Document:

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                                                                   EXHIBIT 10.DD

                                                                  CONFORMED COPY

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

                           SENIOR SECURED INTERIM TERM
                          CREDIT AND SECURITY AGREEMENT

                           Dated as of March 13, 2003

                                      among

                               EL PASO CORPORATION
                                   as Borrower

                                       and

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

                        as Initial Lenders and Co-Agents

                                       and

                            SALOMON SMITH BARNEY INC.
                                       and

                 CREDIT SUISSE FIRST BOSTON, ACTING THROUGH ITS
                              CAYMAN ISLANDS BRANCH

                   as Co-Lead Arrangers and Joint Book Runners

                                       and

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

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<TABLE>

                                TABLE OF CONTENTS
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                                                                                             PAGE
                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

<S>                                                                                            <C>
SECTION 1.01. Certain Defined Terms.........................................................    3
SECTION 1.02. Computation of Time Periods...................................................   21
SECTION 1.03. Use of Certain Terms..........................................................   21
SECTION 1.04. Headings and References.......................................................   22
SECTION 1.05. *Accounting Terms; GAAP.......................................................   22

                                   ARTICLE II

                          AMOUNTS AND TERMS OF THE LOAN

SECTION 2.01. The Loan......................................................................   22
SECTION 2.02. Making the Loan...............................................................   22
SECTION 2.03. Interest......................................................................   22
SECTION 2.04. Certain Fees..................................................................   23
SECTION 2.05. Repayment of the Loan.........................................................   23
SECTION 2.06. Prepayments of the Advance....................................................   23
SECTION 2.07. Increased Costs; Capital Adequacy, Etc........................................   24
SECTION 2.08. Interest Rate Determination; Late Payments; Payments and Computations.........   25
SECTION 2.09. *Taxes........................................................................   26
SECTION 2.10. Evidence of Debt..............................................................   27
SECTION 2.11. Change of Lending Office......................................................   28
SECTION 2.12. Sharing of Payments, Etc......................................................   28
SECTION 2.13. Use of Proceeds...............................................................   29

                                   ARTICLE III

                               CONDITIONS TO LOAN

SECTION 3.01. Conditions Precedent to Making the Loan.......................................   29
SECTION 3.02. Determinations Under Section 3.01.............................................   34

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Borrower................................   34
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                                    ARTICLE V

                            COVENANTS OF THE BORROWER

<S>                                                                                            <C>
SECTION 5.01. Affirmative Covenants.........................................................   38
SECTION 5.02. Negative Covenants............................................................   41
SECTION 5.03. Reporting Requirements........................................................   50

                                   ARTICLE VI

                                EVENTS OF DEFAULT

SECTION 6.01. Events of Default.............................................................   52

                                   ARTICLE VII

                    GRANT OF SECURITY INTEREST, PLEDGE AND ASSIGNMENT

SECTION 7.01. Pledge and Assignment.........................................................   56
SECTION 7.02. Security for Obligations......................................................   57
SECTION 7.03. Delivery of Collateral........................................................   57
SECTION 7.04. Borrower Remains Liable.......................................................   58
SECTION 7.05. Further Assurances............................................................   58
SECTION 7.06. Collateral Agent Appointed Attorney-in-Fact...................................   59
SECTION 7.07. Collateral Agent May Perform..................................................   59
SECTION 7.08. Reasonable Care...............................................................   59
SECTION 7.09. Rights, Remedies and Obligations..............................................   59
SECTION 7.10. Remedies upon Default.........................................................   61
SECTION 7.11. Continuing Assignment and Security Interest...................................   62

                                  ARTICLE VIII

                       THE AGENT AND THE COLLATERAL AGENT

SECTION 8.01. Authorization and Action......................................................   62
SECTION 8.02. Agent's and Collateral Agent's Reliance, Etc..................................   63
SECTION 8.03. Lender Credit Decision........................................................   63
SECTION 8.04. Indemnification of the Agents.................................................   64
SECTION 8.05. Successor Agents..............................................................   64
SECTION 8.06. Lead Arrangers................................................................   64

                                   ARTICLE IX

                                  MISCELLANEOUS

SECTION 9.01. Amendments, Etc...............................................................   64
SECTION 9.02. Notices, Etc..................................................................   65
SECTION 9.03. No Waiver; Remedies...........................................................   66
SECTION 9.04. Costs and Expenses............................................................   66
SECTION 9.05. Right of Set-off..............................................................   67
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<S>                                                                                            <C>
SECTION 9.06. Binding Effect................................................................   67
SECTION 9.07. Assignments and Participations................................................   68
SECTION 9.08. Governing Law.................................................................   70
SECTION 9.09. Execution in Counterparts.....................................................   70
SECTION 9.10. Consent to Jurisdiction.......................................................   70
SECTION 9.11. Loan Facility Migration.......................................................   71
SECTION 9.12. Waiver of Jury Trial..........................................................   71
SECTION 9.13. Most Favored Nation Treatment.................................................   72
SECTION 9.14. Termination...................................................................   72
SECTION 9.15. Conformity with Senior Bank Facility..........................................   72
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Exhibits
--------

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

Exhibit B - Form of Borrower Note

Exhibit C - Form of Subsidiary Guaranty

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

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

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

Exhibit G - Form of Solvency Certificate of the Borrower

Schedules
---------

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

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

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                           SENIOR SECURED INTERIM TERM
                          CREDIT AND SECURITY AGREEMENT

                           Dated as of March 13, 2003

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

                             PRELIMINARY STATEMENTS:

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

2.    The Sponsor Subsidiaries intend to refinance their obligations under the
      Sponsor Subsidiary Credit Agreement (the "SPONSOR SUBSIDIARY
      OBLIGATIONS").

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

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

5.    The Borrower desires to finance the Refinancing Transaction through (a)
      the issuance of debt securities or a syndicated loan facility
      (collectively, the "TAKE-OUT SECURITIES") of the Borrower or the
      Subsidiary Borrowers or one or more of their respective Affiliates, or (b)
      to the extent the Borrower is unable to finance the Refinancing
      Transaction with the Take-Out Securities on or prior to the Closing Date,
      a Senior Secured Interim Term Loan Facility of $1,200,000,000 (the "LOAN
      FACILITY"), to be made available to the Borrower by the Initial Lenders as
      interim financing to the Take-Out Securities and to be secured by a
      collateral assignment by the Borrower of the Subsidiary Loans and
      Subsidiary Collateral to effectively guarantee and provide credit support
      for, and ensure the Lenders against loss in respect of, the Borrower's
      obligations in respect of the

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      Loan Facility. The Initial Lenders have indicated their willingness to
      make available the Loan Facility on the terms and conditions of this
      Agreement.

6.    Certain provisions contained in this Agreement are marked with an asterisk
      (*) and shall be conformed, pursuant to the terms of Section 9.15 hereof,
      to the relevant provisions of the Senior Bank Facility (as hereinafter
      defined) upon execution, delivery and effectiveness thereof.

      NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:

                                   Article I

                         DEFINITIONS AND INTERPRETATION

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

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

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

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

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

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

      *"ALTERNATE PROGRAM" means any program providing for the sale or other
disposition of trade or other receivables entered into by the Borrower or a
Subsidiary 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 to comply with relevant FASB or similar
policies or guidelines from time to time in effect) or (b) customary for similar
transactions as reasonably determined by the administrative agent under the
Senior Bank Facility (or, until the effectiveness of the Senior Bank Facility,
the administrative agent under the El Paso Existing 364-Day Facility).

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

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

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

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

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

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

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

      "BASE RATE MARGIN" means 3.50% per annum.

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

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

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

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

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

      *"CAPITALIZATION" of any Person means the sum (without duplication) of (a)
consolidated Debt of such Person and its consolidated Subsidiaries, plus (b) the
aggregate amount of Guaranties by such Person and its consolidated Subsidiaries,
plus (c) the consolidated common and preferred stockholders' equity of such
Person and its consolidated Subsidiaries, plus (d) the cumulative amount by
which stockholders' equity of such Person shall have been reduced by reason of
non-cash write downs of long-term assets from and after the Closing Date, plus
(e) preferred interests of Subsidiaries (as listed on the consolidated balance
sheet of the Borrower as of December 31, 2002), plus (f) minority interests in
Subsidiaries (as listed on the consolidated balance sheet of the Borrower as of
December 31, 2002), so long as the terms and conditions of any financing
associated with any such items referred to in clause (e) or (f) (or successive
extensions or refinancings thereof) are not amended so as to become more
restrictive

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to the Borrower and its Subsidiaries (taken as a whole) than the terms and
conditions of the Senior Bank Facility, and minus (g) accumulated other
comprehensive income (loss) (or analogous line item).

      "CAPITALIZED LEASES" means all leases that have been or should be, in
accordance with GAAP, recorded as capitalized leases.

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

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

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

      "CITIBANK" means Citibank, N.A.

      "CLOSING DATE" means March 13, 2003.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

      "CREDIT RELATED PARTY" means any of the Borrower, the Pipeline Company
Borrowers, the Senior Bank Facility Guarantors and the Restricted Subsidiaries,
as applicable.

      *"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 Borrower
or a Subsidiary, any liabilities of the Borrower or such Subsidiary, as the case
may be, under any Alternate Program, or any document executed by the Borrower or
such Subsidiary, as the case may be, in connection therewith, (c) any
obligations of the Borrower or a Subsidiary with respect to lease payments for
the headquarters building of the Borrower located in Houston, Texas, (d) Current
Reimbursement Obligations of such Person and (e) any item referred to in clause
(e) or (f) of the definition of "Capitalization" notwithstanding any change in
the accounting treatment thereof after December 31, 2002; 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 or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.

      "DISTRIBUTIONS" means any distribution or dividend or return of capital or
any other distribution, payment or delivery of property or cash, or the
redemption, retirement, purchase or acquisition, directly or indirectly, of any
Equity Interest now or hereafter outstanding (or any warrants for

                                       6
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or options in respect of any such interest) or the setting aside of any funds
for any of the foregoing purposes.

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

      *"EBITDA" means for the applicable period and applicable Pipeline Company
Borrower: the sum of (a) net income (or net loss), (b) interest expense, (c)
income tax expense, (d) depreciation expense, (e) amortization expense, (f) all
extraordinary non-cash losses otherwise deducted from the determination of net
income (or net loss) for such period (other than any such non-cash losses that
require an accrual or reserve for cash charges for any future period and any
write-downs or write-offs of accounts receivable) less all extraordinary
non-cash gains otherwise added in the determination of net income (or net loss)
for such period, and (g) all non-recurring losses or expenses deducted from the
determination of net income (or net loss) for such period to the extent such
losses or expenses were funded from capital contributions from any holder of
Equity Interest in such Pipeline Company Borrower, in each case of such Pipeline
Company Borrower and its consolidated Subsidiaries, determined on a basis in
accordance with GAAP for such period.

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

      "EL PASO EXISTING 3-YEAR FACILITY" means the Amended and Restated
$1,000,000,000 3-year Revolving Credit and Competitive Advance Facility
Agreement, dated as of June 27, 2002, among the Borrower, EPNGC, TGPC, El Paso
CGP Company, a Delaware corporation, the several banks and financial
institutions from time to time parties thereto, JPMorgan Chase Bank, a New York
banking corporation, as administrative agent and CAF advance agent, ABN AMRO
Bank, N.V. and Citibank, N.A. as co-documentation agents, as the same may be
amended, supplemented or modified from time to time.

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

      "ELIGIBLE ASSIGNEE" means:

            (a) a Lender;

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

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

                                       7
<PAGE>

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

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

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

            (g) a finance company, insurance company, mutual fund, pension plan
      or fund or other financial institution or fund (whether a corporation,
      partnership, limited liability company, trust or other Business Entity)
      that is engaged in making, purchasing or otherwise investing in commercial
      loans in the ordinary course of its investment business having assets in
      excess of $100,000,000; and

            (h) other financial institutions or institutional lenders;

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

      *"ENVIRONMENTAL LAWS" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamations of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.

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

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

      *"EPN UNITS" means any Series A Common Units and Series C Common Units
issued by El Paso Energy Partners, L.P. and owned by any Credit Party.

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

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

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

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

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

                                       8
<PAGE>

      "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 and the
regulations promulgated and rulings issued thereunder.

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

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

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

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

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

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

      "FASB" means the Financial Accounting Standards Board.

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

                                       9
<PAGE>

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

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

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

      *"FOREIGN LENDER" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

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

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

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

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

                                       10
<PAGE>

otherwise as contemplated hereby and have not defaulted on its or their portions
thereof, shall be only its pro rata portion of such obligation.

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

      *"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 purpose 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 COSTS" has the meaning set forth in Section 8.04 hereof.

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

      *"INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.

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

      "INTERCREDITOR AGREEMENT" has the meaning set forth in the Senior Bank
Facility.

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

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

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

      "LIBO RATE" means, for any Interest Period (or any portion thereof), an
interest rate per annum equal to the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any
successor page) as the London interbank offered rate for deposits in U.S.

                                       11
<PAGE>

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

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

      "LIBOR MARGIN" means 4.25% per annum.

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

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

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

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

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

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

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

      *"MATERIAL SUBSIDIARY" means any Subsidiary of the Borrower (other than a
"Project Financing Subsidiary", as defined in the El Paso Existing 364-Day
Facility) that itself (on an unconsolidated, stand-alone basis) owns in excess
of 10% of the book value of the consolidated assets of the Borrower and its
consolidated Subsidiaries.

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

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

                                       12
<PAGE>

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

      *"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or 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 Borrower or an ERISA Affiliate has any liability
(contingent or otherwise), such plan being maintained pursuant to one or more
collective bargaining agreements.

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

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

      "MUSTANG TRANSACTION" means the minority interest transaction known as
"Project Mustang" among the Borrower, certain of its Subsidiaries and Mustang
pursuant to the relevant operative documents for such transaction, including,
without limitation, (i) the transactions contemplated by that certain Amended
and Restated El Paso Agreement originally dated as of May 9, 2000, and amended
and restated through July 19, 2002, executed by the Borrower in favor of Mustang
and the other beneficiaries described therein, and (ii) the obligations of
certain Subsidiaries under that certain Amended and Restated Sponsor Subsidiary
Credit Agreement originally dated as of May 9, 2000, and amended and restated
through July 19, 2002, by and among Noric Holdings, L.L.C., as borrower, each
other Sponsor Subsidiary (as defined therein), as co-obligors, Clydesdale
Associates, L.P., as lender, and Wilmington Trust Company, as collateral agent.

      *"NET CASH PROCEEDS" means, with respect to the sale or other disposition
of any asset, or property, an amount equal to one hundred percent (100%) of the
cash proceeds from such sale or other disposition, net of any Taxes, indemnity
obligations, purchase price adjustments and analogous items, related transaction
fees, commissions and expenses and, if applicable, amounts required to satisfy
Permitted Liens on the related property or asset, in each case paid or
reasonably reserved against.

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

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

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

                                       13
<PAGE>

amount in respect of any of the
foregoing that the Agent or any of the Lenders, in its sole discretion, may
elect to pay or advance on behalf of the Borrower.

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

      "ORGANIZATIONAL DOCUMENTS" means, with respect to any Business Entity, any
certificate of incorporation, charter, by-laws, memorandum of association,
articles of association, partnership agreement, limited liability company
agreement, certificate of limited partnership, certificate of formation,
certificate of trust, trust agreement or other agreement or instrument under
which such Business Entity is formed or organized under Applicable Laws.

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

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

      *"PERMITTED LIENS" means:

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

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

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

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

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

            (f) pledges and deposits to secure letters of credit or the
      performance of bids, tenders, trade or government contracts (other than
      for borrowed money), leases, licenses, statutory obligations, surety
      bonds, performance bonds and other obligations, in each case incurred in
      the ordinary course of business;

            (g) any Lien reserved in a grant or conveyance in the nature of a
      farm-out or conditional assignment to the Borrower or any of its
      Subsidiaries entered into in the ordinary

                                       14
<PAGE>

      course of business on reasonable terms to secure undertakings of the
      Borrower or any such Subsidiary in such grant or conveyance;

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

            (i) 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;

            (j) 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, participants, joint venture, joint operating, unitization,
      pooling and communication agreements, or other similar transactions in the
      ordinary course of business; and

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

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

      *"PIPELINE COMPANY BORROWERS" means the collective reference to EPNGC,
TGPC and ANR Pipeline.

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

      *"PRINCIPAL SUBSIDIARY" means, at any time, any Subsidiary of the Borrower
(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 Borrower and
its consolidated Subsidiaries at such time or (b) constituting a Pipeline
Company Borrower.

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

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

                                       15
<PAGE>

      *"PROJECT FINANCING" means any Indebtedness (a) incurred to finance or
refinance the acquisition, improvement, installation, design, engineering,
construction, development, completion, maintenance or operation of, or otherwise
in respect of, all or any portion of any project, or any asset related thereto,
and any Guaranty with respect thereto, other than any portion of such
Indebtedness or Guaranty permitting or providing for recourse against the
Borrower or any of its Subsidiaries, other than (i) recourse to the Equity
Interests in, Indebtedness or other obligations of, or assets of, one or more
Project Financing Subsidiaries, and (ii) such recourse as exists under any
Contingent Guaranty or (b) of any Project Financing Subsidiary, or any Guaranty
with respect thereto, that is secured solely by, or recourse for which is
limited solely to, the Equity Interests in, Indebtedness or other obligations
of, or assets of, one or more Project Financing Subsidiaries.

      *"PROJECT FINANCING SUBSIDIARY" means any Subsidiary of the Borrower whose
principal purpose is to incur Project Financing, or to become a direct or
indirect partner, member or other equity participant or owner in a Business
Entity so created, and substantially all the assets of which Subsidiary or
Business Entity are limited to (a) those assets being financed (or to be
financed), or the operation of which is being financed (or to be financed), in
whole or in part by a Project Financing, (b) power contracts, gas contracts,
administrative or other related service agreements and Swap Agreements related
to gas or power, or (c) Equity Interests in, or Indebtedness or other
obligations of, one or more other such Subsidiaries or Business Entities or to
Indebtedness or other obligations of the Borrower or its Subsidiaries or other
Persons.

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

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

      *"RECEIVABLES PURCHASE AND SALE AGREEMENT" means 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 CNAI, as agent, as amended as of the
date hereof, (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, (c) the anticipated
Receivables Purchase and Servicing Agreement, by and among El Paso Energy
Finance I Company, LLC, TGPC, EPNGC, Southern Natural Gas, the financial
institutions from time to time party thereto as purchasers, and General Electric
Capital Corporation, as a purchaser and as administrative agent for the
purchasers, 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, and (d) the anticipated
Receivables Sale Agreement by and

                                       16
<PAGE>

between El Paso Energy Finance II Company and The CIT Group/Business Credit,
Inc., 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.

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

      "RED RIVER CBI PURCHASE AGREEMENT" means the Purchase Agreement with
respect to certificates of beneficial interest issued by Rio Grande Trust I
dated as of March 29, 2002 among Rio Grande Trust I as issuer, Westdeutsche
Landesbank Girozentrale, New York Branch (now known as WestLB AG, New York
Branch), as initial holder, Whiteclay WTC, Inc. as depositor and Wilmington
Trust Company as trustee.

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

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

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

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

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

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

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

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

      *"RESTRICTED SUBSIDIARIES" means the collective reference to each Pipeline
Company Borrower and its Subsidiaries, each Subsidiary Guarantor (as defined in
the Senior Bank Facility) (other than the Exempted Guarantors, as defined in the
Senior Bank Facility) and its Subsidiaries, ANR Storage Company and its
Subsidiaries, Noric Holdings III, L.L.C. and its Subsidiaries (including,
without limitation, Colorado Interstate Gas Company), CIG Gas Supply Company and
its Subsidiaries (including, without limitation, Wyoming Interstate Company
Ltd.), Wyoming Gas Supply Inc. and its Subsidiaries, and Bear Creek Storage
Company, provided that none of Colorado Interstate Gas Company, Noric Holdings
I, L.L.C. and its Subsidiaries, Noric Holdings IV, L.L.C. and its Subsidiaries
shall be considered a "Restricted Subsidiary" hereunder until the payment in
full of the Mustang Transaction, or any refinancing thereof.

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

                                       17
<PAGE>

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

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

      "SCHEDULED MATURITY DATE" means March 11, 2005.

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

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

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

      "SENIOR BANK FACILITY" means the $3,000,000,000 Revolving Credit Agreement
to be entered into among the Borrower, EPNGC, TGPC, ANR Pipeline, the several
banks and other financial institutions from time to time parties thereto and
JPMorgan Chase Bank, as administrative agent, as amended, supplemented or
otherwise modified from time to time.

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

      *"SENIOR BANK FACILITY BORROWER" means the collective reference to the
Borrower and each Pipeline Company Borrower under the Senior Bank Facility.

      *"SENIOR BANK FACILITY COLLATERAL" means all property of the Credit
Parties, now owned or hereafter acquired, upon which a Lien is purported to be
created by any Senior Bank Facility Security Document.

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

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

      *"SENIOR BANK FACILITY LOAN DOCUMENTS" means, collectively, the "Loan
Documents" (or any analogous terms, as defined in the Senior Bank Facility.

      *"SENIOR BANK FACILITY SECURED PARTIES" has the meaning assigned to the
term "Secured Parties" for any analogous terms under the Senior Bank Facility.

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

      "SOLVENT" means, with respect to any Person as of the date of any
determination, that on such date, after giving effect to such Person's rights
and Obligations under the Operative Documents, including rights of contribution
and indemnity, (a) the fair value of the Property of such Person at fair

                                       18
<PAGE>

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

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

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

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

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

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

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

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

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

      *"SUBSIDIARY" means, as to any Person (the "parent" at any date), any
Business Entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other Business Entity of which 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.

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

      "SUBSIDIARY BORROWER CREDIT AGREEMENT" means the Credit Agreement dated as
of the date hereof among the Subsidiary Loan Parties, the Borrower, as lender,
and CNAI, as loan administrator,

                                       19
<PAGE>

as the same may be amended, amended and restated or otherwise modified from time
to time in accordance with the terms thereof.

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

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

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

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

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

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

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

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

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

      *"SWAP AGREEMENT" means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
the Borrower or its Subsidiaries shall be a Swap Agreement.

      "TAKE-OUT SECURITIES" has the meaning set forth in Preliminary Statement
(5).

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

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

      *"TERMINATION EVENT" means (a) a "reportable event," as such term is
described in Section 4043 of ERISA (other than a "reportable event" not subject
to the provision for 30-day notice to

                                       20
<PAGE>

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 Borrower or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a "substantial employer," as such term is
defined in Section 4001(a)(2) of ERISA or the incurrence of liability by the
Borrower or any ERISA Affiliate under Section 4064 of ERISA upon the termination
of a Multiple Employer Plan, or (c) the filing of a notice of intent to
terminate a Plan or the treatment of a Plan amendment as a termination under
Section 4041 of ERISA, or (d) the institution of proceedings to terminate a Plan
by the PBGC under Section 4042 of ERISA, or (e) the conditions set forth in
Section 302(f)(1)(A) and (B) of ERISA to the creation of a lien upon property or
rights to property of the Borrower or any ERISA Affiliate for failure to make a
required payment to a Plan are satisfied, or (f) the adoption of an amendment to
a Plan requiring the provision of security to such Plan, pursuant to Section 307
of ERISA, or (g) the occurrence of any other event or the existence of any other
condition which would reasonably be expected to result in the termination of, or
the appointment of a trustee to administer, any Plan under Section 4042 of
ERISA.

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

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

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

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

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

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

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

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

                                       21
<PAGE>

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

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

                                   Article II

                          AMOUNTS AND TERMS OF THE LOAN

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

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

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

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

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

                                       22
<PAGE>

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

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

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

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

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

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

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

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

                                       23
<PAGE>

Lender or Lenders, on the last day of such Interest Period, any amount owing
pursuant to Section 9.04(c) in connection with such prepayment.

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

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

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

            (iii) 100% of the Net Cash Proceeds of issuances of Indebtedness of
      any Chain Subsidiary (including as a result of the issuance of the
      Take-Out Securities),

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

            (v) 100% of the Net Cash Proceeds of the Take-Out Securities (to the
      extent not otherwise covered by clauses (i) through (iv) above).

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

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

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

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

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

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

      SECTION 2.07. Increased Costs; Capital Adequacy, Etc. (a) If, due to
either (i) the introduction after the date of this Agreement of or any change
after the date of this Agreement (including

                                       24
<PAGE>

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

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

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

      SECTION 2.08. Interest Rate Determination; Late Payments; Payments and
Computations. (a) The Borrower shall make each payment hereunder not later than
1:00 P.M.

                                       25
<PAGE>

(New York City time) on the day when due in U.S. dollars to the Agent at the
Agent's Account in same day funds. Any payment received after 1:00 P.M. (New
York City time) on the day when due shall be applied on the next following
Business Day.

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

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

      SECTION 2.09. *Taxes. (a) Any and all payments by the Borrower hereunder
or under the Borrower Notes to each Indemnified Party shall be made, in
accordance with Section 2.08, free and clear of and without deduction for any
and all Taxes, excluding all Excluded Taxes. If the Borrower shall be required
by law to deduct any Indemnified Taxes from or in respect of any sum payable
hereunder or under any Borrower 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 2.09) such Indemnified Party receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall
make or cause to be made such deductions and (iii) the Borrower 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 Borrower
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 W8-ECI (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 W8-BEN (relating to all amounts to be received by such Indemnified
Party pursuant to this Agreement) and (II) was not a United States 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 2.09 and is entitled to file
or give, as applicable, under applicable law, provided, further, that should an
Indemnified Party become subject to Indemnified Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps as such
Indemnified Party shall reasonably request to assist such Indemnified Party to
recover such Indemnified Taxes, and provided, further, that each Indemnified
Party, with respect to itself, agrees to indemnify and hold harmless the
Borrower from any taxes, penalties, interest and other expenses, costs and
losses incurred or payable by the Borrower as a result of the failure of the
Borrower 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 2.09. If any Indemnified Party receives a net credit or
refund in respect of such Indemnified Taxes or amounts so paid by the Borrower,
it shall promptly pay such net credit or refund to the Borrower, provided that
the Borrower 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 Borrower agrees to pay all Other Taxes.

                                       26
<PAGE>

      (c) The Borrower will indemnify each Indemnified Party and the Agent for
the full amount of Indemnified Taxes or Other Taxes (including any Indemnified
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.09) 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 Borrower 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 Indemnified
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 Borrower
with U.S. Internal Revenue Service form W-8ECI or W-8BEN or W-8IMY, 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 Borrower
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 Borrower 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 Borrower to such 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 Borrower Notes. Upon the
request of the Borrower 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 Borrower 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 Borrower 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 Borrower of such
fact.

      (e) Any Indemnified Party claiming any additional amounts payable pursuant
to this Section 2.09 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
Borrower hereunder, the agreements and obligations of the Borrower and each
Indemnified Party contained in this Section 2.09 shall survive the payment in
full of all principal of and interest on the Loan and under the Borrower Notes.

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

      SECTION 2.10. Evidence of Debt. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender

                                       27
<PAGE>

resulting from the Loan, including the amounts of principal and interest payable
and paid to such Lender from time to time hereunder.

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

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

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

      SECTION 2.11. Change of Lending Office. The Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.03(c), 2.07 or
2.09 with respect to such Lender, such Lender will use reasonable efforts
(consistent with the internal policies of and legal and statutory restrictions
applicable to such Lender) to select a jurisdiction for the Lending Office of
such Lender or change the jurisdiction of such Lending Office so as to avoid the
need for or reduce the amount of any amounts accruing under 2.03(c), Section
2.07 or 2.09; provided that no such selection, change of the jurisdiction of
such Lending Office or assignment shall be made if, in the reasonable judgment
of such Lender, such selection, change or assignment would be disadvantageous to
such Lender.

      SECTION 2.12. Sharing of Payments, Etc. If any Lender shall obtain at any
time any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise, other than as a result of an assignment pursuant
to Section 9.07) (a) on account of Obligations due and payable to such Lender
hereunder and under the Borrower Notes at such time in excess of its ratable
share (according to the proportion of (i) the amount of such Obligations due and
payable to such Lender at such time to (ii) the aggregate amount of the
Obligations due and payable to all Lenders hereunder and under the Borrower
Notes at such time) of payments on account of the Obligations due and payable to
all Lenders hereunder and under the Borrower Notes at such time obtained by all
the Lenders at such time or (b) on account of Obligations owing (but not due and
payable) to such Lender hereunder and under the Borrower Notes at such time in
excess of its ratable share (according to the proportion of (i) the amount of
such Obligations owing to such Lender at such time to (ii) the aggregate amount
of the Obligations owing (but not due and payable) to all Lenders hereunder and
under the Borrower Notes at such time) of payments on account of the Obligations
owing (but not due and payable) to all Lenders hereunder and under the Borrower
Notes at such time obtained by all of the Lenders at such time, such Lender
shall forthwith purchase from the other Lenders such interests or participating
interests in the Obligations due and payable or owing to them, as the case may
be, as shall be necessary to cause such purchasing Lender to share the excess
payment ratably with each of them; provided, however, that if all or any portion
of such excess payment is thereafter recovered from such purchasing Lender, such
purchase from each other Lender shall be rescinded and such other Lender shall
repay to the purchasing Lender the purchase price to the extent of such Lender's
ratable share (according to the proportion of (i) the purchase price paid to
such Lender to (ii) the aggregate purchase price paid to all Lenders) of such
recovery, together with an amount equal to such Lender's ratable share
(according to the proportion of (i) the amount of such other Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any

                                       28
<PAGE>

interest or other amount paid or payable by the purchasing Lender in respect of
the total amount so recovered. The Borrower agrees that any Lender so purchasing
an interest or participating interest from another Lender pursuant to this
Section 2.12 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such interest
or participating interest, as the case may be, as fully as if such Lender were
the direct creditor of the Borrower in the amount of such interest or
participating interest, as the case may be.

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

                                  Article III

                               CONDITIONS TO LOAN

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

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

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

            (c) The Agent shall have received the following documents, each
      dated as of the Closing Date (other than the documents described in
      clauses (ii) and (iii)), and duly executed by the respective party or
      parties thereto, and otherwise in form and substance satisfactory to the
      Initial Lenders and the Agent (it being understood that all such documents
      shall have been delivered in the form agreed as of the Closing Date), and
      (except for the documents listed in clauses (ii) and (iii) below), in the
      number of copies necessary to provide the Initial Lenders and the Agent
      each with original counterparts of such documents plus three additional
      original counterparts:

                  (i) this Agreement;

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

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

                                       29
<PAGE>

                  (iv) the Subsidiary Guaranty;

                  (v) the Subsidiary Borrower Credit Agreement;

                  (vi) the Subsidiary Borrower Security Agreement;

                  (vii) the Subsidiary Borrower Pledge Agreement;

                  (viii) the Mortgages;

                  (ix) the Transfer Letters;

                  (x) the Account Control Agreements;

                  (xi) the Collateral Agency Agreement;

                  (xii) the Subordination Agreement;

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

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

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

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

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

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

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

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

                                       30
<PAGE>

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

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

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

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

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

                  (xxvi) a favorable opinion of Shearman & Sterling, counsel for
            the Agent;

                  (xxvii) original executed counterparts of each other Operative
            Document;

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

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

                  (xxx) the cancelled EPPC Notes.

                                       31
<PAGE>

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

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

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

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

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

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

            (j) The Agent, Co-Agents, Lead Arrangers and the Initial Lenders
      shall have received a certificate of the chief financial officer of the
      Borrower certifying that (i) no default has occurred and is continuing
      under each of the Borrower's existing revolving credit facilities listed
      on Schedule 3.01(j) and (ii) setting forth computations demonstrating that
      (x) the Borrower was in compliance with the financial covenants set forth
      in each of the Borrower's existing credit facilities listed on Schedule
      3.01(j) as of December 31, 2002 and (y) the Borrower will be in compliance
      with the financial covenants under each of its revolving credit facilities
      listed on Schedule 3.01(j) after giving effect to (A) the transactions
      contemplated hereby, (B) the Refinancing transactions of debt and equity
      contemplated with respect to the Electron Transaction, and (C) the
      issuance of debt securities by ANR Pipeline and Southern Natural Gas, and
      based on the projections for such period previously delivered to the Lead
      Arrangers as of, and for the periods ended, March 31, 2003, June 30, 2003,
      September 30, 2003 and December 31, 2003.

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

                                       32
<PAGE>

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

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

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

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

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

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

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

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

                                       33
<PAGE>

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

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

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

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

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

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

                                   Article IV

                         REPRESENTATIONS AND WARRANTIES

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

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

                                       34
<PAGE>

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

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

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

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

                  (ii) The unaudited consolidated balance sheet of the Borrower
            and its consolidated Subsidiaries as of September 30, 2002, and the
            related consolidated statements of income and cash flows of the
            Borrower and its consolidated Subsidiaries for the three months then
            ended, certified by the chief financial officer of the Borrower,
            copies of which have been furnished or otherwise made available to
            the Agent and the Initial Lenders prior to the date hereof, fairly
            present the consolidated results of operations of the Borrower and
            its consolidated Subsidiaries for the three months then ended, all
            in accordance with GAAP consistently applied (except as approved by
            the chief financial officer of the Borrower and as disclosed
            therein) and subject to normal year end audit adjustments.

            (f) Compliance with Laws, Etc. The Borrower and each of its
      Subsidiaries is in compliance with all laws, rules, regulations and orders
      of any governmental authority applicable to it or its property except
      where the failure to comply, individually or in the aggregate, would not
      in the reasonable judgment of the Borrower be expected to result in a
      Material Adverse Effect,

                                       35
<PAGE>

      provided that any alleged failure to comply with such laws, rules,
      regulations and orders that are disclosed in the Borrower's 8-K's, 10-Q's
      or 10-K's, or materials relating to proxies, in each case filed with the
      SEC prior to the Closing Date shall not be deemed at any time to be
      expected to have a Material Adverse Effect.

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

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

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

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

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

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

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

                                       36
<PAGE>

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

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

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

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

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

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

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

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

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

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

                                       37
<PAGE>

      other party to any Assigned Agreement is, in default in any material
      respect of its obligations under any Assigned Agreement.

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

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

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

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

                                   Article V

                            COVENANTS OF THE BORROWER

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

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

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

            (c) *Visitation Rights. At any reasonable time and from time to
      time, permit 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

                                       38
<PAGE>

      Borrower and any of its Subsidiaries, and to discuss the affairs, finances
      and accounts of the Borrower and any of its Subsidiaries with any of their
      officers and with their independent certified public accountants.

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

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

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

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

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

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

            (j) Delivery of Financial Statements, Etc. for Take-Out Securities.
      Deliver, as soon as available, but no later than May 15, 2003, to the Lead
      Arrangers and the Lenders all financial statements and other data to be
      included in a prospectus or offering memorandum for the Take-Out
      Securities (including, with respect to the Borrower and its consolidated
      Subsidiaries and EPPH and its consolidated Subsidiaries (and to the extent
      required by Regulation S-X, EPPC,

                                       39
<PAGE>

      EPGOM and other Subsidiaries of the Borrower), all audited financial
      statements, all unaudited financial statements (which shall have been
      reviewed by the independent accountants as provided in Statement on
      Auditing Standards No. 71) and all appropriate pro forma financial
      statements prepared in accordance with, or reconciled to, GAAP and
      prepared in accordance with Regulation S-X, and all other data (including
      selected financial data) that the SEC would require in a registered public
      offering of the Take-Out Securities, and arrange for the delivery of a
      customary comfort letter in connection therewith reasonably satisfactory
      to the Take-Out Bankers (as defined in the Commitment Letter).

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

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

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

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

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

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

                  (ii) promptly upon request by the Agent, or any Lender through
            the Agent, do, execute, acknowledge, deliver, record, re-record,
            file, re-file, register and re-register any and all such further
            acts, deeds, conveyances, pledge agreements, mortgages, deeds of
            trust, trust deeds, assignments, financing statements and
            continuations thereof, termination statements, notices of
            assignment, transfers, certificates, assurances and other
            instruments as the Agent, or any Lender through the Agent, may
            reasonably require from time to time in order to (A) carry out more
            effectively the purposes of the Loan

                                       40
<PAGE>

            Documents, (B) to the fullest extent permitted by applicable law,
            subject any Subsidiary Loan Party's or any of its Subsidiaries'
            properties, assets, rights or interests to the Liens now or
            hereafter intended to be covered by any of the Collateral Documents,
            (C) perfect and maintain the validity, effectiveness, perfection and
            priority of any of the Liens intended to be created hereunder and
            (D) assure, convey, grant, assign, transfer, preserve, protect and
            confirm more effectively unto the Lenders the rights granted or now
            or hereafter intended to be granted to the Lenders under any Loan
            Document or under any other instrument executed in connection with
            any Loan Document to which the Borrower or any of its Subsidiaries
            is or is to be a party, and cause each of its Subsidiaries to do so.

