Document:

<PAGE>
                                                                    Exhibit 10.1

                            SWAP SETTLEMENT AGREEMENT

         This Swap Settlement Agreement (the "AGREEMENT"), dated effective as of
August 16, 2004, is entered into by and among El Paso Corporation, a Delaware
corporation ("EL PASO"), El Paso Merchant Energy, L.P., a Delaware limited
partnership ("EPME"), East Coast Power Holding Company L.L.C., a Delaware
limited liability company ("ECPH"), and ECTMI Trutta Holdings LP, a Delaware
limited partnership ("TRUTTA"). El Paso, EPME, ECPH and Trutta may be referred
to herein individually as a "PARTY" and collectively as the "PARTIES." El Paso
and EPME may be referred to herein individually as an "EL PASO PARTY" and
collectively as the "EL PASO PARTIES". ECPH and Trutta may be referred to herein
individually as an "ENRON PARTY" and collectively as the "ENRON PARTIES".

                                    RECITALS

         WHEREAS, EPME and Mesquite Investors, L.L.C., a Delaware limited
liability company ("MESQUITE"), entered into two ISDA Master Agreements, two
Schedules thereto, and two separate Confirmations (one set referred to by the
Parties as the "ECPH SWAP" and the other set referred to by the Parties as the
"TRUTTA SWAP"), each dated as of February 23, 2001 (collectively, the "SWAP
AGREEMENTS");

         WHEREAS, Mesquite, pursuant to an Assignment and Assumption Agreement
dated February 23, 2001 (the "ECPH ASSIGNMENT"), assigned to ECPH, and ECPH
assumed, all of Mesquite's rights and obligations under the ECPH Swap;

         WHEREAS, Mesquite, pursuant to an Assignment and Assumption Agreement
dated as of February 23, 2001 (the "TRUTTA ASSIGNMENT"), assigned to Trutta, and
Trutta assumed, all of Mesquite's rights and obligations under the Trutta Swap;

         WHEREAS, El Paso guaranteed (i) EPME's obligations under the ECPH Swap
pursuant to a Guaranty dated February 23, 2001 (the "ECPH GUARANTY"), and (ii)
EPME's obligations under the Trutta Swap pursuant to a separate Guaranty dated
February 23, 2001 (the "TRUTTA GUARANTY");

         WHEREAS, the Parties have agreed to terminate the Swap Agreements, the
ECPH Guaranty and the Trutta Guaranty on the terms and conditions set forth
herein.

         NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the Parties, intending to be legally bound, agree as follows:

<PAGE>

                                    AGREEMENT

         1. Notes. In consideration of (i) the termination of the ECPH Swap, the
Trutta Swap, the ECPH Guaranty and the Trutta Guaranty, (ii) the mutual releases
set forth herein, and (iii) the other provisions hereof, El Paso shall,
concurrent with the execution and delivery of this Agreement (subject to the
approval of the Court as set forth in paragraph 7 hereof), execute and deliver
to (a) ECPH, a promissory note in the form of Exhibit A attached hereto, in the
original principal amount of $117,524,163 (the "ECPH NOTE"), and (b) Trutta, a
promissory note in the form of Exhibit B attached hereto, in the original
principal amount of $95,828,992 (the "TRUTTA NOTE"). The ECPH Note and the
Trutta Note are sometimes referred to herein as the "NOTES".

         2. Termination of Swap Agreements, ECPH Guaranty and Trutta Guaranty.
Effective as of the date hereof, but subject to (i) the execution and delivery
of the Notes and (ii) the approval of the Court as set forth in paragraph 7
hereof, each of the ECPH Swap, the Trutta Swap, the ECPH Guaranty and the Trutta
Guaranty are terminated in their entirety and are of no further force or effect.

         3. Mutual Release. Effective as of the date hereof, but subject to (i)
the execution and delivery of the Notes and (ii) the approval of the Court as
set forth in paragraph 7 hereof, each Party hereto does fully, finally,
completely, and absolutely RELEASE, ACQUIT, AND FOREVER DISCHARGE each of the
other Parties hereto and each of their respective current and former officers,
directors, shareholders, employees, agents, attorneys, parent companies,
subsidiaries, affiliates, successors, assigns, and representatives, and all
those at interest therewith, of and from any and all claims, demands, actions,
remedies, causes of action, choses in action, debts, liabilities, contracts,
damages, costs (including, without limitation, attorneys' fees and all costs of
court or other proceedings), expenses and losses of every kind or nature,
whether arising by contract, tort or other theory, at this time known or
unknown, accrued or unaccrued, direct or indirect, fixed or contingent, in law,
by statute, by regulation, by court order, or in equity, that either of them and
all their representatives, successors, assigns, agents, employees, or
representatives, and all those at interest therewith, ever had, now has, or
hereafter can, shall or may have, for, upon or by reason or arising out of or
related to the Swap Agreements, the ECPH Assignment, the Trutta Assignment, the
ECPH Guaranty or the Trutta Guaranty; provided, however, that the foregoing
shall not release any Party from its obligations under this Agreement or the
Notes.

         4. El Paso's Representations and Warranties. Subject only to the
approval of the Court as set forth in paragraph 7 hereof El Paso hereby
represents and warrants to the other Parties hereto as follows:

         (a) El Paso is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its organization, and has
all requisite powers, licenses, consents, authorizations, and approvals required
to carry on its business as currently conducted.

         (b) El Paso has the corporate power and authority to execute and
deliver this Agreement and the Notes, and to perform and consummate the
transactions contemplated hereby. El Paso

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has taken all actions necessary to authorize the execution and delivery of this
Agreement and the Notes, and the performance of its obligations hereunder and
thereunder, and the consummation of the transactions contemplated hereby. This
Agreement and the Notes have been duly authorized, executed, and delivered by,
and are enforceable against, El Paso, except as the enforceability hereof and
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.

         (c) The execution and the delivery of this Agreement and the Notes by
El Paso and the performance and consummation of the transactions contemplated
hereby by El Paso will not (i) breach any law or order to which El Paso is
subject or any provision of its organizational documents, (ii) breach any
contract, order, or permit to which El Paso is a party or by which El Paso is
bound or to which any of El Paso's assets is subject, or (iii) require any
consent or authorization from any third party.

         (d) In connection with the transactions contemplated by this Agreement,
El Paso has been represented by competent legal counsel and such transactions,
as evidenced hereby, are the result of good faith, arms-length negotiations
among the Parties hereto.

         5. EPME's Representations and Warranties. Subject only to the approval
of the Court as set forth in paragraph 7 hereof, EPME hereby represents and
warrants to the other Parties hereto as follows:

         (a) EPME is a limited partnership duly organized, validly existing, and
in good standing under the laws of the jurisdiction of its organization, and has
all requisite powers, licenses, consents, authorizations, and approvals required
to carry on its business as currently conducted.

         (b) EPME has the organizational power and authority to execute and
deliver this Agreement, and to perform and consummate the transactions
contemplated hereby. EPME has taken all actions necessary to authorize the
execution and delivery of this Agreement, and the performance of its obligations
hereunder, and the consummation of the transactions contemplated hereby. This
Agreement has been duly authorized, executed, and delivered by, and is
enforceable against, EPME, except as the enforceability hereof 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.

         (c) The execution and the delivery of this Agreement by EPME and the
performance and consummation of the transactions contemplated hereby by EPME
will not (i) breach any law or order to which EPME is subject or any provision
of its organizational documents, (ii) breach any contract, order, or permit to
which EPME is a party or by which EPME is bound or to which any of EPME's assets
is subject, or (iii) require any consent or authorization from any third party.

         (d) In connection with the transactions contemplated by this Agreement,
EPME has been represented by competent legal counsel and such transactions, as
evidenced hereby, are the result of good faith, arms-length negotiations among
the Parties hereto.

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<PAGE>

         6. Representations and Warranties of the Enron Parties. Subject only to
the approval of the Court as set forth in paragraph 7 hereof, the Enron Parties
hereby severally represent and warrant to the other Parties hereto as follows:

         (a) Each Enron Party is duly formed, validly existing, and in good
standing under the laws of the jurisdiction of its organization, and has all
requisite powers, licenses, consents, authorizations, and approvals required to
carry on its business as currently conducted.

         (b) Each Enron Party has the organizational power and authority to
execute and deliver this Agreement, and to perform and consummate the
transactions contemplated hereby. Each Enron Party has taken all actions
necessary to authorize the execution and delivery of this Agreement, the
performance of its obligations hereunder, and the consummation of the
transactions contemplated hereby, including obtaining Bankruptcy Court Approval.
This Agreement has been duly authorized, executed, and delivered by, and is
enforceable against each Enron Party.

         (c) The execution and the delivery of this Agreement by each Enron
Party and the performance and consummation of the transactions contemplated
hereby by each Enron Party will not (i) breach any law or order to which any
Enron Party is subject or any provision of any Enron Party's organizational
documents, (ii) breach any contract, order, or permit to which any Enron Party
is a party or by which any Enron Party is bound or to which any Enron Party's
assets is subject, or (iii) except for Bankruptcy Court Approval, require any
consent or authorization from any third party.

         (d) In connection with the transactions contemplated by this Agreement,
each of the Enron Parties has been represented by competent legal counsel and
such transactions, as evidenced hereby, are the result of good faith,
arms-length negotiations among the Parties hereto.

         (e) Each Enron Party (i) understands that the Notes are not and will
not be registered under the Securities Act of 1933 (the "SECURITIES ACT"), or
under any state securities laws, are being offered and sold in reliance upon
certain federal and state exemptions, and may not be sold or transferred by the
holder of such Note in the absence of an effective registration statement under
the Securities Act, the availability of an exemption from registration
thereunder as reasonably determined by El Paso, or as otherwise expressly
provided for herein, (ii) is sophisticated with knowledge and experience in
business and financial matters as to be capable of evaluating the merits and
risks of investment in the Notes, (iii) is able to bear the economic risk and
lack of liquidity inherent in holding the Notes, (iv) is an "accredited
investor" as defined in Regulation D promulgated under the Securities Act, and
(v) acknowledges and understands, in light of the pending restatement of El
Paso's financial statements, that it cannot rely on El Paso's previously filed
periodic reports; has had access to and reviewed El Paso's other filings with
the Securities and Exchange Commission; has had the opportunity to ask questions
of El Paso and obtain additional information as desired to evaluate the merits
and risks inherent in holding the Notes and all such questions have been
answered to each Enron Party's full satisfaction and has received (or been
provided access to) all requested additional information concerning its
investment in the Notes; and does not desire any further information or data
concerning El Paso.

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         (f) Trutta is acquiring the Trutta Note for its own account and not
with a view to the sale or distribution thereof within the meanings of the
Securities Act.

         7. Bankruptcy Court Approval. Notwithstanding anything to the contrary
herein, it is a condition precedent to the effectiveness of this Agreement and
the Notes, that this Agreement and the Notes shall have been approved by the
United States Bankruptcy Court of the Southern District of New York ("COURT"),
pursuant to the entry of a final, non-appealable order by the Court in the
matter of In re: Enron Corp., et al., Case No. 01-16034, in a form acceptable to
the Parties ("ORDER"), and such Order has not been stayed, amended, vacated,
reversed or rescinded, and from which no appeal may be taken or for which the
time to appeal has expired.

         8. Sale or Transfer of the Notes.

         (a) If either Enron Party desires to sell or transfer (a "TRANSFER")
either of the Notes, such Enron Party shall notify El Paso in writing of the
proposed Transfer, including the identity of the proposed transferee (a
"TRANSFEREE") and the nature of the transaction, and prior to any such Transfer,
deliver to El Paso, at such Enron Party's sole expense such evidence (including
an opinion of counsel) as El Paso may reasonably request in order to evaluate
such proposed Transfer's compliance with any applicable securities laws,
including the Securities Act.

         (b) Solely in connection with a Transfer of the ECPH Note, upon request
of ECPH, the original ECPH Note shall be cancelled and El Paso shall issue two
(but not more than two) new notes in an aggregate principal amount equal to the
principal amount of the original ECPH Note. One of the new notes shall be issued
to CalPERS, subject to CalPERS execution and delivery of a certificate in the
form attached hereto as Exhibit C (the "CALPERS CERTIFICATE"), and any remaining
balance under the original ECPH Note shall be issued to ECPH under the other new
note. The Note issued to CalPERS shall be in the form attached hereto as Exhibit
D (the "CALPERS NOTE"). The CalPERS Note shall be transferable, in whole but not
in part, by CalPERS either (i) as provided in paragraph 8(a) hereof or (ii) in
the United States to a person that CalPERS or a Transferee reasonably believes
is a qualified institutional buyer (as defined in Rule 144A under the Securities
Act) in a transaction meeting the requirements of Rule 144A, provided that prior
to such Transfer such Transferee shall deliver to El Paso a certificate in
substantially the form of the CalPERS Certificate. Upon satisfaction of such
requirements, El Paso shall deliver a new note in the aggregate principal amount
of the CalPERS Note to the Transferee.

         (c) The ECPH Note (except as expressly provided for in paragraph 8(b)
hereof), the Trutta Note, and any subsequent notes (other than the CalPERS Note)
issued in exchange for such notes shall be transferable in whole, but not in
part, subject to any applicable restrictions on transfer set forth in paragraph
8(a) hereof. The CalPERS Note, and any subsequent notes issued in exchange for
such note, shall be transferable in whole, but not in part, subject to any
applicable restrictions on transfer set forth in paragraph 8(b) hereof.

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<PAGE>

         9. Miscellaneous.

         (a) Entire Agreement. This Agreement, together with the Notes and the
Exhibits hereto, constitutes the entire agreement and understanding of the
Parties in respect of its subject matter and supersedes all prior
understandings, agreements, or representations by or among the Parties, written
or oral, to the extent they relate in any way to the subject matter hereof
including, without limitation, the Swap Agreements.

         (b) Successors. All of the terms, agreements, covenants,
representations, warranties, and conditions of this Agreement are binding upon,
and inure to the benefit of and are enforceable by, the Parties and their
respective successors and assigns. This Agreement may not be assigned by any of
the Parties, and any attempted assignment shall be void ab initio.

         (c) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

         (d) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

         (e) Governing Law. This Agreement and the performance of the
obligations of the parties hereunder will be governed by and construed in
accordance with the laws of the State of New York.

         (f) Notices. All notices, requests, and other communications hereunder
shall be in writing and sent by registered or certified mail, return receipt
requested, postage prepaid, or overnight express mail, and addressed to the
intended recipient as set forth below:

                            If to any of the El Paso Parties:

                            El Paso Corporation
                            El Paso Building
                            1001 Louisiana Street
                            Houston, Texas 77002
                            Attn: John J. Hopper
                            Tel: (713) 420-2600
                            Fax: (713) 420-2708

                            If to any of the Enron Parties:

                            Enron North America Corp.
                            Four Houston Center
                            1221 Lamar, Suite 1600
                            Houston, Texas 77010
                            Attn: Charles Ward

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                            Tel: (713) 345-8957
                            Fax: (713) 646-3253

Any Party may send any notice, request, or other communication hereunder to the
intended recipient at the address set forth above using any other means
(including personal delivery, expedited courier, messenger service, telecopy,
telex, ordinary mail, or electronic mail), but no such notice, request, demand,
claim, or other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any Party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.

         (g) Amendments and Waivers. No amendment, modification, replacement,
termination or cancellation of any provision of this Agreement will be valid
unless the same shall be in writing and signed by each of the Parties. No waiver
by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, may be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising because of any prior
or subsequent such occurrence.

         (h) Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof, provided
that any provision of this Agreement that is invalid or unenforceable in any
situation or in any jurisdiction will not affect the enforceability of the
remaining terms and provisions hereof or the enforceability of the offending
term or provision in any other situation or in any other jurisdiction.

         (i) Submission to Jurisdiction. Each Party submits to the jurisdiction
of any state or federal court sitting in Houston, Texas in any action arising
out of or relating to this Agreement and agrees that all claims in respect of
the action may be heard and determined in any such court. Each Party also agrees
not to bring any action arising out of or relating to this Agreement in any
other court.

                            [Signature Page Follows]

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<PAGE>

                                                                    Exhibit 10.1

         IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed and delivered as of the date first written above.

                                    EL PASO CORPORATION

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

                                    EL PASO MERCHANT ENERGY, L.P.

                                    By: /s/ D. Mark Leland
                                        ----------------------------------------
                                    Name: D. Mark Leland
                                    Title: Executive Vice President and Chief
                                           Financial  Officer

                                    EAST COAST POWER HOLDING COMPANY L.L.C.

