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                                                                    EXHIBIT 10.1


                           EL PASO ENERGY CORPORATION


                    2001 OMNIBUS INCENTIVE COMPENSATION PLAN






                        EFFECTIVE AS OF JANUARY 29, 2001



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                                TABLE OF CONTENTS


<TABLE>
<S>               <C>                                                                                 <C>
SECTION 1         PURPOSES..............................................................................1

SECTION 2         DEFINITIONS...........................................................................1
         2.1      Adjusted Value........................................................................1
         2.2      Beneficiary...........................................................................1
         2.3      Board of Directors....................................................................1
         2.4      Cause.................................................................................1
         2.5      Change in Control.....................................................................2
         2.6      Code..................................................................................3
         2.7      Common Stock..........................................................................3
         2.8      Exchange Act..........................................................................3
         2.9      Fair Market Value.....................................................................3
         2.10     Good Reason...........................................................................3
         2.11     Incentive Award.......................................................................4
         2.12     Incentive Stock Option................................................................5
         2.13     Management Committee..................................................................5
         2.14     Maximum Annual Employee Grant.........................................................5
         2.15     Nonqualified Option...................................................................5
         2.16     Option Price..........................................................................5
         2.17     Participant...........................................................................5
         2.18     Performance Cycle.....................................................................5
         2.19     Performance Goals.....................................................................5
         2.20     Performance Peer Group................................................................6
         2.21     Performance Period....................................................................6
         2.22     Performance Ranking Position..........................................................7
         2.23     Performance Unit or Units.............................................................7
         2.24     Permanent Disability or Permanently Disabled..........................................7
         2.25     Plan Administrator....................................................................7
         2.26     Restricted Stock......................................................................7
         2.27     Rule 16b-3............................................................................7
         2.28     Section 16 Insider....................................................................7
         2.29     Section 162(m)........................................................................8
         2.30     Subsidiary............................................................................8
         2.31     Total Shareholder Return..............................................................8
         2.32     Valuation Date........................................................................8

SECTION 3         ADMINISTRATION........................................................................9

SECTION 4         ELIGIBILITY..........................................................................10

SECTION 5         SHARES AND UNITS AVAILABLE FOR THE PLAN..............................................10
</TABLE>



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<TABLE>
<S>               <C>                                                                                  <C>
SECTION 6         STOCK OPTIONS........................................................................11

SECTION 7         STOCK APPRECIATION RIGHTS............................................................18

SECTION 8         LIMITED STOCK APPRECIATION RIGHTS....................................................20

SECTION 9         PERFORMANCE UNITS....................................................................20
         9.1      Grants of Units......................................................................20
         9.2      Notice to Participants...............................................................21
         9.3      Vesting..............................................................................21
         9.4      Valuation of Performance Units.......................................................22
         9.5      Entitlement to Payment...............................................................23
         9.6      Deferred Payment.....................................................................25
         9.7      Acceleration of Payment Due to Change in Control.....................................26

SECTION 10        RESTRICTED STOCK.....................................................................26

SECTION 11        INCENTIVE AWARDS.....................................................................29
         11.1     Procedures for Incentive Awards......................................................29
         11.2     Performance Goal Certification.......................................................29
         11.3     Maximum Incentive Award Payable......................................................29
         11.4     Discretion to Reduce Awards; Participant's Performance...............................29
         11.5     Required Payment of Incentive Awards.................................................30
         11.6     Restricted Stock Election............................................................31
         11.7     Deferred Payment.....................................................................31
         11.8     Payment Upon Change in Control.......................................................31

SECTION 12        REGULATORY APPROVALS AND LISTING.....................................................32

SECTION 13        EFFECTIVE DATE AND TERM OF PLAN......................................................33

SECTION 14        GENERAL PROVISIONS...................................................................34

SECTION 15        COMPLIANCE WITH RULE 16b-3 AND SECTION 162(m)........................................37

SECTION 16        AMENDMENT, TERMINATION OR DISCONTINUANCE
                   OF THE PLAN.........................................................................37
</TABLE>


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El Paso Energy Corporation              ii                     Table of Contents
2001 Omnibus Incentive Compensation Plan
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                           EL PASO ENERGY CORPORATION
                    2001 OMNIBUS INCENTIVE COMPENSATION PLAN

                               SECTION 1 PURPOSES

         The purposes of the El Paso Energy Corporation 2001 Omnibus Incentive
Compensation Plan (the "Plan") are to promote the interests of El Paso Energy
Corporation (the "Company") and its stockholders by strengthening its ability to
attract and retain officers and key management employees ("key management
employees" means those employees who hold the position of department director)
in the employ of the Company and its Subsidiaries (as defined below) by
furnishing suitable recognition of their ability and industry which contribute
materially to the success of the Company and to align the interests and efforts
of the Company's officers and key management employees to the long-term
interests of the Company's stockholders, and to provide a direct incentive to
the Participants (as defined below) to achieve the Company's strategic and
financial goals. The Plan provides for the grant of stock options, limited stock
appreciation rights, stock appreciation rights, restricted stock, incentive
awards and performance units in accordance with the terms and conditions set
forth below.


                              SECTION 2 DEFINITIONS

         Unless otherwise required by the context, the following terms when used
in the Plan shall have the meanings set forth in this Section 2:

2.1 ADJUSTED VALUE

         The dollar value of Performance Units determined as of a Valuation
Date.

2.2 BENEFICIARY

         The person or persons designated by the Participant pursuant to Section
6.4(f) or Section 14.7 of this Plan to whom payments are to be paid pursuant to
the terms of the Plan in the event of the Participant's death.

2.3 BOARD OF DIRECTORS

         The Board of Directors of the Company.

2.4 CAUSE

         The Company may terminate the Participant's employment for Cause. A
termination for Cause is a termination evidenced by a resolution adopted in good
faith by two-thirds (2/3) of the Board of Directors that the Participant (i)
willfully and continually failed to substantially perform the Participant's
duties with the Company (other than a



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failure resulting from the Participant's incapacity due to physical or mental
illness) which failure continued for a period of at least thirty (30) days after
a written notice of demand for substantial performance has been delivered to the
Participant specifying the manner in which the Participant has failed to
substantially perform or (ii) willfully engaged in conduct which is demonstrably
and materially injurious to the Company, monetarily or otherwise; provided,
however, that no termination of the Participant's employment shall be for Cause
as set forth in clause (ii) above until (A) there shall have been delivered to
the Participant a copy of a written notice setting forth that the Participant
was guilty of the conduct set forth in clause (ii) above and specifying the
particulars thereof in detail and (B) the Participant shall have been provided
an opportunity to be heard by the Board of Directors (with the assistance of the
Participant's counsel if the Participant so desires). No act, nor failure to
act, on the Participant's part shall be considered "willful" unless the
Participant has acted, or failed to act, with an absence of good faith and
without a reasonable belief that the Participant's action or failure to act was
in the best interest of the Company. Notwithstanding anything contained in the
Plan to the contrary, no failure to perform by the Participant after notice of
termination is given by the Participant shall constitute Cause.

2.5 CHANGE IN CONTROL

         As used in the Plan, a Change in Control shall be deemed to occur (i)
if any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 of
the Exchange Act), directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting power of the
Company's then outstanding securities, other than persons who exceed such
percentage solely as a result of being executive officers, directors and/or
other affiliates of the Company who are deemed to constitute a "group" as a
result of acting to oppose a Change in Control proposed by another person (ii)
upon the first purchase of the Common Stock pursuant to a tender or exchange
offer (other than a tender or exchange offer made by the Company), (iii) upon
the approval by the Company's stockholders of a merger or consolidation, a sale
or disposition of all or substantially all of the Company's assets or a plan of
liquidation or dissolution of the Company, or (iv) if, during any period of two
(2) consecutive years, individuals who at the beginning of such period
constitute the Board of Directors cease for any reason to constitute at least a
majority thereof, unless the election or nomination for the election by the
Company's stockholders of each new director was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who were directors at the
beginning of the period and such new director's initial assumption of office
does not occur in connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to the election of
directors of the Company. Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur if the Company either merges or consolidates with
or into another company or sells or disposes of all or substantially all of its
assets to another company, if such merger, consolidation, sale or disposition is
in connection with a corporate restructuring wherein the stockholders of the
Company immediately before such merger, consolidation, sale or disposition own,



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2001 Omnibus Incentive Compensation Plan
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directly or indirectly, immediately following such merger, consolidation, sale
or disposition at least eighty percent (80%) of the combined voting power of all
outstanding classes of securities of the company resulting from such merger or
consolidation, or to which the Company sells or disposes of its assets, in
substantially the same proportion as their ownership in the Company immediately
before such merger, consolidation, sale or disposition.

2.6 CODE

         The Internal Revenue Code of 1986, as amended and in effect from time
to time, and the temporary or final regulations of the Secretary of the U.S.
Treasury adopted pursuant to the Code.

2.7 COMMON STOCK

         The Common Stock of the Company, $3 par value per share, or such other
class of shares or other securities as may be applicable pursuant to the
provisions of Section 5.

2.8 EXCHANGE ACT

         The Securities Exchange Act of 1934, as amended.

2.9 FAIR MARKET VALUE

         Unless otherwise provided by the Plan Administrator prior to the date
of a Change in Control as applied to a specific date, Fair Market Value shall be
deemed to be the mean between the highest and lowest quoted selling prices at
which Common Stock is sold on such date as reported in the NYSE-Composite
Transactions by The Wall Street Journal for such date, or if no Common Stock was
traded on such date, on the next preceding day on which Common Stock was so
traded. Notwithstanding the foregoing, upon the exercise, of a limited stock
appreciation right or stock appreciation right granted in connection with a
Nonqualified Option on or after a Change in Control, Fair Market Value on the
date of exercise shall be deemed to be the greater of (i) the highest price per
share of Common Stock as reported in the NYSE-Composite Transactions by The Wall
Street Journal during the sixty (60) day period ending on the day preceding the
date of exercise of the stock appreciation right or limited stock appreciation
right, as the case may be, and (ii) if the Change in Control is one described in
clause (ii) or (iii) of Section 2.5, the highest price per share paid for Common
Stock in connection with such Change in Control.

