Document:

<PAGE>

                                                                 EXHIBIT 10.BB.2

                           THIRD AMENDED AND RESTATED
                       LIMITED LIABILITY COMPANY AGREEMENT
                                       OF
                           MESQUITE INVESTORS, L.L.C.

<PAGE>

                           MESQUITE INVESTORS, L.L.C.

                           THIRD AMENDED AND RESTATED

                       LIMITED LIABILITY COMPANY AGREEMENT

         THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of
Mesquite Investors, L.L.C., a Delaware limited liability company ("MESQUITE")
dated as of March 27, 2000, by Chaparral Investors, L.L.C., a Delaware limited
liability company ("CHAPARRAL" or the "MEMBER") and Mesquite.

                             PRELIMINARY STATEMENTS

         Mesquite was formed as a limited liability company under and pursuant
to the provisions of the LLC Act, pursuant to the filing of the Certificate (as
hereinafter defined) on July 28, 1999, and the execution of the Limited
Liability Company Agreement dated as of July 28, 1999 (the "ORIGINAL
AGREEMENT"), as amended and restated by (i) that certain First Amended and
Restated Agreement of Limited Liability Company dated as of August 12, 1999,
(ii) the First Amendment dated as of August 19, 1999 and (iii) that certain
Second Amended and Restated Agreement of Limited Liability Company dated as of
December 28, 1999 (collectively, the "EXISTING AGREEMENT").

         Prior to the Closing Date, Chaparral has transferred to Mesquite
certain Qualified Energy Assets and the Contingent Debt Instrument. On the
Closing Date, Chaparral will make a cash contribution to Mesquite in the amount
of $796,013,202.43, which will be used by Mesquite to (i) repay $664,659,193.26
in outstanding indebtedness under the Mesquite Credit Agreement and (ii) make El
Paso Loans in the amount of $131,354,009.17.

         SECTION 1.  DEFINITIONS.

         (a) As used in this Mesquite LLC Agreement, capitalized terms defined
in the preamble and other Sections of this Mesquite LLC Agreement shall have the
meanings set forth therein, and capitalized terms that are defined in Section
1.01 of Annex A to the Chaparral LLC Agreement shall have the meanings therefor
set forth in such Annex A.

         (b) The following terms shall have the following meanings when used
herein:

         "CERTIFICATE" means the certificate of formation filed with the
Secretary of State of the State of Delaware on July 28, 1999, to form Mesquite
pursuant to the LLC Act, as originally executed by Kelly Jameson (as an
authorized person within the meaning of the LLC Act) and as amended, modified,
supplemented or restated from time to time, as the context requires.

         "CHAPARRAL LLC AGREEMENT" means the Fourth Amended and Restated Limited
Liability Company Agreement of Chaparral, dated as of March 27, 2000, as
amended, supplemented, amended and restated or otherwise modified from time to
time.

         "DISSOLUTION EVENTS" is defined in Section 17.

         "EXISTING AGREEMENT" is defined in the preamble.

<PAGE>

         "MEMBERSHIP INTEREST" or "INTEREST" means the entire ownership interest
in Mesquite and the right to receive regular and liquidating distributions to
the extent provided in this Mesquite LLC Agreement, the right to participate in
the management of the business and affairs of Mesquite as set forth herein,
including the right to vote on, consent to, or otherwise participate in any
decision or action of or by Mesquite granted pursuant to this Mesquite LLC
Agreement and the LLC Act. Such Interest shall be evidenced by the certificate
issued pursuant to Section 9 hereof.

         "MESQUITE CONFIDENTIAL INFORMATION" means available financial
(including, but not limited to, budgets, forecasts, pro forma or any associated
financial or other spreadsheet models) and other information concerning the
business and/or operations and/or financial and/or other condition or prospects
of Mesquite and its subsidiaries and other affiliates, including, but not
limited to, each Project Company, and any proposed Project Company, and its or
their respective subsidiaries and other affiliates ("MESQUITE SOURCES") that is
subject to confidentiality agreements or other contracts or terms otherwise
restricting disclosure of information applicable to the business and/or
operations and/or financial and/or other condition or prospects of Mesquite
Sources.

         "ORIGINAL AGREEMENT" is defined in the preamble.

         SECTION 2. RULES OF CONSTRUCTION. This Mesquite LLC Agreement and the
definitions referred to in Section 1(a) shall be governed by, and construed in
accordance with, the rules of construction set forth in Section 1.02 of Annex A
to the Chaparral LLC Agreement.

         SECTION 3. CONTINUATION. Chaparral hereby agrees to continue Mesquite
as a limited liability company under and pursuant to the provisions of the LLC
Act and upon the terms and conditions set forth in this Mesquite LLC Agreement.
Chaparral agrees that the Existing Agreement is hereby amended and restated in
its entirety as set forth in, and is hereby superseded in its entirety by, this
Mesquite LLC Agreement.

         SECTION 4. NAME. The name of Mesquite shall continue to be "Mesquite
Investors, L.L.C." and all business of Mesquite shall be conducted in such name.
Chaparral may change the name of Mesquite at any time.

         SECTION 5. PURPOSE; POWERS. The purposes of Mesquite are limited to:
(a) acquiring, owning, holding, forming, selling, leasing, transferring,
exchanging, operating and managing, making investments in, participating in,
disposing of, and exercising rights with respect to, Mesquite Permitted Assets;
(b) engaging directly in, or entering into any agreement or other Contractual
Obligation, or forming any Person, to engage directly or indirectly in, any
business activity that is directly or indirectly related to the activities
described in clause (a) above; (c) engaging in such additional business
activities as are permitted under this Mesquite LLC Agreement or otherwise as
Chaparral, in accordance with the Chaparral LLC Agreement, may direct in
writing; (d) entering into any agreement or other Contractual Obligation, or
forming any Person, to engage directly or indirectly in any business activity
that is directly or indirectly related to the activities described in clause (c)
above; (e) entering into and performing its obligations under the Transaction
Documents to which it is a party; (f) incurring Mesquite Permitted Financial
Obligations; and (g) engaging in activities related or incidental to the
foregoing. Mesquite shall have the power to do any and all acts necessary,
appropriate, proper, advisable, incidental or convenient to or in furtherance of
the purposes of Mesquite set forth in this Section 5.

         SECTION 6. PRINCIPAL PLACE OF BUSINESS; REGISTERED OFFICE. The
principal place of business of Mesquite shall continue to be located at c/o
Wilmington Trust Company, Rodney Square North, 1100 North Market Street, New
Castle County, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration, and Mesquite's business shall be conducted from such place or
places as Chaparral

                                       2
<PAGE>

may designate from time to time. The registered office of Mesquite in the State
of Delaware shall be located at c/o Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, New Castle County, Wilmington, Delaware
19890-0001, Attention: Corporate Trust Administration. Chaparral may from time
to time change the registered office of Mesquite by an amendment to the
Certificate of Mesquite.

         SECTION 7. REGISTERED AGENT. The name and address of the registered
agent of Mesquite for service of process on Mesquite in the State of Delaware
shall be c/o Wilmington Trust Company, Rodney Square North, 1100 North Market
Street, New Castle County, Wilmington, Delaware 19890-0001, Attention: Corporate
Trust Administration. Chaparral may from time to time change the registered
agent by an amendment to the Certificate of Mesquite.

