CERTIFICATE OF DESIGNATION,

                            PREFERENCES AND RIGHTS OF

          SERIES C MANDATORILY CONVERTIBLE SINGLE RESET PREFERRED STOCK

                                       OF

                               EL PASO CORPORATION

                            (Pursuant to Section 151
            of the General Corporation Law of the State of Delaware)


                  I, David L. Siddall, Vice President, Associate General Counsel
and Corporate Secretary of El Paso Corporation (the "Company"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, DO HEREBY
CERTIFY as follows:

                  That pursuant to the authority conferred upon the Board of
Directors by the Restated Certificate of Incorporation of the Company, said
Board of Directors delegated to the Project Gemstone Committee the power to
designate and fix the voting rights, designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions of a series of the Company's Preferred Stock. Pursuant to such
delegated authority, the Project Gemstone Committee of the Board of Directors of
the Company adopted the following resolution creating a series of 190,000 shares
of Preferred Stock designated as Series C Mandatorily Convertible Single Reset
Preferred Stock:

                  RESOLVED that pursuant to the authority granted to and vested
in the Board of Directors of this Company in accordance with the provisions of
the Restated Certificate of Incorporation of the Company, and the authority
delegated to the Project Gemstone Committee by the Board of Directors of the
Company, the Project Gemstone Committee hereby creates a series of Preferred
Stock of the Company and hereby states the designation and number of shares, and
fixes the relative rights, preferences and limitations thereof (in addition to
the provisions set forth in the Restated Certificate of Incorporation which are
applicable to the Preferred Stock of all classes and series) as follows:

                  Section 1. Designation and Amount. There shall be a series of
Preferred Stock of the Company which shall be designated as "Series C
Mandatorily Convertible Single Reset Preferred Stock", par value $.01 per share,
and the number of shares initially constituting such series shall be 190,000.
Such number of shares may be increased by resolution of the Board of Directors
to the extent necessary to fulfill the Company's obligations to issue additional
shares of Series C Mandatorily Convertible Single Reset Preferred Stock pursuant
to the Remarketing Agreement (as defined in Section 2 hereof). Such number of
shares may be decreased by resolution of the Board of Directors, provided that
no decrease shall reduce the number of shares of Series C Mandatorily
Convertible Single Reset Preferred Stock to a number less than that of the
number of shares then outstanding.






                  Section 2. Definitions. Capitalized terms used herein which
are not otherwise defined herein shall have the meaning ascribed thereto in the
Company's Restated Certificate of Incorporation. In addition, the following
terms shall have the following meanings when used herein:

         "Average Trading Price" for a security for any given period means an
amount equal to (i) the sum of the Closing Price for such security on each
Trading Day in such period divided by (ii) the total number of Trading Days in
such period.

         "Board of Directors" shall mean the Board of Directors of the Company.

         "Business Day" shall mean any day other than (a) a Saturday or Sunday
or (b) a day on which commercial banking institutions in the State of New York
or the State of Texas are authorized or obligated by law or executive order to
close.

         "Closing Price" for a security means the closing price for such
security on the Trading Day in question as reported by Bloomberg L.P., or if not
so reported by Bloomberg L.P., as reported by another recognized source selected
by the Board of Directors.

         "Common Stock" shall have the meaning specified in Subsection 6(9)
hereof.

         "Dividend Payment Date" shall have the meaning specified in Subsection
3(1) hereof.

         "Failed Remarketing" shall have the meaning ascribed to such term in
the Remarketing Agreement.

         "Final Sale Date" shall have the meaning ascribed to such term in the
Remarketing Agreement.

         "junior stock" shall mean (and references to shares ranking "junior to"
the Series C Mandatorily Convertible Single Reset Preferred Stock shall refer
to), with respect to Sections 3 and 7 hereof, (a) the Series A Junior
Participating Preferred Stock of the Company, (b) the Common Stock and (c) any
other class or series of stock of the Company which by its terms is not entitled
to receive any dividends unless all dividends required to have been paid or
declared and set apart for payment on the Series C Mandatorily Convertible
Single Reset Preferred Stock shall have been so paid or declared and, with
respect to Sections 4 and 7 hereof, (i) the Series A Junior Participating
Preferred Stock of the Company, (ii) the Common Stock and (iii) any other class
or series of stock of the Company which by its terms is not entitled to receive
any assets upon the liquidation, dissolution or winding up of the affairs of the
Company until holders of the Series C Mandatorily Convertible Single Reset
Preferred Stock shall have received the entire amount to which such holders are
entitled upon liquidation, dissolution or winding up.

         "Mandatory Conversion" shall have the meaning specified in Subsection
6(1) hereof.

         "Mandatory Conversion Date" shall have the meaning specified in
Subsection 6(1) hereof.



                                       2


         "Mandatory Conversion Date Market Price" shall have the meaning
specified in Subsection 6(1) hereof.

         "Mandatory Conversion Rate" shall have the meaning specified in
Subsection 6(1) hereof.

         "Market Disruption Event" shall mean the occurrence or existence on any
Trading Day during the one-half hour period prior to the regularly scheduled
closing time of the Principal Market of any material suspension of or limitation
imposed on trading (by reason of movements in price exceeding limits permitted
by the relevant Principal Market or otherwise) in shares of Common Stock.

         "Note Trigger Event" shall have the meaning ascribed to such term in
the Remarketing Agreement.

         "Optional Conversion" shall have the meaning specified in Subsection
6(2) hereof.