2.10 GOOD REASON

         For purposes of the Plan, a Participant's termination of employment for
Good Reason, following a Change in Control, shall mean the occurrence of any of
the following events or conditions:



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                  (a) a change in the Participant's status, title, position or
         responsibilities (including reporting responsibilities) which
         represents a substantial reduction of the status, title, position or
         responsibilities as in effect immediately prior thereto; the assignment
         to the Participant of any duties or responsibilities which are
         inconsistent with such status, title, position or responsibilities; or
         any removal of the Participant from or failure to reappoint or reelect
         the Participant to any of such positions, except in connection with the
         termination of the Participant's employment for Cause, for Permanent
         Disability or as a result of his or her death, or by the Participant
         other than for Good Reason;

                  (b) a reduction in the Participant's annual base salary;

                  (c) the Company's requiring the Participant (without the
         consent of the Participant) to be based at any place outside a
         thirty-five (35) mile radius of his or her place of employment prior to
         a Change in Control, except for reasonably required travel on the
         Company's business which is not materially greater than such travel
         requirements prior to the Change in Control;

                  (d) the failure by the Company to (i) continue in effect any
         material compensation or benefit plan in which the Participant was
         participating at the time of the Change in Control, including, but not
         limited to, the Plan, the El Paso Energy Corporation Pension Plan, the
         El Paso Energy Corporation Supplemental Benefits Plan, the El Paso
         Energy Corporation Deferred Compensation Plan and the El Paso Energy
         Corporation Retirement Savings Plan, with any amendments and
         restatements of such plans (or substantially similar successor plans)
         made prior to such Change in Control; or (ii) provide the Participant
         with compensation and benefits at least equal (in terms of benefit
         levels and/or reward opportunities) to those provided for under each
         employee benefit plan, program and practice as in effect immediately
         prior to the Change in Control (or as in effect following the Change in
         Control, if greater);

                  (e) any material breach by the Company of any provision of the
         Plan or of any provision of a Participant's employment agreement, if
         any, with the Company or a Subsidiary; or

                  (f) any purported termination of the Participant's employment
         for Cause by the Company which does not otherwise comply with the terms
         of the Plan or the Participant's employment agreement, if any, with the
         Company or a Subsidiary.

2.11 INCENTIVE AWARD

         A percentage of base salary, fixed dollar amount or other measure of
compensation which Participants are eligible to receive, in cash and/or shares
of



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2001 Omnibus Incentive Compensation Plan
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Restricted Stock, at the end of a Performance Period if certain Performance
Goals are achieved.

2.12 INCENTIVE STOCK OPTION

         An option intended to meet the requirements of an Incentive Stock
Option as defined in Section 422 of the Code, as in effect at the time of grant
of such option, or any statutory provision that may hereafter replace such
Section.

2.13 MANAGEMENT COMMITTEE

         A committee consisting of the Chief Executive Officer and such other
senior officers as the Chief Executive Officer shall designate.

2.14 MAXIMUM ANNUAL EMPLOYEE GRANT

         The Maximum Annual Employee Grant set forth in Section 5.4.

2.15 NONQUALIFIED OPTION

         An option which is not intended to meet the requirements of an
Incentive Stock Option as defined in Section 422 of the Code.

2.16 OPTION PRICE

         The price per share of Common Stock at which an option is exercisable.

2.17 PARTICIPANT

         An eligible employee to whom an option, limited stock appreciation
right, stock appreciation right, Restricted Stock, Incentive Award or
Performance Unit is granted under the Plan as set forth in Section 4.

2.18 PERFORMANCE CYCLE

         That period commencing with January 1 of each year in which the grant
of a Performance Unit is made and ending on December 31 of the third succeeding
year, or such other time period as the Plan Administrator may determine. The
Plan Administrator, it its discretion, may initiate an overlapping Performance
Cycle that begins before an existing Performance Cycle has ended.

2.19 PERFORMANCE GOALS

         The Plan Administrator shall establish one or more performance goals
("Performance Goals") for each Performance Period in writing. Such Performance
Goals



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shall be set no later than the commencement of the applicable Performance
Period, or such later date as may be permitted with respect to
"performance-based" compensation under Section 162(m) of the Code, and shall
establish the amount of any Incentive Award to be granted to each Participant,
subject to Section 5.4 below.

         Each Performance Goal selected for a particular Performance Period
shall be any one or more of the following, either individually, alternatively or
in any combination, applied to either the Company as a whole or to a Subsidiary
or business unit, either individually, alternatively or in any combination, and
measured either annually or cumulatively over a period of years, on an absolute
basis or relative to the pre-established target, to previous years' results or
to a designated comparison group, in each case as specified by the Plan
Administrator: Total Shareholder Return, operating income, pre-tax profit,
earnings per share, cash flow, return on capital, return on equity, return on
net assets, net income, debt reduction, safety, return on investment, revenues,
or Common Stock price. The foregoing terms shall have the same meaning as used
in the Company's financial statements, or if the terms are not used in the
Company's financial statements, they shall have the meaning generally applied
pursuant to general accepted accounting principles, or as used in the industry,
as applicable. The Plan Administrator may appropriately adjust any evaluation of
performance under a Performance Goal to exclude any of the following events that
occurs during a Performance Period: (i) asset write-downs, (ii) litigation or
claim judgments or settlements, (iii) the effect of changes in tax law,
accounting principles or other such laws or provisions affecting reported
results, (iv) accruals for reorganization and restructuring programs, and (v)
extraordinary non-recurring items as described in Accounting Principles Board
Opinion No. 30 and/or in management's discussion and analysis of financial
condition and results of operations appearing in the Company's annual report to
stockholders for the applicable year.

2.20 PERFORMANCE PEER GROUP

         Those publicly held companies selected by the Plan Administrator prior
to the commencement of a Performance Period, or such later date as may be
permitted under Section 162(m) of the Code, consistent with maintaining the
status of Performance Units as "performance-based compensation," to form a
comparative performance group in applying Section 9.4.

2.21 PERFORMANCE PERIOD

         That period of time during which Performance Goals are measured to
determine the vesting or granting of options, limited stock appreciation rights,
stock appreciation rights, Restricted Stock, Performance Units or Incentive
Awards, as the Plan Administrator may determine.



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2.22 PERFORMANCE RANKING POSITION

         The relative placement of the Company's Total Shareholder Return
measured against the Total Shareholder Return of the other companies in the
Performance Peer Group for which purposes rank shall be determined by quartile,
with a ranking in the first (1st) quartile (e.g., the Company's Total
Shareholder Return is equal to or greater than the Total Shareholder Return of
at least seventy-five percent (75%) of the Performance Peer Group) corresponding
to the highest quartile of Total Shareholder Return.

2.23 PERFORMANCE UNIT OR UNITS

         Units of long-term incentive compensation granted to a Participant with
respect to a particular Performance Cycle.

2.24 PERMANENT DISABILITY OR PERMANENTLY DISABLED

         A Participant shall be deemed to have become Permanently Disabled for
purposes of the Plan if the Chief Executive Officer of the Company shall find
upon the basis of medical evidence satisfactory to the Chief Executive Officer
that the Participant is totally disabled, whether due to physical or mental
condition, so as to be prevented from engaging in further employment by the
Company or any of its Subsidiaries, and that such disability will be permanent
and continuous during the remainder of the Participant's life; provided, that
with respect to Section 16 Insiders such determination shall be made by the Plan
Administrator.

2.25 PLAN ADMINISTRATOR

         The Board of Directors or the committee appointed and/or authorized
pursuant to Section 3 to administer the Plan.

2.26 RESTRICTED STOCK

         Common Stock granted under the Plan that is subject to the requirements
of Section 10 and such other restrictions as the Plan Administrator deems
appropriate. References to Restricted Stock in this Plan shall include
Performance Restricted Stock (as defined in Section 5.2) unless the context
otherwise requires.

2.27 RULE 16B-3

         Rule 16b-3 of the General Rules and Regulations under the Exchange Act.

2.28 SECTION 16 INSIDER

         Any person who is selected by the Plan Administrator to receive
options, limited stock appreciation rights, stock appreciation rights,
Restricted Stock, Incentive Awards



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and/or Performance Units pursuant to the Plan and who is subject to the
requirements of Section 16 of the Exchange Act, and the rules and regulations
promulgated thereunder.

2.29 SECTION 162(m)

         Section 162(m) of the Code, and regulations promulgated thereunder.

2.30 SUBSIDIARY

         An entity that is designated by the Plan Administrator as a subsidiary
for purposes of the Plan and that is a corporation, partnership, joint venture,
limited liability company, limited liability partnership, or other entity in
which the Company owns directly or indirectly, fifty percent (50%) or more of
the voting power or profit interests, or as to which the Company or one of its
affiliates serves as general or managing partner or in a similar capacity.
Notwithstanding the foregoing, for purposes of options intended to qualify as
Incentive Stock Options, the term "Subsidiary" shall mean a corporation (or
other entity treated as a corporation for tax purposes) in which the Company
directly or indirectly holds more than fifty percent (50%) of the voting power.

2.31 TOTAL SHAREHOLDER RETURN

         The sum of (i) the appreciation or depreciation in the price of a share
of a company's common stock, and (ii) the dividends and other distributions paid
during the applicable Performance Cycle, expressed as a percentage basis of the
Fair Market Value of such share on the first day of the applicable Performance
Cycle, as calculated in a manner determined by the Plan Administrator.

2.32 VALUATION DATE

         The date for determining the Adjusted Value of vested Units that will
be paid or credited to the Participant or Beneficiary in accordance with Section
9.5 or 9.6. The Valuation Date shall occur on the last day of the applicable
Performance Cycle, or such other time as provided in this Plan, or as the Plan
Administrator may select. The Valuation Date for each Performance Cycle shall be
set forth in the grant of Performance Units and shall be established no later
than the date on which the Performance Goals for a particular Performance Cycle
are selected, except as otherwise specifically provided herein.



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                            SECTION 3 ADMINISTRATION

         3.1 With respect to awards made under the Plan to Section 16 Insiders
or employees subject to Section 162(m), the Plan shall be administered by the
Board of Directors or Compensation Committee of the Board of Directors, which
shall be constituted at all times so as to meet the non-employee director
standards of Rule 16b-3 and the outside director requirements of Section 162(m),
so long as any of the Company's equity securities are registered pursuant to
Section 12(b) or 12(g) of the Exchange Act. Subject to the Board of Directors,
and as may be required by the foregoing sentence, the Plan shall be administered
by the Management Committee.

         No member of the Board of Directors or the Plan Administrator shall
vote with respect directly to the granting of options, limited stock
appreciation rights, stock appreciation rights, Restricted Stock, Incentive
Awards and/or Performance Units hereunder to himself or herself, as the case may
be, and, if state corporate law does not permit a committee to grant options,
limited stock appreciation rights, stock appreciation rights, Restricted Stock,
Incentive Awards and Performance Units to directors, then any option, limited
stock appreciation right, stock appreciation right, Restricted Stock, Incentive
Award or Performance Unit granted under the Plan to a director for his or her
services as such shall be approved by the full Board of Directors.

         3.2 Except for the terms and conditions explicitly set forth in the
Plan, the Plan Administrator shall have sole authority to construe and interpret
the Plan, to establish, amend and rescind rules and regulations relating to the
Plan, to select persons eligible to participate in the Plan, to grant options,
limited stock appreciation rights, stock appreciation rights, Restricted Stock,
Incentive Awards and Performance Units hereunder, to administer the Plan, to
make recommendations to the Board of Directors, to determine whether, and the
extent to which, adjustments are made pursuant to Section 5.5 hereof, and to
take all such steps and make all such determinations in connection with the Plan
and the options, limited stock appreciation rights, stock appreciation rights,
Restricted Stock, Incentive Awards and Performance Units granted thereunder as
it may deem necessary or advisable, which determination shall be final and
binding upon all Participants, so long as such interpretation and construction
with respect to Incentive Stock Options corresponds to any applicable
requirements of Section 422 of the Code. The Plan Administrator shall cause the
Company at its expense to take any action related to the Plan which may be
necessary to comply with the provisions of any federal or state law or any
regulations issued thereunder, which the Plan Administrator determines are
intended to be complied with.

