Document:

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                                                                     EXHIBIT 4.D

                             THE COASTAL CORPORATION

                                       AND

                              THE BANK OF NEW YORK,
                           AS PURCHASE CONTRACT AGENT

                           --------------------------
                           PURCHASE CONTRACT AGREEMENT
                           --------------------------

                               DATED AS OF , 1999

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TABLE OF CONTENTS

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RECITALS1

ARTICLE I
Definitions and Other Provisions of General  Applications....................................... 1

Section 1.1.      Definitions....................................................................1
Section 1.2.      Compliance Certificates and Opinions...........................................15
Section 1.3.      Form of Documents Delivered to Agent...........................................16
Section 1.4.      Acts of Holders; Record Dates..................................................16
Section 1.5.      Notices........................................................................18
Section 1.6.      Notice to Holders; Waiver......................................................19
Section 1.7.      Effect of Headings and Table of Contents.......................................19
Section 1.8.      Successors and Assigns.........................................................20
Section 1.9.      Separability Clause............................................................20
Section 1.10.     Benefits of Agreement..........................................................20
Section 1.11.     Governing Law..................................................................20
Section 1.12.     Legal Holidays.................................................................20
Section 1.13.     Counterparts...................................................................21
Section 1.14.     Inspection of Agreement........................................................21

ARTICLE II
Certificate Forms................................................................................21

Section 2.1.      Forms of Certificates Generally................................................21
Section 2.2.      Form of Agent's Certificate of Authentication..................................23

ARTICLE III
The Securities...................................................................................23

Section 3.1.      Title and Terms; Denominations.................................................23
Section 3.2.      Rights and Obligations Evidenced by the Certificates...........................23
Section 3.3.      Execution, Authentication, Delivery and Dating.................................24
Section 3.4.      Temporary Certificates.........................................................25
Section 3.5.      Registration; Registration of Transfer and Exchange............................26
Section 3.6.      Book-Entry Interests...........................................................27
Section 3.7.      Notices to Holders.............................................................28
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Section 3.8.      Appointment of Successor Clearing Agency.......................................29
Section 3.9.      Definitive Certificates........................................................29
Section 3.10.     Mutilated, Destroyed, Lost and Stolen Certificates.............................29
Section 3.11.     Persons Deemed Owners..........................................................31
Section 3.12.     Cancellation...................................................................31
Section 3.13      Establishment or Restablishment of Growth PRIDES...............................32
Section 3.14.     Establishment or Reestablishment of Income PRIDES..............................34
Section 3.15.     Transfer of Collateral upon Occurrence of Termination Event....................36
Section 3.16.     No Consent to Assumption.......................................................36

ARTICLE IV
The Debentures...................................................................................37

Section 4.1.      Payment of Distribution; Rights to Distributions Preserved;
                                    Distribution Rate Reset; Notice..............................37
Section 4.2.      Notice and Voting..............................................................38
Section 4.3.      Tax Event Redemption...........................................................39

ARTICLE V
The Purchase Contracts...........................................................................40

Section 5.1.      Purchase of Shares of Common Stock.............................................40
Section 5.2.      Contract Adjustment Payments...................................................42
Section 5.3.      Deferral of Payment Dates For Contract Adjustment Payments.....................43
Section 5.4.      Payment of Purchase Price......................................................45
Section 5.5.      Issuance of Shares of Common Stock.............................................50
Section 5.6.      Adjustment of Settlement Rate..................................................51
Section 5.7.      Notice of Adjustments and Certain Other Events.................................57
Section 5.8.      Termination Event; Notice......................................................58
Section 5.9.      Early Settlement...............................................................59
Section 5.10.     No Fractional Shares...........................................................61
Section 5.11.     Charges and Taxes..............................................................62

ARTICLE VI
Remedies.........................................................................................62

Section 6.1.      Unconditional Right of Holders to Receive Contract
                  Adjustment Payments and to Purchase Common Stock...............................62
Section 6.2.      Restoration of Rights and Remedies.............................................63

Section 6.3.      Rights and Remedies Cumulative.................................................63
Section 6.4.      Delay or Omission Not Waiver...................................................63
Section 6.5.      Undertaking for Costs..........................................................63
Section 6.6.      Waiver of Stay or Extension Laws...............................................64

ARTICLE VII
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The Agent........................................................................................64

Section 7.1.      Certain Duties and Responsibilities............................................64
Section 7.2.      Notice of Default..............................................................65
Section 7.3.      Certain Rights of Agent........................................................66
Section 7.4.      Not Responsible for Recitals or Issuance of Securities.........................67
Section 7.5.      May Hold Securities............................................................67
Section 7.6.      Money Held in Custody..........................................................67
Section 7.7.      Compensation and Reimbursement.................................................67
Section 7.8.      Corporate Agent Required; Eligibility..........................................68
Section 7.9.      Resignation and Removal; Appointment of Successor..............................68
Section 7.10.     Acceptance of Appointment by Successor.........................................70
Section 7.11.     Merger, Conversion, Consolidation or Succession to Business....................70
Section 7.12.     Preservation of Information; Communications to Holders.........................71
Section 7.13.     No Obligations of Agent........................................................71
Section 7.14.     Tax Compliance.................................................................72

ARTICLE VIII
Supplemental Agreements..........................................................................72

Section 8.1.      Supplemental Agreements Without Consent of Holders.............................72
Section 8.2.      Supplemental Agreements with Consent of Holders................................73
Section 8.3.      Execution of Supplemental Agreements...........................................74
Section 8.4.      Effect of Supplemental Agreements..............................................75
Section 8.5.      Reference to Supplemental Agreements...........................................75

ARTICLE IX
Consolidation, Merger, Sale or Conveyance........................................................75
Section 9.1.      Covenant Not to Merge, Consolidate, Sell or Convey
                  Property Except Under Certain Conditions.......................................75
Section 9.2.      Rights and Duties of Successor Corporation.....................................76
Section 9.3.      Opinion of Counsel Given to Agent..............................................77

ARTICLE X
Covenants........................................................................................77

Section 10.1.     Performance Under Purchase Contracts...........................................77
Section 10.2.     Maintenance of Office or Agency................................................77
Section 10.3.     Company to Reserve Common Stock................................................78
Section 10.4.     Covenants as to Common Stock...................................................78

EXHIBIT A         Form of Face Income PRIDES Certificate
EXHIBIT B         Form of Face Growth PRIDES Certificate
EXHIBIT C         Instruction From Purchase Contract Agent to Collateral Agent
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EXHIBIT D         Instruction to Purchase Contract Agent
EXHIBIT E         Notice to Settle by Separate Cash

<PAGE>   6

         PURCHASE CONTRACT AGREEMENT, dated as of , 1999 between The Coastal
Corporation, a Delaware corporation (the "Company"), and The Bank of New York, a
national banking association, acting as purchase contract agent for the Holders
of Securities from time to time (the "Agent").

                                    RECITALS

         The Company has duly authorized the execution and delivery of this
Agreement and the Certificates evidencing the Securities.

         All things necessary to make the Purchase Contracts, when the
Certificates are executed by the Company and authenticated, executed on behalf
of the Holders and delivered by the Agent, as provided in this Agreement, the
valid obligations of the Company, and to constitute these presents a valid
agreement of the Company, in accordance with its terms, have been done.

                                   WITNESSETH:

         For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed as follows:

                                    ARTICLE I

                        Definitions and Other Provisions
                             of General Applications

Section 1.1.      Definitions.

         For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:

         (a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular; and nouns
and pronouns of the masculine gender include the feminine and neuter genders;

         (b) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles in
the United States;

         (c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision;

         (d) the following terms have the meanings given to them in this Section
1.1(d).
<PAGE>   7

         "Act" when used with respect to any Holder, has the meaning specified
in Section 1.4.

         "Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1993, as amended, as is in effect on the date hereof.

         "Agent" means the Person named as the "Agent" in the first paragraph of
this instrument until a successor Agent shall have become such pursuant to the
applicable provisions of this Agreement, and thereafter "Agent" shall mean such
Person.

         "Agreement" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.

         "Applicable Market Value" has the meaning specified in Section 5.1.

         "Applicable Ownership Interest" means, with respect to an Income PRIDES
and the Treasury Securities in the Treasury Portfolio, (A) a, or %, undivided
beneficial ownership interest in a $1,000 principal or interest amount of a
principal or interest strip in a U.S. Treasury Security included in such
Treasury Portfolio which matures on or prior to 15, 2002 and (B) for each
scheduled interest payment date on the Debentures that occurs after the Tax
Event Redemption Date, a % undivided beneficial ownership interest in a $1,000
face amount of such U.S. Treasury Security which is a principal or interest
strip maturing on such date.

         "Applicable Principal Amount" means either (i) if the Tax Event
Redemption Date occurs prior to 16, 2002, the aggregate principal amount of the
Debentures which are components of Income PRIDES on the Tax Event Redemption
Date or (ii) if the Tax Event Redemption occurs on or after 16, 2002, the
aggregate principal amount of the Debentures outstanding on such Tax Event
Redemption Date.

         "Authorized Newspaper" means a daily newspaper, in the English
language, customarily published on each day that is a Business Day in The City
of New York, whether or not published on days that are Legal Holidays, and of
general circulation in The City of New York. The Authorized Newspaper for the
purposes of the Reset Announcement Date is currently anticipated to be The Wall
Street Journal.

         "Bankruptcy Code" means title 11 of the United States Code, or any
other law of the United States that from time to time provides a uniform system
of bankruptcy laws.

         "Beneficial Owner" means, with respect to a Book-Entry Interest, a
Person who is the owner of such Book-Entry Interest as reflected on the books of
the Clearing Agency or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
<PAGE>   8

         "Board of Directors" means the board of directors of the Company or a
duly authorized committee of that board.

         "Board Resolution" means one or more resolutions of the Board of
Directors, a copy of which has been certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification and delivered
to the Agent.

         "Book-Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 3.6.

         "Business Day" means any day other than a Saturday, Sunday or any other
day on which banking institutions in New York City (in the State of New York)
are permitted or required by any applicable law to close.

         "Cash Settlement" has the meaning set forth in Section 5.4(a)(i).

         "Certificate" means an Income PRIDES Certificate or a Growth PRIDES
Certificate.

         "Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as a
depositary for the Securities and in whose name, or in the name of a nominee of
that organization, shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Securities.

         "Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.

         "Closing Price" has the meaning specified in Section 5.1.

         "Collateral" has the meaning specified in Section 2.1 of the Pledge
Agreement.

         "Collateral Agent" means The Chase Manhattan Bank, as Collateral Agent
under the Pledge Agreement until a successor Collateral Agent shall have become
such pursuant to the applicable provisions of the Pledge Agreement, and
thereafter "Collateral Agent" shall mean the Person who is then the Collateral
Agent thereunder.

         "Collateral Substitution" has the meaning specified in Section 3.13.

         "Common Stock" means the Common Stock, $0.33 1/3 par value, of the
Company.
<PAGE>   9

         "Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor shall have become such pursuant
to the applicable provision of this Agreement, and thereafter "Company" shall
mean such successor.

         "Contract Adjustment Payments" means (i) in the case of Income PRIDES,
the amount payable by the Company in respect of each Purchase Contract initially
constituting a part of an Income PRIDES, equal to o% per annum of the Stated
Amount and (ii) in the case of Growth PRIDES, the amount payable by the Company
in respect of each Purchase Contract initially constituting a part of a Growth
PRIDES, equal to % per annum of the Stated Amount, in each case computed on the
basis of a 360 day year of twelve 30 day months, plus any Deferred Contract
Adjustment Payments accrued pursuant to Section 5.2 or 5.3.

         "Corporate Trust Office" means the principal corporate trust office of
the Agent at which, at any particular time, its corporate trust business shall
be administered, which office at the date hereof is located at The Bank of New
York, 101 Barclay Street, Floor 12 East, New York, NY 10286, Attention:
Corporate Trust Administration.

         "Coupon Rate" means the percentage rate per annum at which each
Debenture will bear interest initially.

         "Current Market Price" has the meaning specified in Section 5.6(a)(8).

         "Debentures" means the series of debentures of the Company designated
the % Debentures due 16, 2004, to be issued under the Indenture as of the date
hereof.

         "Deferred Contract Adjustment Payments" has the meaning specified in
Section 5.3.

         "Depositary" means, initially, DTC until another Clearing Agency
becomes its successor.

         "DTC" means The Depository Trust Company, the initial Clearing Agency.

         "Early Settlement" has the meaning specified in Section 5.9(a).

         "Early Settlement Amount" has the meaning specified in Section 5.9(a).

         "Early Settlement Date" has the meaning specified in Section 5.9(a).

         "Early Settlement Rate" has the meaning specified in Section 5.9(b).

         "Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time, and the
rules and regulations promulgated thereunder.
<PAGE>   10

         "Expiration Date" has the meaning specified in Section 1.4.

         "Expiration Time" has the meaning specified in Section 5.6(a)(6).

         "Failed Remarketing" has the meaning specified in Section 5.4(b).

         "Global Debenture Certificate" means a certificate evidencing the
respective rights and obligations of Holders in respect of the number of
Debentures specified on such certificate and which is registered in the name of
a Clearing Agency or a nominee thereof.

         "Global Certificate" means a Certificate that evidences all or part of
the Securities and is registered in the name of a Depositary or a nominee
thereof.

         "Growth PRIDES" means the collective rights and obligations of a Holder
of a Growth PRIDES Certificate in respect of the Treasury Securities, subject to
the Pledge thereof, and the related Purchase Contract.

         "Growth PRIDES Certificate" means a certificate evidencing the rights
and obligations of a Holder in respect of the number of Growth PRIDES specified
on such certificate.

         "Growth PRIDES Register" and "Growth PRIDES Registrar" have the
respective meanings specified in Section 3.5.

         "Guarantee" means the guarantee agreement to be dated as of , 1999 of
the Company in respect of the Common Securities and the Debentures.

         "Holder," when used with respect to a Security, means the Person in
whose name the Security evidenced by an Income PRIDES Certificate and/or a
Growth PRIDES Certificate is registered in the related Income PRIDES Register
and/or the Growth PRIDES Register, as the case may be.

         "Income PRIDES" means the collective rights and obligations of a Holder
of an Income PRIDES Certificate in respect of a Debenture or an appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
subject in each case to the Pledge thereof, and the related Purchase Contract.

         "Income PRIDES Certificate" means a certificate evidencing the rights
and obligations of a Holder in respect of the number of Income PRIDES specified
on such certificate.

         "Income PRIDES Register" and "Income PRIDES Registrar" have the
respective meanings specified in Section 3.5.
<PAGE>   11

         "Indenture" means, collectively, the Base Indenture and the First
Supplemental Indenture, and any other indentures supplemental thereto pursuant
to which the Debentures are to be issued.

         "Indenture Trustee" means Harris Trust and Savings Bank, a national
banking association, as trustee under the Indenture, or any successor thereto.

         "Issuer Order" or "Issuer Request" means a written order or request
signed in the name of the Company by its Chairman of the Board, its President or
a Vice President and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary, and delivered to the Agent.

         "NYSE" has the meaning specified in Section 5.1.

         "New York Office" shall have the meaning set forth in Section 10.2

         "Officer's Certificate" means a certificate of the Company signed on
its behalf by the Chairman of the Board, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of
the Company and delivered to the Agent.

         "Opinion of Counsel" means an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company or an Affiliate and
who shall be reasonably acceptable to the Agent.

         "Outstanding Securities," with respect to the Income PRIDES or Growth
PRIDES, means, as of the date of determination, all Income PRIDES or Growth
PRIDES, as the case may be, evidenced by Certificates theretofore authenticated,
executed and delivered under this Agreement, except:

                  (i) If a Termination Event has occurred, (A) Growth PRIDES for
         which the Stated Amount of Treasury Securities has been theretofore
         deposited with the Agent in trust for the Holders of such Growth PRIDES
         and (B) Income PRIDES for which the Stated Amount of the related
         Debenture or the appropriate Applicable Ownership Interest of the
         Treasury Portfolio, as the case may be, has been theretofore deposited
         with the Agent in trust for the Holders of such Income PRIDES;

                   (ii) Income PRIDES and Growth PRIDES evidenced by
         Certificates theretofore cancelled by the Agent or delivered to the
         Agent for cancellation or deemed cancelled pursuant to the provisions
         of this Agreement; and

                  (iii) Income PRIDES and Growth PRIDES evidenced by
         Certificates in exchange for or in lieu of which other Certificates
         have been authenticated, executed on behalf of the Holder and delivered
         pursuant to this Agreement, other than any such Certificate in respect
         of which there shall have been presented to
<PAGE>   12

         the Agent proof satisfactory to it that such Certificate is held by a
         bona fide purchaser in whose hands the Income PRIDES or Growth PRIDES
         evidenced by such Certificate are valid obligations of the Company;

provided, however, that in determining whether the Holders of the requisite
number of the Income PRIDES or Growth PRIDES have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Income PRIDES or
Growth PRIDES owned by the Company or any Affiliate of the Company shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Agent shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Income PRIDES or
Growth PRIDES which a Responsible Officer of the Agent knows to be so owned
shall be so disregarded. Income PRIDES or Growth PRIDES so owned which have been
pledged in good faith may be regarded as Outstanding Securities if the pledgee
establishes to the satisfaction of the Agent the pledgee's right so to act with
respect to such Income PRIDES or Growth PRIDES and that the pledgee is not the
Company or any Affiliate of the Company.

         "Payment Date" means each February 16, May 16, August 16 and November
16, commencing 16, .

         "Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, limited
liability company, trust, unincorporated association or government or any agency
or political subdivision thereof or any other entity of whatever nature.

         "Permitted Investments" has the meaning set forth in Section 1 of the
Pledge Agreement.

         "Pledge" means the pledge under the Pledge Agreement of the Debentures
or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as
the case may be, and of the Treasury Securities, in each case constituting a
part of the Securities.

         "Pledge Agreement" means the Pledge Agreement, dated as of the date
hereof, by and among the Company, the Collateral Agent and the Agent, on its own
behalf and as attorney-in-fact for the Holders from time to time of the
Securities, as the same may hereafter be amended in accordance with the terms
thereof.

         "Predecessor Certificate" means a Predecessor Income PRIDES Certificate
or a Predecessor Growth PRIDES Certificate.

         "Predecessor Growth PRIDES Certificate" of any particular Growth PRIDES
Certificate means every previous Growth PRIDES Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Growth PRIDES evidenced thereby; and, for the purposes of this definition, any
Growth PRIDES Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Growth PRIDES
Certificate shall be deemed to
<PAGE>   13

evidence the same rights and obligations of the Company and the Holder as the
mutilated, destroyed, lost or stolen Growth PRIDES Certificate.

         "Predecessor Income PRIDES Certificate" of any particular Income PRIDES
Certificate means every previous Income PRIDES Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Income PRIDES evidenced thereby; and, for the purposes of this definition, any
Income PRIDES Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Income PRIDES
Certificate shall be deemed to evidence the same rights and obligations of the
Company and the Holder as the mutilated, destroyed, lost or stolen Income PRIDES
Certificate.

         "Primary Treasury Dealer" means a primary U.S. government securities
dealer in The City of New York.

         "Proceeds" has the meaning set forth in Section 1 of the Pledge
Agreement.

         "Purchase Contract," when used with respect to any Security, means the
contract forming a part of such Security and obligating the Company to (i) sell
and the Holder of such Security to purchase Common Stock and (ii) pay the Holder
Contract Adjustment Payments, if any, on the terms and subject to the conditions
set forth in Article Five hereof.

         "Purchase Contract Settlement Date" means       16, 2002.

         "Purchase Contract Settlement Fund" has the meaning specified in
Section 5.5.

         "Purchase Price" has the meaning specified in Section 5.1.

         "Purchased Shares" has the meaning specified in Section 5.6(a)(6).

         "Quotation Agent" means (i) Merrill Lynch Government Securities, Inc.
and its respective successors, provided, however, that if the foregoing shall
cease to be a Primary Treasury Dealer, the Sponsor shall substitute therefor
another Primary Treasury Dealer or (ii) any other Primary Treasury Dealer
selected by the Sponsor.

         "Record Date" for the distribution payable in respect of the Debentures
and Contract Adjustment Payments, if any, payable on any Payment Date means the
first day of the month in which the relevant Payment Date occurs.

         "Redemption Amount" means for each Debenture, the product of (i) the
principal amount of such Debenture and (ii) a fraction whose numerator is the
Treasury Portfolio Purchase Price and whose denominator is the Applicable
Principal Amount.

         "Redemption Price" means the redemption price per Security equal to the
Redemption Amount plus any accrued and unpaid Distributions to the date of
redemption
<PAGE>   14

or, in the case of any redemption in connection with the final maturity of the
Debentures, an amount per Security equal to the redemption price for $ in
principal amount of Debentures plus accrued and unpaid Distributions to the date
of redemption.

         "Register" means the Income PRIDES Register and the Growth PRIDES
Register.

         "Registrar" means the Income PRIDES Registrar and the Growth PRIDES
Registrar.

         "Remarketing Agent" has the meaning specified in Section 5.4.

         "Remarketing Agreement" means the Remarketing Agreement dated as of ,
1999 by and among the Company, the Remarketing Agent and the Purchase Contract
Agent.

         "Remarketing Fee" has the meaning specified in Section 5.4.

         "Reorganization Event" has the meaning specified in Section 5.6(b).

         "Reset Agent" means a nationally recognized investment banking firm
chosen by the Sponsor to determine the Reset Rate. It is currently anticipated
that Merrill Lynch, Pierce, Fenner & Smith Incorporated will act in such
capacity.

         "Reset Announcement Date" means the tenth Business Day immediately
preceding the Purchase Contract Settlement Date.

         "Reset Rate" means the distribution rate per annum (to be determined by
the Reset Agent), equal to the sum of (X) the Reset Spread and (Y) the rate of
interest on the Two-Year Benchmark Treasury in effect on the third Business Day
immediately preceding the Purchase Contract Settlement Date that the Capital
Securities should bear in order for the Debentures to have an approximate market
value of % of their aggregate stated liquidation amount on the third Business
Day immediately preceding the Purchase Contract Settlement Date; provided, that
the Company may limit such Reset Spread to be no higher than basis points ( %)
and the Sponsor shall limit the Reset Rate, if applicable, to the maximum rate
permitted by applicable law.

         "Reset Spread" means a spread amount to be determined by the Reset
Agent on the tenth Business Day immediately preceding the Purchase Contract
Settlement Date.

         "Responsible Officer," when used with respect to the Agent, means any
officer of the Agent assigned by the Agent to administer its corporate trust
matters.

         "Security" means an Income PRIDES or a Growth PRIDES.

         "Senior Indebtedness" means indebtedness of any kind of the Company
unless the instrument under which such indebtedness is incurred expressly
provides that it is on a
<PAGE>   15

parity in right of payment with or subordinate in right of payment to the
Contract Adjustment Payments.

         "Settlement Rate" has the meaning specified in Section 5.1.

         "Stated Amount" means $  .

         "Tax Event" means the receipt by the Company of an opinion of a
nationally recognized independent tax counsel experienced in such matters to the
effect that, as a result of (a) any amendment to, or change (including any
announced proposed change) in, the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein affecting taxation, (b) any amendment to or change in an interpretation
or application of such laws or regulations by any legislative body, court,
governmental agency or regulatory authority or (c) any interpretation or
pronouncement that provides for a position with respect to such laws or
regulations that differs from the generally accepted position on the date the
Debentures are issued, which amendment, change or proposed change is effective
or which interpretation or pronouncement is announced on or after the date of
the first issuance of Debentures under the Indenture, there is more than an
insubstantial risk that (i) interest payable by the Company on the Debentures
would not be deductible, in whole or in part, by the Company for United States
federal income tax purposes.

         "Tax Event Redemption" means, if a Tax Event shall occur and be
continuing, the redemption of the Debentures, at the option of the Company, in
whole but not in part, on not less than 30 days nor more than 60 days notice.

         "Tax Event Redemption Date" means the date upon which a Tax Event
Redemption is to occur.

         "Termination Date" means the date, if any, on which a Termination Event
occurs.

         "Termination Event" means the occurrence of any of the following
events: (i) at any time on or prior to the Purchase Contract Settlement Date, a
judgment, decree or court order shall have been entered granting relief under
the Bankruptcy Code, adjudicating the Company to be insolvent, or approving as
properly filed a petition seeking reorganization or liquidation of the Company
or any other similar applicable Federal or State law, and, unless such judgment,
decree or order shall have been entered within 60 days prior to the Purchase
Contract Settlement Date, such decree or order shall have continued undischarged
and unstayed for a period of 60 days; or (ii) at any time on or prior to the
Purchase Contract Settlement Date, a judgment, decree or court order for the
appointment of a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of the Company or of its property, or for the winding up or
liquidation of its affairs, shall have been entered, and, unless such judgment,
decree or order shall have been entered within 60 days prior to the Purchase
Contract Settlement Date, such judgment, decree or order shall have continued
undischarged and unstayed for a period of 60 days, or (iii) at any time on or
prior to the Purchase Contract Settlement Date the
<PAGE>   16

Company shall file a petition for relief under the Bankruptcy Code, or shall
consent to the filing of a bankruptcy proceeding against it, or shall file a
petition or answer or consent seeking reorganization or liquidation under the
Bankruptcy Code or any other similar applicable Federal or State law, or shall
consent to the filing of any such petition, or shall consent to the appointment
of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency
of it or of its property, or shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts generally as
they become due.

         "Threshold Appreciation Price" has the meaning specified in Section
5.1.

         "TIA" means the Trust Indenture Act of 1939, as amended, or any
successor statute.

         "Trading Day" has the meaning specified in Section 5.1.

         "Treasury Portfolio" means, with respect to the Applicable Principal
Amount of Debentures (a) if the Tax Event Redemption Date occurs prior to 16,
2002, a portfolio of zero-coupon U.S. Treasury Securities consisting of (i)
principal or interest strips of U.S. Treasury Securities which mature on or
prior to 15, 2002 in an aggregate amount equal to the Applicable Principal
Amount and (ii) with respect to each scheduled interest payment date on the
Debentures that occurs after the Tax Event Redemption Date, principal or
interest strips of U.S. Treasury Securities which mature on or prior to such
date in an aggregate amount equal to the aggregate interest payment that would
be due on the Applicable Principal Amount of the Debentures on such date, and
(b) if the Tax Event Redemption Date occurs after 16, 2002, a portfolio of
zero-coupon U.S. Treasury Securities consisting of (i) principal or interest
strips of U.S. Treasury Securities which mature on or prior to 15, 2004 in an
aggregate amount equal to the Applicable Principal Amount and (ii) with respect
to each scheduled interest payment date on the Debentures that occurs after the
Tax Event Redemption Date, principal or interest strips of such U.S. Treasury
Securities which mature on or prior to such date in an aggregate amount equal to
the aggregate interest payment that would be due on the Applicable Principal
Amount of the Debentures on such date.

         "Treasury Portfolio Purchase Price" means the lowest aggregate price
quoted by the Primary Treasury Dealer to the Quotation Agent on the third
Business Day immediately preceding the Tax Event Redemption Date for the
purchase of the Treasury Portfolio for settlement on the Tax Event Redemption
Date.

         "Treasury Security" means zero-coupon U.S. Treasury Securities (CUSIP
Number ) which are the principal strip of the U.S. Treasury Securities which
mature on 15, 2002.

         "Two-Year Benchmark Treasury" means direct obligations of the United
States (which may be obligations traded on a when-issued basis only) having a
maturity comparable to the remaining term to maturity of the Debentures, as
agreed upon by the Sponsor and the Reset Agent. The rate for the Two-Year
Benchmark Treasury will be the
<PAGE>   17

bid side rate displayed at 10:00 A.M., New York City time, on the third Business
Day immediately preceding the Purchase Contract Settlement Date in the Telerate
system (or if the Telerate system is (a) no longer available on the third
Business Day immediately preceding the Purchase Contract Settlement Date or (b)
in the opinion of the Reset Agent (after consultation with the Company) no
longer an appropriate system from which to obtain such rate, such other
nationally recognized quotation system as, in the opinion of the Reset Agent
(after consultation with the Company) is appropriate). If such rate is not so
displayed, the rate for the Two-Year Benchmark Treasury shall be, as calculated
by the Reset Agent, the yield to maturity for the Two-Year Benchmark Treasury,
expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis, and computed by taking the arithmetic
mean of the secondary market bid rates, as of 10:30 A.M., New York City time, on
the third Business Day immediately preceding the Purchase Contract Settlement
Date of three leading United States government securities dealers selected by
the Reset Agent (after consultation with the Company) (which may include the
Reset Agent or an Affiliate thereof).

         "Underwriting Agreement" means the Underwriting Agreement dated , 1999
among the Company, and Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Lehman Brothers Inc. and Banc of America Securities LLC.

         "Vice President" means any vice president, whether or not designated by
a number or a word or words added before or after the title "vice president."

Section 1.2.      Compliance Certificates and Opinions.

         Except as otherwise expressly provided by this Agreement, upon any
application or request by the Company to the Agent to take any action under any
provision of this Agreement, the Company shall furnish to the Agent an Officer's
Certificate stating that all conditions precedent, if any, provided for in this
Agreement relating to the proposed action have been complied with and, if
reasonably requested by the Agent, an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Agreement relating to such particular application or request, no
additional certificate or opinion need be furnished.

         Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:

                  (1) a statement that each Person signing such certificate or
         opinion has read such covenant or condition and the definitions herein
         relating thereto;

                   (2) a brief statement as to the nature and scope of the
         examination or investigation upon which the statements or opinions
         contained in such certificate or opinion are based;
<PAGE>   18

                  (3) a statement that, in the opinion of each such Person, he
         or she or it has made such examination or investigation as is necessary
         to enable such individual to express an informed opinion as to whether
         or not such covenant or condition has been complied with; and

                  (4) a statement as to whether, in the opinion of each such
         Person, such condition or covenant has been complied with.

Section 1.3.      Form of Documents Delivered to Agent.

         In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

         Any certificate or opinion of the Company may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless the Company knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
such certificate or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, the
Company stating that the information with respect to such factual matters is in
the possession of the Company unless the Person giving such certificate or
Opinion of Counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such matters
are erroneous.

         Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.

Section 1.4.      Acts of Holders; Record Dates.

         (a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Agent and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and (subject to Section 7.1) conclusive in favor of the Agent and the
Company, if made in the manner provided in this Section.
<PAGE>   19

         (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Agent deems
sufficient.

         (c) The ownership of Securities shall be proved by the Income PRIDES
Register or the Growth PRIDES Register, as the case may be.

         (d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Certificate shall bind every future
Holder of the same Certificate and the Holder of every Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Agent or the
Company in reliance thereon, whether or not notation of such action is made upon
such Certificate.

         (e) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Agreement to be given, made or taken by
Holders of Securities. If any record date is set pursuant to this paragraph, the
Holders of the Outstanding Income PRIDES and the Outstanding Growth PRIDES, as
the case may be, on such record date, and no other Holders, shall be entitled to
take the relevant action with respect to the Income PRIDES or the Growth PRIDES,
as the case may be, whether or not such Holders remain Holders after such record
date; provided that no such action shall be effective hereunder unless taken on
or prior to the applicable Expiration Date by Holders of the requisite number of
Outstanding Securities on such record date. Nothing in this paragraph shall be
construed to prevent the Company from setting a new record date for any action
for which a record date has previously been set pursuant to this paragraph
(whereupon the record date previously set shall automatically and with no action
by any Person be cancelled and of no effect), and nothing in this paragraph
shall be construed to render ineffective any action taken by Holders of the
requisite number of Outstanding Securities on the date such action is taken.
Promptly after any record date is set pursuant to this paragraph, the Company,
at its own expense, shall cause notice of such record date, the pro posed action
by Holders and the applicable Expiration Date to be given to the Agent in
writing and to each Holder of Securities in the manner set forth in Section 1.6.

         With respect to any record date set pursuant to this Section, the
Company may designate any date as the "Expiration Date" and from time to time
may change the Expiration Date to any earlier or later day; provided that no
such change shall be effective unless notice of the proposed new Expiration Date
is given to the Agent in writing, and to each Holder of Securities in the manner
set forth in Section 1.6, on or prior to the existing Expiration Date. If an
Expiration Date is not designated with respect to any record date set pursuant
to this Section, the Company shall be deemed to have initially designated the
180th day after such record date as the Expiration Date with respect thereto,
subject to its right to change the Expiration Date as provided in this
paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than
the 180th day after the applicable record date.
<PAGE>   20

Section 1.5.      Notices.

         Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Agreement to
be made upon, given or furnished to, or filed with,

                   (1) the Agent by any Holder or by the Company shall be
         sufficient for every purpose hereunder (unless otherwise herein
         expressly provided) if made, given, furnished or filed in writing and
         personally delivered or mailed, first-class postage prepaid, to the
         Agent at The Bank of New York, 101 Barclay Street, Floor 12 East, New
         York, NY 10286, Attention: Corporate Trust Administration, or at any
         other address previously furnished in writing by the Agent to the
         Holders and the Company; or

                  (2) the Company by the Agent or by any Holder shall be
         sufficient for every purpose hereunder (unless otherwise herein
         expressly provided) if made, given, furnished or filed in writing and
         personally delivered or mailed, first-class postage prepaid, to the
         Company at The Coastal Corporation, Coastal Tower, Nine Greenway Plaza,
         Houston, TX 77046-0995, Attention: [Chief Financial Officer], or at any
         other address previously furnished in writing to the Agent by the
         Company; or

                  (3) the Collateral Agent by the Agent, the Company or any
         Holder shall be sufficient for every purpose hereunder (unless
         otherwise herein expressly provided) if made, given, furnished or filed
         in writing and person ally delivered or mailed, first-class postage
         prepaid, addressed to the Collateral Agent at , Attention: [Corporate
         Trust Administration], or at any other address previously furnished in
         writing by the Collateral Agent to the Agent, the Company and the
         Holders; or

                  (4) the Indenture Trustee by the Company shall be sufficient
         for every purpose hereunder (unless otherwise herein expressly
         provided) if made, given, furnished or filed in writing and personally
         delivered or mailed, first-class postage prepaid, addressed to the
         Indenture Trustee at c/o Bank of Montreal Trust Company, 77 Water
         Street, New York, New York 10005, Attention: Trust Officer, or at any
         other address previously furnished in writing by the Indenture Trustee
         to the Company.

Section 1.6.      Notice to Holders; Waiver.

         Where this Agreement provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at its address as it appears in the applicable Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to
<PAGE>   21

Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Agreement
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Agent, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.

         In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Agent shall
constitute a sufficient notification for every purpose hereunder.

Section 1.7.      Effect of Headings and Table of Contents.

         The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.

Section 1.8.      Successors and Assigns.

         All covenants and agreements in this Agreement by the Company shall
bind its successors and assigns, whether so expressed or not.

Section 1.9.      Separability Clause.

         In case any provision in this Agreement or in the Securities shall be
invalid, illegal or unenforceable, then, to the extent permitted by law, the
validity, legality and enforceability of the remaining provisions hereof and
thereof shall not in any way be affected or impaired thereby.

Section 1.10.     Benefits of Agreement.

         Nothing in this Agreement or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and, to the extent provided hereby, the Holders, any benefits or any
legal or equitable right, remedy or claim under this Agreement. The Holders from
time to time shall be beneficiaries of this Agreement and shall be bound by all
of the applicable terms and conditions hereof and of the Securities evidenced by
their Certificates by their acceptance of delivery of such Certificates.

Section 1.11.     Governing Law.

         THIS AGREEMENT AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
<PAGE>   22

Section 1.12.     Legal Holidays.

         In any case where any Payment Date shall not be a Business Day, then
(notwithstanding any other provision of this Agreement or the Income PRIDES
Certificates or the Growth PRIDES Certificates) payment of the Contract
Adjustment Payments, if any, shall not be made on such date, but such payments
shall be made on the next succeeding Business Day with the same force and effect
as if made on such Payment Date, provided that no interest shall accrue or be
payable by the Company or any Holder for the period from and after any such
Payment Date unless there shall be a default in the payment due on such next
succeeding Business Day, except that, if such next succeeding Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day with the same force and effect as if made on such Payment
Date.

         In any case where any Purchase Contract Settlement Date shall not be a
Business Day, then (notwithstanding any other provision of this Agreement, the
Income PRIDES Certificates or the Growth PRIDES Certificates), the Purchase
Contracts shall not be performed on such date, but the Purchase Contracts shall
be performed on the immediately following Business Day with the same force and
effect as if performed on the Purchase Contract Settlement Date.

Section 1.13.     Counterparts.

         This Agreement may be executed in any number of counterparts by the
parties hereto on separate counterparts, each of which, when so executed and
delivered, shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument.

Section 1.14.     Inspection of Agreement.

         A copy of this Agreement shall be available at all reasonable times
during normal business hours at the Corporate Trust Office for inspection by any
Holder.

                                   ARTICLE II

                                Certificate Forms

Section 2.1.      Forms of Certificates Generally.

         The Income PRIDES Certificates (including the form of Purchase Contract
forming part of the Income PRIDES evidenced thereby) shall be in substantially
the form set forth in Exhibit A hereto, with such letters, numbers or other
marks of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Income PRIDES are listed or any depositary
therefor, or as may, consistently herewith, be determined by
<PAGE>   23

the officers of the Company executing such Income PRIDES Certificates, as
evidenced by their execution of the Income PRIDES Certificates.

         The definitive Income PRIDES Certificates shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers of the Company executing such
Income PRIDES Certificates, consistent with the provisions of this Agreement, as
evidenced by their execution thereof.

         The Growth PRIDES Certificates (including the form of Purchase Contract
forming part of the Growth PRIDES evidenced thereby) shall be in substantially
the form set forth in Exhibit B hereto, with such letters, numbers or other
marks of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Growth PRIDES are listed or any depositary
therefor, or as may, consistently herewith, be determined by the officers of the
Company executing such Growth PRIDES Certificates, as evidenced by their
execution of the Growth PRIDES Certificates.

         The definitive Growth PRIDES Certificates shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers of the Company executing such
Growth PRIDES Certificates, consistent with the provisions of this Agreement, as
evidenced by their execution thereof.

         Every Global Certificate authenticated, executed on behalf of the
Holders and delivered hereunder shall bear a legend in substantially the
following form:

         THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN THE
NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF
THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.

Section 2.2.      Form of Agent's Certificate of Authentication.

         The form of the Agent's certificate of authentication of the Income
PRIDES shall be in substantially the form set forth on the form of the Income
PRIDES Certificates.

         The form of the Agent's certificate of authentication of the Growth
PRIDES shall be in substantially the form set forth on the form of the Growth
PRIDES Certificates.

                                   ARTICLE III
<PAGE>   24

                                 The Securities

Section 3.1.      Title and Terms; Denominations.

         The aggregate number of Income PRIDES and Growth PRIDES evidenced by
Certificates authenticated, executed on behalf of the Holders and delivered
hereunder is limited to except for Certificates authenticated, executed and
delivered upon registration of transfer of, in exchange for, or in lieu of,
other Certificates pursuant to Section 3.4, 3.5, 3.9, 3.10, 3.13, 3.14, 5.9 or
8.5.

         The Certificates shall be issuable only in registered form and only in
denominations of a single Income PRIDES or Growth PRIDES and any integral
multiple thereof.

Section 3.2.      Rights and Obligations Evidenced by the Certificates.

         Each Income PRIDES Certificate shall evidence the number of Income
PRIDES specified therein, with each such Income PRIDES representing the owner
ship by the Holder thereof of a beneficial interest in a Debenture or the
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
subject to the Pledge of such Debenture or the Applicable Ownership Interest of
the Treasury Portfolio, as the case may be, by such Holder pursuant to the
Pledge Agreement, and the rights and obligations of the Holder thereof and the
Company under one Purchase Contract. The Agent as attorney-in-fact for, and on
behalf of, the Holder of each Income PRIDES shall pledge, pursuant to the Pledge
Agreement, the Debenture or the Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, forming a part of such Income PRIDES, to the
Collateral Agent and grant to the Collateral Agent a security interest in the
right, title, and interest of such Holder in such Debenture or the Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, for the
benefit of the Company, to secure the obligation of the Holder under each
Purchase Contract to purchase the Common Stock of the Company.

         Each Growth PRIDES Certificate shall evidence the number of Growth
PRIDES specified therein, with each such Growth PRIDES representing the owner
ship by the Holder thereof of a 1/100 undivided beneficial interest in a
Treasury Security with a principal amount at maturity equal to $ , subject to
the Pledge of such Treasury Security by such Holder pursuant to the Pledge
Agreement, and the rights and obligations of the Holder thereof and the Company
under one Purchase Contract. The Agent as attorney-in-fact for, and on behalf
of, the Holder of each Growth PRIDES shall pledge, pursuant to the Pledge
Agreement, the Treasury Security to the Collateral Agent and grant to the
Collateral Agent a security interest in the right, title and interest of such
Holder in such Treasury Security, for the benefit of the Company, to secure the
obligation of the Holder under each Purchase Contract to purchase the Common
Stock of the Company.

Section 3.3.      Execution, Authentication, Delivery and Dating.
<PAGE>   25

         Subject to the provisions of Sections 3.13 and 3.14 hereof, upon the
execution and delivery of this Agreement, and at any time and from time to time
thereafter, the Company may deliver Certificates executed by the Company to the
Agent for authentication, execution on behalf of the Holders and delivery,
together with its Issuer Order for authentication of such Certificates, and the
Agent in accordance with such Issuer Order shall authenticate, execute on behalf
of the Holders and deliver such Certificates.

         The Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its President or one of its Vice Presidents and its
Treasurer or one of its Assistant Treasurers or its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the
Certificates may be manual or facsimile.

         Certificates bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates.

         No Purchase Contract evidenced by a Certificate shall be valid until
such Certificate has been executed on behalf of the Holder by the manual
signature of an authorized signatory of the Agent, as such Holder's
attorney-in-fact. Such signature by an authorized signatory of the Agent shall
be conclusive evidence that the Holder of such Certificate has entered into the
Purchase Contracts evidenced by such Certificate.

         Each Certificate shall be dated the date of its authentication.

         No Certificate shall be entitled to any benefit under this Agreement or
be valid or obligatory for any purpose unless there appears on such Certificate
a certificate of authentication substantially in the form provided for herein
executed by an authorized signatory of the Agent by manual signature, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder.

Section 3.4.      Temporary Certificates.

         Pending the preparation of definitive Certificates, the Company shall
execute and deliver to the Agent, and the Agent shall authenticate, execute on
behalf of the Holders, and deliver, in lieu of such definitive Certificates,
temporary Certificates which are in substantially the form set forth in Exhibit
A or Exhibit B hereto, as the case may be, with such letters, numbers or other
marks of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Income PRIDES or Growth PRIDES are listed, or
as may, consistently herewith, be deter mined by the officers of the Company
executing such Certificates, as evidenced by their execution of the
Certificates.
<PAGE>   26

         If temporary Certificates are issued, the Company will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
Corporate Trust Office or the New York office, at the expense of the Company and
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Certificates, the Company shall execute and deliver to the Agent, and
the Agent shall authenticate, execute on behalf of the Holder, and deliver in
exchange therefor, one or more definitive Certificates of like tenor and
denominations and evidencing a like number of Income PRIDES or Growth PRIDES, as
the case may be, as the temporary Certificate or Certificates so surrendered.
Until so exchanged, the temporary Certificates shall in all respects evidence
the same benefits and the same obligations with respect to the Income PRIDES or
Growth PRIDES, as the case may be, evidenced thereby as definitive Certificates.

Section 3.5.      Registration; Registration of Transfer and Exchange.

         The Agent shall keep at the Corporate Trust Office a Register (the
"Income PRIDES Register") in which, subject to such reasonable regulations as it
may prescribe, the Agent shall provide for the registration of Income PRIDES
Certificates and of transfers of Income PRIDES Certificates (the Agent, in such
capacity, the "Income PRIDES Registrar") and a Register (the "Growth PRIDES
Register") in which, subject to such reasonable regulations as it may prescribe,
the Agent shall provide for the registration of the Growth PRIDES Certificates
and transfers of Growth PRIDES Certificates (the Agent, in such capacity, the
"Growth PRIDES Registrar").

         Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office or the New York Office, the Company shall execute and
deliver to the Agent, and the Agent shall authenticate, execute on behalf of the
designated transferee or transferees, and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of any authorized
denominations, like tenor, and evidencing a like number of Income PRIDES or
Growth PRIDES, as the case may be.

         At the option of the Holder, Certificates may be exchanged for other
Certificates, of any authorized denominations and evidencing a like number of
Income PRIDES or Growth PRIDES, as the case may be, upon surrender of the
Certificates to be exchanged at the Corporate Trust Office or the New York
Office. Whenever any Certificates are so surrendered for exchange, the Company
shall execute and deliver to the Agent, and the Agent shall authenticate,
execute on behalf of the Holder, and deliver the Certificates which the Holder
making the exchange is entitled to receive.

         All Certificates issued upon any registration of transfer or exchange
of a Certificate shall evidence the ownership of the same number of Income
PRIDES or Growth PRIDES, as the case may be, and be entitled to the same
benefits and subject to the same obligations, under this Agreement as the Income
PRIDES or Growth PRIDES, as the case may be, evidenced by the Certificate
surrendered upon such registration of transfer or exchange.
<PAGE>   27

         Every Certificate presented or surrendered for registration of transfer
or for exchange shall (if so required by the Agent) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Agent duly executed, by the Holder thereof or its attorney duly
authorized in writing.

         No service charge shall be made for any registration of transfer or
exchange of a Certificate, but the Company and the Agent may require payment
from the Holder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates, other than any exchanges pursuant to Sections 3.4,
3.6, 3.9 and 8.5 not involving any transfer.

         Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on behalf of the Holder and deliver, any Certificate
presented or surrendered for registration of transfer or for exchange on or
after the Business Day immediately preceding the earlier of the Purchase
Contract Settlement Date or the Termination Date. In lieu of delivery of a new
Certificate, upon satisfaction of the applicable conditions specified above in
this Section and receipt of appropriate registration or transfer instructions
from such Holder, the Agent shall (i) if the Purchase Contract Settlement Date
has occurred, deliver the shares of Common Stock issuable in respect of the
Purchase Contracts forming a part of the Securities evidenced by such
Certificate (together with any cash or other property to which the Holder is
entitled), or (ii) if a Termination Event shall have occurred prior to the
Purchase Contract Settlement Date, transfer the Debentures, the appropriate
Applicable Ownership Interest of the Treasury Portfolio or the Treasury
Securities, as the case may be, evidenced thereby, in each case subject to the
applicable conditions and in accordance with the applicable provisions of
Article Five hereof.

Section 3.6.      Book-Entry Interests.