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

            (r) *Security Interests in Senior Bank Facility Collateral. The
      Borrower shall, and shall cause each Senior Bank Facility Subsidiary
      Guarantor, to execute and deliver, to the Senior Bank Facility Collateral
      Agent (i) such guaranties or supplements, amendments and joinders to the
      Credit Party Guarantees and such supplements, amendments and joinders to
      the Senior Bank Facility Security Documents, in each case in form and
      substance reasonably satisfactory to the Senior Bank Facility Collateral
      Agent and as the Senior Bank Facility Collateral Agent deems necessary or
      advisable in order to ensure that the applicable Guarantor's guarantees,
      as primary obligor and not as surety, the full and punctual payment when
      due of the Obligations (as defined in the Senior Bank Facility) and that
      each such guaranty of the Senior Bank Facility Subsidiary Guarantors is
      secured by a valid, perfected and enforceable first-priority security
      interest granted to the Senior Bank Facility Collateral Agent for the
      benefit of the Senior Bank Facility Secured Parties over all of the Senior
      Bank Facility Collateral owned by such Senior Bank Facility Subsidiary
      Guarantor, and (ii) deliver, or cause to be delivered, to the Senior Bank
      Facility Collateral Agent such opinions of counsel and other related
      documents as may be reasonably requested by the Senior Bank Facility
      Collateral Agent with respect to the requirements of this Section 5.01(r).

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

            (a) Liens, Etc.

                  (i) Liens on Collateral. The Borrower shall not, and shall not
            permit any Subsidiary to, create, assume, incur or suffer to exist,
            any Liens upon or with respect to any of the Collateral or any of
            the Equity Interests of the Borrower in EPPH, except any Liens
            securing the EPC Secured Obligations or any other Obligations of the
            Borrower or its Subsidiaries under the Operative Documents, other
            than any Liens in favor of any depositary bank or securities
            intermediary holding the Collateral Account created pursuant to
            customary account documentation or arising by operation of law or
            any ERISA, tax and other inchoate Liens arising by operation of law;

                  (ii) *Ratable Liens on Specified Indenture Debt. The Borrower
            shall not create, assume, incur, or suffer to exist, or permit any
            Subsidiary (other than Southern

                                       41
<PAGE>

            Natural Gas and its Subsidiaries that are not Restricted
            Subsidiaries) to create, assume, incur, or suffer to exist, any Lien
            securing Debt that would require the Borrower or any of its
            Subsidiaries to equally and ratably secure such Debt with any
            Indenture Debt of the Borrower or such Subsidiary, without in any
            such case, making effective provision whereby the Senior Bank
            Facility Secured Obligations shall be secured equally and ratably
            with, or prior to, such Debt so long as such Debt shall be so
            secured.

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

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

                        B. Permitted Liens;

                        C. Liens securing the Obligations of the Borrower and
                  its Subsidiaries under the Senior Bank Facility and under or
                  in respect of other facilities being secured contemporaneously
                  therewith and by the same collateral;

                        D. Liens created by any Alternate Program or any
                  document executed by any "Borrower" or any "Subsidiary" under
                  and as defined in the Senior Bank Facility in connection
                  therewith;

                        E. Prior to the effectiveness of the Senior Bank
                  Facility, Liens existing on the date hereof and Liens incurred
                  pursuant to any Refinancing of Indebtedness underlying such
                  existing Liens, to the extent permitted under Section
                  5.02(b)(v), and thereafter, Liens securing Debt permitted
                  pursuant to Section 5.02(v); and

                        F. 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 5.02(a).

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

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

                                       42
<PAGE>

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

                  (iii) Convertible Securities,

                  (iv) the Take-Out Securities,

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

                  (vi) Project Financings,

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

                  (viii) non-financial Guarantees and indemnities,

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

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

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

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

            (d) *Sale, Etc., of Assets. (i) Sell, lease, or otherwise transfer,
      or permit or suffer to be sold, leased, or transferred, any interest in
      any asset or property constituting the Senior Bank Facility Collateral.

                                       43
<PAGE>

                  (ii) The Borrower shall not, and shall not permit any
            Subsidiary to sell, lease or otherwise transfer any interest in
            Senior Bank Facility Collateral, provided that such Senior Bank
            Facility Collateral constituting all or any part of the EPN Units
            may be sold by the applicable Credit Party for fair market value on
            an arms-length basis in a cash transaction so long as 100% of the
            amount Net Cash Proceeds of such sale is applied as a mandatory
            commitment reduction and/or prepayment as provided in the
            Intercreditor Agreement;

                  (iii) Each Credit Related Party shall not, sell, lease,
            dispose of, or otherwise transfer (a "DISPOSITION") any property or
            asset, provided that this Section 5.02(d) shall not apply to:

                        A. Dispositions of property or assets (other than Senior
                  Bank Facility Collateral) by Restricted Subsidiaries, provided
                  that (x) such sale is for fair market value, is a cash sale
                  and is conducted on an arms-length basis, and (y) if the Net
                  Cash Proceeds of such Disposition exceed $5,000,000 on an
                  individual basis or $10,000,000 in the aggregate during any
                  fiscal year of the Borrower, such Net Cash Proceeds are
                  applied to the Senior Bank Facility Secured Obligations to the
                  extent required in the Intercreditor Agreement;

                        B. Dispositions resulting from any casualty or
                  condemnation of any property or assets of any Restricted
                  Subsidiary, provided that that if the insurance or
                  condemnation proceeds received in connection with such
                  Disposition exceed $5,000,000 on an individual basis or
                  $10,000,000 in the aggregate during any fiscal year of the
                  Borrower, such insurance or condemnation proceeds are applied
                  to the Senior Bank Facility Secured Obligations to the extent
                  required in the Intercreditor Agreement;

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

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

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

                        F. Dispositions of any assets or property by any Credit
                  Related Party to any Restricted Subsidiary, or to any Business
                  Entity that, after giving effect to such Disposition will
                  become and be a Restricted Subsidiary in which the Borrower'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;

                        G. Dispositions permitted by Section 5.02(e);

                                       44
<PAGE>

                        H. Dispositions by any Exempted Guarantor (as such term
                  may be defined in the Senior Bank Facility) of any property or
                  assets that do not constitute Senior Bank Facility Collateral.

                  (iv) In the case of the Borrower and its Subsidiaries, sell,
            lease, or otherwise transfer any of the Equity Interests in any of
            its Subsidiaries if such sale will result in the Borrower owning,
            directly or indirectly, less than 100% of the Equity Interests of
            the Subsidiary Guarantors; or

                  (v) In the case of each Credit Related Party (other than the
            Exempted Guarantors), dispose (in a single or related series of
            transactions) assets constituting all or substantially all of the
            consolidated assets of such Credit Related Party and its
            Subsidiaries taken as a whole, provided that this Section 5.02(d)
            shall not apply to any transaction permitted by Section 5.02(e).

            (e) *Merger, Etc. The Borrower shall not 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 the Senior Bank
      Facility (or, until the effectiveness of the Senior Bank Facility, the El
      Paso Existing 364-Day Facility) or may merge or consolidate with (or
      liquidate into) the Borrower, provided that (A) if such Principal
      Subsidiary merges or consolidates with (or liquidates into) the Borrower,
      either (x) the Borrower 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 Borrower under this Agreement and the Borrower Note 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 Borrower, such merger or consolidation is on an arm's length basis,
      and (ii) the Borrower or any Principal Subsidiary may merge or consolidate
      with any other Business Entity (that is, in addition to the Borrower or
      any Subsidiary), provided that (A) if the Borrower merges or consolidates
      with any such other Business Entity, either (x) the Borrower is the
      continuing or surviving Business Entity or (y) the continuing or surviving
      Business Entity is organized under the laws of the United States or a
      State thereof and unconditionally assumes by agreement all of the
      performance obligations and payment obligations of the Borrower under this
      Agreement and the Borrower Note, (B) if any Principal Subsidiary merges or
      consolidates with any such other Business Entity, the surviving Business
      Entity is directly or indirectly a wholly-owned Principal Subsidiary of
      the Borrower, (C) if either the Borrower 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, and (D) if any Principal Subsidiary
      which is a party to any merger, consolidation or liquidation permitted by
      this paragraph (e) is a Subsidiary Borrower, either (x) such Principal
      Subsidiary 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 such
      Subsidiary Borrower under the Subsidiary Borrower Credit Agreement and the
      Subsidiary Borrower Notes of such Subsidiary Borrower (the Borrower and
      the Lenders agreeing that it is their intention that each Business Entity
      that is a Subsidiary Borrower be organized under the laws of the United
      States or a State thereof).

                                       45
<PAGE>

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

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

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

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

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

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

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

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

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

                                       46
<PAGE>

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

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

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

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

            (i) Chain Subsidiary Bankruptcy. Consent to, vote for, or otherwise
      cause or permit (or permit any of its Affiliates, to consent to, or vote
      for, or otherwise cause or permit) any Chain Subsidiary voluntarily to
      take any action of the type referred to in clause (a)(iii) or (b), or
      clause (c) insofar as such clause (c) refers to clause (a)(iii) or (b), of
      the definition of "Voluntary Bankruptcy".

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

                  (i) a Credit Related Party or, until the effectiveness of the
            Senior Bank Facility and the elimination of any restrictions on
            "Material Subsidiaries", a Material Subsidiary of the Borrower
            (other than EPPC); or

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

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

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

            (m) Chain Subsidiary Equity Issuances. The Borrower shall not permit
      any Chain Subsidiary to issue any Equity Interests to any Person other
      than the holders of Equity Interests

                                       47
<PAGE>

      on the Closing Date (which for the avoidance of doubt shall include any
      such issuance to any such Person as the result of any capital
      contribution).

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

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

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

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

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

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

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

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

                                       48
<PAGE>

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

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

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

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

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

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

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

            (u) *Security Interests in Senior Bank Facility Collateral. The
      Borrower shall, and shall cause each Senior Bank Facility Subsidiary
      Guarantor, to execute and deliver, to the Senior Bank Facility Collateral
      Agent (i) such guaranties or supplements, amendments and joinders to the
      Credit Party Guarantees and such supplements, amendments and joinders to
      the Senior Bank Facility Security Documents, in each case in form and
      substance reasonably satisfactory to the Senior Bank Facility Collateral
      Agent and as the Senior Bank Facility Collateral Agent deems necessary or
      advisable in order to ensure that the applicable Guarantor's guarantees,
      as primary obligor and not as surety, the full and punctual payment when
      due of the Obligations (as defined in the Senior Bank Facility) and that
      each such guaranty of the Senior Bank Facility Subsidiary Guarantors is
      secured by a valid, perfected and enforceable first-priority security
      interest granted to the Senior Bank Facility Collateral Agent for the
      benefit of the Senior Bank Facility Secured Parties over all of the Senior
      Bank Facility Collateral owned by such Senior Bank Facility Subsidiary
      Guarantor, and (ii) deliver, or cause to be delivered, to the Senior Bank
      Facility Collateral Agent such opinions of counsel and other related
      documents as may be reasonably requested by the Senior Bank Facility
      Collateral Agent with respect to the requirements of this Section 5.02(u).

            (v) *Additional Restrictions on Debt. Each Restricted Subsidiary
      (other than the Pipeline Company Borrowers) shall not incur or become
      liable for any Debt or any liability under Guaranties other than such Debt
      or liability existing on the effective date of the Senior Bank Facility
      and shown on Schedule 6.03 to the Senior Bank Facility; provided that each
      such Restricted Subsidiary shall be permitted to refinance, extend, renew
      or refund the principal amount of such Debt or liability so long as such
      Debt or liability is not increased beyond the amount thereof in existence
      on the effective date of the Senior Bank Facility (with respect to the
      applicable Restricted Subsidiary) as shown on Schedule 6.03 to the Senior
      Bank Facility;

                                       49
<PAGE>

      provided further that this Section 5.02(v) shall not become effective
      until the effective date of the Senior Bank Facility.

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

            (x) *Limitation on the Ability of Pipeline Company Borrowers to
      Incur Debt. Each Pipeline Company Borrower shall not incur or become
      liable for any Debt or any liability under Guaranties if, immediately
      after giving effect to such Debt or liability under such Guaranties and
      the receipt and application of any proceeds thereof or value received in
      connection therewith, (i) the ratio of Debt and liabilities under
      Guaranties of the applicable Pipeline Company Borrower and its
      consolidated Subsidiaries to EBITDA of such Pipeline Company Borrower and
      its consolidated Subsidiaries, in each case on a consolidated basis for
      the applicable Pipeline Company Borrower and its Subsidiaries, for the
      then most recently completed four quarter period for which financial
      statements have been delivered as required by Section 5.08 of the Senior
      Bank Facility would exceed 5 to 1 and (ii) the proceeds of any such Debt
      (or of the underlying Debt guaranteed by any such Guaranty) would be used
      for any purpose, other than the funding by the applicable Pipeline Company
      Borrower of capital expenditures or investments in FERC Eligible Assets
      other than any investment in (A) any Equity Interest in any Person that is
      not a Subsidiary Loan Party, (B) all or substantially all of a business
      conducted by any other Person, or (C) all or substantially all of the
      assets constituting a business division or other stand-alone business unit
      of any other Person, except that the foregoing shall not apply to a
      purchase by Colorado Interstate Gas of all of the outstanding Equity
      Interests in Wyoming Interstate Company Ltd., as permitted by the Senior
      Bank Facility.

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

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

            (b) Annual Reports. As soon as publicly available and in any event
      within 120 days after the end of each fiscal year of the Borrower or EPPH
      (as applicable), a copy of the annual report for such year for (A) the
      Borrower and its consolidated Subsidiaries and (B) EPPH and its
      consolidated Subsidiaries, including each of EPPC and its consolidated
      Subsidiaries and EPGOM

                                       50
<PAGE>

      and its consolidated Subsidiaries, in each case containing financial
      statements for such year reported on by PricewaterhouseCoopers LLP or
      other nationally recognized independent public accountants accompanied by
      a report signed by said accountants stating that such financial statements
      have been prepared in accordance with GAAP.

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

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

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

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

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

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

                                       51
<PAGE>

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

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

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

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

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

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

                                   Article VI

                                EVENTS OF DEFAULT

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

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

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

            (c) (i) the Borrower shall fail to perform or observe any term,
      covenant or agreement applicable to it contained in Section 5.01(a) (but
      subject to Section 5.02(e)), 5.03(g) and 5.02 of

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<PAGE>

      this Agreement or (ii) any Credit Related Party shall fail to perform or
      observe any term, covenant or agreement applicable to it contained in
      analogous provisions of the Senior Bank Facility; or

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

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

            (f) *(i) the Borrower or any Subsidiary Loan Party or any Credit
      Related Party shall (A) generally not pay its debts as such debts become
      due, or (B) admit in writing its inability to pay its debts generally, or
      (C) make a general assignment for the benefit of creditors; or (ii) any
      proceeding shall be instituted or consented to by the Borrower or any
      Subsidiary Loan Party or any Credit Related Party seeking to adjudicate it
      a bankrupt or insolvent, or seeking liquidation,

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<PAGE>

      winding up, reorganization, arrangement, adjustment, protection, relief,
      or composition of it or its debts under any law relating to bankruptcy,
      insolvency or reorganization or relief of debtors, or seeking the entry of
      an order for relief or the appointment of a receiver, trustee, or other
      similar official for it or for any substantial part of its property; or
      (iii) any such proceeding shall have been instituted against the Borrower
      or any Subsidiary Loan Party or any Credit Related Party and either such
      proceeding shall not be stayed or dismissed for 60 consecutive days or any
      of the actions referred to above sought in such proceeding (including the
      entry of an order for relief against it or the appointment of a receiver,
      trustee, custodian or other similar official for it or any substantial
      part of its property) shall occur; or (iv) the Borrower or any Subsidiary
      Loan Party or any Credit Related Party shall take any corporate action to
      authorize any of the actions set forth above in this subsection (f); or

            (g) *any judgment or order of any court for the payment of money in
      excess of $100,000,000 shall be rendered against the Borrower or any
      Subsidiary Loan Party or any Credit Related Party 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

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

            (i) *upon completion of, and pursuant to, a transaction, or a series
      of transactions (which may include prior acquisitions of capital stock of
      the Borrower in the open market or otherwise), involving a tender offer
      (i) a "person" (within the meaning of Section 13(d) of the Securities
      Exchange Act of 1934) other than the Borrower or a Subsidiary of the
      Borrower or any employee benefit plan maintained for employees of the
      Borrower and/or any of its Subsidiaries or the trustee therefor, shall
      have acquired direct or indirect ownership of and paid for in excess of
      50% of the outstanding capital stock of the Borrower entitled to vote in
      elections for directors of the Borrower and (ii) at any time before the
      later of (A) six months after the completion of such tender offer and (B)
      the next annual meeting of the shareholders of the Borrower following the
      completion of such tender offer more than half of the directors of the
      Borrower 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

                                       54
<PAGE>

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

            (k) *any material provision of any Senior Bank Facility Loan
      Document shall cease, for any reason, to be in full force and effect or
      any Credit Party shall so assert and, if such invalidity relates solely to
      the Senior Bank Facility Collateral with an aggregate value of $1,000,000
      or less and such invalidity is such so as to be amenable to cure without
      material disadvantage to the position of the Senior Bank Facility
      Administrative Agent, the Senior Bank Facility Collateral Agent and the
      other Senior Bank Facility Secured Parties, such invalidity shall not be
      cured within 10 days of the earlier of such Credit Party so stating in
      writing or delivery of notice thereof by the Senior Bank Facility
      Administrative Agent to the Borrower (or such shorter period as shall be
      specified by the Senior Bank Facility Administrative Agent and is
      reasonable under the circumstances); provided, however, that this Section
      6.02(k) shall only become effective from and after, and shall not cause a
      Default or an Event of Default under this Agreement prior to, the
      effectiveness of the Senior Bank Facility; or

            (l) *any Senior Bank Facility Security Document shall for any reason
      fail or cease to create a valid and enforceable Lien on any Senior Bank
      Facility Collateral purported to be covered thereby or, except as
      permitted by the Senior Bank Facility Loan Documents, such Lien shall fail
      or cease to be a perfected and first-priority Lien, or any Credit Related
      Party shall so state in writing and, if such invalidity relates solely to
      Senior Bank Facility Collateral with an aggregate value of $1,000,000 or
      less and such invalidity is such so as to be amenable to cure without
      material disadvantage to the position of the Senior Bank Facility
      Administrative Agent, the Senior Bank Facility Collateral Agent and the
      other Senior Bank Facility Secured Parties, such invalidity shall not be
      cured within 10 days of the earlier of such Credit Related Party so
      stating in writing or delivery of notice thereof by the Senior Bank
      Facility Administrative Agent to the Borrower (or such shorter period as
      shall be specified by the Senior Bank Facility Administrative Agent and is
      reasonable under the circumstances); provided, however, that this Section
      6.02(l) shall only become effective from and after, and shall not cause a
      Default or an Event of Default under this Agreement prior to, the
      effectiveness of the Senior Bank Facility; or

            (m) *any default under any agreement or instrument relating to any
      secured obligation under the Senior Bank Facility, 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 secured obligation; or any
      such secured obligation shall be required to be prepaid (other than by a
      regularly scheduled required prepayment), prior to the stated maturity
      thereof, as a result of either (i) any default under any agreement or
      instrument relating to any such secured obligation, 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 secured obligation) the effect of which would otherwise be
      to accelerate the maturity of such secured obligation if, as a result
      thereof or with respect thereto, the holder of (or the agent for the
      holders of) such secured obligation shall take any action not permitted by
      the Intercreditor Agreement to exercise any remedy with respect to the
      Senior Bank Facility Collateral or the Borrower shall agree to provide, or
      enter into any negotiation with a view to providing, any additional
      collateral, or any optional prepayment of such secured obligation, or any
      fee or other monetary consideration for any amendment, consent, waiver or
      other modification with respect to such payment default; provided,
      however, that this Section 6.02(m) shall only become effective from and
      after, and shall not cause a Default or an Event of Default under this
      Agreement prior to, the effectiveness of the Senior Bank Facility; or

                                       55
<PAGE>

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

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

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

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

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

then, and in any such event, the Agent shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the Loan
and the Borrower Notes, all interest thereon and all other amounts payable under
this Agreement to be forthwith due and payable, whereupon the Loan and the
Borrower Notes, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrowers;
provided, however, that if an Event of Default under subsection (f) of this
Section 7.1 (except under clause (i)(A) thereof) shall occur, the Loan and the
Borrower Notes, all interest thereon and all other amounts payable under this
Agreement shall automatically become and be forthwith due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.

                                  Article VII

                GRANT OF SECURITY INTEREST, PLEDGE AND ASSIGNMENT

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

            (a) the Subsidiary Loans made pursuant to the Subsidiary Borrower
      Credit Agreement and all distributions, monies, instruments and other
      property or assets from time to time received, receivable or otherwise
      distributable or distributed in respect of or in exchange for

                                       56
<PAGE>

      any or all of the Subsidiary Loans (including, without limitation, the
      proceeds of the repayment of all or any portion of the Subsidiary Loans
      (and any certificates or instruments in respect thereof) and proceeds of
      collateral securing such Subsidiary Loans);

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

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

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

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

            (f) all proceeds of the foregoing.

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

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

                                       57
<PAGE>

therefor, duly endorsed in blank by the Borrower or such other instruments of
transfer as are acceptable to the Collateral Agent, and promptly thereafter
deliver to the Collateral Agent a certificate executed by an authorized officer
of the Borrower describing such Securities and certifying that the same have
been duly pledged and delivered to the Collateral Agent.

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

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

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

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

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

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<PAGE>

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

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

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

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

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

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

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

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<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                  Article VIII

                       THE AGENT AND THE COLLATERAL AGENT

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

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

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

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      SECTION 8.02. Agent's and Collateral Agent's Reliance, Etc. Neither the
Agent, the Collateral Agent or any of their respective directors, officers,
agents or employees shall be liable for any action taken or omitted to be taken
by it or them under or in connection with the Loan Documents or the other
Operative Documents except for its or their own gross negligence, fraud or
willful misconduct, and each Lender agrees that it will not assert or seek to
assert any claim it might have against any of them in violation of this
provision. Without limiting the generality of the foregoing:

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

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

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

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

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

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

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

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

      SECTION 8.03. Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Agent or the Collateral Agent
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without reliance upon the

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Agent or the Collateral Agent and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement.

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

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

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

                                   Article IX

                                  MISCELLANEOUS

      SECTION 9.01. Amendments, Etc. Subject to the other provisions of this
Agreement, no amendment, waiver, modification or supplement of any provision of
this Agreement or any other Loan Document, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless

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the same shall be in writing and signed by the Borrower, the Agent and the
Required Lenders, and then such amendment, waiver, modification, supplement or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that without the prior written
consent of each Lender, no amendment waiver, modification, supplement or consent
(including, without limitation, any consent or waiver by the Collateral Agent
with respect to the Subsidiary Loan Documents) shall be effective that amends,
waives, modifies, supplements, or consents to any departure from, any provision
of this Agreement in any way which would:

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

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

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

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

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

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

            (g) amend the definition of Required Lenders;

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

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

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

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

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

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

            (c) if to CSFB, to its address at 11 Madison Avenue, New York, New
      York 10010, Attention: James Moran, telephone (212) 325-9176, fax (212)
      743-1878; with a copy to Credit

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      Suisse First Boston LLC, 1100 Louisiana Street, Houston, Texas 77002,
      Attention: Paul Davis, telephone (713) 890-1407, fax (713) 890 1500;

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

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

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

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

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

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

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

            (c) If any payment of principal of any LIBOR Advance is made by the
      Borrower to or for the account of any Lender other than on the last day of
      the Interest Period for such Advance, as a result of a payment pursuant to
      Section 2.06, acceleration of the maturity of the Borrower Notes pursuant
      to Section 6.01 or for any other reason, or if the Borrower fails to make
      any payment or prepayment of an Advance for which a notice of prepayment
      has been given or that is otherwise required to be made, whether pursuant
      to Section 2.04, 2.06 or 6.01 or otherwise, the Borrower shall, upon
      demand by the

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      affected Lender (with a copy of such demand to the Agent), pay to the
      Agent for the account of the Lender any amounts required to compensate
      such Lender for any additional losses, costs or expenses that it may
      reasonably incur as a result of such payment or such failure to pay or
      prepay, as the case may be, including, without limitation, any loss
      (including loss of anticipated profits), cost or expense incurred by
      reason of the liquidation or reemployment of deposits or other funds
      acquired by the Lender to fund or maintain such Advance.

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

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

      SECTION 9.06. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Borrower, the Agent, the Lead Arrangers, the
Co-Agents and the Collateral

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

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

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

                                       68
<PAGE>

      perform in accordance with their terms all of the obligations which by the
      terms of this Agreement are required to be performed by it as a Lender.

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

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

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

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

                                       69
<PAGE>

            (g) Anything in this Agreement to the contrary notwithstanding, any
      Lender may at any time create a security interest in all or any portion of
      its rights under this Agreement (including the Advances owing to it) and
      the Borrower Notes issued to it hereunder in favor of any Federal Reserve
      Bank in accordance with Regulation A of the Board of Governors of the
      Federal Reserve System (or any successor regulation) and the applicable
      operating circular of such Federal Reserve Bank. Any Lender which is a
      fund may also create such a security interest in favor of any holders of
      obligations owed or securities issued by such Lender or to any trustee for
      or other representatives of such holders. No consent of either the Agent
      or the Borrower shall be necessary with respect to such security interest.

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

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

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

            (b) Any legal action or proceeding with respect to this Agreement or
      any other Loan Document may be brought in the courts of the State of New
      York located in the County of New York or of the United States for the
      Southern District of New York, and, by execution and delivery of this

                                       70
<PAGE>

      Agreement, the Borrower hereby irrevocably accepts for itself and in
      respect of its property, generally and unconditionally, the jurisdiction
      of the aforesaid courts. Nothing herein shall affect the right of the
      Agent, the Collateral Agent or the Lender to bring any legal action or
      proceeding with respect to this Agreement or any other Loan Document
      against the Borrower in the courts of any other jurisdiction. To the
      fullest extent permitted by applicable law, the Borrower hereby
      irrevocably waives any objection that it may now or hereafter have to the
      laying of venue of any of the aforesaid actions or proceedings arising out
      of or in connection with this Agreement or any other Loan Document brought
      in the courts referred to in subsection (a) of this Section 9.10 and
      hereby further irrevocably waives and agrees not to plead or claim in any
      such court that any such action or proceeding brought in any such court
      has been brought in an inconvenient forum.

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

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

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

                                       71
<PAGE>

      SECTION 9.13. Most Favored Nation Treatment. Each Lender and each Lead
Arranger shall have the benefit of "most favored nation" treatment with respect
to the Senior Bank Facility and the Refinancing of the Electron Transaction
(collectively, the "MFN Transactions"), whether such MFN Transactions close
prior to or after the Closing Date. Each Co-Agent, on behalf of the Lenders,
shall have the individual right (exercised by written notice to the Borrower) to
cause the Operative Documents to be amended, restated, supplemented or otherwise
modified to reflect the terms and conditions of the MFN Transactions in their
sole discretion. The foregoing shall not apply to pricing terms after the
completion of the successful syndication of the Loan Facility (defined as may be
separately agreed among the Borrower and the Lead Arrangers). "Most-favored
nation" treatment shall not require the Lenders to accept any term or condition
of any MFN Transaction, including, without limitation, any term or condition
that is less favorable to the Lenders than those that exist on the Closing Date.
This Section 9.13 shall not apply to any conforming changes to be made to the
provisions of this Agreement as contemplated under Section 9.15.

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

      SECTION 9.15. Conformity with Senior Bank Facility. The Borrower and each
Lender hereby agree to enter into, execute and deliver and, if requested by the
Borrower, each of the Co-Agents and the Agent hereby acknowledges and agrees
that it will enter into, execute and deliver or acknowledge and accept, as the
case may be, an amendment to this Agreement to conform each defined term,
Section, subsection, clause, and other provision hereof identified with an
asterisk to the respective defined term, Section, subsection, clause and other
provision contained in the execution version of Senior Bank Facility, such
amendment to be entered into, executed and delivered no later than ten Business
Days after the making of the initial loan under the Senior Bank Facility. Each
such Person acknowledges and agrees to be bound as of the Closing Date by any
such defined term, Section, subsection, clause and other provision, identified
with an asterisk, in each case as so amended. If the Senior Bank Facility is not
consummated, then the provisions of this Agreement (including, without
limitation, those marked with an asterisk (*)) shall remain unchanged. During
the period between the effectiveness of the Senior Bank Facility and the
effectiveness of the amendment referred to above, any event or circumstance
which would not constitute a Default or an Event of Default hereunder if such
amendment were effective during such period, shall not constitute a Default or
an Event of Default hereunder during such period prior to the effectiveness of
such amendment.

                                       72
<PAGE>

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

                                       EL PASO CORPORATION

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

                                       73
<PAGE>

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

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

<PAGE>

                                       Co-Agents:
                                       ---------

                                       CITICORP NORTH AMERICA, INC.

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

                                       CREDIT SUISSE FIRST BOSTON, ACTING
                                       THROUGH ITS CAYMAN ISLANDS BRANCH

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

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

<PAGE>

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

                                       SALOMON SMITH BARNEY INC.

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

                                       CREDIT SUISSE FIRST BOSTON, ACTING
                                       THROUGH ITS CAYMAN ISLANDS BRANCH

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

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

<PAGE>

                                       Initial Lenders:
                                       ---------------

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

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

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

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

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

<PAGE>

$35,000,000.00                         ABLECO FINANCE LLC

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

<PAGE>

$65,000,000.00                         AP FUNDING LP

                                       By: A3 Fund Management LLC

                                       Its General Partner

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

<PAGE>

$15,000,000.00                         MANCHESTER SECURITIES CORP.

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

<PAGE>

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

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

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

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

<PAGE>

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

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

<PAGE>

$5,000,000.00                          FERNWOOD ASSOCIATES, LP

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

<PAGE>

$10,000,000.00                         CONTINENTAL CASUALTY COMPANY

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

<PAGE>

$2,000,000.00                          LONGACRE MASTER FUND LTD.

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

<PAGE>

$1,000,000.00                          401(k) SAVINGS PLAN OF THE CHASE
                                       MANHATTAN BANK AND CERTAIN
                                       AFFILIATED COS.

                                       By: MacKay Shields LLC
                                       Its: Investment Advisor

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

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

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

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

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

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

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

<PAGE>

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

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

<PAGE>

$8,500,000.00                          MARINER LDC

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

$10,000,000.00                         TRILOGY PORTFOLIO COMPANY, LLC

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

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

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

$2,500,000.00                          MARINER OPPORTUNITY FUND, LP

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

<PAGE>

$15,000,000.00                         SOF INVESTMENTS, L.P.

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

<PAGE>

$3,000,000.00                          REDWOOD MASTER FUND

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

<PAGE>

$25,000,000.00                         STARK EVENT TRADING

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

<PAGE>

$10,000,000.00                         THE TRAVELERS INSURANCE COMPANY

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

<PAGE>

$5,000,000.00                          UBS AG, STAMFORD BRANCH

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

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

<PAGE>

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

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

<PAGE>

$4,000,000.00                          YORK CAPITAL MANAGEMENT

                                       By /s/ Doug Silverman
                                       -----------------------------------------
                                       Name: Doug Silverman
                                       Title: Associate

<PAGE>
                                                                  CONFORMED COPY

                                 AMENDMENT NO. 1

                                     TO THE

                                 $1,200,000,000

            SENIOR SECURED INTERIM TERM CREDIT AND SECURITY AGREEMENT

                           Dated as of March 14, 2003

      THIS AMENDMENT NO. 1 dated as of March 14, 2003 (the "AMENDMENT NO. 1") to
the $1,200,000,000 SENIOR SECURED INTERIM TERM CREDIT AND SECURITY AGREEMENT,
dated as of March 13, 2003 (the "AGREEMENT"), among EL PASO CORPORATION, a
Delaware corporation (the "BORROWER"), the banks, financial institutions and
other lenders listed on the signature pages thereof (the "INITIAL LENDERS"), the
additional Lenders (as defined therein) party thereto, CITICORP NORTH AMERICA,
INC., a Delaware corporation ("CNAI"), CREDIT SUISSE FIRST BOSTON, ACTING
THROUGH ITS CAYMAN ISLANDS BRANCH ("CSFB"; and, together with CNAI, the
"CO-AGENTS"), CNAI as administrative agent (the "AGENT") for the Lenders and as
Collateral Agent (as defined therein), and CSFB and SALOMON SMITH BARNEY INC.
("SSBI"), each as a co-lead arranger and joint book runner (collectively, the
"LEAD ARRANGERS"), evidences the agreement of the parties as follows:

      WHEREAS, the Borrower, the Agent and the Required Lenders desire to amend
the Agreement in accordance with Section 9.01 thereof.

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

      SECTION 1. Amendment to the Agreement.

      Section 9.07(a) of the Agreement is hereby amended to delete, in its
entirety, the parenthetical expression "(except in the case of an assignment to
an existing Lender)" in the seventh and eighth line thereof and replace it with
the following:

      "(except in the case of an assignment to an existing Lender, an Affiliate
of any Lender, a Related Fund of any Lender or an assignment which will result
in a group of Lenders which are managed by the same Person holding a Commitment
or Advances (as the case may be) of not less than $1,000,000)".

      SECTION 2. Capitalized Terms. Capitalized terms used but not otherwise
defined in this Amendment No. 1 shall have the respective meanings ascribed to
such terms in the Agreement.

      SECTION 3. Execution in Counterparts; Effectiveness. This Amendment No. 1
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

<PAGE>

but one and the same agreement. Delivery of an executed counterpart of a
signature page to this Amendment No. 1 by telecopier shall be effective as
delivery of an original executed counterpart of this Amendment No. 1. This
Amendment No. 1 shall be effective when executed by the Borrower, the Agent and
Lenders constituting the Required Lenders.

      SECTION 4. Governing Law. This Amendment No. 1 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 Amendment No. 1 to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.

                                            EL PASO CORPORATION

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

                                            CITICORP NORTH AMERICA, INC.,
                                            as Agent

                                            By  /s/ Michael Mauer
                                               ---------------------------------
                                               Name:  Michael Mauer
                                               Title: Managing Director

                                            CREDIT SUISSE FIRST BOSTON, ACTING
                                            THROUGH ITS CAYMAN ISLANDS BRANCH:

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

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

<PAGE>

                                            CITICORP NORTH AMERICA, INC.

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

                                                                   EXHIBIT 10.EE

                                                                  CONFORMED COPY

                                 $1,200,000,000

                                CREDIT AGREEMENT

                                      Among

                           EL PASO PRODUCTION COMPANY
                           EL PASO PRODUCTION GOM INC.
                          VERMEJO MINERALS CORPORATION
                          EL PASO ENERGY RATON, L.L.C.

                     as Subsidiary Borrowers and Guarantors,

                       EL PASO PRODUCTION HOLDING COMPANY
                        SABINE RIVER INVESTORS VI, L.L.C.
                        SABINE RIVER INVESTORS IX, L.L.C.

                                 as Guarantors,

                               EL PASO CORPORATION

                                   as Lender,

                                       and

                          CITICORP NORTH AMERICA, INC.