         "Optional Conversion Rate" shall have the meaning specified in
Subsection 6(2) hereof.

         "parity stock" shall mean (and references to shares ranking "on a
parity with" the Series C Mandatorily Convertible Single Reset Preferred Stock
shall refer to), with respect to Sections 3 and 7 hereof, (a) the Series B
Mandatorily Convertible Single Reset Preferred Stock of the Company and (b) any
other class or series of stock of the Company which by its terms is entitled to
receive payment of dividends on a parity with the Series C Mandatorily
Convertible Single Reset Preferred Stock and, with respect to Sections 4 and 7
hereof, (i) the Series B Mandatorily Convertible Single Reset Preferred Stock of
the Company and (ii) any other class or series of stock of the Company the
holders of which by its terms are entitled to receive assets upon the
liquidation, dissolution or winding up of the affairs of the Company on a parity
with the holders of Series C Mandatorily Convertible Single Reset Preferred
Stock.

         "Principal Market" shall have the meaning ascribed to such term in the
Remarketing Agreement.

         "Rate Reset Date" means the earlier to occur of (A) the consummation of
the remarketing of the Initial Shares (as such term is defined in the
Remarketing Agreement), which is expected to be on or about the third Trading
Day following the Successful Repricing Date, and (B) a Failed Remarketing.

         "Redemption Event" means the occurrence of any of the following: (i)
any consolidation or merger of the Company with or into another corporation or
entity, unless in connection with such consolidation or merger the outstanding
shares of Common Stock immediately preceding the consummation of such
consolidation or merger are converted into, exchanged for or otherwise represent
a majority of the outstanding shares of common stock of the surviving or
resulting corporation or entity immediately succeeding the consummation of such
consolidation or merger or (ii) the Company sells or conveys to another entity
(other than a Subsidiary) all or substantially all of the assets of the Company.



                                       3


         "Remarketing Agents" shall have the meaning ascribed to such term in
the Remarketing Agreement.

         "Remarketing Agreement" shall mean the Remarketing and Registration
Rights Agreement dated as of November 1, 2001 among the Company, El Paso
Gemstone Share Trust, Gemstone Investor Limited, The Bank of New York, as
Indenture Trustee and Fiscal Agent, and Credit Suisse First Boston Corporation,
J.P. Morgan Securities, Inc., as Initial Remarketing Agents.

         "Reset Common Yield" shall mean the quotient of (i) the product of (x)
4 and (y) the amount of the ordinary quarterly cash dividend on one share of
Common Stock most recently declared prior to the Trigger Date (as appropriately
adjusted for the events referred to in Subsection 6(3)(a)), unless subsequent to
such declaration and prior to the Trigger Date, the Company has publicly
announced a change to, or elimination of, its ordinary quarterly cash dividend
(including a filing with the Securities and Exchange Commission including such
change or elimination), in which case clause (y) above shall be the amount of
such proposed ordinary quarterly cash dividend (or $0.00 if such dividend is to
be eliminated), divided by (ii) the Reset Price (provided, however, that if as
of the Trigger Date there is more than one class of Common Stock, then the Reset
Common Yield shall be calculated with respect to each then outstanding class of
Common Stock, and the Reset Common Yield (as used herein) shall be the amount
calculated with respect to the class of Common Stock resulting in the greatest
Reset Common Yield).

         "Reset Dividend Rate" shall mean an amount per annum per share equal to
the product of (i) the sum of (x) the Reset Common Yield (expressed as a
percentage), plus (y) 7% and (ii) $5,000.00 (rounded to the nearest cent).

         "Reset Price" shall mean the higher of (i) the Closing Price of a share
of Common Stock on the Trigger Date or (ii) the quotient (rounded up to the
nearest cent) of $950,000,000 divided by the number, as of the Trigger Date, of
the authorized but unissued shares of Common Stock that have not been reserved
as of the Trigger Date by the Board of Directors for purposes other than as
contemplated by Section 6(7), subject to adjustment as provided in Subsection
6(3)(a) hereof.

         "Rights" means rights or warrants distributed by the Company under a
shareholder rights plan or agreement to all holders of Common Stock entitling
the holders thereof to subscribe for or purchase shares of the Company's capital
stock (either initially or under certain circumstances), which rights or
warrants, until the occurrence of a specified event or events ("Rights Events"),
(i) are deemed to be transferred with such shares of Common Stock, (ii) are not
exercisable and (iii) are also issued in respect of future issuances of Common
Stock.

         "Rights Events" shall have the meaning ascribed to such term in the
definition of Rights.

         "senior stock" shall mean (and references to shares ranking "senior to"
or "prior to" the Series C Mandatorily Convertible Single Reset Preferred Stock
shall refer to), with respect to Sections 3 and 7 hereof, any class or series of
stock of the Company by its terms ranking senior to the Series C Mandatorily
Convertible Single Reset Preferred Stock in respect of the right to




                                       4


receive dividends and, with respect to Sections 4 and 7 hereof, any class or
series of stock of the Company by its terms ranking senior to the Series C
Mandatorily Convertible Single Reset Preferred Stock with respect to the right
of the holders thereof to receive assets upon the liquidation, dissolution or
winding up of the affairs of the Company.

         "Subsidiary" means any corporation or other entity of which the Company
owns, directly or indirectly sufficient securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other individuals performing similar functions.

         "Successful Repricing Date" shall have the meaning ascribed to such
term in the Remarketing Agreement.