         The Certificates, on original issuance, will be issued in the form of
one or more fully registered Global Certificates, to be delivered to the
Depositary by, or on behalf of, the Company. Such Global Certificate shall
initially be registered on the books and records of the Company in the name of
Cede & Co., the nominee of the Depositary, and no Beneficial Owner will receive
a definitive Certificate representing such Beneficial Owner's interest in such
Global Certificate, except as provided in Section 3.9. The Agent shall enter
into an agreement with the Depositary if so requested by the Company. Unless and
until definitive, fully registered Certificates have been issued to Beneficial
Owners pursuant to Section 3.9:

                  (a) the provisions of this Section 3.6 shall be in full force
and effect;

                  (b) the Company shall be entitled to deal with the Clearing
Agency for all purposes of this Agreement (including the payment of Contract
Adjustment Payments, if any, and receiving approvals, votes or consents
hereunder) as the Holder of the Securities
<PAGE>   28

and the sole holder of the Global Certificate(s) and shall have no obligation to
the Beneficial Owners;

                  (c) to the extent that the provisions of this Section 3.6
conflict with any other provisions of this Agreement, the provisions of this
Section 3.6 shall control; and

                  (d) the rights of the Beneficial Owners shall be exercised
only through the Clearing Agency and shall be limited to those established by
law and agreements between such Beneficial Owners and the Clearing Agency and/or
the Clearing Agency Participants. The Clearing Agency will make book entry
transfers among Clearing Agency Participants and receive and transmit payments
of Contract Adjustment Payments, if any, to such Clearing Agency Participants.

Section 3.7.      Notices to Holders.

         Whenever a notice or other communication to the Holders is required to
be given under this Agreement, the Company or the Company's agent shall give
such notices and communications to the Holders and, with respect to any
Securities registered in the name of a Clearing Agency or the nominee of a
Clearing Agency, the Company or the Company's agent shall, except as set forth
herein, have no obligations to the Beneficial Owners.

Section 3.8.      Appointment of Successor Clearing Agency.

         If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Securities, the Company may, in its sole
discretion, appoint a successor Clearing Agency with respect to the Securities.

Section 3.9.      Definitive Certificates.

         If (i) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Securities and a successor Clearing
Agency is not appointed within 90 days after such discontinuance pursuant to
Section 3.8, (ii) the Company elects to terminate the book-entry system through
the Clearing Agency with respect to the Securities, or (iii) there shall have
occurred and be continuing a default by the Company in respect of its
obligations under one or more Purchase Contracts, or one or more Debentures,
then upon surrender of the Global Certificates representing the Book-Entry
Interests with respect to the Securities by the Clearing Agency, accompanied by
registration instructions, the Company shall cause definitive Certificates to be
delivered to Beneficial Owners in accordance with the instructions of the
Clearing Agency. The Company shall not be liable for any delay in delivery of
such instructions and may conclusively rely on and shall be protected in relying
on, such instructions.

Section 3.10.     Mutilated, Destroyed, Lost and Stolen Certificates.
<PAGE>   29

         If any mutilated Certificate is surrendered to the Agent, the Company
shall execute and deliver to the Agent, and the Agent shall authenticate,
execute on behalf of the Holder, and deliver in exchange therefor, a new
Certificate at the cost of the Holder, evidencing the same number of Income
PRIDES or Growth PRIDES, as the case may be, and bearing a Certificate number
not contemporaneously outstanding.

         If there shall be delivered to the Company and the Agent (i) evidence
to their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) such security or indemnity at the cost of the Holder as may be required by
them to hold each of them and any agent of any of them harmless, then, in the
absence of notice to the Company or the Agent that such Certificate has been
acquired by a bona fide purchaser, the Company shall execute and deliver to the
Agent, and the Agent shall authenticate, execute on behalf of the Holder, and
deliver to the Holder, in lieu of any such destroyed, lost or stolen
Certificate, a new Certificate, evidencing the same number of Income PRIDES or
Growth PRIDES, as the case may be, and bearing a Certificate number not
contemporaneously outstanding.

         Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on behalf of the Holder, and deliver to the Holder, a
Certificate on or after the Business Day immediately preceding the earlier of
the Purchase Contract Settlement Date or the Termination Date. In lieu of
delivery of a new Certificate, upon satisfaction of the applicable conditions
specified above in this Section and receipt of appropriate registration or
transfer instructions from such Holder, the Agent shall (i) if the Purchase
Contract Settlement Date has occurred, deliver the shares of Common Stock
issuable in respect of the Purchase Contracts forming a part of the Securities
evidenced by such Certificate (together with any cash or other property to which
the Holder is entitled), or (ii) if a Termination Event shall have occurred
prior to the Purchase Contract Settlement Date, transfer the Debentures, the
appropriate Applicable Ownership Interest of the Treasury Portfolio or the
Treasury Securities, as the case may be, evidenced thereby, in each case subject
to the applicable conditions and in accordance with the applicable provisions of
Article Five hereof.

         Upon the issuance of any new Certificate under this Section, the
Company and the Agent may require the payment by the Holder of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the reasonable fees and expenses of
the Agent) connected therewith.

         Every new Certificate issued pursuant to this Section in lieu of any
destroyed, lost or stolen Certificate shall constitute an original additional
contractual obligation of the Company and of the Holder in respect of the
Security evidenced thereby, whether or not the destroyed, lost or stolen
Certificate (and the Securities evidenced thereby) shall be at any time
enforceable by anyone, and shall be entitled to all the benefits and be subject
to all the obligations of this Agreement equally and proportionately with any
and all other Certificates delivered hereunder.
<PAGE>   30

         The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.

Section 3.11.     Persons Deemed Owners.

         Prior to due presentment of a Certificate for registration of transfer,
the Company and the Agent, and any agent of the Company or the Agent, may treat
the Person in whose name such Certificate is registered as the owner of the
Income PRIDES or Growth PRIDES evidenced thereby, for the purpose of receiving
interest on the Debentures or on the maturing quarterly interest strips of the
Treasury Portfolio, as applicable, receiving payments of Contract Adjustment
Payments, if any, performance of the Purchase Contracts and for all other
purposes whatsoever, whether or not any interest on the Debentures or the
Contract Adjustment Payments, if any, payable in respect of the Purchase
Contracts constituting a part of the Income PRIDES or Growth PRIDES evidenced
thereby shall be overdue and notwithstanding any notice to the contrary, and
neither the Company nor the Agent, nor any agent of the Company or the Agent,
shall be affected by notice to the contrary.

         Notwithstanding the foregoing, with respect to any Global Certificate,
nothing herein shall prevent the Company, the Agent or any agent of the Company
or the Agent, from giving effect to any written certification, proxy or other
authorization furnished by any Clearing Agency (or its nominee), as a Holder,
with respect to such Global Certificate or impair, as between such Clearing
Agency and owners of beneficial interests in such Global Certificate, the
operation of customary practices governing the exercise of rights of such
Clearing Agency (or its nominee) as Holder of such Global Certificate.

Section 3.12.     Cancellation.

         All Certificates surrendered for delivery of shares of Common Stock on
or after the Purchase Contract Settlement Date, upon the transfer of Debentures,
the appropriate Applicable Ownership Interest of the Treasury Portfolio or
Treasury Securities, as the case may be, after the occurrence of a Termination
Event or pursuant to an Early Settlement, or upon the registration of a transfer
or exchange of a Security, or a Collateral Substitution or the re-establishment
of an Income PRIDES or a Growth PRIDES shall, if surrendered to any Person other
than the Agent, be delivered to the Agent and, if not already cancelled, shall
be promptly cancelled by it. The Company may at any time deliver to the Agent
for cancellation any Certificates previously authenticated, executed and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Certificates so delivered shall, upon Issuer Order, be
promptly cancelled by the Agent. No Certificates shall be authenticated,
executed on behalf of the Holder and delivered in lieu of or in exchange for any
Certificates cancelled as provided in this Section, except as expressly
permitted by this Agreement. All cancelled Certificates held by the Agent shall
upon written request be returned to the Company.
<PAGE>   31

         If the Company or any Affiliate of the Company shall acquire any
Certificate, such acquisition shall not operate as a cancellation of such
Certificate unless and until such Certificate is delivered to the Agent
cancelled or for cancellation.

Section 3.13.     Establishment or Reestablishment of Growth PRIDES.

         A Holder may separate the Debentures or the appropriate Applicable
Owner ship Interest of the Treasury Portfolio, as applicable, from the related
Purchase Contracts in respect of an Income PRIDES by substituting for such
Debentures or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, Treasury Securities in an aggregate principal
amount of such Debentures or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as applicable (a "Collateral Substitution"), at any time from and
after the date of this Agreement and on or prior to the fifth Business Day
immediately preceding the Purchase Contract Settlement Date in the case of the
Debentures and on or prior to the second Business Day immediately preceding the
Purchase Contract Settlement Date in the case of the appropriate Applicable
Ownership Interest of the Treasury Portfolio, in each case by (a) depositing
with the Collateral Agent Treasury Securities having an aggregate principal
amount of the Debentures comprising part of such Income PRIDES or for the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio comprising part of such
Income PRIDES, as the case may be, and (b) (i) delivering cash in an amount
equal to the excess of the Contract Adjustment Payments that would have accrued
since the last date that Contract Adjustment Payments were made to the date of
substitution on the Growth PRIDES being created by the holder, over the Contract
Adjustment Payments that have accrued over the same time period on the related
Income PRIDES, which amount the Agent shall promptly remit to the Company, and
(ii) transferring the related Income PRIDES to the Agent accompanied by a notice
to the Agent, substantially in the form of Exhibit D hereto, stating that the
Holder has transferred the relevant amount of Treasury Securities to the
Collateral Agent and requesting that the Agent instruct the Collateral Agent to
release the Debentures or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, underlying such Income PRIDES, whereupon
the Agent shall promptly give such instruction to the Collateral Agent,
substantially in the form of Exhibit C hereto. Upon receipt of the Treasury
Securities described in clause (a) above and the instruction described in clause
(b) above, in accordance with the terms of the Pledge Agreement, the Collateral
Agent will release to the Agent, on behalf of the Holder, Debentures or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be, having the appropriate aggregate principal amount in the case of such
Debentures or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, as the
case may be, from the Pledge, free and clear of the Company's security interest
therein, and upon receipt thereof the Agent shall promptly:

                  (i)  cancel the related Income PRIDES;
<PAGE>   32

                  (ii) transfer the Debentures or the appropriate Applicable
Owner ship Interest of the Treasury Portfolio, as the case may be, to the
Holder; and

                  (iii) authenticate, execute on behalf of such Holder and
deliver a Growth PRIDES Certificate executed by the Company in accordance with
Section 3.3 evidencing the same number of Purchase Contracts as were evidenced
by the cancelled Income PRIDES.

         Holders who elect to separate the Debentures or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
from the related Purchase Contract and to substitute Treasury Securities for
such Debentures or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, shall be responsible for any fees or expenses
payable to the Collateral Agent for its services as Collateral Agent in respect
of the substitution, and the Company shall not be responsible for any such fees
or expenses.

         Holders may make Collateral Substitutions (i) only in integral
multiples of [40] Income PRIDES if Debentures are being substituted by Treasury
Securities, or (ii) only in integral multiples of [ ] Income PRIDES if the
appropriate Applicable Ownership Interests of the Treasury Portfolio are being
substituted by Treasury Securities.

         In the event a Holder making a Collateral Substitution pursuant to this
Section 3.13 fails to effect a book-entry transfer of the Income PRIDES or fails
to deliver an Income PRIDES Certificate(s) to the Agent after depositing
Treasury Securities with the Collateral Agent, the Debentures or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
constituting a part of such Income PRIDES, and any interest on such Debenture or
the Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
shall be held in the name of the Agent or its nominee in trust for the benefit
of such Holder, until such Income PRIDES is so transferred or the Income PRIDES
Certificate is so delivered, as the case may be, or, with respect to an Income
PRIDES Certificate, such Holder provides evidence satisfactory to the Company
and the Agent that such Income PRIDES Certificate has been destroyed, lost or
stolen, together with any indemnity that may be required by the Agent and the
Company.

         Except as described in this Section 3.13, for so long as the Purchase
Contract underlying an Income PRIDES remains in effect, such Income PRIDES shall
not be separable into its constituent parts, and the rights and obligations of
the Holder in respect of the Debentures or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, and Purchase Contract
comprising such Income PRIDES may be acquired, and may be transferred and
exchanged, only as an Income PRIDES.

Section 3.14.     Establishment or Reestablishment of Income PRIDES.

         A Holder of a Growth PRIDES may create or recreate Income PRIDES at any
time (i) on or prior to the fifth Business Day immediately preceding the
Purchase Contract Settlement Date, if a Tax Event Redemption has not occurred,
and (ii) on or prior to the
<PAGE>   33

second Business Day immediately preceding the Purchase Contract Settlement Date,
if a Tax Event Redemption has occurred and an Applicable Owner ship Interest in
the Treasury Portfolio has become a component of the Income PRIDES, in each case
by (a) depositing with the Collateral Agent Debentures or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
having an aggregate principal amount in the case of the Debentures, or an
appropriate Applicable Ownership Interest (as defined in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may be, equal to
the aggregate principal amount of the Treasury Securities comprising part of the
Growth PRIDES and (b) transferring the related Growth PRIDES to the Agent
accompanied by a notice to the Agent, substantially in the form of Exhibit D
hereto, stating that the Holder has transferred the relevant amount of
Debentures or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, to the Collateral Agent and requesting that the
Agent instruct the Collateral Agent to release the Treasury Securities
underlying such Growth PRIDES, whereupon the Agent shall promptly give such
instruction to the Collateral Agent, substantially in the form of Exhibit C
hereto. Upon receipt of the Debentures or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, described in clause (a)
above and the instruction described in clause (b) above, in accordance with the
terms of the Pledge Agreement, the Collateral Agent will release to the Agent,
on behalf of the Holder, of the Treasury Securities having a corresponding
aggregate principal amount from the Pledge, free and clear of the Company's
security interest therein, and upon receipt thereof the Agent shall promptly:

                  (i)   cancel the related Growth PRIDES;

                  (ii)  transfer the Treasury Securities to the Holder; and

                  (iii) authenticate, execute on behalf of such Holder and
deliver an Income PRIDES Certificate executed by the Company in accordance with
Section 3.3 evidencing the same number of Purchase Contracts as were evidenced
by the cancelled Growth PRIDES.

         Holders of Growth PRIDES may establish or reestablish Income PRIDES in
integral multiples of [25] Growth PRIDES for [25] Income PRIDES if a Tax Event
Redemption has not occurred, and in integral multiples of Growth PRIDES for
Income PRIDES if a Tax Event Redemption has occurred.

         In the event a Holder establishing or re-establishing Income PRIDES
pursuant to this Section 3.14 fails to effect a book-entry transfer of the
Growth PRIDES or fails to deliver a Growth PRIDES Certificate(s) to the Agent
after depositing Debentures or the appropriate Applicable Ownership Interest of
the Treasury Portfolio, as the case may be, with the Collateral Agent, the
Treasury Securities constituting a part of such Growth PRIDES shall be held in
the name of the Agent or its nominee in trust for the benefit of such Holder,
until such Growth PRIDES is so transferred or the Growth PRIDES Certificate is
so delivered, as the case may be, or, with respect to a Growth PRIDES
Certificate, such Holder provides evidence satisfactory to the Company and the
Agent
<PAGE>   34

that such Growth PRIDES Certificate has been destroyed, lost or stolen, together
with any indemnity that may be required by the Agent and the Company.

         Except as provided in this Section 3.14, for so long as the Purchase
Contract underlying a Growth PRIDES remains in effect, such Growth PRIDES shall
not be separable into its constituent parts and the rights and obligations of
the Holder of such Growth PRIDES in respect of the Treasury Security and
Purchase Contract comprising such Growth PRIDES may be acquired, and may be
transferred and exchanged, only as a Growth PRIDES.

Section 3.15.     Transfer of Collateral upon Occurrence of Termination Event.

         Upon the occurrence of a Termination Event and the transfer to the
Agent of the Debentures, the appropriate Applicable Ownership Interest of the
Treasury Portfolio or the Treasury Securities, as the case may be, underlying
the Income PRIDES and the Growth PRIDES pursuant to the terms of the Pledge
Agreement, the Agent shall request transfer instructions with respect to such
Debentures or the appropriate Applicable Ownership Interest of the Treasury
Portfolio or Treasury Securities, as the case may be, from each Holder by
written request mailed to such Holder at its address as it appears in the Income
PRIDES Register or the Growth PRIDES Register, as the case may be. Upon
book-entry transfer of the Income PRIDES or Growth PRIDES or delivery of an
Income PRIDES Certificate or Growth PRIDES Certificate to the Agent with such
transfer instructions, the Agent shall transfer the Debentures, the Applicable
Ownership Interest of the Treasury Portfolio or Treasury Securities, as the case
may be, underlying such Income PRIDES or Growth PRIDES, as the case may be, to
such Holder by book-entry transfer, or other appropriate procedures, in
accordance with such instructions; provided, however, that, to the extent that a
Holder of Income PRIDES or Growth PRIDES would otherwise be entitled to receive
less than $1,000 principal amount at maturity of the Treasury Portfolio or the
Treasury Securities, the Agent shall dispose of such securities for cash, and
transfer the appropriate amount of such cash to such Holder in accordance with
such Holder's instructions. In the event a Holder of Income PRIDES or Growth
PRIDES fails to effect such transfer or delivery, the Debentures, the
appropriate Applicable Ownership Interest of the Treasury Portfolio or Treasury
Securities, as the case may be, underlying such Income PRIDES or Growth PRIDES,
as the case may be, and any distributions thereon, shall be held in the name of
the Agent or its nominee in trust for the benefit of such Holder, until such
Income PRIDES or Growth PRIDES are transferred or the Income PRIDES Certificate
or Growth PRIDES Certificate is surrendered or such Holder provides satisfactory
evidence that such Income PRIDES Certificate or Growth PRIDES Certificate has
been destroyed, lost or stolen, together with any indemnity that may be required
by the Agent and the Company.

Section 3.16.     No Consent to Assumption.

          Each Holder of a Security, by acceptance thereof, shall be deemed
expressly to have withheld any consent to the assumption under Section 365 of
the Bankruptcy Code or otherwise, of the Purchase Contract by the Company,
receiver, liquidator or a person
<PAGE>   35

or entity performing similar functions, its trustee in the event that the
Company becomes the debtor under the Bankruptcy Code or subject to other similar
state or federal law providing for reorganization or liquidation.

                                   ARTICLE IV

                                 The Debentures

Section 4.1.      Payment of Distribution; Rights to Distributions Preserved;
Distribution Rate Reset; Notice.

         A distribution on any Debenture or on the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case may be, which is paid
on any Payment Date shall, subject to receipt thereof by the Agent from the
Collateral Agent as provided by the terms of the Pledge Agreement, be paid to
the Person in whose name the Income PRIDES Certificate (or one or more
Predecessor Income PRIDES Certificates) of which such Debenture or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be, is a part is registered at the close of business on the Record Date for
such Payment Date.

         Each Income PRIDES Certificate evidencing Debentures delivered under
this Agreement upon registration of transfer of or in exchange for or in lieu of
any other Income PRIDES Certificate shall carry the rights to distributions
accrued and unpaid, and distributions to accrue, which were or will be carried
by the Debentures underlying such other Income PRIDES Certificate.

         In the case of any Income PRIDES with respect to which Cash Settlement
of the underlying Purchase Contract is effected on the Business Day immediately
preceding the Purchase Contract Settlement Date pursuant to prior notice, or
with respect to which Early Settlement of the underlying Purchase Contract is
effected on an Early Settlement Date, or with respect to which a Collateral
Substitution is effected, in each case on a date that is after any Record Date
and on or prior to the next succeeding Payment Date, interest on the Debentures
or on the appropriate Applicable Ownership Interest of the Treasury Portfolio,
as the case may be, underlying such Income PRIDES otherwise payable on such
Payment Date shall be payable on such Payment Date notwithstanding such Cash
Settlement or Early Settlement or Collateral Substitution, and such
distributions shall, subject to receipt thereof by the Agent, be payable to the
Person in whose name the Income PRIDES Certificate (or one or more Predecessor
Certificates) was registered at the close of business on the Record Date. Except
as otherwise expressly provided in the immediately preceding sentence, in the
case of any Income PRIDES with respect to which Cash Settlement or Early
Settlement of the underlying Purchase Contract is effected on the Business Day
immediately preceding the Purchase Contract Settlement Date or an Early
Settlement Date, as the case may be, or with respect to which a Collateral
Substitution has been effected, distributions on the related Debentures or on
the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may
<PAGE>   36

be, that would otherwise be payable after the Purchase Contract Settlement Date
or Early Settlement Date shall not be payable hereunder to the Holder of such
Income PRIDES; provided, however, that to the extent that such Holder continues
to hold the separated Debentures that formerly comprised a part of such Holder's
Income PRIDES, such Holder shall be entitled to receive the distributions on
such separated Debentures.

         The applicable Coupon Rate on the Debentures on and after the Purchase
Contract Settlement Date will be reset on the third Business Day immediately
preceding the Purchase Contract Settlement Date to the Reset Rate (such Reset
Rate to be in effect on and after the Purchase Contract Settlement Date). On the
Reset Announcement Date the Reset Spread and the Two-Year Benchmark Treasury to
be used to determine the Reset Rate will be announced by the Company. On the
Business Day immediately following the Reset Announcement Date, the Debentures
Holders will be notified of such Reset Spread and Two-Year Benchmark Treasury by
the Company. Such notice shall be sufficiently given to Holders of Debentures if
published in an Authorized Newspaper in The City of New York.

         Not later than 7 calendar days nor more than 15 calendar days prior to
the Reset Announcement Date, the Company will notify the DTC or its nominee (or
any successor Clearing Agency or its nominee) by first-class mail, postage
prepaid, to notify the Beneficial Owners or Clearing Agency Participants holding
Income PRIDES or Growth PRIDES, of such Reset Announcement Date and the
procedures to be followed by such Holders of Income PRIDES who intend to settle
their obligation under the Purchase Contract with separate cash on the Purchase
Contract Settlement Date.

Section 4.2.      Notice and Voting.

         Under the terms of the Pledge Agreement, the Agent will be entitled to
exercise the voting and any other consensual rights pertaining to the Debentures
pledged with the Collateral Agent but only to the extent instructed by the
Holders as described below. Upon receipt of notice of any meeting at which
holders of Debentures are entitled to vote or upon any solicitation of consents,
waivers or proxies of holders of Debentures, the Agent shall, as soon as
practicable thereafter, mail to the Holders of Income PRIDES a notice (a)
containing such information as is contained in the notice or solicitation, (b)
stating that each Holder on the record date set by the Agent therefor (which, to
the extent possible, shall be the same date as the record date for determining
the holders of Debentures entitled to vote) shall be entitled to instruct the
Agent as to the exercise of the voting rights pertaining to the Debentures
underlying their Income PRIDES and (c) stating the manner in which such
instructions may be given. Upon the written request of the Holders of Income
PRIDES on such record date, the Agent shall endeavor insofar as practicable to
vote or cause to be voted, in accordance with the instructions set forth in such
requests, the maximum number of Debentures as to which any particular voting
instructions are received. In the absence of specific instructions from the
Holder of an Income PRIDES, the Agent shall abstain from voting the Debentures
underlying such Income PRIDES. The Company hereby agrees, if applicable, to
solicit Holders of Income
<PAGE>   37

PRIDES to timely instruct the Agent in order to enable the Agent to vote such
Debentures.

Section 4.3.      Tax Event Redemption.

         Upon the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, pursuant to the terms of the Pledge Agreement, the
Collateral Agent will apply an amount equal to the Redemption Amount of such
Redemption Price to purchase on behalf of the Holders of Income PRIDES the
Treasury Portfolio and promptly remit the remaining portion of such Redemption
Price to the Agent for payment to the Holders of such Income PRIDES. The
Treasury Portfolio will be substituted for the Pledged Debentures, and will be
held by the Collateral Agent in accordance with the terms of the Pledge
Agreement to secure the obligation of each Holder of an Income PRIDES to
purchase the Common Stock of the Company under the Purchase Contract
constituting a part of such Income PRIDES. Following the occurrence of a Tax
Event Redemption prior to the Purchase Contract Settlement Date, the Holders of
Income PRIDES and the Collateral Agent shall have such security interests,
rights and obligations with respect to the Treasury Portfolio as the Holder of
Income PRIDES and the Collateral Agent had in respect of the Debentures, as the
case may be, subject to the Pledge thereof as provided in Sections 2, 3, 4, 5
and 6 of the Pledge Agreement, and any reference herein or in the Certificates
to the Debenture shall be deemed to be a reference to such Treasury Portfolio
and any reference herein or in the Certificates to interest on the Debentures
shall be deemed to be a reference to corresponding distributions on the Treasury
Portfolio. The Company may cause to be made in any Income PRIDES Certificates
thereafter to be issued such change in phraseology and form (but not in
substance) as may be appropriate to reflect the substitution of the Treasury
Portfolio for Debentures as collateral.

                                    ARTICLE V

                             The Purchase Contracts

Section 5.1.      Purchase of Shares of Common Stock.

         Each Purchase Contract shall, unless an Early Settlement has occurred
in accordance with Section 5.9 hereof, obligate the Holder of the related
Security to purchase, and the Company to sell, on the Purchase Contract
Settlement Date at a price equal to the Stated Amount (the "Purchase Price"), a
number of newly issued shares of Common Stock equal to the Settlement Rate
unless, on or prior to the Purchase Contract Settlement Date, there shall have
occurred a Termination Event with respect to the Security of which such Purchase
Contract is a part. The "Settlement Rate" is equal to (a) if the Applicable
Market Value (as defined below) is equal to or greater than $ (the "Threshold
Appreciation Price"), o shares of Common Stock per Purchase Contract, (b) if the
Applicable Market Value is less than the Threshold Appreciation Price but is
greater than $ , the number of shares of Common Stock per Purchase Contract
equal to the Stated Amount divided by the Applicable Market Value and (c) if the
Applicable Market
<PAGE>   38

Value is less than or equal to $ , shares of Common Stock per Purchase Contract,
in each case subject to adjustment as provided in Section 5.6 (and in each case
rounded upward or down ward to the nearest 1/10,000th of a share). As provided
in Section 5.10, no fractional shares of Common Stock will be issued upon
settlement of Purchase Contracts.

         The "Applicable Market Value" means the average of the Closing Price
per share of Common Stock on each of the 20 consecutive Trading Days ending on
the third Trading Day immediately preceding the Purchase Contract Settlement
Date or, for purposes of determining cash payable in lieu of fractional shares
in connection with an Early Settlement, the third Trading Day immediately
preceding the relevant Early Settlement Date. The "Closing Price" of the Common
Stock on any date of determination means the closing sale price (or, if no
closing price is reported, the last reported sale price) of the Common Stock on
The New York Stock Exchange, Inc. (the "NYSE") on such date or, if the Common
Stock is not listed for trading on the NYSE on any such date, as reported in the
composite transactions for the principal United States securities exchange on
which the Common Stock is so listed, or if the Common Stock is not so listed on
a United States national or regional securities exchange, as reported by the
Nasdaq National Market or, if the Common Stock is not so reported, the last
quoted bid price for the Common Stock in the over-the-counter market as reported
by the National Quotation Bureau or similar organization, or, if such bid price
is not available, the market value of the Common Stock on such date as
determined by a nationally recognized independent investment banking firm
retained for this purpose by the Company. A "Trading Day" means a day on which
the Common Stock (A) is not suspended from trading on any national or regional
securities exchange or association or over-the-counter market at the close of
business and (B) has traded at least once on the national or regional securities
exchange or association or over-the-counter market that is the primary market
for the trading of the Common Stock.

         Each Holder of an Income PRIDES or a Growth PRIDES, by its acceptance
thereof, irrevocably authorizes the Agent to enter into and perform the related
Purchase Contract on its behalf as its attorney-in-fact (including the execution
of Certificates on behalf of such Holder), agrees to be bound by the terms and
provisions thereof, covenants and agrees to perform its obligations under such
Purchase Contracts, and consents to the provisions hereof, irrevocably
authorizes the Agent as its attorney-in-fact to enter into and perform the
Pledge Agreement on its behalf as its attorney-in-fact, and consents to and
agrees to be bound by the Pledge of the Debentures, the Treasury Portfolio or
the Treasury Securities pursuant to the Pledge Agreement; provided that upon a
Termination Event, the rights of the Holder of such Security under the Purchase
Contract may be enforced without regard to any other rights or obligations. Each
Holder of an Income PRIDES or a Growth PRIDES, by its acceptance thereof,
further covenants and agrees, that, to the extent and in the manner provided in
Section 5.4 and the Pledge Agreement, but subject to the terms thereof, payments
in respect of the principal amount of the Debentures or the Proceeds of the
Treasury Securities or the Treasury Portfolio on the Purchase Contract
Settlement Date shall be paid by the Collateral Agent to the Company
<PAGE>   39

in satisfaction of such Holder's obligations under such Purchase Contract and
such Holder shall acquire no right, title or interest in such payments.

         Upon registration of transfer of a Certificate, the transferee shall be
bound (without the necessity of any other action on the part of such
transferee), under the terms of this Agreement, the Purchase Contracts
underlying such Certificate and the Pledge Agreement and the transferor shall be
released from the obligations under this Agreement, the Purchase Contracts
underlying the Certificates so transferred and the Pledge Agreement. The Company
covenants and agrees, and each Holder of a Certificate, by its acceptance
thereof, likewise covenants and agrees, to be bound by the provisions of this
paragraph.

Section 5.2.      Contract Adjustment Payments.

         Subject to Section 5.3 herein, the Company shall pay, on each Payment
Date, the Contract Adjustment Payments, if any, payable in respect of each
Purchase Contract to the Person in whose name a Certificate (or one or more
Predecessor Certificates) is registered at the close of business on the Record
Date next preceding such Payment Date. The Contract Adjustment Payments, if any,
will be payable at the New York Office maintained for that purpose or, at the
option of the Company, by check mailed to the address of the Person entitled
thereto at such Person's address as it appears on the Income PRIDES Register or
the Growth PRIDES Register.

         Upon the occurrence of a Termination Event, the Company's obligation to
pay Contract Adjustment Payments (including any accrued or Deferred Contract
Adjustment Payments), if any, shall cease.

         Each Certificate delivered under this Agreement upon registration of
transfer of or in exchange for or in lieu of (including as a result of a
Collateral Substitution or the re-establishment of an Income PRIDES) any other
Certificate shall carry the rights to Contract Adjustment Payments, if any,
accrued and unpaid, and to accrue Contract Adjustment Payments, if any, which
were carried by the Purchase Contracts underlying such other Certificates.

         Subject to Section 5.9, in the case of any Security with respect to
which Early Settlement of the underlying Purchase Contract is effected on an
Early Settlement Date, or in respect of which Cash Settlement of the underlying
Purchase Contract is effected on the Business Day immediately preceding the
Purchase Contract Settlement Date, or with respect to which a Collateral
Substitution or an establishment or re-establishment or Income PRIDES pursuant
to Section 3.14 is effected, in each case on a date that is after any Record
Date and on or prior to the next succeeding Payment Date, Contract Adjustment
Payments on the Purchase Contracts underlying such Securities otherwise payable
on such Payment Date shall be payable on such Payment Date notwithstanding such
Cash Settlement, Early Settlement, Collateral Substitution or establishment or
re-establishment of Income PRIDES, and such Contract Adjustment Payments shall
be paid to the Person in whose name the Certificate evidencing such Security (or
one or more
<PAGE>   40

Predecessor Certificates) is registered at the close of business on such Record
Date. Except as otherwise expressly provided in the immediately preceding
sentence, in the case of any Security with respect to which Cash Settlement or
Early Settlement of the underlying Purchase Contract is effected on the Business
Day immediately preceding the Purchase Contract Settlement Date or an Early
Settlement Date, as the case may be, or with respect to which a Collateral
Substitution or an establishment or re-establishment of Income PRIDES has been
effected, Contract Adjustment Payments, if any, that would otherwise be payable
after the Purchase Contract Settlement Date or Early Settlement Date with
respect to such Purchase Contract shall not be payable.

         The Company's obligations with respect to Contract Adjustment Payments,
if any, will be subordinated and junior in right of payment to the Company's
obligations under any Senior Indebtedness.

Section 5.3.      Deferral of Payment Dates For Contract Adjustment Payments.

         The Company shall have the right, at any time prior to the Purchase
Contract Settlement Date, to defer the payment of any or all of the Contract
Adjustment Payments, if any, otherwise payable on any Payment Date, but only if
the Company shall give the Holders and the Agent written notice of its election
to defer such payment (specifying the amount to be deferred) at least ten
Business Days prior to the earlier of (i) the next succeeding Payment Date or
(ii) the date the Company is required to give notice of the Record Date or
Payment Date with respect to payment of such Contract Adjustment Payments, if
any, to the NYSE or other applicable self-regulatory organization or to Holders
of the Securities, but in any event not less than one Business Day prior to such
Record Date. Any Contract Adjustment Payments, if any, so deferred shall, to the
extent permitted by law, bear additional Contract Adjustment Payments thereon at
the rate of % per annum (computed on the basis of 360 day year of twelve 30 day
months), compounding on each succeed ing Payment Date, until paid in full (such
deferred installments of Contract Adjustment Payments, if any, together with the
additional Contract Adjustment Payments accrued thereon, being referred to
herein as the "Deferred Contract Adjustment Payments"). Deferred Contract
Adjustment Payments, if any, shall be due on the next succeeding Payment Date
except to the extent that payment is deferred pursuant to this Section. No
Contract Adjustment Payments, if any, may be deferred to a date that is after
the Purchase Contract Settlement Date and no such deferral period may end other
than on a Payment Date. If the Purchase Contracts are terminated upon the
occurrence of a Termination Event, the Holder's right to receive Contract
Adjustment Payments, if any, and Deferred Contract Adjustment Payments will
terminate.

         In the event that the Company elects to defer the payment of Contract
Adjustment Payments, if any, on the Purchase Contracts until a Payment Date
prior to the Purchase Contract Settlement Date, then all Deferred Contract
Adjustment Payments, if any, shall be payable to the registered Holders as of
the close of business on the Record Date immediately preceding such Payment
Date.
<PAGE>   41

         In the event that the Company elects to defer the payment of Contract
Adjustment Payments, if any, on the Purchase Contracts until the Purchase
Contract Settlement Date, each Holder will receive on the Purchase Contract
Settlement Date in lieu of a cash payment a number of shares of Common Stock (in
addition to a number of shares of Common Stock equal to the Settlement Rate)
equal to (x) the aggregate amount of Deferred Contract Adjustment Payments
payable to such Holder divided by (y) the Applicable Market Value.

         No fractional shares of Common Stock will be issued by the Company with
respect to the payment of Deferred Contract Adjustment Payments on the Purchase
Contract Settlement Date. In lieu of fractional shares otherwise issuable with
respect to such payment of Deferred Contract Adjustment Payments, the Holder
will be entitled to receive an amount in cash as provided in Section 5.10.

         In the event the Company exercises its option to defer the payment of
Contract Adjustment Payments, if any, then, until the Deferred Contract
Adjustment Payments have been paid, the Company shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
or make guarantee payments with respect to the foregoing (other than (i)
purchases or acquisitions of shares of capital stock of the Company in
connection with the satisfaction by the Company of its obligations under any
employee benefit plans or the satisfaction by the Company of its obligations
pursuant to any contract or security outstanding on the date of such event
requiring the Company to purchase capital stock of the Company, (ii) as a result
of a reclassification of the Company's capital stock or the exchange or
conversion of one class or series of the Company's capital stock for another
class or series of the Company's capital stock, (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (iv) dividends or distributions in capital stock of the Company (or
rights to acquire capital stock) or repurchases or redemptions of capital stock
solely from the issuance or exchange of capital stock or (v) redemptions or
repurchases of any rights outstanding under a shareholder rights plan or the
declaration thereunder of a dividend of rights in the future).

Section 5.4.      Payment of Purchase Price.

                  (a) (i) Unless a Tax Event Redemption has occurred or a Holder
         settles the underlying Purchase Contract through the early delivery of
         cash to the Purchase Contract Agent in the manner described in Section
         5.9, each Holder of an Income PRIDES must notify the Agent by use of a
         notice in substantially the form of Exhibit E hereto of its intention
         to pay in cash ("Cash Settlement") the Purchase Price for the shares of
         Common Stock to be purchased pursuant to a Purchase Contract. Such
         notice shall be made on or prior to 5:00 p.m., New York City time, on
         the fifth Business Day immediately preceding the Purchase Contract
         Settlement Date. The Agent shall promptly notify the Collateral Agent
         of the receipt of such a notice from a Holder intending to make a Cash
         Settlement.
<PAGE>   42

                   (ii) A Holder of an Income PRIDES who has so notified the
         Agent of its intention to make a Cash Settlement is required to pay the
         Purchase Price to the Collateral Agent prior to 11:00 a.m., New York
         City time, on the Business Day immediately preceding the Purchase
         Contract Settlement Date in lawful money of the United States by
         certified or cashiers' check or wire transfer, in each case in
         immediately available funds payable to or upon the order of the
         Company. Any cash received by the Collateral Agent will be invested
         promptly by the Collateral Agent in Permitted Investments and paid to
         the Company on the Purchase Contract Settlement Date in settlement of
         the Purchase Contract in accordance with the terms of this Agreement
         and the Pledge Agreement. Any funds received by the Collateral Agent in
         respect of the investment earnings from the investment in such
         Permitted Investments, will be distributed to the Agent when received
         for payment to the Holder.

                  (iii) If a Holder of an Income PRIDES fails to notify the
         Agent of its intention to make a Cash Settlement in accordance with
         paragraph (a)(i) above, such failure shall constitute an event of
         default and the Holder shall be deemed to have consented to the
         disposition of the pledged Debentures pursuant to the remarketing as
         described in paragraph (b) below. If a Holder of an Income PRIDES does
         notify the Agent as provided in paragraph (a)(i) above of its intention
         to pay the Purchase Price in cash, but fails to make such payment as
         required by paragraph (a)(ii) above, such failure shall also constitute
         a default; however, the Debentures of such a Holder will not be
         remarketed but instead the Collateral Agent, for the benefit of the
         Company, will exercise its rights as a secured party with respect to
         such Debentures, including but not limited to those rights specified in
         paragraph (c) below.

                  (b) In order to dispose of the Debentures of Income PRIDES
Holders who have not notified the Agent of their intention to effect a Cash
Settlement as provided in paragraph (a)(i) above, the Company shall engage a
nationally recognized investment bank (the "Remarketing Agent") pursuant to the
Remarketing Agreement to sell such Debentures. In order to facilitate the
remarketing, the Agent shall notify, by 10:00 a.m., New York City time, on the
fourth Business Day immediately preceding the Purchase Contract Settlement Date,
the Remarketing Agent of the aggregate principal amount of Debentures to be
remarketed. Concurrently, the Collateral Agent, pursuant to the terms of the
Pledge Agreement, will present for remarketing such Debentures to the
Remarketing Agent. Upon receipt of such notice from the Agent and such
Debentures from the Collateral Agent, the Remarketing Agent will, on the third
Business Day immediately preceding the Purchase Contract Settlement Date, use
its reasonable efforts to remarket such Debentures on such date at a price of
approximately [ ]% (but not less than 100%) of the aggregate stated liquidation
amount of such aggregate principal amount of Debentures, plus accrued and unpaid
interest (including deferred interest), if any, thereon; provided that the
Company may limit the Reset Rate to be no higher than the rate on the Two-Year
Benchmark Treasury plus [ basis points ( %)] and provided further that the Reset
Rate shall in no event exceed (and the Company shall limit
<PAGE>   43

the Reset Rate so that it does not exceed) the maximum rate permitted by law.
After deducting as the remarketing fee ("Remarketing Fee") an amount not
exceeding basis points ( %)] of the aggregate principal amount of the remarketed
Debentures from any amount of such proceeds in excess of the aggregate principal
amount of the remarketed Debentures plus accrued and unpaid interest (including
deferred interest), if any, then the Remarketing Agent will remit the entire
amount of the proceeds from such remarketing to the Collateral Agent. Such
portion of the proceeds, equal to the aggregate principal amount of Debentures
will automatically be applied by the Collateral Agent, in accordance with the
Pledge Agreement to satisfy in full such Income PRIDES holders' obligations to
pay the Purchase Price for the Common Stock under the related Purchase Contracts
on the Purchase Contract Settlement Date. Any proceeds in excess of those
required to pay the Purchase Price and the Remarketing Fee will be remitted to
the Agent for payment to the Holders of the related Income PRIDES. Income PRIDES
Holders whose Debentures are so remarketed will not otherwise be responsible for
the payment of any Remarketing Fee in connection therewith. If, in spite of
using its reasonable efforts, the Remarketing Agent cannot remarket the related
Debentures (other than to the Company) of such Holders of Income PRIDES at a
price not less than 100% of the aggregate principal amount of Debentures plus
accrued and unpaid interest (including deferred interest), if any, the
remarketing will be deemed to have failed (a "Failed Remarketing") and in
accordance with the terms of the Pledge Agreement the Collateral Agent for the
benefit of the Company will exercise its rights as a secured party with respect
to such Debentures, including those actions specified in paragraph (c) below;
provided, that if upon a Failed Remarketing the Collateral Agent exercises such
rights for the benefit of the Company with respect to such Debentures, any
accrued and unpaid interest (including deferred interest) on such Debentures
will become payable and be paid in cash by the Company to the Agent for payment
to the Holder of the Income PRIDES to which such Debentures relates. Such
payment will be made by the Company on or prior to 11 a.m. New York City time on
the Purchase Contract Settlement Date in lawful money of the United States by
certified or cashiers' check or wire transfer in immediately available funds
payable to or upon the order of the Agent. The Company will cause a notice of
such Failed Remarketing to be published on the second Business Day immediately
preceding the Purchase Contract Settlement Date in a daily newspaper in the
English language of general circulation in The City of New York, which is
expected to be The Wall Street Journal.

                  (c) With respect to any Debentures beneficially owned by
Holders who have elected Cash Settlement but failed to deliver cash as required
in (a)(ii) above, or with respect to Debentures which are subject to a Failed
Remarketing, the Collateral Agent for the benefit of the Company reserves all of
its rights as a secured party with respect thereto and, subject to applicable
law and paragraph (h) below, may, among other things, (i) retain the Debentures
in full satisfaction of the Holders obligations under the Purchase Contracts or
(ii) sell the Debentures in one or more public or private sales.

                     (d) (i) Unless a Holder of an Income PRIDES (if a Tax Event
         Redemption has occurred) settles the underlying Purchase Contract
         through the early delivery of cash to the Purchase Contract Agent in
         the manner described in
<PAGE>   44

         Section 5.9, each Holder of an Income PRIDES (if a Tax Event Redemption
         has occurred) must notify the Agent by use of a notice in substantially
         the form of Exhibit E hereto of its intention to pay in cash the
         Purchase Price for the shares of Common Stock to be purchased pursuant
         to a Purchase Contract on or prior to 5:00 p.m., New York City time, on
         the second Business Day immediately preceding the Purchase Contract
         Settlement Date. The Agent shall promptly notify the Collateral Agent
         of the receipt of such a notice from a Holder intending to make such a
         Cash Settlement.

                           (ii) A Holder of an Income PRIDES (if a Tax Event
         Redemption has occurred) who has so notified the Agent of its intention
         to make a Cash Settlement in accordance with paragraph (d)(i) above is
         required to pay the Purchase Price to the Collateral Agent prior to
         11:00 a.m., New York City time, on the Business Day immediately
         preceding the Purchase Contract Settlement Date in lawful money of the
         United States by certified or cashiers' check or wire transfer, in each
         case in immediately available funds payable to or upon the order of the
         Company. Any cash received by the Collateral Agent will be invested
         promptly by the Collateral Agent in Permitted Investments and paid to
         the Company on the Purchase Contract Settlement Date in settlement of
         the Purchase Contract in accordance with the terms of this Agreement
         and the Pledge Agreement. Any funds received by the Collateral Agent in
         respect of the investment earnings from the investment in such
         Permitted Investments will be distributed to the Agent when received
         for payment to the Holder.

                           (iii) If a Holder of an Income PRIDES (if a Tax Event
         Redemption has occurred) fails to notify the Agent of its intention to
         make a Cash Settlement in accordance with paragraph (d)(i) above, or if
         a Holder of an Income PRIDES (if a Tax Event Redemption has occurred)
         does notify the Agent as provided in paragraph (d)(i) above its
         intention to pay the Purchase Price in cash, but fails to make such
         payment as required by paragraph (d)(ii) above, then upon the maturity
         of the appropriate Applicable Ownership Interest of the Treasury
         Portfolio held by the Collateral Agent on the Business Day immediately
         prior to the Purchase Contract Settlement Date, the appropriate
         Applicable Ownership Interest of the Treasury Portfolio received by the
         Collateral Agent will be invested promptly in overnight Permitted
         Investments. On the Purchase Contract Settlement Date an amount equal
         to the Purchase Price will be remitted to the Company as payment
         thereof without receiving any instructions from the Holder. In the
         event the sum of the proceeds from the related appropriate Applicable
         Ownership Interest of the Treasury Portfolio and the investment
         earnings earned from such investments is in excess of the aggregate
         Purchase Price of the Purchase Contracts being settled thereby, the
         Collateral Agent will distribute such excess to the Agent for the
         benefit of the Holder of the related Income PRIDES when received.

                  (e) Any distribution to Holders of excess funds and interest
described above, shall be payable at the New York Office maintained for that
purpose or, at the option of
<PAGE>   45

the Holder, by check mailed to the address of the Person entitled thereto at
such address as it appears on the Register.

                  (f) Unless a Holder settles the underlying Purchase Contract
through the early delivery of cash to the Collateral Agent in the manner
described herein, the Company shall not be obligated to issue any shares of
Common Stock in respect of a Purchase Contract or deliver any certificate
therefor to the Holder unless it shall have received payment in full of the
Purchase Price for the shares of Common Stock to be purchased thereunder in the
manner herein set forth.

                  (g) Upon Cash Settlement of any Purchase Contract, (i) the
Collateral Agent will in accordance with the terms of the Pledge Agreement cause
the Pledged Debentures or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, or the Pledged Treasury Securities
underlying the relevant Security to be released from the Pledge by the
Collateral Agent free and clear of any security interest of the Company and
transferred to the Agent for delivery to the Holder thereof or its designee as
soon as practicable and (ii) subject to the receipt thereof from the Collateral
Agent, the Agent shall, by book-entry transfer, or other appropriate procedures,
in accordance with instructions provided by the Holder thereof, transfer such
Debentures or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, or such Treasury Securities (or, if no such
instructions are given to the Agent by the Holder, the Agent shall hold such
Debentures or the Treasury Portfolio, as the case may be, or such Treasury
Securities, and any distributions thereon, in the name of the Agent or its
nominee in trust for the benefit of such Holder).

                  (h) The obligations of the Holders to pay the Purchase Price
are non-recourse obligations and are payable solely out of any Cash Settlement
or the proceeds of any Collateral pledged to secure the obligations of the
Holders and in no event will Holders be liable for any deficiency between the
proceeds of Collateral disposition and the Purchase Price.