                              as Loan Administrator

                                 March 13, 2003

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<S>                                                                                                          <C>
ARTICLE I  DEFINITIONS AND ACCOUNTING TERMS......................................................................1

         Section 1.01  Certain Defined Terms.....................................................................1

         Section 1.02  Computation of Time Periods..............................................................23

         Section 1.03  Accounting Terms; Changes in GAAP........................................................23

         Section 1.04  Miscellaneous............................................................................23

ARTICLE II  TERMS OF FACILITY...................................................................................24

         Section 2.01  Term Loans...............................................................................24

         Section 2.02  Borrowing Base...........................................................................24

         Section 2.03  Optional Prepayment of Loans.............................................................27

         Section 2.04  Mandatory Prepayment of Loans............................................................27

         Section 2.05  Scheduled Repayment of Loans.............................................................31

         Section 2.06  Interest and Certain Fees................................................................31

         Section 2.07  Breakage Costs...........................................................................32

         Section 2.08  Right to Substitute Collateral; Release of Liens in Connection Therewith.................33

         Section 2.09  Collateral Release Provisions............................................................34

         Section 2.10  Payments and Computations................................................................35

         Section 2.11  Yield Protection.........................................................................36

         Section 2.12  Taxes....................................................................................37

         Section 2.13  Conditions Precedent.....................................................................39

         Section 2.14  Post-Closing Items and Certificates......................................................39

ARTICLE III  GUARANTEES.........................................................................................39

         Section 3.01  Guarantee Obligations....................................................................39

         Section 3.02  Obligations Unconditional................................................................40

         Section 3.03  Waivers..................................................................................41

         Section 3.04  Reinstatement............................................................................41

         Section 3.05  Subrogation..............................................................................41

         Section 3.06  Remedies.................................................................................41

         Section 3.07  Continuing Guarantee.....................................................................41

         Section 3.08  Rights of Contribution...................................................................41

         Section 3.09  General Limitation on Guarantee Obligations..............................................42
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                                       <C>
         Section 3.10  Release of Certain Guarantors............................................................42

ARTICLE IV  REPRESENTATIONS AND WARRANTIES......................................................................43

         Section 4.01  Existence; Subsidiaries..................................................................43

         Section 4.02  Power and Authority......................................................................43

         Section 4.03  Authorization and Approvals..............................................................43

         Section 4.04  Enforceable Obligations..................................................................44

         Section 4.05  Financial Statements.....................................................................44

         Section 4.06  True and Complete Disclosure.............................................................44

         Section 4.07  Litigation...............................................................................45

         Section 4.08  Use of Proceeds..........................................................................45

         Section 4.09  Investment Company Act...................................................................45

         Section 4.10  Public Utility Holding Company Act.......................................................45

         Section 4.11  Taxes....................................................................................45

         Section 4.12  Pension Plans............................................................................45

         Section 4.13  Title to Property; Condition of Property; Casualties.....................................46

         Section 4.14  No Burdensome Restrictions...............................................................47

         Section 4.15  Environmental Condition..................................................................48

         Section 4.16  Permits, Licenses, Etc...................................................................48

         Section 4.17  Gas Contracts............................................................................49

         Section 4.18  Leases, Etc..............................................................................49

         Section 4.19  Insurance................................................................................49

         Section 4.20  Hedging Agreements.......................................................................49

         Section 4.21  Material Agreements......................................................................49

         Section 4.22  No Default...............................................................................50

         Section 4.23  Affiliate Transactions...................................................................50

         Section 4.24  Debt and Liens...........................................................................50

         Section 4.25  Solvent 50

         Section 4.26  Cash Management and Accounts.............................................................50

         Section 4.27  Tax Sharing Agreements...................................................................50

         Section 4.28  Compliance with Laws.....................................................................51

ARTICLE V  AFFIRMATIVE COVENANTS................................................................................51

         Section 5.01  Compliance with Laws, Etc................................................................51

         Section 5.02  Maintenance of Insurance.................................................................51
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                                         <C>
         Section 5.03  Preservation of Corporate Existence, Etc.................................................52

         Section 5.04  Payment of Taxes, Etc....................................................................52

         Section 5.05  Visitation Rights........................................................................52

         Section 5.06  Reporting Requirements...................................................................53

         Section 5.07  Maintenance of Property..................................................................57

         Section 5.08  Agreement to Pledge......................................................................57

         Section 5.09  Development of the Properties............................................................57

         Section 5.10  Use of Proceeds..........................................................................57

         Section 5.11  Title Opinions...........................................................................58

         Section 5.12  Further Assurances; Cure of Title Defects................................................58

         Section 5.13  Trade Payables...........................................................................59

         Section 5.14  Operating Account........................................................................59

         Section 5.15  Transfer of Noric Holdings...............................................................59

ARTICLE VI  NEGATIVE COVENANTS..................................................................................60

         Section 6.01  Liens, Etc...............................................................................60

         Section 6.02  Debt    .................................................................................60

         Section 6.03  Agreements Restricting Liens and Restricted Payments.....................................60

         Section 6.04  Merger or Consolidation..................................................................61

         Section 6.05  Dispositions.............................................................................61

         Section 6.06  Restricted Payments......................................................................61

         Section 6.07  Affiliate Transactions...................................................................62

         Section 6.08  Compliance with ERISA....................................................................62

         Section 6.09  Sale-and-Leaseback.......................................................................63

         Section 6.10  Change of Business.......................................................................63

         Section 6.11  Organizational Documents, Name Change....................................................63

         Section 6.12  Bank Deposit and Other Accounts..........................................................64

         Section 6.13  Use of Proceeds..........................................................................64

         Section 6.14  Investments..............................................................................64

         Section 6.15  Gas Imbalances, Take-or-Pay or Other Prepayments.........................................64

         Section 6.16  Payment of Consolidated Taxes............................................................64

         Section 6.17  Issuance of Equity.......................................................................64

ARTICLE VII  EVENTS OF DEFAULT; REMEDIES........................................................................65

         Section 7.01  Events of Default........................................................................65

</TABLE>

                                       iii

<PAGE>

<TABLE>
<S>                                                                                                        <C>
         Section 7.02  Optional Acceleration of Maturity........................................................66

         Section 7.03  Automatic Acceleration of Maturity.......................................................67

         Section 7.04  Right of Set-off.........................................................................67

         Section 7.05  Non-exclusivity of Remedies..............................................................67

ARTICLE VIII  THE LOAN ADMINISTRATOR............................................................................68

         Section 8.01  Authorization and Action.................................................................68

         Section 8.02  Loan Administrator's Reliance, Etc.......................................................68

         Section 8.03  CNAI.....................................................................................68

         Section 8.04  Lender Credit Decision...................................................................69

         Section 8.05  Indemnification..........................................................................69

         Section 8.06  Successor Loan Administrator.............................................................69

ARTICLE IX  MISCELLANEOUS.......................................................................................70

         Section 9.01  Amendments, Etc..........................................................................70

         Section 9.02  Notices, Communications, Etc.............................................................70

         Section 9.03  No Waiver; Remedies......................................................................72

         Section 9.04  Costs and Expenses.......................................................................72

         Section 9.05  Binding Effect...........................................................................73

         Section 9.06  Collateral Assignment by the Lender......................................................73

         Section 9.07  Indemnification..........................................................................73

         Section 9.08  Execution in Counterparts................................................................74

         Section 9.09  Survival of Representations, Etc.........................................................74

         Section 9.10  Severability.............................................................................74

         Section 9.11  Governing Law............................................................................74

         Section 9.12  WAIVER OF JURY TRIAL.....................................................................74

         Section 9.13  Consent to Jurisdiction..................................................................74

         Section 9.14  Confidentiality..........................................................................76

         Section 9.15  ENTIRE AGREEMENT.........................................................................77

</TABLE>

                                       iv
<PAGE>

ANNEXES:

         Annex I NOTICE INFORMATION

         Annex II Initial Borrowing Base Amounts

EXHIBITS:

         Exhibit A          -     Form of Note
         Exhibit B          -     Form of Mortgage
         Exhibit C          -     Form of Transfer Letter
         Exhibit D          -     Form of Security Agreement
         Exhibit E          -     Form of Pledge Agreement
         Exhibit F-1        -     Form of Deposit Account Control Agreement
         Exhibit F-2        -     Form of Securities Account Control Agreement
         Exhibit F-3        -     Form of Commodity Account Control Agreement
         Exhibit G          -     Form of Master Subordination Agreement

SCHEDULES:

         Schedule 1.01(A)    -    Excluded Property
         Schedule 1.01(B)    -    Existing Investments
         Schedule 1.01(C)    -    Farmout Arrangements
         Schedule 2.14            Post-Closing Items
         Schedule 4.01       -    Existing Subsidiaries
         Schedule 4.07       -    Litigation
         Schedule 4.13(a)    -    Interests in Collateral Oil and Gas Properties
         Schedule 4.13(b)    -    Obligations in connection with Oil and Gas
                                  Properties
         Schedule 4.15       -    Environmental Issues
         Schedule 4.21       -    Material Agreements
         Schedule 4.23       -    Material Related Party Contracts
         Schedule 4.26       -    Locations of Bank Accounts
         Schedule 5.02       -    Insurance
         Schedule 6.02       -    Debt to be paid on Closing Date

                                       v
<PAGE>

                                CREDIT AGREEMENT

         This Credit Agreement dated as of March 13, 2003 (this "Agreement") is
among the Subsidiary Borrowers and the Parent Guarantors named herein, El Paso
Corporation, a Delaware corporation ("EPC"), and Citicorp North America, Inc.,
as loan administrator (in such capacity, the "Loan Administrator").

         EPC has agreed to advance to the Subsidiary Borrowers certain term
loans that will be guaranteed by the Parent Guarantors and secured by certain
assets of the Subsidiary Borrowers and the Parent Guarantors, in each case on
the terms and conditions described herein. The parties hereto understand and
agree that the loans from EPC to the Subsidiary Borrowers, and the guarantees
and security interests for such loans contemplated herein, are being assigned as
collateral security for certain obligations of EPC under the EPC Credit
Agreement described herein, and are granted to effectively guarantee and provide
credit support for, and ensure the lenders to EPC under such EPC Credit
Agreement against loss in respect of, the obligations of EPC under the EPC
Credit Agreement.

         Therefore, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

         Section 1.01 Certain Defined Terms. As used in this Agreement, the
terms defined above shall have the meanings set forth therein and the following
terms shall have the following meanings (unless otherwise indicated, such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):

         "Acceptable Security Interest" in any Property means a Lien which (a)
exists in favor of the Collateral Agent for the benefit of the Subsidiary
Secured Parties, (b) is superior to all other Liens of any other Person in the
Property encumbered thereby (other than Permitted Liens), (c) secures the
Subsidiary Secured Obligations, (d) is enforceable, and (e) is perfected (unless
the Property subject to such Lien is Unperfected Collateral).

         "Account Control Agreement" means (i) a Deposit Account Control
Agreement in substantially the form of Exhibit F-1, (ii) a Securities Account
Control Agreement in the form of Exhibit F-2, (iii) a Commodity Account Control
Agreement in substantially the form of Exhibit F-3 or (iv) an account control
agreement otherwise in substantially form and substance satisfactory to the
Collateral Agent, in each case among a Subsidiary Borrower, the Collateral
Agent, and a depositary bank, a securities intermediary or commodity
intermediary, as the case may be, selected by such Subsidiary Borrower and
approved by the Lender and the Collateral Agent, as the same may be amended,
modified, or supplemented from time to time, and "Account Control Agreements"
shall mean all such Account Control Agreements, collectively.

         "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

<PAGE>

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 Credit Agreement, as the same may be amended,
supplemented, and otherwise modified from time to time.

         "Aggregate Borrowing Base" means, as of any date of determination
thereof, the sum of the Borrowing Bases of all Subsidiary Borrowers as of such
date.

         "Aggregate Loan Amount" means, as of any date of determination thereof,
the aggregate outstanding principal amount of the Loans of all Subsidiary
Borrowers as of such date.

         "Applicable UCC" means, with respect to any Collateral, the Uniform
Commercial Code in effect in any state the law of which governs the perfection
of the Lien of the Collateral Agent in such Collateral.

         "Balance Sheet" means the pro forma balance sheet for each of the
Subsidiary Borrowers as of December 31, 2002, and delivered to the Lender and
the Loan Administrator prior to the Closing Date.

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

         "Base Rate Advance" means the portion of each Loan accruing interest as
provided under Section 2.06(a)(i) or as provided in the proviso at the end of
Section 2.06(a).

         "Base Rate Margin" means 3.50% per annum.

         "Borrower Share" means, with respect to any Subsidiary Borrower as of
any date of determination thereof, the percentage that the outstanding principal
amount of such Subsidiary Borrower's Loan on such date represents of the
aggregate outstanding principal amount of all Loans of the Subsidiary Borrowers
on such date.

         "Borrowing Base" means, with respect to any Subsidiary Borrower at any
particular time, the U.S. dollar amount determined by the Loan Administrator in
accordance with CNAI's customary oil and gas lending criteria to be the
Borrowing Base of such Subsidiary Borrower pursuant to Section 2.02.

                                       2
<PAGE>

         "Borrowing Base Determination Date" shall have the meaning set forth in
Section 2.02(b).

         "Burdens" means, with respect to Collateral Oil and Gas Properties of
any Subsidiary Borrower, any royalties, overriding royalties, net profits
interests, production payments, reversionary interests, calls on production, and
other burdens on or deductions from the proceeds of production, that do not
secure Debt for borrowed money and that are taken into account in computing the
net revenue interests and working interests of such Subsidiary Borrower as set
out on Schedule 4.13(a).

         "Business Day" means (a) any day of the year except Saturday, Sunday
and any day on which banks are required or authorized to close in New York City,
New York or Houston, Texas and (b) if the applicable Business Day relates to any
LIBOR Advances, any day which is a "Business Day" described in clause (a) and
which is also a day for trading by and between banks in the London interbank
eurodollar market.

         "Capital Leases" means, as applied to any Person, any lease of any
Property by such Person as lessee which would, in accordance with GAAP, be
required to be classified and accounted for as a capital lease on the balance
sheet of such Person.

         "Cash Collateral" means cash in U.S. dollars and Cash Equivalents
deposited in or credited to any Cash Collateral Account.

         "Cash Collateral Account" means, with respect to any Subsidiary
Borrower, its cash collateral account established pursuant to the terms of the
Security Agreement that is subject to an Acceptable Security Interest in favor
of the Collateral Agent to secure the Subsidiary Secured Obligations.

         "Cash Equivalents" means cash and any of the following: (a) amounts
credited to current accounts, deposit accounts, time deposits, insured
certificates of deposit or freely marketable and transferable debt obligations
of any United States bank that is a member of the United States Federal Reserve
System and whose (or whose parent's) short-term unsecured and non-credit
enhanced debt obligations are rated at least "A-1" and "P-1" by S&P and Moody's,
respectively, or any then equivalent rating announced by S&P or Moody's,
respectively, and that is not subject to currency controls; and (b) U.S.
Treasury securities or any other freely negotiable and marketable debt
securities issued by the government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed by the full
faith and credit of the same; provided, however, that items described in clauses
(a) and (b) shall not constitute Cash Equivalents unless (i) such items are
denominated in U.S. dollars, (ii) if issued by a non-governmental entity, such
items are issued by an issuer whose long-term debt obligations are rated at
least "A-" by S&P, "A3" by Moody's, or any then equivalent rating announced by
S&P or Moody's, respectively, or an equivalent investment grade rating from a
nationally recognized debt rating agency, (iii) such items are not issues the
interest or dividend on which is exempt from Federal income tax (or would be so
exempt if the issue were held by a citizen or resident of the United States or a
domestic corporation (as defined in Section 7701(a) of the Code)) and (iv) if
other than cash or demand obligations, such items have a remaining maturity of
not longer than ninety (90) days.

                                       3
<PAGE>

         "CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, 42 USC Section 9601 et seq. as amended, state and
local analogs, and all rules and regulations and requirements thereunder in each
case as now or hereafter in effect.

         "Change in Control" shall occur if (a) EPPH shall no longer be a
wholly-owned direct Subsidiary of EPC, or (b) any other Subsidiary Loan Party
shall no longer be a direct or indirect wholly-owned Subsidiary of EPPH.

         "Citibank" means Citibank, N.A., a national banking association.

         "Citigroup Parties" is defined in Section 9.02(d).

         "Closing Date" is defined in the EPC Credit Agreement.

         "CNAI" means Citicorp North America, Inc.

         "Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute.

         "Collateral" means Property of the Subsidiary Loan Parties (other than
Excluded Property or Property for which a release of Lien has been effected or
is required to be effected in accordance with the terms of this Agreement,
including without limitation pursuant to Sections 2.08 and 2.09) described in
any Security Instrument as collateral for the Subsidiary Secured Obligations.

         "Collateral Agency Agreement" means the Collateral Agency Agreement
dated as of March 13, 2003 among the Loan Administrator, the Lender, the EPC
Agent, EPC (both as the Lender hereunder and the Borrower under the EPC Credit
Agreement), the Subsidiary Loan Parties, and CNAI, as Collateral Agent.

         "Collateral Agent" means CNAI, acting as Collateral Agent pursuant to
the terms of the Collateral Agency Agreement and the Security Instruments, and
performing the functions described herein to be performed by the Collateral
Agent in respect of certain permitted Collateral substitutions and Lien
releases, and any successor Collateral Agent appointed pursuant to the terms of
Section 6.04 of the Collateral Agency Agreement.

         "Collateral Oil and Gas Properties" means Oil and Gas Properties of the
Subsidiary Borrowers included in the Collateral.

         "Combined Reserve Ratio" means, as of any date of determination
thereof, the ratio of (a) the Aggregate Borrowing Base on such date to (b) the
Aggregate Loan Amount on such date.

         "Communications" is defined in Section 9.02(b).

         "Controlled Group" means, with respect to any Subsidiary Loan Party,
all members of a controlled group of corporations and all businesses (whether or
not incorporated) under common control which, together with such Subsidiary Loan
Party, are treated as a single employer under Section 414 of the Code.

                                       4
<PAGE>

         "Debt" means, for any Person, without duplication: (a) indebtedness of
such Person for borrowed money, including, without limitation, obligations under
letters of credit, surety bonds or bankers acceptances, and agreements relating
to the issuance of letters of credit, surety bonds or acceptance financing; (b)
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments; (c) obligations of such Person to pay the deferred purchase
price of property or services (including, without limitation, obligations that
are non-recourse to the credit of such Person but are secured by the assets of
such Person, but excluding trade accounts payable); (d) obligations of such
Person as lessee under Capital Leases and obligations of such Person in respect
of synthetic leases; (e) Hedging Obligations; (f) obligations of such Person
owing in respect of redeemable preferred stock of such Person; (g) any
obligations in respect of any volumetric production payments, Dollar-denominated
production payments or any Prepaid Finance Transaction; (h) obligations of such
Person under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) of such Person to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (g) above;
and (i) indebtedness or obligations of others of the kinds referred to in
clauses (a) through (h) secured by any Lien on or in respect of any Property of
such Person.

         "Default" means (a) an Event of Default or (b) any event or condition
which with notice or lapse of time or both would become an Event of Default.

         "Default Rate" means (a) with regard to the principal amount of any
Loan, 2% above the rate otherwise applicable to the principal amount of such
Loan, and (b) with regard to any other amount not paid when due, the rate that
would be applicable to such amount if such amount were a Base Rate Advance plus
2%.

         "Disposition" means, with respect to any Property, any sale, farm-out,
participation, assignment, gift, exchange, lease, conversion, transfer, or other
disposition of such Property, whether voluntary or involuntary, including any
transfer by way of a capital contribution and the creation of any Burden, or
material increase in any existing Burden. "Dispose" and "Disposed" shall have
correlative meanings.

         "Environment" or "Environmental" shall have the meanings set forth in
CERCLA.

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

         "Environmental Law" means any federal, state, local or foreign statute,
law, ordinance, rule, regulation, code, order, writ, judgment, injunction,
decree or judicial or agency interpretation, policy or guidance relating to
pollution or protection of the environment, health, safety or natural resources,
including without limitation those relating to (a) the use, handling,

                                       5
<PAGE>

transportation, treatment, storage, disposal, release or discharge of Hazardous
Substances; (b) pollution, contamination, injury, destruction, loss, protection,
cleanup, reclamation or restoration of the air, surface water, groundwater, land
surface or subsurface strata, or other natural resources; (c) solid, gaseous or
liquid waste generation, treatment, processing, recycling, reclamation, cleanup,
storage, disposal or transportation; (d) exposure to pollutants, contaminants or
hazardous, medically infectious, or toxic substances, materials or wastes; (e)
the safety or health of employees; or (f) the manufacture, processing, handling,
transportation, distribution in commerce, use, storage or disposal of hazardous,
medical, infectious, or toxic substances, materials or wastes.

         "Environmental Permit" means any permit, license, order, registration,
approval or other authorization under Environmental Law.

         "EPC" means El Paso Corporation, a Delaware corporation.

         "EPC Agent" means (i) initially, CNAI, in its capacity as agent for the
EPC Lenders under the EPC Credit Agreement, and (ii) following the completion of
any refinancing of the EPC Credit Agreement, any person acting as agent, trustee
or indenture trustee for the EPC Lenders in respect of any EPC Refinancing
Facility.

         "EPC Collateral Account" means the "Collateral Account" of EPC
described in the EPC Credit Agreement.

         "EPC Credit Agreement" means the Senior Secured Interim Term Credit and
Security Agreement dated as of March 13, 2003 among EPC, as borrower, the
lenders parties thereto, CNAI and Credit Suisse First Boston, acting through its
Cayman Islands Branch ("CSFB"), as Initial Lenders and Co-Agents, Salomon Smith
Barney Inc. and CSFB, as Co-Lead Arrangers and Joint Book Runners, and CNAI, as
Agent.

         "EPC Event of Default" means any "Event of Default" (as defined in the
EPC Credit Agreement or any EPC Refinancing Facility).

         "EPC Lenders" means the lenders parties to the EPC Credit Agreement, or
if the EPC Refinancing Facility has replaced the EPC Credit Agreement, then EPC
Lenders shall mean the lenders or security holders pursuant to such EPC
Refinancing Facility.

         "EPC Loans" means the Loan, as defined in and made pursuant to the EPC
Credit Agreement.

         "EPC Obligations" means the obligations of (i) EPC to the EPC Lenders
and the EPC Agent under the EPC Credit Agreement or (ii) the issuer under any
EPC Refinancing Facility.

         "EPC Obligations Guaranty" means the Guaranty Agreement dated as of
March 13, 2003 executed by the Subsidiary Loan Parties in favor of the EPC Agent
for the benefit of the EPC Lenders, pursuant to which the Subsidiary Loan
Parties guarantee the EPC Obligations.

         "EPC Refinancing Facility" means any debt or securities issued in
connection with a refinancing of the obligations of EPC under the EPC Credit
Agreement.

                                       6
<PAGE>

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

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

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

         "Equipment" means all equipment (as defined in the UCC), and including
without limitation, fuel separators, plant compressors, pumps, pumping units,
tanks and tank batteries, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, appliances, tools, implements, cables, wires,
towers, casing, tubing and rods.

         "Equity Interest" means with respect to any Person, any shares,
interests, participation, or other equivalents (however designated) of corporate
stock, membership interest or partnership interest (or any other ownership
interest) of such Person, and any options, warrants or other rights to acquire
any of the foregoing, and any securities exchangeable for, or convertible into,
any of the foregoing.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) which is a member of a group of which any Subsidiary Loan Party is
a member and which is under common control within the meaning of the regulations
under Section 414(b), (c), (m) or (o) of the Code.

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

         "Eurodollar Reserve Percentage" means for any LIBOR Advance the reserve
percentage applicable during any Interest Period (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) under regulations issued from time to time by the Board of Governors
of the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for the Lender or any EPC Lender, as
applicable, with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities having a term equal to such Interest Period.

         "Event of Default" has the meaning specified in Section 7.01.

         "Excess Collateral" has the meaning specified in Section 2.09(b).

         "Excluded Property" means the Property of the Subsidiary Loan Parties
described on Schedule 1.01(A).

         "Excluded Taxes" means, with respect to the Lender, the Loan
Administrator, the Collateral Agent or any other recipient of any payment to be
made by or on account of any obligation of the Subsidiary Loan Parties
hereunder, (a) income or franchise taxes imposed on

                                       7
<PAGE>

(or measured by) such Person's net income by the United States of America, or by
the jurisdiction under the laws of which such Person is organized or in which
its principal office is located or, in the case of the Lender, in which it
applicable office is located, (b) any branch profits taxes imposed by the United
States of America or any similar tax imposed by any other jurisdiction in which
any Subsidiary Loan Party is located, and (c) in the case of any such Person
that is not organized under the laws of the U.S. or any State thereof, any
withholding tax that is imposed on amounts payable to such Person at the time
such Person becomes entitled to any payment hereunder, or is attributable to
such Person's failure to comply with Section 2.12(d), except to the extent that
such Person (or its assignor, if any) was entitled, at the time of designation
of a new lending office (or assignment), to receive additional amounts from any
Subsidiary Loan Parties with respect to such withholding tax pursuant to Section
2.12(a).

         "Existing Investments" means the Investments existing on the date of
this Agreement described on Schedule 1.01(B).

         "Extraordinary Receipt" means (i) any cash received by or paid to or
for the account of any Subsidiary Loan Party or any of its Subsidiaries not in
the ordinary course of business, (ii) pension plan reversions, (iii) tax
rebates, (iv) Insurance Proceeds (including, without limitation, proceeds of any
key man life insurance but excluding proceeds of business interruption insurance
to the extent such proceeds constitute compensation for lost revenues or
earnings), (v) condemnation awards (and payments in lieu thereof), and (vi)
indemnity payments and any purchase price adjustment received in connection with
any purchase agreement; provided, however, that an Extraordinary Receipt shall
not include any proceeds of (A) Permitted Dispositions, (B) loan proceeds
received pursuant to the Loan Documents, (C) proceeds that would otherwise
constitute an Extraordinary Receipt to the extent the aggregate U.S. dollar
amount (or other currency equivalent) of such proceeds for any applicable event
does not exceed $5,000,000, or (D) cash receipts received from Insurance
Proceeds, condemnation awards (or payments in lieu thereof) or indemnity
payments to the extent that such Insurance Proceeds, awards or indemnity
payments are in respect of loss or damage to equipment, fixed assets or real
property and such Subsidiary Borrower certifies to the Loan Administrator, on or
prior to the receipt of such proceeds by such Subsidiary Borrower or any of its
Subsidiaries, that such proceeds are expected to be applied to reimburse such
Person for expenditures previously incurred, or to pay expenditures that will be
incurred to replace or repair the equipment, fixed assets or real property in
respect of which such proceeds were received in accordance with the terms of the
Loan Documents, or used for damage control or cleanup related thereto, so long
as such application is made within three (3) months after the receipt of
proceeds in respect of such damage or loss and so long as no Default exists at
the time of such receipt of such proceeds; provided that any proceeds which are
not so applied within the time period specified above shall thereupon be deemed
to be an Extraordinary Receipt received by such Person as of the last day of
such time period.

         "Federal Funds Rate" means, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on

                                       8
<PAGE>

such transactions received by CNAI from three Federal funds brokers of
recognized standing selected by it.

         "Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any of its successors.

         "Financial Statements" means the consolidated financial statements for
certain of the Subsidiary Loan Parties delivered to the EPC Agent and the EPC
Lenders pursuant to Section 3.01(f)(1) of the EPC Credit Agreement prior to the
Closing Date.

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

         "Governmental Authority" means, as to any Person in connection with any
subject, any foreign, national, state or provincial governmental authority, or
any political subdivision of any state thereof, or any agency, department,
commission, board, authority, instrumentality, bureau or court, in each case
having jurisdiction over such Person or such Person's Property in connection
with such subject.

         "Guaranteed Obligations" means all principal, interest, fees,
reimbursements, indemnifications, and other amounts payable by the Subsidiary
Loan Parties to the Lender, the Loan Administrator, or the Collateral Agent
under the Loan Documents (including, with respect to each Subsidiary Borrower,
its obligations in respect of its Loan and its guarantee obligations under
Section 3.01 in respect of each other Subsidiary Borrower's Loan).

         "Guaranteed Parties" has the meaning specified in Section 3.01(a).

         "Guarantors" means, collectively, (i) the Parent Guarantors and (ii) in
connection with their obligations under Section 3.01, the Subsidiary Borrowers,
and "Guarantor" means any one of them.

         "Hazardous Substance" means the substances identified as such pursuant
to CERCLA and those regulated under any other Environmental Law, including
without limitation pollutants, contaminants, petroleum, petroleum products,
radionucleides, radioactive materials, and medical and infectious waste.

         "Hazardous Waste" means the substances regulated as such pursuant to
any Environmental Law.

         "Hedging Obligations" of a Person means all obligations of such Person
under forward sales arrangements, calls, options, swaps, collars, floors, caps
or other similar transactions or any combination thereof, including any right or
obligation to purchase, sell or deliver any currency, commodity or security at a
future date for a specified price entered into to protect such Person from
fluctuations in prices or rates, including currencies, interest rates, commodity
prices, and securities prices.

         "Hydrocarbons" means oil, gas, coal seam gas, casinghead gas, drip
gasoline, natural gasoline, condensate, distillate, and all other liquid and
gaseous hydrocarbons produced or to be

                                       9
<PAGE>

produced in conjunction therewith from a well bore and all products,
by-products, and other substances derived therefrom or the processing thereof,
and all other minerals and substances produced in conjunction with such
substances, including, but not limited to, sulfur, geothermal steam, water,
carbon dioxide, helium, and any and all minerals, ores, or substances of value
and the products and proceeds therefrom.

         "Indemnified Taxes" means Taxes other than Excluded Taxes.

         "Independent Engineer" means Huddleston & Co., Inc., or any other
engineering firm selected by the Subsidiary Borrowers and reasonably acceptable
to the Loan Administrator.

         "Independent Engineering Report" means a report, in form and substance
reasonably satisfactory to the Loan Administrator, prepared by an Independent
Engineer, addressed to the Loan Administrator with respect to the Collateral Oil
and Gas Properties owned by each Subsidiary Borrower (or to be acquired by any
Subsidiary Borrower) which are or are to be included in the Borrowing Base,
which report shall be in a form substantially similar to the report issued by
Huddleston & Co., Inc. effective as of January 1, 2003, consistent with CNAI's
customary internal standards and practices for valuing and predetermining the
value of Oil and Gas Properties in connection with reserve based oil and gas
loan transactions, and shall include such other information as is otherwise
reasonably requested by the Loan Administrator. Independent Engineering Reports
delivered after the closing date shall reflect separately each Subsidiary
Borrower's respective Collateral Oil and Gas Properties.

         "Individual Reserve Ratio" means, for any Subsidiary Borrower as of any
date of determination thereof, the ratio of (a) the Borrowing Base in effect as
of such date for such Subsidiary Borrower to (b) the aggregate outstanding
principal amount of the Loan of such Subsidiary Borrower on such date.

         "Initial Borrowing Base Amount" means, with respect to each Subsidiary
Borrower, the amount set forth next to the name of such Subsidiary Borrower on
Annex II.

         "Insurance Proceeds" means any proceeds received from casualty and loss
insurance maintained by or on behalf of any Subsidiary Borrower or any of its
Property that constitutes Collateral and relating to claims with respect to
losses of such Subsidiary Borrower in respect of such Property, whether such
proceeds are payable to such Subsidiary Borrower or to the Collateral Agent (and
specifically excluding proceeds of any liability insurance).

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

         "Investments" means (a) the acquisition (whether for cash, Property,
services or securities or otherwise) of capital stock, bonds, notes, debentures,
partnership or other ownership interests or other securities of any other Person
or any agreement to make any such acquisition (including, without limitation,
any "short sale" or any sale of any securities at a time when such

                                       10
<PAGE>

securities are not owned by the Person entering into such sale); (b) the making
of any deposit (for avoidance of doubt, other than a deposit constituting a
Permitted Lien) with, or advance, loan or other extension of credit to, any
other Person (including the purchase of Property from another Person subject to
an understanding or agreement, contingent or otherwise, to resell such Property
to such Person); or (c) any capital contribution made in or to any Person.

         "Lease Operating Expenditures" or "LOE" means, for any month and with
regard to any Oil and Gas Property, all direct costs paid by any operator on
behalf of any Subsidiary Borrower to operate, maintain and produce such Oil and
Gas Property, excluding any non-recurring development or other non-recurring
capital expenditures incurred with respect to such Oil and Gas Property.

         "Leases" means (a) to the extent applicable to Oil and Gas Properties,
all oil and gas and/or oil, gas, and mineral leases and leasehold interests, fee
mineral interests, term mineral interests, subleases, farmouts, royalties,
overriding royalties, net profits interests, production payments, contract
rights to oil, gas, and mineral leases and leasehold interests under joint
exploration or joint development agreements, and similar interests or estates
including any reversionary or carried interests relating to any of the
foregoing, (b) all production units and drilling and spacing units (and the Oil
and Gas Properties covered thereby) which may affect all or any portion of such
interests including those units and any units created by agreement or
designation or under orders, regulations, rules or other official acts of any
federal, state or other governmental body or agency having jurisdiction, (c) all
surface leases, rights-of-way, easements and servitudes relating to Oil and Gas
Properties, (d) any and all non-consent interests owned or held by, or otherwise
benefiting, a Person and arising out of, or pursuant to, any contracts or
agreements relating to Oil and Gas Properties the Person is a party to, (e) any
other interest in, to or relating to (i) all or any part of the land relating to
or described in the leases or other instruments set forth in (a) through (c)
above, or (ii) any of the estates, property rights or other interests referred
to above, (f) any instrument executed in amendment, correction, modification,
confirmation, renewal or extension of the same, (g) any and all rights, titles
and interests of a Person (which are similar in nature to any of the rights, and
interests described in subsections (a) through (f) of this definition) which are
located on or under or which concern any Oil and Gas Properties located in
counties under which the rights in (a) through (c) above arise or counties in
which a counterpart of any of the Security Instruments is filed of record in the
real property records of such county, and (h) all tenements, hereditaments and
appurtenances now existing or hereafter obtained in connection with any of the
aforesaid, including any rights arising under unitization agreements, orders or
other arrangements, communitization agreements, orders or other arrangements or
pooling orders, agreements or other arrangements, including without limitation
all units created under orders, regulations and rules of any Governmental
Authority having jurisdiction.

         "Legal Requirement" means, as to any Person, any law, statute,
ordinance, decree, requirement, order, judgment, rule, regulation (or official
interpretation of any of the foregoing) of, and the terms of any license or
permit issued by, any Governmental Authority, including, but not limited to,
Regulations D, T, U, and X, which is applicable to such Person.

         "Lender" means EPC and any of its successors or permitted assigns.

                                       11
<PAGE>

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

         "LIBOR Advance" means the portion of each Loan accruing interest as
provided in Section 2.06(a)(ii) and (iii).

         "LIBOR Margin" means 4.25% per annum.

         "Lien" means any mortgage, lien, pledge, assignment, charge, deed of
trust, security interest, hypothecation, preference, deposit arrangement or
encumbrance (or other type of arrangement having the practical effect of the
foregoing) to secure or provide for the payment of any obligation of any Person,
whether arising by contract, operation of law, or otherwise (including, without
limitation, the interest of a vendor or lessor under any conditional sale
agreement, synthetic lease, Capital Lease, or other title retention agreement).

         "Loan" means, with respect to any Subsidiary Borrower, the term advance
made to such Subsidiary Borrower by the Lender pursuant to Section 2.01.

         "Loan Administrator" means Citicorp North America, Inc., in its
capacity as Loan Administrator pursuant to Article VIII, and any successor Loan
Administrator pursuant to Section 8.06.

         "Loan Documents" means this Agreement, the Notes, the Security
Instruments, the Account Control Agreements, the Master Subordination Agreement,
the Collateral Agency Agreement, and each other agreement, instrument, or
document executed by any Subsidiary Loan Party or any of their officers at any
time in connection with this Agreement.

         "Master Subordination Agreement" means the Master Subordination
Agreement in substantially the form of the attached Exhibit G, as the same may
be amended, modified, or supplemented from time to time.

         "Material Adverse Change" means (a) a material adverse change in the
business, assets (including the Oil and Gas Properties of any Subsidiary
Borrower taken as a whole), financial condition, prospects, or results of
operations of any Subsidiary Loan Party and its Subsidiaries, taken as a whole,
since December 31, 2001; (b) a material adverse effect on any Subsidiary Loan
Party's ability to perform its obligations under this Agreement or any other
Loan Document; or

                                       12
<PAGE>

(c) a material adverse effect on the rights of the Subsidiary Secured Parties
under the Loan Documents.

         "Maximum Rate" means the maximum nonusurious interest rate under
applicable law (determined under such laws after giving effect to any items
which are required by such laws to be construed as interest in making such
determination, including without limitation, if required by such laws, certain
fees and other costs).

         "Moody's" means Moody's Investors Service, Inc.

         "Mortgage" means a Deed of Trust, Mortgage, Security Agreement,
Assignment of Liens and Security Interests, Financing Statement and Assignment
of Production or any other mortgage or deed of trust executed by any Subsidiary
Borrower in favor of the Collateral Agent for the benefit of the Subsidiary
Secured Parties and in substantially the form of the attached Exhibit B or such
other form as may be requested by Collateral Agent in its reasonable discretion,
as the same may be amended, modified or supplemented from time-to-time, and
"Mortgages" shall mean all of such Mortgages collectively.

         "Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA.

         "Net Cash Proceeds" means:

         (a) with respect to any Permitted Collateral Disposition, all Cash
Equivalents received by or on behalf of any Subsidiary Borrower in connection
with such Permitted Collateral Disposition calculated after (i) payment of, or
provision for, all commissions, brokers' fees and discounts and other reasonable
out-of-pocket fees and expenses actually incurred to the extent, but only to the
extent, the amounts so deducted are actually paid by such Subsidiary Borrower to
a Person that is not an Affiliate thereof in respect of such Permitted
Collateral Disposition; and (ii) provision for all income or other taxes payable
in respect of the fiscal year in which such Permitted Collateral Disposition
occurs measured by or resulting from such Permitted Collateral Disposition and
which are payable in such fiscal year or the succeeding fiscal year, in each
case described in clause (i) or (ii) above to the extent the amounts so deducted
are actually paid and are properly attributable to such transaction or to the
asset that is the subject thereof; provided, however, that in the case of taxes
that are deductible under clause (ii) above but for the fact that, at the time
of receipt of such Cash Equivalents, such taxes have not been actually paid or
are not then payable, such Subsidiary Borrower may deduct an amount (the
"Reserved Amount") equal to the amount reserved in accordance with generally
accepted accounting principles for such Subsidiary Borrower's reasonable
estimate of such taxes, other than taxes for which such Subsidiary Borrower is
indemnified; provided further, however, that, at the time such taxes are paid,
an amount equal to the amount, if any, by which the Reserved Amount for such
taxes exceeds the amount of such taxes actually paid shall constitute "Net Cash
Proceeds" of the type for which such taxes were reserved for all purposes
hereunder; and

         (b) with respect to any Extraordinary Receipt or any Permitted
Disposition described in clause (ix) of the definition of Permitted Disposition,
all Cash Equivalents received by or on behalf of any Subsidiary Borrower in
connection thereof.