         SECTION 8. TERM. The term of Mesquite commenced on the date the
Certificate was filed in the Office of the Secretary of State of the State of
Delaware in accordance with the LLC Act, and shall continue until the winding up
and liquidation of Mesquite and the completion of its business following a
Dissolution Event as provided in Section 17 hereof.

         SECTION 9. MEMBER. At no time may Mesquite have more than one member.
Chaparral shall be the sole member of Mesquite. A certificate in the form
attached as Exhibit A hereto shall be issued to Chaparral on the Closing Date to
evidence its interest as the sole member of Mesquite, and Chaparral, as sole
member of Mesquite, is hereby authorized and directed to execute such
certificate. Each of the parties hereto hereby acknowledges and agrees that
Chaparral's interest in Mesquite shall constitute a "security" governed by
Article 8 of the Uniform Commercial Code as in effect in any applicable
jurisdiction.

         SECTION 10. CAPITAL CONTRIBUTIONS. Chaparral may contribute cash or
other property to Mesquite as it shall decide, from time to time, provided that
any such contribution is permissible under Section 5 hereof.

         SECTION 11. TAX CHARACTERIZATION AND RETURNS. For so long as Chaparral
is the sole member of Mesquite, it is the intention of Chaparral that Mesquite
be disregarded for federal and all relevant state tax purposes and that the
activities of Mesquite be deemed to be the activities of Chaparral for such
purposes. Chaparral is hereby authorized to file any necessary elections with
any tax authorities.

         SECTION 12. MANAGEMENT. The management of Mesquite shall be vested
solely in Chaparral, which shall have all powers to control and manage the
business and affairs of Mesquite and may exercise all powers of Mesquite.
Chaparral and Mesquite are hereby authorized and directed to enter into the
Management Agreement, pursuant to which Chaparral will delegate certain of its
managerial responsibilities hereunder, as more specifically set forth in the
Management Agreement.

         SECTION 13. RESTRICTIONS ON AUTHORITY OF THE MEMBER AND ACTIVITIES OF
MESQUITE.

         (a) Indebtedness, Etc. Chaparral shall not cause or permit Mesquite to,
nor shall Mesquite, incur, assume or obligate itself by contract for any
Permitted Financial Obligations owing by Mesquite other than Mesquite Permitted
Financial Obligations; provided, further, that Chaparral shall not cause or
permit Mesquite to, nor shall Mesquite, enter into any Mesquite Permitted
Financial Obligations that impose greater restrictions (on a pro rata basis) on
(i) Mesquite's ability to Distribute to Chaparral funds sufficient to pay when
due (x) the Class A Member's Cumulative Priority Return or (y) any Distribution
required to be made pursuant to Section 5.1(c) of the Chaparral LLC Agreement
than (ii) are applicable to Mesquite's ability to pay the Management Fee.

                                       3
<PAGE>

         (b) Mergers. Chaparral shall not cause or permit Mesquite to, nor shall
Mesquite, legally merge or consolidate with or into any Person.

         (c) Business Activities. Chaparral shall not cause or permit Mesquite
to, nor shall Mesquite, engage in any activities other than those described in
Section 5.

         (d) Voluntary Bankruptcy. Chaparral shall not cause or permit Mesquite,
nor shall Mesquite, commence any Voluntary Bankruptcy of Mesquite.

         SECTION 14. DISTRIBUTIONS. Chaparral may cause Mesquite to distribute
any cash held by it or any other Mesquite Property that is neither reasonably
necessary for the operation of Mesquite nor in violation of Sections 18-607 or
18-804 of the LLC Act to Chaparral at any time.

         SECTION 15. TRANSFER. Chaparral shall not Dispose of all or any part of
its Membership Interest except as permitted under the Chaparral LLC Agreement.

         SECTION 16. DISTRIBUTIONS UPON DISSOLUTION. Upon the occurrence of a
Dissolution Event, Chaparral shall be entitled to receive, after paying or
making reasonable provision for all of Mesquite's creditors to the extent
required by Section 18-804 of the LLC Act, the remaining Mesquite Property.

         SECTION 17. DISSOLUTION. Mesquite shall dissolve, and commence winding
up and liquidating upon the first to occur of any of the following
(collectively, "DISSOLUTION EVENTS"):

                  (a) Chaparral shall have given its consent for Mesquite to
         dissolve;

                  (b) a judicial dissolution of Mesquite pursuant to Section
         18-802 of the LLC Act; and

                  (c) such time as there are no members of Mesquite (provided,
         that if within ninety days following any event terminating the
         continued membership of Chaparral, the Personal Representative (as
         defined in the LLC Act) of Chaparral agrees in writing to continue
         Mesquite and to admit itself or some other Person as a member of
         Mesquite effective as of the date of the occurrence of the event that
         terminated the continued membership of Chaparral, then Mesquite shall
         not be dissolved and its affairs shall not be wound up).

         Anything in this Mesquite LLC Agreement to the contrary
notwithstanding, for so long as any Obligation of Mesquite is outstanding: (i)
the "Bankruptcy" (as defined in the LLC Act) of Chaparral shall not cause
Chaparral to cease to be a member of Mesquite and upon the occurrence of such
Bankruptcy, the business of Mesquite shall continue without dissolution; (ii)
Chaparral waives any right that it might have under Section 18-801(b) of the LLC
Act to agree in writing to dissolve Mesquite upon the Bankruptcy of Chaparral or
the occurrence of any event that causes Chaparral to cease to be a member of
Mesquite and (iii) the existence of Mesquite as a separate legal entity shall
continue until the cancellation of its Certificate as provided in the LLC Act.

         SECTION 18. WITHDRAWAL. Chaparral shall not withdraw from Mesquite in
respect of its Membership Interest.

         SECTION 19. TRANSACTIONS WITH AFFILIATES. All transactions between any
of Limestone, El Paso, El Paso Chaparral, or El Paso Chaparral Holding Company
(or any of their respective Affiliates), on the one hand, and Chaparral on
behalf of Mesquite, on the other hand, shall comply with the provisions of
Section 6.5(a)(ii) of the Chaparral LLC Agreement.

                                       4
<PAGE>

         SECTION 20. CONFIDENTIALITY. Chaparral hereby agrees that it is and
will be bound by the terms and conditions of any Applicable Law or Contractual
Obligation respecting confidentiality binding upon Mesquite, any Subsidiary of
Mesquite or any Mesquite Minority Owned QEC with respect to Mesquite
Confidential Information.

         SECTION 21. SEPARATENESS COVENANTS. Mesquite covenants that:

         (a) It shall: (i) maintain and prepare separate financial reports and
financial statements, showing its assets and liabilities separate and apart from
those of any other Person, and will not have its assets listed on the financial
statement of any other Person; provided, however, that its assets may be
included on a consolidated financial statement of its parent if: (A) such
consolidated financial statement shall contain a footnote to the effect that
Mesquite's assets are owned by Mesquite, and (B) such assets shall be listed on
Mesquite's own balance sheet; (ii) maintain its books, records and bank accounts
separate from those of its Affiliates, any constituent party and any other
Person; and (iii) not permit any Affiliate or constituent party independent
access to its bank accounts (other than access by Chaparral in its capacity as
sole member of Mesquite).

         (b) It shall not commingle or pool any of the funds and other assets of
Mesquite with those of any Affiliate or constituent party or any other Person,
and it shall hold all of its assets in its own name.

         (c) It has done, or caused to be done, and shall do, all things
necessary to observe all Delaware limited liability company formalities and
other organizational formalities, and preserve its existence.