Section 5.5.      Issuance of Shares of Common Stock.

         Unless a Termination Event or an Early Settlement shall have occurred,
on the Purchase Contract Settlement Date, upon its receipt of payment in full of
the Purchase Price for the shares of Common Stock purchased by the Holders
pursuant to the foregoing provisions of this Article and subject to Section
5.6(b), the Company shall issue and deposit with the Agent, for the benefit of
the Holders of the Outstanding Securities, one or more certificates representing
newly issued shares of Common Stock registered in the name of the Agent (or its
nominee) as custodian for the Holders (such certificates for shares of Common
Stock, together with any dividends or distributions for which both a record date
and payment date for such dividend or distribution has occurred on or after the
Purchase Contract Settlement Date, being hereinafter referred to as the
"Purchase Contract Settlement Fund") to which the Holders are entitled
hereunder. Subject to the foregoing, upon surrender of a Certificate to the
Agent on or after the Purchase Contract Settlement Date, together with
settlement instructions thereon duly
<PAGE>   46

completed and executed, the Holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing that number of whole
shares of Common Stock which such Holder is entitled to receive pursuant to the
provisions of this Article Five (after taking into account all Securities then
held by such Holder) together with cash in lieu of fractional shares as provided
in Section 5.10 and any dividends or distributions with respect to such shares
constituting part of the Purchase Contract Settlement Fund, but without any
interest thereon, and the Certificate so surrendered shall forthwith be
cancelled. Such shares shall be registered in the name of the Holder or the
Holder's designee as specified in the settlement instructions provided by the
Holder to the Agent. If any shares of Common Stock issued in respect of a
Purchase Contract are to be registered to a Person other than the Person in
whose name the Certificate evidencing such Purchase Contract is registered, no
such registration shall be made unless the Person requesting such registration
has paid any transfer and other taxes required by reason of such registration in
a name other than that of the registered Holder of the Certificate evidencing
such Purchase Contract or has established to the satisfaction of the Company
that such tax either has been paid or is not payable.

Section 5.6.      Adjustment of Settlement Rate.

         (a)      Adjustments for Dividends, Distributions, Stock Splits, Etc.

                  (1) In case the Company shall pay or make a dividend or other
distribution on the Common Stock in Common Stock, the Settlement Rate, as in
effect at the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be increased by dividing such Settlement Rate by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such increase to become
effective immediately after the opening of business on the day following the
date fixed for such determination. For the purposes of this paragraph (1), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include any shares issuable
in respect of any scrip certificates issued in lieu of fractions of shares of
Common Stock. The Company will not pay any dividend or make any distribution on
shares of Common Stock held in the treasury of the Company.

                  (2) In case the Company shall issue rights, options or
warrants to all holders of its Common Stock (not being available on an
equivalent basis to Holders of the Securities upon settlement of the Purchase
Contracts underlying such Securities) entitling them, for a period expiring
within 45 days after the record date for the determination of stockholders
entitled to receive such rights, options or warrants, to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price per share of the Common Stock on the date fixed for the
determination of stockholders entitled to receive such rights, options or
warrants (other than pursuant to a dividend reinvestment plan or share purchase
plan), the Settlement Rate in effect at the opening of
<PAGE>   47

business on the day following the date fixed for such determination shall be
increased by dividing such Settlement Rate by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock which the aggregate offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase at such
Current Market Price and the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such increase to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (2), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include any shares issuable in respect of any
scrip certificates issued in lieu of fractions of shares of Common Stock. The
Company shall not issue any such rights, options or warrants in respect of
shares of Common Stock held in the treasury of the Company.

                  (3) In case outstanding shares of Common Stock shall be
subdivided or split into a greater number of shares of Common Stock, the
Settlement Rate in effect at the opening of business on the day following the
day upon which such subdivision or split becomes effective shall be
proportionately increased, and, conversely, in case outstanding shares of Common
Stock shall each be combined into a smaller number of shares of Common Stock,
the Settlement Rate in effect at the opening of business on the day following
the day upon which such combination becomes effective shall be proportionately
reduced, such increase or reduction, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision, split or combination becomes effective.

                  (4) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its indebtedness,
shares of capital stock, securities, cash or other property (but excluding any
rights or warrants referred to in paragraph (2) of this Section, any dividend or
distribution paid exclusively in cash and any dividend or distribution referred
to in paragraph (1) of this Section), the Settlement Rate shall be increased so
that the same shall equal the rate determined by dividing the Settlement Rate in
effect immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution by a
fraction of which the numerator shall be the Current Market Price per share of
the Common Stock on the date fixed for such determination less the then fair
market value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a Board Resolution filed with the Agent) on such
date of the portion of the evidences of indebtedness, shares of capital stock,
securities, cash or other property so distributed applicable to one share of
Common Stock and the denominator shall be such Current Market Price per share of
the Common Stock, such adjustment to become effective immediately prior to the
opening of business on the day following the date fixed for the determination of
stockholders entitled to receive such distribution. In any case in which this
paragraph (4) is applicable, paragraph (2) of this Section shall not be
applicable.
<PAGE>   48

                  (5) In case the Company shall, (I) by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding (i) regular
quarterly cash distributions, (ii) any cash that is distributed in a
Reorganization Event to which Section 5.6(b) applies or (iii) cash that is
distributed as part of a distribution referred to in paragraph (4) of this
Section) in an aggregate amount that, combined together with (II) the aggregate
amount of any other distributions to all holders of its Common Stock (other than
regular quarterly cash distributions) made exclusively in cash within the 12
months preceding the date of payment of such distribution and in respect of
which no adjustment pursuant to this paragraph (5) or paragraph (6) of this
Section has been made and (III) the aggregate of any cash plus the fair market
value, as of the expiration of the applicable tender or exchange offer referred
to below (as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution), of consideration payable in
respect of any tender or exchange offer (other than consideration payable in
respect of any odd-lot tender offer) by the Company or any of its subsidiaries
for all or any portion of the Common Stock concluded within the 12 months
preceding the date of payment of the distribution described in clause (I) above
and in respect of which no adjustment pursuant to this paragraph (5) or
paragraph (6) of this Section has been made, exceeds 15% of the product of the
Current Market Price per share of the Common Stock on the date for the
determination of holders of shares of Common Stock entitled to receive such
distribution times the number of shares of Common Stock outstanding on such
date, then, and in each such case, immediately after the close of business on
such date for determination, the Settlement Rate shall be increased so that the
same shall equal the rate determined by dividing the Settlement Rate in effect
immediately prior to the close of business on the date fixed for determination
of the stockholders entitled to receive such distribution by a fraction (i) the
numerator of which shall be equal to the Current Market Price per share of the
Common Stock on the date fixed for such determination less an amount equal to
the quotient of (x) the combined amount distributed or payable in the
transactions described in clauses (I), (II) and (III) above and (y) the number
of shares of Common Stock outstanding on such date for determination and (ii)
the denominator of which shall be equal to the Current Market Price per share of
the Common Stock on such date for determination.

         (6) In case (I) a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to stockholders (based on the acceptance (up
to any maximum specified in the terms of the tender or exchange offer) of
Purchased Shares) of an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) that combined together with (II) the
aggregate of the cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution), as of the expiration of such tender or exchange offer, of
consideration payable in respect of any other tender or exchange offer (other
than consideration payable in respect of any odd-lot tender offer) by the
Company or any subsidiary of the Company for all or any portion of the Common
Stock expiring within the 12 months preceding the expiration of such tender or
exchange offer and in respect of which no adjustment pursuant to paragraph (5)
of this
<PAGE>   49

Section or this paragraph (6) has been made and (III) the aggregate amount of
any distributions (other than regular quarterly cash distributions) to all
holders of the Company's Common Stock made exclusively in cash within the 12
months preceding the expiration of such tender or exchange offer and in respect
of which no adjustment pursuant to paragraph (5) of this Section or this
paragraph (6) has been made, exceeds 15% of the product of the Current Market
Price per share of the Common Stock as of the last time (the "Expiration Time")
tenders could have been made pursuant to such tender or exchange offer (as it
may be amended) times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, then, and in each such
case, immediately prior to the opening of business on the day after the date of
the Expiration Time, the Settlement Rate shall be adjusted so that the same
shall equal the rate determined by dividing the Settlement Rate immediately
prior to the close of business as of the Expiration Time by a fraction (i) the
numerator of which shall be equal to (A) the product of (I) the Current Market
Price per share of the Common Stock as of the Expiration Time and (II) the
number of shares of Common Stock outstanding (including any tendered shares) as
of the Expiration Time less (B) the amount of cash plus the fair market value
(determined as aforesaid) of the aggregate consideration payable to stockholders
based on the transactions described in clauses (I), (II) and (III) above
(assuming in the case of clause (I) the acceptance, up to any maximum specified
in the terms of the tender or exchange offer, of Purchased Shares), and (ii) the
denominator of which shall be equal to the product of (A) the Current Market
Price per share of the Common Stock as of the Expiration Time and (B) the number
of shares of Common Stock outstanding (including any tendered shares) as of the
Expiration Time less the number of all shares validly tendered and not withdrawn
as of the Expiration Time (the shares deemed so accepted, up to any such
maximum, being referred to as the "Purchased Shares").

                  (7) The reclassification of Common Stock into securities
including securities other than Common Stock (other than any reclassification
upon a Reorganization Event to which Section 5.6(b) applies) shall be deemed to
involve (a) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such reclassification shall
be deemed to be "the date fixed for the determination of stockholders entitled
to receive such distribution" and the "date fixed for such determination" within
the meaning of paragraph (4) of this Section), and (b) a subdivision, split or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of shares
of Common Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which such subdivision
or split becomes effective" or "the day upon which such combination becomes
effective", as the case may be, and "the day upon which such subdivision, split
or combination becomes effective" within the meaning of paragraph (3) of this
Section).

                  (8) The "Current Market Price" per share of Common Stock on
any day means the average of the daily Closing Prices for the five consecutive
Trading Days selected by the Company commencing not more than 30 Trading Days
before, and ending not later than, the earlier of the day in question and the
day before the "ex date" with respect to the
<PAGE>   50

issuance or distribution requiring such computation. For purposes of this
paragraph, the term "ex date", when used with respect to any issuance or
distribution, shall mean the first date on which the Common Stock trades regular
way on such exchange or in such market without the right to receive such
issuance or distribution.

                  (9) All adjustments to the Settlement Rate, shall be
calculated to the nearest 1/10,000th of a share of Common Stock (or if there is
not a nearest 1/10,000th of a share to the next lower 1/10,000th of a share). No
adjustment in the Settlement Rate shall be required unless such adjustment would
require an increase or decrease of at least one percent therein; provided,
however, that any adjustments which by reason of this subparagraph are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. If an adjustment is made to the Settlement Rate pursuant
to paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section 5.6(a),
an adjustment shall also be made to the Applicable Market Value solely to
determine which of clauses (a), (b) or (c) of the definition of Settlement Rate
in Section 5.1 will apply on the Purchase Contract Settlement Date. Such
adjustment shall be made by multiplying the Applicable Market Value by a
fraction of which the numerator shall be the Settlement Rate immediately after
such adjustment pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10)
of this Section 5.6(a) and the denominator shall be the Settlement Rate
immediately before such adjustment; provided, however, that if such adjustment
to the Settlement Rate is required to be made pursuant to the occurrence of any
of the events contemplated by paragraph (1), (2), (3), (4), (5), (7) or (10) of
this Section 5.6(a) during the period taken into consideration for determining
the Applicable Market Value, appropriate and customary adjustments shall be made
to the Settlement Rate.

                  (10) The Company may make such increases in the Settlement
Rate, in addition to those required by this Section, as it considers to be
advisable in order to avoid or diminish any income tax to any holders of shares
of Common Stock resulting from any dividend or distribution of stock or issuance
of rights or warrants to purchase or subscribe for stock or from any event
treated as such for income tax purposes or for any other reasons.

         (b) Adjustment for Consolidation, Merger or Other Reorganization Event.
In the event of (i) any consolidation or merger of the Company with or into
another Person (other than a merger or consolidation in which the Company is the
continuing corporation and in which the Common Stock outstanding immediately
prior to the merger or consolidation is not exchanged for cash, securities or
other property of the Company or another corporation), (ii) any sale, transfer,
lease or conveyance to another Person of the property of the Company as an
entirety or substantially as an entirety, (iii) any statutory exchange of
securities of the Company with another Person (other than in connection with a
merger or acquisition) or (iv) any liquidation, dissolution or winding up of the
Company other than as a result of or after the occurrence of a Termination Event
(any such event, a "Reorganization Event"), the Settlement Rate will be adjusted
to provide that each Holder of Securities will receive on the Purchase Contract
Settlement Date with respect to each Purchase Contract forming a part thereof
(or upon any Early Settlement), the kind and amount of securities, cash and
other property receivable upon such
<PAGE>   51

Reorganization Event (without any interest thereon, and without any right to
dividends or distribution thereon which have a record date that is prior to the
Purchase Contract Settlement Date) by a Holder of the number of shares of Common
Stock issuable on account of each Purchase Contract if the Purchase Contract
Settlement Date had occurred immediately prior to such Reorganization Event
assuming such Holder of Common Stock is not a Person with which the Company
consolidated or into which the Company merged or which merged into the Company
or to which such sale or transfer was made, as the case may be (any such Person,
a "Constituent Person"), or an Affiliate of a Constituent Person to the extent
such Reorganization Event provides for different treatment of Common Stock held
by Affiliates of the Company and non-affiliates and such Holder failed to
exercise its rights of election, if any, as to the kind or amount of securities,
cash and other property receivable upon such Reorganization Event (provided that
if the kind or amount of securities, cash and other property receivable upon
such Reorganization Event is not the same for each share of Common Stock held
immediately prior to such Reorganization Event by other than a Constituent
Person or an Affiliate thereof and in respect of which such rights of election
shall not have been exercised ("non-electing share"), then for the purpose of
this Section the kind and amount of securities, cash and other property
receivable upon such Reorganization Event by each non-electing share shall be
deemed to be the kind and amount so receivable per share by of the non-electing
shares). In the event of such a Reorganization Event, the Person formed by such
consolidation, merger or exchange or the Person which acquires or leases the
assets of the Company or, in the event of a liquidation or dissolution of the
Company, the Company or a liquidating trust created in connection therewith,
shall execute and deliver to the Agent an agreement supplemental hereto
providing that the Holders of each Out standing Security shall have the rights
provided by this Section 5.6. Such supple mental agreement shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental agreement, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section. The above provisions of this
Section shall similarly apply to successive Reorganization Events.

Section 5.7.      Notice of Adjustments and Certain Other Events.

     (a) Whenever the Settlement Rate is adjusted as herein provided, the
Company shall:

                  (i) forthwith compute the Settlement Rate in accordance with
         Section 5.6 and prepare and transmit to the Agent an Officer's
         Certificate setting forth the Settlement Rate, the method of
         calculation thereof in reason able detail, and the facts requiring such
         adjustment and upon which such adjustment is based; and

                  (ii) within 10 Business Days following the occurrence of an
         event that requires an adjustment to the Settlement Rate pursuant to
         Section 5.6 (or if the Company is not aware of such occurrence, as soon
         as practicable after becoming so aware), provide a written notice to
         the Holders of the Securities of the occurrence of such event and a
         statement in reasonable detail setting forth the
<PAGE>   52

         method by which the adjustment to the Settlement Rate was deter mined
         and setting forth the adjusted Settlement Rate.

         (b) The Agent shall not at any time be under any duty or responsibility
to any Holder of Securities to determine whether any facts exist which may
require any adjustment of the Settlement Rate, or with respect to the nature or
extent or calculation of any such adjustment when made, or with respect to the
method employed in making the same. The Agent shall not be accountable with
respect to the validity or value (or the kind or amount) of any shares of Common
Stock, or of any securities or property, which may at the time be issued or
delivered with respect to any Purchase Contract; and the Agent makes no
representation with respect thereto. The Agent shall not be responsible for any
failure of the Company to issue, transfer or deliver any shares of Common Stock
pursuant to a Purchase Contract or to comply with any of the duties,
responsibilities or covenants of the Company contained in this Article.

Section 5.8.      Termination Event; Notice.

         The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay Contract Adjustment
Payments, if any, or Deferred Contract Adjustment Payments, if the Company shall
have such obligation, and the rights and obligations of Holders to purchase
Common Stock, shall immediately and automatically terminate, without the
necessity of any notice or action by any Holder, the Agent or the Company, if,
on or prior to the Purchase Contract Settlement Date, a Termination Event shall
have occurred. Upon and after the occurrence of a Termination Event, the
Securities shall thereafter represent the right to receive the Debentures or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be, forming a part of such Securities in the case of Income PRIDES, or
Treasury Securities in the case of Growth PRIDES, in accordance with the
provisions of Section 4.3 of the Pledge Agreement; provided, however, that, to
the extent that a Holder of Income PRIDES or Growth PRIDES would otherwise be
entitled to receive less than $1,000 principal amount at maturity of the
Treasury Portfolio or the Treasury Securities, the Agent shall dispose of such
securities for cash, and transfer the appropriate amount of such cash to such
Holder in accordance with such Holder's instructions. Upon the occurrence of a
Termination Event, the Company shall promptly but in no event later than two
Business Days thereafter give written notice to the Agent, the Collateral Agent
and to the Holders, at their addresses as they appear in the Register.

Section 5.9.      Early Settlement.

         (a) Subject to and upon compliance with the provisions of this Section
5.9, at the option of the Holder thereof, Purchase Contracts underlying
Securities having an aggregate Stated Amount equal to $1,000 or an integral
multiple thereof may be settled early ("Early Settlement") in the case of Income
PRIDES (unless a Tax Event Redemption has occurred) on or prior to the fifth
Business Day immediately preceding the Purchase Contract Settlement Date and in
the case of Growth PRIDES on or prior to
<PAGE>   53

the second Business Day immediately preceding the Purchase Contract Settlement
Date, in each case, as provided herein; provided however, that if a Tax Event
Redemption has occurred and the Treasury Portfolio has become a component of the
Income PRIDES, Purchase Contracts underlying Income PRIDES may be settled early
on or prior to the second Business Day immediately preceding the Purchase
Contract Settlement Date, but only in an aggregate amount of Income PRIDES or in
an integral multiple thereof. In order to exercise the right to effect Early
Settlement with respect to any Purchase Contracts, the Holder of the Certificate
evidencing Securities shall deliver such Certificate to the Agent at the
Corporate Trust Office or the New York Office duly endorsed for transfer to the
Company or in blank with the form of Election to Settle Early on the reverse
thereof duly completed and accompanied by payment (payable to the Company) in
immediately available funds in an amount (the "Early Settlement Amount") equal
to (i) the product of (A) the Stated Amount times (B) the number of Purchase
Contracts with respect to which the Holder has elected to effect Early
Settlement plus (ii) if such delivery is made with respect to any Purchase
Contracts during the period from the close of business on any Record Date next
preceding any Payment Date to the opening of business on such Payment Date, an
amount equal to the Contract Adjustment Payments, if any, payable on such
Payment Date with respect to such Purchase Contracts; provided that no payment
shall be required pursuant to clause (ii) of this sentence if the Company shall
have elected to defer the Contract Adjustment Payments which would otherwise be
payable on such Payment Date. Except as provided in the immediately preceding
sentence and subject to the next to last paragraph of Section 5.2, no payment or
adjustment shall be made upon Early Settlement of any Purchase Contract on
account of any Contract Adjustment Payments accrued on such Purchase Contract or
on account of any dividends on the Common Stock issued upon such Early
Settlement or on account of any Deferred Contract Adjustment Payments. If the
foregoing requirements are first satisfied with respect to Purchase Contracts
underlying any Securities at or prior to 5:00 p.m., New York City time, on a
Business Day, such day shall be the "Early Settlement Date" with respect to such
Securities and if such requirements are first satisfied after 5:00 p.m., New
York City time, on a Business Day or on a day that is not a Business Day, the
"Early Settlement Date" with respect to such Securities shall be the next
succeed ing Business Day.

         (b) Upon Early Settlement of Purchase Contracts by a Holder of the
related Securities and payment of any transfer or similar taxes payable by such
Holder in connection with the issuance of the related Common Stock to any person
other than such Holder, the Company shall issue, and the Holder shall be
entitled to receive, shares of newly issued Common Stock on account of each
Purchase Contract as to which Early Settlement is effected (the "Early
Settlement Rate"); provided, however, that upon the Early Settlement of the
Purchase Contracts, the Holder of such related Securities will forfeit the right
to receive any Deferred Contract Adjustment Payments and future Contract
Adjustment Payments, if any, except to the extent that the Early Settlement Date
is after the close of business on a Record Date and prior to the opening of
business on the corresponding Payment Date. The Early Settlement Rate shall be
adjusted in the same manner and at the same time as the Settlement Rate is
adjusted. As promptly as practicable after Early Settlement of Purchase
Contracts in accordance with the
<PAGE>   54

provisions of this Section 5.9, the Company shall issue and shall deliver to the
Agent at the Corporate Trust Office a certificate or certificates for the full
number of shares of Common Stock issuable upon such Early Settlement together
with payment in lieu of any fraction of a share, as provided in Section 5.10.

         (c) No later than the third Business Day after the applicable Early
Settlement Date the Company shall cause (i) the shares of Common Stock issuable
upon Early Settlement of Purchase Contracts to be issued and delivered, and (ii)
the related Debentures or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, in the case of Income PRIDES, or the related Treasury
Securities, in the case of Growth PRIDES, to be released from the Pledge by the
Collateral Agent and transferred, in each case to the Agent for delivery to the
Holder thereof or its designee.

         (d) Upon Early Settlement of any Purchase Contracts, and subject to
receipt of shares of Common Stock from the Company and the Debentures, the
appropriate Applicable Ownership Interest of the Treasury Portfolio or Treasury
Securities, as the case may be, from the Collateral Agent, as applicable, the
Agent shall, in accordance with the instructions provided by the Holder thereof
on the applicable form of Election to Settle Early on the reverse of the
Certificate evidencing the related Securities, (i) transfer to the Holder the
Debentures, Treasury Portfolio or Treasury Securities, as the case may be,
forming a part of such Securities, and (ii) deliver to the Holder a certificate
or certificates for the full number of shares of Common Stock issuable upon such
Early Settlement together with payment in lieu of any fraction of a share, as
provided in Section 5.10.

         (e) In the event that Early Settlement is effected with respect to
Purchase Contracts underlying less than all the Securities evidenced by a
Certificate, upon such Early Settlement the Company shall execute and the Agent
shall authenticate, countersign and deliver to the Holder thereof, at the
expense of the Company, a Certificate evidencing the Securities as to which
Early Settlement was not effected.

Section 5.10.     No Fractional Shares.

         No fractional shares or scrip representing fractional shares of Common
Stock shall be issued or delivered upon settlement on the Purchase Contract
Settlement Date or upon Early Settlement of any Purchase Contracts. If
Certificates evidencing more than one Purchase Contract shall be surrendered for
settlement at one time by the same Holder, the number of full shares of Common
Stock which shall be delivered upon settlement shall be computed on the basis of
the aggregate number of Purchase Contracts evidenced by the Certificates so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be deliverable upon settlement of any Purchase Contracts on the
Purchase Contract Settlement Date or upon Early Settlement, the Company, through
the Agent, shall make a cash payment in respect of such fractional interest in
an amount equal to the value of such fractional shares times the Applicable
Market Value. The Company shall provide the Agent from time to time with
sufficient funds to permit the Agent to make all cash payments required by this
Section 5.10 in a timely manner.
<PAGE>   55

Section 5.11.     Charges and Taxes.

         The Company will pay all stock transfer and similar taxes attributable
to the initial issuance and delivery of the shares of Common Stock pursuant to
the Purchase Contracts and in payment of any Deferred Contract Adjustment
Payments; provided, however, that the Company shall not be required to pay any
such tax or taxes which may be payable in respect of any exchange of or
substitution for a Certificate evidencing a Security or any issuance of a share
of Common Stock in a name other than that of the registered Holder of a
Certificate surrendered in respect of the Securities evidenced thereby, other
than in the name of the Agent, as custodian for such Holder, and the Company
shall not be required to issue or deliver such share certificates or
Certificates unless or until the Person or Persons requesting the transfer or
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid
or that no such tax is due.

                                   ARTICLE VI

                                    Remedies

Section 6.1.      Unconditional Right of Holders to Receive Contract Adjustment
Payments and to Purchase Common Stock.

         The Holder of any Income PRIDES or Growth PRIDES shall have the right,
which is absolute and unconditional (subject to the right of the Company to
defer payment thereof pursuant to Section 5.3, and to the forfeiture of any
Deferred Contract Adjustment Payments upon Early Settlement pursuant to Section
5.9(b) or upon the occurrence of a Termination Event), to receive payment of
each installment of the Contract Adjustment Payments, if any, with respect to
the Purchase Contract constituting a part of such Security on the respective
Payment Date for such Security and to purchase Common Stock pursuant to such
Purchase Contract and, in each such case, to institute suit for the enforcement
of any such payment and right to purchase Common Stock, and such rights shall
not be impaired without the consent of such Holder.

Section 6.2.      Restoration of Rights and Remedies.

         If any Holder has instituted any proceeding to enforce any right or
remedy under this Agreement and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company and such Holder shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of such Holder
shall continue as though no such proceeding had been instituted.

Section 6.3.      Rights and Remedies Cumulative.
<PAGE>   56

         Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Certificates in the last paragraph of
Section 3.10, no right or remedy herein conferred upon or reserved to the
Holders 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.

Section 6.4.      Delay or Omission Not Waiver.

         No delay or omission of any Holder to exercise any right or remedy upon
a default shall impair any such right or remedy or constitute a waiver of any
such right. Every right and remedy given by this Article or by law to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by such Holders.

Section 6.5.      Undertaking for Costs.

         All parties to this Agreement agree, and each Holder of Income PRIDES
or Growth PRIDES, by its acceptance of such Income PRIDES or Growth PRIDES shall
be deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Agreement, or in any
suit against the Agent for any action taken, suffered or omitted by it as Agent,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; provided that the provisions of this Section shall not
apply to any suit instituted by the Company, to any suit instituted by the
Agent, to any suit instituted by any Holder, or group of Holders, holding in the
aggregate more than 10% of the Outstanding Securities, or to any suit instituted
by any Holder for the enforcement of interest on any Debentures or Contract
Adjustment Payments, if any, on any Purchase Contract on or after the respective
Payment Date therefor in respect of any Security held by such Holder, or for
enforcement of the right to purchase shares of Common Stock under the Purchase
Contracts constituting part of any Security held by such Holder.

Section 6.6.      Waiver of Stay or Extension Laws.

         The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Agreement; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Agent or the Holders, but will suffer and permit the
execution of every such power as though no such law had been enacted.
<PAGE>   57

                                   ARTICLE VII

                                    The Agent

Section 7.1.      Certain Duties and Responsibilities.

         (a) (1) The Agent undertakes to perform, with respect to the
Securities, such duties and only such duties as are specifically set forth in
this Agreement and the Pledge Agreement, and no implied covenants or obligations
shall be read into this Agreement against the Agent; and

             (2) The Agent may, with respect to the Securities, conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Agent and
conforming to the requirements of this Agreement, but in the case of any
certificates or opinions which by any provision hereof are specifically required
to be furnished to the Agent, the Agent shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Agreement.

         (b) No provision of this Agreement shall be construed to relieve the
Agent from liability for its own negligent action, its own negligent failure to
act, or its own wilful misconduct or bad faith, except that

                  (1) this Subsection shall not be construed to limit the effect
                      of Subsection (a) of this Section;

                  (2) the Agent shall not be liable for any error of judgment
                      made in good faith by a Responsible Officer, unless it
                      shall be proved that the Agent was negligent in
                      ascertaining the pertinent facts; and

                  (3) no provision of this Agreement shall require the Agent to
                      expend or risk its own funds or otherwise incur any
                      financial liability in the performance of any of its
                      duties hereunder, or in the exercise of any of its rights
                      or powers.

         (c) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Agent shall be subject to the provisions of this
Section.

         (d) The Agent is authorized to execute and deliver the Pledge Agreement
in its capacity as Agent.

Section 7.2.      Notice of Default.
<PAGE>   58

         Within 30 days after the occurrence of any default by the Company
hereunder of which a Responsible Officer of the Agent has actual knowledge, the
Agent shall transmit by mail to the Company and the Holders of Securities, as
their names and addresses appear in the Register, notice of such default
hereunder, unless such default shall have been cured or waived.

Section 7.3.      Certain Rights of Agent.

 Subject to the provisions of Section 7.1:

         (a) the Agent may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;

         (b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by an Officer's Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;

         (c) whenever in the administration of this Agreement the Agent shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Agent (unless other evidence be
herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate of the Company;

         (d) the Agent may consult with counsel of its selection and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;

         (e) the Agent shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the Agent,
in its discretion, may make reasonable further inquiry or investigation into
such facts or matters related to the execution, delivery and performance of the
Purchase Contracts as it may see fit, and, if the Agent shall determine to make
such further inquiry or investigation, it shall be given a reasonable
opportunity to examine the books, records and premises of the Company,
personally or by agent or attorney; and

         (f) the Agent may execute any of the powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys or an
Affiliate and the
<PAGE>   59

Agent shall not be responsible for any misconduct or negligence on the part of
any agent or attorney or an Affiliate appointed with due care by it hereunder.

Section 7.4.      Not Responsible for Recitals or Issuance of Securities.

         The recitals contained herein and in the Certificates shall be taken as
the statements of the Company and the Agent assumes no responsibility for their
accuracy. The Agent makes no representations as to the validity or sufficiency
of either this Agreement or of the Securities, or of the Pledge Agreement or the
Pledge. The Agent shall not be accountable for the use or application by the
Company of the proceeds in respect of the Purchase Contracts.

Section 7.5.      May Hold Securities.

         Any Registrar or any other agent of the Company, or the Agent and its
Affiliates, in their individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with the Company, the Collateral
Agent or any other Person with the same rights it would have if it were not
Registrar or such other agent, or the Agent.

Section 7.6.      Money Held in Custody.

         Money held by the Agent in custody hereunder need not be segregated
from the other funds except to the extent required by law or provided herein.
The Agent shall be under no obligation to invest or pay interest on any money
received by it hereunder except as otherwise expressly provided herein or as
otherwise agreed in writing with the Company.

Section 7.7.      Compensation and Reimbursement.

         The Company agrees:

                  (1) to pay to the Agent from time to time such compensation
for all services rendered by it hereunder as the parties shall agree from time
to time;

                  (2) except as otherwise expressly provided herein, to
reimburse the Agent upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Agent in accordance with any provision of
this Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence, willful misconduct or bad
faith; and

                  (3) to indemnify the Agent and any predecessor Agent for, and
to hold it harmless against, any loss, liability or expense incurred without
negligence, willful misconduct or bad faith on its part, arising out of or in
connection with the acceptance or administration of its duties hereunder,
including the costs and expenses of defending
<PAGE>   60

itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.

Section 7.8.      Corporate Agent Required; Eligibility.

         There shall at all times be an Agent hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having (or being a subsidiary of a bank
holding company having) a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority and having
an office in the Borough of Manhattan, The City of New York, if there be such a
corporation in the Borough of Manhattan, The City of New York, qualified and
eligible under this Article and willing to act on reasonable terms. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Agent shall cease to
be eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.

Section 7.9.      Resignation and Removal; Appointment of Successor.

         (a) No resignation or removal of the Agent and no appointment of a
successor Agent pursuant to this Article shall become effective until the
acceptance of appointment by the successor Agent in accordance with the
applicable requirements of Section 7.10.

         (b) The Agent may resign at any time by giving written notice thereof
to the Company 60 days prior to the effective date of such resignation. If the
instrument of acceptance by a successor Agent required by Section 7.10 shall not
have been delivered to the Agent within 30 days after the giving of such notice
of resignation, the resigning Agent may petition any court of competent
jurisdiction for the appointment of a successor Agent.

         (c) The Agent may be removed at any time by Act of the Holders of a
majority in number of the Outstanding Securities delivered to the Agent and the
Company.

         (d) If at any time

                  (1) the Agent fails to comply with Section 310(b) of the TIA,
         as if the Agent were an indenture trustee under an indenture qualified
         under the TIA, after written request therefor by the Company or by any
         Holder who has been a bona fide Holder of a Security for at least six
         months, or

                  (2) the Agent shall cease to be eligible under Section 7.8 and
         shall fail to resign after written request therefor by the Company or
         by any such Holder, or
<PAGE>   61

                  (3) the Agent shall become incapable of acting or shall be
         adjudged a bankrupt or insolvent or a receiver of the Agent or of its
         property shall be appointed or any public officer shall take charge or
         control of the Agent or of its property or affairs for the purpose of
         rehabilitation, conservation or liquidation,

then, in any such case, (i) the Company by a Board Resolution may remove the
Agent, or (ii) any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Agent and
the appointment of a successor Agent.

         (e) If the Agent shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Agent for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Agent and
shall comply with the applicable requirements of Section 7.10. If no successor
Agent shall have been so appointed by the Company and accepted appointment in
the manner required by Section 7.10, any Holder who has been a bona fide Holder
of a Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Agent.

         (f) The Company shall give, or shall cause such successor Agent to
give, notice of each resignation and each removal of the Agent and each
appointment of a successor Agent by mailing written notice of such event by
first-class mail, postage prepaid, to all Holders as their names and addresses
appear in the applicable Register. Each notice shall include the name of the
successor Agent and the address of its Corporate Trust Office and New York
Office, if any.

Section 7.10.     Acceptance of Appointment by Successor.

         (a) In case of the appointment hereunder of a successor Agent, every
such successor Agent so appointed shall execute, acknowledge and deliver to the
Company and to the retiring Agent an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Agent shall become
effective and such successor Agent, without any further act, deed or conveyance,
shall become vested with all the rights, powers, agencies and duties of the
retiring Agent; but, on the request of the Company or the successor Agent, such
retiring Agent shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Agent all the rights, powers and
trusts of the retiring Agent and shall duly assign, transfer and deliver to such
successor Agent all property and money held by such retiring Agent hereunder.

         (b) Upon request of any such successor Agent, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Agent all such rights, powers and agencies referred to in
paragraph (a) of this Section.
<PAGE>   62

         (c) No successor Agent shall accept its appointment unless at the time
of such acceptance such successor Agent shall be qualified and eligible under
this Article.

Section 7.11.     Merger, Conversion, Consolidation or Succession to Business.

         Any corporation into which the Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Agent shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Agent, shall be the successor of the Agent hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Certificates shall have been
authenticated and executed on behalf of the Holders, but not delivered, by the
Agent then in office, any successor by merger, conversion or consolidation to
such Agent may adopt such authentication and execution and deliver the
Certificates so authenticated and executed with the same effect as if such
successor Agent had itself authenticated and executed such Securities.

Section 7.12.     Preservation of Information; Communications to Holders.

         (a) The Agent shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders received by the Agent in its
capacity as Registrar.

         (b) If three or more Holders (herein referred to as "applicants") apply
in writing to the Agent, and furnish to the Agent reasonable proof that each
such applicant has owned a Security for a period of at least six months
preceding the date of such application, and such application states that the
applicants desire to communicate with other Holders with respect to their rights
under this Agreement or under the Securities and is accompanied by a copy of the
form of proxy or other communication which such applicants propose to transmit,
then the Agent shall mail to all the Holders copies of the form of proxy or
other communication which is specified in such request, with reasonable
promptness after a tender to the Agent of the materials to be mailed and of
payment, or provision for the payment, of the reasonable expenses of such
mailing.

Section 7.13.     No Obligations of Agent.

         Except to the extent otherwise provided in this Agreement, the Agent
assumes no obligations and shall not be subject to any liability under this
Agreement, the Pledge Agreement or any Purchase Contract in respect of the
obligations of the Holder of any Security thereunder. The Company agrees, and
each Holder of a Certificate, by his acceptance thereof, shall be deemed to have
agreed, that the Agent's execution of the Certificates on behalf of the Holders
shall be solely as agent and attorney-in-fact for the Holders, and that the
Agent shall have no obligation to perform such Purchase Contracts on behalf of
the Holders, except to the extent expressly provided in Article V hereof.

Section 7.14.     Tax Compliance.
<PAGE>   63

         (a) The Agent, on its own behalf and on behalf of the Company, will
comply with all applicable certification, information reporting and withholding
(including "backup" withholding) requirements imposed by applicable tax laws,
regulations or administrative practice with respect to (i) any payments made
with respect to the Securities or (ii) the issuance, delivery, holding,
transfer, redemption or exercise of rights under the Securities. Such compliance
shall include, without limitation, the preparation and timely filing of required
returns and the timely payment of all amounts required to be withheld to the
appropriate taxing authority or its designated agent.

         (b) The Agent shall comply with any written direction received from the
Company with respect to the application of such requirements to particular
payments or Holders or in other particular circumstances, and may for purposes
of this Agreement rely on any such direction in accordance with the provisions
of Section 7.1(a)(2) hereof.

         (c) The Agent shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available, on
written request, to the Company or its authorized representative within a
reasonable period of time after receipt of such request.

                                  ARTICLE VIII

                             Supplemental Agreements

Section 8.1.      Supplemental Agreements Without Consent of Holders.

         Without the consent of any Holders, the Company and the Agent, at any
time and from time to time, may enter into one or more agreements supplemental
hereto, in form satisfactory to the Company and the Agent, for any of the
following purposes:

                  (1) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the covenants of the
Company herein and in the Certificates; or

                  (2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon the
Company; or

                  (3) to evidence and provide for the acceptance of appointment
hereunder by a successor Agent; or

                  (4) to make provision with respect to the rights of Holders
pursuant to the requirements of Section 5.6(b); or
<PAGE>   64

                  (5) to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions herein, or
to make any other provisions with respect to such matters or questions arising
under this Agreement, provided such action shall not adversely affect the
interests of the Holders.

Section 8.2.      Supplemental Agreements with Consent of Holders.

         With the consent of the Holders of not less than a majority of the
Outstanding Purchase Contracts voting together as one class, by Act of said
Holders delivered to the Company and the Agent, the Company, when authorized by
a Board Resolution, and the Agent may enter into an agreement or agreements
supplemental hereto for the purpose of modifying in any manner the terms of the
Purchase Contracts or the provisions of this Agreement or the rights of the
Holders in respect of the Securities (other than the Debentures, which may be
modified only in accordance with the applicable provisions of the Indenture;
provided, however, that, except as contemplated herein, no such supplemental
agreement shall, without the consent of the Holder of each Outstanding Security
affected thereby,

                  (1) change any Payment Date;

                  (2) change the amount or the type of Collateral required to be
         Pledged to secure a Holder's obligations under any Purchase Contract,
         impair the right of the Holder of any Purchase Contract to receive
         distributions on the related Collateral (except for the rights of
         Holders of Income PRIDES to substitute the Treasury Securities for the
         Pledged Debentures or the rights of holders of Growth PRIDES to
         substitute Debentures for the Pledged Treasury Securities) or otherwise
         adversely affect the Holder's rights in or to such Collateral or
         adversely alter the rights in or to such Collateral;

                  (3) reduce any Contract Adjustment Payments, if any, or any
         Deferred Contract Adjustment Payment, or change any place where, or the
         coin or currency in which, any Contract Adjustment Payment is payable;

                  (4) impair the right to institute suit for the enforcement of
         any Purchase Contract, any Contract Adjustment Payment, if any, or any
         Deferred Contract Adjustment Payment, if any;

                  (5) reduce the number of shares of Common Stock (or the amount
         of any other property) to be purchased pursuant to any Purchase
         Contract, increase the price to purchase shares of Common Stock (or any
         other property) upon settlement of any Purchase Contract, change the
         Purchase Contract Settlement Date or otherwise adversely affect the
         Holder's rights under any Purchase Contract; or

                  (6) reduce the percentage of the outstanding Purchase
         Contracts the consent of whose Holders is required for any such
         supplemental agreement;
<PAGE>   65

provided, that if any amendment or proposal referred to above would adversely
affect only the Income PRIDES or the Growth PRIDES, then only the affected class
of Holder as of the record date for the Holders entitled to vote thereon will be
entitled to vote on such amendment or proposal, and such amendment or proposal
shall not be effective except with the consent of Holders of not less than a
majority of such class.

         It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental agreement, but it shall
be sufficient if such Act shall approve the substance thereof.

Section 8.3.      Execution of Supplemental Agreements.

         In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby of
the agencies created by this Agreement, the Agent shall be entitled to receive
and (subject to Section 7.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental agreement is
authorized or permitted by this Agreement. The Agent may, but shall not be
obligated to, enter into any such supplemental agreement which affects the
Agent's own rights, duties or immunities under this Agreement or otherwise.

Section 8.4.      Effect of Supplemental Agreements.

         Upon the execution of any supplemental agreement under this Article,
this Agreement and the Securities shall be modified in accordance therewith, and
such supplemental agreement shall form a part of this Agreement for all
purposes; and every Holder of Certificates theretofore or thereafter
authenticated, executed on behalf of the Holders and delivered hereunder shall
be bound thereby.

Section 8.5.      Reference to Supplemental Agreements.

         Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any supplemental agreement pursuant to this
Article may, and shall if required by the Agent, bear a notation in form
approved by the Agent as to any matter provided for in such supplemental
agreement. If the Company shall so determine, new Certificates so modified as to
conform, in the opinion of the Agent and the Company, to any such supplemental
agreement may be prepared and executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Agent in exchange for
Outstanding Certificates.

                                   ARTICLE IX

                    Consolidation, Merger, Sale or Conveyance

Section 9.1.      Covenant Not to Merge, Consolidate, Sell or Convey Property
Except Under Certain Conditions.
<PAGE>   66

         The Company covenants that it will not merge or consolidate with any
other Person or sell, assign, transfer, lease or convey all or substantially all
of its properties and assets to any Person or group of affiliated Persons in one
transaction or a series of related transactions, unless (i) either the Company
shall be the continuing corporation, or the successor (if other than the
Company) shall be a corporation organized and existing under the laws of the
United States of America or a State thereof or the District of Columbia and such
corporation shall expressly assume all the obligations of the Company under the
Purchase Contracts, this Agreement, the Indenture, the Remarketing Agreement and
the Pledge Agreement by one or more supplemental agreements in form reasonably
satisfactory to the Agent and the Collateral Agent, executed and delivered to
the Agent and the Collateral Agent by such corporation, and (ii) the Company or
such successor corporation, as the case may be, shall not, immediately after
such merger or consolidation, or such sale, assignment, transfer, lease or
conveyance, be in default of its payment obligations under this Agreement or the
Debentures, or in default of its obligations to deliver Common Stock (or other
property) on the Purchase Contract Settlement Date or any Early Settlement Date,
or in material default in the performance of any other covenant hereunder or
under the Debentures, the Indenture, the Remarketing Agreement, the Purchase
Contracts or the Pledge Agreement.

Section 9.2.      Rights and Duties of Successor Corporation.

         In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance and upon any such assumption by a successor corporation in
accordance with Section 9.1, such successor corporation shall succeed to and be
substituted for the Company with the same effect as if it had been named herein
as the Company, and its predecessor shall, except in the case of a lease, be
released from its obligations under this Agreement. Such successor corporation
thereupon may cause to be signed, and may issue either in its own name or in the
name of The Coastal Corporation any or all of the Certificates evidencing
Securities issuable hereunder which theretofore shall not have been signed by
the Company and delivered to the Agent; and, upon the order of such successor
corporation, instead of the Company, and subject to all the terms, conditions
and limitations in this Agreement prescribed, the Agent shall authenticate and
execute on behalf of the Holders and deliver any Certificates which previously
shall have been signed and delivered by the officers of the Company to the Agent
for authentication and execution, and any Certificate evidencing Securities
which such successor corporation thereafter shall cause to be signed and
delivered to the Agent for that purpose. All the Certificates so issued shall in
all respects have the same legal rank and benefit under this Agreement as the
Certificates theretofore or thereafter issued in accordance with the terms of
this Agreement as though all of such Certificates had been issued at the date of
the execution hereof.

         In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance, such change in phraseology and form (but not in substance)
may be made in the Certificates evidencing Securities thereafter to be issued as
may be appropriate.
<PAGE>   67

Section 9.3.      Opinion of Counsel Given to Agent.

         The Agent, subject to Sections 7.1 and 7.3, shall receive an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, sale,
assignment, transfer, lease or conveyance, and any such assumption, complies
with the provisions of this Article and that all conditions precedent hereunder
to the consummation of any such consolidation, merger, sale, assignment,
transfer, lease or conveyance have been met.

                                    ARTICLE X

                                    Covenants

Section 10.1.     Performance Under Purchase Contracts.

         The Company covenants and agrees for the benefit of the Holders from
time to time of the Securities that it will duly and punctually perform its
obligations under the Purchase Contracts in accordance with the terms of the
Purchase Contracts and this Agreement.

Section 10.2.     Maintenance of Office or Agency.

         The Company will maintain or cause to be maintained in the Borough of
Manhattan, The City of New York an office or agency (a "New York Office") and in
where Certificates may be presented or surrendered for payment and for
acquisition of shares of Common Stock (or other property) upon settlement of the
Purchase Contracts on the Purchase Contract Settlement Date or Early Settlement
and for transfer of Collateral upon occurrence of a Termination Event, where
Certificates may be surrendered for registration of transfer or exchange, for a
Collateral Substitution or re-establishment of an Income PRIDES and where
notices and demands to or upon the Company in respect of the Securities and this
Agreement may be served. The Company will give prompt written notice to the
Agent of the location, and any change in the location, of such office or agency.
If at any time the Company shall fail to maintain any such required office or
agency or shall fail to furnish the Agent with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Company hereby appoints the Agent as its agent
to receive all such presentations, surrenders, notices and demands.

         The Company may also from time to time designate one or more other
offices or agencies where Certificates may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. The Company will
give prompt written notice to the Agent of any such designation or rescission
and of any change in the location of any such other office or agency.
<PAGE>   68

         The Company hereby designates the Borough of Manhattan, the City of New
York and       , as the places of payment for the Securities, and hereby
appoints the Agent, acting through its Corporate Trust Office in The Bank of New
York, 101 Barclay Street, Floor 12 East, New York, NY 10286 and through its
office located at c/o       , as the registrar, paying agent and transfer agent
for the Income PRIDES and the Growth PRIDES and for the other purposes
contemplated by this Section 10.2.

Section 10.3.     Company to Reserve Common Stock.

         The Company shall at all times prior to the Purchase Contract
Settlement Date reserve and keep available, free from preemptive rights, out of
its authorized but unissued Common Stock the full number of shares of Common
Stock issuable against tender of payment in respect of all Purchase Contracts
constituting a part of the Securities evidenced by Outstanding Certificates.

Section 10.4.     Covenants as to Common Stock.