                                    By:  Joint Energy Development Investments
                                         II, Limited Partnership, its sole
                                         member

                                         By: Enron Capital Management II Limited
                                             Partnership, its general partner

                                             By: Enron Capital II Corp., its
                                                 general partner

                                    By: /s/ Joseph M. Deffner
                                        ----------------------------------------
                                    Name: Joseph M. Deffner
                                    Title: President and Chief Executive Officer

                                    ECTMI TRUTTA HOLDINGS LP

                                    By: Brook I LLC,  its general partner

                                    By: /s/ Joseph M. Deffner
                                        ----------------------------------------
                                    Name: Joseph M. Deffner
                                    Title: President and Chief Executive Officer

<PAGE>

                                                                    Exhibit 10.1

                                    EXHIBIT A
                                FORM OF ECPH NOTE

See attached.

<PAGE>

                                                                    Exhibit 10.1

                                    EXHIBIT B
                               FORM OF TRUTTA NOTE

See attached.

<PAGE>

                                                                    Exhibit 10.1

                                    EXHIBIT C
                           FORM OF CALPERS CERTIFICATE

See attached.

<PAGE>

                                                                    Exhibit 10.1

                                    EXHIBIT D
                              FORM OF CALPERS NOTE

See attached.
<PAGE>
                                                                    Exhibit 10.1

                                    EXHIBIT A
                                FORM OF ECPH NOTE

See attached.

<PAGE>

                                   (ECPH Note)

THIS NOTE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS NOTE
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF THIS NOTE
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS NOTE MAY BE OFFERED, RESOLD OR
OTHERWISE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY (I) IN THE UNITED STATES
TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A OR (II) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT, AS DETERMINED IN THE REASONABLE
DISCRETION OF THE COMPANY. ANY HOLDER HEREOF DESIRING TO TRANSFER THIS NOTE
PURSUANT TO CLAUSE (II) ABOVE MUST FIRST FURNISH THE COMPANY, AT HOLDER'S SOLE
EXPENSE, AN OPINION OF COUNSEL (IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE COMPANY) THAT NEITHER REGISTRATION NOR QUALIFICATION UNDER THE SECURITIES
ACT OR ANY APPLICABLE STATE SECURITIES LAWS IS REQUIRED IN CONNECTION WITH SUCH
TRANSFER AND SUCH OTHER EVIDENCE (INCLUDING A CERTIFICATE FROM THE TRANSFEREE)
AS THE COMPANY MAY REASONABLY REQUEST IN ORDER TO EVALUATE COMPLIANCE WITH ANY
APPLICABLE SECURITIES LAWS, INCLUDING THE SECURITIES ACT. THE COMPANY WILL BE
ENTITLED TO DISREGARD ANY ATTEMPTED SALE, TRANSFER, OR ASSIGNMENT IN VIOLATION
OF THE FOREGOING.

                               El Paso Corporation

$117,524,163                                                     August 16, 2004

         FOR VALUE RECEIVED, the undersigned, El Paso Corporation, a corporation
organized under the laws of the State of Delaware (herein called the "COMPANY"),
promises to pay to the order of East Coast Power Holding Company L.L.C., a
Delaware limited liability company (together with any other lawful and proper
holder of this note from time to time, the "PAYEE"), the principal sum of
$117,524,163, with interest (computed on the basis of a 360-day year of twelve
30-day months) from the date hereof until paid in full on the unpaid principal
balance hereof at the rate equal to the lesser of (i) 6.5% per annum and (ii)
the Highest Lawful Rate.

         1. Definitions. As used in this note, the following terms shall have
the respective meanings indicated:

                  (a) "BANKRUPTCY LAW" means Title 11, U.S. Code, or any similar
federal or state law for the relief of debtors.

<PAGE>

                  (b) "BOARD OF DIRECTORS" means the board of directors of the
Company, or the executive or any other committee of that board duly authorized
to act in respect thereof.

                  (c) "CONSOLIDATED NET TANGIBLE ASSETS" means, at any date of
determination, the total amount of assets after deducting therefrom (i) all
current liabilities (excluding (A) any current liabilities that by their terms
are extendable or renewable at the option of the obligor thereon to a time more
than 12 months after the time as of which the amount thereof is being computed,
and (B) current maturities of long-term debt), and (ii) the value (net of any
applicable reserves) of all goodwill, trade names, trademarks, patents and other
like intangible assets, all as set forth on the consolidated balance sheet of
the Company and its consolidated subsidiaries for the Company's most recently
completed fiscal quarter, prepared in accordance with generally accepted
accounting principles.

                  (d) "CUSTODIAN" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.

                  (e) "DEBT" means any obligation created or assumed by any
Person for the repayment of money borrowed and any purchase money obligation
created or assumed by such Person.

                  (f) "DEFAULT" means any event which is, or after notice or
lapse of time or both would become, an Event of Default with respect hereto.

                  (g) "EVENT OF DEFAULT" has the meaning specified in paragraph
4(a) hereof.

                  (h) "FUNDED DEBT" means all Debt maturing one year or more
from the date of the creation thereof, all Debt directly or indirectly renewable
or extendible, at the option of the debtor, by its terms or by the terms of any
instrument or agreement relating thereto, to a date one year or more from the
date of the creation thereof, and all Debt under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period of one
year or more.

                  (i) "HIGHEST LAWFUL RATE" shall mean, on any day, the maximum
nonusurious rate of interest permitted for that day by whichever of the
applicable federal or state law permits the highest interest rate, stated as a
rate per annum.

                  (j) "LIEN" means any mortgage, pledge, security interest,
charge, lien or other encumbrance of any kind, whether or not filed, recorded or
perfected under applicable law.

                  (k) "PERMITTED LIENS" means (i) Liens upon rights-of-way for
pipeline purposes; (ii) any governmental Lien, mechanics, materialmen's,
carriers or similar Lien incurred in the ordinary course of business which is
not yet due or which is being contested in good faith by appropriate proceedings
and any undetermined Lien which is incidental to construction; (iii) the right
reserved to, or vested in, any municipality or public authority by the terms of
any right, power, franchise, grant, license, permit or by any provision of law,
to purchase or recapture or to designate a purchaser of, any property; (iv)
Liens of taxes and assessments which are (A) for the then current year, (B) not
at the time delinquent, or (C) delinquent but the validity of which is being
contested at the time by the Company or any Subsidiary in good faith; (v) Liens
of, or to

                                       2
<PAGE>

secure performance of, leases; (vi) any Lien upon, or deposits of, any assets in
favor of any surety company or clerk of court for the purpose of obtaining
indemnity or stay of judicial proceedings; (vii) any Lien upon property or
assets acquired or sold by the Company or any Restricted Subsidiary resulting
from the exercise of any rights arising out of defaults on receivables; (viii)
any Lien incurred in the ordinary course of business in connection with
workmen's compensation, unemployment insurance, temporary disability, social
security, retiree health or similar laws or regulations or to secure obligations
imposed by statute or governmental regulations; (ix) any Lien upon any property
or assets in accordance with customary banking practice to secure any Debt
incurred by the Company or any Restricted Subsidiary in connection with the
exporting of goods to, or between, or the marketing of goods in, or the
importing of goods from, foreign countries; or (x) any Lien in favor of the
United States of America or any state thereof, or any other country, or any
political subdivision of any of the foregoing, to secure partial, progress,
advance, or other payments pursuant to any contract or statute, or any Lien
securing industrial development, pollution control, or similar revenue bonds.

                  (l) "PERSON" means any individual, corporation, partnership,
joint venture, limited liability company, association, joint-stock company,
trust, other entity, unincorporated organization or government or any agency or
political subdivision thereof.

                  (m) "PRINCIPAL PROPERTY" means (a) any pipeline assets of the
Company or any Subsidiary, including any related facilities employed in the
transportation, distribution or marketing of natural gas, that is located in the
United States or Canada, and (b) any processing or manufacturing plant owned or
leased by the Company or any Subsidiary and located within the United States or
Canada, except, in the case of either clause (a) or (b), any such assets or
plant which, in the opinion of the Board of Directors, is not material in
relation to the activities of the Company and its Subsidiaries as a whole.

                  (n) "RESTRICTED SUBSIDIARY" means any Subsidiary of the
Company owning or leasing any Principal Property.

                  (o) "SALE-LEASEBACK TRANSACTION" means the sale or transfer by
the Company or any Restricted Subsidiary of any Principal Property to a Person
(other than the Company or a Subsidiary) and the taking back by the Company or
any Restricted Subsidiary, as the case may be, of a lease of such Principal
Property.

                  (p) "SUBSIDIARY" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.

         2. Payments of Principal and Interest.

                  (a) Accrued and unpaid interest on the unpaid principal
balance of this note shall be due and payable in quarterly installments. The
first quarterly installment of interest shall be due and payable on November 15,
2004, and a like installment shall be due and payable on the 15th

                                       3
<PAGE>

day of the succeeding February, May and August thereafter until this note shall
have been fully paid and satisfied; provided, that on August 15, 2005 (the
"MATURITY DATE"), the entire unpaid principal balance of this note and all
accrued and unpaid interest on the unpaid principal balance of this note shall
be finally due and payable.

                  (b) Payments of principal and interest with respect to this
note are to be made in the lawful currency of the United States of America at
such address or to the credit of such account as Payee may from time to time
notify the Company in writing.

                  (c) This note may be prepaid, in whole or in part, at any time
or from time to time, without penalty.

                  (d) Whenever any payment to be made hereunder (including
principal and interest) shall be stated to be due on a day that is not a
business day, such payment shall be due on the next following business day.

         3. Covenants.

                  (a) Payment of Principal and Interest. The Company covenants
and agrees for the benefit of Payee that it will duly and punctually pay the
principal of and any interest on this note in accordance with the terms hereof.

                  (b) Existence. The Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if it
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company.

                  (c) Limitations on Liens. The Company will not, nor will it
permit any Restricted Subsidiary to, create, assume, incur or suffer to exist
any Lien upon any Principal Property, whether owned or leased on the date hereof
or thereafter acquired, to secure any Debt of the Company or any other Person,
without in any such case making effective provision whereby this note shall be
secured equally and ratably with, or prior to, such Debt so long as such Debt
shall be so secured. This restriction shall not apply to:

                           (i) any Lien upon any property or assets of the
                  Company or any Restricted Subsidiary in existence on the date
                  hereof or created pursuant to an after-acquired property
                  clause or similar term in existence on the date hereof or any
                  mortgage, pledge agreement, security agreement or other
                  similar instrument in existence on the date hereof;

                           (ii) any Lien upon any property or assets created at
                  the time of acquisition of such property or assets by the
                  Company or any Restricted Subsidiary or within one year after
                  such time to secure all or a portion of the purchase price for
                  such property or assets or Debt incurred to finance such
                  purchase price, whether such Debt was incurred prior to, at
                  the time of or within one year of such acquisition;

                                       4
<PAGE>

                           (iii) any Lien upon any property or assets existing
                  thereon at the time of the acquisition thereof by the Company
                  or any Restricted Subsidiary (whether or not the obligations
                  secured thereby are assumed by the Company or any Restricted
                  Subsidiary);

                           (iv) any Lien upon any property or assets of a Person
                  existing thereon at the time such Person becomes a Restricted
                  Subsidiary by acquisition, merger or otherwise;

                           (v) the assumption by the Company or any Restricted
                  Subsidiary of obligations secured by any Lien existing at the
                  time of the acquisition by the Company or any Restricted
                  Subsidiary of the property or assets subject to such Lien or
                  at the time of the acquisition of the Person which owns such
                  property or assets;

                           (vi) any Lien on property to secure all or part of
                  the cost of construction or improvements thereon or to secure
                  Debt incurred prior to, at the time of, or within one year
                  after completion of such construction or making of such
                  improvements, to provide funds for any such purpose;

                           (vii) any Lien on any oil, gas, mineral and
                  processing and other plant properties to secure the payment of
                  costs, expenses or liabilities incurred under any lease or
                  grant or operating or other similar agreement in connection
                  with or incident to the exploration, development, maintenance
                  or operation of such properties;

                           (viii) any Lien arising from or in connection with a
                  conveyance by the Company or any Restricted Subsidiary of any
                  production payment with respect to oil, gas, natural gas,
                  carbon dioxide, sulphur, helium, coal, metals, minerals,
                  steam, timber or other natural resources;

                           (ix) any Lien in favor of the Company or any
                  Restricted Subsidiary;

                           (x) any Lien created or assumed by the Company or any
                  Restricted Subsidiary in connection with the issuance of Debt
                  the interest on which is excludable from gross income of the
                  holder of such Debt pursuant to the Internal Revenue Code of
                  1986, as amended, or any successor statute, for the purpose of
                  financing, in whole or in part, the acquisition or
                  construction of property or assets to be used by the Company
                  or any Subsidiary;

                           (xi) any Lien upon property or assets of any foreign
                  Restricted Subsidiary to secure Debt of that foreign
                  Restricted Subsidiary;

                           (xii) Permitted Liens;

                           (xiii) any Lien upon any additions, improvements,
                  replacements, repairs, fixtures, appurtenances or component
                  parts thereof attaching to or required to be attached to
                  property or assets pursuant to the terms of any mortgage,
                  pledge agreement, security agreement or other similar
                  instrument, creating a Lien upon such

                                       5
<PAGE>

                  property or assets permitted by clauses (i) through (xii),
                  inclusive, of this paragraph 3(c); or

                           (xiv) any extension, renewal, refinancing, refunding
                  or replacement (or successive extensions, renewals,
                  refinancing, refundings or replacements) of any Lien, in whole
                  or in part, that is referred to in clauses (i) through (xiii),
                  inclusive, of this paragraph 3(c), or of any Debt secured
                  thereby; provided, however, that the principal amount of Debt
                  secured thereby shall not exceed the greater of the principal
                  amount of Debt so secured at the time of such extension,
                  renewal, refinancing, refunding or replacement and the
                  original principal amount of Debt so secured (plus in each
                  case the aggregate amount of premiums, other payments, costs
                  and expenses required to be paid or incurred in connection
                  with such extension, renewal, refinancing, refunding or
                  replacement); provided, further, however, that such extension,
                  renewal, refinancing, refunding or replacement shall be
                  limited to all or a part of the property (including
                  improvements, alterations and repairs on such property)
                  subject to the encumbrance so extended, renewed, refinanced,
                  refunded or replaced (plus improvements, alterations and
                  repairs on such property).

Notwithstanding the foregoing provisions of this paragraph 3(c), the Company
may, and may permit any Restricted Subsidiary to, create, assume, incur or
suffer to exist any Lien upon any Principal Property to secure any Debt of the
Company or any other Person that is not excepted by clauses (i) through (xiv),
inclusive, of this paragraph 3(c) without securing this note, provided that the
aggregate principal amount of all Debt then outstanding secured by such Lien and
all similar Liens, together with all net sale proceeds from Sale-Leaseback
Transactions (excluding Sale-Leaseback Transactions permitted by clauses (i)
through (iv), inclusive, of paragraph 3(d)), does not exceed 15% of Consolidated
Net Tangible Assets.

                  (d) Restriction on Sale-Leaseback Transactions. The Company
will not, nor will it permit any Restricted Subsidiary to, engage in a
Sale-Leaseback Transaction unless:

                           (i) such Sale-Leaseback Transaction occurs within one
                  year from the date of acquisition of the Principal Property
                  subject thereto or the date of the completion of construction
                  or commencement of full operations on such Principal Property,
                  whichever is later;

                           (ii) the Sale-Leaseback Transaction involves a lease
                  for a period, including renewals, of not more than three
                  years;

                           (iii) the Company or such Restricted Subsidiary would
                  be entitled to incur Debt secured by a Lien on the Principal
                  Property subject thereto in a principal amount equal to or
                  exceeding the net sale proceeds from such Sale-Leaseback
                  Transaction without securing this note; or

                           (iv) the Company or such Restricted Subsidiary,
                  within a one-year period after such Sale-Leaseback
                  Transaction, applies or causes to be applied an amount not
                  less than the net sale proceeds from such Sale-Leaseback
                  Transaction to (A) the

                                       6
<PAGE>

                  repayment, redemption or retirement of Funded Debt of the
                  Company or any Subsidiary, or (B) investment in another
                  Principal Property.