         "Threshold Appreciation Price" means the product of (i) the Reset Price
as of the time in question and (ii) 1.10.

         "Trading Day" means a day on which the Principal Market with respect to
a security is regularly scheduled to be open for trading. For purposes of this
definition, if there is a Market Disruption Event on any such day, then the
relevant Trading Day shall be the first preceding day on which the Principal
Market with respect to a security is regularly scheduled to be open for trading
and (i) on which there is no Market Disruption Event and (ii) that is not
otherwise already included as a Trading Day for purposes of computing the
"Closing Price" or the "Mandatory Conversion Date Market Price", unless there is
a Market Disruption Event on each of the five such preceding days that, but for
the Market Disruption Event, would have been a Trading Day, in which event the
fifth such preceding day shall be the Trading Day, notwithstanding the Market
Disruption Event.

         "Trigger Date" shall mean the earlier to occur of (A) the Successful
Repricing Date and (B) the date of a Failed Remarketing; provided that if any
such day is not a Trading Day, then the Trigger Date will be the next succeeding
Trading Day.

                  Section 3. Dividends.

         (1) The holders of the Series C Mandatorily Convertible Single Reset
Preferred Stock shall not be entitled to receive any dividends (nor shall
dividends commence to accrue) prior to, or with respect to any period ending
prior to, the Rate Reset Date. The holders of the Series C Mandatorily
Convertible Single Reset Preferred Stock, in preference to the rights of holders
of any junior stock but subject to the rights of holders of any senior stock and
parity stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of any funds legally available therefor cumulative cash
dividends from the Rate Reset Date at the Reset Dividend Rate, and no more,
payable on the dates as set forth in this Section 3. Dividends shall accrue on
the Series C Mandatorily Convertible Single Reset Preferred Stock from the Rate
Reset Date. Dividends shall be payable quarterly in arrears on each January 1,
April 1, July 1, and October 1 commencing on the first such date following the
Rate Reset Date (each such date being hereinafter referred to as a "Dividend
Payment Date"); provided, that if any such Dividend Payment Date is not a
Business Day, then any payment with respect to such Dividend Payment Date shall
be payable on the next succeeding Business Day. Each such dividend shall be
payable to holders of record as they appear on the books of the Company or any
transfer agent for the




                                       5


Series C Mandatorily Convertible Single Reset Preferred Stock on such record
dates as shall be fixed by the Board of Directors subject to applicable law
(which record date shall be no more than 60 days prior to the date fixed for the
payment thereof). Dividends on the Series C Mandatorily Convertible Single Reset
Preferred Stock shall accrue on a daily basis commencing on and including the
Rate Reset Date, and accrued dividends for each dividend period or portion
thereof shall cumulate, to the extent not paid, as of the date on which such
dividends were to have been paid. A dividend period shall commence on a Dividend
Payment Date or the Rate Reset Date, as the case may be, and continue to the day
next preceding the next succeeding Dividend Payment Date. Accumulated unpaid
dividends shall not accrue interest. Dividends (or cash amounts equal to accrued
and unpaid dividends) payable on the Series C Mandatorily Convertible Single
Reset Preferred Stock for any period less than or more than a full quarterly
period shall be computed on the basis of a 360-day year of twelve 30-day months
and the actual number of days elapsed in any period less than one month.
Dividends on the Series C Mandatorily Convertible Single Reset Preferred Stock
shall accrue whether or not the Company has earnings, whether or not there are
funds legally available for the payment of such dividends and whether or not
such dividends are declared. Dividends in arrears for any past dividend periods
or portions thereof may be declared and paid at any time without reference to
any regular Dividend Payment Date to holders of record on such date as shall be
fixed by the Board of Directors subject to applicable law. As provided in
Subsection 6(1), dividends on the Series C Mandatorily Convertible Single Reset
Preferred Stock shall cease to accrue on the day immediately preceding the
Mandatory Conversion Date and, in the case of an Optional Redemption of the
Series C Mandatorily Convertible Single Reset Preferred Stock, dividends shall
accrue only to the extent provided in Subsection 6(2).

         (2) As long as any shares of Series C Mandatorily Convertible Single
Reset Preferred Stock are outstanding, no dividends or other distributions for
any dividend period (other than dividends or other distributions payable in
shares of, or warrants, rights or options exercisable for or convertible into,
junior stock, and cash in lieu of fractional shares of such junior stock in
connection with any such dividend or distribution) will be paid on any junior
stock unless: (i) full dividends, if any, on all outstanding shares of senior
stock, parity stock and Series C Mandatorily Convertible Single Reset Preferred
Stock have been paid, or declared and irrevocably set aside for payment, for all
dividend periods terminating on or prior to the payment date of such junior
stock dividend or distribution, to the extent such dividends on senior stock,
parity stock or Series C Mandatorily Convertible Single Reset Preferred Stock
are cumulative; (ii) the Company has paid or irrevocably set aside all amounts,
if any, then or theretofore required to be paid or set aside for all purchase,
retirement, and sinking funds, if any, for any outstanding shares of senior
stock or parity stock; and (iii) the Company is not in default on any of its
obligations to redeem any outstanding shares of senior stock or parity stock.