         The Company covenants that all shares of Common Stock which may be
issued against tender of payment in respect of any Purchase Contract
constituting a part of the Outstanding Securities will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable. The Company shall
comply with all applicable securities laws regulating the offer, issuance and
delivery of shares of Common Stock upon settlement of Purchase Contracts and
will endeavor to list such shares on each national securities exchange or
automated quotation system on which the Common Stock is then listed.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

                                          THE COASTAL CORPORATION

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

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

                                          The Bank of New York
                                          as Purchase Contract Agent

                                          By:
                                             -----------------------------------
<PAGE>   69

                                          Name:
                                          Title:

<PAGE>   70

                                    EXHIBIT A

                   (Form of Face of Income PRIDES Certificate)

         THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN THE
NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF
THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY,
AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

No. _____                      CUSIP No.
Number of Income PRIDES _______

                  ____% Income PRIDES

         This Income PRIDES Certificate certifies that ___________ is the
registered Holder of the number of Income PRIDES set forth above. Each Income
PRIDES represents (i) either (a) beneficial ownership by the Holder of $
principal amount of % Debentures due       , 16, 2004 (the "Debenture"), subject
to the Pledge of such Debenture by such Holder pursuant to the Pledge Agreement
or (b) upon the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, the appropriate Applicable Ownership Interest of the
Treasury Portfolio, subject to the Pledge of such Applicable Ownership Interest
of the Treasury Portfolio by such Holder pursuant to the Pledge Agreement, and
(ii) the rights and obligations of the Holder under one Purchase Contract with
The Coastal Corporation, a Dela ware corporation (the "Company," which term, as
used herein, includes its successors pursuant to the Purchase Contract
Agreement). All capitalized terms used herein which are defined in the Purchase
Contract Agreement have the meaning set forth therein.
<PAGE>   71

         Pursuant to the Pledge Agreement, the Debentures or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
constituting part of each Income PRIDES evidenced hereby have been pledged to
the Collateral Agent, for the benefit of the Company, to secure the obligations
of the Holder under the Purchase Contract comprising a portion of such Income
PRIDES.

         The Pledge Agreement provides that all payments of the Stated Amount or
the appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may be, or cash
distributions on any Pledged Debentures (as defined in the Pledge Agreement) or
the appropriate Applicable Ownership Interest (as specified in clause (B) of the
definition of such term) of the Treasury Portfolio, as the case may be,
constituting part of the Income PRIDES received by the Collateral Agent shall be
paid by the Collateral Agent by wire transfer in same day funds (i) in the case
of (A) cash distributions with respect to Pledged Debentures or the appropriate
Applicable Ownership Interest (as specified in clause (B) of the definition of
such term) of the Treasury Portfolio, as the case may be, and (B) any payments
of the Stated Amount or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such terms) of the Treasury
Portfolio, as the case may be, with respect to any Debentures or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
that have been released from the Pledge pursuant to the Pledge Agreement, to the
Agent to the account designated by the Agent, no later than 2:00 p.m., New York
City time, on the Business Day such payment is received by the Collateral Agent
(provided that in the event such payment is received by the Collateral Agent on
a day that is not a Business Day or after 12:30 p.m., New York City time, on a
Business Day, then such payment shall be made no later than 10:30 a.m., New York
City time, on the next succeeding Business Day) and (ii) in the case of payments
of the Stated Amount of any Pledged Debentures or the appropriate Applicable
Owner ship Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio that has not been released from the Pledge pursuant to
the Pledge Agreement, as the case may be, to the Company on the Purchase
Contract Settlement Date (as defined herein) in accordance with the terms of the
Pledge Agreement, in full satisfaction of the respective obligations of the
Holders of the Income PRIDES of which such Pledged Debentures or the Treasury
Portfolio, as the case may be, are a part under the Purchase Contracts forming a
part of such Income PRIDES. Interest on any Debentures or Distributions on the
appropriate Applicable Ownership Interest (as specified in clause (B) of the
definition of such term) of the Treasury Portfolio, as the case may be, forming
part of an Income PRIDES evidenced hereby which are payable quarterly in arrears
on February 16, May 16, August 16 and November 16 each year, commencing 16, (a
"Payment Date"), shall, subject to receipt thereof by the Agent from the
Collateral Agent, be paid to the Person in whose name this Income PRIDES
Certificate (or a Predecessor Income PRIDES Certificate) is registered at the
close of business on the Record Date for such Payment Date.

         Each Purchase Contract evidenced hereby obligates the Holder of this
Income PRIDES Certificate to purchase, and the Company to sell, on 16, 2002 (the
"Purchase Contract Settlement Date"), at a price equal to $25 (the "Stated
Amount"), a number of
<PAGE>   72

shares of Common Stock, $0.33 1/3 par value per share ("Common Stock"), of the
Company equal to the Settlement Rate, unless on or prior to the Purchase
Contract Settlement Date there shall have occurred a Termination Event or an
Early Settlement with respect to the Income PRIDES of which such Purchase
Contract is a part, all as provided in the Purchase Contract Agreement and more
fully described on the reverse hereof. The purchase price (the "Purchase Price")
for the shares of Common Stock purchased pursuant to each Purchase Contract
evidenced hereby, if not paid earlier, shall be paid on the Purchase Contract
Settlement Date by application of payment received in respect of the Stated
Amount or the appropriate Applicable Ownership Interest (as specified in clause
(A) of the definition of such term) of the Treasury Portfolio, as the case may
be, of the Pledged Debentures or the appropriate Applicable Ownership Interest
of the Treasury Portfolio, as the case may be, pledged to secure the obligations
under such Purchase Contract of the Holder of the Income PRIDES of which such
Purchase Contract is a part.

         The Company shall pay on each Payment Date in respect of each Purchase
Contract forming part of an Income PRIDES evidenced hereby an amount (the
"Contract Adjustment Payments") equal to    % per annum of the Stated Amount,
computed on the basis of a 360-day year of twelve 30 day months, subject to
deferral at the option of the Company as provided in the Purchase Contract
Agreement and more fully described on the reverse hereof. Such Contract
Adjustment Payments, if any, shall be payable to the Person in whose name this
Income PRIDES Certificate (or a Predecessor Income PRIDES Certificate) is
registered at the close of business on the Record Date for such Payment Date.

         Interest on the Debentures or Distributions on the appropriate
Applicable Ownership Interest (as specified in clause (B) of the definition of
such term) of the Treasury Portfolio, as the case may be, and Contract
Adjustment Payments, if any, will be payable at the Corporate Trust Office of
the Agent and at the New York Office or, at the option of the Company, by check
mailed to the address of the Person entitled thereto as such address appears on
the Income PRIDES Register.

         Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.

         Unless the certificate of authentication hereon has been executed by
the Agent by manual signature, this Income PRIDES Certificate shall not be
entitled to any benefit under the Pledge Agreement or the Purchase Contract
Agreement or be valid or obligatory for any purpose.

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.

                                     THE COASTAL CORPORATION
<PAGE>   73

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

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

                                     HOLDER SPECIFIED ABOVE (as to
                                     Obligations of such Holder under the
                                     Purchase Contracts evidenced
                                     hereby)

                                     By: THE BANK OF NEW YORK
                                     not individually but soley
                                     as attorney-in-fact of such
                                     Holder

                                     By:
                                        ----------------------------------------

                                     Name:
                                     Title:
Dated:           , 1999

                      AGENT'S CERTIFICATE OF AUTHENTICATION

         This is one of the Income PRIDES Certificates referred to in the within
mentioned Purchase Contract Agreement.

                        By: THE BANK OF NEW YORK,
                            as Purchase Contract Agent

                        By:
                           ------------------------------------
                                Authorized Signatory

                 (Form of Reverse of Income PRIDES Certificate)
<PAGE>   74

         Each Purchase Contract evidenced hereby is governed by a Purchase
Contract Agreement, dated as of        , 1999 (as may be supplemented from time
to time, the "Purchase Contract Agreement"), between the Company and The Bank of
New York, as Purchase Contract Agent (including its successors thereunder,
herein called the "Agent"), to which Purchase Contract Agreement and
supplemental agreements thereto reference is hereby made for a description of
the respective rights, limitations of rights, obligations, duties and immunities
thereunder of the Agent, the Company and the Holders and of the terms upon which
the Income PRIDES Certificates are, and are to be, executed and delivered.

         Each Purchase Contract evidenced hereby obligates the Holder of this
Income PRIDES Certificate to purchase, and the Company to sell, on the Purchase
Contract Settlement Date at a price equal to the Purchase Price, a number of
shares of Common Stock of the Company equal to the Settlement Rate, unless, on
or prior to the Purchase Contract Settlement Date, there shall have occurred a
Termination Event or an Early Settlement with respect to the Security of which
such Purchase Contract is a part. The "Settlement Rate" is equal to (a) if the
Applicable Market Value (as defined below) is equal to or greater than $    (the
"Threshold Appreciation Price"), shares of Common Stock per Purchase Contract,
(b) if the Applicable Market Value is less than the Threshold Appreciation Price
but is greater than $     , the number of shares of Common Stock per Purchase
Contract equal to the Stated Amount divided by the Applicable Market Value and
(c) if the Applicable Market Amount is less than or equal to $     , shares of
Common Stock per Purchase Contract, in each case subject to adjustment as
provided in the Purchase Contract Agreement. No fractional shares of Common
Stock will be issued upon settlement of Purchase Contracts, as provided in the
Purchase Contract Agreement.

         Each Purchase Contract evidenced hereby, which is settled either
through Early Settlement or Cash Settlement, shall obligate the Holder of the
related Income PRIDES to purchase at the Purchase Price, and the Company to
sell, a number of newly issued shares of Common Stock equal to the Early
Settlement Rate or the Settlement Rate, as applicable.

         The "Applicable Market Value" means the average of the Closing Price
per share of Common Stock on each of the 20 consecutive Trading Days ending on
the third Trading Day immediately preceding the Purchase Contract Settlement
Date or, for purposes of determining cash payable in lieu of factional shares in
connection with an Early Settlement, the third Trading Day immediately preceding
the relevant Early Settlement Date. The "Closing Price" of the Common Stock on
any date of determination means the closing sale price (or, if no closing price
is reported, the last reported sale price) of the Common Stock on The New York
Stock Exchange, Inc. (the "NYSE") on such date or, if the Common Stock is not
listed for trading on the NYSE on any such date, as reported in the composite
transactions for the principal United States securities exchange on which the
Common Stock is so listed, or if the Common Stock is not so listed on a United
States
<PAGE>   75

national or regional securities exchange, as reported by the Nasdaq National
Market, or, if the Common Stock is not so reported, the last quoted bid price
for the Common Stock in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or, if such bid price is not
available, the market value of the Common Stock on such date as determined by a
nationally recognized independent investment banking firm retained for this
purpose by the Company. A "Trading Day" means a day on which the Common Stock
(A) is not suspended from trading on any national or regional securities
exchange or association or over-the-counter market at the close of business and
(B) has traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.

         In accordance with the terms of the Purchase Contract Agreement, the
Holder of this Income PRIDES Certificate shall pay the Purchase Price for the
shares of Common Stock purchased pursuant to each Purchase Contract evidenced
hereby by effecting a Cash Settlement, an Early Settlement or from the proceeds
of a remarketing of the related Pledged Debentures of such holders. A Holder of
Income PRIDES who does not elect, on or prior to 5:00 p.m. New York City time on
the fifth Business Day (or, if a Tax Event Redemption has occurred, the second
Business Day) immediately preceding the Purchase Contract Settlement Date, to
make an effective Cash Settlement or an Early Settlement, shall pay the Purchase
Price for the shares of Common Stock to be issued under the related Purchase
Contract from the Proceeds of the sale of the related Pledged Debentures held by
the Collateral Agent. Such sale will be made by the Remarketing Agent pursuant
to the terms of the Remarketing Agreement and the Remarketing Underwriting
Agreement on the third Business Day immediately preceding the Purchase Contract
Settlement Date. If, as provided in the Purchase Contract Agreement, upon the
occurrence of a Failed Remarketing the Collateral Agent, for the benefit of the
Company, exercises its rights as a secured creditor with respect to the Pledged
Debentures related to this Income PRIDES certificate, any accrued and unpaid
interest (including deferred interest) on such Pledged Debentures will become
payable by the Company to the holder of this Income PRIDES Certificate in the
manner provided for in the Purchase Contract Agreement.

         The Company shall not be obligated to issue any shares of Common Stock
in respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment in full of the aggregate Purchase
Price for the shares of Common Stock to be purchased thereunder in the manner
herein set forth.

         Under the terms of the Pledge Agreement, the Agent will be entitled to
exercise the voting and any other consensual rights pertaining to the Pledged
Debentures. Upon receipt of notice of any meeting at which holders of Debentures
are entitled to vote or upon the solicitation of consents, waivers or proxies of
holders of Debentures, the Agent shall, as soon as practicable thereafter, mail
to the Income PRIDES holders a notice (a) containing such information as is
contained in the notice or solicitation, (b) stating that each Income PRIDES
holder on the record date set by the Agent therefor (which, to the extent
possible, shall be the same date as the record date for determining the holders
of
<PAGE>   76

Debentures entitled to vote) shall be entitled to instruct the Agent as to the
exercise of the voting rights pertaining to the Debentures constituting a part
of such holder's Income PRIDES and (c) stating the manner in which such
instructions may be given. Upon the written request of the Income PRIDES Holders
on such record date, the Agent shall endeavor insofar as practicable to vote or
cause to be voted, in accordance with the instructions set forth in such
requests, the maximum number of Debentures as to which any particular voting
instructions are received. In the absence of specific instructions from the
Holder of an Income PRIDES, the Agent shall abstain from voting the Debentures
evidenced by such Income PRIDES.

         Upon the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, pursuant to the terms of the Pledge Agreement, the
Collateral Agent will apply an amount equal to the Redemption Amount of such
Redemption Price to purchase on behalf of the Holders of Income PRIDES, the
Treasury Portfolio and promptly remit the remaining portion of such Redemption
Price to the Agent for payment to the Holders of such Income PRIDES.

         Following the occurrence of a Tax Event Redemption prior to the
Purchase Contract Settlement Date, the Holders of Income PRIDES and the
Collateral Agent shall have such security interests rights and obligations with
respect to the Treasury Portfolio as the Holder of Income PRIDES and the
Collateral Agent had in respect of the Debentures, as the case may be, subject
to the Pledge thereof as provided in Sections 2, 3, 4, 5 and 6 of the Pledge
Agreement and any reference herein to the Debenture shall be deemed to be a
reference to such Treasury Portfolio and any reference herein or in the
Certificates to interest on the Debentures shall be deemed to be a reference to
corresponding distributions on the Treasury Portfolio.

         The Income PRIDES Certificates are issuable only in registered form and
only in denominations of a single Income PRIDES and any integral multiple
thereof. The transfer of any Income PRIDES Certificate will be registered and
Income PRIDES Certificates may be exchanged as provided in the Purchase Contract
Agreement. The Income PRIDES Registrar may require a Holder, among other things,
to furnish appropriate endorsements and transfer documents permitted by the
Purchase Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Agent may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. A Holder who elects to substitute Treasury
Securities for Debentures or the appropriate Applicable Ownership Interest of
the Treasury Portfolio, thereby creating or recreating Growth PRIDES, shall be
responsible for any fees or expenses payable in connection therewith. Except as
provided in the Purchase Contract Agreement, for so long as the Purchase
Contract underlying an Income PRIDES remains in effect, such Income PRIDES shall
not be separable into its constituent parts, and the rights and obligations of
the Holder of such Income PRIDES in respect of Debentures or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be, and
the Purchase Contract constituting such Income PRIDES may be transferred and
exchanged only as an Income PRIDES. A Holder of an Income PRIDES may create or
recreate a Growth PRIDES by
<PAGE>   77

delivering to the Collateral Agent Treasury Securities in an aggregate principal
amount equal to the aggregate principal amount of the Pledged Debentures or the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may be, in
exchange for the release of such Pledged Debentures or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be, in
accordance with the terms of the Purchase Contract Agreement and the Pledge
Agreement. From and after such Collateral Substitution, the Security for which
such Pledged Treasury Securities secures the Holder's obligation under the
Purchase Contract shall be referred to as a "Growth PRIDES." A Holder may make
such Collateral Substitution only in integral multiples of 40 Income PRIDES for
40 Growth PRIDES; provided, however, that if a Tax Event Redemption has occurred
and the Treasury Portfolio has become a component of the Income PRIDES, a Holder
may make such Collateral Substitutions only in integral multiples of Income

         PRIDES for       Growth PRIDES. Such Collateral Substitution may cause
the equivalent aggregate Stated Amount of this Certificate to be increased or
decreased; provided, however, the equivalent aggregate Stated Amount outstanding
under this Income PRIDES Certificate shall not exceed $     . All such
adjustments to the equivalent aggregate Stated Amount of this Income PRIDES
Certificate shall be duly recorded by placing an appropriate notation on the
Schedule attached hereto.

         A Holder of Growth PRIDES may create or recreate Income PRIDES by
delivering to the Collateral Agent Debentures or the appropriate Applicable
Owner ship Interest of the Treasury Portfolio, with an aggregate principal
amount, in the case of such Debentures, or with the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, in the case of such appropriate Applicable Ownership
Interest of the Treasury Portfolio, equal to the aggregate principal amount of
the Pledged Treasury Securities in ex change for the release of such Pledged
Treasury Securities in accordance with the terms of the Purchase Contract
Agreement and the Pledge Agreement. Any such creation or recreation of an Income
PRIDES may be effected only in multiples of 40 Growth PRIDES for 40 Income
PRIDES; provided, however, that if a Tax Event Redemption has occurred and the
Treasury Portfolio has become a component of the Income PRIDES, a Holder may
make such substitution only in integral multiples of              Growth PRIDES
for Income PRIDES.

         Subject to the next succeeding paragraph, the Company shall pay, on
each Payment Date, the Contract Adjustment Payments, if any, payable in respect
of each Purchase Contract to the Person in whose name the Income PRIDES
Certificate evidencing such Purchase Contract is registered at the close of
business on the Record Date for such Payment Date. Contract Adjustment Payments,
if any, will be payable at the Corporate Trust Office of the Agent and the New
York Office or, at the option of the Company, by check mailed to the address of
the Person entitled thereto at such address as it appears on the Income PRIDES
Register.
<PAGE>   78

         The Company shall have the right, at any time prior to the Purchase
Contract Settlement Date, to defer the payment of any or all of the Contract
Adjustment Payments, if any, otherwise payable on any Payment Date, but only if
the Company shall give the Holders and the Agent written notice of its election
to defer such payment (specifying the amount to be deferred) as provided in the
Purchase Contract Agreement. Any Contract Adjustment Payments, if any, so
deferred shall, to the extent permitted by law, bear additional Contract
Adjustment Payments thereon at the rate of      % per annum (computed on the
basis of a 360-day year of twelve 30 day months), compounding on each succeeding
Payment Date, until paid in full (such deferred installments of Contract
Adjustment Payments, if any, together with the additional Contract Adjustment
Payments accrued thereon, are referred to herein as the "Deferred Contract
Adjustment Payments"). Deferred Contract Adjustment Payments, if any, shall be
due on the next succeeding Payment Date except to the extent that payment is
deferred pursuant to the Purchase Contract Agreement. No Contract Adjustment
Payments, if any, may be deferred to a date that is after the Purchase Contract
Settlement Date and no such deferral period may end other than on a Payment
Date.

         In the event that the Company elects to defer the payment of Contract
Adjustment Payments, if any, on the Purchase Contracts until a Payment Date
prior to the Purchase Contract Settlement Date, then all Deferred Contract
Adjustment Payments, if any, shall be payable to the registered Holders as of
the close of business on the Record Date immediately preceding such Payment
Date.

         In the event that the Company elects to defer the payment of Contract
Adjustment Payments, if any, on the Purchase Contracts until the Purchase
Contract Settlement Date, the Holder of this Income PRIDES Certificate will
receive on the Purchase Contract Settlement Date, in lieu of a cash payment, a
number of shares of Common Stock (in addition to the number of shares of Common
Stock equal to the Settlement Rate) equal to (x) the aggregate amount of
Deferred Contract Adjustment Payments payable to the Holder of this Income
PRIDES Certificate divided by (y) the Applicable Market Value.

         In the event the Company exercises its option to defer the payment of
Contract Adjustment Payments, if any, then until the Deferred Contract
Adjustment Payments have been paid, the Company shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
or make guarantee payments with respect to the foregoing (other than (i)
purchases or acquisitions of capital stock of the Company in connection with the
satisfaction by the Company of its obligations under any employee benefit plans
or the satisfaction by the Company of its obligations pursuant to any contract
or security outstanding on the date of such event requiring the Company to
purchase capital stock of the Company, (ii) as a result of a reclassification of
the Company's capital stock or the exchange or conversion of one class or series
of the Company's capital stock for another class or series of the Company's
capital stock, (iii) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (iv) dividends
or distributions in capital stock of the Company
<PAGE>   79

(or rights to acquire capital stock) or repurchases or redemptions of capital
stock solely from the issuance or exchange of capital stock or (v) redemptions
or repurchases of any rights outstanding under a shareholder rights plan or a
declaration thereunder of a dividend of rights in the future).

         The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay Contract Adjustment
Payments, if any, or any Deferred Contract Adjustment Payments, and the rights
and obligations of Holders to purchase Common Stock shall immediately and
automatically terminate, without the necessity of any notice or action by any
Holder, the Agent or the Company, if, on or prior to the Purchase Contract
Settlement Date, a Termination Event shall have occurred. Upon the occurrence of
a Termination Event, the Company shall promptly but in no event later than two
Business Days thereafter give written notice to the Agent, the Collateral Agent
and to the Holders, at their addresses as they appear in the Income PRIDES
Register. Upon and after the occurrence of a Termination Event, the Collateral
Agent shall release the Debentures or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, from the Pledge in
accordance with the provisions of the Pledge Agreement.

         Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, at the option of the Holders thereof, Purchase Contracts
underlying Securities having an aggregate Stated Amount equal to $1,000 or an
integral multiple thereof may be settled early ("Early Settlement") as provided
in the Purchase Contract Agreement; provided, however, that if a Tax Event
Redemption has occurred and the Treasury Portfolio has become a component of the
Income PRIDES, Holders may early settle Income PRIDES only in integral multiples
of Income PRIDES. In order to exercise the right to effect Early Settlement with
respect to any Purchase Contracts evidenced by this Income PRIDES Certificate,
the Holder of this Income PRIDES Certificate shall deliver this Income PRIDES
Certificate to the Agent at the Corporate Trust Office or the New York Office
duly endorsed for transfer to the Company or in blank with the form of Election
to Settle Early set forth below duly completed and accompanied by payment in the
form of immediately available funds payable to the Company in an amount (the
"Early Settlement Amount") equal to (i) the product of (A) the Stated Amount
times (B) the number of Purchase Contracts with respect to which the Holder has
elected to effect Early Settlement, plus (ii) if such delivery is made with
respect to any Purchase Contracts during the period from the close of business
on any Record Date for any Payment Date to the opening of business on such
Payment Date, an amount equal to the Contract Adjustment Payments, if any,
payable on such Payment Date with respect to such Purchase Contracts; provided
that no payment shall be required pursuant to clause (ii) of this sentence if
the Company shall have elected to defer the Contract Adjustment Payments which
would otherwise be payable on such Payment Date. Upon Early Settlement of
Purchase Contracts by a Holder of the related Securities, the Pledged Debentures
or the appropriate Applicable Ownership Interest of the Treasury Portfolio
underlying such Securities shall be released from the Pledge as provided in the
Pledge Agreement and the Holder shall be entitled to receive a number of shares
of Common
<PAGE>   80

Stock on account of each Purchase Contract forming part of a Income PRIDES as to
which Early Settlement is effected equal to the Early Settlement Rate; provided
however, that upon the Early Settlement of the Purchase Contracts, the Holder
thereof will forfeit the right to receive any Deferred Contract Adjustment
Payments and any future Contract Adjustment Payments, if any, on such Purchase
Contracts, except to the extent that the Early Settlement Date is after the
close of business on a Record Date and prior to the opening of business on the
corresponding Payment Date. The Early Settlement Rate shall initially be equal
to o shares of Common Stock and shall be adjusted in the same manner and at the
same time as the Settlement Rate is adjusted as provided in the Purchase
Contract Agreement.

         Upon registration of transfer of this Income PRIDES Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be required by the Agent pursuant to the
Purchase Contract Agreement) under the terms of the Purchase Contract Agreement,
the Pledge Agreement and the Purchase Contracts evidenced hereby and the
transferor shall be released from the obligations under the Purchase Contract
Agreement, the Pledge Agreement and the Purchase Contracts evidenced by this
Income PRIDES Certificate. The Company covenants and agrees, and the Holder, by
its acceptance hereof, likewise covenants and agrees, to be bound by the
provisions of this paragraph.

         The Holder of this Income PRIDES Certificate, by its acceptance hereof,
authorizes the Agent to enter into and perform the related Purchase Contracts
forming part of the Income PRIDES evidenced hereby on his behalf as his
attorney-in-fact, expressly withholds any consent to the assumption (i.e.,
affirmance) of the Purchase Contracts by the Company or its trustee in the event
that the Company becomes the subject of a case under the Bankruptcy Code, agrees
to be bound by the terms and provisions thereof, covenants and agrees to perform
its obligations under such Purchase Contracts, consents to the provisions of the
Purchase Contract Agreement, authorizes the Agent to enter into and perform the
Pledge Agreement on its behalf as its attorney-in-fact, and consents to the
Pledge of the Debentures or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, underlying this Income PRIDES
Certificate pursuant to the Pledge Agreement. The Holder further covenants and
agrees, that, to the extent and in the manner provided in the Purchase Contract
Agreement and the Pledge Agreement, but subject to the terms thereof, payments
in respect to the aggregate principal amount of the Pledged Debentures, or the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, on the Purchase Contract
Settlement Date shall be paid by the Collateral Agent to the Company in
satisfaction of such Holder's obligations under such Purchase Contract and such
Holder shall acquire no right, title or interest in such payments.

         Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts.

         The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.
<PAGE>   81

         The Company, the Agent and its Affiliates and any agent of the Company
or the Agent may treat the Person in whose name this Income PRIDES Certificate
is registered as the owner of the Income PRIDES evidenced hereby for the purpose
of receiving payments of interest payable quarterly on the Debentures or on the
maturing quarterly interest strips of the Treasury Portfolio, as applicable,
receiving payments of Contract Adjustment Payments, if any, and any Deferred
Contract Adjustment Payments, if any, performance of the Purchase Contracts and
for all other purposes whatsoever, whether or not any payments in respect
thereof be overdue and notwithstanding any notice to the contrary, and neither
the Company, the Agent nor any such agent shall be affected by notice to the
contrary.

         The Purchase Contracts shall not, prior to the settlement thereof,
entitle the Holder to any of the rights of a holder of shares of Common Stock.

         A copy of the Purchase Contract Agreement is available for inspection
at the offices of the Agent.

                                  ABBREVIATIONS

         The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM  -                          as tenants in common

UNIF GIFT MIN ACT -                 ------------Custodian------------
                                    (cust)                   (minor)

                                    Under Uniform Gifts to Minors Act

                                    ---------------------------------
                                                  (State)

TEN ENT -                           as tenants by the entireties

JT TEN -                            as joint tenants with right of survivorship
                                    and not as tenants in common

Additional abbreviations may also be used though not in the above list.

                     -------------------------------------

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
<PAGE>   82

--------------------------------------------------------------------------------
(Please insert Social Security or Taxpayer I.D. or other Identifying Number of
Assignee)

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
(Please Print or Type Name and Address Including Postal Zip Code of Assignee)
the within Income PRIDES Certificates and all rights thereunder, hereby
irrevocably constituting and appointing _____________________________________
attorney to transfer said Income PRIDES Certificates on the books of The Coastal
Corporation with full power of substitution in the premises.

Dated:
        -----------------           -------------------------------------------
                                    Signature

                    NOTICE: The signature to this assignment must correspond
                    with the name as it appears upon the face of the within
                    Income PRIDES Certificates in every particular, without
                    alteration or enlargement or any change whatsoever.

Signature Guarantee:
                    -------------------------------------
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

                             SETTLEMENT INSTRUCTIONS

         The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of Income PRIDES evidenced
by this Income PRIDES Certificate be registered in the name of, and delivered,
together with a check in payment for any fractional share, to the undersigned at
the address indicated below unless
<PAGE>   83

a different name and address have been indicated below. If shares are to be
registered in the name of a Person other than the undersigned, the undersigned
will pay any transfer tax payable incident thereto.

Dated:
      --------------------------------    ------------------------------------
                                   Signature
                                   Signature Guarantee:
                                   (if assigned to another person)

         Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

If shares are to be registered               REGISTERED HOLDER
in the name of and delivered to
a Person other than the Holder,
please (i) print such Person's
name and address and (ii)
provide a guarantee of your
signature:

                                             Please print name and address of
                                             Registered Holder:

-------------------------------------        -----------------------------------
               Name                                           Name

-------------------------------------        -----------------------------------
              Address                                        Address

-------------------------------------        -----------------------------------

-------------------------------------        -----------------------------------

-------------------------------------        -----------------------------------

Social Security or other
Taxpayer Identification
Number, if any
                                              ----------------------------------
<PAGE>   84

                            ELECTION TO SETTLE EARLY

         The undersigned Holder of this Income PRIDES Certificate hereby
irrevocably exercises the option to effect Early Settlement in accordance with
the terms of the Purchase Contract Agreement with respect to the Purchase
Contracts underlying the number of Income PRIDES evidenced by this Income PRIDES
Certificate specified below. The option to effect Early Settlement may be
exercised only with respect to Purchase Contracts underlying Growth PRIDES with
an aggregate Stated Amount equal to $1,000 or an integral multiple thereof. The
undersigned Holder directs that a certificate for shares of Common Stock
deliverable upon such Early Settlement be registered in the name of, and
delivered, together with a check in payment for any fractional share and any
Income PRIDES Certificate representing any Income PRIDES evidenced hereby as to
which Early Settlement of the related Purchase Contracts is not effected, to the
undersigned at the address indicated below unless a different name and address
have been indicated below. Pledged Debentures or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, deliverable
upon such Early Settlement will be transferred in accordance with the transfer
instructions set forth below. If shares are to be registered in the name of a
Person other than the undersigned, the undersigned will pay any transfer tax
payable incident thereto.

Dated:
      ----------------------------               ------------------------------
                                                   Signature

Signature Guarantee (if assigned to another person):
                                             -----------------------------------

Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

         Number of Securities evidenced hereby as to which Early Settlement of
the related Purchase Contracts is being elected:

If shares of Common Stock or Income                REGISTERED HOLDER
PRIDES Certificates are to be regis-
<PAGE>   85

tered in the name of and delivered to
and Pledged Debentures, or an
Applicable Ownership Interest in
the Treasury Portfolio, as the case may
be, are to be transferred to a Person
other than the Holder, please (i) print such
Person's name and address and (ii) provide
a guarantee of your signature:

                                             Please print name and address of
                                             Registered Holder:

-------------------------------------        -----------------------------------
               Name                                  Name

-------------------------------------        -----------------------------------
              Address                                Address

-------------------------------------        -----------------------------------

-------------------------------------        -----------------------------------

-------------------------------------        -----------------------------------

Social Security or other
Taxpayer Identification
Number, if any
                              ----------------------------------

Transfer Instructions for Pledged Debentures, or the Applicable Ownership
Interest in the Treasury Portfolio, as the case may be, Transferable Upon Early
Settlement or a Termination Event:

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

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[TO BE ATTACHED TO GLOBAL CERTIFICATES]
<PAGE>   86

            SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE

         The following increases or decreases in this Global Certificate have
been made:

      Signature of authorized officer of
Purchase Contract Agent or Securities
Custodian

Amount of decrease in Stated Amount of
the Global Certificate

Amount of increase in Stated Amount of
the Global Certificate

Stated Amount of this Global Certificate
Following such decrease or increase

                                    EXHIBIT B

                   (Form of Face of Growth PRIDES Certificate)

         THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN THE
NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF
THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY,
AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
<PAGE>   87

No.__________                             CUSIP NO.

Number of Growth PRIDES __________

             _________% Growth PRIDES

         This Growth PRIDES Certificate certifies that __________ is the
registered Holder of the number of Growth PRIDES set forth above. Each Growth
PRIDES represents (i) a 1/100 undivided beneficial ownership interest in a
Treasury Security having a principal amount at maturity equal to $1,000, subject
to the Pledge of such Treasury Security by such Holder pursuant to the Pledge
Agreement, and (ii) the rights and obligations of the Holder under one Purchase
Contract with The Coastal Corporation, a Delaware corporation (the "Company,"
which term, as used herein, includes its successors pursuant to the Purchase
Contract Agreement). All capitalized terms used herein which are defined in the
Purchase Contract Agreement have the meaning set forth therein.

         Pursuant to the Pledge Agreement, the Treasury Securities constituting
part of each Growth PRIDES evidenced hereby have been pledged to the Collateral
Agent, for the benefit of the Company, to secure the obligations of the Holder
under the Purchase Contract comprising a portion of such Growth PRIDES.

         The Pledge Agreement provides that all payments of the principal of any
Treasury Securities received by the Collateral Agent shall be paid by the
Collateral Agent by wire transfer of same day funds (i) in the case of any
principal payments with respect to any Treasury Securities that have been
released from the Pledge pursuant to the Pledge Agreement, to the Holders of the
applicable Growth PRIDES to the accounts designated by them in writing for such
purpose no later than 2:00 p.m. New York City time, on the Business Day such
payment is received by the Collateral Agent (provided that in the event such
payment is received by the Collateral Agent on a day that is not a Business Day
or after 12:30 p.m., New York City time, on a Business Day, then such payment
shall be made no later than 10:30 a.m., New York City time, on the next
succeeding Business Day), and (ii) in the case of the principal of any Pledged
Treasury Securities, to the Company on the Purchase Contract Settlement Date (as
defined herein) in accordance with the terms of the Pledge Agreement, in full
satisfaction of the respective obligations of the Holders of the Growth PRIDES
of which such Pledged Treasury Securities are a part under the Purchase
Contracts forming a part of such Growth PRIDES.

         Each Purchase Contract evidenced hereby obligates the Holder of this
Growth PRIDES Certificate to purchase, and the Company, to sell, on o 16, 2002
(the "Purchase Contract Settlement Date"), at a price equal to $o (the "Stated
Amount"), a number of shares of Common stock, $0.33 1/3 par value per share
("Common Stock"), of the Company equal to the Settlement Rate, unless on or
prior to the Purchase Contract Settlement Date there shall have occurred a
Termination Event or an Early Settlement with respect to the Growth PRIDES of
which such Purchase Contract is a part, all as provided in the Purchase Contract
Agreement and more fully described on the reverse
<PAGE>   88

hereof. The purchase price (the "Purchase Price") for the shares of Common Stock
purchased pursuant to each Purchase Contract evidenced hereby, if not paid
earlier, shall be paid on the Purchase Contract Settlement Date by application
of the Proceeds from the Treasury Securities pledged to secure the obligations
under such Purchase Contract in accordance with the terms of the Pledge
Agreement.

         The Company shall pay on each Payment Date in respect of each
Purchase Contract forming part of a Growth PRIDES evidenced hereby an amount
(the "Contract Adjustment Payments") equal to o % per annum of the Stated
Amount, computed on the basis of a 360-day year of twelve 30 day months, subject
to deferral at the option of the Company as provided in the Purchase Contract
Agreement and more fully described on the reverse hereof. Such Contract
Adjustment Payments, if any, shall be payable to the Person in whose name this
Growth PRIDES Certificate (or a Predecessor Growth PRIDES Certificate) is
registered at the close of business on the Record Date for such Payment Date.

         Contract Adjustment Payments, if any, will be payable at the Corporate
Trust Office of the Agent and at the New York Office or, at the option of the
Company, by check mailed to the address of the Person entitled thereto as such
address appears on the Growth PRIDES Register.

         Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.

         Unless the certificate of authentication hereon has been executed by
the Agent by manual signature, this Growth PRIDES Certificate shall not be
entitled to any benefit under the Pledge Agreement or the Purchase Contract
Agreement or be valid or obligatory for any purpose.

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.

                                    THE COASTAL CORPORATION

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

                                    By:
                                       --------------------------------
                                    Name:
                                    Title:
<PAGE>   89

                                    HOLDER SPECIFIED ABOVE (as to
                                    obligations of such Holder under the
                                    Purchase Contracts)

                                    By:  THE BANK OF NEW YORK not individually
                                         but solely as attorney-in-fact of
                                         such Holder

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

Dated:       , 1999

                      AGENT'S CERTIFICATE OF AUTHENTICATION

         This is one of the Growth PRIDES referred to in the within-mentioned
Purchase Contract Agreement.

                           By:  THE BANK OF NEW YORK,
                              as Purchase Contract Agent

                           By:
                              --------------------------------
                                  Authorized Signatory

<PAGE>   90

                              ( Form of Reverse of
                           Growth PRIDES Certificate)

         Each Purchase Contract evidenced hereby is governed by a Purchase
Contract Agreement, dated as of o, 1999 (as may be supplemented from time to
time, the "Purchase Contract Agreement"), between the Company and The Bank of
New York, as Purchase Contract Agent (including its successors thereunder,
herein called the "Agent"), to which the Purchase Contract Agreement and
supplemental agreements thereto reference is hereby made for a description of
the respective rights, limitations of rights, obligations, duties and immunities
thereunder of the Agent, the Company and the Holders and of the terms upon which
the Growth PRIDES Certificates are, and are to be, executed and delivered.

         Each Purchase Contract evidenced hereby obligates the Holder of this
Growth PRIDES Certificate to purchase, and the Company to sell, on the Purchase
Contract Settlement Date at the Purchase Price, a number of shares of Common
Stock of the Company equal to the Settlement Rate, unless, on or prior to the
Purchase Contract Settlement Date, there shall have occurred a Termination Event
or an Early Settlement with respect to the Security of which such Purchase
Contract is a part. The "Settlement Rate" is equal to (a) if the Applicable
Market Value (as defined below) is equal to or greater than $o (the "Threshold
Appreciation Price"), o shares of Common Stock per Purchase Contract, (b) if the
Applicable Market Value is less than the Threshold Appreciation Price but is
greater than $o, the number of shares of Common Stock per Purchase Contract
equal to the Stated Amount divided by the Applicable Market Value and (c) if the
Applicable Market Amount is less than or equal to $o, o shares of Common Stock
per Purchase Contract, in each case subject to adjustment as provided in the
Purchase Contract Agreement. No fractional shares of Common Stock will be issued
upon settlement of Purchase Contracts, as provided in the Purchase Contract
Agreement.

         Each Purchase Contract evidenced hereby, which is settled through Early
Settlement, shall obligate the Holder of the related Growth PRIDES to purchase
at the Purchase Price, and the Company to sell, a number of newly issued shares
of Common Stock equal to the Early Settlement Rate.

         The "Applicable Market Value" means the average of the Closing Price
per share of Common Stock on each of the 20 consecutive Trading Days ending on
the third Trading Day immediately preceding the Purchase Contract Settlement
Date or, for purposes of determining cash payable in lieu of fractional shares
in connection with an Early Settlement, the third Trading Day immediately
preceding the relevant Early Settlement Date. The "Closing Price" of the Common
Stock on any date of determination means the closing sale price (or, if no
closing price is reported, the last reported sale price) of the Common Stock on
The New York Stock Exchange, Inc. (the "NYSE") on such date or, if the Common
Stock is not listed for trading on the NYSE on any such date, as reported in
<PAGE>   91

the composite transactions for the principal United States securities exchange
on which the Common Stock is so listed, or if the Common Stock is not so listed
on a United States national or regional securities exchange, as reported by the
Nasdaq National Market or, if the Common Stock is not so reported, the last
quoted bid price for the Common Stock in the over-the-counter market as reported
by the National Quotation Bureau or similar organization, or, if such bid price
is not available, the market value of the Common Stock on such date as
determined by a nationally recognized independent investment banking firm
retained for this purpose by the Company. A "Trading Day" means a day on which
the Common Stock (A) is not suspended from trading on any national or regional
securities exchange or association or over-the-counter market at the close of
business and (B) has traded at least once on the national or regional securities
exchange or association or over-the-counter market that is the primary market
for the trading of the Common Stock.

         In accordance with the terms of the Purchase Contract Agreement, the
Holder of this Growth PRIDES Certificate shall pay the Purchase Price for the
shares of Common Stock purchased pursuant to each Purchase Contract evidenced
hereby by effecting either an Early Settlement of each such Purchase Contract or
by applying a principal amount of the Pledged Treasury Securities underlying
such Holder's Growth PRIDES equal to the Stated Amount of such Purchase Contract
to the purchase of the Common Stock. A Holder of Growth PRIDES who does not
elect, on or prior to 5:00 p.m. New York City time on the second Business Day
immediately preceding the Purchase Contract Settlement Date, to make an Early
Settlement, shall pay the Purchase Price for the shares of Common Stock to be
issued on the related Purchase Contract by applying a principal amount of the
Pledged Treasury Securities as aforesaid.

         The Company shall not be obligated to issue any shares of Common Stock
in respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment in full of the aggregate Purchase
Price for the shares of Common Stock to be purchased thereunder in the manner
herein set forth.

         The Growth PRIDES Certificates are issuable only in registered form and
only in denominations of a single Growth PRIDES and any integral multiple
thereof. The transfer of any Growth PRIDES Certificate will be registered and
Growth PRIDES Certificates may be exchanged as provided in the Purchase Contract
Agreement. The Growth PRIDES Registrar may require a Holder, among other things,
to furnish appropriate endorsements and transfer documents permitted by the
Purchase Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Agent may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. A Holder who elects to substitute Debentures or
the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, for Treasury Securities, thereby creating or recreating Income
PRIDES, shall be responsible for any fees or expenses payable in connection
therewith. Except as provided in the Purchase Contract Agreement, for so long as
the Purchase Contract underlying a Growth PRIDES remains in effect, such Growth
PRIDES shall not be separable into its constituent parts, and the rights and
<PAGE>   92

obligations of the Holder of such Growth PRIDES in respect of the Treasury
Security and the Purchase Contract constituting such Growth PRIDES may be
transferred and exchanged only as a Growth PRIDES. A Holder of Growth PRIDES may
create or recreate Income PRIDES by delivering to the Collateral Agent
Debentures or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, with an aggregate principal amount, in the case of such Debentures,
or with the appropriate Applicable Ownership Interest (as specified in clause
(A) of the definition of such term) of the Treasury Portfolio, in the case of
such appropriate Applicable Ownership Interest of the Treasury Portfolio, equal
to the aggregate principal amount of the Pledged Treasury Securities in exchange
for the release of such Pledged Treasury Securities in accordance with the terms
of the Purchase Contract Agreement and the Pledge Agreement. From and after such
substitution, the Security for which such Pledged Debentures or appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
secures the Holder's obligation under the Purchase Contract shall be referred to
as an "Income PRIDES." A Holder may make such a substitution only in integral
multiples of 40 Growth PRIDES for 40 Income PRIDES; provided, however, that if a
Tax Event Redemption has occurred and the Treasury Portfolio has become a
component of the Income PRIDES, a Holder may make such substitution only in
integral multiples of Growth PRIDES for Income PRIDES. Such substitution may
cause the equivalent aggregate Stated Amount of this Certificate to be increased
or decreased; provided, however, the equivalent aggregate Stated Amount
outstanding under this Growth PRIDES Certificate shall not exceed $o. All such
adjustments to the equivalent aggregate Stated Amount of this Growth PRIDES
Certificate shall be duly recorded by placing an appropriate notation on the
Schedule attached hereto.

         A Holder of an Income PRIDES may create or recreate a Growth PRIDES by
delivering to the Collateral Agent Treasury Securities in an aggregate principal
amount of the Pledged Debentures or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, as the case may be, in exchange for the release of such
Pledged Debentures or the appropriate Applicable Owner ship Interest of the
Treasury Portfolio, as the case may be, in accordance with the terms of the
Purchase Contract Agreement and the Pledge Agreement. Any such creation or
recreation of a Growth PRIDES may be effected only in multiples of 45 Income
PRIDES for 45 Growth PRIDES; provided, however, if a Tax Event Redemption has
occurred and the Treasury Portfolio has become a component of the Income PRIDES,
a Holder may make such Collateral Substitution only in integral multiples of
       Income PRIDES for        Growth PRIDES.

         Subject to the next succeeding paragraph, the Company shall pay, on
each Payment Date, the Contract Adjustment Payments, if any, payable in respect
of each Purchase Contract to the Person in whose name the Growth PRIDES
Certificate evidencing such Purchase Contract is registered at the close of
business on the Record Date for such Payment Date. Contract Adjustment Payments,
if any, will be payable at the Corporate Trust Office of the Agent and the New
York Office or, at the option of the Company, by check mailed to the address of
the Person entitled thereto at such address as it appears on the Growth PRIDES
Register.
<PAGE>   93

         The Company shall have the right, at any time prior to the Purchase
Contract Settlement Date, to defer the payment of any or all of the Contract
Adjustment Payments, if any, otherwise payable on any Payment Date, but only if
the Company shall give the Holders and the Agent written notice of its election
to defer such payment (specifying the amount to be deferred) as provided in the
Purchase Contract Agreement. Any Contract Adjustment Payments, if any, so
deferred shall, to the extent permitted by law, bear additional Contract
Adjustment Payments thereon at the rate of per annum (computed on the basis of a
360-day year of twelve 30 day months), compounding on each succeeding Payment
Date, until paid in full (such deferred installments of Contract Adjustment
Payments, if any, together with the additional Contract Adjustment Payments
accrued thereon, are referred to herein as the "Deferred Contract Adjustment
Payments"). Deferred Contract Adjustment Payments, if any, shall be due on the
next succeeding Payment Date except to the extent that payment is deferred
pursuant to the Purchase Contract Agreement. No Contract Adjustment Payments, if
any, may be deferred to a date that is after the Purchase Contract Settlement
Date and no such deferral period may end other than on a Payment Date.

         In the event that the Company elects to defer the payment of Contract
Adjustment Payments, if any, on the Purchase Contracts until a Payment Date
prior to the Purchase Contract Settlement Date, then all Deferred Contract
Adjustment Payments, if any, shall be payable to the registered Holders as of
the close of business on the Record Date immediately preceding such Payment
Date.

         In the event that the Company elects to defer the payment of Contract
Adjustment Payments, if any, on the Purchase Contracts until the Purchase
Contract Settlement Date, the Holder of this Growth PRIDES Certificate will
receive on the Purchase Contract Settlement Date, in lieu of a cash payment, a
number of shares of Common Stock (in addition to the number of shares of Common
Stock equal to the Settlement Rate) equal to (x) the aggregate amount of
Deferred Contract Adjustment Payments payable to the Holder of this Growth
PRIDES Certificate divided by (y) the Applicable Market Value.