         3.3 Each member of any committee acting as Plan Administrator, while
serving as such, shall be considered to be acting in his or her capacity as a
director of the Company. Members of the Board of Directors and members of any
committee acting under the Plan shall be fully protected in relying in good
faith upon the advice of counsel and shall incur no liability except for gross
negligence or willful misconduct in the performance of their duties.



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                              SECTION 4 ELIGIBILITY

         To be eligible for selection by the Plan Administrator to participate
in the Plan, an individual must be an officer or key management employee (other
than an employee who is a member of a unit covered by a collective bargaining
agreement) of the Company, or of any Subsidiary, as of the date on which the
Plan Administrator grants to such individual an option, limited stock
appreciation right, stock appreciation right, Restricted Stock, Incentive Award
or Performance Unit or a person who, in the judgment of the Plan Administrator,
holds a position of responsibility and is able to contribute substantially to
the Company's continued success. Members of the Board of Directors of the
Company who are full-time salaried officers shall be eligible to participate.
Members of the Board of Directors who are not employees are not eligible to
participate in this Plan.


                SECTION 5 SHARES AND UNITS AVAILABLE FOR THE PLAN

         5.1 Subject to Section 5.5, the maximum number of shares that may be
issued upon settlement of Incentive Awards or Performance Units and exercise of
options, limited stock appreciation rights, stock appreciation rights and
Restricted Stock granted under the Plan is six million (6,000,000) shares of
Common Stock, from shares held in the Company's treasury or out of authorized
but unissued shares of the Company, or partly out of each, as shall be
determined by the Plan Administrator. For purposes of Section 5.1, the aggregate
number of shares of Common Stock issued under this Plan at any time shall equal
only the number of shares actually issued upon exercise or settlement of
options, limited stock appreciation rights, stock appreciation rights,
Restricted Stock, Incentive Awards and Performance Units and not returned to the
Company upon cancellation, expiration or forfeiture of any such award or
delivered (either actually or by attestation) in payment or satisfaction of the
purchase price, exercise price or tax obligation of the award.

         5.2 Notwithstanding the foregoing, and subject to Section 5.5, the
number of shares for which Restricted Stock may be granted pursuant to Section
10 of the Plan may not exceed two million (2,000,000) shares of Common Stock,
including the granting or vesting of Restricted Stock that is in compliance with
the performance-based requirements of Section 162(m) (the "Performance
Restricted Stock").

         5.3 Subject to Section 5.5, the number of Performance Units which may
be granted under the Plan may not exceed five hundred thousand (500,000) Units.
Units that have been granted and are fully vested or that still may become fully
vested under the terms of the Plan shall reduce the number of outstanding Units
that are available for use in making future grants under the Plan.

         5.4 For purposes of qualifying as "performance-based compensation"
under Section 162(m), the maximum number of shares, as calculated in accordance
with the provisions of Section 5.1, and maximum amount with respect to which
awards under this



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2001 Omnibus Incentive Compensation Plan
<PAGE>   14

Plan may be granted to any eligible employee in any one year shall not exceed:
(a) one million (1,000,000) shares, in the case of options (and related limited
stock appreciation rights or stock appreciation rights); (b) one million
(1,000,000) shares in the case of shares of Restricted Stock (whether or not
such Restricted Stock is Performance Restricted Stock) or shares issuable upon
settlement of Performance Units; and (c) ten million dollars ($10,000,000) in
cash, Restricted Stock or a combination thereof, in the case of Incentive
Awards. With respect to Performance Units, the maximum number of Units granted
to any eligible employee for any Performance Cycle shall not exceed one hundred
thousand (100,000) Performance Units, each with a value of not more than $150.
Collectively, the foregoing maximums referred to in this Section 5.4 shall be
referred to as the "Maximum Annual Employee Grant."

         5.5 In the event of a recapitalization, stock split, stock dividend,
exchange of shares, merger, reorganization, change in corporate structure or
shares of the Company or similar event, the Board of Directors or the Plan
Administrator, may make, and following a Change in Control may make, appropriate
adjustments in the number of shares authorized for issuance under the Plan, the
Maximum Annual Employee Grant and, with respect to outstanding options, limited
stock appreciation rights, stock appreciation rights, and Restricted Stock, the
Plan Administrator may make appropriate adjustments in the number of shares and
the Option Price, except that any such adjustments for purposes of Sections 5.4
and 6.3 shall be consistent with the requirements under Code Sections 162(m) and
422, respectively.


                             SECTION 6 STOCK OPTIONS

         6.1 Options may be granted to eligible employees in such number, and at
such times during the term of the Plan as the Plan Administrator shall
determine, the Plan Administrator taking into account the duties of the
respective employees, their present and potential contributions to the success
of the Company, and such other factors as the Plan Administrator shall deem
relevant in accomplishing the purposes of the Plan. The Plan Administrator may
grant an option or provide for the grant of an option, either from time to time
in the discretion of the Plan Administrator or automatically upon the occurrence
of specified events, including, without limitation, the achievement of
performance goals, the satisfaction of an event or condition within the control
of the recipient of the option or within the control of others. The granting of
an option shall take place when the Plan Administrator by resolution, written
consent or other appropriate action determines to grant such an option to a
particular Participant at a particular price. Each option shall be evidenced by
a written instrument delivered by or on behalf of the Company containing
provisions not inconsistent with the Plan, which may (but need not) require the
Participant's signature.

         6.2 An option granted under the Plan may be either an Incentive Stock
Option or a Nonqualified Option.



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         6.3 Each provision of the Plan and each Incentive Stock Option granted
thereunder shall be construed so that each such option shall qualify as an
Incentive Stock Option, and any provision thereof that cannot be so construed
shall be disregarded, unless the Participant agrees otherwise. The total number
of shares which may be purchased upon the exercise of Incentive Stock Options
granted under the Plan shall not exceed the total specified in Section 5.1, as
adjusted pursuant to Section 5.5. Incentive Stock Options, in addition to
complying with the other provisions of the Plan relating to options generally,
shall be subject to the following conditions:

         (a) Ten Percent (10%) Stockholders

                  A Participant must not, immediately before an Incentive Stock
         Option is granted to him or her, own stock representing more than ten
         percent (10%) of the voting power or value of all classes of stock of
         the Company or of a Subsidiary. This requirement is waived if (i) the
         Option Price of the Incentive Stock Option to be granted is at least
         one hundred ten percent (110%) of the Fair Market Value of the stock
         subject to the option, determined at the time the option is granted,
         and (ii) the option is not exercisable more than five (5) years from
         the date the option is granted.

         (b) Annual Limitation

                  To the extent that the aggregate Fair Market Value (determined
         at the time of the grant of the option) of the stock with respect to
         which Incentive Stock Options are exercisable for the first time by the
         Participant during any calendar year exceeds One Hundred Thousand
         Dollars ($100,000), such options shall be treated as Nonqualified
         Options.

         (c) Additional Terms

                  Any other terms and conditions which the Plan Administrator
         determines, upon advice of counsel, must be imposed for the option to
         be an Incentive Stock Option.

         6.4 Except as otherwise provided in Section 6.3, all Incentive Stock
Options and Nonqualified Options under the Plan shall be granted subject to the
following terms and conditions:

         (a) Option Price

                  The Option Price shall be determined by the Plan
         Administrator, but shall not be less than one hundred percent (100%) of
         the Fair Market Value of the Common Stock on the date the option is
         granted.



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         (b) Duration of Options

                  Options shall be exercisable at such time and under such
         conditions as set forth in the option grant, but in no event shall any
         Incentive Stock Option be exercisable subsequent to the day before the
         tenth anniversary of the date this Plan was adopted, nor shall any
         option (including an Incentive Stock Option) be exercisable later than
         the tenth anniversary of the date of its grant.

         (c) Exercise of Options

                  Subject to Section 6.4(j), a Participant may not exercise an
         option until the Participant has completed one (1) year of continuous
         employment with the Company or any of its Subsidiaries from and
         including the date on which the option is granted, or such other period
         as the Plan Administrator may determine in a particular case. This
         requirement is waived in the event of death, Permanent Disability of a
         Participant or a Change in Control before such period of continuous
         employment is completed. Thereafter, shares of Common Stock covered by
         an option may be purchased at one time or in such installments over the
         balance of the option period as may be provided in the option grant.
         Any shares not purchased on the applicable installment date may be
         purchased thereafter at any time prior to the final expiration of the
         option. To the extent that the right to purchase shares has accrued
         thereunder, options may be exercised from time to time by written
         notice to the Company setting forth the number of shares with respect
         to which the option is being exercised.

         (d) Payment

                  The purchase price of shares purchased under options shall be
         paid in full to the Company upon the exercise of the option by
         delivery of    consideration equal to the product of the Option Price
         and the number of shares purchased (the "Purchase Price"). Such
         consideration may be either (i) in cash or (ii) at the discretion of
         the Plan Administrator, in Common Stock already owned by the
         Participant for at least six (6) months, or any combination of cash
         and Common Stock. The Fair Market Value of such Common Stock as
         delivered shall be valued as of the day prior to delivery. The Plan
         Administrator can determine that additional forms of payment will be
         permitted. To the extent permitted by the Plan Administrator and
         applicable laws and regulations (including, but not limited to,
         federal tax and securities laws, regulations and state corporate law),
         an option may also be exercised in a "cashless" exercise by delivery
         of a properly executed exercise notice together with irrevocable
         instructions to a broker selected by the Company to promptly deliver
         to the Company the amount of sale or loan proceeds to pay the Purchase
         Price. A Participant shall have none of the rights of a stockholder
         until the shares of Common Stock are issued to the Participant.



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                  If specifically authorized in the option grant, a Participant
         may elect to pay all or a portion of the Purchase Price by having
         shares of Common Stock with a Fair Market Value equal to all or a
         portion of the Purchase Price be withheld from the shares issuable to
         the Participant upon the exercise of the option; provided that such
         shall be permitted of a Participant who is a Section 16 Insider only if
         approved in advance by the Board of Directors or the Compensation
         Committee, if required by Section 16, and rules promulgated thereunder,
         of the Exchange Act. The Fair Market Value of such Common Stock as is
         withheld shall be determined as of the same day as the exercise of the
         option.

                  Notwithstanding any other provision in this Plan to the
         contrary and unless the Plan Administrator shall otherwise determine,
         in the event of a "cashless" exercise, and for that purpose only under
         this Plan, a Participant's compensation shall be equal to the
         difference between the actual sales price received for the underlying
         Common Stock and the Option Price. For all other purposes under this
         Plan, the Fair Market Value shall be the value against which
         compensation is determined.

