponsor Subsidiary Company Agreement.

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<PAGE>

                  "TGPC" means Tennessee Gas Pipeline Company, a Delaware
corporation.

                  "TGPC HOLDING" means El Paso TGPC Investments, L.L.C., a
Delaware limited liability company and the direct parent of TGPC.

                  "THIRD RESTATEMENT DATE" has the meaning set forth in Section
3.03 of the Sponsor Subsidiary Credit Agreement.

                  "THRESHOLD ADJUSTMENT PERIOD" has the meaning set forth in
Section 2.09(b)(vii) of the Sponsor Subsidiary Credit Agreement.

                  "TOTAL CASH COLLATERAL AMOUNT" means, at any time, (a) the
aggregate amount of all Cash Collateral Amounts that have been paid or deemed to
have been paid by the Sponsor Subsidiary Members to the Sponsor Subsidiary Cash
Reserve, the Noric Holdings I Cash Reserve or the Noric Holdings IV Cash Reserve
pursuant to Section 5.06 of the Sponsor Subsidiary Credit Agreement prior to
such time less (b) the aggregate amount of all Cash Collateral Amounts that have
been Distributed from the Sponsor Subsidiary Cash Reserve, the Noric Holdings I
Cash Reserve and the Noric Holdings IV Cash Reserve on the Cash Collateral
Amount Distribution Dates pursuant to Section 7.04(g) of the Sponsor Subsidiary
Credit Agreement prior to such time less (c) the aggregate amount of all Cash
Collateral Amounts that have been used to make prepayments of Advances pursuant
to Section 7.04(j) of the Sponsor Subsidiary Credit Agreement prior to such
time.

                  "TRANSACTION ASSET" means an Energy Investment or an E&P
Asset.

                  "TRANSACTION ASSET SCHEDULE" means, with respect to (a) each
Energy Investment and any Intermediate Holder and each Underlying Business
related thereto and (b) each E&P Asset related thereto, the written schedule
identifying, among other things, the exceptions to the representations and
warranties in Section 4.02 of the of the Sponsor Subsidiary Credit Agreement and
the covenants in Sections 5.08 and 5.09 of the Sponsor Subsidiary Credit
Agreement, as agreed pursuant to the Acquisition/Accession Procedures Schedule.

                  "TRANSACTION COSTS" has the meaning set forth in the Mustang
Company Agreement.

                  "TRANSACTIONS" shall mean all the transactions and activities
referred to in or contemplated by the Operative Documents to which El Paso or
any El Paso Party is a party.

                  "TRANSFER" means, with respect to any Clydesdale Partnership
Interest, Lusitano Membership Interest, Lipizzan Partnership Interest, Noric
Membership Interest, Palomino Membership Interest, Paso Fino Membership Interest
or Noric LP Partnership Interest as a noun, any voluntary or involuntary
transfer or sale of, assignment of an interest (including a security interest)
in or other disposition of such Clydesdale Partnership Interest, Lusitano
Membership Interest, Lipizzan Partnership Interest, Noric Membership Interest,
Palomino Membership Interest, Paso Fino Membership Interest or Noric LP
Partnership Interest (other than a retirement or redemption of such Clydesdale
Partnership Interest, Lusitano Membership Interest, Lipizzan Partnership
Interest, Noric Membership Interest, Palomino Membership Interest, Paso Fino
Membership Interest or Noric LP Partnership Interest), and, as a verb,
voluntarily or

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<PAGE>

involuntarily to transfer, sell, assign (including assign for security) or
otherwise dispose of, such Clydesdale Partnership Interest, Lusitano Membership
Interest, Lipizzan Partnership Interest, Noric Membership Interest, Palomino
Membership Interest, Paso Fino Membership Interest or Noric LP Partnership
Interest (other than to retire or redeem such Clydesdale Partner's, Lusitano's,
Lipizzan's, Noric Member's, Palomino's, Paso Fino's or Noric LP's interest),
including, in each case, any transfer by operation of Applicable Law, merger or
bankruptcy or otherwise. The adjective "TRANSFERRED" has the correlative
meaning.