         In addition, as long as any Series C Mandatorily Convertible Single
Reset Preferred Stock is outstanding, no shares of any junior stock may be
purchased, redeemed, or otherwise acquired by the Company or any Subsidiary
(except in connection with a reclassification or exchange of any junior stock
through the issuance of other junior stock and cash in lieu of fractional shares
of such junior stock in connection therewith) and except for the acquisition of
shares of any junior stock pursuant to contractual obligations binding against
the Company or any Subsidiary that were entered into prior to the date of the
first issuance of shares of Series C Mandatorily Convertible Single Reset
Preferred Stock or pursuant to contractual obligations that




                                       6


are entered into at a time subsequent thereto when such acquisitions of shares
could be made pursuant to this Subsection 6(2) nor may any funds be set aside or
made available for any sinking fund for the purchase or redemption of any junior
stock unless: (i) full dividends, if any, on all outstanding shares of senior
stock, parity stock and Series C Mandatorily Convertible Single Reset Preferred
Stock have been paid, or declared and irrevocably set aside for payment, for all
dividend periods terminating on or prior to the date of such purchase,
redemption or acquisition, to the extent dividends on such senior stock, parity
stock or Series C Mandatorily Convertible Single Reset Preferred Stock dividends
are cumulative, (ii) the Company has paid or irrevocably set aside all amounts,
if any, then or theretofore required to be paid or set aside for all purchase,
retirement, and sinking funds, if any, for any outstanding shares of senior
stock or parity stock; and (iii) the Company is not in default on any of its
obligations to redeem any outstanding shares of senior stock or parity stock.
Subject to the provisions described above, such dividends or other distributions
(payable in cash, property, or junior stock) as may be determined from time to
time by the Board of Directors may be declared and paid on the shares of any
junior stock and from time to time junior stock may be purchased, redeemed or
otherwise acquired by the Company or any Subsidiary. In the event of the
declaration and payment of any such dividends or other distributions, the
holders of such junior stock will be entitled, to the exclusion of holders of
any outstanding senior stock or parity stock, to share therein according to
their respective interests.

         (3) As long as any Series C Mandatorily Convertible Single Reset
Preferred Stock is outstanding, dividends or other distributions for any
dividend period may not be paid on any outstanding shares of parity stock (other
than dividends or other distributions payable in shares of, or warrants, rights
or options exercisable for or convertible into, parity stock or junior stock and
cash in lieu of fractional shares of such parity stock or junior stock in
connection with any such dividend), unless either: (a)(i) full dividends, if
any, on all outstanding shares of senior stock, parity stock and Series C
Mandatorily Convertible Single Reset Preferred Stock have been paid, or declared
and irrevocably set aside for payment, for all dividend periods terminating on
or prior to the payment date of such dividend or distribution with respect to
such senior stock, parity stock or Series C Mandatorily Convertible Single Reset
Preferred Stock, to the extent dividends on such senior stock, parity stock or
Series C Mandatorily Convertible Single Reset Preferred Stock are cumulative;
(ii) the Company has paid or irrevocably set aside all amounts, if any, then or
theretofore required to be paid or irrevocably set aside for all purchase,
retirement and sinking funds, if any, for any outstanding shares of senior stock
or parity stock; and (iii) the Company is not in default on any of its
obligations to redeem any outstanding shares of senior stock or parity stock; or
(b) any such dividends are declared and paid pro rata so that the amounts of any
dividends declared and paid per share on outstanding Series C Mandatorily
Convertible Single Reset Preferred Stock and each share of such parity stock
will in all cases bear to each other the same ratio that accrued and unpaid
dividends (including any accumulation with respect to unpaid dividends for prior
dividend periods, if such dividends are cumulative) per share of outstanding
Series C Mandatorily Convertible Single Reset Preferred Stock and such
outstanding shares of parity stock bear to each other.

         In addition, as long as any Series C Mandatorily Convertible Single
Reset Preferred Stock is outstanding, no shares of any parity stock may be
purchased, redeemed or otherwise acquired by the Company or any Subsidiary
(except with any parity stock, junior stock and cash in lieu of fractional
shares of such parity stock or junior stock in connection therewith and except



                                       7


for the acquisition of shares of any parity stock pursuant to contractual
obligations binding against the Company or any Subsidiary that were entered into
prior to the date of the first issuance of shares of Series C Mandatorily
Convertible Single Reset Preferred Stock or pursuant to contractual obligations
that are entered into at a time subsequent thereto when such acquisitions of
shares could be made pursuant to this Subsection 6(3)) unless: (i) full
dividends, if any, on all outstanding shares of senior stock, parity stock and
Series C Mandatorily Convertible Single Reset Preferred Stock have been paid, or
declared and irrevocably set aside for payment, for all dividend periods
terminating on or prior to the date of such purchase, redemption or other
acquisition, to the extent dividends on such senior stock, parity stock or
Series C Mandatorily Convertible Single Reset Preferred Stock are cumulative;
(ii) the Company has paid or set aside all amounts, if any, then or theretofore
required to be paid or irrevocably set aside for all purchase, retirement, and
sinking funds, if any, for any outstanding shares of senior stock or parity
stock; and (iii) the Company is not in default of any of its obligations to
redeem any outstanding shares of senior stock or parity stock.

         (4) Any dividend payment made on the Series C Mandatorily Convertible
Single Reset Preferred Stock shall first be credited against the earliest
accrued but unpaid dividend due with respect to the Series C Mandatorily
Convertible Single Reset Preferred Stock.

         (5) All dividends paid with respect to the Series C Mandatorily
Convertible Single Reset Preferred Stock shall be paid pro rata to the holders
entitled thereto.