         (e) Restrictions

                  The Plan Administrator shall determine and reflect in the
         option grant, with respect to each option, the nature and extent of the
         restrictions, if any, to be imposed on the shares of Common Stock which
         may be purchased thereunder, including, but not limited to,
         restrictions on the transferability of such shares acquired through the
         exercise of such options for such periods as the Plan Administrator may
         determine and, further, that in the event a Participant's employment by
         the Company, or a Subsidiary, terminates during the period in which
         such shares are nontransferable, the Participant shall be required to
         sell such shares back to the Company at such prices as the Plan
         Administrator may specify in the option. In addition, the Plan
         Administrator may require that a Participant who wants to effectuate a
         "cashless" exercise of options be required to sell the shares of Common
         Stock acquired in the associated exercise to the Company, or in the
         open market through the use of a broker selected by the Company, at
         such price and on such terms as the Plan Administrator may determine at
         the time of grant, or otherwise. Without limiting the foregoing, the
         Plan Administrator may impose such restrictions, conditions or
         limitations as it determines appropriate as to the timing and manner of
         any resales by the Participant or other subsequent transfers by the
         Participant of any shares issued as a result of the exercise of an
         option, including without limitation (i) restrictions under an insider
         trading policy, (ii) restrictions designed to delay and/or coordinate
         the timing and manner of sales by the Participant and other
         participants and (iii) restrictions as to the use of a specified
         brokerage firm for such resales or other transfers.



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         (f) Nontransferability of Options

                  Options granted under the Plan and the rights and privileges
         conferred thereby shall not be subject to execution, attachment or
         similar process and may not be transferred, assigned, pledged or
         hypothecated in any manner (whether by operation of law or otherwise)
         other than by will or by the applicable laws of descent and
         distribution. Notwithstanding the foregoing and only as provided by the
         Plan Administrator or the Company, as applicable, Nonqualified Options
         may be transferred to a Participant's immediate family members,
         directly or indirectly or by means of a trust, corporate entity or
         partnership (a person who thus acquires this option by such transfer, a
         "Permitted Transferee"). A transfer of an option may only be effected
         by the Company at the request of the Participant and shall become
         effective upon the Permitted Transferee agreeing to such terms as the
         Plan Administrator may require and only when recorded in the Company's
         record of outstanding options. In the event an option is transferred as
         contemplated hereby, the option may not be subsequently transferred by
         the Permitted Transferee except a transfer back to the Participant or
         by will or the laws of descent and distribution. A transferred option
         may be exercised by a Permitted Transferee to the same extent as, and
         subject to the same terms and conditions as, the Participant (except as
         otherwise provided herein), as if no transfer had taken place. As used
         herein, "immediate family" shall mean, with respect to any person, such
         person's child, stepchild, grandchild, parent, stepparent, grandparent,
         spouse, sibling, mother-in-law, father-in-law, son-in-law,
         daughter-in-law, brother-in-law, sister-in-law, and shall include
         adoptive relationships. In the event of exercise of a transferred
         option by a Permitted Transferee, any amounts due to (or to be withheld
         by) the Company upon exercise of the option shall be delivered by (or
         withheld from amounts due to) the Participant, the Participant's estate
         or the Permitted Transferee, in the reasonable discretion of the
         Company.

                  In addition, to the extent permitted by applicable law and
         Rule 16b-3, the Plan Administrator may permit a recipient of a
         Nonqualified Option to designate in writing during the Participant's
         lifetime a Beneficiary to receive and exercise the Participant's
         Nonqualified Options in the event of such Participant's death (as
         provided in Section 6.4(i)). A designation by a Participant under the
         Company's Omnibus Compensation Plan dated as of January 1, 1992, as
         amended, the Company's 1995 Omnibus Compensation Plan effective as of
         January 13, 1995, as amended and restated, or the 1999 Omnibus
         Incentive Compensation Plan effective as of January 20, 1999 (the
         "Predecessor Plans"), shall remain in effect under the Plan for any
         options unless such designation is revoked or changed under the Plan.
         Except as otherwise provided for herein, if any Participant attempts to
         transfer, assign, pledge, hypothecate or otherwise dispose of any
         option under the Plan or of any right or privilege conferred thereby,
         contrary to the provisions of the Plan or such option, or suffers the
         sale or levy or any attachment or similar process upon the rights and
         privileges conferred hereby, all affected options held by such
         Participant shall be immediately forfeited.



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         (g) Purchase for Investment

                  The Plan Administrator shall have the right to require that
         each Participant or other person who shall exercise an option under the
         Plan, and each person into whose name shares of Common Stock shall be
         issued pursuant to the exercise of an option, represent and agree that
         any and all shares of Common Stock purchased pursuant to such option
         are being purchased for investment only and not with a view to the
         distribution or resale thereof and that such shares will not be sold
         except in accordance with such restrictions or limitations as may be
         set forth in the option or by the Plan Administrator. This Section
         6.4(g) shall be inoperative during any period of time when the Company
         has obtained all necessary or advisable approvals from governmental
         agencies and has completed all necessary or advisable registrations or
         other qualifications of shares of Common Stock as to which options may
         from time to time be granted as contemplated in Section 12.

         (h) Termination of Employment

                  Upon the termination of a Participant's employment for any
         reason other than death or Permanent Disability, the Participant's
         option shall be exercisable only to the extent that it was then
         exercisable and, unless provided otherwise in this Plan or in the grant
         letter, shall immediately be forfeited to the extent not exercisable.
         Unless the term of the options expires sooner, the exercisable portion
         of such options shall expire according to the following schedule;
         provided, that the Plan Administrator may at any time determine in a
         particular case that specific limitations and restrictions under the
         Plan shall not apply:

                  (i) Retirement

                           The option shall expire, unless exercised, thirty-six
                  (36) months after the Participant's retirement from the
                  Company or any Subsidiary.

                  (ii) Disability

                           The option shall expire, unless exercised, thirty-six
                  (36) months after the Participant's termination on account of
                  Permanent Disability.

                  (iii) Termination

                           Subject to subparagraphs (iv) and (v) below, the
                  option shall expire, unless exercised, not more than
                  thirty-six (36) months, as specified in the grant letter,
                  after a Participant resigns or is terminated as an employee of
                  the Company or any of its Subsidiaries other than as a result
                  of retirement, disability or death, unless the Chief Executive
                  Officer of the Company shall have determined in a specific
                  case that the option should expire sooner or should terminate
                  when the Participant's employment



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2001 Omnibus Incentive Compensation Plan
<PAGE>   20

                  status ceases; provided, however, that for Section 16
                  Insiders, such determination shall be made by the Plan
                  Administrator.

                  (iv) Termination Following a Change in Control

                           The option shall expire, unless exercised or expiring
                  earlier in accordance with its original terms, thirty-six (36)
                  months after a Participant's termination of employment (other
                  than a termination by the Company for Cause or a voluntary
                  termination by the Participant other than for Good Reason)
                  following a Change in Control, provided that said termination
                  of employment occurs within two (2) years following a Change
                  in Control.

                  (v) All Other Terminations

                           Notwithstanding subparagraphs (iii) and (iv) above,
                  the option shall expire upon termination of employment for
                  Cause and any option intended to qualify as an Incentive Stock
                  Option shall state that it will not qualify for tax treatment
                  as an Incentive Stock Option if it is exercised more than one
                  year after the Participant's termination of employment on
                  account of disability (as defined in Section 22(e)(3) of the
                  Code) and shall expire three (3) months after the
                  Participant's termination of employment other than on account
                  of death, Permanent Disability or termination for Cause.

         (i) Death of Participant

                  Upon the death of a Participant, whether during the
         Participant's period of employment or during the period prior to the
         option's expiration as provided in Section 6.4(h), the option shall
         expire, unless the original term of the option expires sooner, twelve
         (12) months after the date of the Participant's death, unless the
         option is exercised within such twelve (12) month period by the
         Participant's Beneficiary, legal representatives, estate or the person
         or persons to whom the deceased's option rights shall have passed by
         will or the laws of descent and distribution; provided, that the Plan
         Administrator may determine in a particular case that specific
         limitations and restrictions under the Plan shall not apply.
         Notwithstanding any other Plan provisions pertaining to the times at
         which options may be exercised, no option shall continue to be
         exercisable, pursuant to Section 6.4(h) or this Section 6.4(i), at a
         time that would violate the maximum duration of Section 6.4(b).

         (j) Change in Control

                  Notwithstanding other Plan provisions pertaining to the times
         at which options may be exercised, all outstanding options, to the
         extent not then currently



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         exercisable, shall become exercisable in full upon the occurrence of a
         Change in Control. No option (whether or not intended to be an
         Incentive Stock Option) shall continue to be exercisable, pursuant to
         Sections 6.4(h) and 6.4(i), at a time that would violate the maximum
         duration of Section 6.4(b).

         (k) Deferral Election

                  A Participant may elect irrevocably (at a time and in a manner
         determined by the Plan Administrator or the Company, as appropriate)
         prior to exercising an option granted under the Plan that issuance of
         shares of Common Stock upon exercise of such option and/or associated
         stock appreciation right shall be deferred until a pre-specified date
         in the future or until the Participant ceases to be employed by the
         Company or any of its Subsidiaries, as elected by the Participant.
         After the exercise of any such option and prior to the issuance of any
         deferred shares, the number of shares of Common Stock issuable to the
         Participant shall be credited to the deferred stock account (or such
         other account(s) as the Management Committee shall deem necessary and
         appropriate) under a memorandum deferred account established pursuant
         the Company's then-existing Deferred Compensation Plan (as it may be
         further amended) (the "Deferred Compensation Plan"), and any dividends
         or other distributions paid on the Common Stock (or its equivalent)
         shall be deemed reinvested in additional shares of Common Stock (or its
         equivalent) until all credited deferred shares shall become issuable
         pursuant to the Participant's election, unless the management committee
         of the Deferred Compensation Plan shall otherwise determine.

         (l) Repricing

                  The Company shall not reprice any options, except for
         adjustments pursuant to Section 5.5, as determined by the Plan
         Administrator, unless such action is subject to approval of the
         Company's stockholders or unless the number of shares available for
         issuance under the Plan is reduced by the number of shares that were
         subject to options affected by such action. For purposes of the Plan,
         the term "reprice" shall mean lowering the exercise price of previously
         awarded Nonqualified Options within the meaning of Item 402(i) under
         Securities and Exchange Commission Regulation S-K.


                       SECTION 7 STOCK APPRECIATION RIGHTS

         7.1 The Plan Administrator may grant stock appreciation rights to
Participants in connection with any option granted under the Plan, either at the
time of the grant of such option or at any time thereafter during the term of
the option. Such stock appreciation rights shall cover the same number of shares
covered by the options (or such lesser number of shares of Common Stock as the
Plan Administrator may determine) and shall, except as provided in Section 7.3,
be subject to the same terms and conditions as



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El Paso Energy Corporation                                               Page 18
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the related options and such further terms and conditions not inconsistent with
the Plan as shall from time to time be determined by the Plan Administrator.