                                       13
<PAGE>

          "Note" means the promissory note of each Subsidiary Borrower payable
to the order of the Lender, in substantially the form of the attached Exhibit A,
evidencing the Loan made to such Subsidiary Borrower hereunder.

         "Oil and Gas Properties" means (a) all Leases; (b) all operating
agreements, contracts and other agreements which relate to any of the Leases or
the production, sale, purchase, exchange or processing of Hydrocarbons from or
attributable to such Leases; (c) all Hydrocarbons in and under and which may be
produced, saved, processed or attributable to the Leases, including all oil in
tanks, the lands covered thereby and all rents, issues, profits, proceeds,
products, revenues and other incomes from or attributable to the Leases; (d) all
accounts (including accounts resulting from the sale of Hydrocarbons at the
wellhead), contract rights and general intangibles, including all accounts,
contract rights and general intangibles now or hereafter arising regardless of
whether any of the foregoing is in connection with the sale or other disposition
of any Hydrocarbons or otherwise, including all Liens securing the same; (e) all
oil and gas properties, rights, titles, interests and estates described or
referred to above, including any and all Property, real or personal, now owned
or hereafter acquired, used or held for use in connection with the operating,
working or development of any of such Leases or Property and including any and
all oil wells, gas wells, injection wells or other wells, buildings, structures,
fuel separators, liquid extraction plants, plant compressors, pumps, pumping
units, field gathering systems, tanks and tank batteries, fixtures, valves,
fittings, machinery and parts, engines, boilers, meters, apparatus, appliances,
tools, implements, cables, wires, towers, casing, tubing and rods, and similar
equipment; and (f) all additions, substitutions, replacements, accessions and
attachments to any and all of the foregoing.

         "Operating Account" has the meaning specified in Section 4.26.

         "Operating Budget" means, with respect to any Subsidiary Borrower and
its Subsidiaries, a consolidated budget of the Subsidiary Borrower's and its
consolidated Subsidiaries' in a form substantially similar to the form submitted
to the Loan Administrator in connection with the closing provided for herein but
including specific items for (i) exploration capital expenditures, (ii)
development capital expenditures, and (iii) maintenance capital expenditures and
such other information as is reasonably requested by the Loan Administrator and
reflecting amounts reasonably satisfactory to the Loan Administrator.

         "Parent Guarantors" means, collectively, EPPH, Sabine VI and Sabine IX,
and "Parent Guarantor" means each of such Persons.

         "Payment Date" means the last Business Day of each Interest Period.

         "PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

         "Permit" means any approval, certificate of occupancy, consent, waiver,
exemption, variance, franchise, order, permit, authorization, right or license
of or from any Governmental Authority, including without limitation, an
Environmental Permit.

         "Permitted Collateral Dispositions" means any Disposition of Collateral
described in clauses (vi), (vii) and (viii) of the definition of Permitted
Dispositions.

                                       14
<PAGE>

         "Permitted Dispositions" means a Disposition by any Subsidiary Borrower
consisting of:

         (i)      sales of produced Hydrocarbons in the ordinary course of
                  business;

         (ii)     Oil and Gas Properties that such Subsidiary Borrower has
                  reasonably determined have no significant economic value;

         (iii)    other assets (other than Oil and Gas Properties) which are
                  Disposed of in the ordinary course of business, including
                  without limitation: (A) inventory sold in the ordinary course
                  of business, (B) equipment such as office equipment that is
                  routinely replaced or eliminated, and (C) vehicles;

         (iv)     Equipment that is obsolete or no longer used or necessary for
                  such Subsidiary Borrower's business;

         (v)      if no Default has occurred and is continuing, (A) Oil and Gas
                  Properties to the extent that there are no Proved Developed
                  Producing Reserves, Proved Developed Non-Producing Reserves or
                  Proved Undeveloped Reserves attributable thereto and (B)
                  Release Properties;

         (vi)     Oil and Gas Properties not otherwise described in any other
                  clause of this definition, if (a) the consideration received
                  therefor is for arms' length fair value and in cash, (b) prior
                  to such Disposition such Subsidiary Borrower provides evidence
                  satisfactory to the Loan Administrator to enable the Loan
                  Administrator to determine that, after giving effect to such
                  Disposition and the application of proceeds thereof, and
                  excluding any value associated with such assets Disposed of
                  from the Borrowing Base, such Subsidiary Borrower's Individual
                  Reserve Ratio would not be less than 1.25 to 1.0, and the
                  Combined Reserve Ratio would not be less than 1.75 to 1.0 (it
                  being agreed that for purposes of making any certification
                  concerning the Combined Reserve Ratio, such Subsidiary
                  Borrower may rely on the most recent determination of the
                  Borrowing Base for each other Subsidiary Borrower as made by
                  the Loan Administrator pursuant to Section 2.02, and the
                  outstanding balance of the Loan of each other Subsidiary
                  Borrower as of such date reported to such Subsidiary Borrower
                  by the Loan Administrator), and (c) such applicable Subsidiary
                  Borrower makes a mandatory prepayment of its Loan in the
                  amount of the Net Cash Proceeds received in respect of such
                  Disposition in accordance with Section 2.04(c);

         (vii)    all equity in Vermejo if (a) the consideration received
                  therefore is for arms' length fair value and in cash, (b)
                  prior to such Disposition, Raton provides evidence
                  satisfactory to the Loan Administrator to enable the Loan
                  Administrator to determine that, after giving effect to such
                  Disposition and the application of proceeds thereof, and
                  excluding from the determination of the Combined Reserve Ratio
                  at such time, the Borrowing Base of Vermejo, Raton's
                  Individual Reserve Ratio would not be less than 1.25 to 1.0
                  and the Combined Reserve Ratio (excluding the Borrowing Base
                  of Vermejo) would not be less than 1.75 to 1.0 (it being
                  agreed that for purposes of making any certification
                  concerning the

                                       15
<PAGE>

                  Combined Reserve Ratio, Raton may rely on the most recent
                  determination of the Borrowing Base for each other remaining
                  Subsidiary Borrower as made by the Loan Administrator pursuant
                  to Section 2.02 and the outstanding balance of the Loan of
                  each other Subsidiary Borrower as of such date reported to
                  such Subsidiary Borrower by the Loan Administrator), and (c)
                  Raton prepays the Vermejo Loan in full and, to the extent that
                  the Net Cash Proceeds received in respect of the Disposition
                  of the equity of Vermejo exceed the outstanding amount of the
                  Vermejo Loan, Raton makes a prepayment of its Loan in the
                  amount of such excess in accordance with Section 2.04(c), and,
                  to the extent that the Net Cash Proceeds received in respect
                  of the Disposition of the equity of Vermejo exceed the
                  outstanding amount of the Vermejo Loan and the Raton Loan,
                  EPPC makes a prepayment of its Loan in the amount of such
                  excess in accordance with Section 2.04(c);

         (viii)   all equity in Raton if (a) the consideration received
                  therefore is for arms' length fair value and in cash, (b)
                  prior to such Disposition, EPPC provides evidence satisfactory
                  to the Loan Administrator to enable the Loan Administrator to
                  determine that, after giving effect to such Disposition, the
                  application of proceeds thereof, and excluding from the
                  determination of the Combined Reserve Ratio at such time the
                  Borrowing Base of Raton and the Borrowing Base of Vermejo,
                  each of EPPC's Individual Reserve Ratio would not be less than
                  1.25 to 1.0 and the Combined Reserve Ratio (excluding the
                  Borrowing Base of Raton and the Borrowing Base of Vermejo)
                  would not be less than 1.75 to 1.0 (it being agreed that for
                  purposes of making any certification concerning the Combined
                  Reserve Ratio, EPPC may rely on the most recent determination
                  of the Borrowing Base for each other remaining Subsidiary
                  Borrower as made by the Loan Administrator pursuant to Section
                  2.02, and the outstanding balance of the Loan of each other
                  Subsidiary Borrower as of such date reported to such
                  Subsidiary Borrower by the Loan Administrator), and (c) EPPC
                  prepays the Loans of Raton and Vermejo in full and, to the
                  extent the Net Cash Proceeds received in respect of the
                  Disposition of the equity of Raton exceed the aggregate
                  outstanding principal amount of the Loans of Raton and
                  Vermejo, EPPC makes a prepayment of its Loan in an amount of
                  such excess in accordance with Section 2.04(c);

         (ix)     farmouts and participation arrangements of Oil and Gas
                  Properties that include only Proved Undeveloped Reserves
                  and/or unproven reserves that are not Proved Developed
                  Producing Reserves or Proved Developed Non-Producing Reserves
                  if (a) prior to such Disposition such Subsidiary Borrower
                  provides evidence satisfactory to the Loan Administrator to
                  enable the Loan Administrator to determine that, after giving
                  effect to such Disposition, and excluding any value associated
                  with such assets Disposed of from the Borrowing Base, such
                  Subsidiary Borrower's Individual Reserve Ratio would not be
                  less than 1.25 to 1.0, and the Combined Reserve Ratio would
                  not be less than 1.75 to 1.0 (it being agreed that for
                  purposes of making any certification concerning the Combined
                  Reserve Ratio, such Subsidiary Borrower may rely on the most
                  recent determination of the Borrowing Base for each other
                  Subsidiary Borrower as made

                                       16
<PAGE>

                  by the Loan Administrator pursuant to Section 2.02 and the
                  outstanding balance of the Loan of each other Subsidiary
                  Borrower as of such date reported to such Subsidiary Borrower
                  by the Loan Administrator), and (b) such Subsidiary Borrower
                  utilizes the Net Cash Proceeds it receives in connection with
                  such Disposition for the development of such Oil and Gas
                  Properties; and

         (x)      cash dividends and distributions permitted to be paid under
                  Section 6.06.

                  "Permitted Investments" means (a) with respect to any Parent
Guarantor, (i) Equity Interests held as of the Closing Date, (ii) additional
capital contributions to any Subsidiary Loan Party, and (iii) Investments
consisting of Subordinated Intercompany Debt and (b) with respect to any
Subsidiary Borrower, any of the following:

         (i)      Investments in cash and Cash Equivalents;

         (ii)     Investments consisting of Subordinated Intercompany Debt;

         (iii)    Existing Investments;

         (iv) Investments in any Subsidiary Borrower or any wholly-owned
Subsidiary which has become a guarantor of the Guaranteed Obligations and has
pledged its assets as Collateral;

         (v) Investments (other than Investments in Equity Interests) made in
the ordinary course of business consistent with past practice (including with
respect to quantity, quality and frequency);

         (vi) Investments consisting of the extension of credit to customers,
along with any security such customers place for the benefit of the Subsidiary
Borrower, in each case in the ordinary course of business;

         (vii) Investments consisting of the deferred sale price of Permitted
Dispositions; and

         (viii) other Investments of such Subsidiary Borrower the outstanding
principal or stated amount of which shall not exceed $5,000,000 in the aggregate
at any time (but not including any Investments after the Closing Date in Noric
Holdings I, L.L.C. or any of its Subsidiaries).

         "Permitted Liens" means, with respect to any Subsidiary Loan Party, the
following Liens on Property of such Subsidiary Loan Party:

         (a)      Liens securing the Subsidiary Secured Obligations;

         (b) purchase money Liens upon any equipment acquired or held by such
Subsidiary Loan Party or any of its Subsidiaries in the ordinary course of
business prior to or at the time of, or within sixty (60) days after, such
Subsidiary Loan Party's or such Subsidiary's acquisition of such equipment;
provided that, the principal amount of the Debt secured by such Liens (i) was
incurred solely for the purpose of financing the acquisition of such equipment,
and does not exceed the aggregate purchase price of such equipment plus related
transaction costs, (ii) is

                                       17
<PAGE>

secured only by such equipment and the proceeds thereof and not by any other
assets of such Subsidiary Loan Party and its Subsidiaries, and (iii) is not
increased in amount;

         (c) Liens for taxes, assessments, or other governmental charges or
levies not yet delinquent or that (provided foreclosure, sale, or other similar
proceedings shall not have been initiated) are being contested in good faith by
appropriate proceedings, and such reserves as may be required by GAAP shall have
been made therefor;

         (d) Liens in favor of vendors, carriers, warehousemen, repairmen,
mechanics, workmen, materialmen, construction, or similar Liens arising by
operation of law in respect of obligations that are not yet delinquent or that
are being contested in good faith by appropriate proceedings, provided such
reserves as may be required by GAAP shall have been made therefor;

         (e) Liens to operators and non-operators under joint operating
agreements arising in the ordinary course of the business of such Subsidiary
Loan Party or the relevant Subsidiary of such Subsidiary Loan Party to secure
amounts owing, which amounts are not yet delinquent or are being contested in
good faith by appropriate proceedings, provided such reserves as may be required
by GAAP shall have been made therefor;

         (f) Burdens;

         (g) Liens arising out of pledges or deposits under workers'
compensation laws, unemployment insurance, old age pensions or other social
security or retirement benefits, or similar legislation or to secure public or
statutory obligations of such Subsidiary Loan Party and its Subsidiaries;

         (h) operating agreements, unitization and pooling agreements and
orders, those certain farmout agreements more particularly described on Schedule
1.01(C), gas balancing agreements and other agreements, in each case that are
customary in the oil, gas and mineral production business and that are entered
into in the ordinary course of business, to the extent that any such Lien
referred to in this clause does not (i) materially impair the use of the
Property covered by such Lien for the purposes for which such Property is held
by such Subsidiary Loan Party or any of its Subsidiaries or materially impair
the value of such Property subject thereto, (ii) obligate any Subsidiary Loan
Party or any of its Subsidiaries to make a Disposition, other than a Permitted
Disposition, or (iii) contain any Burdens or preferential purchase rights beyond
those taken into account in computing the net revenue interests and working
interests of each Subsidiary Loan Party and its Subsidiaries shown in the most
recent Independent Engineering Report;

         (i) easements, rights-of-way, restrictions, and other similar
encumbrances, and minor defects in the chain of title that are customarily
accepted in the oil and gas financing industry, none of which interfere with the
ordinary conduct of the business of Subsidiary Borrower or any of its
Subsidiaries or materially detract from the value or use of the Property to
which they apply;

         (j) Liens securing Capital Leases permitted under Section 6.02, but
only on the Property covered under such lease and the proceeds thereof;

                                       18
<PAGE>

         (k) Liens on cash or securities of such Subsidiary Loan Party securing
Debt permitted under Section 6.02; and

         (l) (i) Liens contemplated by any Account Control Agreement with
respect to any Account covered thereby, and (ii) Liens that are in favor of any
depositary bank or securities intermediary or commodity intermediary maintaining
any account for EPPC or EPGOM, provided that with respect to any such Lien
described in this clause (ii), such Lien exists pursuant to customary account
documentation or arises by operation of law, and the obligations in favor of
such depositary bank, securities intermediary, or commodity intermediary secured
by such Lien do not constitute Debt of EPPC or EPGOM or any other Subsidiary
Loan Party.

         "Person" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability corporation or company,
limited liability partnership, trust, unincorporated association, joint venture
or other entity, or a government or any political subdivision or agency thereof
or any trustee, receiver, custodian or similar official.

         "Plan" means an employee benefit plan (other than a Multiemployer Plan)
maintained for employees of the Subsidiary Borrower or any member of the
Controlled Group and covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code.

         "Platform" is defined in Section 9.02(c).

         "Pledge Agreement" means a Pledge Agreement in the form of the attached
Exhibit E, executed by each of the Subsidiary Loan Parties (other than Sabine
IX) in favor of the Collateral Agent for the benefit of the Subsidiary Secured
Parties to secure the Subsidiary Secured Obligations, as the same may be
amended, modified or supplemented from time to time.

         "Post-Closing Items" has the meaning set forth in Section 2.14.

         "Prepaid Finance Transaction" means (i) any forward sale of oil, gas or
other minerals that is intended primarily as a borrowing of funds (other than
forward sales transactions or arrangements effective after the Closing Date in
which the aggregate amount of proceeds received by all Subsidiary Borrowers does
not exceed $30,000,000 for all such forward sale transactions or arrangements),
(ii) conveyances of Burdens in transactions primarily intended as a borrowing of
funds, and (iii) any swap transaction that is intended primarily as a borrowing
of funds, in each case for any transaction described in clauses (i), (ii) and
(iii), whether or not any such transaction is an "off-balance sheet transaction"
pursuant to any applicable law or regulation.

         "Property" of any Person means any property or assets (whether real,
personal, or mixed, tangible or intangible) of such Person.

         "Property Evaluation Information" means each Independent Engineering
Report and such other information as any Subsidiary Borrower shall deliver to
the Loan Administrator from time to time in connection with a determination of
the Borrowing Base for such Subsidiary Borrower pursuant to Section 2.02.

                                       19
<PAGE>

         "Proved Developed Non-Producing Reserves" means reserves which exist
behind the casing of existing wells, or at minor depths below the present bottom
of such wells, which are expected to be produced through these wells in the
predictable future and where the cost of making oil and gas available for
production is relatively small compared to the cost of a new well.

         "Proved Developed Producing Reserves" means reserves which are expected
to be produced from existing completion intervals now open for production in
existing wells.

         "Proved Undeveloped Reserves" shall mean reserves which are expected to
be recovered from additional wells on undrilled acreage or from existing wells
where a relatively major expenditure is required for recompletion. Such reserves
on undrilled acreage are limited to those drilling units offsetting productive
units which are reasonably certain of production when drilled. Proven Reserves
for other undrilled units are claimed only when it can be demonstrated with
reasonable certainty, based on accepted geological, geophysical, and engineering
studies and data, that there is continuity of reservoir from an existing
productive formation. No estimates for Proved Undeveloped Reserves are
attributable to any improved recovery technique contemplated for any acreage,
unless the techniques to be employed have been proved effective by actual tests
in the same areas and reservoir.

         "Proven Reserves" means, at any particular time, the estimated
quantities of Hydrocarbons which geological and engineering data demonstrate
with reasonable certainty to be recoverable in future years from known
reservoirs attributable to Collateral Oil and Gas Properties of any Subsidiary
Borrower, which are included or to be included in the Borrowing Base of such
Subsidiary Borrower, under then existing economic and operating conditions
(i.e., prices and costs as of the date the estimate is made). The prices used
may include consideration of changes in existing prices provided only by
contractual arrangements, but not on escalations based upon future conditions.

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

         "Regulations T, U, and X" mean Regulations T, U, and X of the Federal
Reserve Board, as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.

         "Release" shall have the meaning set forth in CERCLA or under any other
Environmental Law.

         "Release Property" has the meaning set forth in Section 2.08(b).

         "Reportable Event" shall have the meaning set forth in Section 4043 of
ERISA and the regulations issued thereunder.

         "Response" shall have the meaning set forth in CERCLA or under any
other Environmental Law.

         "Responsible Officer" means (a) with respect to any Person that is a
corporation, such Person's Chief Executive Officer, President or Chief Financial
Officer, or any Vice President of

                                       20
<PAGE>

such Person, (b) with respect to any Person that is a limited liability company,
a manager or the Responsible Officer of such Person's managing member or
manager, and (c) with respect to any Person that is a general partnership, the
Responsible Officer of such Person's general partner or partners.

         "Restricted Payment" means, with respect to any Person, (a) any
dividend or distribution on, or any purchase, redemption, retirement, defeasance
or other acquisition for value of any of its Equity Interests now or hereafter
outstanding, (b) any return of any capital to its stockholders, partners or
members (or the equivalent Persons thereof) as such, (c) the making of any
distribution of assets, Equity Interests, obligations or securities to its
stockholders, partners or members (or the equivalent Persons thereof) as such,
or (d) repayment or repurchase or other means of satisfying or extinguishing
Subordinated Intercompany Debt payable by such Person to EPC.

         "S&P" means Standard & Poor's Ratings Group.

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

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

         "Scheduled Maturity Date" means March 11, 2005.

          "Security Agreement" means the Security Agreement in substantially the
form of the attached Exhibit D, executed by the Subsidiary Loan Parties in favor
of the Collateral Agent for the benefit of the Subsidiary Secured Parties to
secure the Subsidiary Secured Obligations, as the same may be amended, modified,
or supplemented from time to time.

         "Security Instruments" means, collectively, the Mortgages, the Transfer
Letters, the Pledge Agreement, the Security Agreement and each other agreement,
instrument or document executed at any time by any Subsidiary Loan Party to the
Collateral Agent in connection with any of the foregoing or otherwise providing
collateral security to the Collateral Agent for the benefit of the Subsidiary
Secured Parties to secure the Subsidiary Secured Obligations.

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

                                       21
<PAGE>

existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.

         "Subordinated Intercompany Debt" means Debt in connection with
intercompany loans (i) from EPC to a Subsidiary Loan Party or (ii) from one
Subsidiary Loan Party to another Subsidiary Loan Party (other than Sabine IX),
in each case where (x) such Debt is subordinated to the Subsidiary Secured
Obligations pursuant to the Master Subordination Agreement, (y) such Debt is not
evidenced by a promissory note or other instrument unless the Collateral Agent
has requested that such Debt be evidenced by a promissory note or other
instrument and delivered to the Collateral Agent to be held as Collateral, and
(z) in the case of any such Debt payable to a Subsidiary Loan Party, such
Subsidiary Loan Party's rights in connection therewith are subject to an
Acceptable Security Interest.

         "Subsidiary" of a Person means any corporation or other entity of which
more than 50% of the outstanding Equity Interests having ordinary voting power
under ordinary circumstances to elect a majority of the board of directors or
similar governing body of such corporation or other entity (irrespective of
whether at such time the Equity Interest of any other class or classes of such
corporation or other entity shall or might have voting power upon the occurrence
of any contingency) is at the time directly or indirectly owned or controlled by
such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person. Unless otherwise indicated herein, each
reference to the term "Subsidiary" shall mean a Subsidiary of a Subsidiary Loan
Party.

         "Subsidiary Borrowers" means, collectively, EPPC, EPGOM and, until the
date (if any) on which such Person shall have been Disposed of in accordance
with clause (vii) or (viii) (as applicable) of the definition of "Permitted
Dispositions", Vermejo and Raton, and "Subsidiary Borrower" means any of them,
as applicable.

         "Subsidiary Loan Parties" means, collectively, the Subsidiary
Borrowers, EPPH, Sabine VI and Sabine IX, and "Subsidiary Loan Party" means any
of such Persons.

         "Subsidiary Secured Obligations" means, collectively, (i) the
obligations of the Subsidiary Loan Parties under this Agreement and the other
Loan Documents, and (ii) the obligations of the Subsidiary Loan Parties under
the EPC Obligations Guaranty.

         "Subsidiary Secured Parties" means the Lender, the Loan Administrator,
the Collateral Agent, the EPC Agent and the EPC Lenders, and each of their
respective successors and permitted assigns that at any time hold any Subsidiary
Secured Obligations.

         "Termination Event" means (a) the occurrence of a Reportable Event,
other than a Reportable Event not subject to the provision for 30-day notice to
the PBGC under such regulations, (b) the withdrawal of any Subsidiary Loan Party
or any of its Affiliates from a Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, (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, (d) the institution of proceedings
to terminate a Plan by the PBGC, or (e) any other event or condition which
constitutes grounds

                                       22
<PAGE>

under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan.

         "Transfer Letters" means, collectively, the letters in lieu of transfer
orders executed by each Subsidiary Borrower executing a Mortgage in the form of
the attached Exhibit C, as each of the same may be amended, modified or
supplemented from time to time. The Transfer Letters shall direct each purchaser
of Hydrocarbons attributable to the Collateral Oil and Gas Properties to make
payments for such Hydrocarbons directly to the respective Subsidiary Borrower's
Operating Accounts as of the Closing Date.

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

          "United States" and "U.S." each mean the United States of America.

         "U.S.$" or "$" means lawful money of the United States.

         "Unperfected Collateral" means any of the following Property which is
subject to a Lien created under any Security Instrument in favor of the
Collateral Agent: (i) goods that are subject to certificates of title statutes,
(ii) letter-of-credit rights with respect to letters of credit that do not
constitute "supporting obligations" as defined in Section 9-102(a)(77) of the
UCC, and (iii) any other property subject to a statute, regulation or treaty
referred to in Section 9-311(a) of the UCC.

         "Vermejo" means Vermejo Minerals Corporation, a Delaware corporation.

         Section 1.02 Computation of Time Periods. In this Agreement, with
respect to the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including" and the words "to,"
"ending on" and "until" each means "to but excluding".

         Section 1.03 Accounting Terms; Changes in GAAP. 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 or (b) not so materially inconsistent with such principles
that any covenant determined in whole or in part in the Loan Documents by
reference to such terms 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 1.03.

         Section 1.04 Miscellaneous. Article, Section, Annex, Schedule, and
Exhibit references are to Articles, Sections of, and Annexes, Schedules and
Exhibits to this Agreement, unless otherwise specified. All references to
instruments, documents, contracts, and agreements are references to such
instruments, documents, contracts, and agreements as the same may be amended,
supplemented, and otherwise modified from time to time, unless otherwise
specified. 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. The term "including" means
"including, without limitation,". Paragraph headings have been inserted in this
Agreement as a matter of convenience for reference only and it is

                                       23
<PAGE>

agreed that such paragraph headings are not a part of this Agreement and shall
not be used in the interpretation of any provision of this Agreement. All times
specified herein (unless otherwise specified) shall be deemed to refer to New
York City time.

                                   ARTICLE II

                                TERMS OF FACILITY

         Section 2.01 Term Loans. The Lender agrees, on the terms and conditions
set forth in this Agreement, to make a single term loan (a "Loan") to each
Subsidiary Borrower on the Closing Date equal to the Initial Borrowing Base
Amount for such Subsidiary Borrower specified on Annex II; provided that the
aggregate outstanding principal amount of the Lender's Loans to all Subsidiary
Borrowers shall not exceed U.S.$1,200,000,000 or such lesser amount as the
Lender receives as proceeds of its borrowing on the Closing Date under the EPC
Credit Agreement. Any principal amount of a Loan that is repaid by or on behalf
of any Subsidiary Borrower may not be reborrowed. The indebtedness of each
Subsidiary Borrower to the Lender resulting from the Loan made to such
Subsidiary Borrower shall be evidenced by a Note of such Subsidiary Borrower
payable to the order of the Lender in principal amount equal to such Subsidiary
Borrower's Initial Borrowing Base Amount.

         Section 2.02 Borrowing Base.

         (a) Initial Borrowing Base of each Subsidiary Borrower. The Initial
Borrowing Base Amount for each Subsidiary Borrower in effect as of the Closing
Date has been set by the Loan Administrator and the Lender, in consultation with
the Subsidiary Borrowers, and is hereby acknowledged by each Subsidiary
Borrower. Such amount shall be deemed to be the Borrowing Base of such
Subsidiary Borrower until such Borrowing Base is redetermined pursuant to this
Section 2.02, in each case in accordance with the standards set forth in Section
2.02(e).

         (b) Borrowing Base Redeterminations. Following the Closing Date, the
Borrowing Base for each Subsidiary Borrower shall be redetermined by the Loan
Administrator quarterly on the last business day of each March, June, September
and December (each, a "Borrowing Base Determination Date"), commencing on June
30, 2003. In addition, following the Loan Administrator's completion of all due
diligence required by it in connection with the business, finances, accounting,
legal and environmental matters relevant to each Subsidiary Borrower and its
Collateral (whether such due diligence is completed before or following the
Closing Date), the Loan Administrator may request a redetermination of the
Borrowing Base for such Subsidiary Borrower (for purposes of its Initial
Borrowing Base Amount) to reflect any material adverse findings as a result of
such due diligence (it being agreed that the Loan Administrator shall cause such
review to commence and be completed as quickly as practicable).

         (c) Borrowing Base Reporting. In connection with the redetermination of
each Subsidiary Borrower's Borrowing Base, prior to each Borrowing Base
Determination Date the Subsidiary Borrowers shall provide the following to the
Loan Administrator and the Lender:

                  (i) On or before the date thirty (30) days preceding each
March Borrowing Base Determination Date, the Subsidiary Borrowers shall deliver
to the Loan Administrator and

                                       24
<PAGE>

the Lender an Independent Engineering Report, dated effective as of December 31
of the preceding calendar year and such other information as may be reasonably
requested by the Loan Administrator with respect to the Collateral Oil and Gas
Properties included or to be included in the Borrowing Base of each Subsidiary
Borrower. Utilizing such Independent Engineering Report and such supplemental
data and other information as the Loan Administrator deems relevant, the Loan
Administrator shall redetermine the Borrowing Base for each Subsidiary Borrower
in accordance with Section 2.02(e) and notify the Lender, the Subsidiary
Borrowers, and the Collateral Agent of its calculation of each redetermined
Borrowing Base on or before such March Borrowing Base Determination Date.

                  (ii) On or before the date thirty (30) days preceding each
June Borrowing Base Determination Date, the Subsidiary Borrowers shall deliver
to the Loan Administrator and the Lender supplemental data (including, without
limitation, monthly production reports and information with respect to events
that have occurred since the immediately preceding March Borrowing Base
Determination Date and that are material to the Independent Engineering Report
delivered prior to such March Borrowing Base Determination Date) and such other
information as may be reasonably requested by the Loan Administrator with
respect to the Collateral Oil and Gas Properties included or to be included in
the Borrowing Base of each Subsidiary Borrower. Utilizing such supplemental data
and information and such other information as the Loan Administrator deems
relevant, the Loan Administrator shall redetermine the Borrowing Base for each
Subsidiary Borrower in accordance with Section 2.02(e) and notify the Lender,
the Subsidiary Borrowers, and the Collateral Agent of its calculation of each
redetermined Borrowing Base on or before such June Borrowing Base Determination
Date.

                  (iii) On or before the date thirty (30) days preceding each
September Borrowing Base Determination Date, the Subsidiary Borrowers shall
deliver to the Loan Administrator and the Lender an Independent Engineering
Report, dated effective as of June 30 of such year and such other information as
may be reasonably requested by the Loan Administrator with respect to the Oil
and Gas Properties included or to be included in the Borrowing Base of each
Subsidiary Borrower. Utilizing such Independent Engineering Report and such
supplemental data and other information as the Loan Administrator deems
relevant, the Loan Administrator shall redetermine the Borrowing Base for each
Subsidiary Borrower in accordance with Section 2.02(e) and notify the Lender,
the Subsidiary Borrowers, and the Collateral Agent of its calculation of each
redetermined Borrowing Base on or before such September Borrowing Base
Determination Date.

                  (iv) On or before the date thirty (30) days preceding each
December Borrowing Base Determination Date, the Subsidiary Borrowers shall
deliver to the Loan Administrator and the Lender supplemental data (including,
without limitation, monthly production reports and information with respect to
events that have occurred since the immediately preceding September Borrowing
Base Determination Date and that are material to the Independent Engineering
Report delivered prior to such September Borrowing Base Determination Date) and
such other information as may be reasonably requested by the Loan Administrator
with respect to the Collateral Oil and Gas Properties included or to be included
in the Borrowing Base of each Subsidiary Borrower. Utilizing such supplemental
data and information and such other information as the Loan Administrator deems
relevant, the Loan Administrator shall redetermine the Borrowing Base for each
Subsidiary Borrower in accordance

                                       25
<PAGE>

with Section 2.02(e) and notify the Lender, the Subsidiary Borrowers, and the
Collateral Agent of its calculation of each redetermined Borrowing Base on or
before such December Borrowing Base Determination Date.

                  (v) In the event that the Subsidiary Borrowers do not furnish
to the Loan Administrator and the Lender in any material respect the reports,
data or other information specified in clauses (i), (ii), (iii) or (iv) above by
the date specified therein, the Loan Administrator may nonetheless redetermine
the Borrowing Base of each Subsidiary Borrower and redesignate each such
Borrowing Base from time to time thereafter in its sole discretion until the
Loan Administrator receives the relevant report, data or other information, as
applicable, whereupon the Loan Administrator shall redetermine the Borrowing
Base as otherwise specified in this Section 2.02.

                  (vi) Each delivery by a Subsidiary Borrower of Property
Evaluation Information to the Loan Administrator and the Lender shall be deemed
to be a representation and warranty by such Subsidiary Borrower on the date of
such delivery that (i) the representations and warranties contained in Sections
4.06 and 4.13 are true and correct on and as of such date, except for changes
resulting from transactions not prohibited pursuant to the terms of this
Agreement and (ii) except as disclosed in writing to the Loan Administrator and
the Lender at the time of such delivery and except for fluctuations in the price
of oil and gas generally, there has been no material adverse change with respect
to the Collateral described in such Property Evaluation Information since the
relevant dates of such Property Evaluation Information.

         (d) Interim Redeterminations. In addition to the Borrowing Base
redeterminations provided for in Section 2.02(c), the Loan Administrator may at
any time and from time to time, in its sole discretion and based on such
information as the Loan Administrator shall deem relevant (but in accordance
with Section 2.02(e)), make an additional redetermination of the Borrowing Base
of any Subsidiary Borrower. The Loan Administrator shall give the Subsidiary
Borrowers at least ten (10) days' prior written notice that a redetermination of
any Borrowing Base pursuant to this paragraph (d) is to be performed. In
connection with any redetermination of any Borrowing Base under this Section
2.02(d), the applicable Subsidiary Borrower shall provide the Loan Administrator
with such information regarding such Subsidiary Borrower's business (including,
without limitation, its Collateral Oil and Gas Properties, Proven Reserves, and
production relating thereto) as the Loan Administrator may reasonably request.

         (e) Standards for Borrowing Base Redeterminations. Each redetermination
of the Borrowing Base of each Subsidiary Borrower by the Loan Administrator
pursuant to this Section 2.02 shall be made (i) in the sole discretion of the
Loan Administrator (but in accordance with the other provisions of this Section
2.02(e)), (ii) in accordance with CNAI's customary internal standards and
practices for valuing and redetermining the value of Oil and Gas Properties in
connection with reserve based oil and gas loan transactions, (iii) in
conjunction with the most recent Independent Engineering Report or other
information received by the Loan Administrator relating to the Proven Reserves
of each Subsidiary Borrower, and (iv) based upon the estimated value of the
Proven Reserves owned by the Subsidiary Borrower set forth in the most recent
Independent Engineering Report as determined by the Loan Administrator in
accordance with CNAI's customary internal standards and practices for valuing
and redetermining the value of Oil and Gas Properties in connection with reserve
based oil and gas loan transactions and based

                                       26
<PAGE>

on information included in the most recent Independent Engineering Report. In
valuing and redetermining the Borrowing Base for each Subsidiary Borrower, the
Loan Administrator may also consider the business, financial condition, and Debt
obligations of such Subsidiary Borrower and such other factors as the Loan
Administrator customarily deems appropriate. In that regard, each Subsidiary
Borrower acknowledges that the determination of its Borrowing Base will contain
an equity cushion (market value in excess of loan value), which is essential for
the adequate protection of the Subsidiary Secured Parties. Except with respect
to the Initial Borrowing Base Amounts, Proven Reserves shall not be included or
considered for inclusion in the Borrowing Base for any Subsidiary Borrower
unless the Loan Administrator shall have received, at such Subsidiary Borrower's
expense, evidence satisfactory in form and substance to the Loan Administrator
that the Collateral Agent has an Acceptable Security Interest in the Oil and Gas
Properties relating thereto pursuant to the Security Instruments. At all times
after the Loan Administrator has given the Subsidiary Borrowers notification of
a redetermination of any Borrowing Base under this Section 2.02, such Borrowing
Base shall be equal to the redetermined amount until such Borrowing Base is
subsequently redetermined in accordance with this Section 2.02.

         (f) Cash Collateral. Notwithstanding the foregoing, if at any time any
Subsidiary Borrower is permitted by the terms of this Agreement to deposit Cash
Collateral into its Cash Collateral Account in lieu of making any mandatory
prepayment pursuant to Section 2.04 or in connection with any permitted
substitution of Collateral pursuant to Section 2.08, the "Borrowing Base" of
such Subsidiary Borrower shall be increased by the amount of such Cash
Collateral (except as otherwise specified herein for calculations that are to be
made without consideration of any Cash Collateral provided by such Subsidiary
Borrower).