                  Section 4. Liquidation Preference. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Company, then, before any distribution or payments shall be made to the
holders of any junior stock, but subject to the rights of any senior stock or
parity stock, the holders of the Series C Mandatorily Convertible Single Reset
Preferred Stock shall be entitled to be paid in full in cash the amount of
$5,000.00 per share, together with, to the extent lawful, accrued dividends to
the date of such distribution or payment, whether or not earned or declared. If
such payment shall have been made in full to the holders of the Series C
Mandatorily Convertible Single Reset Preferred Stock and all preferential
payments or distributions to be made with respect to senior stock and parity
stock have been made in full, the remaining assets and funds of the Company
shall be distributed among the holders of the junior stock, according to their
respective rights and preferences and in each case according to their respective
shares. If, upon any liquidation, dissolution or winding up of the affairs of
the Company, the amounts so payable are not paid in full to the holders of all
shares of the Series C Mandatorily Convertible Single Reset Preferred Stock and
parity stock, the holders of the Series C Mandatorily Convertible Single Reset
Preferred Stock, together with holders of parity stock, shall share ratably in
any distribution of assets in proportion to the full amounts to which they would
otherwise be respectively entitled. Neither the consolidation or merger of the
Company with another entity, nor the sale, lease, transfer, exchange or
conveyance of all or a part of its assets, shall be deemed a liquidation,
dissolution or winding up of the affairs of the Company within the meaning of
the foregoing provisions of this Section 4.

                  Section 5. Redemption. The Company shall have the right to
redeem all, but not less than all, of the outstanding Series C Mandatorily
Convertible Single Reset Preferred Stock (x) at any time following a Redemption
Event and prior to a Trigger Date and (y) at any time prior to a Note Trigger
Event, in each case in cash at the redemption price of $5,000.00 per share



                                       8


(the "Redemption Price"). Except as set forth in the preceding sentence and to
the extent contemplated by Section 6(1)(y), the Company shall not have the right
to redeem any or all of the Series C Mandatorily Convertible Single Reset
Preferred Stock at any other time. Notice of a redemption of the Series C
Mandatorily Convertible Single Reset Preferred Stock shall be provided in
writing to the holders of record of such shares at their respective addresses as
they shall appear on the books of the Company at least two Business Days and not
more than 60 calendar days prior to the date fixed for redemption. Each such
notice of redemption shall specify the date fixed for redemption and the
Redemption Price. On or after the date fixed for redemption as stated in such
notice, each holder of the shares called for redemption shall surrender the
certificate evidencing such shares to the Company and shall thereupon be
entitled to receive payment of the Redemption Price. If, on the date fixed for
redemption, funds necessary for the redemption shall be available therefor and
shall have been irrevocably deposited or set aside, then, notwithstanding that
the certificates evidencing any shares so called for redemption shall not have
been surrendered, the shares shall no longer be deemed outstanding, and all
rights whatsoever with respect to the shares so called for redemption (except
the right of the holders to receive the Redemption Price without interest upon
surrender of their certificates therefor) shall terminate.

                  Section 6. Conversion.

         (1) Unless previously converted at the option of the holder in
accordance with the provisions hereof, on the earlier to occur of (i) the third
anniversary of the Rate Reset Date and (ii) November 1, 2007, or if such date is
not a Business Day, the next succeeding day that is a Business Day (the
"Mandatory Conversion Date"), each outstanding share of Series C Mandatorily
Convertible Single Reset Preferred Stock shall, without additional notice to
holders thereof, convert automatically (the "Mandatory Conversion") into (x) a
number of fully paid and non-assessable shares of Common Stock at the Mandatory
Conversion Rate (as defined herein) in effect on the Mandatory Conversion Date;
and (y) the right to receive an amount in cash equal to all accrued and unpaid
dividends on such share of Series C Mandatorily Convertible Single Reset
Preferred Stock (other than previously declared dividends payable to a holder of
record as of a prior date) to and including the day immediately prior to the
Mandatory Conversion Date, whether or not earned or declared, out of funds
legally available therefor (and if sufficient funds are not then legally
available therefor, the Company shall pay such amount, if any, pro rata (based
on the amounts so owing) to the holders of the Series C Mandatorily Convertible
Single Reset Preferred Stock and any parity stock then entitled to similar
payment as is then legally available therefor and shall pay any deficiency
thereafter as soon as funds are legally available therefor). The "Mandatory
Conversion Rate" is equal to the following number of shares of Common Stock per
share of Series C Mandatorily Convertible Single Reset Preferred Stock: (a) if
the Mandatory Conversion Date Market Price is greater than or equal to the
Threshold Appreciation Price, the quotient of (i) $5,000.00 divided by (ii) the
Threshold Appreciation Price, (b) if the Mandatory Conversion Date Market Price
is less than the Threshold Appreciation Price but is greater than the Reset
Price, the quotient of $5,000.00 divided by the Mandatory Conversion Date Market
Price and (c) if the Mandatory Conversion Date Market Price is less than or
equal to the Reset Price, the quotient of $5,000.00 divided by the Reset Price,
subject to adjustment as provided in this Section 6. "Mandatory Conversion Date
Market Price" shall mean the Average Trading Price per share of Common Stock for
the 20 consecutive Trading Days immediately prior to, but not including, the
Mandatory Conversion Date; provided,




                                       9


however, that if an event occurs during such 20 consecutive Trading Days that
would require an adjustment to the Mandatory Conversion Rate pursuant to
Subsections 6(3) or 6(5), the Board of Directors may make such adjustments to
the Average Trading Price for shares of Common Stock for such 20 Trading Day
period as it reasonably deems appropriate to effectuate the intent of the
adjustments in Subsections 6(3) and 6(5), in which case any such determination
by the Board of Directors shall be set forth in a resolution of the Board of
Directors and shall be conclusive absent manifest error.