                  "TRANSFER RESTRICTION" means, with respect to any Transaction
Asset, any restriction on the transferability of such Transaction Asset, in
whole or in part, including pursuant to a Subsequent Transfer, including any
such restriction in the form of a Lien, any rights granted to or in favor of any
Person, including, in the case of any Energy Investment, any right in the nature
of a right of first refusal, a right of first offer, call rights or tag-along
rights or any such restriction arising as a result of a requirement that the
holder of the Energy Investment be (or not be) a specified Person or affiliate
thereof or any limit on the number of holders of such interest of the same class
(in each case other than pursuant to securities laws applicable to any transfer,
any FERC regulation of general applicability or the Operative Documents).

                  "TRANSFEREE CERTIFICATE" (a) as used in the Clydesdale
Partnership Agreement, means a certificate executed by a prospective transferee
of a Clydesdale Partnership Interest in accordance with Section 10.3(f) of the
Clydesdale Partnership Agreement and in the form of Exhibit E thereto and (b) as
used in the Noric Company Agreement, means a certificate executed by a
prospective transferee of a Noric Membership Interest in accordance with Section
10 of the Noric Company Agreement in the form of Exhibit A thereto.

                  "TRANSFEROR CERTIFICATE" (a) as used in the Clydesdale
Partnership Agreement, means a certificate executed by a prospective transferor
of a Clydesdale Partnership Interest in accordance with Section 10.3(f) of the
Clydesdale Partnership Agreement and in the form of Exhibit F thereto and (b) as
used in the Noric Company Agreement, means a certificate executed by a
prospective transferor of a Noric Membership Interest in accordance with Section
10 of the Noric Company Agreement in the form of Exhibit B thereto.

                  "TRANSFERS OF INTERESTS" means the collective reference to:

                  (a)      the transfer by Noric Holdings of a portion of its
Class A Limited Partnership Interest in Clydesdale to Noric Holdings I;

                  (b)      the transfer of the Noric Class B Membership Interest
by Clydesdale to Noric Holdings I in redemption of the entire Clydesdale Class A
Limited Partnership Interest held by Noric Holdings I;

                  (c)      the transfer by El Paso Oil & Gas Resources and El
Paso Production Oil & Gas USA of their respective Class A Membership Interests
in Noric Holdings I to El Paso Production Oil & Gas Company, a wholly owned
Subsidiary of El Paso;

                  (d)      the transfer by El Paso Production Oil & Gas Company
of its Class A Membership Interests in Noric Holdings I to El Paso Noric
Investments I, L.L.C., a wholly owned Subsidiary of El Paso;

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<PAGE>

                  (e)      the transfer by El Paso Production Company and El
Paso Energy Raton, L.L.C. of their respective Class A Membership Interests in
Noric Holdings I to El Paso Noric Investments I, L.L.C.;

                  (f)      the transfer by El Paso Oil & Gas Resources and El
Paso Production Oil & Gas USA of their respective Class A Membership Interests
in Noric Holdings IV to one or more direct or indirect wholly owned subsidiaries
of El Paso;

                  (g)      the transfer by El Paso CNG Company of its Class A
Membership Interest in Noric Holdings III to one or more wholly owned
subsidiaries of El Paso; and

                  (h)      the granting of the Liens on all of the Class A
Membership Interests in Noric Holdings I, Noric Holdings III and Noric Holdings
IV (including all certificates representing such interests) and on the proceeds
thereof to the collateral agent under the Security and Intercreditor Agreement
(as defined in the El Paso New Revolving Facility) to secure the Secured
Obligations (as defined in the Security and Intercreditor Agreement).

                   (i)     the transfer by Ambac Private Holdings, LLC of its
Class A Member Interest in Mustang Investors, L.L.C. to Shetland.

                  "TWENTIETH ANNIVERSARY" means the twentieth anniversary of the
Closing Date or, if such day is not a Business Day, the immediately preceding
Business Day.

                  "UCC" means, with respect to any state or territory of the
United States, the "Uniform Commercial Code" in effect in such state or
territory.

                  "UNAPPLIED AMOUNT INTEREST" has the meaning set forth in the
Mustang Credit and Security Agreement.