         (d) It does not, and shall not, guarantee, become obligated for, or
hold itself or its credit out to be responsible for or available to satisfy, the
debts or obligations of any other Person or the decisions or actions respecting
the daily business or affairs of any other Person (except Mesquite Permitted
Financial Obligations and except as otherwise provided for in or permitted under
the Transaction Documents).

         (e) It shall not acquire Equity Interests of any Affiliate or of
Chaparral (other than Mesquite Permitted Assets and except as otherwise provided
for in or permitted under this Mesquite LLC Agreement or the other Transaction
Documents). It shall not buy or hold any evidence of indebtedness for borrowed
money issued by, or make any loan or advance to, any other Person (other than
any such evidence of indebtedness for borrowed money, loan or advance
constituting Mesquite Permitted Assets, and except as otherwise provided for in
or permitted under this Mesquite LLC Agreement or the other Transaction
Documents).

         (f) Mesquite shall not be consensually merged or legally consolidated
with any other Person (other than certain Affiliates for financial reporting and
federal tax purposes).

         (g) Each bank account of Mesquite shall be separate from the bank
accounts of any other Person.

         (h) Mesquite shall not permit or suffer to exist any Liens on its
assets other than (i) Permitted Liens and (ii) Liens securing any Mesquite
Permitted Financial Obligations.

         SECTION 22. LIMITED LIABILITY. Chaparral shall have no liability for
Mesquite Permitted Financial Obligations or any other Obligations of Mesquite
except to the extent expressly required by the LLC Act.

                                       5
<PAGE>

         SECTION 23. AMENDMENT. This Mesquite LLC Agreement may be amended only
in a writing signed by Chaparral and subject to the terms and conditions of the
Chaparral LLC Agreement.

         SECTION 24. ENFORCEABILITY OF AGREEMENT. Notwithstanding any other
provision of this Mesquite LLC Agreement to the contrary, Chaparral hereby
agrees that this Mesquite LLC Agreement constitutes a legal, valid and binding
agreement of Chaparral.

         SECTION 25. GOVERNING LAW. THE LAWS OF THE STATE OF DELAWARE (WITHOUT
REGARD TO CONFLICT OF LAW PRINCIPLES) SHALL GOVERN THE VALIDITY OF THIS MESQUITE
LLC AGREEMENT, THE CONSTRUCTION OF ITS TERMS, AND THE INTERPRETATION OF THE
RIGHTS AND DUTIES OF THE MEMBER OR MEMBERS OF MESQUITE.

         SECTION 26. SEVERABILITY. Any provision of this Mesquite LLC Agreement
that is prohibited by or unenforceable in any relevant jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions thereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

         SECTION 27. CONSENT TO JURISDICTION PROVISION. Chaparral hereby (i)
irrevocably submits to the non-exclusive jurisdiction of any Delaware State
court or Federal court sitting in Wilmington, Delaware in any action arising out
of this Mesquite LLC Agreement, (ii) agrees that all claims in such action may
be decided in such court, (iii) waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum, and (iv) consents to the service of
process by mail. A final judgment in any such action shall be conclusive and may
be enforced in other jurisdictions. Nothing herein shall affect the right of any
party to serve legal process in any manner permitted by law or affect its right
to bring any action in any other court.

                                       6
<PAGE>

         IN WITNESS WHEREOF, the undersigned have caused this Third Amended and
Restated Limited Liability Company Agreement to be executed as of the day and
year first above written.

                                    MESQUITE INVESTORS, L.L.C.

                                    By:  Chaparral Investors, L.L.C.,
                                           its sole member

                                         By: El Paso Chaparral Investor, L.L.C.,
                                              its managing member

                                             By: El Paso Chaparral Holding
                                                  Company, its sole member

                                             By:  /s/ John L. Harrison
                                                  -----------------------------
                                                  Name:  John L. Harrison
                                                  Title: Vice President

                             Mesquite LLC Agreement
<PAGE>

                                    CHAPARRAL INVESTORS, L.L.C.

                                    By: El Paso Chaparral Investor, L.L.C.,
                                        its managing member

                                        By: El Paso Chaparral Holding Company,
                                            its sole member

                                            By:      /s/ John L. Harrison
                                                --------------------------------
                                                Name:  John L. Harrison
                                                Title: Vice President

                             Mesquite LLC Agreement<PAGE>
                                                                 EXHIBIT 10.BB.3

                    AMENDED AND RESTATED MANAGEMENT AGREEMENT

                  This AMENDED AND RESTATED MANAGEMENT AGREEMENT (the
"Agreement") is made as of March 27, 2000 (the "Closing Date"), among EL PASO
CHAPARRAL MANAGEMENT, L.P., a Delaware limited partnership (the "Management
Company"), CHAPARRAL INVESTORS, L.L.C., a Delaware limited liability company,
MESQUITE INVESTORS, L.L.C., a Delaware limited liability company, and EL PASO
CHAPARRAL INVESTOR, L.L.C., a Delaware limited liability company. Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in Annex A to the Participation Agreement dated as of
March 15, 2000 among El Paso, Limestone, the Co-Issuer, DLJ Inc., El Paso
Chaparral Holding, El Paso Chaparral Holding II, the Management Company, El Paso
Chaparral, Chaparral, Mesquite, the Share Trust, the Overfund Trust, Electron,
Wilmington Trust Company and United States Trust Company of New York (each as
defined therein).

                                    RECITALS

                  A. As of December 28, 1999, the Management Company, Chaparral,
Mesquite and El Paso Chaparral entered into a management agreement (the
"Original Management Agreement").

                  B. The Management Company, Chaparral, Mesquite and El Paso
Chaparral desire to amend and restate the Original Management Agreement in its
entirety.

                  C. Mesquite has express authority under the Mesquite LLC
Agreement, and Chaparral has express authority under the Chaparral LLC
Agreement, to enter into this Agreement.

                  D. The Managing Member is entering into this Agreement in its
capacity as managing member of Chaparral for the purpose of delegating
management authority pursuant to Section 6.1 of the Chaparral LLC Agreement, and
Chaparral is entering into this Agreement in its capacity as sole member of
Mesquite for the purpose of delegating management authority pursuant to Section
12 of the Mesquite LLC Agreement and for the other purposes set forth herein.

                  E. Chaparral and Mesquite (together, the "Companies") desire
to continue to use the Management Company's administrative and management
resources, and to that end the Companies desire to employ, hire or otherwise
retain the administrative and management services of the Management Company (and
each of the Managing Member and Chaparral, in its capacity as sole member of
Mesquite, desires to delegate management authority to the Management Company)
for purposes of managing the functions of the business of the Companies, as more
fully described herein.