Notwithstanding the foregoing provisions of this paragraph 3(d), the Company
may, and may permit any Restricted Subsidiary to, effect any Sale-Leaseback
Transaction that is not excepted by clauses (i) through (iv), inclusive, of this
paragraph 3(d), provided that the net sale proceeds from such Sale-Leaseback
Transaction, together with the aggregate principal amount of then outstanding
Debt secured by Liens upon Principal Properties not excepted by clauses (i)
through (xiv), inclusive, of paragraph 3(c), do not exceed 15% of the
Consolidated Net Tangible Assets.

                  (e) Company May Consolidate, Etc., Only on Certain Terms. The
Company shall not consolidate with or merge into any other Person or sell, lease
or transfer its properties and assets as, or substantially as, an entirety to,
any Person, unless:

                           (i) (A) in the case of a merger, the Company is the
                  surviving entity, or (B) the Person formed by such
                  consolidation or into which the Company is merged or the
                  Person which acquires by sale or transfer, or which leases,
                  the properties and assets of the Company as, or substantially
                  as, an entirety shall expressly assume, the due and punctual
                  payment of the principal of and any interest on this note and
                  the performance or observance of every covenant and condition
                  of this note on the part of the Company to be performed or
                  observed; and

                           (ii) immediately after giving effect to such
                  transaction, no Default or Event of Default exists.

Upon any consolidation of the Company with, or merger of the Company into, any
other Person or any sale, transfer or lease of the properties and assets of the
Company as, or substantially as, an entirety in accordance with this paragraph
3(e), the successor Person formed by such consolidation or into which the
Company is merged or to which such sale, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this note with the same effect as if such successor Person had
been named originally as the Company herein, and thereafter, except in the case
of a lease, the Company shall be relieved of all obligations and covenants under
this note.

                  (f) Waiver of Certain Covenants. The Company may omit in any
particular instance to comply with any term, provision or condition set forth in
paragraphs 3(b), 3(c) or 3(d) if before the time for such compliance the holders
of at least a majority in aggregate principal amount of the Company's senior
debt securities issued under that certain Indenture between the Company and HSBC
Bank USA, as trustee (successor to JPMorgan Chase Bank), dated as of May 10,
1999 (the "INDENTURE"), voting as one class, shall, in connection with the debt
issued under such Indenture, by act of such holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company in respect of any
such term, provision or condition shall remain in full force and effect.

                                       7
<PAGE>

         4. Remedies.

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

                           (i) default in the payment of any interest on the
                  note when it becomes due and payable, and continuance of such
                  default for a period of 30 days; or

                           (ii) default in the payment of the principal of the
                  note at its maturity; or

                           (iii) default in the performance, or breach, of any
                  term, covenant or warranty of the Company in this note (other
                  than a term, covenant or warranty a default in whose
                  performance or whose breach is elsewhere in this paragraph
                  specifically dealt with), and continuance of such default or
                  breach for a period of 60 days after there has been given, by
                  registered or certified mail, to the Company by the Payee a
                  written notice specifying such default or breach and requiring
                  it to be remedied and stating that such notice is a Notice of
                  Default hereunder; or

                           (iv) the Company pursuant to or within the meaning of
                  any Bankruptcy Law (A) commences a voluntary case, (B)
                  consents to the entry of any order for relief against it in an
                  involuntary case, (C) consents to the appointment of a
                  Custodian of it or for all or substantially all of its
                  property, or (D) makes a general assignment for the benefit of
                  its creditors; or

                           (v) a court of competent jurisdiction enters an order
                  or decree under any Bankruptcy Law that (A) is for relief
                  against the Company in an involuntary case, (B) appoints a
                  Custodian of the Company or for all or substantially all of
                  its property, or (C) orders the liquidation of the Company;
                  and the order or decree remains unstayed and in effect for 90
                  days.

                  (b) Acceleration of Maturity. If an Event of Default with
respect to this note occurs and is continuing, then in every such case the Payee
may declare the principal amount of this note to be due and payable immediately,
by a notice in writing to the Company, and upon any such declaration such
principal amount (or specified amount) shall become immediately due and payable.

                  (c) Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Payee is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.

         5. Choice of Law. This Note shall be construed and enforced in
accordance with, and the rights of the Company and Payee shall be governed by,
the law of the State of New York, excluding choice-of-law principles.

                                       8
<PAGE>

         6. No Usury Intended; Spreading. It is the intent of the Company and
the Payee in the execution and performance of this note to contract in strict
compliance with the usury laws of any applicable state and the United States of
America from time to time in effect. In furtherance thereof, the Company and the
Payee stipulate and agree that none of the provisions contained in this note
shall ever be construed to create a contract to pay for the use, forbearance, or
detention of money with interest at a rate in excess of the Highest Lawful Rate
and that for purposes hereof "interest" shall include the aggregate of all
charges which constitute interest under such laws that are contracted for,
reserved, taken, charged, or received under this note. In determining whether or
not the interest paid or payable, under any specific contingency, exceeds the
Highest Lawful Rate, the Company and the Payee shall, to the maximum extent
permitted under applicable law, (a) treat any nonprincipal payment as an
expense, fee, or premium rather than as interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) "spread" the total amount of
interest throughout the entire contemplated term of this note. The provisions of
this paragraph shall control over all other provisions of this note which may be
in apparent conflict herewith.

         7. Amendments and Waivers. No waivers, amendments or modifications of
this note shall be valid unless in writing and signed by the Company and the
Payee.

         8. Transfers. This note was originally issued in a transaction exempt
from registration under the Securities Act, and this note may not be offered,
sold or otherwise transferred in the absence of such registration or an
applicable exemption therefrom. The holder of this note agrees for the benefit
of the Company that this note may be offered, resold or otherwise transferred,
in whole but not in part, only (i) in the United States to a person whom the
seller reasonably believes is a qualified institutional buyer (as defined in
Rule 144A under the Securities Act) in a transaction meeting the requirements of
Rule 144A or (ii) pursuant to an exemption from registration under the
Securities Act, as determined in the reasonable discretion of the Company. Any
holder hereof desiring to transfer this note pursuant to clause (ii) above must
first furnish the Company, at holder's sole expense, an opinion of counsel (in
form and substance reasonably satisfactory to the Company) that neither
registration nor qualification under the Securities Act or any applicable state
securities laws is required in connection with such transfer and such other
evidence (including a certificate from the transferee) as the Company may
reasonably request in order to evaluate compliance with any applicable
securities laws, including the Securities Act. The Company will be entitled to
disregard any attempted sale, transfer, or assignment in violation of the
foregoing.

                            [Signature Page Follows]

                                       9
<PAGE>

         IN WITNESS WHEREOF, El Paso Corporation has caused this note to be
executed effective as of August 16, 2004.

                                              EL PASO CORPORATION

                                              By:
                                                 -------------------------------
                                              Name:
                                                   -----------------------------
                                              Title:
                                                    ----------------------------

<PAGE>
                                                                    Exhibit 10.1

                                    EXHIBIT B
                               FORM OF TRUTTA NOTE

See attached.

<PAGE>

                                  (Trutta Note)

THIS NOTE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS NOTE
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM, AS DETERMINED IN THE
REASONABLE DISCRETION OF EL PASO CORPORATION ("EL PASO"). ANY HOLDER HEREOF
DESIRING TO TRANSFER THIS NOTE MUST FIRST FURNISH EL PASO, AT HOLDER'S SOLE
EXPENSE, AN OPINION OF COUNSEL (IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
EL PASO) THAT NEITHER REGISTRATION NOR QUALIFICATION UNDER THE SECURITIES ACT OR
ANY APPLICABLE STATE SECURITIES LAWS IS REQUIRED IN CONNECTION WITH SUCH
TRANSFER AND SUCH OTHER EVIDENCE AS EL PASO MAY REASONABLY REQUEST IN ORDER TO
EVALUATE COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS, INCLUDING THE
SECURITIES ACT. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF EL PASO THAT
THIS NOTE MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN WHOLE BUT NOT IN
PART. EL PASO WILL BE ENTITLED TO DISREGARD ANY ATTEMPTED SALE, TRANSFER, OR
ASSIGNMENT IN VIOLATION OF THE FOREGOING.

                               El Paso Corporation

$95,828,992                                                      August 16, 2004

         FOR VALUE RECEIVED, the undersigned, El Paso Corporation, a corporation
organized under the laws of the State of Delaware (herein called the "COMPANY"),
promises to pay to the order of ECTMI Trutta Holdings LP, a Delaware limited
partnership (together with any other lawful and proper holder of this note from
time to time, the "PAYEE"), the principal sum of $95,828,992, with interest
(computed on the basis of a 360-day year of twelve 30-day months) from the date
hereof until paid in full on the unpaid principal balance hereof at the rate
equal to the lesser of (i) 6.5% per annum and (ii) the Highest Lawful Rate.

         1. Definitions. As used in this note, the following terms shall have
the respective meanings indicated:

                  (a) "BANKRUPTCY LAW" means Title 11, U.S. Code, or any similar
federal or state law for the relief of debtors.

                  (b) "BOARD OF DIRECTORS" means the board of directors of the
Company, or the executive or any other committee of that board duly authorized
to act in respect thereof.

<PAGE>

                  (c) "CONSOLIDATED NET TANGIBLE ASSETS" means, at any date of
determination, the total amount of assets after deducting therefrom (i) all
current liabilities (excluding (A) any current liabilities that by their terms
are extendable or renewable at the option of the obligor thereon to a time more
than 12 months after the time as of which the amount thereof is being computed,
and (B) current maturities of long-term debt), and (ii) the value (net of any
applicable reserves) of all goodwill, trade names, trademarks, patents and other
like intangible assets, all as set forth on the consolidated balance sheet of
the Company and its consolidated subsidiaries for the Company's most recently
completed fiscal quarter, prepared in accordance with generally accepted
accounting principles.

                  (d) "CUSTODIAN" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.

                  (e) "DEBT" means any obligation created or assumed by any
Person for the repayment of money borrowed and any purchase money obligation
created or assumed by such Person.

                  (f) "DEFAULT" means any event which is, or after notice or
lapse of time or both would become, an Event of Default with respect hereto.

                  (g) "EVENT OF DEFAULT" has the meaning specified in paragraph
4(a) hereof.

                  (h) "FUNDED DEBT" means all Debt maturing one year or more
from the date of the creation thereof, all Debt directly or indirectly renewable
or extendible, at the option of the debtor, by its terms or by the terms of any
instrument or agreement relating thereto, to a date one year or more from the
date of the creation thereof, and all Debt under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period of one
year or more.

                  (i) "HIGHEST LAWFUL RATE" shall mean, on any day, the maximum
nonusurious rate of interest permitted for that day by whichever of the
applicable federal or state law permits the highest interest rate, stated as a
rate per annum.

                  (j) "LIEN" means any mortgage, pledge, security interest,
charge, lien or other encumbrance of any kind, whether or not filed, recorded or
perfected under applicable law.

                  (k) "PERMITTED LIENS" means (i) Liens upon rights-of-way for
pipeline purposes; (ii) any governmental Lien, mechanics, materialmen's,
carriers or similar Lien incurred in the ordinary course of business which is
not yet due or which is being contested in good faith by appropriate proceedings
and any undetermined Lien which is incidental to construction; (iii) the right
reserved to, or vested in, any municipality or public authority by the terms of
any right, power, franchise, grant, license, permit or by any provision of law,
to purchase or recapture or to designate a purchaser of, any property; (iv)
Liens of taxes and assessments which are (A) for the then current year, (B) not
at the time delinquent, or (C) delinquent but the validity of which is being
contested at the time by the

                                       2
<PAGE>

Company or any Subsidiary in good faith; (v) Liens of, or to secure performance
of, leases; (vi) any Lien upon, or deposits of, any assets in favor of any
surety company or clerk of court for the purpose of obtaining indemnity or stay
of judicial proceedings; (vii) any Lien upon property or assets acquired or sold
by the Company or any Restricted Subsidiary resulting from the exercise of any
rights arising out of defaults on receivables; (viii) any Lien incurred in the
ordinary course of business in connection with workmen's compensation,
unemployment insurance, temporary disability, social security, retiree health or
similar laws or regulations or to secure obligations imposed by statute or
governmental regulations; (ix) any Lien upon any property or assets in
accordance with customary banking practice to secure any Debt incurred by the
Company or any Restricted Subsidiary in connection with the exporting of goods
to, or between, or the marketing of goods in, or the importing of goods from,
foreign countries; or (x) any Lien in favor of the United States of America or
any state thereof, or any other country, or any political subdivision of any of
the foregoing, to secure partial, progress, advance, or other payments pursuant
to any contract or statute, or any Lien securing industrial development,
pollution control, or similar revenue bonds.

                  (l) "PERSON" means any individual, corporation, partnership,
joint venture, limited liability company, association, joint-stock company,
trust, other entity, unincorporated organization or government or any agency or
political subdivision thereof.

                  (m) "PRINCIPAL PROPERTY" means (a) any pipeline assets of the
Company or any Subsidiary, including any related facilities employed in the
transportation, distribution or marketing of natural gas, that is located in the
United States or Canada, and (b) any processing or manufacturing plant owned or
leased by the Company or any Subsidiary and located within the United States or
Canada, except, in the case of either clause (a) or (b), any such assets or
plant which, in the opinion of the Board of Directors, is not material in
relation to the activities of the Company and its Subsidiaries as a whole.

                  (n) "RESTRICTED SUBSIDIARY" means any Subsidiary of the
Company owning or leasing any Principal Property.

                  (o) "SALE-LEASEBACK TRANSACTION" means the sale or transfer by
the Company or any Restricted Subsidiary of any Principal Property to a Person
(other than the Company or a Subsidiary) and the taking back by the Company or
any Restricted Subsidiary, as the case may be, of a lease of such Principal
Property.

                  (p) "SUBSIDIARY" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.

                                       3
<PAGE>

         2. Payments of Principal and Interest.

                  (a) Accrued and unpaid interest on the unpaid principal
balance of this note shall be due and payable in quarterly installments. The
first quarterly installment of interest shall be due and payable on November 15,
2004, and a like installment shall be due and payable on the 15th day of the
succeeding February, May and August thereafter until this note shall have been
fully paid and satisfied; provided, that on August 15, 2005 (the "MATURITY
DATE"), the entire unpaid principal balance of this note and all accrued and
unpaid interest on the unpaid principal balance of this note shall be finally
due and payable.

                  (b) Payments of principal and interest with respect to this
note are to be made in the lawful currency of the United States of America at
such address or to the credit of such account as Payee may from time to time
notify the Company in writing.

                  (c) This note may be prepaid, in whole or in part, at any time
or from time to time, without penalty.

                  (d) Whenever any payment to be made hereunder (including
principal and interest) shall be stated to be due on a day that is not a
business day, such payment shall be due on the next following business day.

         3. Covenants.

                  (a) Payment of Principal and Interest. The Company covenants
and agrees for the benefit of Payee that it will duly and punctually pay the
principal of and any interest on this note in accordance with the terms hereof.

                  (b) Existence. The Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if it
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company.