         7.2 Each stock appreciation right shall entitle the holder of the
related option to surrender to the Company unexercised the related option, or
any portion thereof, and to receive from the Company in exchange therefor an
amount equal to the excess of the Fair Market Value of one share of Common Stock
on the date the right is exercised over the Option Price per share times the
number of shares covered by the option, or portion thereof, which is
surrendered. Payment shall be made in shares of Common Stock valued at Fair
Market Value as of the date the right is exercised, or in cash, or partly in
shares and partly in cash, at the discretion of the Plan Administrator. Stock
appreciation rights may be exercised from time to time upon actual receipt by
the Company of written notice stating the number of shares of Common Stock with
respect to which the stock appreciation right is being exercised. The value of
any fractional shares shall be paid in cash.

         7.3 Stock appreciation rights are subject to the following
restrictions:

                  (a) Each stock appreciation right shall be exercisable at such
         time or times as the option to which it relates shall be exercisable,
         or at such other times as the Plan Administrator may determine. In the
         event of death or Permanent Disability of a Participant during
         employment but before the Participant has completed such period of
         continuous employment, such stock appreciation right shall be
         exercisable, but only within the period specified in the related
         option. In the event of a Change in Control, the requirement that a
         Participant shall have completed a one (1) year period of continuous
         employment is waived with respect to a Participant who is employed by
         the Company at the time of the Change in Control but who, within the
         one (1) year period, voluntarily terminates employment for Good Reason
         or is terminated by the Company other than for Cause.

                  (b) Except following a Change in Control, each request to
         exercise a stock appreciation right shall be subject to approval or
         denial in whole or in part by the Plan Administrator in its sole
         discretion. Denial or approval of such request shall not require a
         subsequent request to be similarly treated by the Plan Administrator.

                  (c) The right of a Participant to exercise a stock
         appreciation right shall be canceled if and to the extent the related
         option is exercised or canceled. To the extent that a stock
         appreciation right is exercised, the related option shall be deemed to
         have been surrendered unexercised and canceled.

                  (d) A holder of stock appreciation rights shall have none of
         the rights of a stockholder until shares of Common Stock, if any, are
         issued to such holder pursuant to such holder's exercise of such
         rights.



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                  (e) The acquisition of Common Stock pursuant to the exercise
         of a stock appreciation right shall be subject to the same restrictions
         as would apply to the acquisition of Common Stock acquired upon
         exercise of the related option, as set forth in Section 6.4.


                   SECTION 8 LIMITED STOCK APPRECIATION RIGHTS

         8.1 The Plan Administrator may grant limited stock appreciation rights
to Participants in connection with any options granted under the Plan, either at
the time of the grant of such option or at any time thereafter during the term
of the option. Such limited stock appreciation rights shall cover the same
number of shares covered by the options (or such lesser number of shares of
Common Stock as the Plan Administrator may determine) and shall, except as
provided in Section 8.3, be subject to the same terms and conditions as the
related options and such further terms and conditions not inconsistent with the
Plan as shall from time to time be determined by the Plan Administrator.

         8.2 Each limited stock appreciation right shall entitle the holder of
the related option to surrender to the Company the unexercised portion of the
related option and to receive from the Company in exchange therefor an amount in
cash equal to the excess of the Fair Market Value of one (1) share of Common
Stock on the date the right is exercised over the Option Price per share times
the number of shares covered by the option, or portion thereof, which is
surrendered.

         8.3 Limited stock appreciation rights are subject to the following
restrictions:

                  (a) Limited stock appreciation rights shall be exercisable
         only to the same extent and subject to the same conditions as the
         options related thereto are exercisable, as provided in Section 6.4(j).

                  (b) The right of a Participant to exercise a limited stock
         appreciation right shall be canceled if and to the extent the related
         option is exercised. To the extent that a limited stock appreciation
         right is exercised, the related option shall be deemed to have been
         surrendered unexercised and canceled.


                           SECTION 9 PERFORMANCE UNITS

9.1   GRANTS OF UNITS

         Subject to the Maximum Annual Employee Grant, Units may be granted to
Participants in such number as the Plan Administrator shall determine, taking
into account the duties of the respective Participants, their present and
potential contributions to the success of the Company or its Subsidiaries, their
compensation provided by other



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El Paso Energy Corporation                                               Page 20
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<PAGE>   24

incentive plans, their salaries, and such other factors as the Plan
Administrator shall deem appropriate. Normally, Units will be granted only at
the beginning of each Performance Cycle except in cases where a prorated grant
may be made in mid-cycle to a newly eligible Participant or a Participant whose
job responsibilities have significantly changed during the cycle.

9.2 NOTICE TO PARTICIPANTS

         The Plan Administrator shall notify each Participant in writing of the
grant of Units to the Participant. Such notice shall set forth the Total
Shareholder Return requirements, vesting schedule and other terms and conditions
applicable to such Units, and may (but need not) require the Participant's
signature.

9.3 VESTING

         (a) Vesting Schedule

                  The Plan Administrator shall adopt a vesting schedule for each
         year of a Performance Cycle. Vesting of Units for each year may (i)
         occur automatically after a Participant has completed the specified
         period of continuous employment with the Company or any of its
         Subsidiaries from the date of grant of such Units, (ii) be contingent
         upon attaining certain levels of Total Shareholder Return for the year
         in which the Units are eligible to vest, or (iii) occur at such other
         times or subject to such other criteria as the Plan Administrator may
         determine. The Plan Administrator may, in its discretion, at any time
         prior to a Change in Control alter the vesting guidelines in the event
         of unusual circumstances provided that to the extent applicable any
         such discretion shall be exercised in a manner consistent with Section
         162(m). Vesting of Units with respect to Participants who begin
         participation or receive an additional grant of Units during the
         Performance Cycle will be determined by the Plan Administrator at the
         time of grant.

         (b) Change in Control

                  Notwithstanding the foregoing vesting provisions, upon a
         Change in Control all unvested Units shall become fully vested on a pro
         rata basis to the maximum extent to which they could have vested as of
         the end of the year in which the Change in Control occurs.



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9.4 VALUATION OF PERFORMANCE UNITS

         All Performance Units granted to Participants under the Plan shall be
valued as follows:

         (a) Initial and Continuing Value

                  Each Performance Unit shall have an initial value of one
         hundred dollars ($100) as of the date of the grant of Performance
         Units. Except where the Adjusted Value of Performance Units is
         determined as provided under Section 9.4(b), each Performance Unit
         shall continue to have a dollar value of one hundred dollars ($100) on
         each date subsequent to the date of grant of the Performance Unit.

         (b) Adjusted Value

                  The determination of the Adjusted Value of Performance Units
         for benefit payments under Sections 9.5(b)(i) and 9.5(b)(ii) as of any
         relevant Valuation Date shall be made based on the Company's
         Performance Ranking Position for the applicable Performance Cycle
         compared to the Performance Ranking Position of the Performance Peer
         Group, based on the following schedule:

<TABLE>
<CAPTION>
                          Company's Performance                        Adjusted
                            Ranking Position                            Value
                          ---------------------                        --------
<S>                                                                    <C>
                              1st Quartile                              $ 150
                              2nd Quartile                              $ 100
                              3rd Quartile                              $  50
                              4th Quartile                              $   0
</TABLE>

         If any company which is a member of the Performance Peer Group (i)
         ceases to exist by reason of a liquidation, merger or other
         transaction; (ii) undergoes a significant alteration in size, through
         recapitalization or otherwise, such that its total market
         capitalization as determined from its published financial statements is
         more than fifty percent (50%) greater or less than its total market
         capitalization as of the grant date for the applicable Performance
         Cycle; or (iii) otherwise changes its line of business significantly to
         make it inappropriate to use such company in comparison, and if such
         event(s) occurs after the time the Plan Administrator can alter the
         Performance Peer Group under Section 2.20 above, then such company
         shall be considered to remain in the Performance Peer Group, and to
         have achieved a Total Shareholder Return less than the Company's Total
         Shareholder Return without regard to any actual Total Shareholder
         Return actually achieved by such company, provided, however, that the
         Plan Administrator shall have the authority to reduce the Adjusted
         Value of Performance Units in such event if it determines that such
         reduction is appropriate in view of the Company's



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<PAGE>   26

         performance relative to those companies in the Performance Peer Group
         and not described in clauses (i), (ii) or (iii), above.

9.5 ENTITLEMENT TO PAYMENT

         (a) Performance Certification

                  The Plan Administrator shall certify in writing, prior to
         payment of the Performance Units pursuant to this Section 9.5, the
         Company's Performance Ranking Position. In no event will an award be
         payable under this Section 9 if the Company's Performance Ranking
         Position is in the fourth (4th) quartile.

         (b) Eligibility for Benefit Payments

                  Benefit payments with respect to vested Performance Units
         shall be paid under the following circumstances:

                  (i) Primary Benefit Payment

                           Upon the expiration of each Performance Cycle, all
                  uncanceled Performance Units granted with respect to such
                  Performance Cycle shall vest and benefit payments with respect
                  to such Performance Units shall become payable. A Participant
                  who has remained an employee continuously from the date of the
                  grant of the Performance Units for a Performance Cycle through
                  the last day of such Performance Cycle shall be eligible to
                  receive a benefit payment equal to the Adjusted Value, as
                  provided for in Section 9.4(b), of the Performance Units (the
                  "Primary Benefit") with respect to and as of the close of such
                  Performance Cycle. The Valuation Date for determining such
                  Adjusted Value shall be established by the Plan Administrator
                  at the time the Performance Units are granted. The amount of
                  any benefit payment payable with respect to Performance Units
                  shall be reduced by the amount of any interim benefit payments
                  made pursuant to Section 9.5(b)(ii) with respect to such
                  Performance Units. If the interim benefit payments exceed the
                  Primary Benefit, no payment shall be made.