         Section 2.03 Optional Prepayment of Loans. Each Subsidiary Borrower may
prepay the outstanding principal balance of its Loan, in whole or in part, after
giving prior written notice to the Loan Administrator and the Lender (which
notice must state the proposed date and aggregate principal amount of such
prepayment and which must be received by the Loan Administrator and the Lender
no later than 11:00 a.m. on the Business Day preceding the proposed date of such
prepayment). If any such notice is given, such Subsidiary Borrower shall prepay
its Loan in whole or in part in an aggregate principal amount equal to the
amount specified in such notice, together with accrued interest to the date of
such prepayment on the principal amount prepaid and amounts required to be paid
pursuant to Section 2.07 as a result of such prepayment being made on such date;
provided, however, that each partial prepayment shall be made in a minimum
amounts of $1,000,000 and in integral multiples of $1,000,000 in excess thereof
and in an aggregate principal amount such that after giving effect thereto such
Loan shall have a principal amount outstanding of at least $1,000,000. Full
prepayment of any Loan is permitted without restriction of amounts.

         Section 2.04 Mandatory Prepayment of Loans. Each Subsidiary Borrower
shall be required to prepay the outstanding principal amount of its Loan,
together with accrued interest to the date of such prepayment on the principal
amount prepaid and amounts required to be paid pursuant to Section 2.07 as a
result of such prepayment being made on such date, on the dates and in the
amounts set forth below:

                                       27
<PAGE>

         (a) Individual Reserve Ratio. If, on any date the Borrowing Base for
any Subsidiary Borrower is redetermined pursuant to Section 2.02, the Individual
Reserve Ratio of such Subsidiary Borrower on such date is less than 1.25 to 1.0,
then on or before the third Business Day following such date, such Subsidiary
Borrower shall (i) prepay the principal amount of such Subsidiary Borrower's
outstanding Loan and/or (ii) provide Cash Collateral to the Collateral Agent
(and the amount of such Cash Collateral shall increase such Subsidiary
Borrower's Borrowing Base), in amount(s) so that, after giving effect to such
prepayment and/or increase to such Borrowing Base, the Individual Reserve Ratio
of such Subsidiary Borrower is not less than 1.25 to 1.0; provided, however,
that, if Cash Collateral has been provided pursuant to clause (ii) above, and on
the next date that the Borrowing Base of such Subsidiary Borrower is
redetermined the Loan Administrator determines that the Borrowing Base of such
Subsidiary Borrower has not increased from the Borrowing Base determined as of
the preceding redetermination date (excluding, however, any increase in such
Borrowing Base attributable to such Cash Collateral) by an amount sufficient to
cause the Individual Reserve Ratio of such Subsidiary Borrower based on the
redetermined Borrowing Base (without counting any such Cash Collateral in the
calculation thereof) to be not less than 1.25 to 1.0, then such Subsidiary
Borrower shall be obligated to prepay its Loan in an amount sufficient to cause
its Individual Reserve Ratio to be not less than 1.25 to 1.0 and the Collateral
Agent shall apply such Cash Collateral for such purpose.

         (b) Combined Reserve Ratio. If, on any date the Borrowing Base for any
Subsidiary Borrower is redetermined pursuant to Section 2.02, the Combined
Reserve Ratio on such date is less than 1.75 to 1.0, then on or before the third
Business Day following such date, the Subsidiary Borrowers shall (i) prepay the
aggregate principal amount of such Subsidiary Borrowers' outstanding Loans
and/or (ii) provide Cash Collateral to the Collateral Agent (and the amount of
such Cash Collateral shall increase the Borrowing Base of the Subsidiary
Borrower providing such Cash Collateral) in amount(s) so that, after giving
effect to such prepayment(s) and/or increase to the applicable Borrowing Bases,
the Combined Reserve Ratio is not less than 1.75 to 1.0; provided, however,
that, if Cash Collateral has been provided pursuant to clause (ii) above, and on
the next date that the Borrowing Base of any Subsidiary Borrower is redetermined
the Loan Administrator determines that the aggregate Borrowing Bases of the
Subsidiary Borrowers have not increased from the aggregate Borrowing Bases of
the Subsidiary Borrowers determined as of the preceding redetermination date
(excluding, however, any increase in such Borrowing Bases that is attributable
to any Cash Collateral) by an amount sufficient to cause the Combined Reserve
Ratio (without counting any such Cash Collateral in the calculation thereof) to
be not less than 1.75 to 1.0, then the Subsidiary Borrowers shall be obligated
to prepay the aggregate principal amount of the Loans in an amount sufficient to
cause the Combined Reserve Ratio to be not less than 1.75 to 1.0, and the
Collateral Agent shall apply such Cash Collateral for such purpose.

         (c) Permitted Collateral Disposition. On any Business Day that a
Permitted Collateral Disposition is to occur with respect to any Subsidiary
Borrower's Collateral, such Subsidiary Borrower shall cause 100% of the Net Cash
Proceeds of such Disposition to be paid into its Cash Collateral Account on the
Business Day such proceeds are received, and agrees that the Loan Administrator
shall thereupon instruct the Collateral Agent to withdraw such proceeds and
apply such proceeds as follows (and such Subsidiary Borrower agrees that, to
effectuate the foregoing, the Collateral Agent shall withdraw the amount
required to be prepaid from such Cash Collateral

                                       28
<PAGE>

Account and apply the same to such Subsidiary Borrowers' obligations as
instructed by the Loan Administrator in accordance with the terms of this
provision): (i) (A) in the case of a Permitted Collateral Disposition as
described in clause (vii) of the definition of Permitted Disposition, first to
prepay the outstanding principal amount of Vermejo's Loan, next to prepay the
outstanding principal amount of Raton's Loan, and then to prepay the outstanding
principal amount of EPPC's Loan (in the case of such clause (vii)), (B) in the
case of a Permitted Collateral Disposition as described in clause (viii) of the
definition of Permitted Disposition, first to prepay the outstanding principal
amounts of the Loans of both Raton and Vermejo, and then to prepay the
outstanding principal amount of the EPPC Loan; and (C) in the case of a
Permitted Collateral Disposition as described in clause (vi) of the definition
of Permitted Disposition, to prepay the outstanding principal amount of such
Subsidiary Borrower's Loan; and (ii) if there remain any Net Cash Proceeds from
such Disposition after making the prepayment in full of Loans as described in
the order above, then, in such event the other Subsidiary Borrowers shall be
required to ratably prepay a principal amount of their respective outstanding
Loans in an aggregate amount equal to the remaining proceeds (it being agreed
that the Subsidiary Borrower that made such Permitted Collateral Disposition and
prepaid its Loan in full with the proceeds thereof may advance the remaining Net
Cash Proceeds of such Disposition in the form of intercompany loans to each
other Subsidiary Borrower whose Loan is required to be prepaid (constituting
Subordinated Intercompany Debt of such other Subsidiary Borrowers) to enable
such other Subsidiary Borrowers to make such required prepayments).

         (d) Permitted Disposition of Release Property. On any Business Day a
Permitted Disposition by a Subsidiary Borrower of Release Property occurs:

                  (i) If the Cash Collateral substituted for such Release
Property pursuant to Section 2.08(b) has not been applied pursuant to Section
2.04(e) and the Net Cash Proceeds of such Disposition are equal to or less than
such Cash Collateral, then the Loan Administrator shall instruct the Collateral
Agent to withdraw such Cash Collateral and (x) apply the proceeds thereof to
prepay the Loan of such Subsidiary Borrower and (y) if there remains any such
proceeds after making the prepayment in full of such Subsidiary Borrower's Loan,
apply such remaining proceeds to ratably prepay the principal amount of the
other Subsidiary Borrowers' outstanding Loans (it being agreed that the
Subsidiary Borrower that made such Permitted Disposition and had its Loan
prepaid in full with the proceeds of the Cash Collateral substituted for the
Release Property Disposed of shall be deemed to have made an intercompany loan
to each other Subsidiary Borrower (constituting Subordinated Intercompany Debt)
in the amount of the prepayment of such other Subsidiary Borrower's Loan made
pursuant to this provision).

                  (ii) If the Cash Collateral substituted for such Release
Property pursuant to Section 2.08(b) has not been applied pursuant to Section
2.04(e) and the Net Cash Proceeds of such Disposition are greater than the Cash
Collateral substituted with respect to such Release Property, then such
Subsidiary Borrower shall cause an amount equal to the excess of (x) such Net
Cash Proceeds of such Disposition over (y) the amount of such Cash Collateral
(such excess, the "Excess Cash Proceeds") to be paid into its Cash Collateral
Account on such Business Day and agrees that the Loan Administrator shall
instruct the Collateral Agent to withdraw such Excess Cash Proceeds and such
Cash Collateral substituted for such Release Property and (1) shall apply such
Excess Cash Proceeds and such Cash Collateral substituted for such Release
Property to prepay the Loan of such Subsidiary Borrower, and (2) if there remain
any such

                                       29
<PAGE>

proceeds after making the prepayment in full of such Subsidiary Borrower's Loan,
shall apply the remaining proceeds to ratably prepay a principal amount of the
other Subsidiary Borrowers' outstanding Loans (it being agreed that the
Subsidiary Borrower that made such Permitted Disposition and had such proceeds
applied to prepaid its Loan in full shall be deemed to have advanced in the form
of an intercompany loan to each other Subsidiary Borrower (constituting
Subordinated Intercompany Debt of such other Subsidiary Borrower) in the amount
of the prepayment of such other Subsidiary Borrower's Loan made to this
provision).

                  (iii) If the Cash Collateral substituted for such Release
Property pursuant to Section 2.08(b) has been applied pursuant to Section
2.04(e) and the amount of such Net Cash Proceeds of such Disposition exceeds the
amount of such Cash Collateral (such excess, the "Excess Cash Proceeds"), then
such Subsidiary Borrower shall cause the Excess Cash Proceeds of such
Disposition to be paid into its Cash Collateral Account on such Business Day and
agrees that the Loan Administrator shall instruct the Collateral Agent to
withdraw such Excess Cash Proceeds and (x) prepay the Loan of such Subsidiary
Borrower and (y) if there remain any such Excess Cash Proceeds after making the
prepayment in full of such Subsidiary Borrower's Loan, then, apply such
remaining Excess Cash Proceeds to ratably prepay a principal amount of the other
Subsidiary Borrowers' outstanding Loans (it being agreed that the Subsidiary
Borrower that made such Permitted Disposition and had the Excess Cash Proceeds
of such sale applied to prepaid its Loan in full shall be deemed to have made an
intercompany loan to each other Subsidiary Borrower (constituting Subordinated
Intercompany Debt) in the amount of the prepayment of such other Subsidiary
Borrower's Loan made pursuant to this provision).

                  (iv) If the Cash Collateral substituted for such Release
Property pursuant to Section 2.08(b) has been applied pursuant to Section
2.04(e) and the amount of such Net Cash Proceeds from such Permitted Disposition
are less than the amount of Cash Collateral substituted for such Release
Property pursuant to Section 2.08(b), then such Subsidiary Borrower shall be
permitted to retain the full amount of such Net Cash Proceeds.

         (e) Cash Collateral Held in Exchange for Release Property. If on the
next Borrowing Base Determination Date following any substitution of Cash
Collateral for any Release Property pursuant to Section 2.08(b), such Release
Property has not been sold, then (i) on or before the third Business Day
following such Borrowing Base Determination Date, the Subsidiary Borrower shall
be required to prepay the principal amount of its Loan in an amount equal to
such Cash Collateral, and the Loan Administrator shall instruct the Collateral
Agent to withdraw such amount from the Cash Collateral Account of such
Subsidiary Borrower and apply it for such purpose, and (ii) if there remain any
proceeds of such Cash Collateral on deposit in such Subsidiary Borrower's Cash
Collateral Account in the event that such prepayment results in the prepayment
in full of such Subsidiary Borrower's Loan, then, in such event the other
Subsidiary Borrowers shall be required to ratably prepay a principal amount of
their respective outstanding Loans in an aggregate amount equal to the remaining
proceeds (it being agreed that the Subsidiary Borrower that has such remaining
Cash Collateral shall be deemed to have made intercompany loans to each other
Subsidiary Borrower using such remaining Cash Collateral (constituting
Subordinated Intercompany Debt of such other Subsidiary Borrowers) to enable
such other Subsidiary Borrowers to make such required prepayments), and the Loan
Administrator shall instruct the Collateral Agent shall apply such remaining
proceeds for such purpose.

                                       30
<PAGE>

         (f) Extraordinary Receipt. On any Business Day that any Subsidiary
Borrower receives proceeds of any Extraordinary Receipt, (i) such Subsidiary
Borrower shall prepay the outstanding principal amount of its Loan by an amount
equal to 100% of the Net Cash Proceeds of such Extraordinary Receipt, and (ii)
if there remain any Net Cash Proceeds from such Extraordinary Receipt in the
event that such prepayment results in the prepayment in full of such Subsidiary
Borrower's Loan, then, in such event the other Subsidiary Borrowers shall be
required to ratably prepay a principal amount of their respective outstanding
Loans in an aggregate amount equal to the remaining proceeds (it being agreed
that the Subsidiary Borrower that received such Extraordinary Receipt and
prepaid its Loan in full with the proceeds thereof may advance the remaining Net
Cash Proceeds of such Extraordinary Receipt in the form of intercompany loans to
each other Subsidiary Borrower (constituting Subordinated Intercompany Debt of
such other Subsidiary Borrowers) to enable such other Subsidiary Borrowers to
make such required prepayments).

         Section 2.05 Scheduled Repayment of Loans. On each of (i) the last
Business Day of June 2004, and (ii) the last Business Day of September 2004,
each Subsidiary Borrower shall repay a portion of the outstanding principal
balance of its Loan in an amount equal to its Borrower Share of $300,000,000.
Each Subsidiary Borrower shall repay the remaining outstanding amount of its
Loan in full on the Scheduled Maturity Date.

         Section 2.06 Interest and Certain Fees. (a) Each Subsidiary Borrower
shall pay to the Lender interest on the unpaid principal amount of such
Subsidiary Borrower's Loan on each Payment Date, accruing from the date of the
making of such Loan until such principal amount shall be paid in full, at the
following rate per annum:

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

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

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

provided, however, that if (A) the introduction of or any change in or in the
interpretation of any law or regulation shall make it unlawful, or any central
bank or other governmental authority asserts that it is unlawful, for the Lender
to obtain funds in the London interbank market during such Interest Period (or
portion thereof), (B) the Lender is not able to obtain funding under the EPC
Credit Agreement or any EPC Refinancing Facility with interest accruing at the
LIBO Rate that would apply to LIBOR Advances under this Agreement, (C) the LIBO
Rate will not adequately reflect the cost to the Lender of maintaining its Loan
to such Subsidiary Borrower during such Interest Period (or portion thereof) at
the LIBO Rate, (D) the LIBO Rate cannot be determined, or (E) any Event of
Default shall occur and be continuing, then the interest rate applicable to such
Subsidiary Borrower's Loan for such Interest Period (or portion thereof) shall

                                       31
<PAGE>

be the interest rate per annum equal to the sum of the Base Rate in effect on
each day during such Interest Period (or portion thereof) plus the Base Rate
Margin.

         (b) Overdue Rate. If any Subsidiary Loan Party fails to pay any amount
due and payable under this Agreement or any other Loan Document on the date due,
such Subsidiary Loan Party shall pay interest on such overdue amount at the
Default Rate, from the date such amount shall be due until such amount shall be
paid in full, payable in arrears on the date such amount shall be paid in full
and on demand by the Loan Administrator.

         (c) Additional Cost for Eurodollar Reserves. If the Lender either (i)
is required to pay increased interest pursuant to Section 2.03(c) of the EPC
Credit Agreement or any analogous provision of any EPC Refinancing Facility, or
(ii) 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, all or any portion of the Loans
hereunder, then, in the case of an event as described in either clause (i) or
(ii), the Subsidiary Borrowers shall pay to the Lender additional interest on
the unpaid principal amount of the Loans (other than any such additional
interest accruing to the Lender in respect of periods prior to the 30th day
preceding the date notice of such interest is given by the Loan Administrator as
provided in this Section 2.06(c)), payable on the same day or days on which
interest is payable on the Loans, at an interest rate per annum equal at all
times during each Interest Period to the excess of (i) the rate obtained by
dividing the LIBO Rate for such Interest Period by a percentage equal to 100%
minus the Eurodollar Reserve Percentage, if any, for the Lender for such
Interest Period over (ii) the LIBO Rate for such Interest Period. The amount of
any such additional interest (if any) shall be determined by the Lender and the
Loan Administrator, and the Loan Administrator shall furnish written notice of
the amount of such additional interest to the Subsidiary Borrowers and the
Lender, which notice shall be conclusive and binding for all purposes, absent
manifest error.

         (d) Certain Fees. Each of the Subsidiary Borrowers shall pay to the
Lender its Borrower Share of any fees payable by EPC pursuant to the terms of
Section 2.04 of the EPC Credit Agreement or any analogous provision of any EPC
Refinancing Facility, on the same date such fees are due and payable by EPC
thereunder.

         Section 2.07 Breakage Costs. (a) If for any reason whatsoever any
payment or purchase of principal of, or conversion of, any LIBOR Advance of any
Subsidiary Borrower is made on any date other than on the last day of an
Interest Period relating to such LIBOR Advance, then such Subsidiary Borrower
shall, upon demand by the Loan Administrator, pay to the Loan Administrator any
amounts which the Lender requires to compensate the Lender for any additional
losses, costs or expenses which the Lender may reasonably incur as a result of:

                  (i) any additional amount that the Lender is required, under
         the terms of Section 11.04(c) of the EPC Credit Agreement or any
         analogous provision of any EPC Refinancing Facility, to pay to any EPC
         Lender as a result of any prepayment of EPC Obligations on such date as
         a result of the prepayment of the Loan of such Subsidiary Borrower on
         such date; or

                                       32
<PAGE>

                  (ii) any loss, cost or expense incurred by the Lender by
         reason of the liquidation or reemployment of deposits or other funds
         acquired by the Lender to fund or maintain the LIBOR Advance of such
         Subsidiary Borrower that was prepaid on such date.

         (b) In addition, if for any reason (other than as described in Section
2.07(a)(i)), the Lender is required, under the terms of Section 11.04(c) of the
EPC Credit Agreement or any analogous provision of any EPC Refinancing Facility,
to pay to any EPC Lender as a result of any prepayment of EPC Obligations on
such date (whether or not such prepayment was made as a result of any prepayment
of the Loans hereunder or otherwise), but without duplication of any amount
payable pursuant to Section 2.07(a)(i), then the Subsidiary Borrowers shall,
upon demand by the Loan Administrator, pay to the Loan Administrator any amounts
which the Lender is required to pay to such EPC Lender on such date.

         Section 2.08 Right to Substitute Collateral; Release of Liens in
Connection Therewith. Unless a Default has occurred and is continuing, each
Subsidiary Borrower may request the Loan Administrator to instruct the
Collateral Agent to accept substitute Collateral (and release its Lien on
Collateral to be subject to the substitution) in the following circumstances:

         (a) Substitute Oil and Gas Properties. Such Subsidiary Borrower may at
any time request the Loan Administrator to instruct the Collateral Agent to
accept Liens on Oil and Gas Properties acquired by such Subsidiary Borrower and
reasonably acceptable to the Collateral Agent as new Collateral in place of Oil
and Gas Properties or other assets previously pledged by such Subsidiary
Borrower as Collateral, and upon the effectiveness of such new Liens, the Lender
and the Loan Administrator agree that the Collateral Agent will, as promptly as
practicable and in any event within three Business Days after such
effectiveness, release its Liens on such previously pledged Collateral, provided
the Collateral Agent is satisfied that (i) it will have an Acceptable Security
Interest in the new Oil and Gas Properties prior to or simultaneously with any
release of any Lien on existing Collateral, (ii) the Borrowing Base of such
Subsidiary Borrower is redetermined by the Loan Administrator to confirm that
such substitution of Collateral does not result in a reduction of the Borrowing
Base of such Subsidiary Borrower, and (iii) after giving effect to any such
substitution of Collateral and redetermination of the Borrowing Base for such
Subsidiary Borrower, such Subsidiary Borrower's Individual Reserve Ratio is not
less than 1.25 to 1.0 and the Combined Reserve Ratio is not less than 1.75 to
1.0 (it being agreed that for purposes of determining the Combined Reserve
Ratio, the calculation shall be made using the most recent determination of the
Borrowing Base for each other Subsidiary Borrower as made by the Loan
Administrator pursuant to Section 2.02, and the outstanding balance of the Loan
of each other Subsidiary Borrower as of such date as determined by the Loan
Administrator).

         (b) Substitution of Cash Collateral. Such Subsidiary Borrower may at
any time request the Loan Administrator to instruct the Collateral Agent to
accept Cash Collateral in substitution of Collateral Oil and Gas Properties that
such Subsidiary Borrower expects to sell prior to the next Borrowing Base
Determination Date, and upon the deposit of such Cash Collateral in such
Subsidiary Borrower's Cash Collateral Account in an amount equal to the amount
of the Borrowing Base of such Subsidiary Borrower attributable to the Oil and
Gas Properties to be released (the "Release Property"), the Loan Administrator
shall instruct the

                                       33
<PAGE>

Collateral Agent to release its Liens on the Release Property, provided the Loan
Administrator is satisfied that (a) the Collateral Agent will have an Acceptable
Security Interest in the Cash Collateral so deposited, (b) the Borrowing Base of
such Subsidiary Borrower is redetermined to confirm that such substitution of
Collateral does not result in a reduction of the Borrowing Base of such
Subsidiary Borrower, and (c) after giving effect to any such substitution of
Collateral and redetermination of the Borrower Base for such Subsidiary
Borrower, such Subsidiary Borrower's Individual Reserve Ratio is not less than
1.25 to 1.0 and the Combined Reserve Ratio is not less than 1.75 to 1.0 (it
being agreed that for purposes of determining the Combined Reserve Ratio, the
calculation shall be made using the most recent determination of the Borrowing
Base for each other Subsidiary Borrower as made by the Loan Administrator
pursuant to Section 2.02, and the outstanding balance of the Loan of each other
Subsidiary Borrower as of such date as determined by the Loan Administrator).

         Section 2.09 Collateral Release Provisions.

         (a) Permitted Dispositions. In the event any Subsidiary Loan Party
requests the Loan Administrator to instruct the Collateral Agent to release its
Lien on any specified Collateral to permit a Permitted Disposition of such
Collateral, the Loan Administrator shall so instruct the Collateral Agent and
the Collateral Agent shall as promptly as practicable (and in any event within
five (5) Business Days after such request) release its Lien on such Collateral,
provided that, except with respect to Permitted Dispositions described in clause
(i) or (iii) of the definition of Permitted Disposition, (i) at such time no
Default has occurred and is continuing, and (ii) such Subsidiary Loan Party has
certified to the Loan Administrator that such Disposition constitutes a
Permitted Disposition, and, to the extent required, has made appropriate
arrangements with the Loan Administrator to comply with any mandatory prepayment
required pursuant to Section 2.04(c) in connection with such Permitted
Disposition.

         (b) Excess Collateral. On only one occasion prior to the Scheduled
Maturity Date, and provided that no Default has occurred and is continuing, the
Subsidiary Borrowers may request the Loan Administrator to instruct the
Collateral Agent to release its Lien on Collateral specified by the Subsidiary
Borrowers which has a Borrowing Base value (based on the 1.75 to 1.0 Combined
Coverage Ratio) of not more than 1.75 times an amount equal to 10% of the
outstanding principal balance of the Loans at such time (such Collateral being
"Excess Collateral" for purposes of this Agreement and the outstanding principal
amount of the Loans covered thereby being the "Loan Value" of such Excess
Collateral), and the Loan Administrator shall thereafter instruct the Collateral
Agent to release its Lien on such Excess Collateral, and the Collateral Agent
shall release such Lien on such Excess Collateral as promptly as practicable
(and in any event within three (3) Business Days after such request), provided
that prior to or contemporaneously with effecting any such requested release of
Collateral (a) the Subsidiary Borrowers shall have prepaid an outstanding
principal amount of the Loans equal to 1.25 multiplied by the Loan Value of such
Excess Collateral to be released, (b) the Subsidiary Borrowers requesting the
release shall have certified to the Loan Administrator that the release is being
requested in connection with a Disposition of such Excess Collateral for the
receipt by the Subsidiary Borrowers of non-cash consideration that constitutes
fair value for the Disposition, and (c) upon redetermination by the Loan
Administrator of the Borrowing Base of each Subsidiary Borrower associated with
the remaining Collateral of such Subsidiary Borrower, the Loan Administrator
confirms that, after giving effect to the requested release of Excess

                                       34
<PAGE>

Collateral and the required prepayment of Loans, each Subsidiary Borrower's
Individual Reserve Ratio would be not less than 1.25 to 1.0 and the Combined
Reserve Ratio would be not less than 1.75 to 1.0.

         (c) Cash Collateral Added to Cure Ratio Shortfalls. If at any time
following any redetermination of the Borrowing Base of any Subsidiary Borrower,
such Subsidiary Borrower delivers Cash Collateral in lieu of making a mandatory
prepayment of such Subsidiary's Loan pursuant to Section 2.04(a) or (b), and
thereafter (i) at the time of the next immediately succeeding redetermination of
the Borrowing Base of such Subsidiary Borrower, the Loan Administrator
determines that the Borrowing Base of such Subsidiary Borrower has increased
from the Borrowing Base determined as of the preceding redetermination date
(excluding, however, any increase in such Borrowing Base attributable to any
Cash Collateral provided by such Subsidiary Borrower), and (ii) no Default has
occurred and is continuing, then at the request of such Subsidiary Borrower, the
Collateral Agent shall return to such Subsidiary Borrower all or part of the
Cash Collateral previously provided by such Subsidiary Borrower in any amount
equal to (but not exceeding) the amount of such increase in the Borrowing Base
of such Subsidiary Borrower; provided further that after giving effect to such
release of Cash Collateral, the reduction of the Borrowing Base of such
Subsidiary Borrower by the amount of the Cash Collateral to be released and any
prepayment of Loans made pursuant to Section 2.04(a) or (b), the Individual
Reserve Ratio of the Subsidiary Borrower would continue to be at least 1.25 to
1.0 and the Combined Reserve Ratio would continue to be at least 1.75 to 1.0.

         (d) Cash Collateral Substituted for Release Property Sold. If at any
time following any Permitted Disposition of Release Property and application of
the proceeds thereof as required pursuant to the mandatory prepayment provisions
of Section 2.04, (i) there remains any Cash Collateral that was delivered to the
Collateral Agent at the time such Property became Release Property, and (ii) no
Default has occurred and is continuing, then at the request of such Subsidiary
Borrower, the Collateral Agent shall as promptly as practicable (and in any
event within three (3) Business Days) return to such Subsidiary Borrower all or
part of such remaining Cash Collateral; provided further that after giving
effect to such release of Cash Collateral and the reduction of the Borrowing
Base of such Subsidiary Borrower by the amount of the Cash Collateral to be
released, the Loan Administrator determines that the Individual Reserve Ratio of
the Subsidiary Borrower would continue to be at least 1.25 to 1.0 and the
Combined Reserve Ratio would continue to be at least 1.75 to 1.0.

         Section 2.10 Payments and Computations.

         (a) Payment Procedures. All payments to be made by or on behalf of any
Subsidiary Loan Party hereunder or under the Loan Documents shall be made by
depositing such payment amount into the EPC Collateral Account not later than
1:00 p.m. on the day when due in U.S. dollars (or such other location as the
Loan Administrator shall designate in writing to such Subsidiary Loan Party) in
same day funds without deduction, setoff, or counterclaim of any kind. The
Collateral Agent shall withdraw such funds promptly thereafter and apply such
funds in accordance with the terms of this Agreement and the Collateral Agency
Agreement and, in the event any EPC obligations are then due and payable, shall
transfer such funds to the EPC Agent prior to remitting any remaining funds to
the applicable Subsidiary Loan Party.

                                       35
<PAGE>

         (b) Computations. All computations of interest based on the Base Rate
shall be made by the Loan Administrator on the basis of a year of 365 or 366
days, as the case may be, and all computations of fees and all other interest
shall be made by the Loan Administrator, 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 Loan Administrator of an interest rate or fee
shall be conclusive and binding for all purposes, absent manifest error.

         (c) Non-Business Day Payments. Whenever any payment 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 or fees, as the case may be;
provided, however, in the case of any payment of any LIBOR Advance, if such
extension would cause payment to be made in the next following calendar month,
such payment shall be made on the immediately preceding Business Day.

         Section 2.11 Yield Protection.

         (a) EPC Funding Costs. At any time the EPC Credit Agreement or the EPC
Refinancing Facility is in effect and the Lender is required pursuant to the
terms thereof to pay any amount pursuant to provisions designed to protect each
EPC Lender's yield on its loans to EPC against regulatory changes that increase
such EPC Lender's costs or require additional capital (including, without
limitation, pursuant to Section 2.07 of the EPC Credit Agreement or any
analogous provision of any EPC Refinancing Facility), then such Subsidiary
Borrower shall reimburse the Lender for its Borrower Share of such amount
payable by EPC.

         (b) Increased Cost. At any time the EPC Credit Agreement or the EPC
Refinancing Facility is not in effect, each Subsidiary Borrower agrees as
follows:

                  (i) Increased Costs. If, due to either (x) 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 included as increased
         costs pursuant to Section 2.06(c)) in or in the interpretation of any
         law or regulation or (y) the compliance with any guideline or request
         issued or made after the date of this Agreement from or by any central
         bank or other governmental authority (whether or not having the force
         of law), in each case above, there shall be any increase in the cost to
         the Lender of agreeing to make, fund or maintain, or of making, funding
         or maintaining, LIBOR Advances, then the Subsidiary Borrowers shall
         from time to time, upon demand by the Loan Administrator (with a copy
         of such demand to the Lender), pay to the Loan Administrator for the
         account of the Lender additional amounts sufficient to reimburse the
         Lender for all such increased costs (except those costs incurred more
         than sixty (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). The Lender agrees to use its best
         efforts promptly to notify the Subsidiary Borrowers of any event
         referred to in clause (x) or (y) above, provided that the failure to
         give such notice shall not affect the rights of the Lender under this
         Section 2.11(b)(i) (except as otherwise expressly provided above in
         this Section

                                       36
<PAGE>

         2.11(b)(i)). A certificate as to the amount of such increased cost,
         submitted to the Subsidiary Borrowers and the Loan Administrator by the
         Lender, shall be conclusive and binding for all purposes, absent
         manifest error. The Lender agrees to use its best efforts (including a
         reasonable effort to change its lending office or to transfer its
         affected LIBOR Advances to an affiliate of the Lender) to avoid, or
         minimize the amount of, any demand for payment from the Subsidiary
         Borrowers under this Section 2.11(b)(i). In the event that the Lender
         shall change its lending office and such change results (at the time of
         such change) in increased costs to the Lender, the Subsidiary Borrowers
         shall not be liable to the Lender for such increased costs incurred by
         the Lender to the extent, but only to the extent, that such increased
         costs shall exceed the increased costs which the Lender would have
         incurred if the lending office of the Lender had not been so changed,
         but, subject to the terms of this subsection (b)(i) above and to
         Section 2.10, nothing herein shall require the Lender to change its
         lending office for any reason.

                  (ii) Increased Capital. If the Lender shall have determined
         that, after the date hereof, the adoption of any applicable law, rule
         or regulation regarding capital adequacy, or any change therein, or any
         change in the interpretation or administration thereof by any
         governmental authority, central bank or comparable agency charged with
         the interpretation or administration thereof, or compliance by the
         Lender or any corporation controlled by the lender (or its lending
         office) with any request or directive regarding capital adequacy
         (whether or not having the force of law) of any such authority, central
         bank or comparable agency (except to the extent such request or
         directive arises as a result of the individual creditworthiness of the
         Lender or such corporation), has the effect of increasing the amount of
         capital required or expected to be maintained as a result of the
         Lender's obligations hereunder, with the result being to increase the
         cost to the Lender or such corporation, the Lender shall have the right
         to give prompt written notice and demand for payment thereof to such
         Subsidiary Borrower with a copy to the Loan Administrator although the
         failure to give any such notice shall not release or diminish any of
         such Subsidiary Borrower's obligations to pay additional amounts
         pursuant to this Section 2.11(b)(ii), and such Subsidiary Borrower
         shall pay such additional amounts.

         (c) Payments on Demand. Any such amount payable by the Subsidiary
Borrowers from time to time pursuant to this Section 2.11, shall be paid by the
Subsidiary Borrowers upon demand by the Loan Administrator for the benefit of
the Lender or such corporation controlling the Lender (with a copy of such
demand to the Lender).

         Section 2.12 Taxes.

         (a) Any and all payments by the Subsidiary Loan Parties under this
Agreement and the Loan Documents shall be made, in accordance with Section 2.10,
free and clear of and without deduction for any and all Taxes, excluding all
Excluded Taxes. If any Subsidiary Loan Party shall be required by law to deduct
any Indemnified Taxes from or in respect of any sum payable to the Lender or the
Loan Administrator, (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 2.12), the Lender or the Loan
Administrator (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made; (ii) the Subsidiary Loan Party
shall make such deductions; and (iii) the Subsidiary

                                       37
<PAGE>

Loan Party shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.

         (b) In addition, each Subsidiary Loan Party agrees to pay all Other
Taxes.

         (c) Each Subsidiary Loan Party indemnifies the Lender and the Loan
Administrator for the full amount of Indemnified Taxes or Other Taxes
(including, without limitation, any Indemnified Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section 2.12) paid by the Lender
or the Loan Administrator (as the case may be) and any liability (including
interest and expenses) arising therefrom or with respect thereto, whether or not
such taxes or other taxes were correctly or legally asserted. Each payment
required to be made by such Subsidiary Loan Party in respect of this
indemnification shall be made to the loan administrator for the benefit of any
party claiming such indemnification within thirty (30) days from the date the
Subsidiary Loan Party receives written demand therefor from the Loan
Administrator on behalf of itself as Loan Administrator or any the lender. If
the Lender or the Loan Administrator receives a refund in respect of any taxes
paid by any Subsidiary Borrower under this subsection (c), the Lender or the
Loan Administrator as the case may be, shall as promptly as practicable (and in
any event within ten (10) days of its receipt of such refund) promptly pay such
Subsidiary Loan Party's share of such refund to such Subsidiary Loan Party.

         (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 Subsidiary
Borrowers with U.S. Internal Revenue Service form W8-ECI, W8-BEN, or W-IMY, 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 Subsidiary
Borrowers 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 Subsidiary Borrowers 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 any Subsidiary
Borrower to such 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 Subsidiary Borrowers 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 Subsidiary Borrowers 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 Subsidiary
Borrowers 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 Subsidiary Borrowers
of such fact.

         (e) Any Indemnified Party claiming any additional amounts payable
pursuant to this Section 2.12 shall use its best efforts (consistent with its
internal policy and legal and regulatory

                                       38
<PAGE>

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
Subsidiary Borrowers hereunder, the agreements and obligations of the Subsidiary
Borrowers and each Indemnified Party contained in this Section 2.12 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 Subsidiary Borrowers under
this Section 2.12 shall not be payable under Section 2.11.

         (h) At any time the EPC Credit Agreement or the EPC Refinancing
Facility is in effect and the Lender is required pursuant to the terms thereof
to pay any amount pursuant to provisions thereof providing for indemnities of
certain parties related to Taxes or Other Taxes (as such terms may be defined
thereunder), then each Subsidiary Borrower shall reimburse the Lender for its
Borrower Share of such amount payable by EPC.

         Section 2.13. Conditions Precedent. The obligation of the Lender to
make the Loans to the Subsidiary Borrowers is subject to the conditions
precedent that the Closing Date under the EPC Credit Agreement shall have
occurred and EPC shall have received the proceeds of the EPC Loan.

         Section 2.14 Post-Closing Items and Certificates. Within the time set
forth on Schedule 2.14, the Subsidiary Loan Parties shall execute and deliver to
the Loan Administrator each of the items listed on Schedule 2.14 ("Post-Closing
Items"), together with such other documents as the Loan Administrator may
reasonably request in connection with obtaining an Acceptable Security Interest
on Collateral covered by Security Instruments which are Post-Closing Items. On
and as of the date which is ten (10) days after the last date provided on
Schedule 2.14, each Subsidiary Loan Party shall deliver to the Loan
Administrator a certificate executed by a Responsible Officer of such Subsidiary
Loan Party certifying that each such Security Instrument delivered as a
Post-Closing Item creates an Acceptable Security Interest in all Collateral
purported to be covered thereby.

                                   ARTICLE III

                                   GUARANTEES

         Section 3.01 Guarantee Obligations.

         (a) Guarantees of Parent Guarantors. Each Parent Guarantor hereby
guarantees to the Lender, the Loan Administrator, the Collateral Agent and their
respective successors and assigns (the "Guaranteed Parties"), the prompt payment
in full when due (whether at stated maturity, by acceleration or otherwise) of
the Guaranteed Obligations. Each Parent Guarantor hereby further agrees that if
any Subsidiary Borrower shall fail to pay in full when due (whether at stated
maturity, by acceleration or otherwise) any of the Guaranteed Obligations, such
Parent Guarantor

                                       39
<PAGE>

will promptly pay the same to the Loan Administrator, without any demand or
notice whatsoever, and that in the case of any extension of time of payment or
renewal of any of the Guaranteed Obligations, the same will be promptly paid in
full when due (whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.