<PAGE>

                                    AGREEMENT

                  NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual covenants and agreements set forth herein, the parties hereto agree
as follows:

                  1. Definitions. For the purpose of this Agreement, the
following terms shall have the following meanings:

                           "APPLICABLE DISCOUNT RATE" shall mean:

                           (i) for Cash Flows from assets with binding off-take
or sales contracts, such as power purchase agreements or other hedged sales
contracts, from the residual contractual portion of completed restructurings, or
from such projects in construction that are being constructed pursuant to a
turn-key engineering, procurement and construction contract, the 10-year U.S.
Treasury Rate plus 2.65%, or, in the case of such projects in construction that
are not being constructed pursuant to a turn-key engineering, procurement and
construction contract, the 10-year U.S. Treasury Rate plus 3.65%;

                           (ii) for Cash Flows from merchant power facilities
or other assets with no significant off-take, tolling or other comparable
contractual arrangements or, in the case of such projects in construction that
are being constructed pursuant to a turn-key engineering, procurement and
construction contract, the 10-year U.S. Treasury Rate plus 5.65%, or, in the
case of such projects in construction that are not being constructed pursuant to
a turn-key engineering, procurement and construction contract, the 10-year U.S.
Treasury Rate plus 6.65%;

                           (iii) for Cash Flows from expected contract
restructurings, the 10-year U.S. Treasury Rate plus 5.65%;

                           (iv) for Cash Flows from expected terminal values,
the 10-year U.S. Treasury Rate plus 5.65%;

                           (v) for Cash Flows from Contingent Debt Instruments,
the Applicable Discount Rate for the underlying project, as determined pursuant
to (i), (ii), (iii) or (iv) above;

                           (vi) for Annual Fixed Fees, 10%; and

                           (vii) in any other case, such discount rate as shall
be established according to fair and reasonable procedures developed by the
Management Company in good faith in consultation with the Companies.

                           "AVAILABLE NET PRESENT VALUE" as of any time of
determination by the Management Company shall mean the excess, if any, of (a)
the sum of (i) the Present Value of Cash Flows, (ii) the Fair Market Value of
Financial Investments, (iii) the outstanding principal of and accrued and unpaid
interest on all loans to El Paso from Chaparral, Mesquite or any of their
Subsidiaries, and (iv) the Present Value of all other assets over (b) the sum of
(i) Liabilities not otherwise taken into account in the computation of Cash
Flows, (ii) the Limestone Equity Cash

                                      -2-
<PAGE>

Component and Limestone Equity PIK Component, (iii) the Limestone Note Component
and (iv) the Present Value of all Annual Fixed Fees payable to the Management
Company after the date of determination through March 31, 2003.

                           "CASH FLOWS" shall mean the portion of expected
pre-tax cash flows (to the extent not taxed at the Chaparral, Mesquite, Mesquite
Operating Subsidiary, or project level) from the Project Companies (excluding
Mesquite) that would be distributable to Chaparral or Mesquite, as the case may
be (after working capital, debt service of the relevant Project Company, capital
expenditures/investment requirements, reserve requirements (including reserves
for maintenance, debt service, known/expected environmental, decommissioning,
litigation, or other such costs) and taxes other than income taxes), plus
expected net restructuring monetization proceeds or expenses, as the case may
be, plus cash flows from Contingent Debt Instruments, and plus a terminal value,
as appropriate. For purposes of determining Cash Flows, project financial models
shall be prepared annually as of October 1 by the Management Company, in good
faith and on a consistent basis, based upon actual historical and expected
future performance at the time of determination of the Annual Performance Fee
(the "OCTOBER 1 FINANCIAL MODEL"). Additionally, projections shall be prepared
to reflect a common set of general economic assumptions (including market prices
for power (by region, as required), commodity prices, inflation rates, interest
rates, and exchange rates, as applicable). Such assumptions shall be updated at
the time of determination of the Annual Performance Fee to reflect current
conditions and expectations at such time. For purposes of calculating expected
net restructuring monetization proceeds or expenses, as the case may be, the
expected cost of funds in the monetization shall consider the counterparty
credit risk and other residual risks retained after restructuring, as well as
the average life of the financing and the required debt service coverage ratios.
Projections shall be prepared for the period representing the shortest of: (i)
the longer of (a) 20 operating years or (b) the life of the power purchase
agreement (if the project is not expected to be restructured), (ii) the expected
economic useful life of the asset or (iii) the expected physical life of the
asset; provided that in the case of the Contingent Debt Instruments, the
projection period shall equal the term of the relevant Contingent Debt
Instrument. If the project is expected to be restructured, the maximum
projection period shall be the shortest of (i)(a),(ii) or (iii) of the preceding
sentence. If it is reasonably expected that the asset will have economic value
at the end of the projection period as defined by this paragraph, a liquidation
terminal value shall be estimated and included in determining Cash Flows. As a
guideline for calculating terminal values, a current dollar estimate shall be
prepared, shall be projected forward to the terminal year assuming a general
inflation rate (or other such rate as shall be applicable at the time), and
shall be discounted at the Applicable Discount Rate. Alternative methods for
calculating terminal values may also be utilized, provided that such methods are
utilized reasonably in good faith and are appropriately supported and
documented. A series of examples illustrating the methodologies used to
determine Cash Flows is included as Annex A to this Agreement.

                           "COVERAGE RATIO TEST" shall mean that the Coverage
Ratio equals or exceeds 1.05.

                           "FAIR MARKET VALUE" of any Financial Investment shall
mean the fair market value as reasonably determined by the Management Company in
accordance with the following procedures: (i) debt securities, other than money
market instruments described in

                                      -3-
<PAGE>

clause (ii), will be valued on the basis of dealer-supplied quotations or by
using a pricing service selected by the Management Company in good faith; (ii)
money market instruments with a remaining maturity of 60 days or less will be
valued at amortized cost; (iii) overnight repurchase agreements will be valued
at cost and term repurchase agreements will be valued at the average of bid
quotations obtained from at least two recognized and independent dealers; (iv)
securities listed on any U.S. or non-U.S. stock exchange or on the Nasdaq Stock
Market will be valued at the last sale price on the exchange or system in which
they are principally traded on the valuation date; if there is no sale on the
valuation date, securities will be valued at the mean between the closing bid
and asked prices; and (v) all other Financial Investments, including those for
which a pricing service supplies no quotation or a quotation that is believed by
the Management Company to be materially inaccurate, will be valued at fair
market value according to fair and reasonable procedures developed by the
Management Company in good faith in consultation with the Companies.

                           "GUARANTY", "GUARANTEED" and "GUARANTEEING" each
shall mean any act by which either of the Companies 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
(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 for which El Paso or any wholly owned Subsidiary of
El Paso is the primary guarantor or obligor or has an unconditional obligation
to indemnify the relevant Company, unless El Paso or such Subsidiary is in
default with respect thereto and (c) any such act in connection with a Project
Financing that either (i) guarantees performance of the completion of the
project which is financed by such Project Financing, until such time, if any,
that such guaranty becomes 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 Chaparral or
Mesquite with respect to any obligation as to which a third party or parties are
jointly, or jointly and severally, liable as a guarantor or otherwise as
contemplated hereby and have not defaulted on its or their portions thereof,
shall be only its pro rata portion of such obligation.

                           "LIABILITIES" shall mean without duplication (a) all
Relevant Indebtedness of the Companies excluding Project Financing and (b)
Guarantees, except to the extent any such Relevant Indebtedness or Guaranteed
obligations have otherwise been taken into account in the calculation of Cash
Flows.

                           "PRESENT VALUE" of Cash Flows or any other sum shall
mean the present value discounted at the Applicable Discount Rate using a
mid-year discounting convention, unless another discounting convention is, in
the reasonable judgment of the Management Company, more appropriate given the
specific circumstances. When calculated at October 1 of each year for purposes
of determining the Annual Performance Fee and the Coverage Ratio, Present Values
shall be as of January 1 of the next subsequent year. Any determination of
Present Value shall be subject to review in accordance with the procedures set
forth in Section 4.3 applicable to the determination of the Annual Performance
Fee and the Coverage Ratio.