                  (c) Limitations on Liens. The Company will not, nor will it
permit any Restricted Subsidiary to, create, assume, incur or suffer to exist
any Lien upon any Principal Property, whether owned or leased on the date hereof
or thereafter acquired, to secure any Debt of the Company or any other Person,
without in any such case making effective provision whereby this note shall be
secured equally and ratably with, or prior to, such Debt so long as such Debt
shall be so secured. This restriction shall not apply to:

                           (i) any Lien upon any property or assets of the
                  Company or any Restricted Subsidiary in existence on the date
                  hereof or created pursuant to an after-acquired property
                  clause or similar term in existence on the date hereof or any
                  mortgage, pledge agreement, security agreement or other
                  similar instrument in existence on the date hereof;

                                       4
<PAGE>

                           (ii) any Lien upon any property or assets created at
                  the time of acquisition of such property or assets by the
                  Company or any Restricted Subsidiary or within one year after
                  such time to secure all or a portion of the purchase price for
                  such property or assets or Debt incurred to finance such
                  purchase price, whether such Debt was incurred prior to, at
                  the time of or within one year of such acquisition;

                           (iii) any Lien upon any property or assets existing
                  thereon at the time of the acquisition thereof by the Company
                  or any Restricted Subsidiary (whether or not the obligations
                  secured thereby are assumed by the Company or any Restricted
                  Subsidiary);

                           (iv) any Lien upon any property or assets of a Person
                  existing thereon at the time such Person becomes a Restricted
                  Subsidiary by acquisition, merger or otherwise;

                           (v) the assumption by the Company or any Restricted
                  Subsidiary of obligations secured by any Lien existing at the
                  time of the acquisition by the Company or any Restricted
                  Subsidiary of the property or assets subject to such Lien or
                  at the time of the acquisition of the Person which owns such
                  property or assets;

                           (vi) any Lien on property to secure all or part of
                  the cost of construction or improvements thereon or to secure
                  Debt incurred prior to, at the time of, or within one year
                  after completion of such construction or making of such
                  improvements, to provide funds for any such purpose;

                           (vii) any Lien on any oil, gas, mineral and
                  processing and other plant properties to secure the payment of
                  costs, expenses or liabilities incurred under any lease or
                  grant or operating or other similar agreement in connection
                  with or incident to the exploration, development, maintenance
                  or operation of such properties;

                           (viii) any Lien arising from or in connection with a
                  conveyance by the Company or any Restricted Subsidiary of any
                  production payment with respect to oil, gas, natural gas,
                  carbon dioxide, sulphur, helium, coal, metals, minerals,
                  steam, timber or other natural resources;

                           (ix) any Lien in favor of the Company or any
                  Restricted Subsidiary;

                           (x) any Lien created or assumed by the Company or any
                  Restricted Subsidiary in connection with the issuance of Debt
                  the interest on which is excludable from gross income of the
                  holder of such Debt pursuant to the Internal Revenue Code of
                  1986, as amended, or any successor statute, for the purpose of
                  financing, in whole or in part, the acquisition or
                  construction of property or assets to be used by the Company
                  or any Subsidiary;

                                       5
<PAGE>

                           (xi) any Lien upon property or assets of any foreign
                  Restricted Subsidiary to secure Debt of that foreign
                  Restricted Subsidiary;

                           (xii) Permitted Liens;

                           (xiii) any Lien upon any additions, improvements,
                  replacements, repairs, fixtures, appurtenances or component
                  parts thereof attaching to or required to be attached to
                  property or assets pursuant to the terms of any mortgage,
                  pledge agreement, security agreement or other similar
                  instrument, creating a Lien upon such property or assets
                  permitted by clauses (i) through (xii), inclusive, of this
                  paragraph 3(c); or

                           (xiv) any extension, renewal, refinancing, refunding
                  or replacement (or successive extensions, renewals,
                  refinancing, refundings or replacements) of any Lien, in whole
                  or in part, that is referred to in clauses (i) through (xiii),
                  inclusive, of this paragraph 3(c), or of any Debt secured
                  thereby; provided, however, that the principal amount of Debt
                  secured thereby shall not exceed the greater of the principal
                  amount of Debt so secured at the time of such extension,
                  renewal, refinancing, refunding or replacement and the
                  original principal amount of Debt so secured (plus in each
                  case the aggregate amount of premiums, other payments, costs
                  and expenses required to be paid or incurred in connection
                  with such extension, renewal, refinancing, refunding or
                  replacement); provided, further, however, that such extension,
                  renewal, refinancing, refunding or replacement shall be
                  limited to all or a part of the property (including
                  improvements, alterations and repairs on such property)
                  subject to the encumbrance so extended, renewed, refinanced,
                  refunded or replaced (plus improvements, alterations and
                  repairs on such property).

Notwithstanding the foregoing provisions of this paragraph 3(c), the Company
may, and may permit any Restricted Subsidiary to, create, assume, incur or
suffer to exist any Lien upon any Principal Property to secure any Debt of the
Company or any other Person that is not excepted by clauses (i) through (xiv),
inclusive, of this paragraph 3(c) without securing this note, provided that the
aggregate principal amount of all Debt then outstanding secured by such Lien and
all similar Liens, together with all net sale proceeds from Sale-Leaseback
Transactions (excluding Sale-Leaseback Transactions permitted by clauses (i)
through (iv), inclusive, of paragraph 3(d)), does not exceed 15% of Consolidated
Net Tangible Assets.

                  (d) Restriction on Sale-Leaseback Transactions. The Company
will not, nor will it permit any Restricted Subsidiary to, engage in a
Sale-Leaseback Transaction unless:

                           (i) such Sale-Leaseback Transaction occurs within one
                  year from the date of acquisition of the Principal Property
                  subject thereto or the date of the completion of construction
                  or commencement of full operations on such Principal Property,
                  whichever is later;

                                       6
<PAGE>

                           (ii) the Sale-Leaseback Transaction involves a lease
                  for a period, including renewals, of not more than three
                  years;

                           (iii) the Company or such Restricted Subsidiary would
                  be entitled to incur Debt secured by a Lien on the Principal
                  Property subject thereto in a principal amount equal to or
                  exceeding the net sale proceeds from such Sale-Leaseback
                  Transaction without securing this note; or

                           (iv) the Company or such Restricted Subsidiary,
                  within a one-year period after such Sale-Leaseback
                  Transaction, applies or causes to be applied an amount not
                  less than the net sale proceeds from such Sale-Leaseback
                  Transaction to (A) the repayment, redemption or retirement of
                  Funded Debt of the Company or any Subsidiary, or (B)
                  investment in another Principal Property.

Notwithstanding the foregoing provisions of this paragraph 3(d), the Company
may, and may permit any Restricted Subsidiary to, effect any Sale-Leaseback
Transaction that is not excepted by clauses (i) through (iv), inclusive, of this
paragraph 3(d), provided that the net sale proceeds from such Sale-Leaseback
Transaction, together with the aggregate principal amount of then outstanding
Debt secured by Liens upon Principal Properties not excepted by clauses (i)
through (xiv), inclusive, of paragraph 3(c), do not exceed 15% of the
Consolidated Net Tangible Assets.

                  (e) Company May Consolidate, Etc., Only on Certain Terms. The
Company shall not consolidate with or merge into any other Person or sell, lease
or transfer its properties and assets as, or substantially as, an entirety to,
any Person, unless:

                           (i) (A) in the case of a merger, the Company is the
                  surviving entity, or (B) the Person formed by such
                  consolidation or into which the Company is merged or the
                  Person which acquires by sale or transfer, or which leases,
                  the properties and assets of the Company as, or substantially
                  as, an entirety shall expressly assume, the due and punctual
                  payment of the principal of and any interest on this note and
                  the performance or observance of every covenant and condition
                  of this note on the part of the Company to be performed or
                  observed; and

                           (ii) immediately after giving effect to such
                  transaction, no Default or Event of Default exists.

Upon any consolidation of the Company with, or merger of the Company into, any
other Person or any sale, transfer or lease of the properties and assets of the
Company as, or substantially as, an entirety in accordance with this paragraph
3(e), the successor Person formed by such consolidation or into which the
Company is merged or to which such sale, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this note with the same effect as if such successor

                                       7
<PAGE>

Person had been named originally as the Company herein, and thereafter, except
in the case of a lease, the Company shall be relieved of all obligations and
covenants under this note.

                  (f) Waiver of Certain Covenants. The Company may omit in any
particular instance to comply with any term, provision or condition set forth in
paragraphs 3(b), 3(c) or 3(d) if before the time for such compliance the holders
of at least a majority in aggregate principal amount of the Company's senior
debt securities issued under that certain Indenture between the Company and HSBC
Bank USA, as trustee (successor to JPMorgan Chase Bank), dated as of May 10,
1999 (the "INDENTURE"), voting as one class, shall, in connection with the debt
issued under such Indenture, by act of such holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company in respect of any
such term, provision or condition shall remain in full force and effect.

         4. Remedies.

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

                           (i) default in the payment of any interest on the
                  note when it becomes due and payable, and continuance of such
                  default for a period of 30 days; or

                           (ii) default in the payment of the principal of the
                  note at its maturity; or

                           (iii) default in the performance, or breach, of any
                  term, covenant or warranty of the Company in this note (other
                  than a term, covenant or warranty a default in whose
                  performance or whose breach is elsewhere in this paragraph
                  specifically dealt with), and continuance of such default or
                  breach for a period of 60 days after there has been given, by
                  registered or certified mail, to the Company by the Payee a
                  written notice specifying such default or breach and requiring
                  it to be remedied and stating that such notice is a Notice of
                  Default hereunder; or

                           (iv) the Company pursuant to or within the meaning of
                  any Bankruptcy Law (A) commences a voluntary case, (B)
                  consents to the entry of any order for relief against it in an
                  involuntary case, (C) consents to the appointment of a
                  Custodian of it or for all or substantially all of its
                  property, or (D) makes a general assignment for the benefit of
                  its creditors; or

                                       8
<PAGE>

                           (v) a court of competent jurisdiction enters an order
                  or decree under any Bankruptcy Law that (A) is for relief
                  against the Company in an involuntary case, (B) appoints a
                  Custodian of the Company or for all or substantially all of
                  its property, or (C) orders the liquidation of the Company;
                  and the order or decree remains unstayed and in effect for 90
                  days.

                  (b) Acceleration of Maturity. If an Event of Default with
respect to this note occurs and is continuing, then in every such case the Payee
may declare the principal amount of this note to be due and payable immediately,
by a notice in writing to the Company, and upon any such declaration such
principal amount (or specified amount) shall become immediately due and payable.

                  (c) Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Payee is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.

         5. Choice of Law. This Note shall be construed and enforced in
accordance with, and the rights of the Company and Payee shall be governed by,
the law of the State of New York, excluding choice-of-law principles.

         6. No Usury Intended; Spreading. It is the intent of the Company and
the Payee in the execution and performance of this note to contract in strict
compliance with the usury laws of any applicable state and the United States of
America from time to time in effect. In furtherance thereof, the Company and the
Payee stipulate and agree that none of the provisions contained in this note
shall ever be construed to create a contract to pay for the use, forbearance, or
detention of money with interest at a rate in excess of the Highest Lawful Rate
and that for purposes hereof "interest" shall include the aggregate of all
charges which constitute interest under such laws that are contracted for,
reserved, taken, charged, or received under this note. In determining whether or
not the interest paid or payable, under any specific contingency, exceeds the
Highest Lawful Rate, the Company and the Payee shall, to the maximum extent
permitted under applicable law, (a) treat any nonprincipal payment as an
expense, fee, or premium rather than as interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) "spread" the total amount of
interest throughout the entire contemplated term of this note. The provisions of
this paragraph shall control over all other provisions of this note which may be
in apparent conflict herewith.

         7. Amendments and Waivers. No waivers, amendments or modifications of
this note shall be valid unless in writing and signed by the Company and the
Payee.

                            [Signature Page Follows]

                                       9
<PAGE>

         IN WITNESS WHEREOF, El Paso Corporation has caused this note to be
executed effective as of August 16, 2004.

                                         EL PASO CORPORATION

                                         By:
                                            ------------------------------------
                                         Name:
                                              ----------------------------------
                                         Title:
                                               ---------------------------------

<PAGE>
                                                                    Exhibit 10.1

                                    EXHIBIT C
                           FORM OF CALPERS CERTIFICATE

See attached.

<PAGE>

                                   CERTIFICATE
                                    (CalPERS)

         The undersigned is delivering this certificate to El Paso Corporation
("El Paso"), pursuant to section 8 of that certain Swap Settlement Agreement
dated effective as of August 16, 2004, by and among El Paso and the other
parties thereto (the "Settlement Agreement") and hereby certifies and agrees as
follows:

         1.       Terms not otherwise defined herein shall have the meanings
                  given such terms in the Settlement Agreement.

         2.       The undersigned understands that the CalPERS Note has not
                  been, and will not be, registered under the Securities Act of
                  1933 (the "Securities Act"), or under any state securities
                  laws, was originally offered and sold in reliance upon certain
                  federal and state exemptions from such registration, and may
                  not be sold or transferred by the undersigned in the absence
                  of an effective registration statement under the Securities
                  Act or the availability of an exemption from registration
                  thereunder as reasonably determined by El Paso.

         3.       The undersigned is acquiring the CalPERS Note for its own
                  account and not with a view to the sale or distribution
                  thereof within the meanings of the Securities Act.

         4.       The undersigned is an "accredited investor" as such term is
                  defined in Rule 501(a) of Regulation D promulgated under the
                  Securities Act, has such knowledge and experience in business
                  and financial matters as to be capable of evaluating the
                  merits and risks of the undersigned's investment in the
                  CalPERS Note, and is able to bear indefinitely the economic
                  risk and lack of liquidity inherent in holding the CalPERS
                  Note.

         5.       The undersigned is a "qualified institutional buyer" as such
                  term in defined in Rule 144A promulgated under the Securities
                  Act ("QIB"), is aware that the sale of the CalPERS Note to it
                  may be made in reliance upon Rule 144A, and is acquiring the
                  CalPERS Note for its own account or for the account of a QIB.

         6.       The undersigned acknowledges and understands, in light of the
                  pending restatement of El Paso's financial statements, that it
                  cannot rely on El Paso's previously filed periodic reports,
                  but that it has had access to and reviewed El Paso's other
                  filings with the Securities and Exchange Commission ("SEC"),
                  and has had the opportunity to ask questions of, and receive
                  additional information from, El Paso concerning its investment
                  in the CalPERS Note. The undersigned confirms that all such
                  questions have been answered by El Paso to the undersigned's
                  full satisfaction and that the undersigned has received (or
                  been provided access to) all requested additional information
                  concerning its investment in the CalPERS Note and does not
                  desire any further information or data concerning El Paso.
<PAGE>

         7.       The undersigned has the necessary power and authority to
                  execute and deliver this certificate, and has taken all
                  actions necessary to authorize its execution and delivery by
                  the undersigned. This undertaking has been duly authorized,
                  executed, and delivered by, and is enforceable against, the
                  undersigned.

                            [Signature Page Follows]

<PAGE>

         The undersigned has caused this certificate to be executed this __ day
of ____________, 2004.

                                        CALIFORNIA PUBLIC EMPLOYEES'
                                        RETIREMENT SYSTEM

                                        By:
                                           -------------------------------------
                                        Name:
                                             -----------------------------------
                                        Title:
                                              ----------------------------------

<PAGE>
                                                                    Exhibit 10.1

                                    EXHIBIT D
                              FORM OF CALPERS NOTE

See attached.

<PAGE>
                                 (CalPERS Note)

THIS NOTE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS NOTE
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF THIS NOTE
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS NOTE MAY BE OFFERED, RESOLD OR
OTHERWISE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY (I) IN THE UNITED STATES
TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A OR (II) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT, AS DETERMINED IN THE REASONABLE
DISCRETION OF THE COMPANY. ANY HOLDER HEREOF DESIRING TO TRANSFER THIS NOTE
PURSUANT TO CLAUSE (II) ABOVE MUST FIRST FURNISH THE COMPANY, AT HOLDER'S SOLE
EXPENSE, AN OPINION OF COUNSEL (IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE COMPANY) THAT NEITHER REGISTRATION NOR QUALIFICATION UNDER THE SECURITIES
ACT OR ANY APPLICABLE STATE SECURITIES LAWS IS REQUIRED IN CONNECTION WITH SUCH
TRANSFER AND SUCH OTHER EVIDENCE (INCLUDING A CERTIFICATE FROM THE TRANSFEREE)
AS THE COMPANY MAY REASONABLY REQUEST IN ORDER TO EVALUATE COMPLIANCE WITH ANY
APPLICABLE SECURITIES LAWS, INCLUDING THE SECURITIES ACT. THE COMPANY WILL BE
ENTITLED TO DISREGARD ANY ATTEMPTED SALE, TRANSFER, OR ASSIGNMENT IN VIOLATION
OF THE FOREGOING.

                               El Paso Corporation

$                                                                      , 200
 -----------------                                      ---------------     ----

         FOR VALUE RECEIVED, the undersigned, El Paso Corporation, a corporation
organized under the laws of the State of Delaware (herein called the "COMPANY"),
promises to pay to the order of the California Public Employees' Retirement
System (together with any other lawful and proper holder of this note from time
to time, the "PAYEE"), the principal sum of $       , with interest (computed on
the basis of a 360-day year of twelve 30-day months) from the date hereof until
paid in full on the unpaid principal balance hereof at the rate equal to the
lesser of (i) 6.5% per annum and (ii) the Highest Lawful Rate.

      1. Definitions. As used in this note, the following terms shall have the
respective meanings indicated:

            (a) "BANKRUPTCY LAW" means Title 11, U.S. Code, or any similar
federal or state law for the relief of debtors.

            (b) "BOARD OF DIRECTORS" means the board of directors of the
Company, or the executive or any other committee of that board duly authorized
to act in respect thereof.