         In the event the Company exercises its option to defer the payment of
Contract Adjustment Payments, if any, then until the Deferred Contract
Adjustment Payments have been paid, the Company shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
or make guarantee payments with respect to the foregoing (other than (i)
purchases or acquisitions of shares of capital stock of the Company in
connection with the satisfaction by the Company of its obligations under any
employee benefit plans or the satisfaction by the Company of its obligations
pursuant to any contract or security outstanding on the date of such event
requiring the Company to purchase capital stock of the Company, (ii) as a result
of a reclassification of the Company's capital stock or the exchange or
conversion of one class or series of the Company's capital stock for another
class or series of the Company's capital stock, (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being
<PAGE>   94

converted or exchanged, (iv) dividends or distributions in capital stock of the
Company (or rights to acquire capital stock) or repurchases or redemptions of
capital stock solely from the issuance or exchange of capital stock or (v)
redemptions or repurchases of any rights outstanding under a shareholder rights
plan or a declaration thereunder of a dividend of rights in the future).

         The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay Contract Adjustment
Payments, if any, or any Deferred Contract Adjustment Payments, and the rights
and obligations of Holders to purchase Common Stock shall immediately and
automatically terminate, without the necessity of any notice or action by any
Holder, the Agent or the Company, if, on or prior to the Purchase Contract
Settlement Date, a Termination Event shall have occurred. Upon the occurrence of
a Termination Event, the Company shall promptly but in no event later than two
Business Days thereafter give written notice to the Agent, the Collateral Agent
and to the Holders, at their addresses as they appear in the Growth PRIDES
Register. Upon and after the occurrence of a Termination Event, the Collateral
Agent shall release the Treasury Securities from the Pledge in accordance with
the provisions of the Pledge Agreement.

         Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, at the option of the Holders thereof, Purchase Contracts
underlying Securities having an aggregate Stated Amount equal to $1,000 or an
integral multiple thereof may be settled early ("Early Settlement") as provided
in the Purchase Contract Agreement. In order to exercise the right to effect
Early Settlement with respect to any Purchase Contracts evidenced by this Growth
PRIDES Certificate, the Holder of this Growth PRIDES Certificate shall deliver
this Growth PRIDES Certificate to the Agent at the Corporate Trust Office or the
New York Office duly endorsed for transfer to the Company or in blank with the
form of Election to Settle Early set forth below duly completed and accompanied
by payment in the form of immediately available funds payable to the Company in
an amount (the "Early Settlement Amount") equal to (i) the product of (A) the
Stated Amount times (B) the number of Purchase Contracts with respect to which
the Holder has elected to effect Early Settlement, plus (ii) if such delivery is
made with respect to any Purchase Contracts during the period from the close of
business on any Record Date for any Payment Date to the opening of business on
such Payment Date, an amount equal to the Contract Adjustment Payments, if any,
payable on such Payment Date with respect to such Purchase Contracts; provided
that no payment shall be required pursuant to clause (ii) of this sentence if
the Company shall have elected to defer the Contract Adjustment Payments which
would otherwise be payable on such Payment Date. Upon Early Settlement of
Purchase Contracts by a Holder of the related Securities, the Pledged Treasury
Securities underlying such Securities shall be released from the Pledge as
provided in the Pledge Agreement and the Holder shall be entitled to receive a
number of shares of Common Stock on account of each Purchase Contract forming
part of a Growth PRIDES as to which Early Settlement is effected equal to the
Early Settlement Rate; provided however, that upon the Early Settlement of the
Purchase Contracts, the Holder thereof will forfeit the right to receive any
Deferred Contract
<PAGE>   95

Adjustment Payments and any future Contract Adjustment Payments on such Purchase
Contracts, except to the extent that the Early Settlement Date is after the
close of business on a Record Date and prior to the opening of business on the
corresponding Payment Date. The Early Settlement Rate shall initially be equal
to o shares of Common Stock and shall be adjusted in the same manner and at the
same time as the Settlement Rate is adjusted as provided in the Purchase
Contract Agreement.

         Upon registration of transfer of this Growth PRIDES Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be required by the Agent pursuant to the
Purchase Contract Agreement) under the terms of the Purchase Contract Agreement,
the Pledge Agreement and the Purchase Contracts evidenced hereby and the
transferor shall be released from the obligations under the Purchase Contract
Agreement, the Pledge Agreement and the Purchase Contracts evidenced by this
Growth PRIDES Certificate. The Company covenants and agrees, and the Holder, by
his acceptance hereof, likewise covenants and agrees, to be bound by the
provisions of this paragraph.

         The Holder of this Growth PRIDES Certificate, by its acceptance hereof,
authorizes the Agent to enter into and perform the related Purchase Contracts
forming part of the Growth PRIDES evidenced hereby on his behalf as its
attorney-in-fact, expressly withholds any consent to the assumption (i.e.,
affirmance) of the Purchase Contracts by the Company or its trustee in the event
that the Company becomes the subject of a case under the Bankruptcy Code, agrees
to be bound by the terms and provisions thereof, covenants and agrees to perform
its obligations under such Purchase Contracts, consents to the provisions of the
Purchase Contract Agreement, authorizes the Agent to enter into and perform the
Pledge Agreement on its behalf as its attorney-in-fact, and consents to the
Pledge of the Treasury Securities underlying this Growth PRIDES Certificate
pursuant to the Pledge Agreement. The Holder further covenants and agrees, that,
to the extent and in the manner provided in the Purchase Contract Agreement and
the Pledge Agreement, but subject to the terms thereof, payments in respect to
the Stated Amount of the Pledged Treasury Securities on the Purchase Contract
Settlement Date shall be paid by the Collateral Agent to the Company in
satisfaction of such Holder's obligations under such Purchase Contract and such
Holder shall acquire no right, title or interest in such payments.

         Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts.

         The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.

         The Company, the Agent and its Affiliates and any agent of the Company
or the Agent may treat the Person in whose name this Growth PRIDES Certificate
is registered as the owner of the Growth PRIDES evidenced hereby for the purpose
of receiving payments of interest on the Treasury Securities, receiving payments
of Contract Adjustment Payments, if any, and any Deferred Contract Adjustment
Payments, if any,
<PAGE>   96

performance of the Purchase Contracts and for all other purposes whatsoever,
whether or not any payments in respect thereof be overdue and notwithstanding
any notice to the contrary, and neither the Company, the Agent nor any such
agent shall be affected by notice to the contrary.

         The Purchase Contracts shall not, prior to the settlement thereof,
entitle the Holder to any of the rights of a holder of shares of Common Stock.

         A copy of the Purchase Contract Agreement is available for inspection
at the offices of the Agent.

                                  ABBREVIATIONS

         The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM  -                          as tenants in common

UNIF GIFT MIN ACT -                 ------------Custodian------------
                                    (cust)                   (minor)

                                    Under Uniform Gifts to Minors Act

                                    ---------------------------------
                                                 (State)

TEN ENT -                           as tenants by the entireties

JT TEN -                            as joint tenants with right of survivorship
                                    and not as tenants in common

Additional abbreviations may also be used though not in the above list.

                  ---------------------------------------------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
                      ---------------------------------------------------------

--------------------------------------------------------------------------------
(Please insert Social Security or Taxpayer I.D. or other Identifying Number
 of Assignee)

--------------------------------------------------------------------------------
<PAGE>   97

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
(Please Print or Type Name and Address Including Postal Zip Code of Assignee)
the within Growth PRIDES Certificates and all rights thereunder, hereby
irrevocably constituting and appointing

--------------------------------------------------------------------------------
attorney to transfer said Growth PRIDES Certificates on the books of The Coastal
Corporation with full power of substitution in the premises.

Dated:
        -----------------           --------------------------------
                                    Signature

                                    NOTICE: The signature to this assignment
                                    must correspond with the name as it appears
                                    upon the face of the within Growth PRIDES
                                    Certificates in every particular, without
                                    alteration or enlargement or any change
                                    whatsoever.

Signature Guarantee:
                     --------------------------------
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

                             SETTLEMENT INSTRUCTIONS

         The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of Growth PRIDES evidenced
by this Growth PRIDES Certificate be registered in the name of, and delivered,
together with a check in payment for any fractional share, to the undersigned at
the address indicated below unless a different name and address have been
indicated below. If shares are to be registered in the name of a Person other
than the undersigned, the undersigned will pay any transfer tax payable incident
thereto.

Dated:
      ---------------------------            ----------------------------
                                             Signature
<PAGE>   98
                                             ----------------------------
                                             Signature Guarantee:
                                             (if assigned to another person)

         Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

If shares are to be registered               REGISTERED HOLDER
in the name of and delivered to
a Person other than the Holder,
please (i) print such Person's name
and address and (ii) provide a
guarantee of your signature:

                                             Please print name and address of
                                             Registered Holder:

-------------------------------------        -----------------------------------
               Name                                           Name

-------------------------------------        -----------------------------------
              Address                                        Address

-------------------------------------        -----------------------------------

-------------------------------------        -----------------------------------

-------------------------------------        -----------------------------------

Social Security or other
Taxpayer Identification
Number, if any
                                             -----------------------------------

                            ELECTION TO SETTLE EARLY

         The undersigned Holder of this Growth PRIDES Certificate hereby
irrevocably exercises the option to effect Early Settlement in accordance with
the terms of the
<PAGE>   99

Purchase Contract Agreement with respect to the Purchase Contracts underlying
the number of Growth PRIDES evidenced by this Growth PRIDES Certificate
specified below. The option to effect Early Settlement may be exercised only
with respect to Purchase Contracts underlying Growth PRIDES with an aggregate
Stated Amount equal to $1,000 or an integral multiple thereof. The undersigned
Holder directs that a certificate for shares of Common Stock deliverable upon
such Early Settlement be registered in the name of, and delivered, together with
a check in payment for any fractional share and any Growth PRIDES Certificate
representing any Growth PRIDES evidenced hereby as to which Early Settlement of
the related Purchase Contracts is not effected, to the undersigned at the
address indicated below unless a different name and address have been indicated
below. Pledged Treasury Securities deliverable upon such Early Settlement will
be transferred in accordance with the transfer instructions set forth below. If
shares are to be registered in the name of a Person other than the undersigned,
the undersigned will pay any transfer or similar tax payable incident thereto.

Dated:
      ------------------------------     -----------------------------
                                         Signature

Signature Guarantee:
                    ----------------------------------
(if assigned to another person)

Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

         Number of Securities evidenced hereby as to which Early Settlement of
the related Purchase Contracts is being elected:

If shares of Common Stock or Growth          REGISTERED HOLDER
PRIDES Certificates are to be regis-
tered in the name of and delivered to
and Pledged Treasury Securities are to
be transferred to a Person other than
the Holder, please (i) print such Person's
name and address and (ii) provide a
guarantee of your signature:

                                             Please print name and address of
                                             Registered Holder:
<PAGE>   100

-------------------------------------        -----------------------------------
               Name                                           Name

-------------------------------------        -----------------------------------
              Address                                        Address

-------------------------------------        -----------------------------------

-------------------------------------        -----------------------------------

-------------------------------------        -----------------------------------

Social Security or other
Taxpayer Identification
Number, if any
                                  --------------------------------

Transfer Instructions for Pledged Treasury
Securities Transferable Upon Early
Settlement or a Termination Event:

-------------------------------------

-------------------------------------

-------------------------------------

<PAGE>   101

                     [TO BE ATTACHED TO GLOBAL CERTIFICATES]

            SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE

                  The following increases or decreases in this Global
Certificate have been made:

Signature of authorized officer of
Purchase Contract Agent or Securities
Custodian

Amount of decrease in Stated Amount of
the Global Certificate

Amount of increase in Stated Amount of
the Global Certificate

Stated Amount of this Global Certificate
Following such decrease or increase

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
<PAGE>   102

                                    EXHIBIT C

                    INSTRUCTION FROM PURCHASE CONTRACT AGENT
                               TO COLLATERAL AGENT

The Chase Manhattan Bank
[Address]

Attention: Corporate Trust Services Division

         Re:  FELINE PRIDES of The Coastal Corporation (the "Company")

         We hereby notify you in accordance with Section [4.1] [4.2] of the
Pledge Agreement, dated as of      , 1999, (the "Pledge Agreement") among the
Company, your selves, as Collateral Agent, Custodial Agent and Securities
Intermediary and ourselves, as Purchase Contract Agent and as attorney-in-fact
for the holders of [Income PRIDES] [Growth PRIDES] from time to time, that the
holder of the Securities listed below (the "Holder") has elected to substitute
[$_____ aggregate principal amount of Treasury Securities] [$_______ aggregate
principal amount of Debentures or the appropriate Applicable Ownership Interest
of the Treasury Portfolio, as the case may be,] in exchange for an equal Value
of [Pledged Debentures or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be,] [Pledged Treasury Securities] held by
you in accordance with the Pledge Agreement and has delivered to us a notice
stating that the Holder has Transferred [Treasury Securities] [Debentures or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be,] to you, as Collateral Agent. We hereby instruct you, upon receipt of
such [Pledged Treasury Securities] [Pledged Debentures or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,],
and upon the payment by such Holder of any applicable fees, to release the
[Debentures or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be,] [Treasury Securities] related to such [Income
PRIDES] [Growth PRIDES] to us in accordance with the Holder's instructions.
Capitalized terms used herein but not defined shall have the meaning set forth
in the Pledge Agreement.

Date:
     --------------------               ---------------------------------------
                                        By:

                                        ---------------------------------------
                                        Name:
                                        Title:
                                        Signature Guarantee:

<PAGE>   103

                               -------------------

Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Debentures or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be,] for the [Pledged
Debentures or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be,] [Pledged Treasury Securities]:

---------------------------      ------------------------------------
          Name                   Social Security or other Taxpayer
                                 Identification Number, if any

---------------------------
       Address

---------------------------

---------------------------

<PAGE>   104

                                    EXHIBIT D

                     INSTRUCTION TO PURCHASE CONTRACT AGENT

The Bank of New York
101 Barclay Street, Floor 12 East
 New York, NY 10286

Attention: Corporate Trust Administration

         Re:   FELINE PRIDES of The Coastal Corporation (the "Company")

         The undersigned Holder hereby notifies you that it has delivered
to         , as Collateral Agent, [$_______ aggregate principal amount of
Treasury Securities] [$ aggregate principal amount of Debentures or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, the case
may be,] in exchange for an equal Value of [Pledged Debentures or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be,] [Pledged Treasury Securities] held by the Collateral Agent, in
accordance with Section [4.1], [4.2] of the Pledge Agreement, dated o, 1999 (the
"Pledge Agreement"), between you, the Company and the Collateral Agent. The
under signed Holder has paid the Collateral Agent all applicable fees relating
to such exchange. The undersigned Holder hereby instructs you to instruct the
Collateral Agent to release to you on behalf of the undersigned Holder the
[Pledged Debentures or the appropriate Applicable Ownership Interest of the
Treasury Portfolio] [Pledged Treasury Securities] related to such [Income
PRIDES] [Growth PRIDES]. Capitalized terms used herein but not defined shall
have the meaning set forth in the Pledge Agreement.

Dated:
      ------------------------------    ---------------------------------------
                                        Signature

                                        Signature Guarantee:
                                                            -------------------

Please print name and address of Registered Holder:

---------------------------            ------------------------------------
          Name                         Social Security or other Taxpayer
                                       Identification Number, if any

---------------------------
        Address

---------------------------

---------------------------

<PAGE>   105

                                    EXHIBIT E

                        NOTICE TO SETTLE BY SEPARATE CASH

The Bank of New York
101 Barclay Street, Floor 12 East
New York, NY 10286

Attention: Corporate Trust Administration

         Re:   FELINE PRIDES of The Coastal Corporation (the "Company")

         The undersigned Holder hereby irrevocably notifies you in accordance
with Section 5.4 of the Purchase Contract Agreement dated as of o, 1999 among
the Company and yourselves, as Purchase Contract Agent and as Attorney-in-Fact
for the Holders of the Purchase Contracts, that such Holder has elected to pay
to the Collateral Agent, on or prior to 11:00 a.m. New York City time, on the
Business Day immediately preceding the Purchase Contract Settlement Date, (in
lawful money of the United States by [certified or cashiers check or] wire
transfer, in each case in immediately available funds), $_________ as the
Purchase Price for the shares of Common Stock issuable to such Holder by the
Company under the related Purchase Contract on the Purchase Contract Settlement
Date. The undersigned Holder hereby instructs you to notify promptly the
Collateral Agent of the undersigned Holders election to make such cash
settlement with respect to the Purchase Contracts related to such Holder's
[Income PRIDES] [Growth PRIDES].

Dated:
      ------------------------------    ---------------------------------------
                                        Signature

                                        Signature Guarantee:
                                                            -------------------

Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

Please print name and address of Registered Holder:

---------------------------            ------------------------------------

<PAGE>   106

Name                                   Social Security or other Taxpayer
                                       Identification Number, if any

---------------------------
Address

---------------------------

---------------------------

<PAGE>   107

--------------------------------------------------------------------------------

               FIRST SUPPLEMENT TO PURCHASE CONTRACT AGREEMENT

                          DATED AS OF JANUARY 29, 2001

                                      AMONG

                            THE COASTAL CORPORATION,

                           EL PASO ENERGY CORPORATION

                                       AND

                              THE BANK OF NEW YORK,
                           AS PURCHASE CONTRACT AGENT

--------------------------------------------------------------------------------

<PAGE>   108

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                             PAGE

<S>                                                                          <C>
                                    ARTICLE I
                                   DEFINITIONS

SECTION 1.1. DEFINITION OF TERMS .........................................     2

                                   ARTICLE II
                              CONCERNING THE MERGER

SECTION 2.1. EL PASO AS ISSUER OF COMMON STOCK UPON SETTLEMENT ...........     3
SECTION 2.2. ACCEPTANCE BY AGENT .........................................     3

                                   ARTICLE III
                              CONCERNING SETTLEMENT

SECTION 3.1. PURCHASE CONTRACT SETTLEMENT ................................     3
SECTION 3.2. SETTLEMENT RATE .............................................     4

                                   ARTICLE IV
                                  MISCELLANEOUS

SECTION 4.1. RATIFICATION OF PURCHASE CONTRACT AGREEMENT..................     4
SECTION 4.2. EFFECTIVENESS ...............................................     4
SECTION 4.3. SECURITIES DEEMED CONFORMED .................................     5
SECTION 4.4. GOVERNING LAW ...............................................     5
SECTION 4.5. SEPARABILITY ................................................     5
SECTION 4.6. COUNTERPARTS ................................................     5
</TABLE>

<PAGE>   109

         FIRST SUPPLEMENT TO PURCHASE CONTRACT AGREEMENT, dated as of January
29, 2001 (this "Supplemental Agreement"), among The Coastal Corporation, a
Delaware corporation (the "Company"), El Paso Energy Corporation, a Delaware
corporation ("El Paso"), and The Bank of New York, a New York banking
corporation, acting as purchase contract agent for the Holders of Securities
from time to time (the "Agent").

         WHEREAS, the Company and the Agent executed and delivered a Purchase
Contract Agreement, dated as of August 3, 1999 (the "Purchase Contract
Agreement"), to provide for the execution and delivery of the Purchase Contracts
and Certificates related to the Income PRIDES or Growth PRIDES (collectively,
the "Securities");

         WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of
January 17,2000 (the "Merger Agreement"), by and among the Company, El Paso
Merger Company, a wholly owned subsidiary of El Paso, and El Paso, El Paso
Merger Company is to merge (the "Merger") with and into the Company;

         WHEREAS, Section 2.1(a) of the Merger Agreement provides that, at the
effective time of the Merger (the "Effective Time"), each share of Common
Stock of the Company issued and outstanding immediately prior to the Effective
Time shall be converted into, and shall be cancelled in exchange for, the right
to receive 1.23 shares of Common Stock of El Paso, par value $3.00 per share,
including any associated preferred stock purchase rights ("El Paso Common
Stock");

         WHEREAS, Section 9.1 of the Purchase Contract Agreement permits the
Company to merge with another corporation provided certain terms and conditions
are satisfied;

         WHEREAS, Section 5.6(b) of the Purchase Contract Agreement provides
that in the event of a Reorganization Event the Person formed thereby shall
execute and deliver to the Agent an agreement supplemental to the Purchase
Contract Agreement providing that the Holders of each Outstanding Security shall
have the rights provided by Section 5.6 and for adjustments, for subsequent
events, that are as nearly equivalent as may be practicable to the adjustments
provided for in Section 5.6 of the Purchase Contract Agreement.

         WHEREAS, Section 8.1 of the Purchase Contract Agreement authorizes the
Company and the Agent to enter into a supplemental agreement without the consent
of any Holders, to, among other things, make provision with respect to the
rights of Holders pursuant to the requirements of Section 5.6(b) of the Purchase
Contract Agreement;

         WHEREAS, the Company has furnished the Agent with an Opinion of
Counsel, stating that the Merger and this Supplemental Agreement comply with the
provisions of Article IX of the Purchase Contract Agreement and that all
conditions precedent to the

                                       1
<PAGE>   110

consummation of the Merger set forth in the Purchase Contract Agreement have
been met;

         WHEREAS, pursuant to Section 8.3 of the Purchase Contract Agreement, in
executing this Supplemental Agreement the Agent shall be fully protected in
relying upon an Opinion of Counsel furnished by the Company stating that the
execution of this Supplemental Agreement is authorized or permitted by the
Purchase Contract Agreement; and

         WHEREAS, the Company has requested that the Agent execute and deliver
this Supplemental Agreement.

         NOW THEREFORE, in consideration of the premises El Paso and the Company
covenant and agree with the Agent as follows:

                                    ARTICLE I
                                   DEFINITIONS

SECTION 1.1. DEFINITION OF TERMS.

         Unless the context otherwise requires:

         (a) a term defined in the Purchase Contract Agreement has the same
meaning when used in this Supplemental Agreement;

         (b) a term defined anywhere in this Supplemental Agreement has the same
meaning throughout;

         (c) the singular includes the plural and vice versa; and

         (d) headings are for convenience of reference only and do not affect
interpretation.

                                       2
<PAGE>   111

                                   ARTICLE II
                              CONCERNING THE MERGER

SECTION 2.1. EL PASO AS ISSUER OF COMMON STOCK UPON SETTLEMENT.

         (a) The parties hereby agree that, from and after the Effective Time,
El Paso shall issue and deliver the number of shares of El Paso Common Stock
which is sufficient to settle the Purchase Contracts as provided in Article III
of this Supplemental Agreement, against payment in full of the Purchase Price in
the manner set forth in the Purchase Contract Agreement and Section 2.1(b)
hereof.

         (b) The Company hereby agrees that it will immediately forward to El
Paso all funds received by it under Section 5.4, 5.9 or otherwise under the
Purchase Contract Agreement for payment of the purchase price upon settlement of
the Purchase Contract for the shares of El Paso Common Stock to be so issued.

SECTION 2.2. ACCEPTANCE BY AGENT.

         The Agent accepts this Supplemental Agreement and agrees to execute its
duties and responsibilities as hereby supplemented upon the terms and conditions
set forth in the Purchase Contract Agreement, including the terms and provisions
defining and limiting the liabilities and responsibilities of the Agent, which
terms and provisions shall in like manner define and limit its liabilities and
responsibilities in the performance of its duties created by the Purchase
Contract Agreement as hereby supplemented; and without limiting the generality
of the foregoing, the Agent shall not be responsible in any manner whatsoever
for or with respect to any of the recitals or statements contained herein, all
of which recitals or statements are made solely by El Paso and the Company, or
for or with respect to the validity or sufficiency of this Supplemental
Agreement or any of the terms or provisions hereof.

                                   ARTICLE III
                              CONCERNING SETTLEMENT

SECTION 3.1. PURCHASE CONTRACT SETTLEMENT.

         (a) The parties understand and agree that, pursuant to Section 5.6(b)
of the Purchase Contract Agreement, the Merger will constitute a Reorganization
Event as a result of which as of the Effective Time the Settlement Rate shall be
adjusted such that each Holder of Securities will receive on the Purchase
Contract Settlement Date with

                                       3
<PAGE>   112

respect to each Purchase Contract forming a part thereof (or upon any Early
Settlement) the number of shares of El Paso Common Stock receivable pursuant to
the Merger (without any interest thereon, and without any right to dividends or
distribution thereon which have a record date that is prior to the Purchase
Contract Settlement Date) by a holder of the number of shares of the Company's
Common Stock that would have been issuable on account of each Purchase Contract
if the Purchase Contract Settlement Date had occurred immediately prior to the
Effective Time, subject to any further adjustments in the Settlement Rate under
Article V of the Purchase Contract Agreement prior to settlement. Attached as
Exhibit A hereto is an Officer's Certificate, pursuant to Section 5.7(a)(i) of
the Purchase Contract Agreement, which sets forth the method of calculation of
the Settlement Rate as of the Effective Time, as adjusted for the Merger.

         (b) The parties hereby agree that, subject to the other provisions of
this Supplemental Agreement from and after the Effective Time, the provisions of
the Purchase Contract Agreement and the Purchase Contracts that refer to the
delivery of "Common Stock" of the Company, including without limitation Sections
5.4, 5.5, 5.9, 10.3 and 10.4 of the Purchase Contract Agreement, shall relate to
El Paso Common Stock by operation of Section 5.6(b) of the Purchase Contract
Agreement.

SECTION 3.2. SETTLEMENT RATE.

         In accordance with the last two sentences of Section 5.6(b) of the
Purchase Contract Agreement, the Settlement Rate shall be adjusted for events
subsequent to the Effective Time, in a manner that is as nearly equivalent as
may be practicable to the adjustments provided for in Section 5.6 of the
Purchase Contract Agreement, as if El Paso was the original "Company" and El
Paso Common Stock was the original "Common Stock" under the provisions of
Section 5.6 of the Purchase Contract Agreement.

                                   ARTICLE IV
                                  MISCELLANEOUS

SECTION 4.1. RATIFICATION OF PURCHASE CONTRACT AGREEMENT.

         The Purchase Contract Agreement, as supplemented by this Supplemental
Agreement, is in all respects ratified and confirmed, and this Supplemental
Agreement shall be deemed part of the Purchase Contract Agreement in the manner
and to the extent herein and therein provided.

SECTION 4.2. EFFECTIVENESS.

                                       4
<PAGE>   113
         This Supplemental Agreement shall become a legally effective and
binding instrument upon the later of (i) execution and delivery hereof by all
parties hereto and (ii) the Effective Time.

SECTION 4.3. SECURITIES DEEMED CONFORMED.

         As of the Effective Time, the provisions of each Security then
outstanding shall be deemed to be conformed, without the necessity for any
reissuance or exchange of such Security or any other action on the part of the
Holders, El Paso, the Company or Agent, so as to reflect this Supplemental
Agreement.

SECTION 4.4. GOVERNING LAW.

         This Supplemental Agreement shall be governed by and construed in
accordance with the laws (other than the choice of law provisions) of the State
of New York.

SECTION 4.5. SEPARABILITY.

         In came any one or more of the provisions contained in this
Supplemental Agreement or in the Securities shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Supplemental
Agreement or of the Securities, but this Supplemental Agreement and the
Securities shall be construed as if such invalid or illegal or unenforceable
provision had never been contained herein or therein.

SECTION 4.6. COUNTERPARTS.

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

                                        5
<PAGE>   114

         TN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Agreement to be duly executed as of the day and year first above written.

                              THE COASTAL CORPORATION

                              By /s/ AUSTIN M. O'TOOLE
                                 ----------------------------------------------
                                 Name: Austin M. O'Toole
                                 Title: Senior Vice President &
                                        Corporate Secretary

                              EL PASO ENERGY CORPORATION

                              By    /s/ DAVID L. SIDDALL
                                 ----------------------------------------------
                                 Name:  David L. Siddall
                                 Title: Vice President

                              THE BANK OF NEW YORK, as Agent

                              By    /s/ REMO J. REALE
                                 ----------------------------------------------
                                 Name:  Reno J. REALE
                                 Title: Vice President

                                       6

<PAGE>   115

                                                                       EXHIBIT A

                              OFFICER'S CERTIFICATE
                                       OF
                             THE COASTAL CORPORATION
                 UNDER SECTION 5.7(a)(i) AND SECTION 9.1 OF THE
                           PURCHASE CONTRACT AGREEMENT

         THE UNDERSIGNED, AUSTIN M. O'TOOLE, the Senior Vice President and
Corporate Secretary of The Coastal Corporation, a Delaware corporation (the
"Company"), hereby certifies:

                  (i)     Accompanying this Certificate is the duly executed
                          Supplemental Purchase Contract Agreement (the
                          "Supplemental Agreement"), dated as of January,
                          2001, among the Company, El Paso Energy Corporation, a
                          Delaware corporation ("El Paso"), and The Bank of New
                          York, as purchase contract agent (the "Agent"), which
                          will become effective as of Effective Time of the
                          Merger of El Paso Merger Company, a wholly-owned
                          subsidiary of El Paso (the "Merger Sub") into the
                          Company and which amends the Purchase Contract
                          Agreement dated as of August 3,1999 among the Company
                          and the Agent.

                  (ii)    Pursuant to Section 5.7(a)(i) of the Purchase Contract
                          Agreement, the Settlement Rate from and after the
                          Effective Time, the method of calculation thereof, and
                          the facts requiring such adjustment and upon which
                          such adjustment is based, are as follows:

                                  As of the Effective Time, the Merger Sub will
                                  merge with and into the Company and the
                                  Company's Common Stock will no longer exist.
                                  Section 5.6(b) of the Purchase Contract
                                  Agreement provides that the Merger constitutes
                                  a Reorganization Event whereupon the
                                  Settlement Rate will be adjusted to provide
                                  that each Holder of Securities will receive on
                                  the Purchase Contract Settlement date with
                                  respect to each Purchase Contract forming a
                                  part thereof (or upon Early Settlement), the
                                  kind and amount of securities, cash and other
                                  property receivable upon such Reorganization
                                  Event (without any interest thereon, and
                                  without any right to dividends or distribution
                                  thereon which have a record date that is prior
                                  to the Purchase Contract Settlement Date) by a
                                  holder of the number of shares of the
                                  Company's Common Stock issuable on account of
                                  each Purchase Contract as if the Purchase
                                  Contract Settlement Date had occurred
                                  immediately prior to such Reorganization Event
                                  and assuming such holder failed to exercise
                                  his rights of election as to the kind or
                                  amount of securities, cash and other property
                                  so receivable.

         METHOD OF CALCULATION:

                  1)      Settlement Rate prior to the Effective Time

                          a)      If the Applicable Market Value is equal to or
                                  greater than $46.4363 (the "Threshold
                                  Appreciation Price"), 0.5384 shares of Company
                                  Common Stock per Purchase Contract;

                                       A-1

<PAGE>   116

                b)     if the Applicable Market Value is less than the Threshold
                       Appreciation Price, but greater than $38.0625, the number
                       of shares of Company Common Stock equal to the Stated
                       Amount divided by the Applicable Market Value, and

                c)     if the Applicable Market Value is less than or equal to
                       $38.0625, 0.6568 shares of Company Common Stock per
                       Purchase Contract.

        2)      The Applicable Market Value of the Company's Common Stock
                calculated prior to the Merger is greater than the Threshold
                Appreciation Price ($46.4363). Accordingly, as described in 1)a)
                above, the applicable Settlement Rate as if the Purchase
                Contract Settlement Date had occurred immediately prior to the
                Merger (but prior to adjustment for the Merger) is 0.5384 shares
                of Company Common Stock per Purchase Contract.

        3)      Securities Receivable Upon Reorganization Event: Upon
                consummation of the Merger, each holder of a share of the
                Company's Common Stock will receive 1.23 shares of El Paso
                Common Stock.

        4)      Adjustment Settlement Rate: Accordingly, unless there shall have
                occurred a Termination Event, each Holder of a Purchase Contract
                will be obligated to purchase on the Purchase Contract
                Settlement Date (subject to the next sentence) at a price equal
                to the Stated Amount ($25), and El Paso will be required to sell
                at such price, 0.6622 shares of El Paso Common Stock (the
                product of 0.5384 times 1.23), subject to any further
                adjustments in the Settlement Rate under Article V of the
                Purchase Contract Agreement prior to settlement. Pursuant to the
                Purchase Contract Agreement, in the case of Early Settlement,
                Cash Settlement, or through the application of Proceeds from
                related Treasury Securities, the Cash Settlement Rate and Early
                Settlement Rate (as applicable) will also be determined based on
                the adjusted Settlement Rate as applicable to the El Paso Common
                Stock.

        5)      The Company is not in default in the performance of any covenant
                or condition under the Purchase Contract Agreement, any of the
                Securities, or the Pledge Agreement.

         Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to such terms in the Supplemental Agreement and the Purchase
Contract Agreement.

         IN WITNESS WHEREOF, I have executed this Certificate on this ___ day of
January, 2001.

                                                 THE COASTAL CORPORATION

                                                 ------------------------------
                                                 By:     Austin M. O'Toole
                                                 Title:  Senior Vice President
                                                         and Corporate Secretary

                                       A-2
<PAGE>   117
     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Agreement to be duly executed as of the day and year first above written.

                                        THE COASTAL CORPORATION

                                        By__________________________
                                          Name:
                                          Title:

                                        EL PASO ENERGY CORPORATION

                                        By__________________________
                                          Name:
                                          Title:

                                        THE BANK OF NEW YORK, as Agent

                                        By__________________________
                                          Name:
                                          Title:<PAGE>   1
                                                                  EXHIBIT 10.B.1

                                                                  EXECUTION COPY

================================================================================

                           EL PASO ENERGY CORPORATION

                                   ----------

                              $700,000,000 3-MONTH
                       REVOLVING CREDIT FACILITY AGREEMENT

                          DATED AS OF DECEMBER 21, 2000

                                   ----------

                            THE CHASE MANHATTAN BANK

================================================================================

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                               Page
                                                                               ----
<S>                                                                            <C>
ARTICLE I

         DEFINITIONS AND ACCOUNTING TERMS.........................................1
         SECTION 1.1 Certain Defined Terms........................................1
         SECTION 1.2 Computation of Time Periods.................................15
         SECTION 1.3 Accounting Terms............................................15
         SECTION 1.4 References..................................................15

ARTICLE II

         AMOUNTS AND TERMS OF THE ADVANCES.......................................15
         SECTION 2.1 The Advances................................................15
         SECTION 2.2 Making the Advances.........................................15
         SECTION 2.3 Evidence of Debt............................................17
         SECTION 2.4 Money Market Advances.......................................17
         SECTION 2.5 [Intentionally left blank]..................................18
         SECTION 2.6 [Intentionally left blank]..................................18
         SECTION 2.7 [Intentionally left blank]..................................18
         SECTION 2.8 Fees........................................................18
         SECTION 2.9 Reduction of the Commitments................................19
         SECTION 2.10 Repayment of Advances......................................19
         SECTION 2.11 Interest on Advances.......................................19
         SECTION 2.12 Additional Interest on Eurodollar Rate Advances............20
         SECTION 2.13 Interest Rate Determination................................20
         SECTION 2.14 Voluntary Conversion of Advances...........................21
         SECTION 2.15 Optional and Mandatory Prepayments.........................21
         SECTION 2.16 Increased Costs............................................22
         SECTION 2.17 Increased Capital..........................................23
         SECTION 2.18 Illegality.................................................23
         SECTION 2.19 Pro Rata Treatment, Payments and Computations..............24
         SECTION 2.20 Taxes......................................................25
         SECTION 2.21 Sharing of Payments, Etc...................................27
         SECTION 2.22 Use of Proceeds............................................28
         SECTION 2.23 Extension of Stated Termination Date.......................28
         SECTION 2.24 [Intentionally left blank].................................29
         SECTION 2.25 Replacement of Lenders.....................................29

ARTICLE III

         CONDITIONS OF EFFECTIVENESS AND LENDING.................................30
         SECTION 3.1 Conditions Precedent to Effectiveness of this Agreement.....30
         SECTION 3.2 Conditions Precedent to Initial Advances....................30
         SECTION 3.3 [Intentionally left blank]..................................31
         SECTION 3.4 Conditions Precedent to Each Borrowing......................31
</TABLE>

<PAGE>   3

<TABLE>
<CAPTION>
                                                                              Page
                                                                              ----
<S>                                                                           <C>
ARTICLE IV

         REPRESENTATIONS AND WARRANTIES.........................................31
         SECTION 4.1 Representations and Warranties of the Company..............31

ARTICLE V

         COVENANTS OF THE COMPANY...............................................34
         SECTION 5.1 Affirmative Covenants......................................34
         SECTION 5.2 Negative Covenants.........................................35
         SECTION 5.3 Reporting Requirements.....................................39
         SECTION 5.4 Restrictions on Material Subsidiaries......................41

ARTICLE VI

         [Intentionally left blank].............................................41

ARTICLE VII

         EVENTS OF DEFAULT......................................................42
         SECTION 7.1 Event of Default...........................................42

ARTICLE VIII

         THE AGENT..............................................................45
         SECTION 8.1 Authorization and Action...................................45
         SECTION 8.2 Agent's Reliance, Etc......................................45
         SECTION 8.3 Chase and Affiliates.......................................45
         SECTION 8.4 Lender Credit Decision.....................................46
         SECTION 8.5 Indemnification............................................46
         SECTION 8.6 Successor Agent............................................46

ARTICLE IX

         MISCELLANEOUS..........................................................47
         SECTION 9.1 Amendments, Etc............................................47
         SECTION 9.2 Notices, Etc...............................................47
         SECTION 9.3 No Waiver; Remedies........................................47
         SECTION 9.4 Costs and Expenses; Indemnity..............................48
         SECTION 9.5 Right of Set-Off...........................................48
         SECTION 9.6 Binding Effect.............................................49
         SECTION 9.7 Assignments and Participations.............................49
         SECTION 9.8 Confidentiality............................................51
         SECTION 9.9 Consent to Jurisdiction....................................52
         SECTION 9.10 GOVERNING LAW.............................................53
         SECTION 9.11 Rate of Interest..........................................53
         SECTION 9.12  Execution in Counterparts................................53
</TABLE>

<PAGE>   4

                                    SCHEDULE

Schedule I        Commitments, Addresses, Etc.

                                    EXHIBITS

Exhibit A                  Form of Note
Exhibit B                  Form of Notice of Borrowing
Exhibit C                  Form of Assignment and Acceptance
Exhibit D                  Form of Opinion of [General][Senior] Counsel
                              of the Company
Exhibit E                  Form of Opinion of New York Counsel to the
                              Company
Exhibit F                  Form of Process Agent Letter
Exhibit G                  Form of Extension Request

<PAGE>   5

                  $700,000,000 3-MONTH REVOLVING CREDIT FACILITY AGREEMENT,
dated as of December 21, 2000, among EL PASO ENERGY CORPORATION, a Delaware
corporation (the "Company"), the several banks and other financial institutions
from time to time parties to this Agreement (the "Lenders"), THE CHASE MANHATTAN
BANK, a New York banking corporation, as administrative agent for the Lenders
(in such capacity, the "Agent") and Chase Securities Inc. as lead arranger and
book manager ("CSI").

                  The parties hereto hereby agree as follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

                  SECTION 1.1 Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):

                  "Agent" has the meaning assigned to such term in the preamble
hereof.

                  "Advance" means an advance by a Lender to the Company pursuant
         to Article II, and refers to a Base Rate Advance or a Eurodollar Rate
         Advance or a Money Market Advance.

                  "Affiliate" means as to any Person, any other Person that,
         directly or indirectly, controls, is controlled by or is under common
         control with such Person or is a director or officer of such Person.
         The term "control" (including the terms "controlled by" or "under
         common control with") means, with respect to any Person, the
         possession, direct or indirect, of the power to vote 20% or more of the
         securities having ordinary voting power for the election of directors
         of such Person or to direct or cause the direction of the management
         and policies of such Person, whether through ownership of voting
         securities or by contract or otherwise. Neither a director nor any
         officer of a Person, in such capacity, shall be deemed an "Affiliate"
         of such Person for purposes of this Agreement.

                  "Agreement" means this $700,000,000 3-Month Revolving Credit
         Facility Agreement, as amended, restated, supplemented or otherwise
         modified from time to time.

                  "Alternate Program" means any program providing for the sale
         or other disposition of trade or other receivables entered into by the
         Company or a Subsidiary which is in addition to or in replacement of
         the program evidenced by either Receivables Purchase and Sale Agreement
         (whether or not either Receivables Purchase and Sale Agreement shall
         then be in effect), provided that such program is on terms (a)
         substantially similar to either Receivables Purchase and Sale Agreement
         (as modified

<PAGE>   6

                                                                               2

         to comply with FASB 125 or similar policies or guidelines from time to
         time in effect) or (b) customary for similar transactions as reasonably
         determined by the Agent.

                  "Applicable Eurodollar Rate Margin" with respect to any
         Eurodollar Rate Advance to the Company means for any day the rate per
         annum set forth below opposite the applicable S&P Bond Rating and
         Moody's Bond Rating in effect on such day for the Company:

<TABLE>
<CAPTION>
         Bond Rating                                          Applicable Eurodollar
         (S&P/Moody's)                   Level                     Rate Margin
         -------------                   -----                ---------------------
<S>                                      <C>                  <C>
         A/A2 or higher                     I                         .180%
         A-/A3                             II                         .270%
         BBB+/Baa1                        III                         .300%
         BBB/Baa2                          IV                         .375%
         BBB-/Baa3                          V                         .550%
         BB+/Ba1 or lower                  VI                         .800%;
</TABLE>

         provided that (i) if the Bond Ratings for the Company do not fall
         within the same Level, the Applicable Eurodollar Rate Margin applicable
         to such day will be the percentage opposite the Bond Rating that is at
         the higher level (Level I being the highest and Level VI being the
         lowest Level), (ii) in the event a Bond Rating for the Company is not
         available from one of the Rating Agencies, the Applicable Eurodollar
         Rate Margin will be based on the Bond Rating of the other Rating
         Agency, and (iii) in the event a Bond Rating for the Company is
         available from none of the Rating Agencies, the Applicable Eurodollar
         Rate Margin will be the percentage opposite Level VI; provided,
         further, that (i) for each day on which the aggregate principal amount
         of the Advances outstanding hereunder is equal to or greater than 25%
         of the aggregate amount of the total Commitments hereunder, the
         Applicable Eurodollar Rate Margin will be increased by 0.125% for such
         day and (ii) for each day on which any Eurodollar Rate Advance is
         outstanding before January 1, 2001, the Applicable Eurodollar Rate
         Margin will be increased by 0.125% for such day.

                  "Assignment and Acceptance" means an assignment and acceptance
         entered into by a Lender and an Eligible Assignee, and accepted by the
         Agent, in substantially the form of Exhibit C.

                  "Base Rate" means for any day, a rate per annum (adjusted to
         the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, rounded
         upwards to the next highest 1/16 of 1%) equal to the greater of (a) the
         Prime Rate in effect on such day, (b) the secondary market rate for
         certificates of deposit (grossed up for reserve requirements) plus 1/2
         of 1% and (c) the Effective Federal Funds Rate in effect on such day
         plus 1/2 of 1%; provided, that for each day on which any Base Rate
         Advance is outstanding before January 1, 2001, the applicable Base Rate
         will be increased by 0.125% for such day. Any change in the Base Rate
         due to a change in the Prime Rate, the rate for certificates of deposit
         or the Effective Federal Funds Rate shall be effective as of the
         opening of business on the effective day of

<PAGE>   7

                                                                               3

         such change in the Prime Rate, the rate for certificates of deposit or
         the Effective Federal Funds Rate, respectively.

                  "Base Rate Advance" means an Advance (other than a Money
         Market Advance) which bears interest as provided in Section 2.11(a)(i).

                  "Bond Rating" means a rating assigned to the Company's senior
         long-term unsecured debt by any of the Rating Agencies.

                  "Borrowing" means (i) a borrowing consisting of Advances of
         the same Type made on the same day by the Lenders, and, in the case of
         Eurodollar Rate Advances, having Interest Periods of the same duration,
         it being understood that there may be more than one Borrowing on a
         particular day and (ii) a Money Market Advance.

                  "Business Day" means a day of the year on which banks are not
         required or authorized to close in New York, New York and, if the
         applicable Business Day relates to any Eurodollar Rate Advances, on
         which dealings are carried on in the London interbank market.

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

                  "Capitalization" of any Person means the sum (without
         duplication) of (a) consolidated Debt of such Person and its
         consolidated Subsidiaries, plus (b) the aggregate amount of Guaranties
         entered into by such Person and its consolidated Subsidiaries, plus (c)
         the consolidated common and preferred stockholders' equity of such
         Person and its consolidated Subsidiaries, plus (d) the cumulative
         amount by which stockholders' equity of such Person shall have been
         reduced by reason of non-cash write downs of long-term assets from and
         after the Effective Date.

                  "Chase" means The Chase Manhattan Bank, a New York banking
         corporation.

                  "Closing Date" has the meaning assigned to such term in
         Section 3.2.

                  "Commitment" means as to any Lender, the obligation of such
         Lender to make Advances (other than Money Market Advances) to the
         Company hereunder in an aggregate principal amount at any one time
         outstanding not to exceed the amount set forth opposite such Lender's
         name on Schedule I (as such Schedule I is amended from time to time
         pursuant to Section 9.7(c)), as such amount may be reduced from time to
         time in accordance with the provisions of this Agreement.

                  "Commitment Expiration Date" has the meaning assigned to such
         term in Section 2.23(a).

<PAGE>   8

                                                                               4

                  "Commitment Percentage" means as to any Lender at any time,
         the percentage which such Lender's Commitment then constitutes of the
         aggregate Commitments (or, at any time after the Commitments shall have
         expired or terminated, the percentage which the aggregate principal
         amount of such Lender's Advances then outstanding constitutes of the
         aggregate principal amount of the Advances then outstanding).

                  "Company" has the meaning assigned to such term in the
         preamble hereof.

                  "Contingent Guaranty" has the meaning assigned to such term in
         the definition of the term "Guaranty" contained in this Section 1.1.

                  "Convert," "Conversion" and "Converted" each refers to a
         conversion of Advances of one Type into Advances of another Type
         pursuant to Section 2.13, 2.14 or 2.18.

                  "Current Reimbursement Obligations" means, with respect to any
         Person, non-contingent obligations of such Person to reimburse a bank
         or other Person in respect of amounts paid under a letter of credit or
         similar instrument that are paid on or prior to the fifth Business Day
         after the due date therefor.

                  "Debt" means, as to any Person, all Indebtedness of such
         Person other than (a) any Project Financing of such Person, (b) in the
         case of the Company or a Principal Subsidiary, any liabilities of the
         Company or such Principal Subsidiary, as the case may be, under any
         Alternate Program, or any document executed by the Company or such
         Principal Subsidiary, as the case may be, in connection therewith, (c)
         any obligations of the Company or a Principal Subsidiary with respect
         to lease payments for the headquarters building of the Company located
         in Houston, Texas and (d) Current Reimbursement Obligations of such
         Person; provided, however, that for purposes of Article V, "Debt" shall
         not include up to an aggregate amount (determined without duplication
         of amount) of $200,000,000 of (i) the amount of optional payments in
         lieu of asset repurchase or other payments to similar effect, including
         extension or renewal payments, on off balance sheet leases and (ii) the
         amount of the purchase price for optional acquisition of such asset (in
         either case, calculated at the lower amount payable in respect of such
         asset under clause (i) or (ii) above).