                                      -4-
<PAGE>

                           "PROJECT FINANCING" means any Relevant Indebtedness
incurred to finance a project, excluding any portion of such Relevant
Indebtedness permitting or providing for recourse against Chaparral or Mesquite
other than (a) recourse to the stock or assets of the Project Financing
Subsidiary, if any, incurring or Guaranteeing such Relevant Indebtedness, and
(b) such recourse as exists under any Contingent Guaranty.

                           "PROJECT FINANCING SUBSIDIARY" means any Subsidiary
of Mesquite whose principal purpose is to incur Project Financing, or to become
a partner, member or other equity participant in a partnership, limited
liability company or other entity so created, and substantially all the assets
of which Subsidiary, partnership, limited liability company or other entity are
limited to those assets being financed (or to be financed) in whole or in part
by a Project Financing.

                           "QUARTERLY FIXED FEE" means, for any calendar
quarter, one quarter of the Annual Fixed Fee for the calendar year which
includes such calendar quarter.

                           "QUARTERLY MANAGEMENT FEE" means, for any calendar
quarter, the sum of the Quarterly Fixed Fee and the Quarterly Performance Fee
for such calendar quarter.

                           "QUARTERLY PERFORMANCE FEE" means, for any calendar
quarter, one quarter of the Annual Performance Fee for the calendar year which
includes such calendar quarter.

                           "10-YEAR U.S. TREASURY RATE" means, as of any date of
determination, the yield, adjusted for constant maturity, of 10-year U.S.
treasury notes, as reported in Federal Reserve Statistical Release H.15 (or, if
such release is no longer published, such other report of the Federal Reserve
Board as may replace such release) on the date of determination, or if such
yield is not reported on the date of determination, as of the most recent date
on which such yield has been reported.

                  2. Services. In consideration of the payments by Chaparral and
Mesquite to the Management Company as provided in Section 4 hereof, the
Management Company agrees to perform on behalf of each Company during the term
of this Agreement (a) management of Chaparral's and Mesquite's project level
restructuring and monetization activities (including, without limitation,
negotiation, modification, termination and replacement of power purchase
agreements, fuel supply and other similar agreements), project level financing
agreements, the sale and purchase of project level assets, and the
identification, evaluation, negotiation and consummation of new investments in
Energy Assets, and (b) those functions that are normally considered part of the
day-to-day administrative and management activities for businesses similar to
the business undertaken by such Company, including, without limitation, (i)
financial, accounting, budgeting and tax services, (ii) general legal and
financial services, (iii) personnel administration and payroll services, and
(iv) cash management services (collectively, the "Services").

                  3. Subcontracting. Without limiting the obligations of the
Management Company to the Companies hereunder, in connection with the Management
Company's providing of the Services, the Management Company may subcontract with
or otherwise retain the services

                                      -5-
<PAGE>

of other Persons including, but not limited to, El Paso Power Services Company
or other Affiliates of the Management Company (but only at a rate equal to
actual costs and expenses of any such Affiliate). For purposes of this
Agreement, any Services performed by such Persons shall be deemed to have been
performed by the Management Company.

                  4. Compensation for Services.

                           4.1. (a) Subject to Section 4.2, in consideration of
the provision by the Management Company to each of the Companies of the
Services, the Companies shall be jointly and severally obligated to pay to the
Management Company on or prior to each March 31 (including March 31, 2000), June
30, September 30 and December 31, an amount equal to the Quarterly Management
Fee.

                                (b) In addition to the payments described in
paragraph (a), the Companies shall be jointly and severally obligated to
reimburse the Management Company, within 10 days after the submission of
invoices therefor, for all third party expenses actually incurred by the
Management Company or any of its Affiliates for accounting, auditing, consulting
or legal services on behalf of the Companies in connection with the
identification, evaluation or attempted acquisition of any Energy Asset which
acquisition is not consummated, provided that the aggregate amount of such
expenses for the year ending December 31, 2000 or any subsequent year which the
Companies shall be obligated to reimburse shall not exceed $2,000,000.

                           4.2. (a) If, giving effect to the payment of the
Annual Performance Fee, the Coverage Ratio Test as determined pursuant to
Section 4.3 and as adjusted pursuant to Sections 4.4 and 4.5 would not be
satisfied, payment of the Annual Performance Fee shall be deferred except to the
extent, if any, that payment of a portion of the Annual Performance Fee would be
permitted under the Coverage Ratio Test. Subject to Section 4.2(b), the portion
(if any) of the Annual Performance Fee payment of which would be permitted under
the Coverage Ratio Test shall be payable in four equal quarterly payments in
accordance with the provisions of Section 4.1 (a), each of which shall represent
a partial payment of the Quarterly Performance Fee for the applicable period.

                                (b) The obligation of the Companies to pay the
Quarterly Performance Fee for any period (or any deferred portion of any
Quarterly Performance Fee for any prior period) is subject to satisfaction of
the condition that no Default shall have occurred and be continuing as of the
date of payment. Upon the date of any payment of any portion of the Quarterly
Performance Fee (or of any deferred portion of any Quarterly Performance Fee for
any prior period), the Management Company shall provide to the Companies an
officer's certificate certifying that no Default has occurred and is continuing
and, if the Management Company is unable to deliver such certificate, the
payment of the Quarterly Performance Fee (or of any deferred portion of any
Quarterly Performance Fee for any prior period) shall be deferred, subject to
payment at such future date on which such payment shall be permitted in
accordance with the provisions of this Section 4.2 (b) and of Section 4.2(c).

                                (c) Subject to Section 4.2(b), the unpaid
balance of any Quarterly Performance Fee shall be payable at such time as, but
only to the extent that, (i) such

                                      -6-
<PAGE>

payment would be permitted under the Coverage Ratio Test as determined pursuant
to Section 4.3 and as adjusted pursuant to Sections 4.4 and 4.5 and (ii) any
Default shall have been cured and shall no longer be continuing.

                                (d) No Annual Performance Fees (or any portion
thereof) or expense reimbursement pursuant to Section 4.1(b) shall be payable
during any year (or portion thereof) from the Earn-Out Period Commencement Date
to the Earn-Out Period Termination Date, and the Management Company shall
receive in consideration for the Services in any year (or portion thereof)
during such period only the Annual Fixed Fee.