<PAGE>

            (c) "CONSOLIDATED NET TANGIBLE ASSETS" means, at any date of
determination, the total amount of assets after deducting therefrom (i) all
current liabilities (excluding (A) any current liabilities that by their terms
are extendable or renewable at the option of the obligor thereon to a time more
than 12 months after the time as of which the amount thereof is being computed,
and (B) current maturities of long-term debt), and (ii) the value (net of any
applicable reserves) of all goodwill, trade names, trademarks, patents and other
like intangible assets, all as set forth on the consolidated balance sheet of
the Company and its consolidated subsidiaries for the Company's most recently
completed fiscal quarter, prepared in accordance with generally accepted
accounting principles.

            (d) "CUSTODIAN" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.

            (e) "DEBT" means any obligation created or assumed by any Person for
the repayment of money borrowed and any purchase money obligation created or
assumed by such Person.

            (f) "DEFAULT" means any event which is, or after notice or lapse of
time or both would become, an Event of Default with respect hereto.

            (g) "EVENT OF DEFAULT" has the meaning specified in paragraph 4(a)
hereof.

            (h) "FUNDED DEBT" means all Debt maturing one year or more from the
date of the creation thereof, all Debt directly or indirectly renewable or
extendible, at the option of the debtor, by its terms or by the terms of any
instrument or agreement relating thereto, to a date one year or more from the
date of the creation thereof, and all Debt under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period of one
year or more.

            (i) "HIGHEST LAWFUL RATE" shall mean, on any day, the maximum
nonusurious rate of interest permitted for that day by whichever of the
applicable federal or state law permits the highest interest rate, stated as a
rate per annum.

            (j) "LIEN" means any mortgage, pledge, security interest, charge,
lien or other encumbrance of any kind, whether or not filed, recorded or
perfected under applicable law.

            (k) "PERMITTED LIENS" means (i) Liens upon rights-of-way for
pipeline purposes; (ii) any governmental Lien, mechanics, materialmen's,
carriers or similar Lien incurred in the ordinary course of business which is
not yet due or which is being contested in good faith by appropriate proceedings
and any undetermined Lien which is incidental to construction; (iii) the right
reserved to, or vested in, any municipality or public authority by the terms of
any right, power, franchise, grant, license, permit or by any provision of law,
to purchase or recapture or to designate a purchaser of, any property; (iv)
Liens of taxes and assessments which are (A) for the then current year, (B) not
at the time delinquent, or (C) delinquent but the validity of which is being
contested at the time by the Company or any Subsidiary in good faith; (v) Liens
of, or to secure performance of, leases; (vi) any Lien upon, or deposits of, any
assets in favor of any surety company or clerk of court for the purpose of
obtaining indemnity or stay of judicial proceedings; (vii) any Lien upon
property or assets acquired or sold by the Company or any Restricted Subsidiary
resulting from the exercise of any rights arising out of defaults on
receivables; (viii) any Lien incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance, temporary
disability, social security, retiree health or similar laws or regulations or to
secure obligations imposed by statute or governmental

                                       2
<PAGE>

regulations; (ix) any Lien upon any property or assets in accordance with
customary banking practice to secure any Debt incurred by the Company or any
Restricted Subsidiary in connection with the exporting of goods to, or between,
or the marketing of goods in, or the importing of goods from, foreign countries;
or (x) any Lien in favor of the United States of America or any state thereof,
or any other country, or any political subdivision of any of the foregoing, to
secure partial, progress, advance, or other payments pursuant to any contract or
statute, or any Lien securing industrial development, pollution control, or
similar revenue bonds.

            (l) "PERSON" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
other entity, unincorporated organization or government or any agency or
political subdivision thereof.

            (m) "PRINCIPAL PROPERTY" means (a) any pipeline assets of the
Company or any Subsidiary, including any related facilities employed in the
transportation, distribution or marketing of natural gas, that is located in the
United States or Canada, and (b) any processing or manufacturing plant owned or
leased by the Company or any Subsidiary and located within the United States or
Canada, except, in the case of either clause (a) or (b), any such assets or
plant which, in the opinion of the Board of Directors, is not material in
relation to the activities of the Company and its Subsidiaries as a whole.

            (n) "RESTRICTED SUBSIDIARY" means any Subsidiary of the Company
owning or leasing any Principal Property.

            (o) "SALE-LEASEBACK TRANSACTION" means the sale or transfer by the
Company or any Restricted Subsidiary of any Principal Property to a Person
(other than the Company or a Subsidiary) and the taking back by the Company or
any Restricted Subsidiary, as the case may be, of a lease of such Principal
Property.

            (p) "SUBSIDIARY" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.

      2. Payments of Principal and Interest.

            (a) Accrued and unpaid interest on the unpaid principal balance of
this note shall be due and payable in quarterly installments. The first
quarterly installment of interest shall be due and payable on [NOVEMBER 15,
2004], and a like installment shall be due and payable on the 15th day of the
succeeding [FEBRUARY, MAY AND AUGUST] thereafter until this note shall have been
fully paid and satisfied; provided, that on August 15, 2005 (the "MATURITY
DATE"), the entire unpaid principal balance of this note and all accrued and
unpaid interest on the unpaid principal balance of this note shall be finally
due and payable.

            (b) Payments of principal and interest with respect to this note are
to be made in the lawful currency of the United States of America at such
address or to the credit of such account as Payee may from time to time notify
the Company in writing.

            (c) This note may be prepaid, in whole or in part, at any time or
from time to time, without penalty.

                                       3
<PAGE>

            (d) Whenever any payment to be made hereunder (including principal
and interest) shall be stated to be due on a day that is not a business day,
such payment shall be due on the next following business day.

      3. Covenants.

            (a) Payment of Principal and Interest. The Company covenants and
agrees for the benefit of Payee that it will duly and punctually pay the
principal of and any interest on this note in accordance with the terms hereof.

            (b) Existence. The Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence, rights
(charter and statutory) and franchises; provided, however, that the Company
shall not be required to preserve any such right or franchise if it shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company.

          (c) Limitations on Liens. The Company will not, nor will it permit any
Restricted Subsidiary to, create, assume, incur or suffer to exist any Lien upon
any Principal Property, whether owned or leased on the date hereof or thereafter
acquired, to secure any Debt of the Company or any other Person, without in any
such case making effective provision whereby this note shall be secured equally
and ratably with, or prior to, such Debt so long as such Debt shall be so
secured. This restriction shall not apply to:

                  (i) any Lien upon any property or assets of the Company or any
            Restricted Subsidiary in existence on the date hereof or created
            pursuant to an after-acquired property clause or similar term in
            existence on the date hereof or any mortgage, pledge agreement,
            security agreement or other similar instrument in existence on the
            date hereof;

                  (ii) any Lien upon any property or assets created at the time
            of acquisition of such property or assets by the Company or any
            Restricted Subsidiary or within one year after such time to secure
            all or a portion of the purchase price for such property or assets
            or Debt incurred to finance such purchase price, whether such Debt
            was incurred prior to, at the time of or within one year of such
            acquisition;

                  (iii) any Lien upon any property or assets existing thereon at
            the time of the acquisition thereof by the Company or any Restricted
            Subsidiary (whether or not the obligations secured thereby are
            assumed by the Company or any Restricted Subsidiary);

                  (iv) any Lien upon any property or assets of a Person existing
            thereon at the time such Person becomes a Restricted Subsidiary by
            acquisition, merger or otherwise;

                  (v) the assumption by the Company or any Restricted Subsidiary
            of obligations secured by any Lien existing at the time of the
            acquisition by the Company or any Restricted Subsidiary of the
            property or assets subject to such Lien or at the time of the
            acquisition of the Person which owns such property or assets;

                  (vi) any Lien on property to secure all or part of the cost of
            construction or improvements thereon or to secure Debt incurred
            prior to, at the time of, or within

                                       4
<PAGE>

            one year after completion of such construction or making of such
            improvements, to provide funds for any such purpose;

                  (vii) any Lien on any oil, gas, mineral and processing and
            other plant properties to secure the payment of costs, expenses or
            liabilities incurred under any lease or grant or operating or other
            similar agreement in connection with or incident to the exploration,
            development, maintenance or operation of such properties;

                  (viii) any Lien arising from or in connection with a
            conveyance by the Company or any Restricted Subsidiary of any
            production payment with respect to oil, gas, natural gas, carbon
            dioxide, sulphur, helium, coal, metals, minerals, steam, timber or
            other natural resources;

                  (ix) any Lien in favor of the Company or any Restricted
            Subsidiary;

                  (x) any Lien created or assumed by the Company or any
            Restricted Subsidiary in connection with the issuance of Debt the
            interest on which is excludable from gross income of the holder of
            such Debt pursuant to the Internal Revenue Code of 1986, as amended,
            or any successor statute, for the purpose of financing, in whole or
            in part, the acquisition or construction of property or assets to be
            used by the Company or any Subsidiary;

                  (xi) any Lien upon property or assets of any foreign
            Restricted Subsidiary to secure Debt of that foreign Restricted
            Subsidiary;

                  (xii) Permitted Liens;

                  (xiii) any Lien upon any additions, improvements,
            replacements, repairs, fixtures, appurtenances or component parts
            thereof attaching to or required to be attached to property or
            assets pursuant to the terms of any mortgage, pledge agreement,
            security agreement or other similar instrument, creating a Lien upon
            such property or assets permitted by clauses (i) through (xii),
            inclusive, of this paragraph 3(c); or

                  (xiv) any extension, renewal, refinancing, refunding or
            replacement (or successive extensions, renewals, refinancing,
            refundings or replacements) of any Lien, in whole or in part, that
            is referred to in clauses (i) through (xiii), inclusive, of this
            paragraph 3(c), or of any Debt secured thereby; provided, however,
            that the principal amount of Debt secured thereby shall not exceed
            the greater of the principal amount of Debt so secured at the time
            of such extension, renewal, refinancing, refunding or replacement
            and the original principal amount of Debt so secured (plus in each
            case the aggregate amount of premiums, other payments, costs and
            expenses required to be paid or incurred in connection with such
            extension, renewal, refinancing, refunding or replacement);
            provided, further, however, that such extension, renewal,
            refinancing, refunding or replacement shall be limited to all or a
            part of the property (including improvements, alterations and
            repairs on such property) subject to the encumbrance so extended,
            renewed, refinanced, refunded or replaced (plus improvements,
            alterations and repairs on such property).

Notwithstanding the foregoing provisions of this paragraph 3(c), the Company
may, and may permit any Restricted Subsidiary to, create, assume, incur or
suffer to exist any Lien upon any Principal Property to secure any Debt of the
Company or any other Person that is not excepted

                                       5
<PAGE>

by clauses (i) through (xiv), inclusive, of this paragraph 3(c) without securing
this note, provided that the aggregate principal amount of all Debt then
outstanding secured by such Lien and all similar Liens, together with all net
sale proceeds from Sale-Leaseback Transactions (excluding Sale-Leaseback
Transactions permitted by clauses (i) through (iv), inclusive, of paragraph
3(d)), does not exceed 15% of Consolidated Net Tangible Assets.

            (d) Restriction on Sale-Leaseback Transactions. The Company will
not, nor will it permit any Restricted Subsidiary to, engage in a Sale-Leaseback
Transaction unless:

                  (i) such Sale-Leaseback Transaction occurs within one year
            from the date of acquisition of the Principal Property subject
            thereto or the date of the completion of construction or
            commencement of full operations on such Principal Property,
            whichever is later;

                  (ii) the Sale-Leaseback Transaction involves a lease for a
            period, including renewals, of not more than three years;

                  (iii) the Company or such Restricted Subsidiary would be
            entitled to incur Debt secured by a Lien on the Principal Property
            subject thereto in a principal amount equal to or exceeding the net
            sale proceeds from such Sale-Leaseback Transaction without securing
            this note; or

                  (iv) the Company or such Restricted Subsidiary, within a
            one-year period after such Sale-Leaseback Transaction, applies or
            causes to be applied an amount not less than the net sale proceeds
            from such Sale-Leaseback Transaction to (A) the repayment,
            redemption or retirement of Funded Debt of the Company or any
            Subsidiary, or (B) investment in another Principal Property.

Notwithstanding the foregoing provisions of this paragraph 3(d), the Company
may, and may permit any Restricted Subsidiary to, effect any Sale-Leaseback
Transaction that is not excepted by clauses (i) through (iv), inclusive, of this
paragraph 3(d), provided that the net sale proceeds from such Sale-Leaseback
Transaction, together with the aggregate principal amount of then outstanding
Debt secured by Liens upon Principal Properties not excepted by clauses (i)
through (xiv), inclusive, of paragraph 3(c), do not exceed 15% of the
Consolidated Net Tangible Assets.

            (e) Company May Consolidate, Etc., Only on Certain Terms. The
Company shall not consolidate with or merge into any other Person or sell, lease
or transfer its properties and assets as, or substantially as, an entirety to,
any Person, unless:

                  (i) (A) in the case of a merger, the Company is the surviving
            entity, or (B) the Person formed by such consolidation or into which
            the Company is merged or the Person which acquires by sale or
            transfer, or which leases, the properties and assets of the Company
            as, or substantially as, an entirety shall expressly assume, the due
            and punctual payment of the principal of and any interest on this
            note and the performance or observance of every covenant and
            condition of this note on the part of the Company to be performed or
            observed; and

                  (ii) immediately after giving effect to such transaction, no
            Default or Event of Default exists.

Upon any consolidation of the Company with, or merger of the Company into, any
other Person or any sale, transfer or lease of the properties and assets of the
Company as, or substantially as,

                                       6
<PAGE>

an entirety in accordance with this paragraph 3(e), the successor Person formed
by such consolidation or into which the Company is merged or to which such sale,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this note with the same
effect as if such successor Person had been named originally as the Company
herein, and thereafter, except in the case of a lease, the Company shall be
relieved of all obligations and covenants under this note.

            (f) Waiver of Certain Covenants. The Company may omit in any
particular instance to comply with any term, provision or condition set forth in
paragraphs 3(b), 3(c) or 3(d) if before the time for such compliance the holders
of at least a majority in aggregate principal amount of the Company's senior
debt securities issued under that certain Indenture between the Company and HSBC
Bank USA, as trustee (successor to JPMorgan Chase Bank), dated as of May 10,
1999 (the "INDENTURE"), voting as one class, shall, in connection with the debt
issued under such Indenture, by act of such holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company in respect of any
such term, provision or condition shall remain in full force and effect.

      4. Remedies.

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

                  (i) default in the payment of any interest on the note when it
            becomes due and payable, and continuance of such default for a
            period of 30 days; or

                  (ii) default in the payment of the principal of the note at
            its maturity; or

                  (iii) default in the performance, or breach, of any term,
            covenant or warranty of the Company in this note (other than a term,
            covenant or warranty a default in whose performance or whose breach
            is elsewhere in this paragraph specifically dealt with), and
            continuance of such default or breach for a period of 60 days after
            there has been given, by registered or certified mail, to the
            Company by the Payee a written notice specifying such default or
            breach and requiring it to be remedied and stating that such notice
            is a Notice of Default hereunder; or

                  (iv) the Company pursuant to or within the meaning of any
            Bankruptcy Law (A) commences a voluntary case, (B) consents to the
            entry of any order for relief against it in an involuntary case, (C)
            consents to the appointment of a Custodian of it or for all or
            substantially all of its property, or (D) makes a general assignment
            for the benefit of its creditors; or

                  (v) a court of competent jurisdiction enters an order or
            decree under any Bankruptcy Law that (A) is for relief against the
            Company in an involuntary case, (B) appoints a Custodian of the
            Company or for all or substantially all of its property, or (C)
            orders the liquidation of the Company; and the order or decree
            remains unstayed and in effect for 90 days.

                                       7
<PAGE>

            (b) Acceleration of Maturity. If an Event of Default with respect to
this note occurs and is continuing, then in every such case the Payee may
declare the principal amount of this note to be due and payable immediately, by
a notice in writing to the Company, and upon any such declaration such principal
amount (or specified amount) shall become immediately due and payable.

            (c) Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Payee is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.

      5. Choice of Law. This Note shall be construed and enforced in accordance
with, and the rights of the Company and Payee shall be governed by, the law of
the State of New York, excluding choice-of-law principles.