                  "UNDERLYING BUSINESS" means with respect to an Energy
Investment the ultimate Business Entity or Business Entities relating to such
Energy Investment, which in the case of the Energy Investment held by Noric
Holdings III, L.L.C., includes each CIG Controlled Business.

                  "UNITED STATES" and "U.S." each mean the United States of
America.

                  "UNITED STATES BANKRUPTCY CODE" shall mean Title 11 of the
United States Code entitled "Bankruptcy" as in effect from time to time, or any
successor thereto.

                  "UNRECOVERED CAPITAL" means:

                  (a)      with respect to the Clydesdale General Partner at any
         time the excess of (i) the aggregate amount contributed to Clydesdale
         by the Clydesdale General Partner on the Closing Date and from time to
         time thereafter, including pursuant to Section 5.3 of the Clydesdale
         Partnership Agreement (if any) over (ii) the aggregate amount of the
         Capital Account of the Clydesdale General Partner retired and paid to
         the Clydesdale General Partner pursuant to Section 7 and Section 12 of
         the Clydesdale Partnership Agreement; and

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                  (b)      with respect to a Clydesdale Class A Limited Partner
         at any time the excess of (i) the aggregate amount contributed to
         Clydesdale by such Clydesdale Class A Limited Partner on the Closing
         Date and from time to time thereafter, including pursuant to Section
         5.3 of the Clydesdale Partnership Agreement (if any) over (ii) the
         aggregate amount of the Capital Account of such Clydesdale Class A
         Limited Partner retired and paid to such Clydesdale Class A Limited
         Partner pursuant to Section 7 and Section 12 of the Clydesdale
         Partnership Agreement.

                  "VOLUNTARY BANKRUPTCY" has the meaning set forth in the
definition of Bankruptcy.

                  "VOTING INTERESTS" means shares of capital stock issued by a
corporation, or equivalent Equity Interests in any other Person, the holders of
which are ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such Person,
even if the right so to vote has been suspended by the happening of such a
contingency.

                  "WHOLLY OWNED AFFILIATE" of any Person means (a) an Affiliate
of such Person 100% of the capital stock (or its equivalent in the case of
entities other than corporations) of which is owned beneficially by such Person,
directly or indirectly through one or more Wholly Owned Affiliates, or by any
Person who, directly or indirectly, owns beneficially 100% of the capital stock
(or its equivalent in the case of entities other than corporations) of such
Person, or (b) an Affiliate of such Person who, directly or indirectly, owns
beneficially 100% of the capital stock (or its equivalent in the case of
entities other than corporations) of such Person; provided that, for purposes of
determining the ownership of the capital stock of any Person, de minimis amounts
of stock held by directors, nominees and similar persons pursuant to statutory
or regulatory requirements shall not be taken into account.

                  "WIC" means Wyoming Interstate Company Ltd., a Colorado
limited partnership, the general partner of which is CIG Gas Supply Company and
the limited partner of which is Wyoming Gas Supply Inc.

                  "WIC HOLDING" means El Paso WIC Investments, L.L.C., a
Delaware limited liability company and the direct parent of CIG Gas Supply
Company and Wyoming Gas Supply Inc.

                  "WITHDRAWAL LIABILITY" has the meaning given such term under
Part 1 of Subtitle E of Title IV or ERISA.

                  SECTION 2. EL PASO NEW REVOLVING FACILITY DEFINITIONS.
Defined terms used in this Agreement and defined by reference to the El Paso New
Revolving Facility (including defined terms used in such defined terms) shall
have the meaning set forth in the El Paso New Revolving Facility dated as of
April 16, 2003, provided that any amendments to such terms shall be effective
for purposes of this Agreement only if such amendments are expressly consented
to by Mustang, the Mustang Administrative Agent and the Administrative Agent (as
defined in the El Paso New Revolving Facility). In addition the amendment
provisions set forth in the Operative Documents (as such term is defined in the
Mustang Credit and Security Agreement)

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<PAGE>

shall be complied with before any such amendment becomes effective for purposes
of such Operative Documents.