                  "Default" means any event that would constitute an Event of
         Default but for the requirement that notice be given or time elapse or
         both.

                  "Dollars" and "$" means dollars in lawful currency of the
         United States of America.

                  "Effective Date" has the meaning assigned to such term in
         Section 3.1.

                  "Effective Federal Funds Rate" means, for any day, the
         weighted average of the rates on overnight Federal funds transactions
         with members of the Federal Reserve System arranged by Federal funds
         brokers, as published for such day (or, if such day is

<PAGE>   9

                                                                               5

         not a Business Day, for the next preceding Business Day) by the Federal
         Reserve Bank of New York, or, if such rate is not so published for any
         day which is a Business Day, the average of the quotations for such day
         on such transactions received by the Agent from three Federal funds
         brokers of recognized standing selected by it.

                  "Eligible Assignee" means, with respect to any particular
         assignment under Section 9.7, any bank or other financial institution
         approved in writing by (a) the Company expressly with respect to such
         assignment and (b) except as to such an assignment by Chase so long as
         Chase is the Agent hereunder, the Agent, as an Eligible Assignee for
         purposes of this Agreement, provided that (i) the Company may grant or
         withhold its approval in its sole discretion, (ii) the Agent's approval
         shall not be unreasonably withheld and (iii) neither the Agent's nor
         the Company's approval shall be required if the assignee is another
         Lender or an Affiliate of the assigning Lender.

                  "EPNGC" means El Paso National Gas Company, a Delaware
         corporation, and its successors.

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

                  "EPTPC Facility" means the $3,000,000,000 Revolving Credit and
         Competitive Advance Facility Agreement, dated as of November 4, 1996,
         among EPTPC, the several financial institutions from time to time
         parties thereto, and The Chase Manhattan Bank, as administrative agent
         and CAF advance agent thereunder, as the same may be amended, modified
         or supplemented from time to time.

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

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

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

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

                  "Eurodollar Rate" means, for any Interest Period for each
         Eurodollar Rate Advance comprising part of the same Borrowing, an
         interest rate per annum equal to the rate which appears on Page 3750 of
         the Telerate Service (or on any successor or substitute page of such
         service, or any successor to or substitute for such service providing
         rate quotations comparable to those currently provided on such page of
         such service, as determined by the Agent from time to time for purposes
         of providing

<PAGE>   10

                                                                               6

         quotations of interest rates applicable to Dollar deposits in the
         London interbank market) as at approximately 11:00 A.M. (London,
         England time) two Business Days before the first day of such Interest
         Period as the rate for Dollar deposits with a maturity comparable to
         such Interest Period; provided that if such rate is not available at
         such time for any reason, the Eurodollar Rate for such Borrowing for
         such Interest Period shall be the interest rate per annum equal to the
         rate (rounded upward to the nearest whole multiple of 1/16 of 1% per
         annum, if such rate is not such a multiple) per annum at which deposits
         in Dollars are offered by the principal office of the Reference Lender
         in London, England, to prime banks in the London interbank market as at
         approximately 11:00 A.M. (London, England time) two Business Days
         before the first day of such Interest Period, in an approximate amount
         of the Reference Lender's share of the relevant Borrowing for the
         applicable Interest Period. The Eurodollar Rate for the Interest Period
         for each Eurodollar Rate Advance comprising part of the same Borrowing,
         when being determined pursuant to the foregoing proviso clause, shall
         be determined by the Agent on the basis of applicable rates furnished
         to and received by the Agent from the Reference Lender two Business
         Days before the first day of such Interest Period, subject, however, to
         the provisions of Section 2.13.

                  "Eurodollar Rate Advance" means an Advance (other than a Money
         Market Advance) which bears interest determined by reference to the
         Eurodollar Rate, as provided in Section 2.11(a)(ii).

                  "Eurodollar Reserve Percentage" for any Lender for any
         Interest Period for any Eurodollar Rate Advance means the reserve
         percentage applicable during such Interest Period under regulations
         issued from time to time by the Board of Governors of the Federal
         Reserve System (or if more than one such percentage shall be so
         applicable, the daily average of such percentages for those days in
         such Interest Period during which any such percentage shall be so
         applicable) for determining the maximum reserve requirement (including,
         but not limited to, any emergency, supplemental or other marginal
         reserve requirement) for such Lender with respect to liabilities or
         assets consisting of or including Eurocurrency Liabilities having a
         term equal to such Interest Period.

                  "Events of Default" has the meaning assigned to such term in
         Section 7.1.

                  "Excluded Acquisition Debt" means (a) Debt, Guaranties or
         reimbursement obligations of any Business Entity acquired by the
         Company or any of its Subsidiaries and which Debt, Guaranties or
         reimbursement obligations exist immediately prior to such acquisition
         (provided that (i) such Debt, Guaranties or reimbursement obligations
         are not incurred solely in anticipation of such acquisition and (ii)
         immediately prior to such acquisition such Business Entity is not a
         Subsidiary of the Company), (b) Debt, Guaranties or reimbursement
         obligations of EPTPC and its Subsidiaries in existence on the date of
         the merger of El Paso Tennessee Pipeline Company with El Paso Merger
         Company or (c) Debt, Guaranties or reimbursement obligations in respect
         of any asset acquired by the Company or any of its Subsidiaries and
         which Debt, Guaranties or reimbursement obligations exists immediately
         prior to such acquisition (provided that (i) such Debt, Guaranties or
         reimbursement obligations are not incurred solely in

<PAGE>   11

                                                                               7

         anticipation of such acquisition and (ii) immediately prior to such
         acquisition such asset is not an asset of the Company or any of its
         Subsidiaries).

                  "Existing 364-Day Facility" means the $2,000,000,000 364-Day
         Revolving Credit and Competitive Advance Facility Agreement dated as of
         August 4, 2000, among the Company, EPNGC, Tennessee, the several
         financial institutions from time to time parties thereto, Chase, as
         Administrative Agent and CAF Advance Agent, Citibank, N.A. and ABN Amro
         Bank, N.V., as Co-Documentation Agents and Bank of America, N.A., as
         Syndication Agent, as the same has been and may be amended,
         supplemented and modified from time to time.

                  "Existing 3-Year Facility" means the $1,000,000,000 3-Year
         Revolving Credit and Competitive Advance Facility Agreement, dated as
         of August 4, 2000, among the Company, EPNGC, Tennessee, the banks and
         other lenders parties thereto, Chase, as Administrative Agent and CAF
         Advance Agent, Citibank, N.A. and ABN Amro Bank, N.V., as
         Co-Documentation Agents and Bank of America, N.A., as Syndication
         Agent, as the same has been and may be amended, supplemented and
         modified from time to time.

                  "Exposure" means (a) with respect to an Objecting Lender at
         any time, the aggregate outstanding principal amount of its Advances
         and (b) with respect to any other Lender at any time, the maximum
         amount of the Commitment of such Lender.

                  "Extension Request" means each request by the Company made
         pursuant to Section 2.23 for the Lenders to extend the Stated
         Termination Date, which shall contain the information in respect of
         such extension specified in Exhibit G and shall be delivered to the
         Agent in writing.

                  "Facility Fee Commencement Date" means the date hereof.

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

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

                  "Guaranty," "Guaranteed" and "Guaranteeing" each means any act
         by which any Person assumes, guarantees, endorses or otherwise incurs
         direct or contingent liability in connection with, or agrees to
         purchase or otherwise acquire or otherwise assures a creditor against
         loss in respect of, any Debt or Project Financing of any Person other
         than the Company or any of its consolidated Subsidiaries (excluding (a)
         any liability by endorsement of negotiable instruments for deposit or
         collection or similar transactions in the ordinary course of business,
         (b) any liability in connection with obligations of the Company, any of
         its consolidated Subsidiaries, including, obligations under any
         conditional sales agreement, equipment trust financing or equipment
         lease, and (c) any such act in connection with a Project Financing that
         either (i) guarantees to the provider of such Project Financing or any
         other Person performance of the acquisition,

<PAGE>   12

                                                                               8

         improvement, installation, design, engineering, construction,
         development, completion, maintenance or operation of, or otherwise
         affects any such act in respect of, all or any portion of the project
         that is financed by such Project Financing or performance by a Project
         Financing Subsidiary of certain obligations to Persons other than the
         provider of such Project Financing, except during any period, and then
         only to the extent, that such guaranty is a guaranty of payment of such
         Project Financing (other than a guaranty of payment of the type
         referred to in subclause (ii) below) or (ii) is contingent upon, or the
         obligation to pay or perform under which is contingent upon, the
         occurrence of any event other than or in addition to the passage of
         time or any Project Financing becoming due (any such act referred to in
         this clause (c) being a "Contingent Guaranty"); provided, however, that
         for purposes of this definition the liability of the Company or any of
         its Subsidiaries with respect to any obligation as to which a third
         party or parties are jointly, or jointly and severally, liable as a
         guarantor or otherwise as contemplated hereby and have not defaulted on
         its or their portions thereof, shall be only its pro rata portion of
         such obligation.

                  "Indebtedness" of any Person means, without duplication (a)
         indebtedness of such Person for borrowed money, (b) obligations of such
         Person (other than any portion of any trade payable obligation of such
         Person which shall not have remained unpaid for 91 days or more from
         the original due date of such portion) to pay the deferred purchase
         price of property or services, and (c) obligations of such Person as
         lessee under leases which shall have been or should be, in accordance
         with GAAP, recorded as capital leases, except that where such
         indebtedness or obligation of such Person is made jointly, or jointly
         and severally, with any third party or parties other than any
         consolidated Subsidiary of such Person, the amount thereof for the
         purposes of this definition only shall be the pro rata portion thereof
         payable by such Person, so long as such third party or parties have not
         defaulted on its or their joint and several portions thereof.

                  "Indemnified Party" means any or all of the Lenders and the
         Agent.

                  "Interest Period" means, for each Eurodollar Rate Advance
         comprising part of the same Borrowing, the period beginning on the date
         of such Advance or the date of the Conversion of any Advance into such
         an Advance and ending on the last day of the period selected by the
         Company pursuant to the provisions below and, thereafter, each
         subsequent period commencing on the last day of the immediately
         preceding Interest Period and ending on the last day of the period
         selected by the Company pursuant to the provisions below. The duration
         of each such Interest Period shall be one, two or three months or such
         other periods as may from time to time be agreed in writing with all
         the Lenders, in each case as the Company may, upon notice received by
         the Agent not later than 12:00 noon (New York City time) on the third
         Business Day prior to the first day of such Interest Period with
         respect to Eurodollar Rate Advances, select; provided, however, that:

                                 (a) the duration of any Interest Period which
                  commences before the Termination Date and would otherwise end
                  after the Termination Date shall end on the Termination Date;

<PAGE>   13

                                                                               9

                                 (b) if the last day of such Interest Period
                  would otherwise occur on a day which is not a Business Day,
                  such last day shall be extended to the next succeeding
                  Business Day, except if such extension would cause such last
                  day to occur in a new calendar month, then such last day shall
                  occur on the next preceding Business Day;

                                 (c) Interest Periods commencing on the same
                  date for Advances comprising the same Borrowing shall be of
                  the same duration;

                                 (d) with respect to Advances made by an
                  Objecting Lender, no Interest Period with respect to such
                  Advances shall end after such Objecting Lender's Commitment
                  Expiration Date; and

                                  (e) any Interest Period which begins on the
                  last Business Day of a calendar month (or on a day for which
                  there is no numerically corresponding day in the calendar
                  month at the end of such Interest Period) shall, subject to
                  clause (a) above, end on the last Business Day of a calendar
                  month.

         The term "Interest Period" will also include, when used with reference
         to a Money Market Advance, Money Market Interest Periods.

                  "Lenders" has the meaning assigned to such term in the
         preamble hereof.

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

                  "Majority Lenders" means one or more Lenders the Commitment
         Percentages of which aggregate at least 51%, provided, that at any time
         after the Commitment Expiration Date with respect to any Objecting
         Lender (but prior to the termination of all the Commitments), "Majority
         Lenders" shall mean Lenders whose Exposure aggregates at least 51% of
         the aggregate Exposure of all the Lenders.

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

                  "Material Adverse Effect" means a material adverse effect on
         the financial condition or operations of the Company and its
         consolidated Subsidiaries on a consolidated basis.

                  "Material Subsidiary" means any Subsidiary of the Company
         (other than a Project Financing Subsidiary) that itself (on an
         unconsolidated, stand-alone basis) owns in excess of 10% of the book
         value of the consolidated assets of the Company and its consolidated
         Subsidiaries.

                  "Mojave" means Mojave Pipeline Company.

<PAGE>   14

                                                                              10

                  "Money Market Advance" has the meaning assigned to such term
         in Section 2.4.

                  "Money Market Interest Period" has the meaning assigned to
         such term in Section 2.4.

                  "Moody's Bond Rating," with respect to the Company, means for
         any day the Bond Rating of the Company, if any, established by Moody's
         Investors Service, Inc. as in effect at 11:00 A.M., New York City time,
         on such day.

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

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

                  "Net Worth" means, as of any date of determination, the sum of
         the preferred stock and stockholders' equity of the Company as shown on
         the most recent consolidated balance sheet of the Company delivered
         pursuant to Section 5.3 plus the cumulative amount by which
         stockholders' equity of the Company shall have been reduced by reason
         of non-cash write-downs of long term assets from and after the
         Effective Date.

                  "Note" has the meaning assigned to such term in Section
         2.3(d).

                  "Notice of Borrowing" has the meaning specified in Section
         2.2(a).

                  "Obligations" means the collective reference to the unpaid
         principal of and interest on the Advances and the Notes and all other
         financial liabilities of the Company to the Agent and the Lenders
         (including interest accruing at the then applicable rate provided in
         this Agreement after the maturity of the Advances and interest accruing
         at the then applicable rate provided in this Agreement after the filing
         of any petition in bankruptcy, or the commencement of any insolvency,
         reorganization or like proceeding, relating to the Company whether or
         not a claim for post-filing or post-petition interest is allowed in
         such proceeding), whether direct or indirect, absolute or contingent,
         due or to become due, or now existing or hereafter incurred, which may
         arise under, out of, or in connection with, this Agreement or the
         Notes, in each case whether on account of principal, interest,
         reimbursement obligations, fees, indemnities, costs, expenses or

<PAGE>   15

                                                                              11

         otherwise (including, all fees and disbursements of counsel to the
         Agent or to the Lenders that are required to be paid by the Company
         pursuant to this Agreement).

                  "Objecting Lenders" has the meaning assigned to such term in
         Section 2.23(a).

                  "Other Taxes" has the meaning assigned to such term in Section
         2.20(b).

                  "Party" has the meaning assigned to such term in Section 9.8.

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

                  "Permitted Claims" has the meaning assigned to such term in
         Section 9.9(a).

                  "Permitted Liens" means:

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

                  (ii) Liens for taxes, assessments, obligations under workers'
         compensation or other social security legislation or other governmental
         requirements, charges or levies, in each case not yet overdue;

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

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

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

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

                  (vii) any Lien consisting of (A) statutory landlord's liens
         under leases to which the Company or any of its Subsidiaries is a party
         or other Liens on leased property

<PAGE>   16

                                                                              12

         reserved in leases thereof for rent or for compliance with the terms of
         such leases, (B) rights reserved to or vested in any municipality or
         governmental, statutory or public authority to control or regulate any
         property of the Company or any of its Subsidiaries, or to use such
         property in any manner which does not materially impair the use of such
         property for the purposes for which it is held by the Company or any
         such Subsidiary, (C) obligations or duties to any municipality or
         public authority with respect to any franchise, grant, license, lease
         or permit and the rights reserved or vested in any governmental
         authority or public utility to terminate any such franchise, grant,
         license, lease or permit or to condemn or expropriate any property, and
         (D) zoning laws and ordinances and municipal regulations;

                  (viii) any Lien on any assets (including Equity Interests and
         other obligations) securing Indebtedness or other obligations incurred
         or assumed for the purpose of financing all or any part of the cost of
         acquiring, improving, installing, designing, engineering, developing
         (including drilling), or constructing such assets, provided that such
         Lien attaches to such assets concurrently with or within 365 days after
         the acquisition or completion of development, construction or
         installation thereof or improvement thereto; and

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

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

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

                  "Prime Rate" means the rate of interest per annum publicly
         announced from time to time by Chase as its prime rate in effect at its
         principal office in New York City. The Prime Rate is not intended to be
         the lowest rate of interest charged by Chase in connection with
         extensions of credit to debtors.

                  "Principal Subsidiary" means, at any time, any Subsidiary of
         the Company (other than a Project Financing Subsidiary) either (a)
         having assets that are, or owning Subsidiaries with assets that
         together with its assets are, at such time greater than or equal to 5%
         of the consolidated assets of the Company and its consolidated
         Subsidiaries at such time or (b) constituting a "Borrowing Subsidiary"
         under and as defined in the Existing 364-Day Facility.

                  "Process Agent" has the meaning specified in Section 9.9(a).

                  "Project Financing" means any Indebtedness incurred to finance
         or refinance the acquisition, improvement, installation, design,
         engineering, construction, development,

<PAGE>   17

                                                                              13

         completion, maintenance or operation of, or otherwise in respect of,
         all or any portion of any project, or any asset related thereto, and
         any Guaranty with respect thereto, other than any portion of such
         Indebtedness or Guaranty permitting or providing for recourse against
         the Company or any of its Subsidiaries other than (a) recourse to the
         Equity Interests in, Indebtedness or other obligations of, or assets
         of, one or more Project Financing Subsidiaries, and (b) such recourse
         as exists under any Contingent Guaranty.

                  "Project Financing Subsidiary" means any Subsidiary of the
         Company whose principal purpose is to incur Project Financing, or to
         become a direct or indirect partner, member or other equity participant
         or owner in a Business Entity so created, and substantially all the
         assets of which Subsidiary or Business Entity, are limited to those
         assets being financed (or to be financed) or the operation of which is
         being financed (or to be financed), in whole or in part by a Project
         Financing or to Equity Interests in, or Indebtedness or other
         obligations of, one or more other such Subsidiaries or Business
         Entities or to Indebtedness or other obligations of the Company or its
         Subsidiaries or other Persons.

                  "Rating Agency" means any of Moody's Investors Service, Inc.
         and Standard & Poor's Ratings Group; collectively the "Rating
         Agencies."

                  "Receivables Purchase and Sale Agreement" means the collective
         reference to (a) the Receivables Purchase and Sale Agreement dated as
         of January 14, 1992 among EPNGC, CIESCO L.P., a New York limited
         partnership, Corporate Asset Funding Company, a Delaware corporation
         and Citicorp North America, Inc., as agent, as amended as of the date
         hereof, and (b) the Amended and Restated Receivables Sale Agreement
         dated as of December 31, 1996 among El Paso Energy Credit Corporation,
         Asset Securitization Cooperative Corporation and Canadian Imperial Bank
         of Commerce, as administrative agent, as such Agreement may be amended,
         supplemented, restated or otherwise modified from time to time,
         provided that no such amendment, supplement, restatement or
         modification shall change the scope of such Agreement from that of a
         receivables securitization transaction.

                  "Reference Lender" means Chase, or if Chase is no longer a
         Lender at any time, such other Lender as is designated for such
         purposes by the Company.

                  "Register" has the meaning specified in Section 9.7(c).

                  "Required Lenders" means one or more Lenders (a) which are not
         Objecting Lenders with respect to any previous Extension Request and
         (b) which have Commitment Percentages aggregating at least 66-2/3% of
         the aggregate Commitment Percentages of such non-Objecting Lenders.

                  "S&P Bond Rating," with respect to the Company, means for any
         day the Bond Rating of the Company, if any, established by Standard &
         Poor's Ratings Group as in effect at 11:00 A.M., New York City time, on
         such day.

<PAGE>   18

                                                                              14

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

                  "Stated Termination Date" means March 21, 2001 or such later
         date as shall be determined pursuant to the provisions of Section 2.23
         with respect to non-Objecting Lenders.

                  "Subsidiary" means, as to any Person, any Business Entity of
         which shares of stock or other Equity Interests having ordinary voting
         power (other than stock or such other Equity Interests having such
         power only by reason of the happening of a contingency) to elect a
         majority of the board of directors or other managers of such Business
         Entity are at the time owned, directly or indirectly through one or
         more Subsidiaries, or both, by such Person. Unless otherwise qualified,
         all references to a "Subsidiary" or to "Subsidiaries" in this Agreement
         shall refer to a Subsidiary or Subsidiaries of the Company.

                  "Taxes" has the meaning assigned to such term in Section
         2.20(a).

                  "Tennessee" means Tennessee Gas Pipeline Company, a Delaware
         corporation, and its successors.

                  "Termination Date" means the earlier of (a) the Stated
         Termination Date and (b) the date of termination in whole of the
         Commitments pursuant to Section 2.9 or 7.1.

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

<PAGE>   19

                                                                              15

                  "Type" means as to any Advance, its nature as a Base Rate
         Advance or a Eurodollar Rate Advance or a Money Market Advance.

                  "Valero Assets" means those natural gas and natural gas
         liquids and related businesses of PG&E Gas Transmission, Texas
         Corporation and PG&E Gas Transmission Teco, Inc., acquired by the
         Company on or before December 31, 2000.

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

                  SECTION 1.2 Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding."

                  SECTION 1.3 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP either
(a) consistent with those principles applied in the preparation of the financial
statements referred to in Section 4.1(e) or (b) not materially inconsistent with
such principles (so that no covenant contained in Section 5.1 or 5.2 would be
calculated or construed in a materially different manner or with materially
different results than if such covenant were calculated or construed in
accordance with clause (a) of this Section 1.3). "Include," "includes" and
"including" shall be deemed to be followed by "without limitation" whether or
not they are in fact followed by such words or words of like import. References
to any agreement or contract are to such agreement or contract as amended,
modified or supplemented from time to time in accordance with the terms hereof
and thereof.

                  SECTION 1.4 References. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES

                  SECTION 2.1 The Advances. Each Lender severally agrees, on the
terms and conditions hereinafter set forth, to make revolving credit advances to
the Company from time to time on any Business Day during the period from the
date hereof to and including the Termination Date in an aggregate amount not to
exceed at any time outstanding the amount of such Lender's Commitment; provided
that the aggregate amount of the Advances (other than Advances of Objecting
Lenders) outstanding shall not at any time exceed the aggregate amount of the
Commitments. It is acknowledged and agreed that the aggregate amount of Advances
made by any Lender pursuant to the preceding sentence plus the aggregate amount
of Money Market Advances made by such Lender may exceed such Lender's
Commitment, subject to the proviso clause in the preceding sentence. Each
Borrowing pursuant to this Section 2.1 shall be in

<PAGE>   20

                                                                              16

an aggregate amount of $5,000,000 in the case of a Borrowing comprised of Base
Rate Advances and $20,000,000 in the case of a Borrowing comprised of Eurodollar
Rate Advances, or, in each case, an integral multiple of $1,000,000 in excess
thereof (or, in the case of a Borrowing of Base Rate Advances, the aggregate
unused Commitments, if less) and shall consist of Advances of the same Type made
on the same day by the Lenders ratably according to their respective
Commitments. Within the limits of each Lender's Commitment, the Company may make
more than one Borrowing on any Business Day and may borrow, repay pursuant to
Section 2.10 or prepay pursuant to Section 2.15, and reborrow under this Section
2.1 or under Section 2.4.

                  SECTION 2.2 Making the Advances. (a) Each Borrowing of
Advances pursuant to Section 2.1 shall be made on notice by the Company, to the
Agent (a "Notice of Borrowing") received by the Agent, (i) in the case of a
proposed Borrowing pursuant to Section 2.1 comprised of Base Rate Advances, not
later than 10:00 A.M. (New York City time) on the Business Day of such proposed
Borrowing and (ii) in the case of a proposed Borrowing pursuant to Section 2.1
comprised of Eurodollar Rate Advances, not later than 12:00 noon (New York City
time) on the third Business Day prior to the date of such proposed Borrowing.
Each Notice of Borrowing shall be by telecopy or telephone (and if by telephone,
confirmed promptly by telecopier), in substantially the form of Exhibit B,
specifying therein the requested (A) date of such Borrowing, (B) Type of
Advances comprising such Borrowing, (C) aggregate amount of such Borrowing, and
(D) in the case of a Borrowing comprised of Eurodollar Rate Advances, the
initial Interest Period for each such Advance. Each Lender shall, before 1:00
P.M. (New York City time) on the date of such Borrowing, make available to the
Agent at its address at 270 Park Avenue, New York, New York, 10017, Reference:
El Paso Energy Corporation, or at such other address designated by notice from
the Agent to the Lenders pursuant to Section 9.2, in same day funds, such
Lender's ratable portion of such Borrowing. Immediately after the Agent's
receipt of such funds and upon fulfillment of the applicable conditions set
forth in Article III, the Agent will make such funds available to the Company at
Chase, 270 Park Avenue, New York, New York, 10017, Account No. 323291503,
Reference: El Paso Energy Corporation, or at such other account of the Company
maintained by the Agent (or any successor Agent) designated by the Company and
agreed to by the Agent (or such successor Agent), in same day funds.

                  (b) Each Notice of Borrowing shall be irrevocable and binding
on the Company. In the case of any Borrowing which the related Notice of
Borrowing specified is to be comprised of Eurodollar Rate Advances, if such
Advances are not made as a result of any failure to fulfill on or before the
date specified for such Borrowing the applicable conditions set forth in Article
III, the Company shall indemnify each Lender against any loss, cost or expense
incurred by such Lender as a result of such failure, including any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund the Advance to be made by such
Lender as part of such Borrowing.

                  (c) Unless the Agent shall have received notice from a Lender
prior to the date of any Borrowing that such Lender will not make available to
the Agent such Lender's ratable portion of such Borrowing, the Agent may assume
that such Lender has made such portion available to the Agent on the date of
such Borrowing in accordance with subsection (a) of this Section 2.2 and the
Agent may, in reliance upon such assumption, make available to the Company on
such date a corresponding amount. If and to the extent such Lender shall not
have

<PAGE>   21

                                                                              17

so made such ratable portion available to the Agent, such Lender and the Company
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to the Company until the date such amount is repaid to the Agent,
at the Effective Federal Funds Rate for such day. If such Lender shall repay to
the Agent such corresponding amount, such amount so repaid shall constitute such
Lender's Advance to the Company as part of such Borrowing for purposes of this
Agreement.

                  (d) The failure of any Lender to make the Advance to be made
by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Advance to be made by such other Lender on the date of any Borrowing.

                  SECTION 2.3 Evidence of Debt. (a) Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing
indebtedness of the Company to such Lender resulting from each Advance of such
Lender to the Company from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time in respect of such
Advance.

                  (b) The Agent shall maintain the Register pursuant to Section
9.7(c), and a subaccount therein for each Lender, in which shall be recorded (i)
the amount of each Advance made hereunder, the Type thereof and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Company on account of such Advance
to each Lender hereunder and (iii) both the amount of any sum received by the
Agent hereunder from the Company and each Lender's share thereof.

                  (c) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.3(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Company therein recorded; provided, however, that the failure
of any Lender or the Agent to maintain the Register or any such account, or any
error therein, shall not in any manner affect the obligation of the Company to
repay (with applicable interest) the Advances made to the Company by such Lender
in accordance with the terms of this Agreement.

                  (d) The Company agrees that, upon the request to the Agent by
any Lender, the Company will execute and deliver to such Lender a promissory
note of the Company evidencing the Advances of such Lender to the Company,
substantially in the form of Exhibit A with appropriate insertions as to date
and principal amount (a "Note").

                  SECTION 2.4 Money Market Advances. In addition to the other
revolving credit Advances provided for in this Agreement, each Lender may, in
its sole discretion on an uncommitted basis, offer to make loans (the "Money
Market Advances," which shall be Advances for purposes of this Agreement) to the
Company on such terms and conditions (including tenor, amount and interest rate)
as such Lender may offer and the Company shall accept. Each Money Market Advance
shall bear interest at such rate as the applicable Lender

<PAGE>   22

                                                                              18

may offer and the Company shall accept. Each Money Market Advance shall be due
and payable on the last day of the Money Market Interest Period applicable to
such Money Market Advance. Money Market Advances may not be prepaid without the
prior written consent of the applicable Lender. Money Market Advances shall be
available for such interest periods ("Money Market Interest Periods") as a
Lender may offer and the Company shall accept (which interest periods may not
end after the then current Stated Termination Date). The Company may request
Money Market Advances by giving the applicable Lender notice by 10:00 a.m., New
York City time, on the Business Day of the proposed Borrowing. For each day on
which the aggregate principal amount of the Advances hereunder is equal to or
greater than 25% of the aggregate amount of the total Commitments hereunder, the
interest rate for each outstanding Money Market Advance will be increased by
0.125% for such day.

                  SECTION 2.5 [Intentionally left blank]

                  SECTION 2.6 [Intentionally left blank]

                  SECTION 2.7 [Intentionally left blank]

                  SECTION 2.8 Fees. (a) The Company agrees to pay to the Agent
for the account of each Lender a facility fee for the period from the Facility
Fee Commencement Date until all Advances have been paid in full and all
Commitments have been terminated, computed at a variable rate per annum on the
average daily amount of the Commitment of such Lender, which rate will vary
according to the S&P Bond Rating for the Company and the Moody's Bond Rating for
the Company as follows:

<TABLE>
<CAPTION>
              Bond Rating                                                       Facility
             (S&P/Moody's)                           Level                      Fee Rate
             -------------                           -----                      --------
<S>                                                  <C>                        <C>
         A/A2 or higher                                I                          .070%
         A-/A3                                        II                          .080%
         BBB+/Baa1                                   III                          .100%
         BBB/Baa2                                     IV                          .125%
         BBB-/Baa3                                     V                          .150%
         BB+/Ba1 or lower                             VI                          .200%;
</TABLE>

provided that (i) if the Bond Ratings of the Company do not fall within the same
Level, the rate applicable to such day will be the percentage opposite the Bond
Rating that is at the higher Level (Level I being the highest and Level VI being
the lowest), (ii) in the event a Bond Rating for the Company is not available
from one of the Rating Agencies, the rate shall be based on the Bond Rating of
the other Rating Agency, and (iii) in the event a Bond Rating for the Company is
available from none of the Rating Agencies, the rate will be the percentage
opposite Level VI. Such facility fees shall be payable in arrears on the date
that is the earlier of (i) the Stated Termination Date, (ii) the date that is
three months after the Closing Date, (iii) the Termination Date or (iv) such
earlier date on which the Commitments shall terminate as provided herein, and,
if the Lender is an Objecting Lender, on the Commitment Expiration Date
applicable to such Lender.

<PAGE>   23

                                                                              19

                  (b) The Company agrees to pay to Chase Securities Inc. the
fees set forth in the letter, dated as of May 26, 2000 from Chase Securities
Inc. and Chase to the Company.

                  SECTION 2.9 Reduction of the Commitments. The Company shall
have the right, upon at least three Business Days' notice to the Agent, to
terminate in whole or reduce ratably in part the unused portions of the
respective Commitments of the Lenders, provided that each partial reduction
shall be in the aggregate amount of $10,000,000 or any whole multiple of
$1,000,000 in excess thereof.

                  SECTION 2.10 Repayment of Advances. The Company shall repay to
each Lender on the Termination Date the aggregate principal amount of the
Advances then owing to such Lender provided that the Advances made by Objecting
Lenders shall be repaid as provided in Section 2.23.

                  SECTION 2.11 Interest on Advances. (a) Ordinary Interest. The
Company shall pay interest on the unpaid principal amount of each Advance of the
Company owing to each Lender from the date of such Advance until such principal
amount is due (whether at stated maturity, by acceleration or otherwise), at the
following rates:

                        (i) Base Rate Advances. During such periods as such
         Advance is a Base Rate Advance, a rate per annum equal at all times to
         the Base Rate in effect from time to time, payable quarterly in arrears
         on the last day of each March, June, September and December during such
         periods and on the date such Base Rate Advance shall be Converted or
         due (whether at stated maturity, by acceleration or otherwise).

                       (ii) Eurodollar Rate Advances. During such periods as
         such Advance is a Eurodollar Rate Advance, at a rate per annum equal at
         all times during each Interest Period for such Advance to the sum of
         the Eurodollar Rate for such Interest Period plus the Applicable
         Eurodollar Rate Margin in effect from time to time, payable on the last
         day of each such Interest Period and, if any such Interest Period has a
         duration of more than three months, on each day which occurs during
         such Interest Period every three months from the first day of such
         Interest Period, and on the date such Advance shall be Converted or due
         (whether at stated maturity, by acceleration or otherwise).

                      (iii) Money Market Advances. During such periods as such
         Advance is a Money Market Advance, at a rate per annum equal at all
         times during each Money Market Interest Period for such Advance to the
         interest rate for such Money Market Interest Period determined pursuant
         to Section 2.4, payable on the last day of each such Money Market
         Interest Period and on the date such Advance shall be due (whether at
         stated maturity, by acceleration or otherwise).

                  (b) Default Interest. The Company shall pay interest on the
unpaid principal amount of each Advance to it that is not paid when due (whether
at stated maturity, by acceleration or otherwise) from the date on which such
amount is due until such amount is paid in full, payable on demand, at a rate
per annum equal at all times (i) from such due date to the

<PAGE>   24

                                                                              20

last day of the then existing Interest Period in the case of each Eurodollar
Rate Advance, to 1% per annum above the interest rate per annum required to be
paid on such Advance immediately prior to the date on which such amount became
due, and (ii) from and after the last day of the then existing Interest Period,
and at all times in the case of any Base Rate Advance, to 1% per annum above the
Base Rate in effect from time to time.

                  SECTION 2.12 Additional Interest on Eurodollar Rate Advances.
If any Lender shall determine in good faith that reserves under regulations of
the Board of Governors of the Federal Reserve System are required to be
maintained by it in respect of, or a portion of its costs of maintaining
reserves under such regulations is properly attributable to, one or more of its
Eurodollar Rate Advances, the Company shall pay to such Lender additional
interest on the unpaid principal amount of each such Eurodollar Rate Advance to
it (other than any such additional interest accruing to a particular Lender in
respect of periods prior to the 30th day preceding the date notice of such
interest is given by such Lender as provided in this Section 2.12), payable on
the same day or days on which interest is payable on such Advance, at an
interest rate per annum equal at all times during each Interest Period for such
Advance to the excess of (i) the rate obtained by dividing the Eurodollar Rate
for such Interest Period by a percentage equal to 100% minus the Eurodollar
Reserve Percentage, if any, for such Lender for such Interest Period over (ii)
the Eurodollar Rate for such Interest Period. The amount of such additional
interest (if any) shall be determined by each Lender, and such Lender shall
furnish written notice of the amount of such additional interest to the Company
and the Agent, which notice shall be conclusive and binding for all purposes,
absent manifest error.

                  SECTION 2.13 Interest Rate Determination. (a) If the Reference
Lender is not the Agent, the Reference Lender agrees to furnish to the Agent
timely information for the purpose of determining the Eurodollar Rate.

                  (b) The Agent shall give prompt notice to the Company and the
Lenders of the applicable interest rate determined by the Agent for purposes of
Section 2.11(a)(i) or (ii).

                  (c) [Intentionally left blank]

                  (d) If, with respect to any Eurodollar Rate Advances, the
Majority Lenders determine and give notice to the Agent that, as a result of
conditions in or generally affecting the London interbank eurodollar market, the
rates of interest determined on the basis of the Eurodollar Rate for any
Interest Period for such Advances will not adequately reflect the cost to such
Majority Lenders of making, funding or maintaining their respective Eurodollar
Rate Advances for such Interest Period, the Agent shall forthwith so notify the
Company and the Lenders, whereupon,

                        (i) each such Advance will automatically, on the last
         day of the then existing Interest Period therefor, Convert into a Base
         Rate Advance, and

                       (ii) the obligation of the Lenders to make, or to Convert
         Advances into, Eurodollar Rate Advances shall be suspended until the
         Agent shall notify the Company and the Lenders that the circumstances
         causing such suspension no longer exist.

<PAGE>   25

                                                                              21

                  (e) If the Company shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.1, the
Agent will forthwith so notify the Company and the Lenders and such Advances
will automatically, on the last day of the then existing Interest Period
therefor, Convert into Base Rate Advances.

                  (f) On the date on which the aggregate unpaid principal amount
of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by
payment or prepayment or otherwise, to less than $10,000,000, such Eurodollar
Rate Advances shall automatically Convert into Base Rate Advances, and on and
after such date the right of the Company to Convert such Advances into
Eurodollar Rate Advances shall terminate; provided, however, that if and so long
as each such Eurodollar Rate Advance shall have the same Interest Period as
Eurodollar Rate Advances comprising another Borrowing or other Borrowings, and
the aggregate unpaid principal amount of all such Eurodollar Rate Advances shall
equal or exceed $20,000,000, the Company shall have the right to continue all
such Advances as, or to Convert all such Advances into, Eurodollar Rate Advances
having the same Interest Period.

                  (g) If the Reference Lender shall for any reason no longer
have a Commitment or any Advances, the Reference Lender shall thereupon cease to
be the Reference Lender, and the Company shall, by notice to the Lenders,
designate another Lender as the Reference Lender (or if, at any time, there is
only one Lender, such Lender shall automatically be the Reference Lender at such
time) so that there shall at all times be a Reference Lender.

                  SECTION 2.14 Voluntary Conversion of Advances. The Company may
on any Business Day, upon notice given to the Agent, not later than 10:00 A.M.
(New York City time) on the Business Day of the proposed Conversion of
Eurodollar Rate Advances to Base Rate Advances and not later than 12:00 noon
(New York City time) on the third Business Day prior to the date of the proposed
Conversion in the case of a Conversion of Base Rate Advances to Eurodollar Rate
Advances, and subject to the provisions of Sections 2.13, 2.16 and 2.18, Convert
all Advances of one Type (other than Money Market Advances) comprising the same
Borrowing into Advances of another Type (other than Money Market Advances);
provided, however, that any Conversion of any Eurodollar Rate Advances into Base
Rate Advances made on any day other than the last day of an Interest Period for
such Eurodollar Rate Advances shall be subject to the provisions of Section
9.4(b); and provided, further, that, without the consent of all the Lenders, no
Base Rate Advance may be converted into a Eurodollar Rate Advance after the date
that is one month prior to (a) in the case of an Advance made by an Objecting
Lender, such Objecting Lender's Commitment Expiration Date, and (b) in the case
of all Advances, the Termination Date and provided, still further that no Base
Rate Advance may be converted into a Eurodollar Rate Advance if an Event of
Default has occurred and is continuing. Each such notice of a Conversion shall,
within the restrictions specified above, specify (a) the date of such
Conversion, (b) the Advances to be Converted, and (c) if such Conversion is into
Eurodollar Rate Advances, the duration of the Interest Period for each such
Advance.

                  SECTION 2.15 Optional and Mandatory Prepayments. (a) Optional
Prepayments. The Company may, with respect to an Advance other than a Money
Market Advance, upon (i) in the case of Eurodollar Rate Advances, at least two
Business Days' notice

<PAGE>   26

                                                                              22

and (ii) in the case of Base Rate Advances, telephonic notice not later than
12:00 noon (New York City time) on the date of prepayment, to the Agent which
specifies the proposed date and aggregate principal amount of the prepayment and
the Type of Advances to be prepaid, and if such notice is given the Company
shall, or with respect to a Money Market Advance, with the prior consent of the
relevant Lenders, prepay the outstanding principal amounts of the Advances
comprising the same Borrowing in whole or ratably in part, together with accrued
interest to the date of such prepayment on the amount prepaid; provided,
however, that (A) each partial prepayment of Advances (other than Money Market
Advances) shall be in an aggregate principal amount not less than $10,000,000 or
an integral multiple of $1,000,000 in excess thereof and (B) in the event of any
such prepayment of Eurodollar Rate Advances on any day other than the last day
of an Interest Period for such Eurodollar Rate Advances, the Company shall be
obligated to reimburse the Lenders in respect thereof pursuant to, and to the
extent required by, Section 9.4(b); provided, further, however, that the Company
will use its best efforts to give notice to the Agent of the proposed prepayment
of Base Rate Advances on the Business Day prior to the date of such proposed
prepayment.

                  (b) Mandatory Prepayments. If, at any time and from time to
time, the aggregate principal amount of Advances (other than Advances of
Objecting Lenders) then outstanding exceeds the Commitments of all the Lenders
after giving effect to any reduction of the Commitments pursuant to Section 2.9,
the Company shall immediately prepay the Advances of Lenders (other than
Objecting Lenders) (to the extent there are such outstanding Advances) by an
amount equal to such excess.

                  SECTION 2.16 Increased Costs. (a) If, due to either (i) the
introduction after the date of this Agreement of or any change after the date of
this Agreement (including any change by way of imposition or increase of reserve
requirements or assessments other than those referred to in the definition of
"Eurodollar Reserve Percentage" contained in Section 1.1) in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request issued or made after the date of this Agreement from or by
any central bank or other governmental authority (whether or not having the
force of law), in each case above other than those referred to in Section 2.17,
there shall be any increase in the cost to any Lender of agreeing to make, fund
or maintain, or of making, funding or maintaining, Eurodollar Rate Advances
funded in the interbank Eurodollar market, then the Company shall from time to
time, upon demand by such Lender (with a copy of such demand to the Agent), pay
to the Agent for the account of such Lender additional amounts sufficient to
reimburse such Lender for all such increased costs (except those costs incurred
more than 60 days prior to the date of such demand; for the purposes hereof any
cost or expense allocable to a period prior to the publication or effective date
of such an introduction, change, guideline or request shall be deemed to be
incurred on the later of such publication or effective date). Each Lender agrees
to use its best efforts promptly to notify the Company of any event referred to
in clause (i) or (ii) above, provided that the failure to give such notice shall
not affect the rights of any Lender under this Section 2.16(a) (except as
otherwise expressly provided above in this Section 2.16(a)). A certificate as to
the amount of such increased cost, submitted to the Company and the Agent by
such Lender, shall be conclusive and binding for all purposes, absent manifest
error. After one or more Lenders have notified the Company of any increased
costs pursuant to this Section 2.16, the Company may specify by notice to the
Agent and the affected Lenders that, after the date of such notice whenever the

<PAGE>   27

                                                                              23

election of Eurodollar Rate Advances by the Company for an Interest Period or
portion thereof would give rise to such increased costs, such election shall not
apply to the Advances of such Lenders during such Interest Period or portion
thereof, and, in lieu thereof, such Advances shall during such Interest Period
or portion thereof be Base Rate Advances. Each Lender agrees to use its best
efforts (including a reasonable effort to change its lending office or to
transfer its affected Advances to an affiliate of such Lender) to avoid, or
minimize the amount of, any demand for payment from the Company under this
Section 2.6.

                  (b) In the event that any Lender shall change its lending
office and such change results (at the time of such change) in increased costs
to such Lender, the Company shall not be liable to such Lender for such
increased costs incurred by such Lender to the extent, but only to the extent,
that such increased costs shall exceed the increased costs which such Lender
would have incurred if the lending office of such Lender had not been so
changed, but, subject to subsection (a) above and to Section 2.18, nothing
herein shall require any Lender to change its lending office for any reason.

                  SECTION 2.17 Increased Capital. If either (a) the introduction
of or any change in or in the interpretation of any law or regulation or (b)
compliance by any Lender with any guideline or request from any central bank or
other governmental authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender and such Lender determines
that the amount of such capital is increased by or based upon the existence of
such Lender's commitment to lend hereunder and other commitments of this type,
then, within ten days after demand, and delivery to the Company of the
certificate referred to in the last sentence of this Section 2.17 by such Lender
(with a copy of such demand to the Agent), the Company shall pay to the Agent
for the account of such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender or such corporation in
the light of such circumstances, to the extent that such Lender reasonably
determines such increase in capital to be allocable to the existence of such
Lender's commitment to lend hereunder (except any such increase in capital
incurred more than, or compensation attributable to the period before, 90 days
prior to the date of such demand; for the purposes hereof any increase in
capital allocable to, or compensation attributable to, a period prior to the
publication or effective date of such an introduction, change, guideline or
request shall be deemed to be incurred on the later of such publication or
effective date). Each Lender agrees to use its best efforts promptly to notify
the Company of any event referred to in clause (a) or (b) above, provided that
the failure to give such notice shall not affect the rights of any Lender under
this Section 2.17 (except as otherwise expressly provided above in this Section
2.17). A certificate in reasonable detail as to the basis for, and the amount
of, such compensation submitted to the Company by such Lender shall, in the
absence of manifest error, be conclusive and binding for all purposes.

                  SECTION 2.18 Illegality. Notwithstanding any other provision
of this Agreement, if the introduction of or any change in or in the
interpretation of any law or regulation shall make it unlawful, or any central
bank or other governmental authority shall assert that it is unlawful, for any
Lender or its lending office to perform its obligations hereunder to make
Eurodollar Rate Advances or to continue to fund or maintain such Advances
hereunder, such Lender may, by notice to the Company and the Agent, suspend the
right of the Company to

<PAGE>   28

                                                                              24

elect Eurodollar Rate Advances from such Lender and, if necessary in the
reasonable opinion of such Lender to comply with such law or regulation, Convert
all such Eurodollar Rate Advances of such Lender to Base Rate Advances at the
latest time permitted by the applicable law or regulation, and such suspension
and, if applicable, such Conversion shall continue until such Lender notifies
the Company and the Agent that the circumstances making it unlawful for such
Lender to perform such obligations no longer exist (which such Lender shall
promptly do when such circumstances no longer exist). So long as the obligation
of any Lender to make Eurodollar Rate Advances has been suspended under this
Section 2.18, all Notices of Borrowing specifying Advances of such Type shall be
deemed, as to such Lender, to be requests for Base Rate Advances. Each Lender
agrees to use its best efforts (including a reasonable effort to change its
lending office or to transfer its affected Advances to an affiliate) to avoid
any such illegality.

                  SECTION 2.19 Pro Rata Treatment, Payments and Computations.
(a) Each Borrowing by the Company in respect of Advances other than Money Market
Advances shall be made pro rata according to the respective Commitment
Percentages of the Lenders. The Company shall make each payment hereunder
(including under Section 2.8, 2.10 or 2.11) and under the Notes, whether the
amount so paid is owing to any or all of the Lenders or to the Agent, not later
than 12:00 noon (New York City time) without setoff, counterclaim, or any other
deduction whatsoever, on the day when due in Dollars to the Agent at its address
at 270 Park Avenue, New York, New York 10017, Reference: El Paso Energy
Corporation, or at such other location designated by notice to the Company from
the Agent and agreed to by the Company, in same day funds. The Agent will
promptly thereafter cause to be distributed like funds relating to the payment
of principal or interest or facility fees ratably (other than amounts payable
pursuant to Section 2.12, 2.16, 2.17, 2.18 or 2.20 or in respect of principal of
or interest on Money Market Advances) according to the respective amounts of
such principal, interest or facility fees then due and owing to the Lenders, and
like funds relating to the payment of any other amount payable to any Lender to
such Lender, in each case to be applied in accordance with the terms of this
Agreement. Upon its acceptance of an Assignment and Acceptance and recording of
the information contained therein in the Register pursuant to Section 9.7(d),
from and after the effective date specified in such Assignment and Acceptance,
the Agent shall make all payments hereunder and under the Notes in respect of
the interest assigned thereby to the Lender assignee thereunder, and the parties
to such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.