      6. No Usury Intended; Spreading. It is the intent of the Company and the
Payee in the execution and performance of this note to contract in strict
compliance with the usury laws of any applicable state and the United States of
America from time to time in effect. In furtherance thereof, the Company and the
Payee stipulate and agree that none of the provisions contained in this note
shall ever be construed to create a contract to pay for the use, forbearance, or
detention of money with interest at a rate in excess of the Highest Lawful Rate
and that for purposes hereof "interest" shall include the aggregate of all
charges which constitute interest under such laws that are contracted for,
reserved, taken, charged, or received under this note. In determining whether or
not the interest paid or payable, under any specific contingency, exceeds the
Highest Lawful Rate, the Company and the Payee shall, to the maximum extent
permitted under applicable law, (a) treat any nonprincipal payment as an
expense, fee, or premium rather than as interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) "spread" the total amount of
interest throughout the entire contemplated term of this note. The provisions of
this paragraph shall control over all other provisions of this note which may be
in apparent conflict herewith.

      7. Amendments and Waivers. No waivers, amendments or modifications of this
note shall be valid unless in writing and signed by the Company and the Payee.

      8. Transfers. This note was originally issued in a transaction exempt from
registration under the Securities Act, and this note may not be offered, sold or
otherwise transferred in the absence of such registration or an applicable
exemption therefrom. The holder of this note agrees for the benefit of the
Company that this note may be offered, resold or otherwise transferred, in whole
but not in part, only (i) in the United States to a person whom the seller
reasonably believes is a qualified institutional buyer (as defined in Rule 144A
under the Securities Act) in a transaction meeting the requirements of Rule 144A
or (ii) pursuant to an exemption from registration under the Securities Act, as
determined in the reasonable discretion of the Company. Any holder hereof
desiring to transfer this note pursuant to clause (ii) above must first furnish
the Company, at holder's sole expense, an opinion of counsel (in form and
substance reasonably satisfactory to the Company) that neither registration nor
qualification under the Securities Act or any applicable state securities laws
is required in connection with such transfer and such other evidence (including
a certificate from the transferee) as the Company may reasonably request in
order to evaluate compliance with any applicable securities

                                       8
<PAGE>

laws, including the Securities Act. The Company will be entitled to disregard
any attempted sale, transfer, or assignment in violation of the foregoing.

                            [Signature Page Follows]

                                       9
<PAGE>
      IN WITNESS WHEREOF, El Paso Corporation has caused this note to be
executed on _________, 200____.

                                             EL PASO CORPORATION

                                             By:
                                                --------------------------------
                                             Name:
                                                  ------------------------------
                                             Title:
                                                   -----------------------------<PAGE>
                                                                    EXHIBIT 10.1

                                                         EXECUTIVE: SHEKAR AYYAR

                              BINDVIEW CORPORATION

                         EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "AGREEMENT") is made between BindView
Development Corporation, a Texas corporation (the "COMPANY"), and the
"EXECUTIVE" identified above. Unless otherwise indicated, all references to
Sections are to Sections in this Agreement. This Agreement, when executed by
both the Executive and the Company, is effective as of the date written on the
signature page ("EFFECTIVE DATE"). This Agreement replaces and supersedes any
and all prior employment agreements between the Company and the Executive, but
does not supersede or replace stock-option agreements, Benefit-related
agreements, and the like.

1.     BACKGROUND.

1.1    The Executive currently holds, or is being hired for, a senior executive
       position with the Company. As a result, the Executive has, or is expected
       to have, significant responsibility for the Company's management,
       profitability and growth. Likewise, the Executive possesses, or is
       expected to acquire, an intimate knowledge of the Company's business and
       affairs, including its policies, plans, methods, personnel,
       opportunities, and challenges.

1.2    The Compensation Committee of the Company's Board of Directors (the
       "Board") considers the continued employment of the Executive to be in the
       best interests of the Company and its shareholders. The Compensation
       Committee desires to structure the Executive's compensation to encourage
       the Executive to remain in service to the Company, in part by providing
       for certain severance benefits if the Executive's employment ends in
       certain specified ways.

2.     DEFINITIONS. For purposes of this Agreement, the following terms have the
       meanings set forth below. Other defined terms have the meanings set forth
       in the provisions of this Agreement in which they are used.

2.1    BASE SALARY -- see Section 4.1.

2.2    BENEFIT means any Company- provided or -sponsored pension plan, 401k
       plan, insurance plan, employee stock purchase plan, or other employee
       benefit plan, program or arrangement, made available to the Company's
       employees generally.

2.3    BINDVIEW BUSINESS is intentionally defined broadly in view of the
       Executive's senior position with the Company; it means (1) any business
       engaged in by the Company or any other BindView Company during the
       Executive's Employment, or (2) any other business as to which the Company
       or any other BindView Company has made demonstrable preparation to engage
       in during such Employment and (i) in which preparation the Executive
       materially participated, or (ii) concerning which preparation the
       Executive had access to Confidential Information.

2.4    BINDVIEW COMPANY or BINDVIEW COMPANIES means BindView and its affiliates.
       For purposes of this Agreement, (i) an affiliate of a Person is defined
       as any other Person that controls or is controlled by or is under common
       control with that Person, and (ii) control is defined as the direct or
       indirect ownership of at least fifty percent (50%) of the equity or
       beneficial interest in such Person

<PAGE>

                                                         EXECUTIVE: SHEKAR AYYAR

       or the right to vote for or appoint a majority of the board of directors
       or other governing body of such Person.

2.5    BINDVIEW INVENTION means any Invention that is made, conceived, or
       reduced to practice by any person (in whole or in part, either alone or
       jointly with others, whether or not during regular working hours),
       whether or not potentially patentable or copyrightable in the U.S. or
       elsewhere, and the Invention either: (i) involves equipment, supplies,
       facilities, or trade secret information of any BindView Company; (ii)
       involves the time for which the person was compensated by any BindView
       Company; (iii) relates to any BindView Business; or (iv) results, in
       whole or in part, from work which the person performed for any BindView
       Company.

2.6    BINDVIEW MATERIALS means any and all reports, notes, emails, manuals,
       computer programs or data, photographs, and all other recorded, written,
       or printed matter, in any format (including but not limited to electronic
       and hard-copy formats), (i) that the Executive receives from any BindView
       Company, or (ii) that the Executive creates during the Employment and
       that relate to any BindView Business, or (iii) that contain Confidential
       Information of any BindView Company.

2.7    BONUS POTENTIAL AT TARGET means the bonus amount that would be earned by
       the Executive under the Corporate Bonus Plan if On-Target Performance has
       been achieved. The Executive's current Bonus Potential At Target is set
       forth in Schedule 1. Such bonus amount shall be automatically increased
       by the same percentage as any increase in Base Salary (see also Section
       4.1), as well as any other increases in such bonus amount that the
       Company, in its sole discretion, may grant in the future. If such bonus
       amount is increased at any time, then the resulting increased bonus
       amount shall be deemed the Bonus Potential At Target for all purposes
       hereunder.

2.8    BONUS POTENTIAL EARNED means the amount of the Executive's Bonus
       Potential At Target that was earned during the bonus period in question.
       The amount earned will be equal to the Percent of Bonus Potential at
       Target Earned (as that term is used in the Corporate Bonus Plan) during
       the bonus period that corresponds to actual performance during that
       period, multiplied by the Executive's Bonus Potential At Target. The
       amount earned will be prorated for any bonus period the Executive was not
       employed by the Company for the entire bonus period based on the portion
       of the bonus period the Executive was employed by the Company. In no
       event will any portion of the Bonus Potential At Target be deemed to have
       been earned by the Executive if the Executive resigns other than for Good
       Reason or if the Employment is terminated for Cause.

2.9    CAUSE:  As used in this Agreement:

       (a)    The term "Cause" or "for cause" or "with cause" (in upper or lower
              case) means only any one or more of the following except as
              excluded by subparagraph (b): (1) the Executive's conviction of a
              felony; (2) the Executive's willful, material and irreparable
              breach of this Agreement (other than for reason of illness or
              disability); (3) the Executive's gross negligence in the
              performance of, or intentional nonperformance of or inattention
              to, the Executive's material duties and responsibilities
              hereunder, continuing for thirty (30) days after receipt of
              written notice of need to cure the same; or (4) the Executive's
              willful dishonesty, fraud or material misconduct with respect to
              the business or affairs of the Company.

                                                                           Page2
<PAGE>

                                                         EXECUTIVE: SHEKAR AYYAR

       (b)    The terms "Cause," "for cause," and "with cause" (in upper or
              lower case) shall not include any of the following: (1) bad
              judgment; (2) negligence other than gross negligence; (3) any act
              or omission that was based upon (i) authority given pursuant to a
              resolution duly adopted by the Board, (ii) instructions of the
              chief executive officer of the Company or (iii) the advice of
              counsel for the Company; or (4) any act or omission that the
              Executive believed in good faith to have been in the interest of
              the Company, without intent of the Executive to gain therefrom,
              directly or indirectly, a personal profit to which he was not
              legally entitled.

2.10   COBRA means the Consolidated Omnibus Budget Reconciliation Act, as the
       same may be amended from time to time, or any successor statute, together
       with any applicable regulations in effect at the time in question.

2.11   CONFIDENTIAL INFORMATION means information of any BindView Business that
       the Executive learns in the course of the Employment, other than
       information which the Executive can show: (i) was in the Executive's
       possession or within the Executive's knowledge before the Employment; or
       (ii) is or becomes generally known to persons who could take economic
       advantage of it, other than officers, directors, and employees of the
       BindView Companies, without breach of an obligation to a BindView
       Company; or (iii) the Executive obtained from a party having the right to
       disclose it without violation of an obligation to a BindView Company; or
       (iv) is required to be disclosed pursuant to legal process (e.g., a
       subpoena), provided that the Executive notifies the Company immediately
       upon receiving or becoming aware of the legal process in question. No
       combination of information will be deemed to be within any of the four
       exceptions (i) through (iv) in the previous sentence, however, whether or
       not the component parts of the combination are within one or more
       exceptions, unless the combination itself and its economic value and
       principles of operation are themselves within such an exception.

2.12   CORPORATE BONUS PLAN refers to the plan that provides for incentive-based
       annual corporate bonuses for all Company employees other than those paid
       sales commissions, or such other bonus plan as the Company may from time
       to time adopt in its sole discretion, for providing such incentive-based
       annual bonuses. The Corporate Bonus Plan shall establish the bonus levels
       by employee group and the Company- and employee-performance criteria
       required for specified bonus payment percentages to be earned. Any such
       employee-performance criteria which the Company makes applicable to the
       Executive shall be consistent with the Executive's Office and Position.

2.13   DAY, in upper or lower case, means a calendar day except as otherwise
       stated.

2.14   DESIGNATED OWNER means (i) the Company or (ii) if from time to time the
       Company designates one or more other BindView Companies to own certain
       inventions or other intellectual-property rights, such designated other
       BindView Company.

2.15   DISABILITY shall mean the inability of the Executive to perform his
       duties hereunder for a continuous period exceeding three months
       (excluding any leaves of absences approved by the Company), as a result
       of incapacity due to mental or physical injury or illness that is
       determined to be total and permanent by a physician selected by the
       Company or its insurers and acceptable to the Executive or the
       Executive's legal representative.

                                                                           Page3
<PAGE>

                                                         EXECUTIVE: SHEKAR AYYAR

2.16   EMPLOYMENT  means the Executive's employment with the Company.

2.17   GOOD REASON means the occurrence of any one or more of the following
       events without the Executive's express prior written consent (see also
       the notice-and-cure provision in the definition of Resignation for Good
       Reason):

        (a)    (1) removal of the Executive from the Office or Position, or (if
               re-election is required for the Executive to retain the Office or
               Position) failure to re-elect the Executive to the Office or
               Position; or (2) a material diminution in the Executive's Office,
               Position, status, duties, or responsibility from that held by the
               Executive immediately prior to such change; or (3) the assignment
               by the Company to the Executive of duties that are materially
               inconsistent with the Executive's Office or Position;

        (b)    (1) the Company's requiring the Executive to perform a majority
               of his duties or to be permanently based outside of, or the
               moving of the Executive's principal office space from, the
               Company's Principal Operating Offices; or (2) the Company's
               requiring the Executive to be permanently based (meaning
               requiring the Executive to perform a majority of his duties for a
               period of more than 30 days) anywhere other than within 50 miles
               of the Executive's job location at the time that the directive
               for such relocation is made by the Company;

        (c)    any Reduction in the Executive's Base Salary (except as provided
               in the next sentence), Bonus Potential At Target, or other
               compensation (including without limitation any Reduction of any
               non-contingent bonus- or incentive compensation for which the
               Executive is eligible). Notwithstanding the previous sentence,
               the Executive's Base Salary may be reduced by the Company one
               time during the Employment, if, and on condition that, such
               reduction is part of a uniform, across-the-board base salary
               reduction in which the same percentage reduction is applied to
               all Senior Executives;

        (d)    failure to provide the Executive with any Benefit for which the
               Executive is eligible under the Benefit plan's requirements (and,
               if such Benefit in question is optional, which the Executive has
               elected to receive);

        (e)    any failure of the Company to fulfill its obligations under this
               Agreement or under any stock or stock option agreement, change of
               control agreement, bonus, benefit or incentive plan or other
               agreement between the Executive and the Company (see also the
               notice-and-cure provision in the definition of Resignation for
               Good Reason);

        (f)    failure of the Company to provide or maintain a Corporate Bonus
               Plan whereby the Executive may earn a bonus as set forth in
               Section 4.2; or

        (g)    any purported termination by the Company of the Employment other
               than as expressly permitted by this Agreement.

2.18   INVENTION means any and all inventions, discoveries, and improvements,
       whether or not patentable, along with any and all materials and work
       product relating thereto.

                                                                           Page4
<PAGE>

                                                         EXECUTIVE: SHEKAR AYYAR

2.19   OFFICE means the office in the Company set forth in Schedule 1. If the
       Company in its sole discretion promotes the Executive to a more senior
       office in the Company (e.g., vice president to senior vice president),
       then the such more senior office shall be deemed the Office for all
       purposes hereunder.

2.20   ON-TARGET PERFORMANCE means the point at which the requirements under the
       Corporate Bonus Plan necessary for a full payout of the Bonus Potential
       at Target have been achieved. The Company performance requirements
       necessary for a full payout will be the same for all employees
       participating in the Corporate Bonus Plan.

2.21   PERSON means a natural person, corporation, partnership, or other legal
       entity, or a joint venture of two or more of the foregoing.

2.22   POSITION means the area of responsibility so identified in Schedule 1. If
       the Company in its sole discretion increases the Executive's area of
       responsibility, then such increased area of responsibility shall be
       deemed the Position for all purposes hereunder.

2.23   PRINCIPAL OPERATING OFFICES means the office of the Company where the
       majority of the other most senior executives of the Company perform the
       majority of their respective duties.

2.24   REDUCTION, as applied to any aspect of the Executive's compensation or
       benefits, means any exclusion, discontinuance without comparable
       replacement, diminution, or reduction in the same as in effect
       immediately prior to such exclusion, discontinuance, diminution, or
       reduction.

2.25   RESIGN FOR GOOD REASON or Resignation for Good Reason means that all of
       the following occur:

        (a)    the Executive notifies the Company in writing, or the Company
               notifies the Employee in writing, in accordance with the notice
               provisions of this Agreement or otherwise, of the occurrence of
               one or more events constituting Good Reason hereunder;

        (b)    the Company fails to revoke, rescind, cancel, or cure the event
               (or if more than one, all such events) that was the subject of
               the notification under subparagraph (a) within 10 business days
               after such notice; and

       (c)    within ten (10) business days after the end of the
              ten-business-day period described in subparagraph (b), the
              Executive delivers to the Company a notice of resignation in
              accordance with this Agreement.

2.26   SCHEDULE 1 means Schedule 1 set forth at the end of this Agreement above
       the parties' signatures.

2.27   SENIOR EXECUTIVES means the executives of the Company holding the
       following positions, by whatever title designated, and no others: chief
       executive officer; chief financial officer; chief technology officer;
       senior vice president of business development; senior vice president of
       worldwide marketing; vice president of worldwide sales; general counsel;
       and chief accounting officer.

2.28   SEVERANCE BENEFITS means the post-employment compensation and benefits to
       be provided to the Executive by the Company in as set forth in Section 6.

2.29   SEVERANCE PAYMENT - see Section 6.1.

                                                                           Page5
<PAGE>

                                                         EXECUTIVE: SHEKAR AYYAR

2.30   TERMINATION DATE means the effective date of a termination of the
       Employment by either the Company or the Executive.