                           4.3 On or about October 1 of each year, the
Management Company shall deliver to the Companies its calculation of the Annual
Performance Fee and the Coverage Ratio, accompanied by a certificate of an
officer of the Management Company certifying that the Management Company has
prepared the calculation of the Annual Performance Fee and the Coverage Ratio in
good faith and in conformity with the provisions of this Agreement and Annex A
hereto, together with supporting documentation for such calculation, and such
calculation shall be conclusive and binding upon the parties unless the
Companies, within 15 days after the delivery to the Companies of such
calculation, notify the Management Company in writing that the Companies dispute
the Management Company's calculation of the Annual Performance Fee and the
Coverage Ratio, specifying the nature of the dispute and the basis therefor and
the adjustments to the Annual Performance Fee and the Coverage Ratio asserted by
the Companies. The parties shall in good faith attempt to resolve any dispute,
in which event such calculation, as amended to the extent necessary to reflect
the resolution of the dispute, shall be conclusive and binding upon the parties.
If the parties do not reach agreement resolving the dispute within 7 days after
notice is given by the Companies to the Management Company pursuant to the
second preceding sentence, any of the parties shall have the right to require
that the dispute be submitted to a mutually agreeable nationally recognized
investment banking or valuation firm with expertise in the valuation of Energy
Assets (the "Arbiter") for resolution. If the parties cannot agree on the
selection of the Arbiter, the parties shall request the New York City, New York
office of the American Arbitration Association to appoint such a firm, and such
appointment shall be conclusive and binding upon the parties. The arbitration
shall commence no earlier than 15 Business Days after submission of the dispute
to arbitration. Promptly after the commencement of the arbitration, the Arbiter
shall determine, based solely on presentations by the Companies and the
Management Company, and not by independent review, only those issues in dispute
and shall render a report as to the dispute and the resulting computation of the
Annual Performance Fee, if any, and the Coverage Ratio, which shall be
conclusive and binding upon the parties. It is the parties' intention to
complete the arbitration as promptly as possible following the commencement of
arbitration and in any event within 15 days after the commencement of the
arbitration. In resolving any disputed item, the Arbiter (x) shall be bound by
the provisions of this Section 4 and all related definitions and (y) may not
assign a value to any item greater than the greatest value for such item claimed
by either party or less than the smallest value for such item claimed by either
party. The fees, costs and expenses of the Arbiter (i) shall be borne by the
Companies in the proportion that the aggregate dollar amount of adjustments to
the Annual Performance Fee that are unsuccessfully asserted by the Companies (as
finally determined by the Arbiter) bears to the aggregate dollar amount of
adjustments to the Annual Performance Fee asserted and (ii) shall be borne by
the Management Company in the proportion that the aggregate dollar amount of
adjustments to the Annual Performance Fee that are successfully asserted by

                                      -7-
<PAGE>

Chaparral (as finally determined by the Arbiter) bears to the aggregate dollar
amount of adjustments to the Annual Performance Fee so asserted. The Companies
and the Management Company each shall make available to the other (upon the
request of the other) during regular business hours their respective work
papers, computer models, software and personnel utilized in connection with the
preparation or review of the calculation of the Annual Performance Fee and the
Coverage Ratio.

                           4.4. The Management Company shall revise its
calculation of the Annual Performance Fee and the Coverage Ratio for
acquisitions or dispositions of Energy Assets consummated after the date of
calculation of the Annual Performance Fee and the Coverage Ratio pursuant to
Section 4.3 and prior to December 31 of the relevant year. The procedures
specified in Section 4.3 shall apply with respect to the Management Company's
revisions to the Annual Performance Fee and the Coverage Ratio and any dispute
by the Companies regarding the Management Company's calculation of the revisions
to the Annual Performance Fee and the Coverage Ratio.

                           4.5. In addition, the Management Company shall be
permitted to revise its calculation of the Coverage Ratio at any time to reflect
acquisitions of Energy Assets or capital contributions of Financial Investments
not previously taken into account in determining the Available Net Present Value
and the Coverage Ratio; provided that any such revision to reflect acquisitions
of Energy Assets may be made only with the written consent of the Class A
Member, which may be withheld by the Class A Member in its sole discretion.
Subject to the proviso to the preceding sentence, any such revision shall
include updating the calculations of the Available Net Present Value and the
Coverage Ratio to reflect current conditions and expectations as well as to
include Available Net Present Value associated with such acquisitions of Energy
Assets and capital contributions. The procedures specified in Section 4.3 shall
apply with respect to the Management Company's revisions to the Available Net
Present Value and the Coverage Ratio pursuant to this Section 4.5 and any
dispute by the Companies regarding the Management Company's calculation of the
revisions to the Available Net Present Value and the Coverage Ratio. Any
revisions to the Available Net Present Value and the Coverage Ratio pursuant to
this Section 4.5 shall be taken into account for purposes of determining whether
any Annual Performance Fee (or portion thereof) previously deferred may be paid
pursuant to Section 4.2(c), but no adjustment to the amount of the Annual
Performance Fee for such year will be made by reason of any such revisions.

                           4.6 Solely for informational purposes, the Management
Company shall provide to the Companies as of each March 31, June 30, September
30 and December 31, commencing as of June 30, 2000, an update to its calculation
of the Available Net Present Value and the Coverage Ratio, in order to reflect
developments in the business of the Companies and changes in the assumptions
used in calculating the Available Net Present Value and the Coverage Ratio. Such
updated calculations shall be furnished to the Companies for delivery to the
Class A Member together with the delivery by Chaparral of the reports required
by Sections 8.2(b) and (c) of the Chaparral LLC Agreement.

                                      -8-
<PAGE>

                  5. Term and Termination.

                           5.1. Subject to Sections 5.2 and 5.4, the term of
this Agreement shall terminate on the later of (i) the earlier of (x) the date
of termination of the Chaparral LLC Agreement and (y) December 31, 2006 and (ii)
of the Earn Out Period Termination Date (the "Termination Date").

                           5.2. In addition, the Companies may require the
replacement of the Management Company with a successor manager selected by the
Companies from the list of approved successor managers (which may be changed
from time to time at the request of the Management Company or the Companies with
the consent of the other, not to be unreasonably withheld, but shall at all
times contain not less than five approved Persons) set forth on Schedule 5.2
(the "Successor Manager") upon the occurrence of any of the following events:
(i) the Bankruptcy of the Management Company, El Paso Chaparral, El Paso
Chaparral Holding or El Paso; (ii) a material breach by the Management Company
of any covenant set forth in Section 6.2 of this Agreement that continues and is
uncured in all material respects on the date occurring 30 days after the
Management Company, El Paso or any Affiliate of El Paso receives written notice
or has actual knowledge thereof; or (iii) the gross negligence or willful
misconduct of the Management Company in the performance of its obligations under
this Agreement that continues and is uncured in all material respects on the
date occurring 30 days after the Management Company, El Paso or any Affiliate of
El Paso receives written notice or has actual knowledge.

                           5.3. If the Companies require the replacement of the
Management Company pursuant to Section 5.2 hereof, the parties hereto shall
negotiate in good faith to agree upon the terms of a new management agreement,
which shall provide for commercially reasonable compensation to the Successor
Manager, including incentive fees which are customary or appropriate for the
Services being performed by the Successor Manager taking into account the nature
and condition of the assets and business of the Companies. If the parties are
unable to agree upon the terms of the new management agreement within 45 days,
any of the parties hereto shall have the right to require the dispute to be
referred to the New York City, New York office of the American Arbitration
Association for resolution in accordance with its Commercial Arbitration Rules.

                           5.4. Upon the appointment of the Successor Manager,
the Successor Manager shall become vested with all the administrative and
management powers and duties of the Management Company. Upon the written request
of the Successor Manager, the Management Company shall duly assign, transfer,
deliver and pay over to the Successor Manager all moneys or other property then
held or subsequently received by the Management Company on behalf of either of
the Companies.

                           5.5. Notwithstanding any other provision of this
Agreement, and in addition to any other right it may have, the Management
Company shall have the right to terminate this Agreement effective immediately
upon the Bankruptcy of either Chaparral or Mesquite.

                           5.6. Upon the termination of this Agreement, the
Companies shall be jointly and severally obligated to pay for all prorated fees,
costs and expenses determined

                                      -9-
<PAGE>

pursuant to Section 4 hereof and uncured up to the later of (i) the Termination
Date; or (ii) the date on which the Management Company ceases to act as manager
hereunder pursuant to Section 5.1 or 5.3 hereof.