                  (ii) Interim Benefit Payments

                           The Plan Administrator may in its sole discretion
                  provide for an interim benefit payment to be made to a
                  Participant with respect to Performance Units granted for any
                  particular Performance Cycle. The right to any interim benefit
                  payment shall be set forth in the grant of Performance Units
                  to a Participant, or at such other time as the Plan
                  Administrator shall determine, and must establish the terms
                  and conditions of such interim benefit payment (including the
                  Company's Total



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                  Shareholder Return which must be attained during such
                  Performance Period). An interim benefit payment may be
                  provided for after the second year of a Performance Cycle. The
                  interim benefit payment shall be based upon the Adjusted Value
                  of the Performance Units, as provided for in Section 9.4(b)
                  for the period up to the date of the interim payment
                  valuation, and the amount of any such payment shall not exceed
                  fifty percent (50%) of such Adjusted Value for the Performance
                  Units which are vested at the end of the second year;
                  provided, however, that such interim payment will be made only
                  if the Company's Performance Ranking Position is in the first
                  (1st) or second (2nd) quartile. The Valuation Date for
                  determining such Adjusted Value shall be set forth in the
                  grant of Performance Units, or at such other time as
                  determined by the Plan Administrator. The Performance Units
                  which are valued for the interim benefit payment shall also be
                  valued in accordance with Section 9.5(b)(i) or Section 9.7 if
                  applicable, to determine what, if any, additional value the
                  Participant may be entitled to. Interim benefit payments may
                  be made to those Participants who have remained employees
                  continuously from the date of the grant of the applicable
                  Performance Units until the date of the interim benefit
                  payment relating to such Performance Units. The amount of any
                  benefit payment payable with respect to Performance Units
                  pursuant to Sections 9.5(b)(i) and 9.5(d) shall be reduced by
                  the amount of any interim benefit payment made pursuant to
                  this Section 9.5(b)(ii), but not below zero.

         (c) Form of Payment

                  A Participant or a Participant's Beneficiary shall be entitled
         to receive from the Company a benefit payment as provided pursuant to
         Sections 9.5(b)(i) or 9.5(b)(ii), as applicable, equal to the product
         of the Adjusted Value and the number of vested Units of a Participant.
         Such payment shall be made as soon as practicable following the
         applicable Valuation Date in accordance with this Section 9.5(c).

                  Except as provided in Sections 9.5(d) and 9.7 (or unless the
         Plan Administrator otherwise determines at any time that the form of
         payment should be changed), each benefit payment made to a Participant
         pursuant to this Section 9, shall be made as follows:



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                  (i) Participants employed by the Company holding the position
                  of Chairman of the Board, President or Chief Executive Officer
                  and Participants employed by Company Subsidiaries holding
                  equivalent positions, but not necessarily the same title,
                  shall receive their Performance Unit payout as follows:

                           (A) 50% (fifty percent) in cash and

                           (B) 50% (fifty percent) in Common Stock.

                  (ii) Participants employed by the Company holding the position
                  of Vice Chairman of the Board, Chief Operating Officer, or
                  Executive Vice President and Participants employed by Company
                  Subsidiaries holding equivalent positions, but not necessarily
                  the same title, shall receive their Performance Unit payout as
                  follows:

                           (A) 60% (sixty percent) in cash and

                           (B) 40% (forty percent) in Common Stock.

                  (iii) Participants employed by the Company holding the
                  position of Senior Vice President and Participants employed by
                  Company Subsidiaries holding equivalent positions, but not
                  necessarily the same title, shall receive their Performance
                  Unit payout as follows:

                           (A) 75% (seventy-five percent) in cash and

                           (B) 25% (twenty-five percent) in Common Stock.

         (d) Retirement, Death, Disability or Termination of Employment

                  Participants (or their Beneficiaries in the case of their
         deaths) who have retired, died, become Permanently Disabled, or who
         have terminated their employment, prior to the end of a Performance
         Cycle shall not be entitled to receive payment from the Company or its
         Subsidiaries for any Units which were not vested as of the time such
         Participants ceased active employment with the Company or its
         Subsidiaries. Notwithstanding Section 9.5(c), such Participants (or
         their Beneficiaries in the case of their deaths) will be entitled to
         receive a cash payment for vested Units in accordance with Section
         9.5(b)(i). No payments shall be made to such Participants (or
         Beneficiaries) pursuant to Section 9.5(b)(ii). Unless the Plan
         Administrator otherwise determines, a Participant who is terminated
         with Cause shall receive no benefit under this Section 9.

9.6 DEFERRED PAYMENT

         Prior to the time that Units first vest pursuant to Section 9.3, the
Participant may, subject to the consent of the Management Committee and in
accordance with procedures that the Management Committee has approved, elect to
have all or a portion (subject to a



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$1,000 minimum) of the lump-sum cash payment payable pursuant to Section 9.5(c)
with respect to such vested Units deferred according to the terms and conditions
of the Company's Deferred Compensation Plan.

9.7 ACCELERATION OF PAYMENT DUE TO CHANGE IN CONTROL

         Upon a Change in Control, the current Performance Cycle shall
immediately end and all vested Units (including Units that vest pursuant to
Section 9.3(b)) shall be paid in cash to Participants based on a value of one
hundred fifty dollars ($150) per Unit. This payment will be reduced to reflect
any interim benefit payments made in accordance with Section 9.5(b)(ii) and
shall be made (i) in a lump sum in cash that is in lieu of any otherwise
applicable form and time of payment for such Units under the Plan and (ii)
within ten (10) days after the Change in Control.


                           SECTION 10 RESTRICTED STOCK

         10.1 Subject to Sections 5.2 and 5.4, Restricted Stock (including
Performance Restricted Stock) may be granted to Participants in such number and
at such times during the term of the Plan as the Plan Administrator shall
determine, the Plan Administrator taking into account the duties of the
respective Participants, their present and potential contributions to the
success of the Company, and such other factors as the Plan Administrator shall
deem relevant in accomplishing the purposes of the Plan. The granting of
Restricted Stock shall take place when the Plan Administrator by resolution,
written consent or other appropriate action determines to grant such Restricted
Stock to a particular Participant. Each grant shall be evidenced by a written
instrument delivered by or on behalf of the Company containing provisions not
inconsistent with the Plan, which may (but need not) require the Participant's
signature. The Participant receiving a grant of Restricted Stock shall be
recorded as a stockholder of the Company. Each Participant who receives a grant
of Restricted Stock shall have all the rights of a stockholder with respect to
such shares (except as provided in the restrictions on transferability),
including the right to vote the shares and receive dividends and other
distributions; provided, however, that no Participant awarded Restricted Stock
shall have any right as a stockholder with respect to any shares subject to the
Participant's Restricted Stock grant prior to the date of issuance to the
Participant of a certificate or certificates, or the establishment of a
book-entry account, for such shares.

         10.2 Notwithstanding any other provision to the contrary in this
Section 10, before Performance Restricted Stock can be granted or vested, as
applicable, the Plan Administrator shall:

         (a) Determine the Performance Goals, if any, applicable to the
         particular Performance Period; and



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         (b) Certify in writing that any such Performance Goals for a particular
         Performance Period have been attained.

         10.3 A grant of Restricted Stock shall entitle a Participant to
receive, on the date or dates designated by the Plan Administrator, or, if
later, upon payment to the Company of the par value of the Common Stock, if
required, in a manner determined by the Plan Administrator, the number of shares
of Common Stock selected by the Plan Administrator. The Plan Administrator may
require, under such terms and conditions as it deems appropriate or desirable,
that the certificates for Restricted Stock delivered under the Plan may be held
in custody by a bank or other institution, or that the Company may itself hold
such shares in custody until the Restriction Period (as defined in Section 10.4)
expires or until restrictions thereon otherwise lapse, and may require, as a
condition of any issuance of Restricted Stock that the Participant shall have
delivered a stock power endorsed in blank relating to the shares of Restricted
Stock.

         10.4 During a period of years following the date of grant, as
determined by the Plan Administrator, which shall in no event be less than one
(1) year (the "Restriction Period"), the Restricted Stock may not be sold,
assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed
of by the recipient, except in the event of death or termination of employment
on account of Permanent Disability or a Change in Control, or the transfer to
the Company as provided under the Plan.

         10.5 Except as provided in Sections 10.4, 10.6 or 10.7, if a
Participant terminates employment with the Company for any reason before the
expiration of the Restriction Period, all shares of Restricted Stock still
subject to restriction shall be forfeited by the Participant to the Company. In
addition, in the event of any attempt by the Participant to sell, exchange,
transfer, pledge or otherwise dispose of shares of Restricted Stock in violation
of the terms of the Plan without the Company's prior written consent, such
shares shall be forfeited to the Company.

         10.6 The Restriction Period for any Participant shall be deemed to end
and all restrictions on shares of Restricted Stock shall lapse, upon the
Participant's death or termination of employment on account of Permanent
Disability or any termination of employment determined by the Plan Administrator
to end the Restriction Period.

         10.7 The Restriction Period for any Participant shall be deemed to end
and all restrictions on shares of Restricted Stock shall terminate immediately
upon a Change in Control.

         10.8 When the restrictions imposed by Section 10.4 expire or otherwise
lapse with respect to one or more shares of Restricted Stock, the Company shall
deliver to the Participant (or the Participant's legal representative,
Beneficiary or heir) one (1) share of Common Stock in cancellation and
satisfaction of each share of Restricted Stock.



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         10.9 Subject to Section 10.3 (and Section 10.2 in the case of
Performance Restricted Stock), a Participant entitled to receive Restricted
Stock under the Plan shall be issued a certificate, or have a book-entry account
established, for such shares. Such certificate, or book-entry account, shall be
registered in the name of the Participant, and shall bear an appropriate legend
reciting the terms, conditions and restrictions, if any, applicable to such
shares and shall be subject to appropriate stop-transfer orders.

         10.10 Restricted Stock awarded to Participants pursuant to Section 11
in lieu of cash shall be considered Performance Restricted Stock for purposes of
the Plan.

         10.11 The Restriction Period for any Participant shall be deemed to end
and all restrictions on shares of Restricted Stock awarded pursuant to Sections
11.5(a)(ii), 11.5(b)(ii), and 11.6 (except for Restricted Stock awarded pursuant
to Section 11.5(c)) shall lapse upon the Participant's death, retirement,
Permanent Disability, or any other involuntary termination without Cause. The
Restriction Period shall be deemed to end and all restrictions on a
Participant's shares of Restricted Stock awarded pursuant to Section 11.5(c)
shall lapse on a pro rata basis measured in years between (i) the amount of time
which has elapsed between the Award Date and the Participant's death,
retirement, Permanent Disability, or any other involuntary termination without
Cause and (ii) the Restriction Period for such shares. All shares of Restricted
Stock for which the Restriction Period has not lapsed as described above shall
be forfeited to the Company. Notwithstanding the foregoing, the Plan
Administrator, or the Management Committee in the case of Participants other
than Section 16 Insiders, may determine that such Restriction Period should not
lapse or that the Restriction Period on additional shares of Restricted Stock
should lapse.

         10.12 A Participant may elect irrevocably (at a time and in the manner
determined by the Plan Administrator or the Company, as appropriate), prior to
vesting of Restricted Stock, that the Participant relinquishes any and all
rights in the shares of Restricted Stock in exchange for an interest in the
Deferred Compensation Plan, in which case receipt of such shares shall be
deferred until a pre-specified date in the future or until the Participant
ceases to be employed by the Company or any of its Subsidiaries, as elected by
the Participant. At the time the restrictions would have otherwise lapsed on the
shares of Restricted Stock (as specified at the time of grant, or otherwise if
changed by the Plan Administrator), the number of shares of Common Stock
issuable to the Participant shall be credited to the deferred stock account (or
such other account(s) as the Management Committee shall deem necessary and
appropriate) under a memorandum deferred account established pursuant to the
Deferred Compensation Plan, and any dividends or other distributions paid on the
Common Stock (or its equivalent) shall be deemed reinvested in additional shares
of Common Stock (or its equivalent) until all credited deferred shares shall
become issuable pursuant to the Participant's election, unless the management
committee of the Deferred Compensation Plan shall otherwise determine.