2.31   TRIBUNAL means an arbitration panel, court, or other body of competent
       jurisdiction that is deciding a matter relating to this Agreement.

3.     EMPLOYMENT.

3.1    Position; Office. Subject to the terms and conditions hereinafter set
       forth, the Company hereby agrees to employ the Executive, and the
       Executive hereby agrees to serve the Company, in the Office and Position
       referred to in Schedule 1.

        (a)    The Executive will (i) devote his full time, attention, and
               energies to the business of the Company and will diligently and
               to the best of his ability perform all duties incident to his
               Employment hereunder; (ii) use his best efforts to promote the
               interests and goodwill of the Company; (iii) perform such other
               duties commensurate with the Office and Position as the Chief
               Executive Officer of the Company may from time-to-time assign to
               the Executive.

       (b)    This Section 3.1 shall not be construed as preventing the
              Executive from (i) serving on corporate, civic or charitable
              boards or committees (only with the prior approval of the chief
              executive officer of the Company in the case of corporate boards),
              (ii) engaging in other business activities that do not represent a
              conflict of interest with the full execution of his duties to the
              Company, or (iii) making investments in other businesses or
              enterprises; provided that in no event shall any -------- such
              service, business activity or investment require the provision of
              substantial services by the Executive to the operations or the
              affairs of such businesses or enterprises such that the provision
              thereof would interfere in any respect with the performance of the
              Executive's duties hereunder.

3.2    Office Space, Equipment, etc. The Company shall provide the Executive
       with office space, related facilities, equipment, and support personnel
       that are commensurate with the Office and Position.

3.3    Expense Reimbursement.

        (a)    The Company will timely reimburse the Executive for reasonable
               business expenses incurred by the Executive in connection with
               the Employment in accordance with the Company's then-current
               policies.

       (b)    Without limiting Section 2.17(b) (Good Reason includes relocation
              without consent), or this Section 3.3, if the Company determines
              that the Executive shall be relocated, then the Company shall, in
              connection with such relocation, pay or reimburse the Executive
              for all reasonable moving expenses incurred by the Executive.

4.     COMPENSATION AND BENEFITS DURING EMPLOYMENT. During the Employment, the
       Company shall provide compensation and benefits to the Executive as
       follows.

4.1    Base Salary. The Company shall pay the Executive a base salary at a rate
       (before deductions, e.g., for employee-paid insurance premiums;
       deferrals, e.g., for flex-plan contributions; or withholding)

                                                                           Page6
<PAGE>

                                                         EXECUTIVE: SHEKAR AYYAR

       not less than the Base Salary rate set forth in Schedule 1. If the
       Company in its sole discretion increases the Executive's base salary,
       then such increased salary shall be deemed the Base Salary for all
       purposes hereunder. All salary payments shall be made in accordance with
       the normal payroll practices of the Company but in no less than equal
       semi-monthly installments, less withholding or deductions required by law
       or agreed to by the Executive.

4.2    Annual Bonus. In addition to the Base Salary, the Executive will
       participate in the Company's Corporate Bonus Plan. Executive will be paid
       his Bonus Potential Earned pursuant to terms of the Corporate Bonus Plan
       based on his Bonus Potential At Target and his actual performance during
       the bonus period. The Bonus Potential Earned, if any, will be paid in
       full in cash at the same time as the payment of annual bonuses under the
       Corporate Bonus Plan are made to other participants in the plan, with
       such time to be determined by the Company in its discretion but in no
       event later than (i) 15 days following the completion of the Company's
       annual audit or (ii) the date that the Bonus Potential Earned must be
       paid in order to be deductible by the Company for U.S. federal income tax
       purposes for the tax year in which the Bonus Potential Earned was earned,
       whichever is later.

4.3    Benefits. The Executive shall, upon satisfaction of legal or applicable
       third-party provider eligibility requirements with respect thereto, be
       entitled to participate in all Benefits now or hereafter in effect or
       that are hereafter made available to the Company's employees generally.
       The previous sentence shall not be construed as limiting the Company's
       right, in its sole discretion, to add to, reduce, modify, or eliminate
       any such Benefit. In addition, the Company shall maintain for the
       Executive any specific benefits set forth in Schedule 1.

4.4    Vacation; Holidays; Sick Leave. During the Employment the Executive shall
       be entitled to sick leave, holidays, and an annual vacation, all in
       accordance with the regular policy of the Company for its Senior
       Executives (but in no event less than the minimum annual vacation set
       forth in Schedule 1), during which time his compensation and benefits
       shall be paid or provided in full.

4.5    Annual Compensation Review. At least annually during the Employment, the
       Company shall review with the Executive the Base Salary, the Bonus
       Potential At Target, and all other forms of compensation, which the
       Executive is then receiving (or, in the case of contingent compensation,
       for which the Executive is a participant in the applicable plan). The
       Base Salary may be increased (but not decreased) from time to time as
       determined by the Company's board of directors or the compensation
       committee thereof. The Executive's Bonus Potential At Target shall be
       automatically increased by the same percentage as any increase in the
       Base Salary as provided in Section 4.1. Any increase in Base Salary shall
       not limit or reduce any other obligation of the Company to the Executive
       under this Agreement. The Base Salary may not be decreased without the
       Executive's express prior written consent.

5.     TERMINATION OF EMPLOYMENT.

5.1    At-Will Employment; Termination Date. The Executive will be an "at will"
       employee during the entire time of the Employment. Either the Company or
       the Executive may terminate the Employment at any time, for any reason or
       no reason, with or without cause. Any such termination shall be by notice
       in accordance with this Agreement. The Termination Date of the Employment
       will be the

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                                                         EXECUTIVE: SHEKAR AYYAR

       termination date stated in the Company's notice of termination to the
       Executive or in the Executive's notice of resignation to the Company, as
       applicable.

5.2    Notice of Resignation; Waiver of Notice Period. If the Executive resigns
       from the Company, the Executive will give the Company at least two (2)
       weeks' prior notice of resignation. The Company may in its discretion
       waive any notice period stated in the Executive's notice of resignation,
       in which case the Termination Date of the Employment will be the date of
       such waiver.

5.3    No Termination of Agreement Per Se. Termination of the Employment will
       not terminate this Agreement per se; to the extent that either party has
       any right under applicable law to terminate this Agreement, any such
       termination of this Agreement shall be deemed solely to be a termination
       of the Employment without affecting any other right or obligation
       hereunder except as provided herein in connection with termination of the
       Employment.

5.4    Termination for Disability. If the Company determines in good faith that
       the Executive has become subject to a Disability during the Employment
       (pursuant to the definition of Disability as set forth in this Agreement)
       and that it intends to terminate the Employment for that reason, then it
       shall give to the Executive written notice in accordance with this
       Agreement of its intention to terminate the Executive's employment. If
       the Company gives the Executive such written notice, the Executive's
       Employment shall terminate effective on the 30th day after receipt of
       such notice by the Executive, provided that, within such 30-day period,
       the Executive has not returned to full-time performance of the
       Executive's duties.

5.5    Exit Interview. If the Employment is terminated for any reason other than
       death, then to help the Company protect its intellectual property rights
       and other interests, the Executive shall cooperate in such exit-interview
       procedures as may be reasonably requested by the Company and are in
       keeping with the Company's employment and termination policies for all
       employees, including but not limited to providing the Company with
       reasonably complete and accurate information about any plans the
       Executive may have for future employment to the extent such information
       directly relates to the Company's protection of its intellectual property
       rights. The Company shall complete this exit-interview process within 30
       days after the Termination Date.

5.6    Transition of Email, etc. If the Employment is terminated by either the
       Executive or the Company, the Company will provide reasonable cooperation
       in (i) permitting the Executive to copy or remove the Executive's
       personal files (not including Company confidential information) from the
       Executive's computer and office, and (ii) arranging for any personal
       emails or phone messages to be forwarded to the Executive.

5.7    Payments Following Termination . If the Employment is terminated for any
       reason, either by the Company or by the Executive's resignation, then the
       Company shall pay the Executive the following amounts as part of the
       Company's next regular payroll cycle but in no event later than thirty
       (30) days after the Termination Date, to the extent that the same have
       not already been paid:

       (a)    any and all salary and vacation pay earned through the Termination
              Date; and

        (b)    any reimbursable expenses properly reported by the Executive.

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                                                         EXECUTIVE: SHEKAR AYYAR

        The Company shall also pay any Bonus Potential Earned at the same time
        that payments are made to other participants in the Corporate Bonus
        Plan.

6.     SEVERANCE BENEFITS UPON CERTAIN TERMINATIONS

6.1    Severance Payment. If (1) the Employment is terminated by the Company
       other than for Cause, or (2) the Executive resigns for Good Reason, or
       (3) the Executive dies, then:

        (a)    the Company shall pay to the Executive, if living, an amount (the
               "SEVERANCE PAYMENT") equal to one (1) times the highest Base
               Salary in effect (i) during the 12 months immediately prior to
               the Termination Date or (ii) during the Employment, if the
               Employment has lasted less than 12 months. The Severance Payment
               shall be paid in equal, twice-monthly installments over a period
               of 12 months after the Termination Date;

        (b)    if the Executive is not living, then the Severance Payment shall
               be paid to the Executive's heir(s), assign(s),
               successor(s)-in-interest, or legal representative(s), in the same
               manner as specified in subparagraph (a); and

        (c)    as a condition to providing the Executive with the Severance
               Payment, the Company, in its sole discretion, may require the
               Executive to first execute a release, in the form attached hereto
               as Exhibit A

6.2    Continuation of Insurance and Related Benefits. If (1) the Employment is
       terminated by the Company other than for Cause, or (2) the Executive
       resigns for Good Reason, or (3) the Executive dies, then:

        (a)    The Company shall, to the greatest extent permitted by applicable
               law and the terms and conditions of the applicable insurance or
               benefit plan, maintain the Executive (if living) and the
               Executive's dependents as participants in the life, health,
               dental, accident, disability insurance, and similar benefit plans
               offered to (and on the same terms as) other Senior Executives
               until the 12-month anniversary of the Termination Date.

        (b)    To the extent that applicable law or the terms and conditions of
               the applicable insurance or benefit plan do not permit the
               Company to comply with subparagraph (a), the Company shall
               reimburse the Executive (if living) and the Executive's
               dependents, for all expenses incurred by any of them in
               maintaining the same levels of coverage under COBRA as in the
               plans referred to in subparagraph (a), for the same period as
               provided in subparagraph (a), but solely to the extent that such
               expenses exceed the deduction or amount that would have been
               required to be paid by the Executive for such coverage if the
               Employment had not been terminated.

        (c)    If Employment is terminated by the Executive's death, or if the
               Executive dies before the expiration of the Company's obligation
               under this Section 6.2, then the Company shall continue to
               maintain coverage for the Executive's dependents under all
               insurance plans referred to in this Section 6.2 for which such
               dependents had coverage as of the date of the Execu-

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                                                         EXECUTIVE: SHEKAR AYYAR

              tive's death, at the same coverage levels and for the same period
              of time as would have been required had the Executive not died.

        (d)    Following the expiration of such coverage period by the Company
               the Executive (if living) and the Executive's dependents will be
               entitled to elect to maintain coverage under such insurance- and
               benefit plans in accordance with COBRA to the fullest extent
               available under law.

6.3    D&O Insurance and Indemnification. Through at least the tenth anniversary
       of the Termination Date, the Company shall maintain coverage for the
       Executive as an additional insured on all directors' and officers'
       insurance maintained by the Company for the benefit of its directors and
       officers on at least the same basis as all other covered individuals and
       provide the Executive with at least the same corporate indemnification as
       it provides to other Senior Executives.

6.4    No Other Severance Benefits. Other than as described above in this
       Section 6.2, the Executive shall not be entitled to any payment, benefit,
       damages, award or compensation in connection with termination of the
       Employment, by either the Company or the Executive, except as may be
       expressly provided in another written agreement, if any, executed by the
       Executive and by an authorized officer of the Company. Neither the
       Executive nor the Company is obligated to enter into any such other
       written agreement.

6.5    No Waiver of ERISA-Related Rights. Nothing in this Agreement shall be
       construed to be a waiver by the Executive of any benefits accrued for or
       due to the Executive under any employee benefit plan (as such term is
       defined in the Employees' Retirement Income Security Act of 1974, as
       amended) maintained by the Company, if any, except that the Executive
       shall not be entitled to any severance benefits pursuant to any severance
       plan or program of the Company other than as provided herein.

6.6    Mitigation Not Required. The Executive shall not be required to mitigate
       the amount of any payment or benefit which is to be paid or provided by
       the Company pursuant to this Section 6. Any remuneration received by the
       Executive from a third party following termination of the Employment
       shall not apply to reduce the Company's obligations to make payments or
       provide benefits hereunder.

7.     TAX WITHHOLDING. Notwithstanding any other provision of this Agreement,
       the Company may withhold from amounts payable under this Agreement, or
       under any other agreement between the Executive and the Company, all
       federal, state, local and foreign taxes that are required to be withheld
       by applicable laws or regulations.

8.     CONFIDENTIAL INFORMATION.

8.1    The Executive acknowledges that the law provides the Company with
       protection for its trade secrets and confidential information. The
       Executive will not disclose, directly or indirectly, any Confidential
       Information without authorization from the Company's management. The
       Executive will not use any Confidential Information in any way, either
       during or after the Employment with the Company, except as required in
       the course of the Employment.

8.2    The Executive will strictly adhere to any obligations that may be owed to
       former employers insofar as the Executive's use or disclosure of their
       confidential information is concerned.

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                                                         EXECUTIVE: SHEKAR AYYAR

8.3    All originals and all copies of any drawings, blueprints, manuals,
       reports, computer programs or data, notebooks, notes, photographs, and
       all other recorded, written, or printed matter relating to research,
       manufacturing operations, or business of the Company made or received by
       the Executive during the Employment are the property of the Company. Upon
       any termination of the Employment, regardless of the circumstances, the
       Executive will immediately deliver to the Company all property of the
       Company which may still be in the Executive's possession. The Executive
       will not remove or assist in removing such property from the Company's
       premises under any circumstances, either during the Employment or after
       termination thereof, except as authorized by the Company management.

9.     OWNERSHIP OF INTELLECTUAL PROPERTY. The following provisions apply except
       to the extent, if any, expressly stated otherwise in Schedule 1.

9.1    The Company will be the sole owner of any and all BindView Inventions and
       BindView Materials which the Executive participates in inventing or
       developing in any way. The Executive will promptly disclose to the
       Company, or its nominee(s), without additional compensation, all BindView
       Inventions and BindView Materials. The Executive will assist the Company,
       at the Company's expense, in protecting any intellectual property rights
       that may be available anywhere in the world for BindView Inventions and
       BindView Materials, including but not limited to signing U.S. or foreign
       patent applications, oaths or declarations relating to such patent
       applications, and similar documents. To the extent that any BindView
       Invention or BindView Materials are eligible under applicable law to be
       deemed a "work made for hire," or otherwise to be owned automatically by
       the Company, the same will be deemed as such, without additional
       compensation to the Executive.

9.2    To the extent that, as a matter of law, the Executive retains any
       so-called "moral rights" or similar rights as in any BindView Invention
       or BindView Materials, the Executive authorizes the Company or its
       designee to make any changes it desires to any part of the same; to
       combine any such part with other materials; and to withhold the
       Executive's identity in connection with any business operations relating
       to the same; in any case without additional compensation to the
       Executive.

10.    NONCOMPETITION COVENANT.

10.1   The Company agrees to provide the Executive, during the Employment, with
       on-going access to pre-existing and new Confidential Information
       commensurate with the Executive's duties, including but not limited to
       access to appropriate portions of the Company's computer network. To aid
       in the protection of the Company's legitimate interests in such
       Confidential Information, and further in consideration of the Company's
       agreement hereunder to provide the Executive with Severance Benefits, the
       Executive agrees that, beginning on the date that the Company first
       provides the Executive with such access in any form, and ending one year
       thereafter (subject to tolling as provided in Section 10.4), unless the
       Company in its sole discretion gives its prior written consent, the
       Executive will not, directly or indirectly:

        (a)    participate, for himself or on behalf of any other Person, in any
               business that competes with any BindView Business anywhere in the
               world, where the Executive's Employment related in any way to
               such BindView Business. As used in the previous sentence,
               "participate"

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                                                         EXECUTIVE: SHEKAR AYYAR

              includes but is not limited to permitting the Executive's name
              directly or indirectly to be used by or to become associated with
              any other Person (including as an advisor, representative, agent,
              promoter, independent contractor, provider of personal services or
              otherwise) in connection with such competing business;

        (b)    interfere, directly or indirectly, with the relationship between
               any BindView Company and its employees by inducing any such
               employee to terminate his or her employment;

        (c)    solicit for employment, directly or indirectly, on behalf of the
               Executive or any other Person, any person who is at the time in
               question, or at any time in the then-past three-month period has
               been, an employee of any of the BindView Companies; or

        (d)    induce or assist any other Person to engage in any of the
               activities described in subparagraphs (i) through (iii).