                   SECTION 3. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement, and no consent to any departure therefrom, shall be
effective unless the same shall be in writing and signed by each of the parties
hereto, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. Notwithstanding anything
contained herein, any amendment or waiver to defined terms used in the Operative
Documents (as such term is defined in the Mustang Credit and Security Agreement)
shall be effective without the consent of Clydesdale, Appaloosa or any holder of
an equity interest of a party to such amendment or waiver. In addition the
amendment provisions set forth in the Operative Documents (as such term is
defined in the Mustang Credit and Security Agreement) shall be complied with
before any amendment or waiver of any defined term used in such Operative
Documents is effective.

                   SECTION 4. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York.

                   SECTION 5. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.

                   SECTION 6. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS DEFINITIONS AGREEMENT.

                   SECTION 7. CONSENT TO JURISDICTION. (i) Each of the parties
hereby irrevocably submits to the jurisdiction of any New York State or Federal
court sitting in New York City and any appellate court from any thereof in any
action or proceeding in respect of, but only in respect of, any claims or causes
of action arising out of or relating to this Agreement (such claims and causes
of action, collectively, being "PERMITTED CLAIMS"), and each of the parties
hereby irrevocably agrees that all Permitted Claims may be heard and determined
in such New York State court or in such Federal court. Each party hereby
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
aforementioned court in respect of Permitted Claims.

                   SECTION 8. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be given in accordance with the
Notice Agreement.

                  [Remainder of page intentionally left blank]

El Paso Definitions Agreement

                                       82

<PAGE>

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

                                    EL PASO CORPORATION

                                    By:     /s/ John J. Hopper
                                        ----------------------------------------
                                        Name: John J. Hopper
                                        Title: Vice President

El Paso Definitions Agreement

<PAGE>

                                    MUSTANG INVESTORS, L.L.C.

                                    By: Dongola, Inc., as its managing member

                                             By:      /s/ James A. Hanley
                                                 -------------------------------
                                                 Name: James A. Hanley
                                                 Title: Vice President

El Paso Definitions Agreement

<PAGE>

                           NORIC HOLDINGS, L.L.C.

                           By: Shetland Holdings Company, as its class A member

                                    By:      /s/ John J. Hopper
                                        ----------------------------------------
                                        Name: John J. Hopper
                                        Title: Vice President

El Paso Definitions Agreement

<PAGE>

                           NORIC HOLDINGS I, L.L.C.

                           By: El Paso Noric Investments I, L.L.C., as its
                               managing member

                           By:     /s/ John J. Hopper
                               -------------------------------------------------
                               Name: John J. Hopper
                               Title: Vice President

El Paso Definitions Agreement

<PAGE>

                          NORIC HOLDINGS III, L.L.C.

                          By: El Paso Noric Investments III, L.L.C., as its
                              sole class A member

                          By:     /s/ Teresa L. McDonald
                              --------------------------------------------------
                              Name: Teresa L. McDonald
                              Title: Vice President

El Paso Definitions Agreement

<PAGE>

                          NORIC HOLDINGS IV, L.L.C.

                          By: El Paso Noric Investments IV, L.L.C., as its
                              managing member

                          By:     /s/ John J. Hopper
                              --------------------------------------------------
                              Name: John J. Hopper
                              Title: Vice President

El Paso Definitions Agreement

<PAGE>

                     NORIC, L.L.C.

                     By: Noric Holdings I, L.L.C., as its managing member

                         By: El Paso Noric Investments I, L.L.C.,
                             as its managing member

                         By:      /s/ John J. Hopper
                             --------------------------------------------
                             Name: John J. Hopper
                             Title: Vice President

El Paso Definitions Agreement

<PAGE>

                           PALOMINO, L.L.C.

                           By: Noric, L.L.C., as its sole member

                               By: Noric Holdings I, L.L.C., as its
                                   managing member

                                   By: El Paso Noric Investments I,
                                       L.L.C., as its managing member

                                   By:      /s/ John J. Hopper
                                       -------------------------------------
                                       Name: John J. Hopper
                                       Title: Vice President

El Paso Definitions Agreement

<PAGE>

                             PASO FINO, L.L.C.

                             By: Noric, L.L.C., as its sole member

                                 By: Noric Holdings I, L.L.C., as its
                                     managing member

                                     By: El Paso Noric Investments I,
                                         L.L.C., as its managing member

                                     By:      /s/ John J. Hopper
                                         -----------------------------------
                                         Name: John J. Hopper
                                         Title: Vice President

El Paso Definitions Agreement

<PAGE>

                          NORIC, L.P.