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                           SECTION 11 INCENTIVE AWARDS

11.1 PROCEDURES FOR INCENTIVE AWARDS

         Prior to the beginning of a particular Performance Period, or such
other date as the Code may allow, the Plan Administrator shall specify in
writing:

         (a) the Participants who shall be eligible to receive an Incentive
         Award for a Performance Period, (b) the Performance Goals for such
         Performance Period, and (c) the maximum Incentive Award amount payable
         to each Participant if the Performance Goals are met.

         Any Participant chosen to participate under this Section 11 for a given
Performance Period shall receive the maximum Incentive Award amount if the
designated Performance Goals are achieved, subject to the discretion of the Plan
Administrator to reduce such award, as described in Section 11.4.

11.2 PERFORMANCE GOAL CERTIFICATION

         An Incentive Award shall become payable to the extent provided herein
in the event that the Plan Administrator certifies in writing prior to payment
of the award that the Performance Goal or Goals selected for a particular
Performance Period has or have been attained. In no event will an award be
payable under this Plan if the threshold level of performance set for each
Performance Goal for the applicable Performance Period is not attained.

11.3 MAXIMUM INCENTIVE AWARD PAYABLE

         The maximum Incentive Award payable under this Plan to any Participant
for any Performance Period shall be ten million dollars ($10,000,000) in cash,
Restricted Stock, or a combination of cash and Restricted Stock.

11.4 DISCRETION TO REDUCE AWARDS; PARTICIPANT'S PERFORMANCE

         The Plan Administrator, in its sole and absolute discretion, prior to a
Change in Control may reduce the amount of any Incentive Award otherwise payable
to a Participant upon attainment of any Performance Goal for the applicable
Performance Period. A Participant's individual performance must be satisfactory,
regardless of the Company's performance and the attainment of Performance Goals,
before he or she may be granted an Incentive Award. In evaluating a
Participant's performance, the Plan Administrator shall consider the Performance
Goals of the Company and the Participant's responsibilities and accomplishments,
and such other factors as it deems appropriate.



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11.5 REQUIRED PAYMENT OF INCENTIVE AWARDS

         The Plan Administrator, or the Management Committee in the case of
Participants other than Section 16 Insiders or employees subject to Section
162(m), shall make a determination within thirty (30) days after the Company's
financial information is available for a particular Performance Period (the
"Award Date") whether the Performance Goals for that Performance Period have
been achieved and the amount of the award for each Participant. In the absence
of an election by the Participant pursuant to Sections 11.6 or 11.7, the award
shall be paid not later than the end of the month following the month in which
the Plan Administrator determines the amount of the award and shall be paid as
follows:

         (a) Participants employed by the Company holding the position of
         Chairman of the Board, President, Chief Executive Officer, Vice
         Chairman of the Board, Chief Operating Officer, Executive Vice
         President, or Senior Vice President and Participants employed by
         Company Subsidiaries with equivalent positions thereto, but not
         necessarily the same titles, shall receive their incentive award as
         follows:

                   (i) 50% (fifty percent) in cash and

                   (ii) 50% (fifty percent) in Restricted Stock.

         (b) Participants employed by the Company holding the position of Vice
         President and Participants employed by Company Subsidiaries with an
         equivalent position thereto, but not necessarily the same title, shall
         receive their incentive award as follows:

                   (i) 75% (seventy-five percent) in cash and

                   (ii) 25% (twenty-five percent) in Restricted Stock.

         (c) Because the Participant bears forfeiture, price fluctuation, and
         other attendant risks during the Restriction Period (as defined in
         Section 10.4) associated with the Restricted Stock awarded under this
         Plan, Participants shall be awarded an additional amount of Restricted
         Stock equal to the amount of Restricted Stock which a Participant is
         awarded pursuant to Sections 11.5(a)(ii) or 11.5(b)(ii), as applicable.

         (d) Notwithstanding subsections (a) and (b) above, the Plan
         Administrator or Management Committee, as appropriate, may determine
         that a Participant must receive a greater amount of his or her award in
         Restricted Stock, up to and including the entire award in Restricted
         Stock. (For purposes of the Plan, such required shares shall be treated
         as being awarded pursuant to Section 11.5(a)(ii) or Section
         11.5(b)(ii), as applicable.) In such event, a Participant shall be
         entitled to the additional shares of Restricted Stock, awarded pursuant
         to Section 11.5(c) above.



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2001 Omnibus Incentive Compensation Plan
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         The value of awards payable in Restricted Stock pursuant to this
Section 11 shall be calculated by using Fair Market Value.

11.6 RESTRICTED STOCK ELECTION

         In lieu of receiving all or any portion of the cash in accordance with
Sections 11.5(a)(i) or 11.5(b)(i), a Participant may elect to receive additional
Restricted Stock with a value equal to the portion of the incentive award which
the Participant would otherwise have received in cash, but has elected to
receive in Restricted Stock ("Restricted Stock Election"). Participants must
make their Restricted Stock Election at such time and in such a manner as
prescribed by the Management Committee. Each Participant who makes the
Restricted Stock Election shall be entitled to the additional Restricted Stock
granted pursuant to Section 11.5(c) with respect to the amount of the
Participant's Restricted Stock Election. Except as provided in Section 10, all
shares of Restricted Stock awarded pursuant to the Restricted Stock Election are
subject to the same terms and conditions as the Restricted Stock a Participant
receives pursuant to Sections 11.5(a)(ii) or 11.5(b)(ii), as applicable.

11.7 DEFERRED PAYMENT

         Each Participant may elect to have the payment of all or a portion of
any Incentive Award made pursuant to Sections 11.5(a)(i) or 11.5(b)(i), as
applicable, for the year deferred according to the terms and conditions of the
Company's Deferred Compensation Plan. The election shall be irrevocable and
shall be made at such time and in such a manner as prescribed by the Management
Committee. The election shall apply only to that year. If a Participant has not
made an election under this Section, any incentive award granted to the
Participant for that year shall be paid pursuant to Sections 11.5 or 11.6, as
applicable.

11.8 PAYMENT UPON CHANGE IN CONTROL

         Notwithstanding any other provision of this Plan, in the event of a
Change in Control of the Company, the Incentive Award attributable to the
Performance Period in which the Change in Control occurs shall become fully
vested and distributable, in cash equal to the Fair Market Value of the cash and
shares of Common Stock that otherwise would have been issued to the Participant,
within thirty (30) days after the date of the Change in Control, in an amount
equal to the greater of the annual incentive percentage of Annual Salary
established by the Plan Administrator, or the following:



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2001 Omnibus Incentive Compensation Plan
<PAGE>   35

                                       Participants employed by the Company
                                       holding any of the following positions
                                       and Participants employed by Company
                                       Subsidiaries with positions equivalent
                                       thereto, but not necessarily with the
         Percentage of Annual Salary   same titles:
         ---------------------------   --------------------------------------

         100% of Annual Salary         Chairman of the Board, President, Chief
                                       Executive Officer, Vice Chairman of the
                                       Board, Chief Operating Officer, or
                                       Executive Vice President

          80% of Annual Salary         Senior Vice President

          60% of Annual Salary         Vice President

         The term "Annual Salary" as used in this Plan shall mean a
         Participant's annual base salary (whether actual or illustrative) in
         effect on the date of a Change in Control.

         In the event a Change in Control is deemed to have occurred after the
end of a Performance Period, but before the Award Date, each Participant shall
be entitled to receive in cash, within thirty (30) days after the date of the
Change in Control, those amounts set forth above in this Section 11.8 for such
Performance Period. Such amounts are in addition to the amount to which
Participants shall be entitled for the Performance Period in which a Change in
Control is deemed to occur.


                   SECTION 12 REGULATORY APPROVALS AND LISTING

         The Company shall not be required to issue any certificate for shares
of Common Stock upon the exercise of an option or a stock appreciation right
granted under the Plan, in payment of an Incentive Award, with respect to a
grant of Restricted Stock or Common Stock awarded as payment of vested Units
prior to:

                  (a) obtaining any approval or ruling from the Securities and
         Exchange Commission, the Internal Revenue Service or any other
         governmental agency which the Company, in its sole discretion, shall
         determine to be necessary or advisable;

                  (b) listing of such shares on any stock exchange on which the
         Common Stock may then be listed; and

                  (c) completing any registration or other qualification of such
         shares under any federal or state laws, rulings or regulations of any
         governmental body which the Company, in its sole discretion, shall
         determine to be necessary or advisable.



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         All certificates, or book-entry accounts, for shares of Common Stock
delivered under the Plan shall also be subject to such stop-transfer orders and
other restrictions as the Plan Administrator may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission,
any stock exchange upon which Common Stock is then listed and any applicable
federal or State securities laws, and the Plan Administrator may cause a legend
or legends to be placed on any such certificates, or notations on such
book-entry accounts, to make appropriate reference to such restrictions. The
foregoing provisions of this paragraph shall not be effective if and to the
extent that the shares of Common Stock delivered under the Plan are covered by
an effective and current registration statement under the Securities Act of
1933, as amended, or if and so long as the Plan Administrator determines that
application of such provisions are no longer required or desirable. In making
such determination, the Plan Administrator may rely upon an opinion of counsel
for the Company. Without limiting the foregoing, the Plan Administrator may
impose such restrictions, conditions or limitations as it determines appropriate
as to the timing and manner of any resales by the Participant or other
subsequent transfers by the Participant of any shares issued under this Plan,
including without limitation (i) restrictions under an insider trading policy,
(ii) restrictions designed to delay and/or coordinate the timing and manner of
sales by the Participant and other Participants and (iii) restrictions as to the
use of a specified brokerage firm for such resales or other transfers.


                   SECTION 13 EFFECTIVE DATE AND TERM OF PLAN

         The Plan was adopted by the Board of Directors on January 29, 2001, and
is subject to approval by the Company's stockholders within the earlier of the
date of the Company's next annual meeting of stockholders and twelve (12) months
after the date the Plan is adopted by the Board of Directors. Subject to the
foregoing condition, options, limited stock appreciation rights, stock
appreciation rights, Restricted Stock, Incentive Awards and Performance Units
may be granted pursuant to the Plan from time to time within the period
commencing upon adoption of the Plan by the Board of Directors and ending ten
(10) years after the earlier of such adoption and the approval of the Plan by
the stockholders. Options, limited stock appreciation rights, stock appreciation
rights, Restricted Stock, Incentive Awards and Performance Units theretofore
granted may extend beyond that date and the terms and conditions of the Plan
shall continue to apply thereto and to shares of Common Stock acquired
thereunder. To the extent required to qualify as "performance-based
compensation" under Section 162(m), shares of Common Stock underlying options,
limited stock appreciation rights, stock appreciation rights, Restricted Stock
and Common Stock granted, subject to stockholder approval of the Plan may not be
vested, paid, exercised or sold until such stockholder approval is obtained.