         Dividends on the Series C Mandatorily Convertible Single Reset
Preferred Stock shall cease to accrue on the day immediately preceding, and the
Series C Mandatorily Convertible Single Reset Preferred Stock shall cease to be
outstanding on, the Mandatory Conversion Date. The Company shall make
arrangements as it deems appropriate for the issuance of certificates
representing Common Stock and for the payment of cash in respect of such accrued
and unpaid dividends, if any, or cash in lieu of fractional shares, if any, in
exchange for and contingent upon surrender of certificates representing the
Series C Mandatorily Convertible Single Reset Preferred Stock, and the Company
may defer the payment of dividends on such Common Stock and the voting thereof
until, and make such payment and voting contingent upon, the surrender of such
certificates representing the Series C Mandatorily Convertible Single Reset
Preferred Stock, provided that the Company shall give the holders of the Series
C Mandatorily Convertible Single Reset Preferred Stock such notice of any such
actions as the Company deems appropriate and upon such surrender such holders
shall be entitled to receive such dividends declared and paid on such Common
Stock subsequent to the Mandatory Conversion Date. Amounts payable in cash in
respect of the Series C Mandatorily Convertible Single Reset Preferred Stock or
in respect of such Common Stock shall not bear interest.

         (2) Shares of Series C Mandatorily Convertible Single Reset Preferred
Stock shall be convertible during the periods set forth in clauses (x) and (y)
at the option of the holders thereof ("Optional Conversion") at a rate equal to
the number of shares of Common Stock per share of Series C Mandatorily
Convertible Single Reset Preferred Stock (the "Optional Conversion Rate")
determined as follows: (x) at any time on or after the Rate Reset Date and
before the Mandatory Conversion Date, into Common Stock equal to the quotient of
(i) $5,000.00 divided by (ii) the Threshold Appreciation Price, subject to
adjustment as set forth in this Section 6 and (y) at any time prior to the Rate
Reset Date, provided that at such time (I) a Note Trigger Event shall have
occurred and be continuing and (II) the Company shall be prohibited from
remarketing the El Paso Series C Mandatorily Convertible Single Reset Preferred
Stock under the terms of the Remarketing Agreement, into 193.573 shares of
Common Stock, subject to adjustment as set forth in this Section 6. Prior to and
during such time as the Series C Mandatorily Convertible Single Reset Preferred
Stock shall not be convertible, the Optional Conversion Rate shall be the rate
set forth in clause (y) of the immediately preceding sentence. Optional
Conversion of shares of Series C Mandatorily Convertible Single Reset Preferred
Stock may be effected by delivering certificates evidencing such shares of
Series C Mandatorily Convertible Single Reset Preferred Stock, together with
written notice of conversion and, if required by the Company, a proper
assignment of such certificates to the Company or in blank (and, if applicable
as provided in the following paragraph, cash payment of an amount equal to the
dividends attributable to the current dividend period payable on such shares),
to the office of the transfer agent for the shares of Series C Mandatorily
Convertible Single Reset Preferred Stock or to any other office or agency
maintained by the Company for that purpose and



                                       10


otherwise in accordance with Optional Conversion procedures established by the
Company. Each Optional Conversion shall be deemed to have been effected
immediately before the close of business on the date on which the foregoing
requirements shall have been satisfied. The Optional Conversion shall be at the
Optional Conversion Rate in effect at such time and on such date.

         Holders of shares of Series C Mandatorily Convertible Single Reset
Preferred Stock at the close of business on a record date for any payment of
declared dividends shall be entitled to receive the dividend payable on such
shares on the corresponding Dividend Payment Date or other date fixed for
payment of dividends notwithstanding the Optional Conversion of such shares
following such record date and on or prior to such Dividend Payment Date or
other date fixed for payment of dividends. However, shares of Series C
Mandatorily Convertible Single Reset Preferred Stock surrendered for Optional
Conversion after the close of business on a record date for any payment of
declared dividends and before the opening of business on the next succeeding
Dividend Payment Date or other date fixed for payment of dividends must be
accompanied by payment in cash of an amount equal to the dividends attributable
to the current dividend period payable on such shares on such next succeeding
Dividend Payment Date or other date fixed for payment of dividends. Except as
provided in this Subsection 6(2), upon any Optional Conversion, the Company
shall make no payment of or allowance for unpaid dividends, whether or not in
arrears, on such converted shares of Series C Mandatorily Convertible Single
Reset Preferred Stock as to which Optional Conversion has been effected or for
previously declared dividends or distributions on the shares of Common Stock
issued upon such Optional Conversion.