         (b) Guarantees of Subsidiary Borrowers. Each Subsidiary Borrower hereby
guarantees to the Guaranteed Parties, and their respective successors and
assigns, the prompt payment in full when due (whether at stated maturity, by
acceleration or otherwise) of the Guaranteed Obligations owing by any other
Subsidiary Borrower strictly in accordance with the terms thereof (as such terms
may be amended, waived or otherwise modified). Each Subsidiary Borrower hereby
further agrees that if any other Subsidiary Borrower shall fail to pay in full
when due (whether at stated maturity, by acceleration or otherwise) any of the
Guaranteed Obligations, such Subsidiary Borrower will promptly pay the same to
the Loan Administrator, without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any of the Guaranteed
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, by acceleration or otherwise) in accordance with the terms of
such extension or renewal.

         Section 3.02 Obligations Unconditional. The obligations of each
Guarantor under this Article III are absolute and unconditional, irrespective of
the value, genuineness, validity, regularity or enforceability of the
obligations of any Subsidiary Loan Party under this Agreement or any other
agreement or instrument referred to herein, or any substitution, release or
exchange of any other guarantee of or security for any of the Guaranteed
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Agreement that the obligations of each Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.
Without limiting the generality of the foregoing, it is agreed that the
occurrence of any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder, which shall remain absolute and
unconditional as described above:

     (i)      at any time or from time to time, without notice to the
              Guarantors, the time for any performance of or compliance with any
              of the Guaranteed Obligations shall be extended, or such
              performance or compliance shall be waived;

     (ii)     any of the acts mentioned in any of the provisions of this
              Agreement or any other agreement or instrument referred to herein
              shall be done or omitted; or

     (iii)    the maturity of any of the Guaranteed Obligations shall be
              accelerated, or any of the Guaranteed Obligations shall be
              modified, supplemented or amended in any respect, or any right
              under this Agreement or any other agreement or instrument referred
              to herein shall be waived or any other guarantee of any of the
              Guaranteed Obligations or any security therefor shall be released
              or exchanged in whole or in part or otherwise dealt with.

                                       40
<PAGE>

         Section 3.03 Waivers. Each Guarantor hereby expressly waives diligence,
presentment, demand of payment, protest and all notices whatsoever, and any
requirement that the Guaranteed Parties exhaust any right, power or remedy or
proceed against the Subsidiary Borrowers under this Agreement or any other
agreement or instrument referred to herein, or against any other Person under
any other guarantee of, or security for, any of the Guaranteed Obligations.

         Section 3.04 Reinstatement. The obligations of each Guarantor under
this Article III shall be automatically reinstated if and to the extent that for
any reason any payment by or on behalf of any Subsidiary Loan Party in respect
of any of the Guaranteed Obligations is rescinded or must be otherwise restored
by any holder of any of the Guaranteed Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, and the Guarantors
jointly and severally agree that they will indemnify the Lender and the Loan
Administrator on demand for all reasonable costs and expenses (including,
without limitation, fees of counsel) incurred by the Lender or the Loan
Administrator in connection with such rescission or restoration, including any
such costs and expenses incurred in defending against any claim alleging that
such payment constituted a preference, fraudulent transfer or similar payment
under any bankruptcy, insolvency or similar law.

         Section 3.05 Subrogation. Each Guarantor hereby agrees for the benefit
of the Guaranteed Parties and their respective successors and assigns that until
the payment and satisfaction in full of all Guaranteed Obligations and the
expiration and termination of any obligations of the Guaranteed Parties under
this Agreement, such Guarantor shall not exercise any right or remedy arising by
reason of any performance by it of its guarantee in this Article III, whether by
subrogation or otherwise, against any Subsidiary Loan Party or any other
guarantor of any of the Guaranteed Obligations or any security for any of the
Guaranteed Obligations.

         Section 3.06 Remedies. Each Guarantor agrees that, as between such
Guarantor and the Guaranteed Parties, the obligations of the Subsidiary
Borrowers under this Agreement may be declared to be forthwith due and payable
as provided in Section 7.02 (and shall be deemed to have become automatically
due and payable in the circumstances provided in Section 7.03) for purposes of
such Guarantor's obligations under this Article III notwithstanding any stay,
injunction or other prohibition preventing such declaration (or such obligations
from becoming automatically due and payable) as against any Subsidiary Borrower
and that, in the event of such declaration (or such obligations being deemed to
have become automatically due and payable), such obligations (whether or not due
and payable by the Subsidiary Borrowers) shall forthwith become due and payable
by such Guarantor for purposes of this Article III.

         Section 3.07 Continuing Guarantee. The guarantee of each Guarantor in
this Article III is a continuing guarantee, and (unless the guarantee of a
Guarantor is expressly released by the Collateral Agent as contemplated in
Section 3.10) shall apply to all Guaranteed Obligations whenever arising.

         Section 3.08 Rights of Contribution. The Guarantors hereby agree, as
between themselves, that if any Guarantor shall become an Excess Funding
Guarantor (as defined below) by reason of the payment by such Guarantor of any
Guaranteed Obligations, each other Guarantor shall, on demand of such Excess
Funding Guarantor (but subject to the next sentence), pay to such Excess Funding
Guarantor an amount equal to such Guarantor's Pro Rata Share (as

                                       41
<PAGE>

defined below and determined, for this purpose, without reference to the
Properties, debts and liabilities of such Excess Funding Guarantor) of the
Excess Payment (as defined below) in respect of such Guaranteed Obligations. The
payment obligation of a Guarantor to any Excess Funding Guarantor under this
Section 3.08 shall be subordinate and subject in right of payment to the prior
payment in full of the obligations of such Guarantor under the other provisions
of this Article III and such Excess Funding Guarantor shall not exercise any
right or remedy with respect to such excess until payment and satisfaction in
full of all of such obligations. For purposes of this Section 3.08, (i) "Excess
Funding Guarantor" means, in respect of any Guaranteed Obligations, a Guarantor
that has paid an amount in excess of its Pro Rata Share of such Guaranteed
Obligations, (ii) "Excess Payment" means, in respect of any Guaranteed
Obligations, the amount paid by an Excess Funding Guarantor in excess of its Pro
Rata Share of such Guaranteed Obligations, and (iii) "Pro Rata Share" means, for
any Guarantor, the ratio (expressed as a percentage) of (x) the amount by which
the aggregate present fair saleable value of all Properties of such Guarantor
(excluding any shares of stock of any other Guarantor) exceeds the amount of all
the debts and liabilities of such Guarantor (including contingent, subordinated,
unmatured and unliquidated liabilities, but excluding the obligations of such
Guarantor hereunder and any obligations of any other Guarantor that have been
Guaranteed by such Guarantor) to (y) the amount by which the aggregate fair
saleable value of all Properties of all of the Guarantors exceeds the amount of
all the debts and liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities, but excluding the obligations of the Subsidiary
Borrower and the Guarantors hereunder and under the other Loan Documents) of all
of the Guarantors, determined (A) with respect to any Guarantor that is a party
hereto on the date hereof, as of the date hereof, and (B) with respect to any
other Guarantor, as of the date such Guarantor becomes a Guarantor hereunder.

         Section 3.09 General Limitation on Guarantee Obligations. In any action
or proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Guarantor under Section 3.01
would otherwise, taking into account the contribution provisions of Section
3.08, be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability under Section 3.01, then, notwithstanding any other provision
hereof to the contrary, the amount of such liability shall, without any further
action by such Guarantor, the Lender, the Loan Administrator or any other
Person, be automatically limited and reduced to the highest amount that is valid
and enforceable and not subordinated to the claims of other creditors as
determined in such action or proceeding.

         Section 3.10 Release of Certain Guarantors. If either Raton or Vermejo
are Disposed of pursuant to a Permitted Disposition, each of the Lender, the
Subsidiary Loan Parties and the Loan Administrator agrees that the guarantee of
such Guarantor and all other obligations of such Guarantor under this Article
III shall automatically be terminated and released and be deemed to have been
satisfied in full.

                                       42
<PAGE>

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

         Each Subsidiary Loan Party represents and warrants to the Lender and
the Loan Administrator as follows:

         Section 4.01 Existence; Subsidiaries. Each Subsidiary Loan Party is
duly organized or formed, validly existing and in good standing under the laws
of the State of Delaware, and is good standing and qualified to do business in
each jurisdiction where its ownership or lease of Property or conduct of its
business requires such qualification and where the failure to be qualified could
reasonably be expected to cause a Material Adverse Change. The only Subsidiaries
of each Subsidiary Loan Party, after giving effect to all transactions
contemplated to occur on the Closing Date following the funding of the Loans,
are those listed on Schedule 4.01.

         Section 4.02 Power and Authority. The execution, delivery, and
performance by each Subsidiary Loan Party and each of its Subsidiaries of each
Loan Document to which such Person is a party and the consummation of the
transactions contemplated hereby and thereby (a) are within such Subsidiary Loan
Party's and its Subsidiaries' corporate or limited liability company or limited
partnership powers, as applicable, (b) have been duly authorized by all
necessary corporate or limited liability company or limited partnership action,
(c) do not contravene (i) such Subsidiary Loan Party's or any such Subsidiary's
certificate or articles of incorporation, bylaws, limited liability company
agreement or other similar governance documents or (ii) any law or any
contractual restriction binding on or affecting such Subsidiary Loan Party or
any such Subsidiary, and (d) will not result in or require the creation or
imposition of any Lien prohibited by this Agreement. The borrowing of the Loans
hereunder and use of the proceeds of such Loans as contemplated herein and such
Subsidiary Borrower's obligations in connection therewith will be within such
Subsidiary Loan Party's corporate or limited liability company or limited
partnership powers (as applicable), will have been duly authorized by all
necessary corporate or limited liability company or limited partnership
governing action, will not contravene (i) such Subsidiary Loan Party's
organizational documents, or (ii) any law or any contractual restriction binding
on or affecting such Subsidiary Loan Party, and will not result in or require
the creation or imposition of any Lien prohibited by this Agreement.

         Section 4.03 Authorization and Approvals. No consent, order,
authorization, or approval or other action by, and no notice to or (except as
contemplated in respect of filings or recordations in connection with the
perfection of the Liens created by the Security Instruments) filing with, any
Governmental Authority or any other Person is required for the due execution,
delivery, and performance by any Subsidiary Loan Party or any of its
Subsidiaries of this Agreement or the other Loan Documents to which any such
Person is a party or the consummation of the transactions contemplated thereby,
except those necessary to comply with laws, rules, regulations and orders
required in the ordinary course to comply with ongoing obligations of such
Subsidiary Loan Party to comply with laws as set forth in Section 5.01, and to
preserve and maintain its existence as set forth in Section 5.03. At the time of
the making of the Loans, no authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority by such Subsidiary Loan
Party will be required for such Loans or the use of the proceeds of such Loans.

                                       43
<PAGE>

         Section 4.04 Enforceable Obligations. This Agreement and the other Loan
Documents to which each Subsidiary Loan Party is a party have been duly executed
and delivered by such Subsidiary Loan Party, and the Loan Documents to which
each Subsidiary of such Subsidiary Loan Party is a party have been duly executed
and delivered by such Subsidiaries. Each Loan Document to which such Subsidiary
Loan Party or any of its Subsidiaries is a party is the legal, valid, and
binding obligation of such Subsidiary Loan Party and each such Subsidiary which
is a party to it enforceable against such Subsidiary Loan Party and each such
Subsidiary in accordance with its terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, reorganization, moratorium, or
similar law affecting creditors' rights generally and by general principles of
equity.

         Section 4.05 Financial Statements.

         (a) The Financial Statements are accurate and complete in all material
respects and present fairly the financial condition of the Subsidiary Loan
Parties covered thereby, in each case as of the date thereof and for the period
specified therein in accordance with GAAP. As of the dates of such Financial
Statements, there were no material contingent obligations, liabilities for
taxes, unusual forward or long-term commitments, or unrealized or anticipated
losses of any Subsidiary Loan Party or its Subsidiaries covered thereby, except
as disclosed therein and adequate reserves for such items have been made in
accordance with GAAP. All projections, estimates, and pro forma financial
information furnished by such Subsidiary Loan Party to the Loan Administrator
and the Lender prior to the Closing Date were prepared on the basis of
assumptions, data, information, tests, or conditions believed to be reasonable
at the time such projections, estimates, and pro forma financial information
were furnished. Since the date of the most recent Financial Statements, no event
or circumstance that could reasonably be expected to cause a Material Adverse
Change has occurred.

         (b) The Balance Sheet for each Subsidiary Borrower is accurate and
complete in all material respects and presents fairly the financial condition of
the Subsidiary Borrower covered thereby. As of the date of each such Balance
Sheet, there were no material contingent obligations, liabilities for taxes,
unusual forward or long-term commitments, or unrealized or anticipated losses of
such Subsidiary Borrower or its Subsidiaries covered thereby, except as
disclosed therein and adequate reserves for such items have been made on a
combined basis in the Financial Statements in accordance with GAAP. All
projections, estimates, and pro forma financial information furnished by each
Subsidiary Borrower to the Loan Administrator and the Lender prior to the
Closing Date were prepared on the basis of assumptions, data, information,
tests, or conditions believed to be reasonable at the time such projections,
estimates, and pro forma financial information were furnished. Since the date of
each Balance Sheet, no event or circumstance that could cause a Material Adverse
Change has occurred.

         Section 4.06 True and Complete Disclosure. All factual information
(excluding projections, estimates, and pro forma financial information)
heretofore or contemporaneously furnished by or on behalf of such Subsidiary
Loan Party or any of its Subsidiaries in writing to the Loan Administrator or
the Lender for purposes of or in connection with this Agreement, any other Loan
Document or any transaction contemplated hereby or thereby is, and all other
such factual information hereafter furnished by or on behalf of such Subsidiary
Loan Party and its Subsidiaries in writing to the Loan Administrator and the
Lender shall be, true and accurate in all

                                       44

<PAGE>

material respects on the date as of which such information is dated or certified
and does not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements contained therein not
misleading at such time.

         Section 4.07 Litigation. Except as set forth in Schedule 4.07, there is
no pending or, to the best knowledge of such Subsidiary Loan Party, threatened
action or proceeding affecting such Subsidiary Loan Party or any of its
Subsidiaries before any court, Governmental Authority or arbitrator which could
reasonably be expected to cause a Material Adverse Change or which purports to
affect the legality, validity, binding effect or enforceability of this
Agreement or any other Loan Document.

         Section 4.08 Use of Proceeds. The proceeds of the Loans will be used by
the Subsidiary Borrowers for the purposes described in Section 5.10. No
Subsidiary Borrower is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
U). No proceeds of the Loan will be used to purchase or carry any margin stock
in violation of Regulation T, U or X.

         Section 4.09 Investment Company Act. Neither such Subsidiary Loan Party
nor any of its Subsidiaries is an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company Act of
1940, as amended.

         Section 4.10 Public Utility Holding Company Act. Neither such
Subsidiary Loan Party nor any of its Subsidiaries is a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.

         Section 4.11 Taxes. Such Subsidiary Loan Party and each of its
Subsidiaries 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 file or pay which, as
applicable, could reasonably be expected to result in a Lien on any Collateral
(other than Liens of the type described in clause (c) or (g) of the definition
of Permitted Liens) or to cause a Material Adverse Change, unless and to the
extent only that the same are being contested in good faith and by appropriate
proceedings by such Subsidiary Loan Party or the appropriate Subsidiary.

         Section 4.12 Pension Plans. All Plans are in compliance in all material
respects with all applicable provisions of ERISA. No Termination Event has
occurred with respect to any Plan, and each Plan has complied with and been
administered in all material respects in accordance with applicable provisions
of ERISA and the Code. No "accumulated funding deficiency" (as defined in
Section 302 of ERISA) has occurred and there has been no excise tax imposed
under Section 4971 of the Code. No Reportable Event has occurred with respect to
any Multiemployer Plan, and each Multiemployer Plan has complied with and been
administered in all material respects with applicable provisions of ERISA and
the Code. The present value of all benefits vested under each Plan (based on the
assumptions used to fund such Plan) did not, as of the last annual valuation
date applicable thereto, exceed the value of the assets of such Plan allocable
to such vested benefits. None of such Subsidiary Loan Party nor any member of
the Controlled Group has had a complete or partial withdrawal from any
Multiemployer Plan for which there is

                                       45
<PAGE>

any withdrawal liability. As of the most recent valuation date applicable
thereto, none of such Subsidiary Loan Party or any member of the Controlled
Group would become subject to any liability under ERISA if such Subsidiary Loan
Party or any member of the Controlled Group has received notice that any
Multiemployer Plan is insolvent or in reorganization. Based upon GAAP existing
as of the date of this Agreement and current factual circumstances, such
Subsidiary Loan Party has no reason to believe that the annual cost during the
term of this Agreement to such Subsidiary Loan Party or any member of the
Controlled Group for post-retirement benefits to be provided to the current and
former employees of such Subsidiary Loan Party or any member of the Controlled
Group under Plans that are welfare benefit plans (as defined in Section 3(1) of
ERISA) could, in the aggregate, reasonably be expected to cause a Material
Adverse Change.

         Section 4.13 Title to Property; Condition of Property; Casualties.

         (a) Each Parent Guarantor owns no Property other than Equity Interests
in Subsidiary Loan Parties and has good and indefeasible title thereto. Each
Subsidiary Borrower has good and indefeasible title to all of its Properties,
free and clear of all Liens except Permitted Liens. The descriptions set forth
on Schedule 4.13(a) of the quantum and nature of the interests of the Subsidiary
Borrowers in and to the Collateral Oil and Gas Properties include the entire
interests of such Subsidiary Borrowers in the Collateral Oil and Gas Properties
and are complete and accurate in all material respects. Except as set forth on
Schedule 4.13(a), there are no "back-in" or "reversionary" interests held by
third parties which could reduce the interests of any Subsidiary Borrower in the
Collateral Oil and Gas Properties. No operating or other agreement to which any
Subsidiary Borrower is a party or by which any Subsidiary Borrower is bound
affecting any part of the Collateral Oil and Gas Properties requires any
Subsidiary Borrower to bear any of the costs relating to the Collateral Oil and
Gas Properties greater than the leasehold interest of such Subsidiary Borrower
in such portion of the Collateral Oil and Gas Properties, except in the event
such Subsidiary Borrower is obligated under an operating agreement to assume a
portion of a defaulting party's share of costs.

         (b) All Burdens and taxes due under or with respect to the Collateral
Oil and Gas Properties have been properly and timely paid except for Burdens or
taxes that are being contested in good faith by appropriate proceedings
(provided that termination, foreclosure, sale, or other similar proceedings
shall not have been initiated) and such reserves as may be required by GAAP
shall have been made therefor. All costs and expenses payable under the terms of
the Leases have been properly and timely paid except for such costs and expenses
as are being currently paid prior to delinquency in the ordinary course of
business. All of the proceeds from the sale of Hydrocarbons produced from the
Collateral Oil and Gas Properties are being properly and timely paid to the
Subsidiary Borrower owning such Collateral Oil and Gas Properties by the
purchasers or other remitters of production proceeds without suspense. Each
Subsidiary Borrower's ownership of the Hydrocarbons and the undivided interests
therein as specified on Schedule 4.13(a) will, after giving full effect to all
Liens permitted hereby and after giving full effect to the agreements or
instruments affecting the Collateral Oil and Gas Properties set forth in the
Security Instruments and any other instruments or agreements affecting such
Subsidiary Borrower's ownership of the Hydrocarbons, (i) afford such Subsidiary
Borrower not less than the minimum interest in the gross production of
Hydrocarbons from the Collateral Oil and Gas Properties described on Schedule
4.13(a) and (ii) cause such Subsidiary Borrower to bear not

                                       46
<PAGE>

more than that proportionate share of the costs, expenses, and liabilities
attributable to the ownership, development, and operation of the Collateral Oil
and Gas Properties.

         (c) Except as set out on Schedule 4.13(b), there are no obligations in
connection with any Oil and Gas Properties owned by any Subsidiary Borrower or
under any material agreement to which any Subsidiary Borrower is a party or by
which any Subsidiary Borrower is bound which requires the drilling of additional
wells or operations to earn or to continue to retain or keep in full force and
effect any Subsidiary Borrower's ownership of the Collateral Oil and Gas
Properties, except for such obligations the failure to satisfy could not
reasonably be expected to cause a Material Adverse Change.

         (d) All production and sales of Hydrocarbons produced or sold from the
Collateral Oil and Gas Properties have been made in accordance with any
applicable allowables (plus permitted tolerances) imposed by any Governmental
Authority.

         (e) No Subsidiary Borrower has collected any proceeds from the sale of
Hydrocarbons produced from the Collateral Oil and Gas Properties which are
subject to any refund obligation.

         (f) On the Closing Date, the Properties used or to be used in the
continuing operations of each Subsidiary Borrower and its Subsidiaries are in
good repair, working order and condition (ordinary wear and tear excepted).

         (g) Since the date of the evaluation on which the most recent
Independent Engineering Report was based, neither the business nor the
Properties of the Subsidiary Loan Parties taken as a whole, have been materially
and adversely affected as a result of any fire, explosion, earthquake, flood,
drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of Property or cancellation of contracts, Permits, or
concessions by a Governmental Authority, riot, terrorism, activities of armed
forces, or acts of God or of any public enemy, except as otherwise disclosed to
the Loan Administrator.

         (h) The Independent Engineering Reports delivered to the Lender and to
the Loan Administrator in connection with the transactions described in this
Agreement contained estimates of the Proven Reserves that were prepared in
accordance with standard geological and engineering methods generally accepted
in the oil and gas industry. The estimates of the Lease Operating Expenditures
in each such Independent Engineering Report were reasonable and represented the
historical experience of the Collateral Oil and Gas Properties as of the date of
such Independent Engineering Report. The historical factual information supplied
by the Subsidiary Loan Parties to the independent engineering firm in connection
with the preparation of each Independent Engineering Report delivered to the
Lender and to the Loan Administrator prior to the Closing Date was accurate and
complete in all material respects as of the date of such Independent Engineering
Report.

         Section 4.14 No Burdensome Restrictions. Neither such Subsidiary Loan
Party nor any of its Subsidiaries is a party to any material agreement or
instrument or subject to any charter or corporate restriction or provision of
applicable law or governmental regulation which could reasonably be expected to
cause a Material Adverse Change. Neither such Subsidiary Loan

                                       47
<PAGE>

Party nor any of its Subsidiaries (nor to the knowledge of such Subsidiary Loan
Party, any other party), is in default under or with respect to any contract,
agreement, lease, or other instrument to which such Subsidiary Loan Party or any
Subsidiary is a party and which could reasonably be expected to cause a Material
Adverse Change.

         Section 4.15 Environmental Condition.

         (a) Permits, Etc. Except as set forth on Schedule 4.15, such Subsidiary
Loan Party and its Subsidiaries (i) have obtained all Environmental Permits
necessary for the ownership and operation of their respective Properties and the
conduct of their respective businesses; (ii) have at all times been and are in
material compliance with all terms and conditions of such Environmental Permits
and with all other material requirements of applicable Environmental Laws; (iii)
have not received notice of any material violation or alleged violation of any
Environmental Law or Environmental Permit; and (iv) are not subject to any
actual or contingent Environmental Claim, except in each case described in this
Section 4.15(a), where such failure, noncompliance, notice or Environmental
Claim could not reasonably be expected to cause a Material Adverse Change.

         (b) Certain Liabilities. Except as set forth on Schedule 4.15, to such
Subsidiary Loan Party's actual knowledge, none of the present or previously
owned or operated Property of such Subsidiary Loan Party or any of its
Subsidiaries or of any of their former Subsidiaries, wherever located, (i) has
been placed on or proposed to be placed on the National Priorities List, the
Comprehensive Environmental Response Compensation Liability Information System
list, or their state or local analogs, or have been otherwise investigated,
designated, listed, or identified as a potential site for removal, remediation,
cleanup, closure, restoration, reclamation, or other response activity under any
Environmental Laws; (ii) is subject to a Lien, arising under or in connection
with any Environmental Laws, that attaches to any revenues or to any Property
owned or operated by such Subsidiary Loan Party or any of its Subsidiaries,
wherever located, which could reasonably be expected to cause a Material Adverse
Change; or (iii) has been the site of any Release of Hazardous Substances or
Hazardous Wastes from present or past operations which has caused at the site or
at any third-party site any condition that has resulted in or could reasonably
be expected to result in the need for Response that could cause a Material
Adverse Change.

         (c) Certain Actions. Except as set forth on Schedule 4.15, without
limiting the foregoing, (i) all necessary notices have been properly filed, and
no further action is required, under current Environmental Law as to each
Response or other restoration or remedial project undertaken by such Subsidiary
Loan Party or any of its Subsidiaries or any of their former Subsidiaries on any
of their presently or formerly owned or operated Property and (ii) the present
and, to such Subsidiary Loan Party's best knowledge, future liability, if any,
of such Subsidiary Loan Party and its Subsidiaries which could reasonably be
expected to arise in connection with requirements under Environmental Laws will
not result in a Material Adverse Change.

         Section 4.16 Permits, Licences, Etc. Such Subsidiary Loan Party and its
Subsidiaries possess all authorizations, Permits, licenses, patents, patent
rights or licenses, trademarks, trademark rights, trade names rights and
copyrights which are material to the conduct of their business. As of the
Closing Date, such Subsidiary Loan Party has no patents, trademarks or

                                       48
<PAGE>

copyrights except for the trademark on the name of EPC. Such Subsidiary Loan
Party and its Subsidiaries manage and operate their business in all material
respects in accordance with all applicable Legal Requirements and good industry
practices, except where the failure to do so could not reasonably be expected to
cause a Material Adverse Change.

         Section 4.17 Gas Contracts. Neither such Subsidiary Loan Party nor any
of its Subsidiaries, as of the date hereof, (a) is obligated in any material
respect by virtue of any prepayment made under any contract containing a
"take-or-pay" or "prepayment" provision or under any similar agreement to
deliver Hydrocarbons produced from or allocated to any of such Subsidiary Loan
Party's and its Subsidiaries' Oil and Gas Properties at some future date without
receiving full payment therefor at the time of delivery, or (b) except as has
been disclosed to the Loan Administrator, has produced gas in any material
amount, subject to, and none of such Subsidiary Loan Party's and its
Subsidiaries' Oil and Gas Properties is subject to, material balancing rights of
third parties or subject to balancing duties under governmental requirements.

         Section 4.18 Leases, Etc. All Leases and agreements necessary for the
conduct of business of such Subsidiary Loan Party and its Subsidiaries are valid
and subsisting and in full force and effect and there exists no default or event
of default (however defined) or circumstance which with the giving of notice or
lapse of time or both would give rise to a default under any such leases or
agreements, in any such case which could reasonably be expected to cause a
Material Adverse Change.

         Section 4.19 Insurance. Each Subsidiary Borrower carries insurance as
required under Section 5.02 of this Agreement.

         Section 4.20 Hedging Agreements. Except for EPPC, none of the
Subsidiary Loan Parties or their Subsidiaries are party to any hedging agreement
(including commodity price swap agreements, forward agreements or contracts of
sale which provide for prepayment for deferred shipment or delivery of oil, gas
or other commodities). EPPC is not a party to any hedging agreement (including
commodity price swap agreements, forward agreements or contracts of sale which
provide for prepayment for deferred shipment or delivery of oil, gas or other
commodities) that (a) is or may become subject to any margin requirements and
(b) is with a Person other than an Affiliate.

         Section 4.21 Material Agreements. Schedule 4.21 sets forth a complete
and correct list of all material agreements, leases, purchase agreements, joint
venture agreements, and other instruments in effect or to be in effect as of the
date hereof, and such list correctly sets forth the names of the lessee and
lessor with respect to the lease obligations outstanding or to be outstanding
and the Property subject to any Lien securing such lease obligation. Also set
forth on Schedule 4.21 hereto is a complete and correct list of all material
agreements and other instruments of such Subsidiary Loan Party and its
Subsidiaries relating to the purchase, transportation by pipeline, gas
processing, marketing, sale and supply of natural gas and other Hydrocarbons,
the termination of which could reasonably be expected to cause a Material
Adverse Change with respect to such Subsidiary Loan Party. Such Subsidiary Loan
Party has heretofore delivered to the Loan Administrator and the Lender a
complete and correct copy of all such material agreements, purchase agreements,
contracts, joint venture agreements, or other instruments, including any
modifications or supplements thereto, as in effect on the date hereof.

                                       49
<PAGE>

Neither such Subsidiary Loan Party nor any of its Subsidiaries has received any
notice of default under any material contract, agreement, lease, or other
material instrument to which such Subsidiary Loan Party or any such Subsidiary
is a party.

         Section 4.22 No Default. No Default has occurred and is continuing.

         Section 4.23 Affiliate Transactions. Schedule 4.23 sets forth each
instrument, document or agreement to which any Subsidiary Loan Party is a party
that is with or in favor of an Affiliate of such Subsidiary Loan Party and is in
effect on the date of this Agreement, (i) that is material to the business of
such Subsidiary Loan Party, (ii) that, if for a term of longer than three (3)
months, is not cancelable on 90 days notice or less, and (iii) that relates to
any arrangement having terms less favorable to such Subsidiary Loan Party than
could have been obtained in a comparable arm's length transaction with a Person
not an Affiliate of such Subsidiary Loan Party (each such agreement, whether or
not listed on Schedule 4.23 a "Material Related Party Contract"). Copies of each
Material Related Party Contract, as amended, have been provided to the Loan
Administrator. Since the date of this Agreement, no amendment or other
modification to any such Material Related Party Contract has been effected which
could reasonably be expected to cause a Material Adverse Change.

         Section 4.24 Debt and Liens. After application of the proceeds of the
Loans as contemplated herein and the transactions contemplated by the EPC Credit
Agreement on the Closing Date, (a) no Parent Guarantor will have any Debt (other
than under this Agreement, the other Loan Documents and the EPC Obligations
Guaranty) and there will be no Liens on any of its Property (other than Liens
described in clause (a), (c) or (g) of the definition of Permitted Liens), and
(b) no Subsidiary Loan Party or any of its Subsidiaries will have any Debt other
than Debt permitted pursuant to Section 6.02, and there will be no Liens on its
Property other than Permitted Liens.

         Section 4.25 Solvent. Before and after giving effect to the making of
the Loans and the delivery of the guarantees and other agreements contemplated
by this Agreement, each Subsidiary Loan Party is Solvent.

         Section 4.26 Cash Management and Accounts. Schedule 4.26 sets forth the
location, account number, account bank and type of each account (whether a
deposit account, a securities account, or a commodity account) maintained by
each of EPPC and EPGOM with a financial institution acting as depositary bank,
securities intermediary or commodity intermediary as of the date of this
Agreement. Except as contemplated by the last sentence of Section 5.14, neither
Raton nor Vermejo maintains any accounts separate from those described on such
Schedule for EPPC, but the accounts listed for EPPC are used for the operations
of Raton and Vermejo as consolidated Subsidiaries of EPPC. The primary operating
accounts for each of EPPC and EPGOM into which its respective revenues from its
business operations are paid (and in the case of the accounts for EPPC, into
which the revenues from the business operations of Raton and Vermejo are paid)
are identified on such schedule (collectively, herein referred to as their
"Operating Accounts").

         Section 4.27 Tax Sharing Agreements. No Subsidiary Loan Party is a
party to any tax sharing agreement.

                                       50
<PAGE>

         Section 4.28 Compliance with Laws. Each Subsidiary Loan Party is in
compliance in all material respects with all Legal Requirements, including
without limitation, Environmental Laws and all laws, regulations, or directives
with respect to equal employment opportunity and employee safety in all
jurisdictions in which such Subsidiary Loan Party or any of its Subsidiaries
does business.

                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

         So long as any amount under any Loan Document shall remain unpaid, each
Subsidiary Loan Party agrees, unless the Lender and the Loan Administrator shall
otherwise consent in writing, to comply with the following covenants.

         Section 5.01 Compliance with Laws, Etc. Each Subsidiary Loan Party
shall comply, and cause each of its Subsidiaries to comply, in all material
respects with all Legal Requirements. Without limiting the generality and
coverage of the foregoing, such Subsidiary Loan Party shall comply, and shall
cause each of its Subsidiaries to comply, in all material respects, with all
Environmental Laws and all laws, regulations, or directives with respect to
equal employment opportunity and employee safety in all jurisdictions in which
such Subsidiary Loan Party or any of its Subsidiaries do business; provided,
however, that this Section 5.01 shall not prevent such Subsidiary Loan Party or
any of its Subsidiaries from, in good faith and with reasonable diligence,
contesting the validity or application of any such laws or regulations by
appropriate legal proceedings. Without limitation of the foregoing, such
Subsidiary Loan Party shall, and shall cause each of its Subsidiaries to, (a)
maintain and possess all authorizations, Permits, licenses, trademarks, trade
names, rights and copyrights which are necessary to the conduct of its business,
except to the extent failure to do so could not reasonably be expected to cause
a Material Adverse Change, and (b) obtain, as soon as practicable, all consents
or approvals required from any states of the United States (or other
Governmental Authorities) necessary to grant the Collateral Agent an Acceptable
Security Interest in the Subsidiary Borrowers' respective Oil and Gas
Properties, except to the extent such Oil and Gas Properties are Excluded
Property.

         Section 5.02 Maintenance of Insurance.

         (a) Each Subsidiary Borrower shall, and shall cause each of its
Subsidiaries to, procure and maintain or shall cause to be procured and
maintained continuously in effect policies of insurance in form and amounts and
issued by companies, associations or organizations reasonably satisfactory to
the Collateral Agent and covering such casualties, risks, perils, liabilities
and other hazards as set forth on Schedule 5.02. The policies reflected in
Schedule 5.02 are corporate policies maintained by a Subsidiary Borrower or EPC
for the benefit of a Subsidiary Borrower and/or its Subsidiaries and/or its
Properties or its Subsidiaries' Properties. In addition, each Subsidiary
Borrower shall, and shall cause each of its Subsidiaries to, comply with all
requirements regarding insurance contained in the Security Instruments.

                                       51
<PAGE>

         (b) The Subsidiary Loan Parties shall furnish the Collateral Agent with
a certificate of insurance for each insurance coverage set forth in Schedule
5.02. All certificates of insurance shall set forth the coverage, the limits of
liability, the name of the carrier, the policy number, and the period of
coverage. All policies of insurance shall provide for a waiver of subrogation in
favor of the Collateral Agent. All general liability, automobile liability,
excess liability and property insurance policies (other than those issued by Oil
Insurance, Ltd. or sEnergy Insurance, Ltd., as described in the next sentence)
shall either have attached thereto a "lender's loss payable endorsement" for the
benefit of the Collateral Agent, as loss payee in form reasonably satisfactory
to the Collateral Agent, or shall include the Collateral Agent as an additional
insured. The property and excess property/business interruption policies issued
by Oil Insurance, Ltd. and sEnergy Insurance, Ltd., respectively, as identified
on Schedule 5.02 will provide the Collateral Agent with a pay to order
endorsement in a form consistent with their existing practices. All such
policies will not be canceled, allowed to lapse without renewal, surrendered or
amended (which provision shall include any reduction in the scope or limits of
coverage) without at least thirty (30) days' prior written notice to the
Collateral Agent.

         (c) In the event that, notwithstanding the requirements of this Section
5.02, the proceeds of any property and excess property/business interruption
policies are paid to such Subsidiary Loan Party or a Subsidiary of such
Subsidiary Loan Party, subject to the right to retain certain Insurance Proceeds
that is described in the definition of Extraordinary Receipt, such Subsidiary
Loan Party shall deliver, and shall cause such Subsidiary to deliver, such
proceeds to the Collateral Agent immediately upon receipt.

         Section 5.03 Preservation of Corporate Existence, Etc. Except as
provided for in Section 5.15 or as otherwise permitted pursuant to Section 6.04,
each Subsidiary Loan Party shall preserve and maintain, and cause each of its
Subsidiaries to preserve and maintain, its corporate or limited liability
company or partnership, as applicable, existence, rights, franchises, and
privileges in the jurisdiction of its incorporation or organization, as
applicable, and qualify and remain qualified, and cause each such Subsidiary to
qualify and remain qualified, as a foreign corporation in each jurisdiction in
which qualification is necessary for the conduct of its business and operations
or the ownership of its Properties, and, in each case, where failure to qualify
or preserve and maintain its rights and franchises could reasonably be expected
to cause a Material Adverse Change.

         Section 5.04 Payment of Taxes, Etc. Each Subsidiary Loan Party shall
pay and discharge, and cause each of its Subsidiaries to pay and discharge,
before the same shall become delinquent, (a) all taxes, assessments, and
governmental charges or levies imposed upon it or upon its income or profits or
Property that are material in amount, prior to the date on which penalties
attach thereto, and (b) all lawful claims that are material in amount which, if
unpaid, would by law become a Lien upon its Property; provided, however, that
neither such Subsidiary Loan Party nor any such Subsidiary shall be required to
pay or discharge any such tax, assessment, charge, levy, or claim which is being
contested in good faith and by appropriate proceedings, and with respect to
which reserves in conformity with GAAP have been provided.