                           5.7. Notwithstanding any other provision of this
Article 5, the Management Company shall not be replaced as manager unless and
until the Limestone Trustee shall have obtained the approval of the Federal
Energy Regulatory Commission for such action or all of the members of Chaparral
shall have waived the requirement for such approval in writing.

                           5.8. Without limiting the rights of the Companies to
replace the Management Company as manager pursuant to this Section 5, and
subject to its rights to delegate pursuant to Section 3, the Management Company
agrees that it will not voluntarily resign as manager and will continue to serve
as manager notwithstanding any failure by the Companies to pay amounts when due
under this Agreement.

                  6. Standard of Care; Covenants of the Management Company

                           6.1. The Management Company agrees to perform its
duties hereunder in good faith and in accordance with standard industry
practices and in compliance with the applicable provisions of the Mesquite LLC
Agreement, the Chaparral LLC Agreement and this Agreement.

                           6.2. Notwithstanding any other provision of this
Agreement, the Management Company shall not take any action that would violate
any of Sections 1.2, 1.5(a), 6.3, 6.5(a) and 7.4 of the Chaparral LLC Agreement.

                           6.3. The Management Company shall not cause either of
the Companies or any of their Subsidiaries to enter into any transactions with
El Paso or any Affiliate of El Paso (other than transactions among Chaparral and
any of its Subsidiaries or among Subsidiaries of Chaparral), other than
transactions in any calendar quarter which, taken as a whole, are fair and
reasonable and provide, in the aggregate, for exchanges of fair consideration
and reasonably equivalent value between or among the parties thereto. Within 60
days after the end of each calendar quarter, the Management Company shall
provide to the Companies a written certificate of an officer of the Management
Company as to the Management Company's compliance with the provisions of this
Section 6.3.

                           6.4. The Management Company shall not take any action
that would violate any provision of any Transaction Document applicable to
Chaparral or Mesquite.

                           6.5 Prior to the date that is a year and a day after
the Management Company receives notice from the Limestone Trustee that all
outstanding Limestone Certificates have been cancelled pursuant to Section 7.04
of the Limestone Trust Agreement, the Management Company will not institute
against, or join any other Person in instituting against, Chaparral, Mesquite or
any Mesquite Operating Subsidiary, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or similar proceedings under the laws of
the United States or any state of the United States, notwithstanding any
non-payment of fees,

                                      -10-
<PAGE>

expenses, indemnities, reimbursements or other obligations due and owing to the
Management Company under this Agreement or otherwise by Chaparral, Mesquite or
any Mesquite Operating Subsidiary.

                  7. Limitations on Liability; Indemnification.

                           7.1. Neither the Management Company nor any Affiliate
of the Management Company to whom duties of the Management Company are
subcontracted pursuant to this Agreement nor any agent, contractor, vendor,
member, partner, manager, director, officer, employee of the Management Company
or any such Affiliate or any other person who serves at the request of any of
the foregoing in connection with this Agreement (each severally, an "Exculpated
Person") shall be liable, responsible or accountable in damages or otherwise to
the Companies for any losses, damages, liabilities, demands or expenses suffered
by the Companies or any of their Subsidiaries for mistakes of judgment or for
action or inaction except to the extent arising out of the gross negligence or
willful misconduct of such Exculpated Person, nor for any mistake, action or
inaction which said Exculpated Person reasonably believed to be in the best
interests of the Companies and their Subsidiaries, nor for losses, damages,
liabilities, demands or expenses due to any mistake, action or inaction or to
the negligence, dishonesty or bad faith of any employee, broker or other agent,
provided that such employee, broker or agent was selected, engaged or retained
by the Management Company with reasonable care. Each Exculpated Person may
consult with counsel and accountants in respect of the Companies' and their
Subsidiaries' affairs and be fully protected and justified in any action or
inaction which is taken in accordance with the advice or opinion of such counsel
or accountants, provided that they shall have been selected with reasonable care
and provided further that such Exculpated Person has no knowledge concerning the
matter in question that would cause such protection and justification to be
unwarranted and is otherwise acting in good faith. Notwithstanding any of the
foregoing to the contrary, the provisions of this Section 7.1 shall not be
construed so as to relieve (or attempt to relieve) the Exculpated Person of any
liability (including liability under federal securities laws which, under
certain circumstances, impose liability even on persons that act in good faith),
to the extent (but only to the extent) that such liability may not be waived,
modified or limited under applicable law, but shall be construed so as to
effectuate the provisions of this Section 7.1 to the fullest extent permitted by
law.

                           In performing its duties, each Exculpated Person
shall be entitled to rely on information, opinions, reports or statements,
including financial statements and other financial data, in each case prepared
or presented by: (1) one or more agents or employees of the Management Company
or any of its Affiliates, or (2) counsel, accountants or other Persons as to
matters that such Exculpated Person believes to be within such other Person's
professional or expert competence, provided that such Exculpated Person has no
knowledge concerning the matter in question that would cause such reliance to be
unwarranted and is otherwise acting in good faith.

                           The Companies agree that no Exculpated Person shall
be liable to the Companies for incidental, consequential, punitive or indirect
loss or damage, including, but not limited to, cost of reperformance of services
by third parties, damage to property or injury to person, loss of profit, loss
of use, loss of revenue, loss of opportunity, increased costs, cost of capital
or loss of goodwill.

                                      -11-
<PAGE>

                           7.2. The Companies hereby agree jointly and severally
to indemnify and hold harmless each Exculpated Person from and against all
claims, demands, actions, investigations, losses, damages (including amounts
paid in settlement), liabilities or expenses (including reasonable attorneys'
fees and expenses and expenses of investigation) (collectively, "Losses")
incurred by such Exculpated Person arising out of the Services performed
hereunder, except to the extent that such Losses are finally judicially
determined to result from the gross negligence or willful misconduct of such
Exculpated Person. To the extent that the foregoing indemnification is not
permitted under applicable law, the Companies agree jointly and severally to
contribute to such Losses to the fullest extent permitted by applicable law.

                  8. Survival of Terms. The Companies agree that the limitations
on liability, waivers and disclaimers of liability, releases from liability and
indemnification and contribution provisions in this Agreement shall survive
termination or expiration of this Agreement, and shall apply for the benefit of
the Exculpated Persons.

                  9. Non-Waiver of Breach. Each of the Companies and the
Management Company may specifically waive any breach of this Agreement by the
other party, but no such waiver shall be deemed to have been given unless such
waiver is in writing, signed by the waiving party and specifically designates
the breach waived, nor shall any such waiver constitute a continuing waiver of
similar or other breaches.

                  10. Attorney Fees. If any party hereto commences litigation or
arbitration for the judicial or other interpretation, enforcement, termination,
cancellation or rescission hereof, or for damages for the breach hereof, the
prevailing party in any such action, trial, arbitration or appeal thereon shall
be entitled to its reasonable attorneys' fees and court, arbitration and other
costs incurred, to be paid by the losing party as fixed by the court or
arbitrator in the same or a separate suit, and whether or not such action is
pursued to decision or judgment.