         (3) The Optional Conversion Rate shall be adjusted from time to time
and the Mandatory Conversion Rate shall be adjusted from time to time after the
Rate Reset Date in respect of events occurring after the Rate Reset Date, as
follows:

         (a) In case the Company shall (i) pay a dividend on its Common Stock in
other Common Stock, (ii) subdivide or split its outstanding Common Stock into a
greater number of shares, (iii) combine its outstanding Common Stock into a
smaller number of Common Stock, or (iv) issue by reclassification of its Common
Stock any other Common Stock (including in connection with a merger in which the
Company is a surviving corporation), then, in any such event, (1) the Mandatory
Conversion Rate in effect immediately prior to such event shall be adjusted such
that the Reset Price shall be adjusted by multiplying it by a fraction (which
fraction and all other fractions referred to herein may be improper fractions),
the numerator of which is one and the denominator of which is the number of
shares of Common Stock that a holder of one share of Common Stock prior to any
event described above would hold immediately after such event (assuming the
issuance of fractional shares) (the "Recapitalization Adjustment Ratio"), and
(2) the Optional Conversion Rate in effect immediately prior to such event shall
be adjusted by multiplying it by a fraction, the numerator of which is one and
the denominator of which is the Recapitalization Adjustment Ratio. Such
adjustment shall become effective immediately after the effective date of any
such event (or the earlier record date in the case of any such dividend)
whenever any of the events listed above shall occur.

         (b) In case the Company shall issue rights or warrants to all holders
of its Common Stock entitling them (for a period, except in the case of Rights,
expiring within 45 days after the record




                                       11


date for determination of the shareholders entitled to receive such rights or
warrants) to subscribe for or purchase Common Stock at a price per share of
Common Stock less than the current market price per share of Common Stock (as
defined in Subsection 6(4)) on such record date, then in each such case the
Mandatory Conversion Rate on the date of such issuance shall be adjusted such
that the Reset Price shall be adjusted by multiplying it by a fraction the
numerator of which shall be the sum of (x) the number of shares of Common Stock
outstanding immediately prior to such issuance, plus (y) the number of
additional shares of Common Stock which the aggregate offering price of the
total number of shares of Common Stock so offered for subscription or purchase
would purchase at the Average Trading Price for a share of Common Stock on the
record date for such issuance, and the denominator of which shall be the sum of
(x) the number of shares of Common Stock outstanding immediately prior to such
issuance, plus (y) the number of additional shares of Common Stock offered for
subscription or purchase pursuant to such rights or warrants (the "Anti-Dilution
Adjustment Ratio"); and (B) the Optional Conversion Rate in effect on the record
date described below shall be adjusted by multiplying it by a fraction, the
numerator of which is one and the denominator of which is the Anti-Dilution
Adjustment Ratio. For purposes of this Subsection 6(3)(b), the issuance of
rights or warrants to subscribe for or purchase securities exercisable for,
convertible into, or exchangeable for, shares of Common Stock shall be deemed to
be the issuance of rights or warrants to purchase the shares of Common Stock
into which such securities are exercisable, convertible or exchangeable at an
aggregate offering price equal to the aggregate offering price of such
securities plus the minimum aggregate amount (if any) payable upon the exercise,
conversion or exchange of such securities. Such adjustment shall become
effective at the opening of business on the Business Day next following the
record date for such rights or warrants. To the extent that any shares of Common
Stock, or securities exercisable for, convertible into, or exchangeable for,
shares of Common Stock so offered for subscription or purchase are not so
subscribed or purchased by the expiration of such rights or warrants, the
Mandatory Conversion Rate and the Optional Conversion Rate shall each be
readjusted to the rates or amounts, respectively, which would then be in effect,
had the adjustment made upon the issuance of such rights or warrants been made
upon the basis of the issuance of rights or warrants in respect of only the
number of shares of Common Stock and securities exercisable for, convertible
into, or exchangeable for, shares of Common Stock actually issued upon exercise
of such rights or warrants.

         (c) If the Company shall pay a dividend or make a distribution to all
holders of its Common Stock consisting of evidences of its indebtedness or other
assets (including capital shares of the Company other than Common Stock but
excluding any Ordinary Cash Dividends (as defined below)), or shall issue to all
holders of its Common Stock rights or warrants to subscribe for or purchase any
of its securities (other than those referred to in Subsection 6(b)), then in
each such case the Mandatory Conversion Rate in effect immediately prior to such
event shall be adjusted such that the Reset Price shall be adjusted by
multiplying it by a fraction, the numerator of which shall be the Average
Trading Price for a share of Common Stock on such record date, minus the fair
market value as of such record date of the portion of evidences of indebtedness
or other assets so distributed, or of such subscription rights or warrants,
applicable to one share of Common Stock (provided that such numerator shall
never be less than $1.00) and the denominator of which shall be the Average
Trading Price for a share of Common Stock on such record date (the "Distribution
Adjustment Ratio"); and (B) the Optional Conversion Rate in effect immediately
prior to such event shall be adjusted by multiplying it by a fraction, the
numerator of which is one and the denominator of which is the Distribution
Adjustment Ratio.




                                       12


Such adjustment shall become effective on the opening of business on the
Business Day next following the record date for such dividend or distribution or
the determination of shareholders entitled to receive such dividend or
distribution or rights or warrants, as the case may be. "Ordinary Cash
Dividends" shall mean (i) any regular cash dividend on the Common Stock that
does not exceed the per share amount of immediately preceding regular cash
dividend on the Common Stock (as adjusted to appropriately reflect any of the
events referred to in Subsection 6(3)(a)) and (ii) any other cash dividend or
distribution which, when combined on a per share basis with the per share amount
of all other cash dividends and distributions paid on the Common Stock during
the 365-day period ending on the date of declaration of such dividend or
distribution (as adjusted to appropriately reflect any of the events referred to
in Subsection 6(3)(a) and excluding cash dividends or distributions that
resulted in an adjustment to the Mandatory Conversion Rate or the Optional
Conversion Rate) does not exceed 10% of the current market price per Common
Stock (determined pursuant to Subsection 6(4)) on the Trading Day immediately
preceding the date of declaration of such dividend or distribution.