                  (b) All computations of interest based on the Prime Rate and
of facility fees shall be made by the Agent on the basis of a year of 365 or 366
days, as the case may be, and all computations of interest based on the
Eurodollar Rate or the Effective Federal Funds Rate shall be made by the Agent,
and all computations of interest pursuant to Section 2.4 or 2.12 shall be made
by each Lender with respect to its own Advances, on the basis of a year of 360
days, in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest or fees
are payable. Each determination by the Agent (or, in the case of Section 2.4,
2.12, 2.16, 2.17, 2.18 or 2.20, by each Lender with respect to its own Advances)
of an interest rate or an increased cost or increased capital or of illegality
hereunder shall be conclusive and binding for all purposes if made reasonably
and in good faith.

<PAGE>   29

                                                                              25

                  (c) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest; provided, however,
if such extension would cause payment of interest on or principal of Eurodollar
Rate Advances to be made in the next following calendar month, such payment
shall be made on the next preceding Business Day.

                  (d) Unless the Agent shall have received notice from the
Company prior to the date on which any payment is due to the Lenders hereunder
that the Company will not make such payment in full, the Agent may assume that
the Company has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to each
Lender on such due date an amount equal to the amount then due such Lender. If
and to the extent the Company shall not have so made such payment in full to the
Agent, each Lender shall repay to the Agent forthwith on demand such amount
distributed to such Lender together with interest thereon, for each day from the
date such amount is distributed to such Lender until the date such Lender repays
such amount to the Agent, at a rate equal to the Effective Federal Funds Rate
for such day.

                  SECTION 2.20 Taxes. (a) Any and all payments by the Company
hereunder or under the Notes to each Indemnified Party shall be made, in
accordance with Section 2.19, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding all taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, imposed by the jurisdiction under the laws of which such
Indemnified Party is organized, domiciled, resident or doing business, or any
political subdivision thereof or by any jurisdiction in which such Indemnified
Party holds any interest in connection with this Agreement or any Note
(including, in the case of each Lender, the jurisdiction of such Lender's
lending office) or any political subdivision thereof, other than by any
jurisdiction with which the Indemnified Party's connection arises solely from
having executed, delivered or performed obligations or received a payment under,
or enforced, this Agreement or any Note (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Company shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder or under any Note to any
Indemnified Party, (i) the sum payable shall be increased as may be necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.20) such Indemnified Party receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Company shall make or cause to be made such deductions and (iii)
the Company shall pay or cause to be paid the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law, provided that the Company shall not be required to pay any additional
amount (and shall be relieved of any liability with respect thereto) pursuant to
this subsection (a) to any Indemnified Party that either (A) on the date such
Lender became an Indemnified Party hereunder, (I) was not entitled to submit a
U.S. Internal Revenue Service form 1001 (relating to such Indemnified Party, and
entitling it to a complete exemption from United States withholding taxes on all
amounts to be received by such Indemnified Party pursuant to this Agreement) and
a U.S. Internal Revenue Service form 4224 (relating to all amounts to be
received by such Indemnified Party pursuant to this Agreement) and (II) was not
a United States

<PAGE>   30

                                                                              26

person (as such term is defined in Section 7701(a)(30) of the Internal Revenue
Code) or (B) has failed to submit any form or certificate that it was required
to file or provide pursuant to subsection (d) of this Section 2.20 and is
entitled to file or give, as applicable, under applicable law, provided,
further, that should an Indemnified Party become subject to Taxes because of its
failure to deliver a form required hereunder, the Company shall take such steps
as such Indemnified Party shall reasonably request to assist such Indemnified
Party to recover such Taxes, and provided, further, that each Indemnified Party,
with respect to itself, agrees to indemnify and hold harmless the Company from
any taxes, penalties, interest and other expenses, costs and losses incurred or
payable by the Company as a result of the failure of the Company to comply with
its obligations under clause (ii) or (iii) above in reliance on any form or
certificate provided to it by such Indemnified Party pursuant to this Section
2.20. If any Indemnified Party receives a net credit or refund in respect of
such Taxes or amounts so paid by the Company, it shall promptly notify the
Company of such net credit or refund and shall promptly pay such net credit or
refund to the Company, provided that the Company agrees to return such net
credit or refund if the Indemnified Party to which such net credit or refund is
applicable is required to repay it.

                  (b) In addition, the Company agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made by the Company hereunder or
under the Notes or from the execution, delivery or performance of, or otherwise
with respect to, this Agreement or the Notes (hereinafter referred to as "Other
Taxes").

                  (c) The Company will indemnify each Indemnified Party and the
Agent for the full amount of Taxes or Other Taxes (including, any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section 2.20)
paid by such Indemnified Party and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto except as a result of
the gross negligence (which shall in any event include the failure of such
Indemnified Party to provide to the Company any form or certificate that it was
required to provide pursuant to subsection (d) below) or willful misconduct of
such Indemnified Party, whether or not such Taxes or Other Taxes were correctly
or legally asserted. This indemnification shall be made within 30 days from the
date such Indemnified Party makes written demand therefor.

                  (d) On or prior to the date on which each Indemnified Party
organized under the laws of a jurisdiction outside the United States becomes an
Indemnified Party hereunder, such Indemnified Party shall provide the Company
with U.S. Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the U.S. Internal Revenue Service, certifying that
such Indemnified Party is fully exempt from United States withholding taxes with
respect to all payments to be made to such Indemnified Party hereunder, or other
documents satisfactory to the Company indicating that all payments to be made to
such Indemnified Party hereunder are fully exempt from such taxes. Thereafter
and from time to time (but only so long as such Indemnified Party remains
lawfully able to do so), each such Indemnified Party shall submit to the Company
such additional duly completed and signed copies of one or the other of such
Forms (or such successor Forms as shall be adopted from time to time by the
relevant United States taxing authorities) as may be (i) notified by the Company
to such

<PAGE>   31

                                                                              27

Indemnified Party and (ii) required under then-current United States law or
regulations to avoid United States withholding taxes on payments in respect of
all amounts to be received by such Indemnified Party pursuant to this Agreement
or the Notes. Upon the request of the Company from time to time, each
Indemnified Party that is a United States person (as such term is defined in
Section 7701(a)(30) of the Internal Revenue Code) shall submit to the Company a
certificate to the effect that it is such a United States person. If any
Indemnified Party determines, as a result of any change in applicable law,
regulation or treaty, or in any official application or interpretation thereof,
that it is unable to submit to the Company any form or certificate that such
Indemnified Party is obligated to submit pursuant to this subsection (d), or
that such Indemnified Party is required to withdraw or cancel any such form or
certificate previously submitted, such Indemnified Party shall promptly notify
the Company of such fact.

                  (e) Any Indemnified Party claiming any additional amounts
payable pursuant to this Section 2.20 shall use its best efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its lending office if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts which may
thereafter accrue and would not, in the reasonable judgment of such Indemnified
Party, be otherwise disadvantageous to such Indemnified Party.

                  (f) Without prejudice to the survival of any other agreement
of the Company hereunder, the agreements and obligations of the Company and each
Indemnified Party contained in this Section 2.20 shall survive the payment in
full of principal and interest hereunder and under the Notes.

                  (g) Any other provision of this Agreement to the contrary
notwithstanding, any amounts which are payable by the Company under this Section
2.20 shall not be payable under Section 2.16.

                  SECTION 2.21 Sharing of Payments, Etc. If any Lender shall
obtain any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) on account of the Advances made by it (other
than pursuant to Section 2.4, 2.12, 2.16, 2.17, 2.18 or 2.20) in excess of its
ratable share of payments on account of the Advances obtained by all the
Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Advances made by them as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them,
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and each Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of (a) the amount of
such Lender's required repayment to (b) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Company
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section may, to the fullest extent permitted by law, exercise
all its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the Company
in the amount of such participation.

<PAGE>   32

                                                                              28

                  SECTION 2.22 Use of Proceeds. Proceeds of the Advances may be
used for general business purposes of the Company and its Subsidiaries,
including for acquisitions and for payment of commercial paper issued by the
Company, and to refinance any Indebtedness of the Company and its Subsidiaries
(whether in connection with any acquisition or otherwise).

                  SECTION 2.23 Extension of Stated Termination Date. (a) Not
less than 10 days and not more than 30 days prior to the Stated Termination Date
then in effect, provided that no Event of Default shall have occurred and be
continuing, the Company may request an extension of such Stated Termination Date
by submitting to the Agent an Extension Request containing the information in
respect of such extension specified in Exhibit G, which the Agent shall promptly
furnish to each Lender. Each Lender shall, not less than 10 days and not more
than 30 days prior to the Stated Termination Date then in effect, notify the
Company and the Agent of its election to extend or not extend the Stated
Termination Date as requested in such Extension Request. Notwithstanding any
provision of this Agreement to the contrary, any notice by any Lender of its
willingness to extend the Stated Termination Date shall be revocable by such
Lender in its sole and absolute discretion at any time prior to the date which
is 10 days prior to the Stated Termination Date then in effect. For each Lender
that shall approve in writing the extension of the Stated Termination Date
requested in such Extension Request, the Stated Termination Date shall
automatically and without any further action by any Person be extended for the
period specified in such Extension Request with regard to each such approving
Lender; provided that (i) each extension pursuant to this Section 2.23 shall be
for a maximum of three months, (ii) the Commitment of any Lender that does not
consent in writing, or which revokes, in accordance with the provisions of this
Section 2.23, its consent to such extension not less than 10 days and not more
than 30 days prior to the Stated Termination Date then in effect and has not
thereafter reinstated its consent (an "Objecting Lender") shall, unless earlier
terminated in accordance with this Agreement, expire on the Stated Termination
Date in effect on the date of such Extension Request (such Stated Termination
Date, if any, referred to as the "Commitment Expiration Date" with respect to
such Objecting Lender), (iii) no more than three extensions may be requested
pursuant to this Section 2.23, (iv) in no event shall the Termination Date be
extended beyond the first anniversary of the Closing Date, and (v) no such
extension shall be effective unless the Company has paid all fees to the Lenders
required to be paid on the effective date of such extension. If, not less than
10 days and not more than 30 days prior to the Stated Termination Date then in
effect, no Lenders shall approve in writing the extension of the Stated
Termination Date requested in an Extension Request, the Stated Termination Date
shall not be extended pursuant to such Extension Request. The Agent shall
promptly notify (y) the Lenders and the Company of any extension of the Stated
Termination Date pursuant to this Section 2.23 and (z) the Company and the
Lenders of any Lender which becomes an Objecting Lender.

                  (b) Advances owing to any Objecting Lender on the Commitment
Expiration Date with respect to such Lender shall be repaid in full on or before
such Commitment Expiration Date.

                  (c) The Company shall have the right, so long as no Event of
Default has occurred and is then continuing, upon giving notice to the Agent and
the Objecting Lenders in accordance with Section 2.15, to prepay in full the
Advances of the Objecting Lenders, together with accrued interest thereon, any
amounts payable pursuant to Sections 2.11, 2.12, 2.16, 2.17,

<PAGE>   33

                                                                              29

2.18, 2.20 and 9.4(b) and any accrued and unpaid facility fee or other amounts
payable to the Objecting Lenders hereunder and/or, upon giving not less than
three Business Days' notice to the Objecting Lenders and the Agent, to cancel
the whole or part of the Commitments of the Objecting Lenders.

                  (d) Notwithstanding the foregoing, if any Lender becomes an
Objecting Lender, the Company may, at its own expense and in its sole discretion
and prior to the then Stated Termination Date, require such Lender to transfer
or assign, in whole or in part, without recourse (in accordance with Section
9.7), all or part of its interests, rights and obligations under this Agreement
to an Eligible Assignee (provided that the Company, with the full cooperation of
such Lender, can identify an Eligible Assignee that is ready, willing and able
to be an assignee with respect thereto) which shall assume such assigned
obligations (which assignee may be another Lender, if such assignee Lender
accepts such assignment); provided that (A) the assignee or the Company, as the
case may be, shall have paid to such Lender in immediately available funds the
principal of and interest accrued to the date of such payment on the Advances
made by it hereunder and all other amounts owed to it hereunder, including, any
amounts owing pursuant to Section 9.4(b) and any amounts that would be owing
under said Section if such Advances were prepaid on the date of such assignment,
and (B) such assignment does not conflict with any law, rule or regulation or
order of any governmental authority. Any assignee which becomes a Lender as a
result of such an assignment made pursuant to this paragraph (d) shall be deemed
to have consented to the applicable Extension Request and, therefore, shall not
be an Objecting Lender.

                  SECTION 2.24 [Intentionally left blank]

                  SECTION 2.25 Replacement of Lenders. If any Lender requests
compensation under Sections 2.12, 2.16 or 2.17 or if the Company is required to
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.20, or if any Lender suspends the
right of the Company to elect Eurodollar Rate Advances from such Lender pursuant
to Section 2.18, or if any Lender defaults in its obligation to fund Advances
hereunder, then the Company may, at its sole expense and effort, upon notice to
such Lender and the Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.7), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Company
shall have received the prior written consent of the Agent, which consent shall
not unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Advances, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Company (in the case of all other amounts) and (iii) in the case of
any such assignment resulting from a claim for compensation under Sections 2.12
, 2.16 or 2.17 or payments required to be made pursuant to Section 2.20, such
assignment will result in a reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Company to require such assignment and delegation cease to apply.

<PAGE>   34

                                                                              30

                                   ARTICLE III

                     CONDITIONS OF EFFECTIVENESS AND LENDING

                  SECTION 3.1 Conditions Precedent to Effectiveness of this
Agreement. This Agreement shall become effective (the "Effective Date") when (i)
it shall have been executed by the Company and the Agent, and (ii) the Agent and
the Company either shall have been notified by each Lender that such Lender has
executed it or shall have received a counterpart of this Agreement executed by
such Lender (or compliance with the forgoing shall have been waived by the
Lenders). Anything in this Agreement to the contrary notwithstanding, if all of
the conditions to effectiveness of this Agreement specified in this Section 3.1
shall not have been fulfilled on or before January 1, 2001, (i) the Company
shall on such date pay all accrued and unpaid facility fees pursuant to Section
2.8 and (ii) this Agreement, and all of the obligations of the Company, the
Lenders and the Agent hereunder, shall be terminated on and as of 5:00 P.M. (New
York City time) on January 1, 2001; provided, however, that as soon as the Agent
determines that all of the conditions to effectiveness of this Agreement
specified in this Section 3.1 shall have been fulfilled on or before January 1,
2001, the Agent shall furnish written notice to the Company and the Lenders to
the effect that it has so determined, and such notice by the Agent shall
constitute conclusive evidence that this Agreement shall have become effective
for all purposes. Notwithstanding the foregoing, the obligations of the Company
to pay fees pursuant to Section 2.8 as well as all obligations of the Company
pursuant to Section 9.4 shall survive the termination of this Agreement.

                  SECTION 3.2 Conditions Precedent to Initial Advances. The
agreement of each Lender to make the initial Advances to be made by it to the
Company hereunder is subject to (the date upon which all conditions listed in
Section 3.2(a), 3.2(b) and 3.2(c) are satisfied, the "Closing Date") (a) the
occurrence of the Effective Date hereunder, (b) the purchase by the Company of
the Valero Assets from PG&E Corporation prior to, or substantially
simultaneously with, the making of the initial Advances, and (c) the receipt by
the Agent of the following in form and substance satisfactory to the Agent and
in sufficient copies for each Lender:

                  (i) Certified copies of the resolutions of the Board of
         Directors of the Company approving the borrowings contemplated hereby
         and authorizing the execution of this Agreement and the Notes, and of
         all documents evidencing other necessary corporate action of the
         Company and governmental approvals to the Company, if any, with respect
         to this Agreement and the Notes.

                  (ii) A certificate of the Secretary or an Assistant Secretary
         of the Company certifying the names and true signatures of the officers
         of the Company authorized to sign this Agreement and the other
         documents to be delivered by it hereunder.

                  (iii) A favorable opinion of the Senior Counsel of the
         Company, or the Associate General Counsel of the Company, in
         substantially the form of Exhibit D.

<PAGE>   35

                                                                              31

                  (iv) A favorable opinion of Jones, Day, Reavis & Pogue, New
         York counsel to the Company, in substantially the form of Exhibit E.

                  (v) A letter from the Process Agent, in substantially the form
         of Exhibit F, agreeing to act as Process Agent for the Company and to
         forward forthwith all process received by it to the Company.

                  SECTION 3.3 [Intentionally left blank]

                  SECTION 3.4 Conditions Precedent to Each Borrowing. The
obligation of each Lender to make an Advance (including the initial Advance, but
excluding any continuation or Conversion of an Advance) on the occasion of any
Borrowing shall be subject to the conditions precedent that on the date of such
Borrowing this Agreement shall have become effective pursuant to Section 3.1
and, before and immediately after giving effect to such Borrowing and to the
application of the proceeds therefrom, the following statements shall be true
and correct, and the giving by the Company of the applicable Notice of Borrowing
(where applicable) and the acceptance by the Company of the proceeds of such
Borrowing shall constitute its representation and warranty that on and as of the
date of such Borrowing, before and immediately after giving effect thereto and
to the application of the proceeds therefrom, the following statements are true
and correct:

                  (i) each representation and warranty contained in Section 4.1
         is correct in all material respects as though made on and as of such
         date; and

                  (ii) no event has occurred and is continuing, or would result
         from such Borrowing, which constitutes an Event of Default or a
         Default.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  SECTION 4.1 Representations and Warranties of the Company. The
Company represents and warrants as follows:

                  (a) The Company is a corporation duly incorporated, validly
         existing and in good standing under the laws of the State of Delaware.
         Each Principal Subsidiary is duly incorporated, validly existing and in
         good standing in the jurisdiction of its incorporation. The Company and
         each Principal Subsidiary possess all corporate powers and all other
         authorizations and licenses necessary to engage in its business and
         operations as now conducted, the failure to obtain or maintain which
         would have a Material Adverse Effect.

                  (b) The execution, delivery and performance by the Company of
         this Agreement and the Notes are within the Company's corporate powers,
         have been duly authorized by all necessary corporate action, and do not
         contravene (A) the Company's charter or

<PAGE>   36

                                                                              32

         by-laws or (B) any law or any material contractual restriction binding
         on or affecting the Company.

                  (c) No authorization or approval or other action by, and no
         notice to or filing with, any governmental authority or regulatory body
         is required for the due execution, delivery and performance by the
         Company of this Agreement or the Notes, except filings necessary to
         comply with laws, rules, regulations and orders required in the
         ordinary course to comply with ongoing obligations of the Company under
         Section 5.1(a) and (b).

                  (d) This Agreement constitutes, and the Notes when delivered
         hereunder shall constitute, the legal, valid and binding obligations of
         the Company, enforceable against the Company in accordance with their
         respective terms, except as may be limited by any applicable
         bankruptcy, insolvency, reorganization, moratorium or similar laws
         affecting creditors' rights generally or by general principles of
         equity.

                  (e) The consolidated balance sheet of the Company and its
         consolidated Subsidiaries as at December 31, 1999, and the related
         consolidated statements of income and cash flows of the Company and its
         consolidated Subsidiaries for the fiscal year then ended, reported on
         by PricewaterhouseCoopers LLP, independent public accountants, copies
         of which have been furnished to the Agent and the Lenders prior to the
         date hereof, fairly present the consolidated financial condition of the
         Company and its consolidated Subsidiaries as at such date and the
         consolidated results of the operations of the Company and its
         consolidated Subsidiaries for the period ended on such date, all in
         accordance with GAAP consistently applied, and since December 31, 1999,
         there has been no material adverse change in such condition or
         operations. The unaudited consolidated balance sheet of the Company and
         its consolidated Subsidiaries as of June 30, 2000, and the related
         consolidated statements of income and cash flows of the Company and its
         consolidated Subsidiaries for the three months then ended, certified by
         the chief financial officer of the Company, copies of which have been
         furnished to the Agent prior to the date hereof, fairly present the
         consolidated results of operations of the Company and its consolidated
         Subsidiaries for the three months then ended, all in accordance with
         GAAP consistently applied (except as approved by the chief financial
         officer of the Company and as disclosed therein) and subject to normal
         year-end audit adjustments.

                  (f) Each of the Company and its Subsidiaries is in compliance
         with all laws, rules, regulations and orders of any governmental
         authority applicable to it or its property except where the failure to
         comply, individually or in the aggregate, would not in the reasonable
         judgment of the Company be expected to result in a Material Adverse
         Effect.

                  (g) There is no action, suit or proceeding pending, or to the
         knowledge of the Company threatened, against or involving the Company
         or any Principal Subsidiary in any court, or before any arbitrator of
         any kind, or before or by any governmental body, existing as at the
         Effective Date, which in the reasonable judgment of the Company (taking
         into account the exhaustion of all appeals) would have a Material
         Adverse Effect,

<PAGE>   37

                                                                              33

         or which purports to affect the legality, validity, binding effect or
         enforceability of this Agreement or the Notes.

                  (h) The Company and each Principal Subsidiary have duly filed
         all tax returns required to be filed, and have duly paid and discharged
         all taxes, assessments and governmental charges upon it or against its
         properties now due and payable, the failure to pay which would have a
         Material Adverse Effect, unless and to the extent only that the same
         are being contested in good faith and by appropriate proceedings by the
         Company or the appropriate Principal Subsidiary.

                  (i) The Company and each Principal Subsidiary have good title
         to their respective properties and assets, free and clear of all
         mortgages, liens and encumbrances, except for mortgages, liens and
         encumbrances (including covenants, restrictions, rights, easements and
         minor irregularities in title) which do not materially interfere with
         the business or operations of the Company or such Principal Subsidiary
         as presently conducted or which are permitted by Section 5.2(a), and
         except that no representation or warranty is being made with respect to
         Margin Stock.

                  (j) No Termination Event has occurred or is reasonably
         expected to occur with respect to any Plan which, with the giving of
         notice or lapse of time, or both, would constitute an Event of Default
         under Section 7.1(g).

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

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

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

                  (n) Neither the Company nor any ERISA Affiliate has received
         any notification that any Multiemployer Plan is in reorganization,
         insolvent or has been terminated, within the meaning of Title IV of
         ERISA, and no Multiemployer Plan is reasonably expected to be in
         reorganization, insolvent or to be terminated within the meaning of
         Title IV of ERISA the effect of which reorganization, insolvency or
         termination would be the occurrence of an Event of Default under
         Section 7.1(i).

<PAGE>   38

                                                                              34

                  (o) The Company is not an "investment company" or a "company"
         controlled by an "investment company" within the meaning of the
         Investment Company Act of 1940, as amended.

                  (p) The Company is not a "holding company" or a "subsidiary
         company" of a "holding company" within the meaning of the Public
         Utility Holding Company Act of 1935, as amended.

                  (q) The borrowings by the Company under this Agreement and the
         Notes and the applications of the proceeds thereof as provided herein
         will not violate Regulation T, U or X of the Board of Governors of the
         Federal Reserve System.

All representations and warranties made by the Company herein or made in any
certificate delivered pursuant hereto shall survive the making of the Advances
and the execution and delivery to the Lenders of this Agreement and the Notes.

                                    ARTICLE V

                            COVENANTS OF THE COMPANY

                  SECTION 5.1 Affirmative Covenants. So long as any amount
payable by the Company hereunder or under any Note shall remain unpaid or any
Lender shall have any Commitment hereunder, the Company will, unless the
Majority Lenders shall otherwise consent in writing:

                  (a) Preservation of Corporate Existence, Etc. Preserve and
         maintain, and cause each Principal Subsidiary to preserve and maintain,
         its existence, rights (organizational and statutory) and material
         franchises, except as otherwise permitted by Section 5.2(d) or 5.2(e)
         and except that nothing herein shall prevent any change in Business
         Entity form of the Company or any Principal Subsidiary.

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

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

<PAGE>   39

                                                                              35

                  (d) Books and Records. Keep, and cause each of its
         Subsidiaries to keep, proper books of record and account, in which full
         and correct entries shall be made of all its respective financial
         transactions and the assets and business of the Company and each of its
         Subsidiaries, as applicable, in accordance with GAAP either (i)
         consistently applied or (ii) applied in a changed manner provided such
         change shall have been disclosed to the Agent and shall have been
         consented to by the accountants which (as required by Section 5.3(b))
         report on the financial statements of the Company and its consolidated
         Subsidiaries for the fiscal year in which such change shall have
         occurred.

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

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

                  SECTION 5.2 Negative Covenants. So long as any amount payable
by the Company hereunder or under any Note shall remain unpaid or any Lender
shall have any Commitment hereunder, the Company will not, unless the Majority
Lenders shall otherwise consent in writing:

                  (a) Liens, Etc. (i) Create, assume or suffer to exist, or
         permit any Principal Subsidiary to create, assume or suffer to exist,
         any Liens upon or with respect to any of its Equity Interests in any
         Principal Subsidiary, whether now owned or hereafter acquired, or (ii)
         create or assume, or permit any Principal Subsidiary to create or
         assume, any Liens upon or with respect to any other assets material to
         the consolidated operations of the Company and its consolidated
         Subsidiaries taken as a whole securing the payment of Indebtedness and
         Guaranties in an aggregate amount (determined without duplication of
         amount (so that the amount of a Guarantee will be excluded to the
         extent the Indebtedness Guaranteed thereby is included in computing
         such aggregate amount)) exceeding the greater of (x) $300,000,000 and
         (y) 10% of Net Worth as at the date of such creation or assumption;
         provided, however, that this subsection (a) shall not apply to:

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

                           (B) Liens on (1) assets acquired by the Company or
                  any of its Subsidiaries after February 11, 1992 to the extent
                  that such Liens existed at the

<PAGE>   40

                                                                              36

                  time of such acquisition and were not placed thereon by or
                  with the consent of the Company in contemplation of such
                  acquisition and (2) Equity Interests acquired after February
                  11, 1992 in a Business Entity that has become or becomes a
                  Subsidiary of the Company, or on assets of any such Business
                  Entity, to the extent that such Liens existed at the time of
                  such acquisition and were not placed thereon by or with the
                  consent of the Company in contemplation of such acquisition;

                           (C) Liens created by any Alternate Program or any
                  document executed by the Company or any of its Principal
                  Subsidiaries in connection therewith;

                           (D) Liens on Margin Stock;

                           (E) Permitted Liens;

                           (F) Liens arising out of the refinancing, extension,
                  renewal or refunding of any Indebtedness or Guaranty or other
                  obligation secured by any Lien permitted by any of the
                  foregoing clauses of this Section, provided that the principal
                  amount of such Indebtedness or Guaranty or other obligation is
                  not increased (except by the amount of costs reasonably
                  incurred in connection with the issuance thereof) beyond the
                  highest previous amount thereof and such Indebtedness or
                  Guaranty or other obligation is outstanding immediately prior
                  to the refinancing, extension, renewal or refunding and is not
                  secured by any additional assets that would not have been
                  permitted by this Section to secure the Indebtedness or
                  Guaranty or other obligation refinanced, extended, renewed or
                  refunded; and

                           (G) Liens on products and proceeds (including
                  dividend, interest and like payments on, and insurance and
                  condemnation proceeds and rental, lease, licensing and similar
                  proceeds) of, and property evidencing or embodying, or
                  constituting rights or other general intangibles directly
                  relating to or arising out of, and accessions and improvements
                  to, collateral subject to Liens permitted by this Section
                  5.2(a).

                  (b) Consolidated Debt and Guarantees to Capitalization. Permit
         the ratio of (A) the sum of (1) the aggregate amount of consolidated
         Debt of the Company and its consolidated Subsidiaries (without
         duplication of amount under this clause (A) and determined as to all of
         the foregoing entities on a consolidated basis) plus (2) the aggregate
         amount of consolidated Guaranties of the Company and its consolidated
         Subsidiaries (without duplication of amount under this clause (A) and
         determined as to all of the foregoing entities on a consolidated basis)
         to (B) Capitalization of the Company (without duplication and
         determined as to all of the foregoing entities on a consolidated basis)
         to exceed 0.7 to 1.

                  (c) Debt, Etc. Permit any of its consolidated Subsidiaries to
         incur or become liable for any Debt, any Guaranty or any reimbursement
         obligation with respect to any letter of credit (other than any Project
         Financing), if, immediately after giving effect to

<PAGE>   41

                                                                              37

         such Debt, Guaranty or reimbursement obligation and the receipt and
         application of any proceeds thereof or value received in connection
         therewith, the aggregate amount (determined without duplication of
         amount) of Debt, Guaranties and letter of credit reimbursement
         obligations of the Company's consolidated Subsidiaries owing to Persons
         other than the Company and its consolidated Subsidiaries (other than
         any Project Financing) would exceed the greater of (x) $600,000,000 and
         (y) 10% of Net Worth determined as at the date of incurrence or
         assumption thereof; provided, however, that the following Debt,
         Guaranties or reimbursement obligations shall be excluded from the
         application of, and calculation set forth in, this paragraph (c): (A)
         Debt, Guaranties or reimbursement obligations incurred by (x) Mojave or
         (y) EPNGC, (B) Debt, Guaranties or reimbursement obligations arising
         under (x) the EPTPC Facility or (y) the Existing 364-Day Facility or
         the Existing 3-Year Facility, (C) Debt, Guaranties or reimbursement
         obligations incurred by El Paso Field Services Company up to an amount
         not to exceed at any time outstanding the tangible net worth of El Paso
         Field Services Company, provided that such Debt may be guaranteed by
         the Company, (D) Excluded Acquisition Debt, (E) successive extensions,
         refinancings or replacements (at the same Subsidiary or at any other
         consolidated Subsidiary of the Company) of Debt, Guaranties or
         reimbursement obligations (or commitments in respect thereof) referred
         to in clauses (A), (B) and (D) above and in an amount not in excess of
         the amounts so extended, refinanced or replaced (or the amount of
         commitments in respect thereof) and (F) Debt, Guarantees or
         reimbursement obligations incurred by Tennessee pursuant to one or more
         commercial paper programs allowing for the issuance by Tennessee of
         items of commercial paper having maturity dates not later than one year
         from the dates of their respective issuance provided that such Debt,
         Guarantees or reimbursement obligations of Tennessee shall be in an
         aggregate amount not to exceed at any time the excess of (x) the sum of
         (1) the aggregate amount of Commitments, as defined in the Existing
         364-Day Facility, and (2) the aggregate amount of Commitments as
         defined in the Existing 3-Year Facility, over (y) the sum of (1) the
         aggregate amount of Advances, as defined in and outstanding pursuant
         to, the Existing 364-Day Facility, (2) the aggregate amount of
         Advances, as defined in and outstanding pursuant to, the Existing
         3-Year Facility, and (3) the aggregate principal amount of commercial
         paper outstanding from time to time that (I) is issued by the Company
         and its Subsidiaries (other than Tennessee) and (II) relies upon credit
         availability under either the Existing 364-Day Facility or the Existing
         3-Year Facility for commercial paper liquidity purposes.

                  (d) Sale, Etc. of Assets. Sell, lease or otherwise transfer,
         or permit any Principal Subsidiary to sell, lease or otherwise
         transfer, (in either case, whether in one transaction or in a series of
         transactions) assets constituting all or substantially all of the
         consolidated assets of the Company and its Principal Subsidiaries taken
         as a whole, provided that provisions of this subsection (d) shall not
         apply to:

                                 (i) any sale of receivables and related rights
                  pursuant to any Alternate Program;

                                 (ii) any Project Financing Subsidiary and the
                  assets thereof;

<PAGE>   42

                                                                              38

                                 (iii) sales, leases or other transfers of
                  assets or capital stock of any Subsidiary of the Company other
                  than any Principal Subsidiary;

                                 (iv) any sale of Margin Stock;

                                 (v) any sale of up to 20% of the equity of El
                  Paso Field Services Company in an initial public offering of
                  such Person's Equity Interests;

                                 (vi) any sale, lease or other transfer to the
                  Company or any Principal Subsidiary, or to any Business Entity
                  that after giving effect to such transfer will become and be
                  either (A) a Principal Subsidiary in which the Company's
                  direct or indirect equity interest will be at least as great
                  as its direct or indirect equity interest in the transferor
                  immediately prior thereto or (B) a directly or indirectly
                  wholly-owned Principal Subsidiary; and

                                 (vii) any transfer permitted by Section 5.2(e);
                  and

                                 (viii) any transfer to the Company or any of
                  its Subsidiaries of any stock or assets other than FERC
                  regulated assets (or stock or any other equity interest in an
                  entity owning FERC regulated assets) used in the mainline gas
                  transmission business; provided that no Event of Default or
                  Default, shall have occurred and be continuing before and
                  after giving effect to such transfer.

                  (e) Mergers, Etc. Merge or consolidate with any Person, or
         permit any of its Principal Subsidiaries to merge or consolidate with
         any Person, except that (i) any Principal Subsidiary may merge or
         consolidate with (or liquidate into) any other Subsidiary (other than a
         Project Financing Subsidiary, unless the successor Business Entity is
         not treated as a Project Financing Subsidiary under this Agreement) or
         may merge or consolidate with (or liquidate into) the Company, provided
         that (A) if such Principal Subsidiary merges or consolidates with (or
         liquidates into) the Company, either (x) the Company shall be the
         continuing or surviving Business Entity or (y) the continuing or
         surviving Business Entity is organized under the laws of the United
         States or a State thereof and unconditionally assumes by agreement all
         of the performance obligations and payment Obligations of the Company
         under this Agreement and (B) if any such Principal Subsidiary merges or
         consolidates with (or liquidates into) any other Subsidiary, one or
         more Business Entities that are Subsidiaries are the continuing or
         surviving Business Entity(ies) and, if either such Subsidiary is not
         directly or indirectly wholly-owned by the Company, such merger or
         consolidation is on an arm's length basis, and (ii) the Company or any
         Principal Subsidiary may merge or consolidate with any other Business
         Entity (that is, in addition to the Company or any Subsidiary),
         provided that (A) if the Company merges or consolidates with any such
         other Business Entity, either (x) the Company is the continuing or
         surviving Business Entity or (y) the continuing or surviving Business
         Entity is organized under the laws of the United States or a State
         thereof and unconditionally assumes by agreement all of the performance
         obligations and payment Obligations of the Company under this
         Agreement, (B) if any Principal Subsidiary merges or consolidates with
         any such other Business Entity, the

<PAGE>   43

                                                                              39

         surviving Business Entity is directly or indirectly a wholly-owned
         Principal Subsidiary of the Company, (C) if either the Company or any
         Principal Subsidiary merges or consolidates with any such other
         Business Entity, after giving effect to such merger or consolidation no
         Event of Default or Default, shall have occurred and be continuing.

                  SECTION 5.3 Reporting Requirements. So long as any amount
payable by the Company hereunder or under any Note shall remain unpaid or any
Lender shall have any Commitment hereunder, the Company will furnish to each
Lender in such reasonable quantities as shall from time to time be requested by
such Lender:

                  (a) as soon as publicly available and in any event within 60
         days after the end of each of the first three fiscal quarters of each
         fiscal year of each of the Company and EPNGC, a consolidated balance
         sheet of each of the Company and EPNGC and its respective consolidated
         subsidiaries as of the end of such quarter, and consolidated statements
         of income and cash flows of each of the Company and EPNGC and its
         respective consolidated subsidiaries each for the period commencing at
         the end of the previous fiscal year and ending with the end of such
         quarter, certified (subject to normal year-end adjustments) as being
         fairly stated in all material respects by the chief financial officer,
         controller or treasurer of the Company and accompanied by a certificate
         of such officer stating (i) whether or not such officer has knowledge
         of the occurrence of any Event of Default which is continuing hereunder
         or of any event not theretofore remedied which with notice or lapse of
         time or both would constitute such an Event of Default and, if so,
         stating in reasonable detail the facts with respect thereto, (ii) all
         relevant facts in reasonable detail to evidence, and the computations
         as to, whether or not the Company is in compliance with the
         requirements set forth in subsections (b) and (c) of Section 5.2, and
         (iii) a listing of all Principal Subsidiaries and consolidated
         Subsidiaries of the Company showing the extent of its direct and
         indirect holdings of their stocks;

                  (b) as soon as publicly available and in any event within 120
         days after the end of each fiscal year of each of the Company and
         EPNGC, a copy of the annual report for such year for each of the
         Company and EPNGC and its respective consolidated Subsidiaries
         containing financial statements for such year reported by nationally
         recognized independent public accountants acceptable to the Lenders,
         accompanied by (i) a report signed by said accountants stating that
         such financial statements have been prepared in accordance with GAAP
         and (ii) a letter from such accountants stating that in making the
         investigations necessary for such report they obtained no knowledge,
         except as specifically stated therein, of any Event of Default which is
         continuing hereunder or of any event not theretofore remedied which
         with notice or lapse of time or both would constitute such an Event of
         Default;

                  (c) within 120 days after the close of each of the Company's
         fiscal years, a certificate of the chief financial officer, controller
         or treasurer of the Company stating (i) whether or not he has knowledge
         of the occurrence of any Event of Default which is continuing hereunder
         or of any event not theretofore remedied which with notice or lapse of
         time or both would constitute such an Event of Default and, if so,
         stating in reasonable detail the facts with respect thereto, (ii) all
         relevant facts in reasonable detail to evidence,

<PAGE>   44

                                                                              40

         and the computations as to, whether or not the Company is in compliance
         with the requirements set forth in subsections (b) and (c) of Section
         5.2 and (iii) a listing of all Principal Subsidiaries and consolidated
         Subsidiaries of the Company showing the extent of its direct and
         indirect holdings of their stocks;

                  (d) promptly after the sending or filing thereof, copies of
         all publicly available reports which the Company or any Principal
         Subsidiary sends to any of its security holders and copies of all
         publicly available reports and registration statements which the
         Company or any Principal Subsidiary files with the Securities and
         Exchange Commission or any national securities exchange other than
         registration statements relating to employee benefit plans and to
         registrations of securities for selling security holders;

                  (e) within 10 days after sending or filing thereof, a copy of
         FERC Form No. 2: Annual Report of Major Natural Gas Companies, sent or
         filed by the Company to or with the FERC with respect to each fiscal
         year of the Company;

                  (f) promptly in writing, notice of all litigation and of all
         proceedings before any governmental or regulatory agencies against or
         involving the Company or any Principal Subsidiary, except any
         litigation or proceeding which in the reasonable judgment of the
         Company (taking into account the exhaustion of all appeals) is not
         likely to have a material adverse effect on the consolidated financial
         condition of the Company and its consolidated Subsidiaries taken as a
         whole;

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

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

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

<PAGE>   45

                                                                              41

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

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

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

                  Each balance sheet and other financial statement furnished
pursuant to subsections (a) and (b) of this Section 5.3 shall contain
comparative financial information which conforms to the presentation required in
Form 10-Q and 10-K, as appropriate, under the Securities Exchange Act of 1934,
as amended.

                  SECTION 5.4 Restrictions on Material Subsidiaries. The Company
will not, and will not permit any Material Subsidiary, to enter into any
agreement or understanding pursuant to which (a) any non-equity interest claim
the Company may have against any Material Subsidiary would be subordinate in any
manner to the payment of any other obligation of such Material Subsidiary (other
than waivers or subordination of subrogation, contribution or similar rights
under Guaranties and similar agreements) or (b) by its terms limits or restricts
the ability of such Material Subsidiary to make funds available to the Company
(whether by dividend or other distribution, by replacement of any inter-company
advance or otherwise) if, in any such case referred to in this Section 5.4,
there is, at the time any such agreement is entered into, a reasonable
likelihood that all such agreements and understandings, considered together,
would materially and adversely affect the ability of the Company to meet its
obligations as they become due.

                                   ARTICLE VI

                           [Intentionally left blank]

<PAGE>   46

                                                                              42

                                   ARTICLE VII

                                EVENTS OF DEFAULT

                  SECTION 7.1 Event of Default. If any of the following events
("Events of Default") shall occur and be continuing:

                  (a) The Company shall fail to pay any installment of principal
         of any of the Advances or Notes when due, or any interest on any of the
         Advances or Notes or any other amount payable by it hereunder within
         five Business Days after the same shall be due; or

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

                  (c) The Company shall fail to perform or observe any other
         term, covenant or agreement contained in this Agreement on its part to
         be performed or observed and any such failure shall remain unremedied
         for 30 days after written notice thereof shall have been given to the
         Company by the Agent or by any Lender with a copy to the Agent; or

                  (d) The Company or any Principal Subsidiary shall fail to pay
         any Debt or Guaranty (excluding Debt incurred pursuant hereto) of the
         Company or such Principal Subsidiary in an aggregate principal amount
         of $200,000,000 or more, or any installment of principal thereof or
         interest or premium thereon, when due (whether by scheduled maturity,
         required prepayment, acceleration, demand or otherwise) and such
         failure shall continue after the applicable grace period, if any,
         specified in the agreement or instrument relating to such Debt or
         Guaranty; or any other default under any agreement or instrument
         relating to any such Debt, or any other event, shall occur and shall
         continue after the applicable grace period, if any, specified in such
         agreement or instrument, if the effect of such default or event is to
         accelerate, the maturity of such Debt; or any such Debt shall be
         required to be prepaid (other than by a regularly scheduled required
         prepayment), prior to the stated maturity thereof, as a result of
         either (i) any default under any agreement or instrument relating to
         any such Debt or (ii) the occurrence of any other event (other than an
         issuance, sale or other disposition of stock or other assets, or an
         incurrence or issuance of Indebtedness or other obligations, giving
         rise to a repayment or prepayment obligation in respect of such Debt)
         the effect of which would otherwise be to accelerate the maturity of
         such Debt; provided that, notwithstanding any provision contained in
         this subsection (d) to the contrary, to the extent that pursuant to the
         terms of any agreement or instrument relating to any Debt or Guaranty
         referred to in this subsection (d) (or in the case of any such
         Guaranty, relating to any obligations Guaranteed thereby), any sale,
         pledge or disposal of Margin Stock, or utilization of the proceeds of
         such sale, pledge or disposal, would result in a breach of any covenant
         contained therein or otherwise give rise to a default or event of
         default thereunder and/or acceleration of the maturity of the Debt or
         obligations extended pursuant thereto, or payment pursuant to any
         Guaranty, and as a

<PAGE>   47

                                                                              43

         result of such terms or of such sale, pledge, disposal, utilization,
         breach, default, event of default or acceleration or nonpayment under
         such Guaranty, or the provisions thereof relating thereto, this
         Agreement or any Advance hereunder would otherwise be subject to the
         margin requirements or any other restriction under Regulation U issued
         by the Board of Governors of the Federal Reserve System, then such
         breach, default, event of default or acceleration, or nonpayment under
         any Guaranty, shall not constitute a default or Event of Default under
         this subsection (d); or

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

                  (f) Any judgment or order of any court for the payment of
         money in excess of $100,000,000 shall be rendered against the Company
         or any Principal Subsidiary and either (i) enforcement proceedings
         shall have been commenced and are continuing or have been completed by
         any creditor upon such judgment or order (other than any enforcement
         proceedings consisting of the mere obtaining and filing of a judgment
         lien or obtaining of a garnishment or similar order so long as no
         foreclosure, levy or similar process in respect of such lien, or
         payment over in respect of such garnishment or similar order, has
         commenced and is continuing or has been completed) or (ii) there shall
         be any period of 30 consecutive days during which a stay of execution
         or of enforcement proceedings (other than those referred to in the
         parenthesis in clause (i) above) in respect of such judgment or order,
         by reason of a pending appeal, bonding or otherwise, shall not be in
         effect; or

                  (g) (i) Any Termination Event with respect to a Plan shall
         have occurred and, 30 days after notice thereof shall have been given
         to the Company by the Agent, such Termination Event shall still exist;
         or (ii) the Company or any ERISA Affiliate shall have been notified by
         the sponsor of a Multiemployer Plan that it has incurred Withdrawal
         Liability to such Multiemployer Plan; or (iii) the Company or any ERISA
         Affiliate shall have been notified by the sponsor of a Multiemployer
         Plan that such Multiemployer Plan is in reorganization, or is insolvent
         or is being terminated, within the meaning of Title IV of ERISA; or
         (iv) any Person shall engage in a "prohibited transaction" (as defined
         in

<PAGE>   48

                                                                              44

         Section 406 of ERISA or Section 4975 of the Code) involving any Plan;
         and in each case in clauses (i) through (iv) above, such event or
         condition, together with all other such events or conditions, if any,
         would result in an aggregate liability of the Company or any ERISA
         Affiliate that would exceed 10% of the Net Worth of the Company.

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

                  (i) Any event of default shall occur under any agreement or
         instrument relating to or evidencing any Debt now or hereafter existing
         of the Company or any Principal Subsidiary as the result of any change
         of control of the Company;

then, and in any such event, the Agent shall at the request, or may with the
consent, of the Majority Lenders, by notice to the Company, (i) declare the
obligation of each Lender to make Advances to be terminated, whereupon the same
shall forthwith terminate, and (ii) declare the Advances and the Notes, all
interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Advances and the Notes, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Company; provided, however, that if an Event
of Default under subsection (e) of this Section 7.1 (except under clause (i)(A)
thereof) shall occur, (A) the obligation of each Lender to make Advances shall
automatically be terminated and (B) the Advances and the Notes, all interest
thereon and all other amounts payable under this Agreement shall automatically
become and be forthwith due and payable, without presentment, demand, protest or
any notice of any kind, all of which are hereby expressly waived by the Company.

<PAGE>   49

                                                                              45

                                  ARTICLE VIII

                                    THE AGENT

                  SECTION 8.1 Authorization and Action. Each Lender hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto. As to any matters not expressly provided for by this Agreement
(including enforcement of this Agreement or collection of the Notes), the Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Majority Lenders,
and such instructions shall be binding upon all Lenders and all holders of
Notes; provided, however, that the Agent shall not be required to take any
action which exposes the Agent to personal liability or which is contrary to
this Agreement or applicable law. The Agent agrees to give to each Lender prompt
notice of each notice given to it by the Company pursuant to the terms of this
Agreement.

                  SECTION 8.2 Agent's Reliance, Etc. None of the Agent or any of
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (i) may treat
the payee of any Note as the holder thereof until the Agent receives and accepts
an Assignment and Acceptance entered into by the Lender which is the payee of
such Note, as assignor, and an Eligible Assignee, as assignee, as provided in
Section 9.7; (ii) may consult with legal counsel (including counsel for the
Company), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (iii)
makes no warranty or representation to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations (whether written
or oral) made in or in connection with this Agreement; (iv) shall not have any
duty to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions of this Agreement on the part of the Company
or to inspect the property (including the books and records) of the Company; (v)
shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document furnished pursuant hereto; and (vi) shall incur
no liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
telecopier, cable or telex) believed by it to be genuine and signed or sent by
the proper party or parties.