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<PAGE>   37

                          SECTION 14 GENERAL PROVISIONS

         14.1 Nothing contained in the Plan, or in any option, limited stock
appreciation right, stock appreciation right, Restricted Stock, Incentive Award
or Performance Unit granted pursuant to the Plan, shall confer upon any employee
any right with respect to continuance of employment by the Company or a
Subsidiary, nor interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of such employee at any time with or
without assigning any reason therefor.

         14.2 Grants, vesting or payment of stock options, limited stock
appreciation rights, stock appreciation rights, Restricted Stock, Incentive
Awards or Performance Units shall not be considered as part of a Participant's
salary or used for the calculation of any other pay, allowance, pension or other
benefit unless otherwise permitted by other benefit plans provided by the
Company or its Subsidiaries, or required by law or by contractual obligations of
the Company or its Subsidiaries. Notwithstanding the preceding sentence, the
Restricted Stock awarded pursuant to Section 11.5(c) shall not be considered as
part of a Participant's salary or used for the calculation of any other pay,
allowance, pension, or other benefit unless required by contractual obligations
of the Company or its Subsidiaries.

         14.3 Unless otherwise provided in the Plan, the right of a Participant
or Beneficiary to the payment of any compensation under the Plan may not be
assigned, transferred, pledged or encumbered, nor shall such right or other
interests be subject to attachment, garnishment, execution or other legal
process.

         14.4 Leaves of absence for such periods and purposes conforming to the
personnel policy of the Company, or of its Subsidiaries, as applicable, shall
not be deemed terminations or interruptions of employment, unless a Participant
commences a leave of absence from which he or she is not expected to return to
active employment with the Company or its Subsidiaries. The foregoing
notwithstanding, with respect to Incentive Stock Options, employment shall not
be deemed to continue beyond the first ninety (90) days of such leave unless the
Participant's reemployment rights are guaranteed by statute or contract. With
respect to any Participant who, after the date an award is granted under this
Plan, ceases to be employed by the Company or a Subsidiary on a full-time basis
but remains employed on a part-time basis, the Plan Administrator may make
appropriate adjustments, as determined in its sole discretion, as to the number
of shares issuable under, the vesting schedule of or the amount payable under
any unvested awards held by such Participant.

         14.5 In the event a Participant is transferred from the Company to a
Subsidiary, or vice versa, or is promoted or given different responsibilities,
the stock options, limited stock appreciation rights, stock appreciation rights,
Restricted Stock, Incentive Awards and Performance Units granted to the
Participant prior to such date shall not be affected.



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         14.6 Any amounts (deferred or otherwise) to be paid to Participants
pursuant to the Plan are unfunded obligations. Neither the Company nor any
Subsidiary is required to segregate any monies from its general funds, to create
any trusts or to make any special deposits with respect to this obligation. The
Management Committee, in its sole discretion, may direct the Company to share
with its Subsidiaries the costs of a portion of the Incentive Awards paid to
Participants who are executives of those companies. Beneficial ownership of any
investments, including trust investments which the Company may make to fulfill
this obligation, shall at all times remain in the Company. Any investments and
the creation or maintenance of any trust or any Participant account shall not
create or constitute a trust or a fiduciary relationship between the Plan
Administrator, the Management Committee, the Company or any Subsidiary and a
Participant, or otherwise create any vested or beneficial interest in any
Participant or the Participant's Beneficiary or the Participant's creditors in
any assets of the Company or its Subsidiaries whatsoever. The Participants shall
have no claim against the Company for any changes in the value of any assets
which may be invested or reinvested by the Company with respect to the Plan.

         14.7 The designation of a Beneficiary shall be on a form provided by
the Management Committee, executed by the Participant (with the consent of the
Participant's spouse, if required by the Management Committee for reasons of
community property or otherwise), and delivered to the Management Committee. A
Participant may change his or her Beneficiary designation at any time. A
designation by a Participant under the Predecessor Plans shall remain in effect
under the Plan for any Restricted Stock, Incentive Awards or Performance Units
unless such designation is revoked or changed under the Plan. If no Beneficiary
is designated, if the designation is ineffective, or if the Beneficiary dies
before the balance of a Participant's benefit is paid, the balance shall be paid
to the Participant's spouse, or if there is no surviving spouse, to the
Participant's lineal descendants, pro rata, or if there is no surviving spouse
or any lineal descendant, to the Participant's estate. Notwithstanding the
foregoing, however, a Participant's Beneficiary shall be determined under
applicable state law if such state law does not recognize Beneficiary
designations under plans of this sort and is not preempted by laws which
recognize the provisions of this Section 14.7.

         14.8 The Plan shall be construed and governed in accordance with the
laws of the State of Texas.

         14.9 Appropriate provision shall be made for all taxes required to be
withheld in connection with the exercise, grant or other taxable event with
respect to options, limited stock appreciation rights, stock appreciation
rights, Restricted Stock, Incentive Awards and Performance Units under the
applicable laws and regulations of any governmental authority, whether federal,
state or local and whether domestic or foreign, including, but not limited to,
the required withholding of a sufficient number of shares of Common Stock
otherwise issuable to a Participant to satisfy the said required minimum tax
withholding obligations. To the extent provided by the Plan Administrator, a
Participant is permitted to deliver shares of Common Stock (including shares
acquired



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2001 Omnibus Incentive Compensation Plan
<PAGE>   39

pursuant to the exercise of an option or stock appreciation right other than the
option or stock appreciation right currently being exercised, to the extent
permitted by applicable regulations) for payment of withholding taxes on the
exercise of an option, stock appreciation right, or limited stock appreciation
right, upon the grant or vesting of Restricted Stock or upon the payout of
Incentive Awards or Performance Units. At the election of the Plan Administrator
or, subject to approval of the Plan Administrator at its sole discretion, at the
election of a Participant, shares of Common Stock may be withheld from the
shares issuable to the Participant upon the exercise of an option or stock
appreciation right, upon the vesting of the Restricted Stock or upon the payout
of Performance Units to satisfy tax withholding obligations. The Fair Market
Value of Common Stock as delivered pursuant to this Section 14.9 shall be
determined as of the day prior to delivery, and shall be calculated in
accordance with Section 2.9.

         Any Participant who makes a Section 83(b) election under the Code
shall, within ten (10) days of making such election, notify the Company in
writing of such election and shall provide the Company with a copy of such
election form filed with the Internal Revenue Service.

         A Participant is solely responsible for obtaining, or failing to
obtain, tax advice with respect to participation in the Plan prior to the
Participant's (i) entering into any transaction under or with respect to the
Plan, (ii) designating or choosing the times of distributions under the Plan, or
(iii) disposing of any shares of Common Stock issued under the Plan.

         14.10 The Plan Administrator may in its discretion provide financing to
a Participant in a principal amount sufficient to pay the purchase price of any
award under the Plan and/or to pay the amount of taxes required by law to be
withheld with respect to any award. Any such loan shall be subject to all
applicable legal requirements and restrictions pertinent thereto, including
Regulation G promulgated by the Federal Reserve Board. The grant of an award
shall in no way obligate the Company or the Plan Administrator to provide any
financing whatsoever in connection therewith.

         14.11 The Company and any Subsidiary which is in existence or hereafter
comes into existence shall not be liable to a Participant or any other person as
to (a) the non-issuance or sale of shares of Common Stock as to which the
Company has been unable to obtain from any regulatory body having jurisdiction
the authority deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any shares hereunder; and (b) any tax consequence expected,
but not realized, by any Participant or other person due to the issuance,
exercise, settlement, cancellation or other transaction involving any award
provided for hereunder.



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2001 Omnibus Incentive Compensation Plan
<PAGE>   40

            SECTION 15 COMPLIANCE WITH RULE 16b-3 AND SECTION 162(m)

         The Company's intention is that, so long as any of the Company's equity
securities are registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, with respect to awards granted to or held by Section 16 Insiders, the Plan
shall comply in all respects with Rule 16b-3 and Section 162(m) and, if any Plan
provision is later found not to be in compliance with Rule 16b-3 or Section
162(m), that provision shall be deemed modified as necessary to meet the
requirements of Rule 16b-3 and Section 162(m). Notwithstanding the foregoing,
and subject to Section 5.2, the Plan Administrator may grant or vest Restricted
Stock in a manner which is not in compliance with Section 162(m) if the Plan
Administrator determines that it would be in the best interests of the Company.

         Notwithstanding anything in the Plan to the contrary, the Board of
Directors, in its absolute discretion, may bifurcate the Plan so as to restrict,
limit or condition the use of any provision of the Plan to Participants who are
Section 16 Insiders without so restricting, limiting or conditioning the Plan
with respect to other Participants.


               SECTION 16 AMENDMENT, TERMINATION OR DISCONTINUANCE
                                   OF THE PLAN

         16.1 Subject to the Board of Directors and Section 16.2, the Plan
Administrator may from time to time make such amendments to the Plan as it may
deem proper and in the best interest of the Company without further approval of
the stockholders of the Company or any Participants, including, but not limited
to, any amendment necessary to ensure that the Company may obtain any regulatory
approval referred to in Section 12; provided, however, that after a Change in
Control no change in any option, limited stock appreciation right, stock
appreciation right, Restricted Stock, Incentive Award or Performance Unit
theretofore granted may be made without the consent of the Participant which
would impair the right of the Participant to acquire or retain Common Stock or
cash that the Participant may have acquired as a result of the Plan.

         16.2 The Plan Administrator and the Board of Directors may not amend
the Plan without the approval of the stockholders of the Company to

                  (a) materially increase the number of shares, rights,
         Incentive Awards or Units that may be issued under the Plan to Section
         16 Insiders; or

                  (b) lower the Option Price at which options may be granted
         pursuant to Section 6.4(a) or lower the Option Price of any outstanding
         options, except as provided by Section 5.5.

         16.3 The Board of Directors may at any time suspend the operation of or
terminate the Plan with respect to any shares of Common Stock, rights or
Performance



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2001 Omnibus Incentive Compensation Plan
<PAGE>   41

Units which are not at that time subject to option, limited stock appreciation
right, stock appreciation right or grant of Restricted Stock, Incentive Awards
or Performance Units.

         IN WITNESS WHEREOF, the Company has caused the Plan to be executed
effective as of January 29, 2001.


                                       EL PASO ENERGY CORPORATION


                                       By /s/ Joel Richards III
                                         ---------------------------------------
                                       Title: Executive Vice President


ATTEST:

By /s/ David L. Siddall
  ------------------------
Title: Corporate Secretary



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2001 Omnibus Incentive Compensation Plan