         Section 5.05 Visitation Rights. At any reasonable time and from time to
time, upon reasonable notice, each Subsidiary Loan Party shall, and shall cause
its Subsidiaries to, permit the Loan Administrator and the Lender or any of
their respective agents or representatives

                                       52
<PAGE>

thereof at their own risk, to (a) examine and make copies of and abstracts from
the records and books of account of, and visit and inspect at their reasonable
discretion the Properties of, such Subsidiary Loan Party and any such
Subsidiary, and (b) discuss the affairs, finances and accounts of such
Subsidiary Loan Party and any such Subsidiary with any of their respective
officers or directors.

         Section 5.06 Reporting Requirements. Each Subsidiary Loan Party shall
furnish to the Loan Administrator and the Lender:

         (a) Annual Financials. As soon as publicly available and in any event
within 120 days after the end of each fiscal year of EPPH, a copy of the annual
report for such year for EPPH and its consolidated Subsidiaries, including each
of EPPC and its consolidated Subsidiaries and EPGOM and its consolidated
Subsidiaries, in each case containing financial statements for such year
reported on by PricewaterhouseCoopers LLP or other nationally recognized
independent public accountants accompanied by a report signed by said
accountants stating that such financial statements have been prepared in
accordance with GAAP. In addition, at the time of each financial statement
delivered pursuant to this Section 5.06(a), EPPH shall deliver to the Lender and
the Loan Administrator a report duly certified by the chief executive officer or
chief financial officer detailing all capital expenditures made by the
Subsidiary Borrowers during such fiscal year on a combined basis (including the
aggregate amount of exploration capital expenditures and development capital
expenditures);

         (b) Quarterly Financials. 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 EPPH, a consolidated balance sheet of EPPH and its
consolidated Subsidiaries, including each of EPPC and its consolidated
Subsidiaries and EPGOM and its consolidated Subsidiaries as of the end of such
quarter, and consolidated statements of income and cash flows thereof, in each
case for the period commencing at the end of the previous fiscal year and ending
with the end of such quarter, certified (subject to normal year-end adjustments)
as being fairly stated in all material respects by the chief financial officer,
controller or treasurer of EPPH and accompanied by a certificate of such officer
stating (i) whether or not such officer has knowledge of the occurrence of any
Event of Default that is continuing or of any event not theretofore remedied
that with notice or lapse of time or both would constitute an Event of Default
and, if so, stating in reasonable detail the facts with respect thereto. In
addition, at the time of each financial statement delivered pursuant to this
Section 5.06(b), EPPH shall deliver to the Lender and the Loan Administrator a
report duly certified by the chief executive officer or chief financial officer
detailing all capital expenditures made by the Subsidiary Borrowers during such
fiscal quarter on a combined basis (including the aggregate amount of
exploration capital expenditures and development capital expenditures);

         (c) Oil and Gas Reserve Reports. Each Subsidiary Borrower shall deliver
to the Loan Administrator and the Lender:

                  (i) As soon as available but in any event as required pursuant
to Section 2.02, the Independent Engineering Reports described in Section 2.02.

                                       53
<PAGE>

                  (ii) Such other information, including all engineering and
geotechnical data, studies and evaluations made available to any Subsidiary Loan
Party or any of its Subsidiaries or in any of their possession, as may be
reasonably requested by the Loan Administrator with respect to the Collateral
Oil and Gas Properties included or to be included in the Borrowing Base.

                  (iii) With the delivery of each Independent Engineering
Report, a certificate from a Responsible Officer of such Subsidiary Loan Party
certifying that, to the best of his knowledge and in all material respects: (a)
the information contained in the Independent Engineering Report and any other
information delivered in connection therewith is true and correct in all
material respects, (b) such Subsidiary Loan Party owns good and defensible title
to the Collateral Oil and Gas Properties evaluated in such Independent
Engineering Report and such Properties are free of all Liens except for
Permitted Liens, (c) as of the date of the evaluation of the Collateral Oil and
Gas Properties included in such Independent Engineering Report, except as set
forth on an exhibit to the certificate, on a net basis there are no gas
imbalances, take or pay or other prepayments with respect to its Collateral Oil
and Gas Properties evaluated in such Independent Engineering Report which would
require such Subsidiary Loan Party to deliver Hydrocarbons produced from such
Collateral Oil and Gas Properties at some future time without then or thereafter
receiving full payment therefor, (d) none of its Collateral Oil and Gas
Properties have been sold since the date of the last determination of the
Borrowing Base except as set forth on an exhibit to the certificate, which
certificate shall list all of its Collateral Oil and Gas Properties sold and in
such detail as reasonably required by the Loan Administrator, (e) attached to
the certificate is a list of its Collateral Oil and Gas Properties added to and
deleted from the immediately prior Independent Engineering Report and a list
showing any change in working interest or net revenue interest in its Collateral
Oil and Gas Properties occurring and the reason for such change, (f) attached to
the certificate is a list of all Persons disbursing proceeds to such Subsidiary
Loan Party from its Collateral Oil and Gas Properties and (g) except as set
forth on a schedule attached to the certificate, all of the Collateral Oil and
Gas Properties evaluated by such Independent Engineering Report are pledged as
Collateral for the Subsidiary Secured Obligations;

         (d) Production Reports. Each Subsidiary Borrower shall deliver to the
Loan Administrator as soon as available and in any event within thirty (30) days
after the end of March 2003 and each calendar month thereafter, a report
certified by a Responsible Officer of such Subsidiary Loan Party in a form
substantially similar to the form submitted to the Loan Administrator in
connection with the closing provided for herein covering each of the Oil and Gas
Properties of such Subsidiary Loan Party and its Subsidiaries and detailing on a
monthly basis (i) the information as reflected in the report delivered to the
Loan Administrator prior to the Closing Date, (ii) any sales of such Subsidiary
Loan Party's or any Subsidiaries' Oil and Gas Properties during each such month,
and (iii) such other information as is reasonably requested by the Loan
Administrator. The initial report delivered pursuant to this Section shall also
include the production data in the prescribed form for all production periods
arising after the periods covered by the current Independent Engineering Report;

         (e) Defaults. Each Subsidiary Loan Party shall deliver to the Loan
Administrator and the Lender, as soon as possible and in any event within five
(5) Business Days after such Subsidiary Loan Party's knowledge of the occurrence
of any Default, a statement of a

                                       54
<PAGE>

Responsible Officer of such Subsidiary Loan Party setting forth the details of
such Default and the actions which such Subsidiary Loan Party has taken and
proposes to take with respect thereto;

         (f) Termination Events. Each Subsidiary Loan Party shall deliver to the
Loan Administrator and the Lender, as soon as possible and in any event (i)
within thirty (30) days after such Subsidiary Loan Party or any member of the
Controlled Group 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 ten (10) days after such Subsidiary Loan
Party or any of its Affiliates knows or has reason to know that any other
Termination Event with respect to any Plan has occurred, a statement of a
Responsible Officer of such Subsidiary Loan Party describing such Termination
Event and the action, if any, which such Subsidiary Loan Party or such Affiliate
proposes to take with respect thereto;

         (g) Termination of Plans. Each Subsidiary Loan Party shall deliver to
the Loan Administrator and the Lender, promptly and in any event within two
Business Days after receipt thereof by such Subsidiary Loan Party or any member
of the Controlled Group from the PBGC, copies of each notice received by such
Subsidiary Loan Party or any such member of the Controlled Group of the PBGC's
intention to terminate any Plan or to have a trustee appointed to administer any
Plan;

         (h) Other ERISA Notices. Each Subsidiary Loan Party shall deliver to
the Loan Administrator and the Lender, promptly and in any event within five
Business Days after receipt thereof by such Subsidiary Loan Party or any member
of the Controlled Group from a Multiemployer Plan sponsor, a copy of each notice
received by such Subsidiary Loan Party or any member of the Controlled Group
concerning the imposition or amount of withdrawal liability pursuant to Section
4202 of ERISA;

         (i) Environmental Notices. Each Subsidiary Loan Party shall deliver to
the Loan Administrator and the Lender, promptly upon the receipt thereof by such
Subsidiary Loan Party or any of its Subsidiaries, a copy of any form of material
request, notice, summons or citation received from the U.S. Environmental
Protection Agency, or any other Governmental Authority, concerning (i) material
violations or alleged material violations of Environmental Laws, which seeks to
impose a material liability therefor, (ii) any action or omission on the part of
such Subsidiary Loan Party or any Subsidiary or any of their former Subsidiaries
in connection with Hazardous Waste or Hazardous Substances which could
reasonably result in the imposition of material liability therefor, including
without limitation any information request or notice of potential responsibility
under CERCLA, or (iii) the filing of a Lien upon, against or in connection with
such Subsidiary Loan Party or any of its Subsidiaries or their former
Subsidiaries, or any of their leased or owned Property, wherever located as a
result of an Environmental Claim;

         (j) Other Governmental Notices. Each Subsidiary Loan Party shall
deliver to the Loan Administrator and the Lender, promptly and in any event
within five Business Days after receipt thereof by such Subsidiary Loan Party or
any of its Subsidiaries, a copy of any notice, summons, citation, or proceeding
seeking to modify in any material respect, revoke, or suspend

                                       55
<PAGE>

any contract, license, or agreement with any Governmental Authority, the effect
of which could reasonably be expected to cause a Material Adverse Change;

         (k) Material Changes. Each Subsidiary Loan Party shall deliver to the
Loan Administrator and the Lender, prompt written notice of any condition or
event of which such Subsidiary Loan Party has knowledge, which condition or
event has resulted or may reasonably be expected to result in (i) a Material
Adverse Change or (ii) a breach of or noncompliance with any material term,
condition, or covenant of any contract to which such Subsidiary Loan Party or
any of its Subsidiaries is a party or by which they or their Properties may be
bound, the effect of which could reasonably be expected to cause a Material
Adverse Change;

         (l) Disputes, Etc. Each Subsidiary Loan Party shall deliver to the Loan
Administrator and the Lender prompt written notice of any claims, legal or
arbitration proceedings, proceedings before any Governmental Authority, or
disputes, or to the knowledge of such Subsidiary Loan Party threatened,
affecting such Subsidiary Loan Party, or any of its Subsidiaries which, if
adversely determined, could reasonably be expected to cause a Material Adverse
Change, or any material labor controversy of which such Subsidiary Loan Party or
any of its Subsidiaries has knowledge resulting in or reasonably considered to
be likely to result in a strike against such Subsidiary Loan Party or any of its
Subsidiaries;

         (m) Other Accounting Reports. Each Subsidiary Loan Party shall deliver
to the Loan Administrator and the Lender, promptly upon receipt thereof, a copy
of each other report or letter submitted to such Subsidiary Loan Party or any of
its Subsidiaries by any independent accountants in connection with any annual,
interim or special audit made by them of the books of such Subsidiary Loan Party
and its Subsidiaries, and a copy of any response by such Subsidiary Loan Party
or any of its Subsidiaries, or the Board of Directors of such Subsidiary Loan
Party or any Subsidiary of such Subsidiary Loan Party, to such letter or report;

         (n) Operating Budget. Each Subsidiary Borrower shall deliver to the
Loan Administrator and the Lender, (i) as soon as available and in any event no
later than thirty (30) days prior to the beginning of each calendar year (A) an
Operating Budget for each Subsidiary Borrower for the 12-month period beginning
on the first day of such calendar year, and (B) a certificate of a Responsible
Officer of each such Subsidiary Borrower, which certificate shall state that
such Operating Budgets were prepared in good faith and based on reasonable
assumptions regarding the Subsidiary Borrowers' respective projected
requirements for such period, and (ii) as soon as available and in any event no
later than June 1 of each calendar year (A) an Operating Budget for each
Subsidiary Borrower with updated projections for the six-month period beginning
on July 1 of such calendar year and a comparison of the actual versus budgeted
projections for the immediately preceding six-month period, and (B) a
certificate of a Responsible Officer of each such Subsidiary Borrower, which
certificate shall state that such Operating Budgets were prepared in good faith
and based on reasonable assumptions regarding the Subsidiary Borrowers'
respective projected requirements for such period; and

         (o) Other Information. Such other information respecting the business
or Properties, or the financial condition or operations, financial or otherwise,
of such Subsidiary Loan Party or any of its Subsidiaries, as the Lender or the
Loan Administrator may from time to time reasonably request. The Loan
Administrator agrees to provide the Lender with copies of any

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<PAGE>
material notices and information delivered solely to the Loan Administrator
pursuant to the terms of this Agreement.

         Section 5.07 Maintenance of Property.

         (a) Each Subsidiary Loan Party shall, and shall cause each of its
Subsidiaries to, (i) maintain, develop and protect their owned, leased, or
operated Property in a good and workmanlike manner as a prudent operator would
in accordance with generally accepted practices applicable to oil and gas leases
and contracts, and in accordance in all material respects with all applicable
Federal, state and local laws, rules and regulations; and (ii) abstain from
knowingly or willfully permitting the commission of waste or other injury,
destruction, or loss of natural resources, or the occurrence of pollution,
contamination, or any other condition in, on or about the owned or operated
Property involving the Environment that could reasonably be expected to result
in Response activities; provided, however, that the Subsidiary Loan Parties and
their respective Subsidiaries (x) shall not be required to perpetuate or renew
any Lease by payment of delay rentals, (y) may abandon or release any Lease
that, in the opinion of such Subsidiary Loan Party or such Subsidiary, as the
case may be, is uneconomic or (z) may pool and unitize Leases with third-party
Leases.

         (b) Each Subsidiary Loan Party shall, and shall cause each of its
Subsidiaries to, promptly pay or cause to be paid when due and owing (i) all
Burdens payable in respect of the Collateral Oil and Gas Properties; and (ii)
all material expenses incurred in or arising from the operation or development
of the Collateral Oil and Gas Properties, in each case described in this clause
(b), the nonpayment of which could reasonably be expected to cause a Material
Adverse Change.

         Section 5.08 Agreement to Pledge. Each Subsidiary Loan Party shall, and
shall cause each of its Subsidiaries to, grant to the Collateral Agent an
Acceptable Security Interest in all Property of such Subsidiary Loan Party or
any of its Subsidiaries (other than Excluded Property or Property for which a
release of Lien has been effected or is required to be effected in accordance
with the terms of this Agreement, including without limitation pursuant to
Sections 2.08 and 2.09) now owned or hereafter acquired promptly after receipt
of a written request from the Collateral Agent.

         Section 5.09 Development of the Properties. The Subsidiary Borrowers
shall reasonably execute, and carry out, with respect to the Collateral Oil and
Gas Properties the then current planned development as is reflected in the most
current Operating Budget in the effort to timely and efficiently convert Proved
Undeveloped Reserves and Proved Developed Non-Producing Reserves to Proved
Developed Producing Reserves.

         Section 5.10 Use of Proceeds. Each Subsidiary Loan Party shall cause
the proceeds of the Loans to the Subsidiary Borrowers to be used on the Closing
Date as follows: (a) Vermejo shall use the proceeds of its Loan to make a
dividend to Raton, (b) Raton shall use the proceeds of its Loan, together with
the dividends received from Vermejo, to make a dividend to EPPC, (c) EPPC shall
use the proceeds of its Loan, together with the dividends received from Raton,
to make a dividend to repay obligations owing to Sabine River Investors VII LLC
and Sabine River Investors VIII LLC, and (d) EPGOM shall used the proceeds of
its Loan to make a dividend to

                                       57
<PAGE>

Sabine VI. EPPH shall cause each of the Sabine Entities to repay or retire in
full the Red River Transaction (as defined in the EPC Credit Agreement), and
after the repayment or retirement in full of the Red River Transaction, EPPH may
make a dividend to EPC in the amount of any excess cash proceeds.

         Section 5.11 Title Opinions. Such Subsidiary Borrower shall (i) as
provided for on Schedule 2.14 and (ii) from time to time upon the reasonable
request of the Collateral Agent, take such commercially reasonable actions and
execute and deliver such documents and instruments as the Collateral Agent shall
require to ensure that the Collateral Agent shall, at all times after the
expiration of the time periods set out on Schedule 2.14, have received
satisfactory title opinions (including, as set out on Schedule 2.14 or if
otherwise requested, supplemental or new title opinions addressed to it), which
title opinions shall be in form and substance reasonably acceptable to the
Collateral Agent in its sole discretion and shall include opinions confirming
(w) the ownership of applicable Collateral Oil and Gas Properties by such
Subsidiary Borrower, (x) the before payout and after payout ownership interests
held by such Subsidiary Borrower for all wells located on the applicable
Collateral Oil and Gas Properties covered thereby, (y) that the Collateral Agent
has an Acceptable Security Interest in such Oil and Gas Properties of such
Subsidiary Borrower, and (z) such other matters as the Collateral Agent may
request, which opinions shall cover Oil and Gas Properties constituting at least
80% of the present value of the Proven Reserves of such Subsidiary Borrower and
at least 80% of the present value of the Proved Developed Producing Reserves of
such Subsidiary Borrower as determined by the Collateral Agent.

         Section 5.12 Further Assurances; Cure of Title Defects. Such Subsidiary
Loan Party shall and shall cause each of its Subsidiaries to cure promptly any
defects in the creation and issuance of the Notes and the execution and delivery
of the Security Instruments and this Agreement. Such Subsidiary Loan Party
hereby authorizes the Lender or the Collateral Agent to file any financing
statements without the signature of such Subsidiary Loan Party to the extent
permitted by applicable law in order to perfect or maintain the perfection of
any security interest granted under any of the Loan Documents. Such Subsidiary
Loan Party at its expense will and will cause each of its Subsidiaries to
promptly execute and deliver to the Collateral Agent upon request all such other
documents, agreements and instruments to comply with or accomplish the covenants
and agreements of such Subsidiary Loan Party or any such Subsidiary, as the case
may be, in the Security Instruments and this Agreement, or to further evidence
and more fully describe the collateral intended as security for the Notes, or to
correct any omissions in the Security Instruments, or to state more fully the
security obligations set out herein or in any of the Security Instruments, or to
perfect, protect or preserve any Liens created pursuant to any of the Security
Instruments, or to make any recordings, to file any notices or obtain any
consents, all as may be necessary or appropriate in connection therewith. Within
45 days after a request by the Collateral Agent or the Lender to cure any title
defects or exceptions (a) which are not Permitted Liens or (b) which are
reflected on the title opinions delivered pursuant to Section 5.11, such
Subsidiary Loan Party shall (i) cure such title defects or exceptions which are
not Permitted Liens or substitute acceptable Oil and Gas Properties with no
title defects or exceptions except for Permitted Liens covering Collateral of an
equivalent value and (ii) deliver to the Collateral Agent satisfactory title
evidence (including supplemental or new title opinions meeting the foregoing
requirements) in form and substance acceptable to the Collateral Agent in its
reasonable business judgment as to such Subsidiary Loan Party's and its
Subsidiaries' ownership

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<PAGE>

of such Oil and Gas Properties and the Collateral Agent's Liens and security
interests therein as are required to maintain compliance with this Section 5.12.
If within such 45 day period such Subsidiary Loan Party satisfies both clause
(i) and clause (ii) set forth above, then no Default shall have occurred as a
result of such title defect or exception.

         Section 5.13 Trade Payables. Each Subsidiary Borrower shall, and shall
cause each Subsidiary to (a) within ninety (90) days after the same becomes due
(or, with respect to any vendor or other account debtor, within such longer
period as is acceptable to such vendor or other account debtor) pay all trade
payables owed by it other than such trade payables that are being contested in
good faith by appropriate proceedings, and (b) maintain appropriate accruals and
reserves for all trade payables in accordance with GAAP.

         Section 5.14 Operating Accounts. Each of EPPC and EPGOM shall maintain
each of the accounts described on Schedule 4.26 as an Operating Account subject
to an Account Control Agreement, and each of EPPC and EPGOM agrees to deposit
therein all of its revenues (including revenues received in connection with or
attributable to its Collateral Oil and Gas Properties). Each of Raton and
Vermejo agrees to not establish any separate accounts for collection of its
revenues other than the Operating Accounts of EPPC, and each agrees to deposit
in one of the EPPC Operating Accounts all of its revenues (including revenues
received in connection with or attributable to its Collateral Oil and Gas
Properties). Prior to the occurrence and continuance of an Event of Default,
each of EPPC and EPGOM may make withdrawals from its respective Operating
Account to pay its (or in the case of EPPC, Raton's or Vermejo's) operating
costs and expenses, capital expenditures, debt service and for any other purpose
consistent with the terms of this Agreement and permitted by law. After the
occurrence and continuance of an Event of Default, the Collateral Agent may in
its sole discretion retain all amounts deposited in such Operating Accounts or
transfer such amounts to EPPC or EGGOM's Cash Collateral Account, in each case
to be retained by the Collateral Agent as collateral for the Subsidiary Secured
Obligations. Neither the Collateral Agent nor the Lender waives or relinquishes
any of its rights or interests arising under the Loan Documents by permitting
any Subsidiary Borrower to collect and deposit the proceeds of sales of
Hydrocarbons attributable to Subsidiary Borrower's Collateral Oil and Gas
Properties as herein described. Notwithstanding anything in this Section 5.14 to
the contrary, each Subsidiary Loan Party shall be permitted to maintain checking
disbursement accounts for payment of its daily expenses provided that such
accounts do not consolidate on a daily basis with the principal operating
accounts of any EPC affiliate, and such checking disbursement accounts shall not
be required to be subject to an Account Control Agreement.

         Section 5.15 Transfer of Noric Holdings I, L.L.C. The Subsidiary Loan
Parties shall (i) use their commercially reasonable efforts to obtain as
promptly as reasonably possible the necessary third party consents required to
permit the transfer of all Equity Interests of Noric Holdings I, L.L.C. and its
Subsidiaries held by EPPC and Raton from EPPC and Raton to an Affiliate of the
Lender other than any Subsidiary Loan Party or any of their Subsidiaries; and
(ii) immediately after obtaining all required consents, transfer such Equity
Interests to the designated Affiliate.

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<PAGE>

                                   ARTICLE VI

                               NEGATIVE COVENANTS

         So long as any amount under any Loan Document shall remain unpaid, each
Subsidiary Loan Party agrees, unless the Lender and the Loan Administrator shall
otherwise consent in writing, to comply with the following covenants.

         Section 6.01 Liens, Etc. Each Subsidiary Loan Party shall not create,
assume, incur, or suffer to exist, or permit any of its Subsidiaries to create,
assume, incur, or suffer to exist, any Lien on or in respect of any of its
Property whether now owned or hereafter acquired, or assign any right to receive
income, except that (a) each Parent Guarantor may create, incur, assume, and
suffer to exist Permitted Liens described in clauses (a) and (c) of the
definition of Permitted Liens, and (b) each Subsidiary Borrower and its
Subsidiaries may create, incur, assume, and suffer to exist Permitted Liens or
contracts to effect a Permitted Disposition.

         Section 6.02 Debt. Each Subsidiary Loan Party shall not, and shall not
permit any of its Subsidiaries to, create, assume or suffer to exist any Debt
other than Debt described on Schedule 6.02 that is to be paid off or otherwise
satisfied or terminated as of the Closing Date, and other than:

         (a) Debt of such Subsidiary Loan Party under the Loan Documents and
under the EPC Obligations Guaranty and, if the EPC Obligations are assumed by
EPPH as contemplated by Section 9.11 of the EPC Credit Agreement, Debt of EPPH
in respect of the EPC Obligations;

         (b) Debt of any Subsidiary Borrower in the form of obligations for the
deferred purchase price of Property or services incurred in the ordinary course
of business which are not yet due and payable or are being contested in good
faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP have been established;

         (c) Debt of any Subsidiary Borrower under Capital Leases not to exceed
$100,000 in the aggregate;

         (d) Debt of any Subsidiary Borrower consisting of sureties or bonds
provided to any Governmental Authority or other Person and (i) assuring payment
of contingent liabilities of such Subsidiary Loan Party in connection with the
operation of the Oil and Gas Properties, including without limitation with
respect to plugging, facility removal and abandonment of its Oil and Gas
Properties, or (ii) otherwise incurred in the ordinary course of business;

         (e) Subordinated Intercompany Debt; and

         (f) Hedging Obligations of EPPC existing on the date of this Agreement.

         Section 6.03 Agreements Restricting Liens or Restricted Payments. Each
Subsidiary Loan Party shall not, nor shall it permit any of its Subsidiaries to,
create, incur, assume or permit to exist any contract, agreement or
understanding (other than this Agreement and the Security Instruments) which in
any way prohibits or restricts the granting, conveying, creation or imposition
of any Lien on any of its Property, whether now owned or hereafter acquired, to

                                       60

<PAGE>

secure the Subsidiary Secured Obligations, or restricts any Subsidiary of any
Subsidiary Loan Party from paying Restricted Payments to such Subsidiary Loan
Party, or which requires the consent of or notice to other Persons in connection
therewith; provided that with respect to any permitted purchase money Debt or
permitted Capital Lease obligations, such Subsidiary Loan Party may have such
restrictions applicable to the Property acquired or leased in connection
therewith and any proceeds thereof.

         Section 6.04 Merger or Consolidation. Each Subsidiary Loan Party shall
not, and shall not permit any of its Subsidiaries to merge or consolidate with
or into any other Person, provided that, Sabine VII and VIII shall be permitted
to merge or consolidate into Sabine IX, and any Subsidiary Borrower shall be
permitted to merge or consolidate with any other Subsidiary Borrower; provided
that in each case (i) before and after giving effect to such merger or
consolidation, no Default has occurred and is continuing, and (ii) the
Subsidiary Loan Parties have taken all necessary actions to ensure that the
Collateral Agent continues to have an Acceptable Security Interest in all
Collateral associated with the Subsidiary Loan Party subject to any such
permitted merger or consolidation.

         Section 6.05 Dispositions. Each Subsidiary Loan Party shall not, and
shall not permit any of its Subsidiaries to, (a) Dispose of any of its Equity
Interests in Sabine IX or EPPC, or Dispose of any of its other Property (other
than Permitted Dispositions and Dispositions of Property not constituting
Collateral and which is not required to be subject to an Acceptable Security
Interest, subject to satisfaction of any mandatory prepayment required pursuant
to Section 2.04, or arrangements being made in respect thereof satisfactory to
the Loan Administrator); and (b) except in the case of Dispositions described in
clause (i) or (iii) of the definition of Permitted Dispositions, make any
Permitted Disposition unless no Default has occurred and is continuing at the
time of any such Disposition or would exist after giving effect to such
Disposition and application of the proceeds thereof.

         Section 6.06 Restricted Payments. Each Subsidiary Loan Party shall not,
and shall not permit any of its Subsidiaries to, make any Restricted Payments
other than as contemplated under Section 5.10 on the Closing Date; provided
however, that during the one-year period following the Closing Date: (a) any
Subsidiary Loan Party other than EPPH may make Restricted Payments to EPPH or
any other Subsidiary Loan Party if no Default has occurred and is continuing (or
would occur after giving effect thereto), and (b) any Subsidiary Loan Party may
make Restricted Payments as described in clause (d) of the definition of
Restricted Payments, and EPPH may make Restricted Payments in the form of cash
distributions or cash dividends intended to be ultimately received by EPC if, in
each case (i) no Default has occurred and is continuing (or would occur after
giving effect thereto), and (ii) EPPH has confirmed to the satisfaction of the
Loan Administrator prior to making any such Restricted Payment that the amount
of such Restricted Payment and all other Restricted Payments declared or made by
any Subsidiary Loan Party or by EPPH described in this clause (b) during the
then current fiscal quarter of EPPH would not exceed the Free Cash Flow Amount
(as hereinafter defined) determined as the date of the proposed Restricted
Payment (the "Free Cash Flow Determination Date"). For purposes of this Section
6.06:

                  "Free Cash Flow Amount" means, as of any Free Cash Flow
         Determination Date, an amount equal to (i) the Consolidated Cash Flow
         for the fiscal quarter ending

                                       61
<PAGE>

         immediately prior to such Free Cash Flow Determination Date, less (ii)
         capital expenditures actually made during such fiscal quarter, less
         (iii) Required Reserves determined as of such Free Cash Flow
         Determination Date.

                  "Consolidated Cash Flow" means, for any fiscal quarter of
         EPPH, calculated for EPPH and its consolidated Subsidiaries (but
         excluding any direct or indirect Subsidiaries of EPPC that were
         Disposed of during any period prior to the Closing Date, and excluding
         Noric Holdings I, L.L.C. and its Subsidiaries), the sum of (i) net
         income, plus (ii) depreciation, plus (iii) non-cash charges, plus or
         minus (iv) any changes in working capital.

                  "Required Reserves" means, as of any Free Cash Flow
         Determination Date, an amount of cash reserves equal to the aggregate
         amount of interest on the outstanding principal amount of the Loans of
         all Subsidiary Borrowers that is estimated to accrue for the period
         commencing on such Free Cash Flow Determination Date and ending on the
         last day of the calendar month next following such Free Cash Flow
         Determination Date.

         Section 6.07 Affiliate Transactions. Each Subsidiary Loan Party shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
enter into any transaction or series of transactions (including, but not limited
to, the purchase, sale, lease or exchange of Property, the making of any
investment, the giving of any guaranty, the assumption of any obligation or the
rendering of any service) with any of their Affiliates unless such transaction
or series of transactions is (a) on terms no less favorable to such Subsidiary
Loan Party or the Subsidiary, as applicable, than those that could be obtained
in a comparable arm's length transaction with a Person that is not such an
Affiliate, and (b) if a material transaction, terminable upon no more than 90
days' notice by such Subsidiary Loan Party which is party thereto.

         Section 6.08 Compliance with ERISA. Each Subsidiary Loan Party shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
(a) engage in, or permit any Subsidiary or ERISA Affiliate to engage in, any
transaction in connection with which such Subsidiary Loan Party, any Subsidiary
or any ERISA Affiliate could be subjected to either a civil penalty assessed
pursuant to section 502(c), (i) or (l) of ERISA or a tax imposed by Chapter 43
of Subtitle D of the Code; (b) terminate, or permit any Subsidiary or ERISA
Affiliate to terminate, any Plan in a manner, or take any other action with
respect to any Plan, which could result in any liability to such Subsidiary Loan
Party, any Subsidiary or any ERISA Affiliate to the PBGC; (c) fail to make, or
permit any Subsidiary or ERISA Affiliate to fail to make, full payment when due
of all amounts which, under the provisions of any Plan, agreement relating
thereto or applicable law, such Subsidiary Loan Party, such Subsidiary or any
ERISA Affiliate is required to pay as contributions thereto; (d) permit to
exist, or allow any Subsidiary or ERISA Affiliate to permit to exist, any
accumulated funding deficiency within the meaning of Section 302 of ERISA or
section 412 of the Code, whether or not waived, with respect to any Plan; (e)
permit, or allow any Subsidiary or ERISA Affiliate to permit, the actuarial
present value of the benefit liabilities (as "actuarial present value of the
benefit liabilities" shall have the meaning specified in section 4041 of ERISA)
under any Plan maintained by such Subsidiary Loan Party, any Subsidiary or any
ERISA Affiliate which is regulated under Title IV of ERISA to exceed the current
value of the assets (computed on a plan termination basis in accordance with
Title IV of ERISA) of such Plan allocable to such benefit liabilities; (f)
contribute to or assume an

                                       62
<PAGE>

obligation to contribute to, or permit any Subsidiary or ERISA Affiliate to
contribute to or assume an obligation to contribute to, any Multiemployer Plan;
(g) acquire, or permit any Subsidiary or ERISA Affiliate to acquire, an interest
in any Person that causes such Person to become an ERISA Affiliate with respect
to such Subsidiary Loan Party, any Subsidiary or any ERISA Affiliate if such
Person sponsors, maintains or contributes to, or at any time in the six-year
period preceding such acquisition has sponsored, maintained, or contributed to,
(1) any Multiemployer Plan, or (2) any other Plan that is subject to Title IV of
ERISA under which the actuarial present value of the benefit liabilities under
such Plan exceeds the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan allocable
to such benefit liabilities; (h) incur, or permit any Subsidiary or ERISA
Affiliate to incur, a liability to or on account of a Plan under sections 515,
4062, 4063, 4064, 4201 or 4204 of ERISA; (i) contribute to or assume an
obligation to contribute to, or permit any Subsidiary or ERISA Affiliate to
contribute to or assume an obligation to contribute to, any employee welfare
benefit plan, as defined in section 3(1) of ERISA, including, without
limitation, any such plan maintained to provide benefits to former employees of
such entities, that may not be terminated by such entities in their sole
discretion at any time without any material liability; (j) amend or permit any
Subsidiary or ERISA Affiliate to amend, a Plan resulting in an increase in
current liability such that such Subsidiary Loan Party, any Subsidiary or any
ERISA Affiliate is required to provide security to such Plan under section
401(a)(29) of the Code; or (k) permit to exist any occurrence of any Reportable
Event (as defined in Title IV of ERISA), or any other event or condition, which
presents a material (in the reasonable opinion of the Loan Administrator) risk
of such a termination by the PBGC of any Plan.

         Section 6.09 Sale-and-Leaseback. Each Subsidiary Loan Party shall not,
nor shall it permit any of its Subsidiaries to, sell or transfer to a Person any
Property, whether now owned or hereafter acquired, if at the time or thereafter
such Subsidiary Loan Party or a Subsidiary shall lease as lessee such property
or any part thereof or other Property which such Subsidiary Loan Party or a
Subsidiary intends to use for substantially the same purpose as the Property
sold or transferred.

         Section 6.10 Change of Business. Each Subsidiary Loan Party shall not,
nor shall it permit any of its Subsidiaries to, engage in any business or make
any material change in the character of its business if, as a result, the
general nature of the business which would then be engaged in by such Subsidiary
Loan Party or any of its Subsidiaries would be substantially changed from the
general nature of the business engaged in by such Subsidiary Loan Party and its
Subsidiaries on the date of this Agreement.

         Section 6.11 Organizational Documents, Name Change. Each Subsidiary
Loan Party shall not, nor shall it permit any of its Subsidiaries to, amend,
supplement, modify or restate their articles or certificate of incorporation and
bylaws or other equivalent organizational documents if such amendment,
supplement, modification or restatement would include any provisions that could
reasonably be expected to adversely affect the Lender's or the Loan
Administrator's rights under the Loan Documents or, in the case of any Parent
Guarantor, if it would permit such Parent Guarantor to conduct any business
other than holding the Equity Interests held as of the Closing Date by such
Parent Guarantor, entering into the Loan Documents to which it is a party or any
activity incidental thereto. Such Subsidiary Loan Party shall not, nor shall it
permit any of its

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Subsidiaries to, change their name without giving the Loan Administrator
reasonable notice thereof.

         Section 6.12 Bank Deposit and Other Accounts. Each Subsidiary Loan
Party shall not maintain any bank deposit, securities account, or commodities
account other than, in the case of EPPC and EPGOM, the Operating Accounts
described on Schedule 4.26, and any other bank or securities account subject to
an Account Control Agreement, unless otherwise approved by the Collateral Agent
in its sole discretion.

         Section 6.13 Use of Proceeds. Each Subsidiary Loan Party will not
permit the proceeds of its Loan to be used for any purpose other than those
permitted by Section 5.10. Such Subsidiary Loan Party will not engage in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U). Neither such Subsidiary Loan Party
nor any Person acting on behalf of such Subsidiary Loan Party has taken or shall
take, nor permit any Subsidiary of such Subsidiary Loan Party to take, any
action which might cause any of the Loan Documents to violate Regulation T, U or
X or any other regulation of the Board of Governors of the Federal Reserve
System or to violate Section 7 of the Securities Exchange Act of 1934 or any
rule or regulation thereunder, in each case as now in effect or as the same may
hereinafter be in effect, including without limitation, the use of the proceeds
of any Loan to purchase or carry any margin stock in violation of Regulation T,
U or X.

         Section 6.14 Investments. Each Subsidiary Loan Party shall not, and
shall not permit any of its Subsidiaries to, make or permit to exist any
Investment, or form any new Subsidiary, except any that each Subsidiary Loan
Party may make Permitted Investments.

         Section 6.15 Gas Imbalances, Take-or-Pay or Other Prepayments. Each
Subsidiary Borrower shall not, nor shall it permit any of its Subsidiaries to,
allow material gas imbalances, take-or-pay or other prepayments with respect to
the Collateral Oil and Gas Properties of such Subsidiary Borrower or any
Subsidiary which would require such Subsidiary Borrower or any Subsidiary to
deliver any of their respective Hydrocarbons produced from such Collateral Oil
and Gas Properties at some future time without then or thereafter receiving full
payment therefor.

         Section 6.16 Payment of Consolidated Taxes. No Subsidiary Loan Party
shall pay consolidated income taxes to the extent such taxes exceed such
Subsidiary Loan Party's independent income tax liability (in the aggregate with
its consolidated subsidiaries), other than in accordance with any tax sharing
agreement or arrangement that is reasonably satisfactory to the Loan
Administrator.