10.2   The Executive acknowledges that the Company would not permit the
       Executive to have or to continue to have access to Confidential
       Information without the Executive's agreement to the restrictions in
       Section 10.1. The Executive further acknowledges and agrees that: (i) the
       restrictions in Section 10.1 are fair and reasonable and the result of
       negotiation, relate to special, unique and extraordinary matters.

10.3   If the Executive has never been provided with any access to Confidential
       Information at the time the Employment is terminated (including but not
       limited to never having been provided access to an email account or other
       access to a computer network of any BindView Company), then the Executive
       will be automatically released from the restrictions in Section 10.1.
       Such release will be the Executive's EXCLUSIVE REMEDY for any actual or
       alleged breach of this Agreement by the Company in not providing such
       access.

10.4   If the Executive violates the restrictions set forth in Section 10.1, and
       the Company brings a legal action for injunctive or other relief, the
       Company shall not be deprived of the benefit of those restrictions.
       Accordingly, the restrictions in Section 10.1 will be tolled during any
       period in which the Executive violates any of such restrictions until the
       date of entry by a court of competent jurisdiction of a final judgment
       enforcing such restrictions in Section 10.1, as written or as modified by
       the court.

10.5   The Company will not unreasonably withhold its consent under Section 10.1
       to the Executive's employment, after the Employment, by a corporation
       that competes with one or more of the BindView Companies, but only if,
       before starting the new employment, the Executive provides the Company
       with a document reasonably satisfactory to the Company, signed by both
       the Executive and such corporation, containing (i) a written description
       of the Executive's duties in the new job, and (ii) specific assurances
       that in the new job the Executive will neither use nor disclose
       Confidential Information of any BindView Company.

10.6   The Executive may acquire a direct or indirect ownership interest of not
       more than 5% of the outstanding securities of any corporation which is
       engaged in activities prohibited by Section 10.1 which is listed on any
       recognized securities exchange or traded in the over-the-counter market
       in the

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                                                         EXECUTIVE: SHEKAR AYYAR

       United States, provided that such investment is of a totally passive
       nature and does not involve the Executive's devoting time to the
       management or operations of such corporation.

10.7   If a Tribunal determines that any of the restrictions set forth in
       Section 10.1 is unreasonably broad or otherwise unenforceable under
       applicable law, then (i) such determination shall be binding only within
       the geographical jurisdiction of the Tribunal, and (ii) the restriction
       will not be terminated or rendered unenforceable, but instead will be
       reformed (solely for enforcement within the geographic jurisdiction of
       the Tribunal) to the minimum extent required to render it enforceable.

11.    EMPLOYEE HANDBOOKS, ETC. From time to time, the Company may, in its
       discretion, establish, maintain and distribute employee manuals or
       handbooks or personnel policy manuals, and officers or other
       representatives of the Company may make written or oral statements
       relating to personnel policies and procedures. The Executive will adhere
       to and follow all rules, regulations, and policies of the Company set
       forth in such manuals, handbooks, or statements as they now exist or may
       later be amended or modified. Such manuals, handbooks and statements do
       not constitute a part of this Agreement nor a separate contract, and
       shall not be deemed as amending this Agreement or as creating any binding
       obligation on the part of the Company, but are intended only for general
       guidance.

12.    ARBITRATION.

12.1   Except as set forth in Section 12.3 or to the extent prohibited by
       applicable law, any dispute, controversy or claim arising out of (by
       statute, common law, or otherwise) or relating to (i) this Agreement or
       its interpretation, performance, or alleged breach, or (ii) the
       Employment, including but not limited to its commencement and its
       termination, will be submitted to binding arbitration before a single
       arbitrator in accordance with the National Rules for the Resolution of
       Employment Disputes of the American Arbitration Association (AAA) in
       effect on the date of the demand for arbitration.

12.2   The arbitration shall take place before a single arbitrator, who will
       preferably but not necessarily (x) be a practicing attorney, and (y) have
       at least five years' experience in working in or with computer software
       companies. Unless otherwise agreed by the parties, the arbitration shall
       take place in the city in which the Executive's principal office space is
       located at the time of the dispute or was located at the time of
       termination of the Employment (if applicable). Unless otherwise agreed by
       the parties, the Company will pay all reasonable fees and expenses
       charged by the arbitrator and the AAA but will not pay the Executive's
       fees or expenses associated with the arbitration. The arbitrator is
       hereby directed to take all reasonable measures not inconsistent with the
       interests of justice to expedite, and minimize the cost of, the
       arbitration proceedings. Judgment upon the award rendered by the
       arbitrator may be entered in any court having jurisdiction.

12.3   To protect Inventions, trade secrets, or other confidential information,
       the Company may seek temporary, preliminary, and permanent injunctive
       relief in a court of competent jurisdiction, including but not limited to
       an injunction enforcing the provisions of Sections 8, 9, and 10, in each
       case, without waiving its right to arbitration.

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                                                         EXECUTIVE: SHEKAR AYYAR

12.4   At the request of either party, the arbitrator may take any interim
       measures s/he deems necessary with respect to the subject matter of the
       dispute, including measures for the preservation of confidentiality set
       forth in this Agreement.

13.    OTHER PROVISIONS.

13.1   This Agreement shall inure to the benefit of and be binding upon (i) the
       Company and its successors and assigns and (ii) the Executive and the
       Executive's heirs and legal representatives, except that the Executive's
       duties and responsibilities under this Agreement are of a personal nature
       and will not be assignable or delegable in whole or in part without the
       Company's prior written consent.

13.2   The Executive represents and warrants (i) that he has no obligations,
       contractual or otherwise, inconsistent with the Executive's obligations
       set forth in this Agreement, and (ii) that all of his responses to any
       requests, by or on behalf of the Company, for information and/or
       documents, in connection with the Company's hiring of the Executive
       and/or with the negotiation of this Agreement, are truthful and complete.

13.3   All notices and statements with respect to this Agreement must be in
       writing and shall be delivered by certified mail return receipt
       requested; hand delivery with written acknowledgment of receipt; or
       overnight courier with delivery-tracking capability. Notices to the
       Company shall be addressed to the Company's general counsel or chief
       executive officer at the Company's then-current Principal Operating
       Offices. Notices to the Executive may be delivered to the Executive in
       person or to the Executive's then-current home address as indicated on
       the Executive's pay stubs or, if no address is so indicated, as set forth
       in the Company's payroll records. A party may change its address for
       notice by the giving of notice thereof in the manner hereinabove
       provided.

13.4   If the Executive Resigns for Good Reason because of (i) the Company's
       failure to pay the Executive on a timely basis the amounts to which he is
       entitled under this Agreement or (ii) any other breach of this Agreement
       by Company, then the Company shall pay all amounts and damages to which
       the Executive may be entitled as a result of such failure or breach,
       including interest thereon at the maximum non-usurious rate and all
       reasonable legal fees and expenses and other costs incurred by the
       Executive to enforce the Executive's rights hereunder and the Executive
       will be relieved of all obligations under Section 10 (noncompetition).

13.5   This Agreement sets forth the entire present agreement of the parties
       concerning the subjects covered herein; there are no promises,
       understandings, representations, or warranties of any kind concerning
       those subjects except as expressly set forth in this Agreement.

13.6   Any modification of this Agreement must be in writing and signed by all
       parties; any attempt to modify this Agreement, orally or in writing, not
       executed by all parties will be void.

13.7   If any provision of this Agreement, or its application to anyone or under
       any circumstances, is adjudicated to be invalid or unenforceable in any
       jurisdiction, such invalidity or unenforceability will not affect any
       other provision or application of this Agreement which can be given
       effect without the invalid or unenforceable provision or application and
       will not invalidate or render unenforceable such provision or application
       in any other jurisdiction.

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                                                         EXECUTIVE: SHEKAR AYYAR

13.8   This Agreement will be governed and interpreted under the laws of the
       United States of America and of the State of Texas law as applied to
       contracts made and carried out in entirely Texas by residents of that
       State.

13.9   No failure on the part of any party to enforce any provisions of this
       Agreement will act as a waiver of the right to enforce that provision.

13.10  Termination of the Employment, with or without Cause, will not affect the
       continued enforceability of this Agreement.

13.11  Section headings are for convenience only and shall not define or limit
       the provisions of this Agreement.

13.12  This Agreement may be executed in several counterparts, each of which is
       an original. It shall not be necessary in making proof of this Agreement
       or any counterpart hereof to produce or account for any of the other
       counterparts. A copy of this Agreement manually signed by one party and
       transmitted to the other party by FAX or in image form via email shall be
       deemed to have been executed and delivered by the signing party as though
       an original. A photocopy of this Agreement shall be effective as an
       original for all purposes.

                            (Continued on next page)

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                                                         EXECUTIVE: SHEKAR AYYAR

                                   SCHEDULE 1

<Table>
<Caption>
<S>                                          <C>
Effective Date                               July 19, 2004

Office                                       Senior Vice President

Position                                     Responsible for Product Marketing

Base                                         Salary Initially, $190,000 per year ($15,833.33 per month, with first
                                             month pro-rated). Effective April 1, 2005, minimum annual base
                                             compensation will be $200,000 ($16,666.67 per month).

Bonus Potential At Target                    Initially, $190,000 per year. Any bonus for 2004 will be pro-rated on
                                             a 360-day year, reduced by $50,000 (the amount of the signing bonus
                                             below), and tied solely to the Executive's achievement of his
                                             individual management objectives set by the Company. Effective April
                                             1, 2005, the Executive's Bonus Potential At Target will be $200,000
                                             (pro-rated for 2005).

Signing bonus                                $ 50,000, to be paid as additional compensation when the Executive
                                             starts work for the Company, in anticipation of the Executive's
                                             continuing to work for the Company at least 36 months. The Executive
                                             shall not be obligated to repay any portion of the signing bonus, nor
                                             to pay any interest thereon, nor to execute a promissory note or
                                             similar instrument concerning the signing bonus, except as provided in
                                             the next sentence. If, at any time during the 36 months following the
                                             Effective Date, either (i) the Executive resigns other than for Good
                                             Reason or (ii) the Company terminates the Executive's employment for
                                             Cause, then the Executive shall forfeit a pro-rata portion of the
                                             signing bonus and agrees to repay it to the Company, without interest,
                                             within 10 business days thereafter. HYPOTHETICAL EXAMPLE: If the
                                             Executive were to resign for other than Good Reason effective July 19,
                                             2005, then he would forfeit 24/36 = 2/3 of the signing bonus and
                                             therefore would be required to repay the Company the sum of $33,333 by
                                             August 2, 2005.

Temporary                                    housing allowance $5,000 per month, until the earlier of (i) the
                                             Executive's six-month anniversary with the Company or (ii) the date
                                             the Executive relocates to Houston.

Relocation expenses                          The Company will reimburse the Executive for up to $100,000 of actual
                                             expenses incurred in selling his California residence, buying a
                                             Houston residence, normal and reasonable expenses related to moving
                                             family and household goods from California to Houston, and normal and
                                             reasonable travel expenses for house hunting trips during the first
                                             year of employment. All relocation expenses reimbursed by the Company
                                             are subject to pro-rata forfeiture as set forth above for the signing
                                             bonus.

Minimum annual vacation                      20 business days

Other specific benefits                      Reserved parking space

Non-interfering                              activities The Company agrees that the Executive's service on the
                                             advisory board of his former employer, Instantis, Inc. shall not be a
                                             breach of this Agreement, provided that such service does not
                                             interfere with the Executive's performance of his duties.
</Table>

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THIS AGREEMENT CONTAINS PROVISIONS REQUIRING BINDING ARBITRATION OF DISPUTES,
WHICH HAVE THE EFFECT OF WAIVING EACH PARTY'S RIGHT TO A JURY TRIAL. By signing
this Agreement, the Executive acknowledges that the Executive (1) has read and
understood the entire Agreement; (2) has received a copy of it (3) has had the
opportunity to ask questions and consult counsel or other advisors about its
terms; and (4) agrees to be bound by it.

Executed to be effective as of the Effective Date.

BINDVIEW CORPORATION, BY:                          EXECUTIVE

---------------------------                        -----------------------------
Edward L. Pierce,                                  Signature
Executive Vice President
and Chief Financial Officer                        Date signed:
                                                               ----------------
Date signed:
            ---------------

                                                                          Page17
<PAGE>

                                                         EXECUTIVE: SHEKAR AYYAR

                                    EXHIBIT A
                             FORM OF GENERAL RELEASE

I, the undersigned, execute this release ("Release") in consideration of, and as
a condition precedent to, my being provided certain Severance Benefits pursuant
to an Executive Employment Agreement, between myself (referred to therein as the
"Executive") and BINDVIEW CORPORATION ("BindView").

1. On behalf of myself, my attorneys, heirs, executors, administrators,
successors, and assigns, I hereby fully release and discharge BindView, its
parent, subsidiary, and affiliate corporations, and related companies, as well
as all predecessors, successors, assigns, directors, officers, partners, agents,
employees, former employees, heirs, executors, attorneys, and administrators
(hereinafter "BindView, et al."), from all suits, causes of action, and/or
claims of any nature whatsoever, whether known, unknown, or unforeseen, which I
have or may have against BindView, et al., arising out of any event,
transaction, or matter that occurred before the date of my signing of this
Release. I covenant that neither I, nor any person, organization, or other
entity on my behalf, will sue BindView, et al., or initiate any type of action
for damages, against BindView, et al. with respect to any event, transaction, or
matter that occurred before the date of my signing of this Release. I understand
and agree that this Release is a GENERAL RELEASE.

2. This Release specifically includes, but is not limited to, a release of all
claims of breach of contract, employment discrimination, (including, but not
limited to, discrimination on the basis of race, sex, religion, national origin,
age, disability or any other protected status, and coming within the scope of
Title VII of the U.S. Civil Rights Act, as amended, the U.S. Age Discrimination
in Employment Act, as amended, the U.S. Older Workers Benefit Protection Act, or
any other applicable state or federal statute in any U.S. of foreign
jurisdiction), claims concerning recruitment, hiring, salary rate, stock
options, severance pay, wages or benefits due, employment status, libel,
slander, defamation, intentional or negligent misrepresentation and/or
infliction of emotional distress, together with any and all tort, contract, or
other claims which might have been asserted by my or on my behalf in any suit,
charge of discrimination, or claim against BindView, et al.

3.   If I have passed my fortieth (40th) birthday, I acknowledge that:

       a.     I have been given an opportunity of forty-five (45) days to
              consider this Release and that I have been encouraged by BindView
              to discuss its terms with legal counsel of my own choosing and at
              my own expense;

       b.     For a period of seven (7) days following my execution of this
              Release, I will have the right (referred to herein as the
              "Revocation Right") to revoke my waiver of claims arising under
              the Age Discrimination in Employment Act ("ADEA"), a U.S. federal
              statute that prohibits employers from discriminating against
              employees who are over the age of 40. If I wish to exercise the
              Revocation Right:

              i.     I must inform BindView by delivering a written notice of
                     revocation to BindView's Houston office, attention: General
                     Counsel, no later than 5:00 p.m. on the seventh calendar
                     day after the date written by my signature below; and

                                                                          Page18
<PAGE>

                                                         EXECUTIVE: SHEKAR AYYAR

              ii.    If I do so, then (a) the Release shall be voided as to
                     claims arising under the ADEA, but (b) the Release shall
                     remain in full force and effect as to any and all other
                     claims.

4. I agree that except as expressly provided otherwise herein, this Release may
not be released, discharged, abandoned, supplemented, changed, or modified in
any manner, except by an instrument in writing signed by me and a duly
authorized member of the management of BindView.

Date:
     --------------------------           --------------------------------------
                                          [Signature]

                                           -------------------------------------
                                           Printed Name

                                                                         Page 19

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