                          By: Palomino L.L.C., as its general partner

                              By: Noric, L.L.C., as its sole member

                                  By: Noric Holdings I, L.L.C., as its
                                      managing member

                                      By: El Paso Noric Investments I,
                                          L.L.C., as its managing member

                                      By:         /s/ John J. Hopper
                                          ---------------------------------
                                          Name: John J. Hopper
                                          Title: Vice President

El Paso Definitions Agreement

<PAGE>

                         LUSITANO, L.L.C.

                         By: Noric Holdings IV, L.L.C., as its sole member

                             By: El Paso Noric Investments IV,
                                 L.L.C., as its managing member

                             By:     /s/ John J. Hopper
                                 --------------------------------------------
                                 Name: John J. Hopper
                                 Title: Vice President

El Paso Definitions Agreement

<PAGE>

                           LIPIZZAN HOLDING, L.P.

                           By: Lusitano, L.L.C., as its general partner

                               By: Noric Holdings IV, L.L.C., as its sole
                                   member

                                   By: El Paso Noric Investments IV,
                                       L.L.C., as its managing member

                                   By:      /s/ John J. Hopper
                                       -----------------------------------
                                       Name: John J. Hopper
                                       Title: Vice President

El Paso Definitions Agreement

<PAGE>

                WILMINGTON TRUST COMPANY, not in its individual capacity
                but solely as the Sponsor Subsidiary Collateral Agent

                By:      /s/ James A. Hanley
                    ----------------------------------------
                    Name: James A. Hanley
                    Title: Financial Services Officer

El Paso Definitions Agreement

<PAGE>

                          EL PASO NORIC INVESTMENTS I, L.L.C.

                          By:       /s/ John J. Hopper
                              -----------------------------------
                              Name: John J. Hopper
                              Title: Vice President

El Paso Definitions Agreement

<PAGE>

                          EL PASO NORIC INVESTMENTS III, L.L.C.

                          By:      /s/ Teresa L. McDonald
                              ----------------------------------------
                              Name: Teresa L. McDonald
                              Title: Vice President

El Paso Definitions Agreement

<PAGE>

                          EL PASO NORIC INVESTMENTS IV, L.L.C.

                          By:       /s/ John J. Hopper
                              -----------------------------------
                              Name: John J. Hopper
                              Title: Vice President

El Paso Definitions Agreement

<PAGE>

                         CLYDESDALE ASSOCIATES, L.P.

                         By: Appaloosa Holdings Company, as its general
                             partner

                         By:       /s/ John J. Hopper
                             -----------------------------------
                             Name: John J. Hopper
                             Title: Vice President

El Paso Definitions Agreement

<PAGE>

                        APPALOOSA HOLDINGS COMPANY

                        By:     /s/ John J. Hopper
                            -----------------------------
                            Name: John J. Hopper
                            Title: Vice President

El Paso Definitions Agreement

<PAGE>

                       RIO GRANDE TRUST II

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

                           By:    /s/ James A. Hanley
                               -----------------------------------
                               Name: James A. Hanley
                               Title: Financial Services Officer

El Paso Definitions Agreement

<PAGE>

                                   DONGOLA, INC.

                                   By:     /s/ James A. Hanley
                                       ---------------------------------------
                                       Name: James A. Hanley
                                       Title: Vice President

El Paso Definitions Agreement

<PAGE>

                                   SHETLAND HOLDINGS COMPANY

                                   By:     /s/ John J. Hopper
                                       -----------------------------------
                                       Name: John J. Hopper
                                       Title: Vice President and Treasurer

El Paso Definitions Agreement

<PAGE>

                                   BSCS XXVII, INC.

                                   By:     /s/ Lori Gebron
                                       --------------------------------
                                       Name: Lori Gebron
                                       Title: Vice President

El Paso Definitions Agreement

<PAGE>

                                   CITICORP NORTH AMERICA, INC.

                                   By:     /s/ Amy Pincu
                                       -------------------------
                                       Name: Amy Pincu
                                       Title: Vice President

El Paso Definitions Agreement

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