         Section 6.17 Issuance of Equity. Each Subsidiary Loan Party shall not
issue any capital stock or other Equity Interests in such Subsidiary Loan Party,
and shall not issue any securities exchangeable into capital stock or other
equity interests in such Subsidiary Loan Party, provided this Section 6.17 shall
not be construed to limit the making of any Permitted Investment permitted to be
made under Section 6.14.

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                                   ARTICLE VII

                           EVENTS OF DEFAULT; REMEDIES

         Section 7.01 Events of Default. The occurrence of any of the following
events shall constitute an "Event of Default" under any Loan Document:

         (a) Payment. Any Subsidiary Loan Party shall fail to pay when due any
principal, interest, fees, reimbursements, indemnifications, or other amounts
payable hereunder, under the Notes, or under any other Loan Document, and in the
case of nonpayment of any amount other than principal of the Loans, such failure
to pay such amount has continued for more than three (3) Business Days after the
date on which such amount was due;

         (b) Representation and Warranties. Any representation or warranty made
or deemed to be made by any Subsidiary Loan Party in this Agreement or in any
other Loan Document, shall prove to have been incorrect in any material respect
when made or deemed to be made;

         (c) Covenant Breaches. Any Subsidiary Loan Party shall (i) fail to
perform or observe any covenant contained in Section 5.02(a), 5.03, 5.06(e),
(f), (i), (k), 5.12, 5.14 or Article VI of this Agreement or (ii) fail to
perform or observe any other term or covenant set forth in this Agreement or in
any other Loan Document which is not covered by clause (i) above or any other
provision of this Section 7.01 if such failure shall remain unremedied for
thirty (30) days after such Subsidiary Loan Party receives notice, or obtains
knowledge, of the occurrence of such breach or failure;

         (d) Cross-Defaults. (i) Any Subsidiary Loan Party shall fail to pay any
principal of or premium or interest on its Debt which is outstanding in a
principal amount of at least $5,000,000 individually or when aggregated with all
such Debt of the Subsidiary Loan Parties so in default (but excluding Debt under
the Loan Documents and the EPC Obligations Guaranty) when the same becomes due
and payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall (x) continue after the applicable
grace period, if any, specified in the agreement or instrument relating to such
Debt and (y) not be waived; or (ii) any such Debt shall be declared to be due
and payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof;

         (e) Insolvency. Any Subsidiary Loan Party or its Subsidiaries (i) shall
generally not pay its debts as such debts become due, or (ii) shall admit in
writing its inability to pay its debts generally, or (iii) shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against such Subsidiary Loan Party or any of its Subsidiaries, 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 and, in the case of any such proceeding
instituted against such Subsidiary Loan Party, or such Subsidiary, either such
proceeding shall remain undismissed for a period of 60 days or any of the
actions sought in such proceeding shall occur; or such Subsidiary

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<PAGE>

Loan Party or such Subsidiary shall take any corporate or other organizational
action to authorize any of the actions set forth above in this paragraph (e);

         (f) Judgments. Any judgment or order for the payment of money in excess
of $5,000,000 shall be rendered against any Subsidiary Loan Party and either (i)
enforcement proceedings shall have been commenced by any creditor upon such
judgment or order or (ii) there shall be any period of thirty (30) consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect;

         (g) Termination Events. Any Termination Event with respect to a Plan
shall have occurred and, thirty (30) days after notice thereof shall have been
given to the Subsidiary Loan Parties by the Loan Administrator, (i) such
Termination Event shall not have been corrected and (ii) the then present value
of such Plan's vested benefits shall exceed the then current value of assets
accumulated in such Plan by more than the amount of $5,000,000 (or in the case
of a Termination Event involving the withdrawal of a "substantial employer" (as
defined in Section 4001(a)(2) of ERISA), the withdrawing employer's
proportionate share of such excess shall exceed such amount);

         (h) Plan Withdrawals. Any Subsidiary Loan Party or any member of the
Controlled Group as employer under a Multiemployer Plan shall have made a
complete or partial withdrawal from such Multiemployer Plan and the plan sponsor
of such Multiemployer Plan shall have notified such withdrawing employer that
such employer has incurred a withdrawal liability in an annual amount exceeding
$5,000,000;

         (i) Change in Control. Any Change in Control shall have occurred;

         (j) Invalidity of Loan Documents. Any material provision of any Loan
Document shall for any reason cease to be valid and binding on any Subsidiary
Loan Party or any Subsidiary Loan Party shall so state in writing;

         (k) Security Instruments. (i) Except with respect to Post-Closing Items
prior to the dates specified on Schedule 2.14, the Collateral Agent shall fail
to have an Acceptable Security Interest in any material portion of the
Collateral or (ii) any Security Instrument shall at any time and for any reason
cease to create the Lien on any Property purported to be subject to such
agreement that constitutes a material portion of the Collateral in accordance
with the terms of such agreement, or cease to be in full force and effect, or
shall be contested by any Subsidiary Loan Party;

         (l) EPC Event of Default. Any EPC Event of Default shall have occurred
and be continuing after any applicable grace period; or

         (m) Unfunded Plan Benefits. Any Subsidiary Loan Party has liabilities
in respect of unfunded vested benefits under any Plan, to the extent such
liabilities could reasonably be expected to cause a Material Adverse Change.

         Section 7.02 Optional Acceleration of Maturity. If any Event of Default
(other than an Event of Default pursuant to paragraph (e) of Section 7.01,
except for clause (i) thereof) shall have occurred and be continuing, then, and
in any such event,

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<PAGE>

         (a) the Loan Administrator may, by notice to the Subsidiary Loan
Parties, declare all principal, interest, fees, reimbursements,
indemnifications, and all other amounts payable under this Agreement, the Notes,
and the other Loan Documents to be forthwith due and payable, whereupon all such
amounts shall become and be forthwith due and payable in full, without notice of
intent to demand, demand, presentment for payment, notice of nonpayment,
protest, notice of protest, grace, notice of dishonor, notice of intent to
accelerate, notice of acceleration, and all other notices, other than the notice
expressly provided for above, all of which are hereby expressly waived by each
Subsidiary Loan Party; and

         (b) the Collateral Agent may proceed to enforce the Collateral Agent's
and the Lender's rights and remedies under the Security Instruments and the
other Loan Documents for the benefit of the Subsidiary Secured Parties by
appropriate proceedings.

         Section 7.03 Automatic Acceleration of Maturity. If any Event of
Default pursuant to paragraph (e) of Section 7.01 (other than clause (i)
thereof) shall occur,

         (a) all principal, interest, fees, reimbursements, indemnifications,
and all other amounts payable under this Agreement, the Notes, and the other
Loan Documents shall become and be forthwith due and payable in full, without
notice of intent to demand, demand, presentment for payment, notice of
nonpayment, protest, notice of protest, grace, notice of dishonor, notice of
intent to accelerate, notice of acceleration, and all other notices, all of
which are hereby expressly waived by each Subsidiary Loan Party; and

         (b) the Collateral Agent may proceed to enforce the Collateral Agent's
and the Lender's rights and remedies under the Security Instruments and each of
the other Loan Documents for the benefit of the Subsidiary Secured Parties by
appropriate proceedings.

         Section 7.04 Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Collateral Agent is hereby 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 the Collateral Agent or the Lender to or for the credit or the account of any
Subsidiary Loan Party against any and all of the obligations of such Subsidiary
Loan Party now or hereafter existing under this Agreement, the Notes and the
other Loan Documents, irrespective of whether or not the Collateral Agent or the
Lender shall have made any demand under this Agreement, such Notes, or such
other Loan Documents, and although such obligations may be unmatured. The
Collateral Agent agrees to promptly notify the Loan Administrator, the
Subsidiary Loan Parties and the Lender after any such set-off and application
made by the Collateral Agent, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of the
Collateral Agent under this Section 7.04 are in addition to any other rights and
remedies (including, without limitation, other rights of set-off) which the
Collateral Agent or the Lender may have.

         Section 7.05 Non-exclusivity of Remedies. No remedy conferred upon the
Loan Administrator or the Collateral Agent or the Lender in the Loan Documents
is intended to be exclusive of any other remedy, and each remedy shall be
cumulative of all other remedies existing by contract, at law, in equity, by
statute or otherwise.

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                                  ARTICLE VIII

                             THE LOAN ADMINISTRATOR

         Section 8.01 Authorization and Action. The Lender hereby appoints and
authorizes the Loan Administrator to take such action as administrator of the
Loans and this Agreement on behalf of the Lender and to exercise such powers
under this Agreement as are delegated to the Loan Administrator by the terms
hereof and of the other Loan Documents, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement or any other Loan Document (including, without limitation,
enforcement or collection of the Note), the Loan Administrator shall not be
required to exercise any discretion or take any action.

         Section 8.02 Loan Administrator's Reliance, Etc. Neither the Loan
Administrator nor any of its directors, officers, agents, or employees shall be
liable for any action taken or omitted to be taken (INCLUDING THE LOAN
ADMINISTRATOR'S OWN NEGLIGENCE) by it or them under or in connection with this
Agreement or the other Loan Documents, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Loan Administrator: (a) may consult with legal counsel (including
counsel for the Lender or any Subsidiary Loan Party), 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; (c) makes no warranty or
representation to the Lender and shall not be responsible to the Lender for any
statements, warranties, or representations made in or in connection with this
Agreement or the other Loan Documents; (d) 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 or any other Loan Document on the part of any
Subsidiary Loan Party or its Subsidiaries or to inspect the property (including
the books and records) of any Subsidiary Loan Party or its Subsidiaries; (e)
shall not be responsible to the Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency, or value of this Agreement
or any other Loan Document; and (f) shall incur no liability under or in respect
of this Agreement or any other Loan Document by acting upon any notice, consent,
certificate, or other instrument or writing (which may be by telecopier or
telex) believed by it to be genuine and signed or sent by the proper party or
parties.

         Section 8.03 CNAI. Each of the Lender and the Subsidiary Loan Parties
acknowledges and agrees that CNAI's role as the Loan Administrator hereunder and
as the Collateral Agent under this Agreement or any other Loan Document is
administrative in nature and that CNAI and its Affiliates do not have any
responsibilities to the Lender or the Subsidiary Loan Parties whatsoever insofar
as its performance of any of its obligations hereunder (including without
limitation any determination by the Loan Administrator of the Borrowing Base for
any Subsidiary Borrower) other than to apply any proceeds of funds received by
or on behalf of the Lender from the Subsidiary Loan Parties as contemplated by
the Loan Documents. Each of the Lender and the Subsidiary Loan Parties further
acknowledges and agrees that CNAI or any Affiliate of CNAI may from time to time
may be an EPC Lender under the EPC Credit Agreement, and CNAI is the initial EPC
Agent under the EPC Credit Agreement, and CNAI's

----------------------
    (1) Certain of these provisions will be revised to conform to the EPC
        Credit Agreement.

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<PAGE>

rights and obligations in such capacities are independent of any rights it may
have hereunder and it may exercise any such rights and perform any such
obligations as though it were not the Loan Administrator or the Collateral Agent
hereunder and under the other Loan Documents. In addition, CNAI 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 Subsidiary
Loan Parties, the Lender, and any Person who may do business with or own
securities of the Lender or any of its Subsidiaries, all as if CNAI were not the
Loan Administrator or the Collateral Agent hereunder and under the other Loan
Documents and without any duty to account therefor to the Lender or any
Subsidiary Loan Party.

         Section 8.04 Lender Credit Decision. The Lender acknowledges that it
has, independently and without reliance upon the Loan Administrator and based on
the Financial Statements and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement.

         Section 8.05 Indemnification. THE LENDER AGREES TO INDEMNIFY THE LOAN
ADMINISTRATOR AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, AND AGENTS (EACH, AN "INDEMNIFIED PARTY"), TO THE EXTENT
NOT REIMBURSED BY A SUBSIDIARY BORROWER, 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 ANY INDEMNIFIED PARTY IN ANY WAY
RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY ACTION TAKEN OR OMITTED BY
ANY INDEMNIFIED PARTY UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (INCLUDING
THE LOAN ADMINISTRATOR'S OWN NEGLIGENCE), AND INCLUDING, WITHOUT LIMITATION,
ENVIRONMENTAL LIABILITIES, PROVIDED THAT THE LENDER SHALL BE LIABLE FOR ANY
PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS RESULTING FROM THE LOAN
ADMINISTRATOR'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF
THE FOREGOING, THE LENDER AGREES TO REIMBURSE SUCH INDEMNIFIED PARTY, WITHIN TEN
(10) DAYS AFTER DEMAND THEREFOR, FOR ANY OUT-OF-POCKET EXPENSES (INCLUDING
COUNSEL FEES) INCURRED BY SUCH INDEMNIFIED PARTY IN CONNECTION WITH THE
PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT, OR
ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF,
OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT, TO THE EXTENT THAT SUCH INDEMNIFIED PARTY IS NOT
REIMBURSED FOR SUCH BY A SUBSIDIARY BORROWER.

         Section 8.06 Successor Loan Administrator. The Loan Administrator may
resign at any time by giving written notice thereof to the Lender and the
Subsidiary Loan Parties. Upon receipt of notice of any such resignation, the
Loan Administrator shall have the right to appoint a

                                       69
<PAGE>

successor Loan Administrator with, if no Event of Default has occurred and is
continuing, the consent of the Lender and the Subsidiary Loan Parties, which
consent shall not be unreasonably withheld. If no successor Loan Administrator
shall have been so appointed by the Loan Administrator with the consent of the
Lender and the Subsidiary Loan Parties, and shall have accepted such
appointment, within thirty (30) days after the retiring Loan Administrator's
giving of notice of resignation, then the retiring Loan Administrator may, on
behalf of the Lender and the Subsidiary Loan Parties, appoint a successor Loan
Administrator, which shall be, in the case of a successor agent, a commercial
bank organized under the laws of the United States or of any State thereof and
having a combined capital and surplus of at least $500,000,000.00. Upon the
acceptance of any appointment as Loan Administrator by a successor Loan
Administrator, such successor Loan Administrator shall thereupon succeed to and
become vested with all the rights, powers, privileges, and duties of the
retiring Loan Administrator, and the retiring Loan Administrator shall be
discharged from its duties and obligations under this Agreement and the other
Loan Documents. After any retiring Loan Administrator's resignation or removal
hereunder as Loan Administrator, the provisions of this Article VIII shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Loan Administrator under this Agreement and the other Loan Documents.

                                   ARTICLE IX

                                  MISCELLANEOUS

         Section 9.01 Amendments, Etc. No amendment or modification of any
provision of this Agreement or any other Loan Document, shall in any event be
effective unless the same shall be in writing and signed by the Lender, the Loan
Administrator and the Subsidiary Loan Parties. No waiver of any provision hereof
or consent to any departure from any provision hereof by any party hereto shall
be effective unless in writing and signed by the Person to be bound thereby, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.

         Section 9.02 Notices, Communications, Etc.

         (a) Notices Generally. Except as otherwise provided in this Section
9.02, all notices and other communications shall be in writing (including,
without limitation, telecopy or telex) and mailed by certified mail, return
receipt requested, telecopied, hand delivered, or delivered by a nationally
recognized overnight courier, at the address for the appropriate party specified
in Annex I or at such other address as shall be designated by such party in a
written notice to the other parties complying with the requirements of this
Section 9.02. All such notices and communications shall, when so mailed,
telecopied, or hand delivered or delivered by a nationally recognized overnight
courier, be effective when received if mailed, when telecopy transmission is
completed, or when delivered by such messenger or courier, respectively, except
that notices and communications to the Loan Administrator pursuant to Article II
or VIII shall not be effective until received by the Loan Administrator.

-------------------------
      (2) Certain of these provisions will be revised to conform to the EPC
          Credit Agreement.

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<PAGE>

         (b) Email/Internet Communications. Each Subsidiary Loan Party and the
Lender hereby agrees that it will provide to the Loan Administrator all
information, documents and other materials that it is obligated to furnish to
the Loan Administrator pursuant to this Agreement (and any guaranties, security
agreements and other agreements relating thereto), including, without
limitation, all notices, requests, financial statements, financial and other
reports, certificates and other information materials, but excluding any such
communication that (i) relates to a request for a new, or a conversion of an
existing, Loan or Advance (including any election of an interest rate or
interest period relating thereto), (ii) relates to the payment of any principal
or other amount due under this Agreement prior to the scheduled date therefor,
(iii) provides notice of any Default under this Agreement or (iv) is required to
be delivered to satisfy any condition precedent to the effectiveness of this
Agreement and/or any borrowing hereunder (all such non-excluded communications
being referred to herein collectively as "Communications"), by transmitting the
Communications in an electronic/soft medium in a format acceptable to the Loan
Administrator to the following email address: oploanswebadmin@ssmb.com.

In addition, each Subsidiary Loan Party and the Lender agrees to continue to
provide the Communications to the Loan Administrator in the manner specified in
this Agreement but only to the extent requested by the Loan Administrator.

         (c) Disclosure of Communications. Each Subsidiary Loan Party and the
Lender further agrees that the Loan Administrator may make the Communications
available to the EPC Agent and the EPC Lenders by posting the Communications on
"e-Disclosure" (the "Platform"), the Loan Administrator's internet delivery
system that is part of SSB Direct, Global Fixed Income's primary web portal.
Although the primary web portal is secured with a dual firewall and a User
ID/Password Authorization System and the Platform is secured through a single
user per deal authorization method whereby each user may access the Platform
only on a deal-by-deal basis, the Lender and each Subsidiary Loan Party
acknowledge that the distribution of material through an electronic medium is
not necessarily secure and that there are confidentiality and other risks
associated with such distribution.

         (d) NO WARRANTIES. THE COMMUNICATIONS AND THE PLATFORM ARE PROVIDED "AS
IS" AND "AS AVAILABLE". THE CITIGROUP PARTIES (AS DEFINED BELOW) DO NOT WARRANT
THE ACCURACY, ADEQUACY OR COMPLETENESS OF THE COMMUNICATIONS OR THE PLATFORM AND
EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS OR
THE PLATFORM. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER
CODE DEFECTS, IS MADE BY THE CITIGROUP PARTIES IN CONNECTION WITH THE
COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL CNAI OR ANY OF ITS AFFILIATES
OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR
REPRESENTATIVES (COLLECTIVELY, "CITIGROUP PARTIES") HAVE ANY LIABILITY TO ANY
SUBSIDIARY LOAN PARTY OR THE LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF
ANY KIND, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL
OR CONSEQUENTIAL

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<PAGE>

DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT
OF ANY SUBSIDIARY LOAN PARTY'S OR THE LENDER'S OR THE LOAN ADMINISTRATOR'S
TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE
LIABILITY OF ANY CITIGROUP PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY
A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH CITIGROUP
PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

         (e) Indemnification. The Subsidiary Loan Parties and the Lender shall
jointly and severally indemnify and hold harmless each Citigroup Party from and
against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, fees and disbursements of counsel), joint or
several, that may be incurred by or asserted or awarded against any Citigroup
Party (including, without limitation, in connection with any investigation,
litigation or proceeding or the preparation of a defense in connection
therewith), in each case arising out of or in connection with or by reason of,
directly or indirectly, this Agreement or the use of the Platform as
contemplated herein (including, without limitation, any Subsidiary Loan Party's
or the Lender's use of, or inability to use, the Platform), except to the extent
such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
primarily from such Citigroup Party's gross negligence or willful misconduct. In
the case of an investigation, litigation or other proceeding to which the
indemnity in this paragraph applies, such indemnity shall be effective (x)
whether or not such investigation, litigation or proceeding is brought by any of
the Subsidiary Loan Parties or the Lender, or any of their respective directors,
security holders or creditors, or by a Citigroup Party or any other Person, and
(y) whether or not a Citigroup Party is a party to such investigation,
litigation or proceeding.

         (f) Effectiveness of Communications to Loan Administrator. The Loan
Administrator agrees that the receipt of the Communications by the Loan
Administrator at its e-mail address set forth above shall constitute effective
delivery of the Communications to the Loan Administrator for purposes of this
Agreement (and any guaranties, security agreements and other agreements relating
thereto). Nothing herein shall prejudice the right of the Loan Administrator to
give any notice or other communication pursuant to this Agreement (or any
guaranty, security agreement or other agreement relating thereto) in any other
manner specified in this Agreement (or any such guaranty, security agreement or
other agreement).

         Section 9.03 No Waiver; Remedies. No failure on the part of the Lender
or the Loan Administrator 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 such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

         Section 9.04 Costs and Expenses. The Subsidiary Loan Parties agree to
pay on demand (a) all reasonable out-of-pocket costs and expenses of the Loan
Administrator in connection with the preparation, execution, delivery,
administration, modification, and amendment of this Agreement and the other Loan
Documents including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Loan Administrator with respect to advising the Loan

                                       72
<PAGE>

Administrator as to its rights and responsibilities under this Agreement, and
(b) all out-of-pocket costs and expenses, if any, of the Loan Administrator and
the Lender (including, without limitation, reasonable counsel fees and expenses
of the Loan Administrator and the Lender) in connection with the enforcement
(whether through negotiations, legal proceedings, or otherwise) of this
Agreement and the other Loan Documents.

         Section 9.05 Binding Effect. This Agreement shall become effective when
it shall have been executed by the Subsidiary Loan Parties, the Lender and the
Loan Administrator, and thereafter shall be binding upon and inure to the
benefit of each Subsidiary Loan Party, the Lender, the Loan Administrator and
their respective successors and assigns, except that no Subsidiary Loan Party
shall have the right to assign its rights or delegate its duties under this
Agreement or any other Loan Document, or any interest therein, without the prior
written consent of the Lender and the Loan Administrator.

         Section 9.06 Collateral Assignment by the Lender. Each of the
Subsidiary Loan Parties acknowledges and agrees that (a) all of the Lender's
rights under this Agreement and the other Loan Documents are being collaterally
assigned by the Lender to the EPC Agent to secure the EPC Obligations, and (b)
at any time the EPC Agent may do so in accordance with the documents governing
the EPC Credit Agreement or, if applicable, the EPC Refinancing Facility, the
EPC Agent may foreclose upon or otherwise exercise any such rights that have
been collaterally assigned by the Lender and any Person acquiring such rights in
any foreclosure may thereafter act in all respects as the Lender hereunder and
under the other Loan Documents (subject to the provisions of the Loan
Documents).

         Section 9.07 INDEMNIFICATION. (A) EACH OF THE SUBSIDIARY LOAN PARTIES
SHALL INDEMNIFY THE LOAN ADMINISTRATOR, THE COLLATERAL AGENT, THE LENDER AND
EACH AFFILIATE THEREOF AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS FROM, AND DISCHARGE, RELEASE, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY
AND ALL LOSSES, LIABILITIES, CLAIMS, OR DAMAGES WHICH MAY BE IMPOSED ON,
INCURRED BY, OR ASSERTED AGAINST THEM IN ANY WAY RELATING TO OR ARISING OUT OF
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACTION TAKEN OR OMITTED BY
THEM UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (INCLUDING ANY SUCH LOSSES,
LIABILITIES, CLAIMS, DAMAGES, OR EXPENSE INCURRED BY REASON OF THE PERSON BEING
INDEMNIFIED'S OWN NEGLIGENCE OR STRICT LIABILITY) AND INCLUDING WITHOUT
LIMITATION ENVIRONMENTAL LIABILITIES, BUT EXCLUDING ANY SUCH LOSSES,
LIABILITIES, CLAIMS, DAMAGES, OR EXPENSES INCURRED BY REASON OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED.

         (B) IN ADDITION, THE SUBSIDIARY BORROWERS SHALL INDEMNIFY THE LENDER
FOR ANY OBLIGATIONS IT MAY HAVE UNDER THE EPC CREDIT AGREEMENT OR ANY EPC
REFINANCING FACILITY TO THE EXTENT SUCH OBLIGATIONS ARE INCURRED AS A RESULT OF
ANY DEFAULT UNDER THIS

                                       73
<PAGE>

AGREEMENT OR IS OTHERWISE PART OF EPC'S COST OF FUNDS TO MAINTAIN THE LOANS.

         Section 9.08 Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.

         Section 9.09 Survival of Representations, Etc. All representations and
warranties contained in this Agreement or made in writing by or on behalf of any
of the Subsidiary Loan Parties in connection herewith shall survive the
execution and delivery of this Agreement and the Loan Documents, the making of
the Loans and any investigation made by or on behalf of the Lender or the Loan
Administrator, none of which investigations shall diminish the Lender's right to
rely on such representations and warranties. All obligations of the Subsidiary
Loan Parties provided for in Sections 2.11, 2.12(c), 9.02(e), 9.04, and 9.07 and
all of the obligations of the Lender in Section 8.05 and 9.02(e) shall survive
any termination of this Agreement and repayment in full of the Guaranteed
Obligations.

         Section 9.10 Severability. In case one or more provisions of this
Agreement or the other Loan Documents shall be invalid, illegal or unenforceable
in any respect under any applicable law, the validity, legality, and
enforceability of the remaining provisions contained herein or therein shall not
be affected or impaired thereby.

         Section 9.11 Governing Law. THIS AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS SPECIFICALLY PROVIDED OTHERWISE IN
THE SECURITY INSTRUMENTS.

         Section 9.12 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY LAW, THE
SUBSIDIARY LOAN PARTIES, THE LENDER, AND THE LOAN ADMINISTRATOR HEREBY
ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED BY AND HAVE CONSULTED WITH COUNSEL
OF THEIR CHOICE, AND HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN RESPECT OF ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

         Section 9.13 Consent to Jurisdiction. (a) Each of the Subsidiary Loan
Parties and the Lender, on behalf of itself and its successors and assigns and
in respect of its property, hereby irrevocably agrees, to the fullest extent it
may do so under law, in the event it files any action, one effect of which could
be to halt, enjoin, impair or hinder the enforcement of the parties' obligations
hereunder or under the other Loan Documents, or proceedings to enforce
collection on those obligations, including, but not limited to, any proceeding
under the United States Bankruptcy Code, to file such action, and hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined, in the United States District Court for the Southern
District of New York sitting in New York City or in such District's Bankruptcy

                                       74
<PAGE>

Court, as applicable, assuming venue in that District would be proper, or in the
courts of the State of New York, First Department sitting in New York County.
Each of the Subsidiary Loan Parties and the Lender, on behalf of itself and its
successors and assigns, hereby irrevocably waives, to the fullest extent it may
do so under law, the defense of an inconvenient forum to such action or
proceeding. To the fullest extent permitted by applicable law, each of the
Subsidiary Loan Parties and the Lender, on behalf of itself and its successors
and assigns, hereby irrevocably agrees to elect in favor of filing in or
transferring to the United States District Court for the Southern District of
New York, assuming that venue in such district would otherwise be proper, to the
extent it has any control over the choice of a district for the filing or
transfer of a case under the United States Bankruptcy Code for any of its
Affiliates as debtor. In the event an Affiliate of the Subsidiary Loan Parties
or the Lender or any of their respective Affiliates is the subject of a separate
case under the United States Bankruptcy Code, in a court other than the
Bankruptcy Court for the Southern District of New York, each of the Subsidiary
Loan Parties and the Lender, on behalf of itself and its successors and assigns,
hereby irrevocably agrees to the fullest extent permitted by applicable law to
seek a transfer to the latter district, assuming venue in such district would
otherwise be proper. In the event that a bankruptcy court enters a motion to
consolidate multiple cases filed by any Subsidiary Loan Party or the Lender or
any of their respective Affiliates, each Subsidiary Loan Party and the Lender
also agrees to the fullest extent permitted by applicable law to seek a transfer
of the consolidated case to the latter district, assuming venue in such district
would otherwise be proper. The execution of this Agreement is expressly
conditioned on the willingness and intention of the Subsidiary Loan Parties and
the Lender to enforce the provisions of this Section 9.13. In addition, each
Subsidiary Loan Party and the Lender warrants that it is subject to no
preexisting obligations that would interfere with its adherence to the foregoing
provisions of this Section 9.13 and additionally warrants that it will not enter
into other agreements that in any way compromise its ability to adhere to these
provisions without the express written consent of the Lender, the Loan
Administrator, and the Collateral Agent.

         (b) Any legal action or proceeding with respect to this Agreement or
any other Loan Document may be brought in the courts of the State of New York
located in the County of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Agreement, each
Subsidiary Loan Party and the Lender hereby irrevocably accepts for itself and
in respect of its property, generally and unconditionally, the jurisdiction of
the aforesaid courts. Nothing herein shall affect the right of the Lender, the
Loan Administrator, or the Collateral Agent to bring any legal action or
proceeding with respect to this Agreement or any other Loan Document against a
Subsidiary Loan Party or the Lender in the courts of any other jurisdiction. To
the fullest extent permitted by applicable law, each Subsidiary Loan Party and
the Lender hereby irrevocably waives any objection that it may now or hereafter
have to the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement or any other Loan Document
brought in the courts referred to in subsection (a) of this Section 9.13 and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.

         (c) Each Subsidiary Loan Party and the Lender hereby irrevocably
appoints CT Corporation System with offices on the date hereof at 111 Eighth
Avenue, 13th Floor, New York, NY 10011 (or any successor, provided that such
successor shall be located in New York

                                       75
<PAGE>

City and engaged in the business of acting as a process agent and shall be a
company of national recognition, and provided further that notice of such
successor agent shall be promptly given to the Lender, the Loan Administrator
and the Collateral Agent by such Subsidiary Loan Party or the Lender, as
applicable, the "Process Agent") as its designee, appointee and agent to
receive, accept and acknowledge on its behalf and its property service of copies
of the summons and complaint and any other process that may be served in any
action or proceeding under subsection (a) or (b) of this Section 9.13. Such
service may be made by delivering a copy of such process to any Subsidiary Loan
Party or the Lender, as applicable, in care of the Process Agent at the Process
Agent's address and each such Subsidiary Loan Party and the Lender hereby
authorizes and directs the Process Agent to accept such service on its behalf.
As an alternative method of service, each Subsidiary Loan Party and the Lender
also irrevocably consents to the service of any and all process in any such
action or proceeding by the delivering of copies of such process to such
Subsidiary Loan Party and the Lender at its address specified in Section 9.02
hereof. To the fullest extent permitted by applicable law, each Subsidiary Loan
Party and the Lender agrees that a non-appealable final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.

         Section 9.14 Confidentiality. Subject to Section 9.02(b), the Loan
Administrator agrees that it will use its commercially reasonable best efforts
not to disclose, without the prior consent of the Lender or any Subsidiary Loan
Party (other than to its, or its Affiliate's, employees, auditors, accountants,
counsel or other representatives, whether existing at the date of this Agreement
or any subsequent time), any information with respect to the Lender or such
Subsidiary Loan Party which is furnished pursuant to this Agreement, provided
that the Loan Administrator 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 United
States federal regulatory body having or claiming to have jurisdiction over such
Person or to the Federal Reserve Board 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 Person, (v) to any Person, without limitation of any kind,
related to the U.S. tax treatment and U.S. tax structure of the transaction and
all materials of any kind (including opinions or other tax analysis) provided to
any party hereto related to such U.S. tax treatment or U.S. tax structure, or
(vi) to any prospective assignee or participant in connection with any permitted
assignment of any rights or obligations of the Lender hereunder, or any sale of
any participation therein, by the Lender (including without limitation any
assignment related to the exercise of rights by the EPC Agent in connection with
the collateral assignment of the Lender's rights contemplated by Section 9.06),
if such prospective assignee or participant, as the case may be, executes an
agreement with such Subsidiary Loan Party containing provisions substantially
similar to those contained in this Section 9.14; provided, however, that each
Subsidiary Loan Party acknowledges that the Loan Administrator has disclosed and
may continue to disclose such information as the Loan Administrator, in its sole
discretion, determines is appropriate to the EPC Agent and any EPC Lender from
time to time; provided, further, that this Section 9.14 shall not limit or
otherwise restrict EPC's right to disclose any information about the Lender or
any Subsidiary Loan Party.

                                       76
<PAGE>

         Section 9.15 ENTIRE AGREEMENT. THIS AGREEMENT AND THE LOAN DOCUMENTS,
AS DEFINED IN THIS AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES
HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
                            SIGNATURE PAGES FOLLOW.]

                                       77
<PAGE>

         EXECUTED as of the date first above written.

                             SUBSIDIARY BORROWERS:

                             EL PASO PRODUCTION COMPANY

                             By: /s/ John Hopper
                                 ---------------------------------
                                     Name: John Hopper
                                     Title: Vice President

                             EL PASO PRODUCTION GOM INC.

                             By: /s/ John Hopper
                                 ---------------------------------
                                     Name: John Hopper
                                     Title: Vice President

                             VERMEJO MINERALS CORPORATION

                             By: /s/ John Hopper
                                 ---------------------------------
                                     Name: John Hopper
                                     Title: Vice President

                             EL PASO ENERGY RATON, L.L.C.

                             By: /s/ John Hopper
                                 ---------------------------------
                                     Name: John Hopper
                                     Title: Vice President

                                       1
<PAGE>

                             PARENT GUARANTORS:

                             EL PASO PRODUCTION HOLDING COMPANY

                             By: /s/ John Hopper
                                 ---------------------------------
                                     Name: John Hopper
                                     Title: Vice President

                             SABINE RIVER INVESTORS VI, L.L.C.

                             By: /s/ John Hopper
                                 ---------------------------------
                                     Name: John Hopper
                                     Title: Responsible Manager

                             SABINE RIVER INVESTORS IX, L.L.C.

                             By: /s/ John Hopper
                                 ---------------------------------
                                     Name: John Hopper
                                     Title: Responsible Manager

                             LENDER:

                             EL PASO CORPORATION

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

                                       2
<PAGE>

                             LOAN ADMINISTRATOR:

                             CITICORP NORTH AMERICA, INC.
                             as Loan Administrator

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

                                       3
<PAGE>

                                     ANNEX I
                                       TO
                                CREDIT AGREEMENT

                               NOTICE INFORMATION

--------------------------- -----------------------------------
SUBSIDIARY BORROWERS:       EL PASO PRODUCTION COMPANY
--------------------        1001 Louisiana
                            Houston, Texas   77002
                            Attention :  Treasurer
                            Telecopy:  (713) 420-2708
                            Phone:  (713) 420-2490

                            EL PASO PRODUCTION GOM INC.
                            1001 Louisiana
                            Houston, Texas   77002
                            Attention :  Treasurer
                            Telecopy:  (713) 420-2708
                            Phone:  (713) 420-2490

                            VERMEJO MINERALS CORPORATION
                            1001 Louisiana
                            Houston, Texas   77002
                            Attention :  Treasurer
                            Telecopy:  (713) 420-2708
                            Phone:  (713) 420-2490

                            EL PASO ENERGY RATON, L.L.C.
                            1001 Louisiana
                            Houston, Texas   77002
                            Attention :  Treasurer
                            Telecopy:  (713) 420-2708
                            Phone:  (713) 420-2490

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

<PAGE>

---------------------------- ------------------------------------------------
PARENT GUARANTORS:           EL PASO PRODUCTION HOLDING COMPANY
------------------           1001 Louisiana
                             Houston, Texas   77002
                             Attention :  Treasurer
                             Telecopy:  (713) 420-2708
                             Phone:  (713) 420-2490

                             SABINE RIVER INVESTORS VI, L.L.C.
                             c/o Wilmington Trust Company
                             Rodney Square North
                             1100 North Market Street
                             Wilmington, DE 19890
                             Attention: Corporate Trust Administration
                             Telecopy:  (302) 636-4145
                             Phone:  (302) 636-6457/(302) 636-6453

                             SABINE RIVER INVESTORS IX, L.L.C.
                             c/o Wilmington Trust Company
                             Rodney Square North
                             1100 North Market Street
                             Wilmington, DE 19890
                             Attention: Patty Zink/Jim Hanley
                             Corporate Trust Administration
                             Telecopy:  (302) 636-4145
                             Phone:  (302) 636-6457/(302) 6453

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

<PAGE>

---------------------------- ------------------------------------------------
LENDER :                     EL PASO CORPORATION
-------                      1001 Louisiana
                             Houston, Texas   77002
                             Attention:  Chief Financial Officer
                             Telecopy:  (713) 420-4449
                             Phone:  (713) 420-3040

---------------------------- ------------------------------------------------
LOAN ADMINISTRATOR:          CITICORP NORTH AMERICA, INC.
                             1200 Smith Street
                             Houston, Texas 77002
                             Attention: Carol Rooney
                             Telecopy: (713) 654-2849
                             Phone: (713) 654-3590

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

<PAGE>

                                    ANNEX II

                         INITIAL BORROWING BASE AMOUNTS

<TABLE>
<S>                                <C>
El Paso Production Company          $741,178,117

El Paso Production GOM Inc.         $257,000,000

Vermejo Minerals Corporation        $128,821,883

El Paso Energy Raton, L.L.C.        $ 73,000,000
</TABLE>

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