                  SECTION 8.3 Chase and Affiliates. With respect to its
Commitment, the Advances made by it and the Note issued to it, Chase shall have
the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include Chase in its
individual capacity. Chase and its affiliates may accept deposits from, lend
money to, act as trustee under indentures of, and generally engage in any kind
of business with, the Company, any of its Subsidiaries and any Person who may do
business with or own securities of

<PAGE>   50

                                                                              46

the Company or any of its Subsidiaries, all as if Chase were not the Agent and
without any duty to account therefor to the other Lenders.

                  SECTION 8.4 Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Agent or any other
Lender and based on the financial statements referred to in Section 4.1 and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.

                  SECTION 8.5 Indemnification. The Lenders agree to indemnify
the Agent (to the extent not reimbursed by the Company), ratably according to
the respective principal amounts of the Advances then outstanding by each of
them (or if no Advances are at the time outstanding or if any Notes are held by
Persons which are not Lenders, ratably according to the respective amounts of
their aggregate Commitments), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Agent in any way relating to or arising
out of this Agreement or any action taken or omitted by the Agent under this
Agreement, provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including reasonable counsel fees) incurred by the Agent
in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings, in bankruptcy or insolvency proceedings, or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, to the
extent that the Agent is not reimbursed for such expenses by the Company.

                  SECTION 8.6 Successor Agent The Agent may resign at any time
by giving written notice thereof to the Lenders and the Company and may be
removed at any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Majority Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the Majority Lenders'
removal of the retiring Agent, then such retiring Agent may, on behalf of the
Lenders, appoint a successor Agent which shall be a Lender and a commercial bank
organized, or authorized to conduct a banking business, under the laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article VII

<PAGE>   51

                                                                              47

shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.

                                   ARTICLE IX

                                  MISCELLANEOUS

                  SECTION 9.1 Amendments, Etc. An amendment or waiver of any
provision of this Agreement or the Notes, or a consent to any departure by the
Company therefrom, shall be effective against the Lenders and all holders of the
Notes if, but only if, it shall be in writing and signed or consented to in
writing by the Majority Lenders, and then such a waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such amendment, waiver or consent shall,
unless in writing and signed by all the Lenders, be effective to: (a) waive any
of the conditions specified in Article III, (b) except as contemplated by
Sections 2.23 and 2.25, increase or extend the Commitments of the Lenders or
subject the Lenders to any additional obligations, (c) reduce the principal of,
or interest on, any Advance or the Notes or any facility fees hereunder, (d)
postpone any date fixed for any payment of principal of, or interest on, any
Advance or the Notes or any facility fees hereunder, (e) change the percentage
of the Commitments or of the aggregate unpaid principal amount of any Advance or
the Notes, or the number of Lenders, which shall be required for the Lenders or
any of them to take any action under this Agreement, or (f) amend this Section
9.1, provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Lenders required hereinabove
to take such action, affect the rights or duties of the Agent under this
Agreement or any Note.

                  SECTION 9.2 Notices, Etc. Except as otherwise provided in
Section 2.2(a) or 2.15(b), all notices and other communications provided for
hereunder shall be in writing (including telecopier and other readable
communication) and mailed by certified mail, return receipt requested,
telecopied or otherwise transmitted or delivered, if to the Company at El Paso
Energy Building, 1001 Louisiana Street, Houston, Texas 77002, Attention:
Executive Vice President and Chief Financial Officer, Telecopier: (713)
420-4975; if to any Lender, at its address set forth under its name on Schedule
I; if to the Agent, at 270 Park Avenue, 21st floor, New York, New York 10017,
Attention: Steve Wood, Telecopier: (212) 270-2519, Telephone (212) 270-7056; or,
as to each party, at such other address as shall be designated by such party in
a written notice to the other parties. All such notices and communications
shall, if so mailed, telecopied or otherwise transmitted, be effective when
received, if mailed, or when the appropriate answerback or other evidence of
receipt is given, if telecopied or otherwise transmitted, respectively. A notice
received by the Agent or a Lender by telephone pursuant to Section 2.2(a), 2.4
or 2.15(a) shall be effective if the Agent or Lender believes in good faith that
it was given by an authorized representative of the Company and acts pursuant
thereto, notwithstanding the absence of written confirmation or any
contradictory provision thereof.

                  SECTION 9.3 No Waiver; Remedies. No failure on the part of any
Lender or the Agent to exercise, and no delay in exercising, any right hereunder
or under any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder or under any

<PAGE>   52

                                                                              48

Note preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

                  SECTION 9.4 Costs and Expenses; Indemnity. (a) The Company
agrees to pay on demand (i) all reasonable fees and out-of-pocket expenses of
counsel for the Agent in connection with the preparation, execution and delivery
of this Agreement, the Notes and the other documents to be delivered hereunder
and the fulfillment or attempted fulfillment of conditions precedent hereunder,
(ii) all reasonable costs and expenses incurred by the Agent and its Affiliates
in initially syndicating all or any portion of the Commitments hereunder,
including, the related reasonable fees and out-of-pocket expenses of counsel for
the Agent or its Affiliates, travel expenses, duplication and printing costs and
courier and postage fees, and excluding any syndication fees paid to other
parties joining the syndicate and (iii) all out-of-pocket costs and expenses, if
any, incurred by the Agent and the Lenders in connection with the enforcement
(whether through negotiations, legal proceedings in bankruptcy or insolvency
proceedings, or otherwise) of this Agreement, the Notes and the other documents
to be delivered hereunder and thereunder, including the reasonable fees and
out-of-pocket expenses of counsel.

                  (b) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance or Money Market Advance is made by the Company to or for
the account of a Lender on any day other than the last day of the Interest
Period for such Advance, as a result of a prepayment pursuant to Section 2.15 or
a Conversion pursuant to Section 2.13(f) or Section 2.14 or due to acceleration
of the maturity of the Advances and the Notes pursuant to Section 7.1 or due to
any other reason attributable to the Company, or if the Company shall fail to
make a borrowing of Eurodollar Rate Advances or Money Market Advances after the
Company has given a notice requesting the same in accordance with the provisions
of this Agreement, the Company shall, upon demand by such Lender (with a copy of
such demand to the Agent), pay to the Agent for the account of such Lender any
amounts required to compensate such Lender for any additional losses, costs or
expenses which it may reasonably incur as a result of such payment, Conversion
or failure to borrow, including any loss (excluding loss of anticipated
profits), cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by any Lender to fund or maintain such
Advance.

                  (c) The Company agrees to indemnify and hold harmless the
Agent and each Lender from and against any and all claims, damages, liabilities
and expenses (including, fees and disbursements of counsel) which may be
incurred by or asserted against the Agent or such Lender in connection with or
arising out of any investigation, litigation, or proceeding (whether or not the
Agent or such Lender is party thereto) related to any acquisition or proposed
acquisition by the Company, or by any Subsidiary of the Company, of all or any
portion of the stock or substantially all the assets of any Person or any use or
proposed use of the Advances by the Company (excluding any claims, damages,
liabilities or expenses incurred by reason of the gross negligence or willful
misconduct of the party to be indemnified or its employees or agents, or by
reason of any use or disclosure of information relating to any such acquisition
or use or proposed use of the proceeds by the party to be indemnified or its
employees or agents).

                  SECTION 9.5 Right of Set-Off. Upon the declaration of the
Advances and the Notes as due and payable pursuant to the provisions of Section
7.1, each Lender is hereby

<PAGE>   53

                                                                              49

authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender to or for the credit or the account of the Company
against any and all of the obligations of the Company now or hereafter existing
under this Agreement and the Notes of the Company held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement or the Notes and although such obligations may be unmatured. Each
Lender agrees promptly to notify the Company after any such set-off and
application made by such Lender, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
each Lender under this Section 9.5 are in addition to other rights and remedies
(including, other rights of set-off) which such Lender may have.

                  SECTION 9.6 Binding Effect. This Agreement shall become
effective in accordance with the provisions of Section 3.1, and thereafter shall
be binding upon and inure to the benefit of the Company, the Agent and each
Lender and their respective successors and assigns, except that the Company
shall not have the right to assign its rights or obligations hereunder or any
interest herein without the prior written consent of all of the Lenders and no
Lender shall have the right to assign its rights or obligations hereunder or any
interest herein other than in accordance with the provisions of Section 9.7
hereof.

                  SECTION 9.7 Assignments and Participations. (a) Each Lender
may assign to one or more banks or other financial institutions all or a portion
of its rights and obligations under this Agreement (including, all or a portion
of its Commitment, the Advances owing to it and the Notes held by it); provided,
however, that (i) each such assignment shall be of a constant, and not a
varying, percentage of all rights and obligations under this Agreement, (ii) the
amount of the Commitment of the assigning Lender being assigned pursuant to each
such assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $15,000,000 (or, if
less, the entire Commitment of the assigning Lender) and shall be an integral
multiple of $1,000,000, (iii) each such assignment shall be to an Eligible
Assignee, and (iv) the parties to each such assignment shall execute and deliver
to the Agent, for its acceptance and recording in the Register, an Assignment
and Acceptance, together with any Notes subject to such assignment and a
processing and recordation fee of $2,500, and shall send to the Company an
executed counterpart of such Assignment and Acceptance. Upon consent by the
Company to such Eligible Assignee, and such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, (A) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and (B) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).

                  (b) By executing and delivering an Assignment and Acceptance,
each Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the

<PAGE>   54

                                                                              50

other parties hereto as follows: (i) other than as provided in such Assignment
and Acceptance, such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other instrument or document furnished pursuant hereto; (ii)
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company or the
performance or observance by the Company of any of its obligations under this
Agreement or any other instrument or document furnished pursuant hereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements referred to in Section 4.1 and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such assignee
confirms that it is an Eligible Assignee (subject to approval in writing by the
Company, and, if applicable, the Agent, to the extent required by the definition
of "Eligible Assignee"); (vi) such assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.

                  (c) The Agent shall maintain at its address referred to in
Section 9.2 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register (which register may be in electronic form) for the
recordation of the names and addresses of the Lenders and the Commitment of, and
principal amount of the Advances owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Company, the Agent, and the Lenders may
treat each Person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Company or any Lender at any reasonable time and from time to
time upon reasonable prior notice. Upon the acceptance of any Assignment and
Acceptance for recordation in the Register, Schedule I hereto shall be deemed to
be amended to reflect the revised Commitments of the Lenders parties to such
Assignment and Acceptance as well as administrative information with respect to
any new Lender as such information is recorded in the Register.

                  (d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and as assignee representing that it is an Eligible
Assignee, together with any Notes subject to such assignment, the Agent shall,
if such Assignment and Acceptance has been completed and is in substantially the
form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register and (iii) give prompt notice
thereof to the Company; within five Business Days after its receipt of such
notice and its receipt of an executed counterpart of such Assignment and
Acceptance, the Company, at its own expense, shall execute and deliver to the
Agent in exchange for the surrendered Notes, if any, new Notes to the order of
such Eligible Assignee, if requested, in an amount equal to the

<PAGE>   55

                                                                              51

Commitment assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained a Commitment hereunder, new Notes, if requested,
to the order of the assigning Lender in an amount equal to the Commitment
retained by it hereunder. Such new Notes, if any, shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Notes, if any, shall be dated the Closing Date and shall otherwise be in
substantially the form of Exhibit A.

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

                  (f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.7, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Company furnished to such Lender by
or on behalf of the Company; provided that, prior to any such disclosure, the
assignee or participant or proposed assignee or participant shall agree in
writing for the benefit of the Company to preserve the confidentiality of any
confidential information relating to the Company received by it from such Lender
in a manner consistent with Section 9.8.

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

                  SECTION 9.8 Confidentiality. Each Lender and the Agent (each,
a "Party") agrees that it will use its best efforts not to disclose, without the
prior consent of the Company (other than to its, or its Affiliate's, employees,
auditors, accountants, counsel or other

<PAGE>   56

                                                                              52

representatives, whether existing at the date of this Agreement or any
subsequent time), any information with respect to the Company and its
Subsidiaries which is furnished pursuant to this Agreement, provided that any
Party may disclose any such information (i) as has become generally available to
the public, (ii) as may be required or appropriate in any report, statement or
testimony submitted to any municipal, state or Federal regulatory body having or
claiming to have jurisdiction over such party or to the Board of Governors of
the Federal Reserve System or the Federal Deposit Insurance Corporation or
similar organizations (whether in the United States or elsewhere) or their
successors, (iii) as may be required or appropriate in response to any summons
or subpoena or in connection with any litigation or regulatory proceeding, (iv)
in order to comply with any law, order, regulation or ruling applicable to such
party, or (v) to any prospective assignee or participant in connection with any
contemplated assignment of any rights or obligations hereunder, or any sale of
any participation therein, by such Party pursuant to Section 9.7, if such
prospective assignee or participant, as the case may be, executes an agreement
with the Company containing provisions substantially similar to those contained
in this Section 9.8; provided, however, that the Company acknowledges that the
Agent has disclosed and may continue to disclose such information as the Agent
in its sole discretion determines is appropriate to the Lenders from time to
time.

                  SECTION 9.9 Consent to Jurisdiction. (a) The Company hereby
irrevocably submits to the jurisdiction of any New York State or Federal court
sitting in New York City and any appellate court from any thereof in any action
or proceeding by the Agent, any Lender or the holder of any Note in respect of,
but only in respect of, any claims or causes of action arising out of or
relating to this Agreement or the Notes (such claims and causes of action,
collectively, being "Permitted Claims"), and the Company hereby irrevocably
agrees that all Permitted Claims may be heard and determined in such New York
State court or in such Federal court. The Company hereby irrevocably waives, to
the fullest extent it may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any aforementioned
court in respect of Permitted Claims. The Company hereby irrevocably appoints CT
Corporation System (the "Process Agent"), with an office on the date hereof at
1633 Broadway, New York, New York 10019, as its agent to receive on behalf of
the Company and its property service of copies of the summons and complaint and
any other process which may be served by the Agent, any Lender or the holder of
any Note in any such action or proceeding in any aforementioned court in respect
of Permitted Claims. Such service may be made by delivering a copy of such
process to the Company by courier and by certified mail (return receipt
requested), fees and postage prepaid, both (i) in care of the Process Agent at
the Process Agent's above address and (ii) at the Company's address specified
pursuant to Section 9.2, and the Company hereby irrevocably authorizes and
directs the Process Agent to accept such service on its behalf. The Company
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.

                  (b) Nothing in this Section 9.9 (i) shall affect the right of
any Lender, the holder of any Note or the Agent to serve legal process in any
other manner permitted by law or affect any right otherwise existing of any
Lender, the holder of any Note or the Agent to bring any action or proceeding
against the Company or its property in the courts of other jurisdictions or (ii)
shall be deemed to be a general consent to jurisdiction in any particular court
or a general

<PAGE>   57

                                                                              53

waiver of any defense or a consent to jurisdiction of the courts expressly
referred to in subsection (a) above in any action or proceeding in respect of
any claim or cause of action other than Permitted Claims.

                  SECTION 9.10 GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

                  SECTION 9.11 Rate of Interest. It is the intention of the
parties hereto that each Lender shall each conform strictly to usury laws
applicable to it. Accordingly, if the transactions contemplated hereby would be
usurious as to any Lender under laws applicable to it, then, in that event,
notwithstanding anything to the contrary in this Agreement or in the Notes to
the order of such Lender, it is agreed as follows: (a) the aggregate of all
consideration which constitutes interest under law applicable to such Lender
that is contracted for, taken, reserved, charged or received by such Lender
hereunder, or under such Notes or otherwise, shall under no circumstances exceed
the maximum amount allowed by such applicable law, and any excess shall be
credited by such Lender on the principal amount of the sums owed to such Lender
(or, if all amounts owing to such Lender shall have been paid in full, refunded
by such Lender to the Company); or (b) in the event that a prepayment of any
Advances owed to any Lender is required, then such consideration that
constitutes interest under law applicable to such Lender may never include more
than the maximum amount allowed by such applicable law, and excess interest, if
any, provided for shall be canceled automatically by such Lender as of the date
of such prepayment and, if theretofore paid, shall be credited by such Lender on
the principal amount of such prepayment obligation (or, if the principal amount
of such prepayment obligation shall have been paid in full, refunded by such
Lender to the Company). To the extent that Article 5069- 1.0001 of the Texas
Revised Civil Statutes is relevant to any Lender for the purpose of determining
the maximum amount of interest allowed by applicable law, such Lender hereby
elects to determine the applicable rate ceiling under such Article by the
indicated (weekly) rate ceiling from time to time in effect, subject to such
Lender's right subsequently to change such method in accordance with applicable
law. In no event, however, shall Chapter 346 of the Texas Finance Code apply to
this Agreement or the Notes or the transactions contemplated hereby.

                  SECTION 9.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery to the Agent of a counterpart executed by a Lender shall
constitute delivery of such counterpart to all of the Lenders. This Agreement
may be delivered by facsimile transmission of the relevant signature pages
hereof.

<PAGE>   58

                                                                              54

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

                                       EL PASO ENERGY CORPORATION

                                       By: /s/ JEFFREY I. BEASON
                                       Title: Senior Vice President and
                                              Controller

                                       THE CHASE MANHATTAN BANK, as
                                       Agent and Lender

                                       By: /s/ STEVEN WOOD
                                       Title: Vice President

<PAGE>   59

                                                                      SCHEDULE I

                          COMMITMENTS, ADDRESSES, ETC.

<TABLE>
<CAPTION>
Name and Address of Lender                        Amount of Commitment
--------------------------                        --------------------
<S>                                               <C>
The Chase Manhattan Bank                          $700,000,000
270 Park Avenue
New York, NY 10017
Attention: Steve Wood
Telephone: 212-270-7056
Telecopier: 212-270-2519
</TABLE>

<PAGE>   60

                                                                       EXHIBIT A

                                     FORM OF
                                      NOTE

$                                                             New York, New York
 -----------                                                  December 21, 2000]

         FOR VALUE RECEIVED, the undersigned, EL PASO ENERGY CORPORATION, a
Delaware corporation (the "Company"), hereby unconditionally promises to pay to
the order of (the "Lender") at the office of The Chase Manhattan Bank, located
at 270 Park Avenue, New York, New York 10017, in lawful money of the United
States of America and in same day funds, on the Termination Date (or if the
Lender is an Objecting Lender, the Commitment Expiration Date applicable to the
Lender) the principal amount of (a) DOLLARS ($ ), or, if less, (b) the aggregate
unpaid principal amount of all Advances made by the Lender to the Company
pursuant to subsection 2.1 of the Credit Agreement, as hereinafter defined. The
Company further agrees to pay interest in like money at such office on the
unpaid principal amount hereof from time to time outstanding at the rates and on
the dates specified in the Credit Agreement.

         The holder of this Note is authorized to, and prior to any transfer
hereof shall, endorse on the schedules attached hereto and made a part hereof or
on a continuation thereof which shall be attached hereto and made a part hereof
the date, Type and amount of each Advance made pursuant to subsection 2.1 of the
Credit Agreement and the date and amount of each payment or prepayment of
principal thereof, each continuation thereof, each conversion of all or a
portion thereof to another Type and, in the case of Eurodollar Rate Advances,
the length of each Interest Period with respect thereto. Each such endorsement
shall constitute prima facie evidence of the accuracy of the information
endorsed. The failure to make any such endorsement shall not affect the
obligations of the Company in respect of such Advance.

         This Note (a) is one of the Notes referred to in the $700,000,000
3-Month Revolving Credit Facility Agreement, dated as of December 21, 2000 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Company and the Lender, the other banks and
financial institutions from time to time parties thereto and The Chase Manhattan
Bank, as Agent, (b) is subject to the provisions of the Credit Agreement and (c)
is subject to optional and mandatory prepayment in whole or in part as provided
in the Credit Agreement.

         Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.

<PAGE>   61

                                                                             A-2

         All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind except those
expressly required under the Credit Agreement.

         Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.

         THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

                                       EL PASO ENERGY CORPORATION

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

<PAGE>   62

                                                              Schedule A to Note

           ADVANCES, CONVERSIONS AND REPAYMENTS OF BASE RATE ADVANCES

<TABLE>
<CAPTION>
                                                                         Amount of Base Rate
                                 Amount        Amount of Principal of   Advances Converted to
      Amount of Base Rate     Converted to       Base Rate Advances        Eurodollar Rate     Unpaid Principal Balance  Notation
Date       Advances        Base Rate Advances          Repaid                 Advances           of Base Rate Advances    Made By
----  -------------------  ------------------  ----------------------   ---------------------  ------------------------  --------
<S>   <C>                  <C>                 <C>                      <C>                    <C>                       <C>

</TABLE>

<PAGE>   63

                                                              Schedule B to Note

ADVANCES, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR RATE ADVANCES

<TABLE>
<CAPTION>
                                                                                         Amount of Eurodollar
         Amount of      Amount Converted    Interest Period and  Amount of Principal of      Rate Advances
      Eurodollar Rate  to Eurodollar Rate  Eurodollar Rate with      Eurodollar Rate       Converted to Base
Date     Advances           Advances          Respect Thereto        Advances Repaid         Rate Advances
----  ---------------  ------------------  --------------------  ----------------------  --------------------
<S>   <C>              <C>                 <C>                   <C>                     <C>

<CAPTION>
         Unpaid Principal
       Balance of Eurodollar         Notation
Date       Rate Advances             Made By
----   ---------------------         --------
<S>    <C>                           <C>

</TABLE>

<PAGE>   64

                                                                       EXHIBIT B

                                     FORM OF
                               NOTICE OF BORROWING

The Chase Manhattan Bank, as Agent
  for the Lenders parties
  to the Credit Agreement
  referred to below
270 Park Avenue
New York, New York 10017                                                  [Date]

Attention: El Paso Energy Corporation

Ladies and Gentlemen:

                  The undersigned, EL PASO ENERGY CORPORATION, refers to the
$700,000,000 3-Month Revolving Credit Facility Agreement, dated as of December
21, 2000 (the "Credit Agreement," the terms defined therein being used herein as
therein defined), among the undersigned, certain Lenders parties thereto and The
Chase Manhattan Bank, as Agent for said Lenders, and hereby gives you notice,
irrevocably, pursuant to Section 2.2 of the Credit Agreement that the
undersigned hereby requests a Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to such Borrowing (the
"Proposed Borrowing") as required by Section 2.2(a) of the Credit Agreement:

                  (i) The Business Day of the Proposed Borrowing is ___________,
         200__.

                  (ii) The Type of Advances comprising the Proposed Borrowing is
         [Base Rate Advances] [Eurodollar Rate Advances].

                  (iii) The aggregate amount of the Proposed Borrowing is
         $__________.

                  (iv) The Interest Period for each Eurodollar Rate Advance made
         as part of the Proposed Borrowing is [______ month[s]].

                  The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing, before and immediately after giving effect thereto and to the
application of the proceed therefrom:

                  (A) each representation and warranty contained in Section 4.1
         is correct in all material respects as though made on and as of such
         date; and

<PAGE>   65

                                                                             B-2

                  (B) no event has occurred and is continuing, or would result
         from such Proposed Borrowing, which constitutes an Event of Default or
         Default.

                                       Very truly yours,

                                       EL PASO ENERGY CORPORATION

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

<PAGE>   66

                                                                       EXHIBIT C

                                     FORM OF
                            ASSIGNMENT AND ACCEPTANCE

                            Dated _____________, ____

                  Reference is made to the $700,000,000 3-Month Revolving Credit
Facility Agreement, dated as of December 21, 2000 (as the same may be amended,
restated or otherwise modified from time to time, the "Credit Agreement") among
EL PASO ENERGY CORPORATION, a Delaware corporation (the "Company"), the Lenders
(as defined in the Credit Agreement) and The Chase Manhattan Bank, as Agent (the
"Agent"). Terms defined in the Credit Agreement are used herein with the same
meaning.

                  _____________ (the "Assignor") and ____________ (the
"Assignee") agree as follows:

                  1. The Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, that interest in
and to all of the Assignor's rights and obligations under the Credit Agreement
as of the date hereof which represents the percentage interest specified on
Schedule 1 of all outstanding rights and obligations under the Credit Agreement,
including such interest in the Assignor's Commitment, the Advances owing to the
Assignor, and the Notes held by the Assignor. After giving effect to such sale
and assignment, the Assignee's Commitment and the amount of the Advances owing
to the Assignee will be as set forth in Section 2 of Schedule 1.

                  2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto; (iii) makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Company or the performance or observance by the Company of any
of its obligations under the Credit Agreement or any other instrument or
document furnished pursuant thereto; and (iv) attaches the Notes referred to in
paragraph 1 above and requests that the Agent exchange such Notes for new Notes
payable to the order of the Assignee in an amount equal to the Commitment
assumed by the Assignee pursuant hereto or new Notes payable to the order of the
Assignee in an amount equal to the Commitment assumed by the Assignee pursuant
hereto and the Assignor in an amount equal to the Commitment retained by the
Assignor under the Credit Agreement, respectively, as specified on Schedule 1
hereto.

                  3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements referred
to in Section 4.1 thereof and such other documents and information as it has
deemed appropriate to make its own credit

<PAGE>   67

                                                                             C-2

analysis and decision to enter into this Assignment and Acceptance; (ii) agrees
that it will, independently and without reliance upon the Agent, the Assignor or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement; (iii) confirms that it is an
Eligible Assignee; (iv) appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under the Credit Agreement as
are delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender; [and] (vi) specifies
as its address for notices the address set forth beneath its name on the
signature pages hereof [and (vii) attaches the forms prescribed by the Internal
Revenue Service of the United States certifying as to the Assignee's status for
purposes of determining exemption from United States withholding taxes with
respect to all payments to be made to the Assignee under the Credit Agreement
and the Notes or such other documents as are necessary to indicate that all such
payments are subject to such rates at a rate reduced by an applicable tax
treaty](1).

                  4. Following the execution of this Assignment and Acceptance
by the Assignor and the Assignee, it will be delivered to the Agent for
acceptance and recording by the Agent. The effective date of this Assignment and
Acceptance shall be the date of acceptance thereof by the Agent, unless
otherwise specified on Schedule 1 hereto (the "Effective Date").

                  5. Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.

                  6. Upon such acceptance and recording by the Agent, from and
after the Effective Date, the Agent shall make all payments under the Credit
Agreement and the Notes in respect of the interest assigned hereby (including
all payments of principal, interest and commitment fees with respect thereto) to
the Assignee. The Assignor and Assignee shall make all appropriate adjustments
in payments under the Credit Agreement and the Notes for periods prior to the
Effective Date directly between themselves.

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

                  IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed by their respective officers thereunto
duly authorized, as of the date first above written, such execution being made
on Schedule 1 hereto.

----------
(1)      If the Assignee is organized under the laws of a jurisdiction outside
         the United States.

<PAGE>   68

                                   Schedule 1
                                       to
                            Assignment and Acceptance
                              Dated _________, ____

<TABLE>
<S>                                                                <C>
Section 1.

         Percentage Interest:                                                  %
                                                                         ------

Section 2.

         Assignee's Commitment:                                          $
                                                                          ------
         Aggregate Outstanding Principal
           Amount of Advances owing to the Assignee:                     $
                                                                          ------

         Note payable to the order of the Assignee
                                    Dated:                                ,
                                                                   -------  ----

                    Principal amount:                                    $
                                                                          ------

         Note payable to the order of the Assignor
                                    Dated:                                ,
                                                                   -------  ----
                    Principal amount:                                    $
                                                                          ------

Section 3.

         Effective Date(1):                                               ,
                                                                  --------  ----
</TABLE>

[NAME OF ASSIGNEE]                     [NAME OF ASSIGNOR]

By:                                    By:
   -------------------------------        --------------------------------
   Title:                                 Title:
Address for notices:
[Address]

----------
(1)      This date should be no earlier than the date of acceptance by the
         Agent.

<PAGE>   69

                                                                               2

Consented to:

EL PASO ENERGY CORPORATION             THE CHASE MANHATTAN BANK, as
                                            Agent

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

<PAGE>   70

                                                                               3

Accepted this __ day
of __________, ___

THE CHASE MANHATTAN BANK, as
  Agent

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

<PAGE>   71

                                                                       EXHIBIT D

      FORM OF OPINION OF [ASSOCIATE GENERAL][SENIOR] COUNSEL OF THE COMPANY

                                                            [December] ___, 2000

To Each of the Lenders and the Agent
 Referred to Below
c/o The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017

                         Re: El Paso Energy Corporation

Ladies and Gentlemen:

                  This opinion is furnished to you pursuant to Section
3.2(b)(iii) of the $700,000,000 3-Month Revolving Credit Facility Agreement,
dated as of December 21, 2000 (the "Credit Agreement"), among El Paso Energy
Corporation (the "Company"), the banks and other financial institutions from
time to time party thereto (each a "Lender," and together the "Lenders") and The
Chase Manhattan Bank, as Agent (in such capacity, the "Agent") for the Lenders.
Unless the context otherwise requires, all capitalized terms used herein without
definition shall have the meanings ascribed to them in the Credit Agreement.

                  I am [Associate General] [Senior] Counsel of the Company, and
I, or attorneys over whom I exercise supervision, have acted as counsel for the
Company in connection with the preparation, execution and delivery of the Credit
Agreement. In that connection, I or such attorneys have examined:

                  (1) the Credit Agreement, executed by the parties thereto; and

                  (2) the Note, executed by the Company.

                  I, or attorneys over whom I exercise supervision, have also
examined the originals, or copies certified to our satisfaction, of the
agreements, instruments and other documents, and all of the orders, writs,
judgments, awards, injunctions and decrees, which affect or purport to affect
the Company's ability to perform its respective obligations under the Credit
Agreement or the Note (collectively referred to herein as the "Documents"). In
addition, I, or attorneys over whom I exercise supervision, have examined the
originals, or copies certified to our satisfaction, of such other CORPORATE
records of the Company, certificates of public officials and of officers of the
Company, and agreements, instruments and other documents, as I have deemed
necessary as a basis for the opinions hereinafter expressed. In all such
examinations, I, or attorneys over whom I exercise supervision, have assumed the
legal capacity of all natural

<PAGE>   72

                                                                             D-2

persons executing documents, the genuineness of all signatures on original or
certified, conformed or reproduction copies of documents of all parties (other
than, with respect to the Documents, the Company), the authenticity of original
and certified documents and the conformity to original or certified copies of
all copies submitted to such attorneys or me as conformed or reproduction
copies. As to various questions of fact relevant to the opinions expressed
herein, I have relied upon, and assume the accuracy of, representations and
warranties contained in the Credit Agreement and certificates and oral or
written statements and other information of or from public officials, officers
and/or representatives of the Company and others.

                  I have assumed that the parties to the Documents other than
the Company have the power to enter into and perform such documents and that
such documents have been duly authorized, executed and delivered by, and
constitute legal, valid and binding obligations of, such parties.

                  The opinions expressed below are limited to the federal laws
of the United States and, to the extent relevant hereto, the General Corporation
Law of the State of Delaware, as currently in effect. I assume no obligation to
supplement this opinion if any applicable laws change after the date hereof or
if I become aware of any facts that might change the opinions expressed herein
after the date hereof.

                  Based on the foregoing and upon such investigation as we have
deemed necessary, and subject to the limitations, qualifications and assumptions
set forth herein, I am of the following opinion:

                  1. The Company (i) is a corporation duly incorporated and
         existing in good standing under the laws of the State of Delaware, and
         (ii) possesses all the corporate powers and all other authorizations
         and licenses necessary to engage in its business and operations as now
         conducted, the failure to obtain or maintain which would have a
         Material Adverse Effect.

                  2. The execution, delivery and performance by the Company of
         the Documents to which it is a party are within the Company's corporate
         powers and have been duly authorized by all necessary corporate action
         in respect of or by the Company, and do not contravene (i) the
         Company's charter or by-laws, each as amended to date, (ii) any federal
         law, rule or regulation applicable to the Company (excluding provisions
         of federal law expressly referred to in and covered by the opinion of
         Jones, Day, Reavis & Pogue delivered to you in connection with the
         transactions contemplated hereby) or any provision of the General
         Corporation Law of the State of Delaware applicable to the Company, or
         (iii) any contractual restriction binding on or affecting the Company.
         The Documents to which it is a party have been duly executed and
         delivered on behalf of the Company.

                  3. No authorization or approval or other action by, and no
         notice to or filing with, any federal governmental authority or
         regulatory body (including the FERC) is required for the due execution,
         delivery and performance by the Company of the Documents to which it is
         a party, except those required in the ordinary course of business

<PAGE>   73

                                                                             D-3

         in connection with the performance by the Company of its obligations
         under certain covenants and warranties contained in the Documents to
         which it is a party.

                  4. To the best of my knowledge, there is no action, suit or
         proceeding pending or overtly threatened against or involving the
         Company or any of the Principal Subsidiaries which, in my reasonable
         judgment (taking into account the exhaustion of all appeals), would
         have a material adverse effect upon the consolidated financial
         condition of the Company and its consolidated Subsidiaries taken as a
         whole, or which purports to affect the legality, validity, binding
         effect or enforceability of any Document.

                  These opinions are given as of the date hereof and are solely
for your benefit in connection with the transactions contemplated by the Credit
Agreement. These opinions may not be relied upon by you for any other purpose or
relied upon by any other person for any purpose without my prior written
consent.

                                       Very truly yours,

<PAGE>   74

                                                                       EXHIBIT E

               FORM OF OPINION OF NEW YORK COUNSEL TO THE COMPANY

                               [December] __, 2000

To Each of the Lenders and the Administrative Agent, Referred to Below
c/o The Chase Manhattan Bank
270 Park Avenue, 10th Floor
New York, New York 10017

         Re: $700,000,000 3-Month Revolving Credit Faculty Agreement

         We have acted as special New York counsel for El Paso Energy
Corporation, a Delaware corporation (the "Borrower"), in connection with the
$700,000,000 3-Month Revolving Credit Facility Agreement, dated as of December
21, 2000 (the "Credit Agreement"), among the Borrower, the banks and other
financial institutions from time to time party thereto (each a "Lender", and
together the "Lenders"), and The Chase Manhattan Bank, as administrative agent
(in such capacity, the "Administrative Agent") for the Lenders. This opinion is
delivered to you pursuant to Section 3.2(c)(iv) of the Credit Agreement.
Capitalized terms used herein and not otherwise defined have the meanings
assigned such terms in the Credit Agreement. With your permission, all
assumptions and statements of reliance herein have been made without any
independent investigation or verification on our part except to the extent
otherwise expressly stated, and we express no opinion with respect to the
subject matter or accuracy of the assumptions or items upon which we have
relied.

                  In connection with the opinions expressed herein, we have
examined such documents, records and matters of law as we have deemed necessary
for the purposes of this opinion. We have examined, among other documents, the
following:

                  (a) An executed copy of the Credit Agreement; and

                  (b) An executed copy of each of the Notes.

The documents referred to in items (a) and (b) above are referred to herein
collectively as the "Documents."

                  In all such examinations, we have assumed the legal capacity
of all natural persons executing documents, the genuineness of all signatures,
the authenticity of original and certified documents and the conformity to
original or certified copies of all copies submitted to us as conformed or
reproduction copies. As to various questions of fact relevant to the opinions
expressed herein, we have relied upon, and assume the accuracy of,
representations and warranties contained in the Documents and certificates and
oral or written statements and other information of or from representatives of
the Borrower and others and assume compliance on the part of all

<PAGE>   75

                                                                             E-2

parties to the Documents with their covenants and agreements contained therein.
With respect to the opinions expressed in paragraph (a) below, our opinions are
limited (x) to our actual knowledge, if any, of the Borrower's specially
regulated business activities and properties based solely upon an officer's
certificate in respect of such matters and without any independent investigation
or verification on our part and (y) to our review of only those laws and
regulations that, in our experience, are normally applicable to transactions of
the type contemplated by the Documents.

                  To the extent it may be relevant to the opinions expressed
herein, we have assumed that the parties to the Documents have the power to
enter into and perform such documents and to consummate the transactions
contemplated thereby and that such documents have been duly authorized, executed
and delivered by, and, except as set forth in paragraph (b) with respect to the
Borrower, constitute legal, valid and binding obligations of, such parties.

                  Based upon the foregoing, and subject to the limitations,
qualifications and assumptions set forth herein, we are of the opinion that:

                  (a) The execution and delivery to the Administrative Agent and
the Lenders by the Borrower of the Documents and the performance by the Borrower
of its obligations thereunder (i) do not require under present law any filing or
registration by the Borrower with, or approval or consent to the Borrower of,
any governmental agency or authority of the State of New York that has not been
made or obtained except those required in the ordinary course of business in
connection with the performance by the Borrower of its obligations under certain
covenants and warranties contained in the Documents and (ii) do not violate any
present law, or present regulation of any governmental agency or authority, of
the State of New York applicable to the Borrower or its property.

                  (b) The Documents constitute legal, valid and binding
obligations of the Borrower enforceable against the Borrower in accordance with
their respective terms.

                  (c) The borrowings by the Borrower under the Credit Agreement
and the applications of the proceeds thereof as provided in the Credit Agreement
will not violate Regulation T, U or X of the Board of Governors of the Federal
Reserve System.

                  The opinions set forth above are subject to the following
qualifications:

         (A) We express no opinion as to:

                  (i) the validity, binding effect or enforceability (a) of any
         provision of the Documents relating to indemnification, contribution or
         exculpation in connection with violations of any securities laws or
         statutory duties or public policy, or in connection with willful,
         reckless or criminal acts or gross negligence of the indemnified or
         exculpated party or the party receiving contribution; or (b) of any
         provision of any of the Documents relating to exculpation of any party
         in connection with its own negligence that a court would determine in
         the circumstances under applicable law to be unfair or insufficiently
         explicit;

                  (ii) the validity, binding effect or enforceability of (a) any
         purported waiver, release, variation, disclaimer, consent or other
         agreement to similar effect (all of the foregoing, collectively, a
         "Waiver") by the Borrower under the Documents to the extent limited by

<PAGE>   76

                                                                             E-3

         provisions of applicable law (including judicial decisions), or to the
         extent that such a Waiver applies to a right, claim, duty, defense or
         ground for discharge otherwise existing or occurring as a matter of law
         (including judicial decisions), except to the extent that such a Waiver
         is effective under and is not prohibited by or void or invalid under
         provisions of applicable law (including judicial decisions), (b) any
         provision of any Document relating to choice of governing law to the
         extent that the validity, binding effect or enforceability of any such
         provision is to be determined by any court other than a court of the
         State of New York or (c) any provision of any Document relating to
         forum selection to the extent the forum is a federal court;

                  (iii) the enforceability of any provision in the Documents
         specifying that provisions thereof may be waived only in writing, to
         the extent that an oral agreement or an implied agreement by trade
         practice or course of conduct has been created that modifies any
         provision of the Documents;

                  (iv) the effect of any law of any jurisdiction other than the
         State of New York wherein the Administrative Agent or any Lender may be
         located or wherein enforcement of any document referred to above may be
         sought that limits the rates of interest legally chargeable or
         collectible; and

                  (v) any approval, consent or authorization of the Federal
         Energy Regulatory Commission or any other United States federal agency
         or authority needed in connection with the execution, delivery and
         performance by the Borrower of the Documents, the consummation of the
         transactions contemplated thereby and compliance with the terms and
         conditions thereof.

         (B) Our opinions above are subject to (i) applicable bankruptcy,
insolvency, reorganization, fraudulent transfer, voidable preference, moratorium
or similar laws, and related judicial doctrines, from time to time in effect
affecting creditors' rights and remedies generally, (ii) general principles of
equity (including, without limitation, standards of materiality, good faith,
fair dealing and reasonableness, equitable defenses and limits on the
availability of equitable remedies), whether such principles are considered in a
proceeding at law or in equity and (iii) the qualification that certain other
provisions of the Documents may be unenforceable in whole or in part under the
laws (including judicial decisions) of the State of New York or the United
States of America, but the inclusion of such provisions does not affect the
validity as against the Borrower of the Documents to which it is a party, taken
as a whole, and the Documents contain adequate provisions for enforcing payment
of the obligations governed thereby, subject to the other qualifications
contained in this letter.

         (C) Our opinions as to enforceability are subject to the effect of
generally applicable rules of law that:

                  (i) limit the availability of a remedy under certain
         circumstances when another remedy has been elected; and

                  (ii) may, where less than all of a contract may be
         unenforceable, limit the enforceability of the balance of the contract
         to circumstances in which the unenforceable portion is not an essential
         part of the agreed exchange; and

<PAGE>   77

                                                                             E-4

                  (iii) govern and afford judicial discretion regarding the
         determination of damages and entitlement to attorneys' fees and other
         costs.

         (D) For the purposes of the opinion set forth in paragraph (c) above,
we have assumed that (i) none of the Administrative Agent or any of the Lenders
has or will have the benefit of any agreement or arrangement (excluding the
Documents) pursuant to which any Advances are directly or indirectly secured by
Margin Stock, (ii) none of the Administrative Agent, any of the Lenders, or any
of their respective affiliates has extended or will extend any other credit to
the Borrower directly or indirectly secured by Margin Stock and (iii) none of
the Administrative Agent or any of the Lenders has relied or will rely upon any
Margin Stock as collateral in extending or maintaining any Advances pursuant to
the Credit Agreement.

         (E) For purposes of our opinions above insofar as they relate to the
Borrower, we have assumed that (i) the Borrower is a corporation validly
existing in good standing in its jurisdiction of incorporation, has all
requisite power and authority, and has obtained all requisite corporate,
shareholder, third party and governmental authorizations, consents and
approvals, and made all requisite filings and registrations, necessary to
execute, deliver and perform the Documents (except to the extent noted in
paragraph (a) above), and that such execution, delivery and performance will not
violate or conflict with any law, rule, regulation, order, decree, judgment,
instrument or agreement binding upon or applicable to the Borrower or its
properties (except to the extent noted in paragraph (a) above), and (ii) the
Documents have been duly executed and delivered by the Borrower.

                  The opinions expressed herein are limited to (i) Regulations
T, U and X of the Board of Governors of the Federal Reserve System and (ii) the
laws of the State of New York, as currently in effect, except that, without
limiting the foregoing, we express no opinion with respect to, and our opinions
are subject to the effect of, laws, rules or regulations of the State of New
York or the United States of America, or of any governmental agency or authority
thereof, applicable to companies engaged in the gathering, processing,
transmission, distribution, trading or marketing of natural gas or other
hydrocarbon derivatives or power generation or the generation, transmission,
distribution, trading or marketing of electricity, or telecommunications or any
business relating to telecommunications, or to commodities trading (all of the
foregoing, collectively, the "Specified Businesses"), or as to filings,
registrations, approvals or consents under or required by such laws, rules or
regulations, including, without limitation, (x) any regulations of the Federal
Energy Regulatory Commission and of the Federal Communications Commission and
(y) the Federal Power Act and the Public Utilities Holding Company Act of 1935,
as amended (and any related regulations). Our opinions are limited to those
expressly set forth herein, and we express no opinions by implication.

                  We express no opinion as to the compliance or noncompliance,
or the effect of the compliance or noncompliance, of each of the addressees with
any state or federal laws or regulations applicable to each of them by reason of
their status as or affiliation with a federally insured depository institution.

<PAGE>   78

                                                                             E-5

                  The opinions expressed herein are solely for the benefit of
the Administrative Agent and the Lenders and may not be relied on in any manner
or for any purpose by any other person or entity.

                                       Very truly yours,

                                       JONES, DAY, REAVIS & POGUE

                                       Very truly yours,

                                       JONES, DAY, REAVIS & POGUE

                                       By:
                                          --------------------------------------

<PAGE>   79

                                                                       EXHIBIT F

                          [LETTERHEAD OF PROCESS AGENT]

                                                                          [DATE]

To each of the Lenders parties
  to the Credit Agreement (as
  defined and referred to
  below) and to The Chase Manhattan Bank
  as Agent for said Lenders
c/o The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017

To El Paso Energy Corporation
1001 Louisiana Street
Houston, Texas 77002

                           El Paso Energy Corporation
Gentlemen:

                  Reference is made to that certain $700,000,000 3-Month
Revolving Credit Facility Agreement, dated as of December 21, 2000 (said
Agreement, as it may hereafter be amended, restated, supplemented or otherwise
modified from time to time, being the "Credit Agreement," the terms defined
therein being used herein with the same meaning) among El Paso Energy
Corporation (the "Company"), certain banks and other financial institutions from
time to time party thereto as Lenders (the "Lenders") and The Chase Manhattan
Bank, as Agent for the Lenders (in such capacity, the "Agent").

          Pursuant to Section 9.9(a) of the Credit Agreement the Company has
appointed the undersigned (with an office on the date hereof at 1633 Broadway,
New York, New York 10019) as Process Agent to receive on behalf of the Company
and its property service of copies of the summons and complaint and any other
process which may be served by the Agent, any Lender or the holder of any Note
in any action or proceeding by the Agent, any Lender or the holder of any Note
in any New York State or Federal court sitting in New York City in respect of,
but only in respect of, any claims or causes of action arising out of or
relating to the Credit Agreement and the Notes issued pursuant thereto.

                  The undersigned hereby accepts such appointment as Process
Agent and agrees with each of you that (i) the undersigned will not terminate
the undersigned's agency as such Process

<PAGE>   80

                                                                             F-2

Agent prior to January 1, 2001 (and hereby acknowledges that the undersigned has
been paid in full by the Company for its services as Process Agent through such
date), (ii) the undersigned will maintain an office in New York City through
such date and will give the Agent prompt notice of any change of address of the
undersigned, (iii) the undersigned will perform its duties as Process Agent in
accordance with Section 9.9(a) of the Credit Agreement and (iv) the undersigned
will forward forthwith to the Company at its address specified below copies of
any summons, complaint and other process which the undersigned receives in
connection with its appointment as Process Agent.

                  This acceptance and agreement shall be binding upon the
undersigned and all successors of the undersigned.

                                       Very truly yours,

                                       CT CORPORATION SYSTEM

                                       By:

                                       --------------------------------------
                                       Title:

Address of the Company:

El Paso Energy Corporation
1001 Louisiana Street
Houston, Texas 77002

<PAGE>   81

                                                                       EXHIBIT G

                                     FORM OF
                                EXTENSION REQUEST

                                                                          [Date]

The Chase Manhattan Bank, as Agent
270 Park Avenue
New York, New York 10017

[Attention: Jackie Reid]

Gentlemen:

                  Reference is made to the $700,000,000 3-Month Revolving Credit
Facility Agreement, dated as of December 21, 2000, among the undersigned,
certain Lenders parties thereto and The Chase Manhattan Bank, as Agent (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement"). Terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

                  The undersigned hereby represents and warrants that no Event
of Default has occurred or is continuing.

                  This is an Extension Request pursuant to Section 2.23 of the
Credit Agreement requesting an extension of the Stated Termination Date to
[INSERT REQUESTED TERMINATION DATE]. Please transmit a copy of this Extension
Request to each of the Lenders.

                                       EL PASO ENERGY CORPORATION

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

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