                  11. Force Majeure.

                           11.1. Neither the Companies nor the Management
Company shall be liable in damages to the other for any act, omission or
circumstance ("Event of Force Majeure") occasioned by or in consequence of any
acts of God, acts of the public enemy, wars, blockades, insurrections, riots,
epidemics, landslides, lightning, earthquakes, fires, storms, floods, civil
disturbances, explosions, sabotage, the binding order of any court or
governmental authority which has been resisted in good faith by all reasonable
legal means, Federal, state or local laws, or other event or circumstance not
within the control of such party preventing such party from performing its
obligations hereunder, whether caused or occasioned by, or happening on account
of, the act or omission of one of the parties, not within the control of the
party claiming suspension and which by the exercise of due diligence such party
is unable to prevent or overcome.

                           11.2. Such Events of Force Majeure shall not relieve
the Companies or the Management Company of any liability any party may have
under this Agreement in the event of any party's concurring negligence or in the
event of such party's failure to use due diligence to remedy the situation and
to remove the cause in an adequate manner and with all reasonable

                                      -12-
<PAGE>

dispatch, nor shall such Events of Force Majeure relieve any party of liability
unless such party shall give notice and full particulars of the same in writing
to the other party within 10 days of the occurrence relied on. In no event,
however, shall an Event of Force Majeure relieve the Companies from the
obligation of making payments due under this Agreement at the time of such
occurrence.

                  12. Assignment. Subject to Section 3, none of the Companies or
the Management Company shall grant, assign or otherwise convey any of their
respective rights or delegate any of their respective obligations under this
Agreement without the prior written consent of the other parties which consent
shall not be unreasonably withheld.

                  13. Governing Law. The existence, validity, construction,
operation and effect of this Agreement shall be determined in accordance with
and governed by the internal laws of the State of New York. This Agreement shall
be construed equally as against the parties hereto, and shall not be construed
against the party responsible for its drafting.

                  14. Amendments. This Agreement may be amended only by a
writing signed by a duly authorized representative of each of the parties.

                  15. Communications. Except as otherwise expressly provided
herein in any particular case, all notices, approvals, consents, requests and
other communications hereunder shall be in writing and shall, if addressed as
provided in the following sentence, be deemed to have been given, (i) when
delivered by hand, (ii) one Business Day after being sent by a private
nationally or internationally recognized overnight courier service or (iii) when
sent by telecopy, if immediately after transmission the sender's facsimile
machine records in writing the correct answer back; provided that all such
notices, approvals, consents, requests and other communications shall be sent on
a Business Day. Actual receipt at the address of an addressee, regardless of
whether in compliance with the foregoing is effective notice hereunder. Until
otherwise so notified by the respective parties, all notices, approvals,
consents, requests and other communications shall be addressed to the following
addresses:

         To the Management Company at:

                           El Paso Chaparral Management, L.P.
                           1001 Louisiana Street
                           Houston, Texas  77002
                           Attention:  General Counsel
                           Facsimile:  (713) 420-4975

         To each of the Companies at:

                           c/o Wilmington Trust Company
                           Rodney Square North
                           1100 North Market Street
                           Wilmington, Delaware 19890-0001
                           Attention:  Corporate Trust Administration
                           Facsimile:  (302) 651-8882

                                      -13-
<PAGE>

         with copies to:

                           Chaparral Investors, L.L.C.
                           c/o El Paso Energy Corporation
                           1001 Louisiana Street
                           Houston, Texas  77002
                           Attention:  General Counsel
                           Facsimile:  (713) 420-4975

                           Mesquite Investors, L.L.C.
                           c/o El Paso Energy Corporation
                           1001 Louisiana Street
                           Houston, Texas  77002
                           Attention:  General Counsel
                           Facsimile:  (713) 420-4975

         To the Managing Member at:

                           El Paso Chaparral Investor, L.L.C.
                           1001 Louisiana Street
                           Houston, Texas 77002
                           Attention:  General Counsel
                           Facsimile:  (713) 420-4975

         with a copy to the Class A Member:

                           Limestone Electron Trust
                           c/o Wilmington Trust Company
                           Rodney Square North
                           1100 North Market Street
                           Wilmington, Delaware 19890-0001
                           Attention:  Corporate Trust Administration
                           Facsimile:  (302) 651-8882

         and with copies to:

                           DLJ Investment Partners II, L.P.

                           Doug Meltzer
                           277 Park Avenue
                           New York, NY  10172
                           Facsimile:  (212) 892-7272

                                      -14-
<PAGE>

                           Steve Bassford
                           277 Park Avenue
                           New York, NY  10172
                           Facsimile:  (212) 892-7272

                           Ivy Dodes
                           277 Park Avenue
                           New York, NY  10172
                           Facsimile:  (212) 892-2689

                           Dewey Ballantine LLP

                           Thomas C. Mazza
                           1301 Avenue of the Americas
                           New York, NY  10019
                           Facsimile:  (212) 259-6333

A duplicate copy of each notice, approval, consent, request or other
communication given hereunder by each of the parties, to any one of the others
shall also be given to all of the others. However, failure to give notice to any
party shall not affect effectiveness of notice to parties as to whom notice has
been given in accordance with the first two sentences of this Section 15. Each
of the parties may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, approvals, consents, requests
or other communications shall be sent or persons to whose attention the same
shall be directed.

                  16. Counterparts. This Agreement may be executed in
counterparts and any number of counterparts signed in the aggregate by the
parties hereto shall consummate a single original instrument.

                  17. Third Party Beneficiaries. The covenants contained herein
are made solely for the benefit of the parties hereto and successors and assigns
of such parties as specified herein, and shall not be construed as having been
intended to benefit any third party not a party to this Agreement.

                  18. Headings. The headings herein are for reference only and
shall not affect the construction of this Agreement.

                  19. Power of Attorney. In addition to, and not in limitation
of, any of the specific powers granted by the Companies to the Management
Company herein and in each of the Mesquite LLC Agreement and the Chaparral LLC
Agreement, each of Mesquite and Chaparral hereby constitutes and appoints the
Management Company their respective lawful attorney to act in their respective
names and on their respective behalves to execute any documents relating to the
Services.

                                      -15-
<PAGE>
                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their duly authorized officers as of the day and year
first above written.

                                EL PASO CHAPARRAL MANAGEMENT, L.P.

                                By: EL PASO CHAPARRAL HOLDING COMPANY,
                                    its general partner

                                    By:    /s/ John L. Harrison
                                       -----------------------------------------
                                       Name:   John L. Harrison
                                       Title:  Vice President

                                CHAPARRAL INVESTORS, L.L.C.

                                By: EL PASO CHAPARRAL INVESTOR, L.L.C.,
                                    the managing member

                                By: EL PASO CHAPARRAL HOLDING COMPANY,
                                    as sole member

                                    By:    /s/ John L. Harrison
                                       -----------------------------------------
                                       Name:   John L. Harrison
                                       Title:  Vice President

                                MESQUITE INVESTORS, L.L.C.

                                By: CHAPARRAL INVESTORS, L.L.C.,
                                    as sole member

                                By: EL PASO CHAPARRAL INVESTOR, L.L.C.,
                                    the managing member

                                By: EL PASO CHAPARRAL HOLDING COMPANY,
                                    as sole member

                                    By:    /s/ John L. Harrison
                                       -----------------------------------------
                                       Name:   John L. Harrison
                                       Title:  Vice President

                              Management Agreement

<PAGE>

                                EL PASO CHAPARRAL INVESTOR, L.L.C.

                                By: EL PASO CHAPARRAL HOLDING COMPANY,
                                    as sole member

                                    By:    /s/ John L. Harrison
                                       -----------------------------------------
                                       Name:   John L. Harrison
                                       Title:  Vice President

                              Management Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}]]