         (4) For the purpose of any computation under Subsection 6(3), the
"current market price per share of Common Stock" on any date in question shall
mean the Average Trading Price for shares of Common Stock for the 15 consecutive
Trading Days ending on the earlier of the day in question and, if applicable,
the day before the "ex" date with respect to the issuance or distribution
requiring such computation; provided, however, that if another event occurs that
would require an adjustment pursuant to Subsection 6(3), the Board of Directors
may make such adjustments to the Average Trading Price for shares of Common
Stock during such 15 Trading Day period as it reasonably deems appropriate to
effectuate the intent of the adjustments in Subsection 6(3), in which case any
such determination by the Board of Directors shall be set forth in a Board
resolution and shall be conclusive absent manifest error. For purposes of this
Subsection, the term "ex" date, when used with respect to any issuance or
distribution, means the first date on which the shares of Common Stock trade
regular way on the relevant exchange or in the relevant market from which the
Average Trading Price was obtained without the right to receive such issuance or
distribution. For the purpose of any computation under Subsection 6(3), the
"fair market value" of any assets, evidences of indebtedness, subscription
rights or warrants on any date in question: (i) in the event any such item is a
publicly traded security ("Publicly Traded Security"), shall be determined for
such date pursuant to the provisions of this Subsection 6(4) for determination
of the "current market price per share of Common Stock", except that (x) each
reference therein to "Common Stock" shall be deemed to mean such Publicly Traded
Security, and (y) if such Publicly Traded Security does not trade on a "when
issued" basis for the 15 consecutive Trading Days preceding the "ex" date, such
determination shall be made for the period of 15 consecutive Trading Days
commencing on the "ex" date; and (ii) in the event any such item is not a
Publicly Traded Security, shall be reasonably determined in good faith for such
date by the Board of Directors, as evidenced by a resolution of the Board, whose
determination shall be conclusive absent manifest error.

         (5) In any case of any reclassification of Common Stock (other than a
reclassification of the Common Stock referred to in Subsection 6(3)(a)); any
consolidation or merger of the Company with or into another company or other
entity (other than a merger resulting in a reclassification of the Common Stock
referred to in Subsection 6(3)(a)); or any sale or conveyance to another entity
(other than a Subsidiary) of all or substantially all of the assets of the
Company (any such event referred to herein as a "Transaction"), then the
Optional




                                       13


Conversion Rate and Mandatory Conversion Rate shall be adjusted so that after
consummation of such a Transaction the holders of shares of Series C Mandatorily
Convertible Single Reset Preferred Stock will receive, in lieu of the number of
shares of Common Stock which such holder would have received upon conversion but
for such Transaction, the kind and amount of securities, cash and other property
receivable upon consummation of such Transaction by a holder of such number of
shares of Common Stock, subject to further adjustment as provided in this
Section 6, including without limitation, an adjustment to the Optional
Conversion Rate on the Rate Reset Date if such Transaction occurs prior to the
Rate Reset Date. On and after the consummation of any such Transaction, the
Mandatory Conversion Date Market Price, which shall be used for purposes of the
determination as to which of clauses (a), (b) or (c) of the definition of
Mandatory Conversion Rate applies, shall mean the sum of (i) the product of the
Average Trading Price of any Publicly Traded Security received upon consummation
of such Transaction for the 20 consecutive Trading Days immediately prior to,
but not including, the Mandatory Conversion Date multiplied by the fraction of
such security received in such Transaction per share of Common Stock (assuming
the issuance of fractional shares) plus (ii) the fair market value of the cash
and other property received upon consummation of such Transaction per share of
Common Stock as of the day preceding the Mandatory Conversion Date as determined
in accordance with Subsection 6(4). In determining the kind and amount of
securities, cash or other property receivable upon consummation of such
Transaction by a holder of shares of Common Stock, it shall be assumed that such
holder is not a person or entity with which the Company consolidated or into
which the Company was merged or which merged into the Company, as the case may
be, or an affiliate of any such Person and that such holder of Common Stock
failed to exercise rights of election, if any, as to the kind or amount of
securities, cash, or other property receivable upon consummation of such
transaction (provided that, if the kind or amount of securities, cash, or other
property receivable upon consummation of such Transaction is not the same for
each non-electing share, then the kind and amount of securities, cash, or other
property receivable upon consummation of such transaction for each non-electing
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). In the event of such a reclassification,
consolidation, merger, sale or conveyance, effective provisions shall be made in
the certificate of incorporation or similar document of the resulting or
surviving Company or entity so that the conversion rate applicable to any
securities or property into which the shares of the Series C Mandatorily
Convertible Single Reset Preferred Stock shall then be convertible shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock
contained in Subsections 6(3)(a), 6(3)(b) and 6(3)(c) inclusive, and the other
provisions of this Section 6 with respect to the Common Stock shall apply on
terms as nearly equivalent as practicable to any such other securities and
property deliverable upon conversion of shares of Series C Mandatorily
Convertible Single Reset Preferred Stock.

         (6) Whenever any adjustments are required in the shares of Common Stock
into which each share of Series C Mandatorily Convertible Single Reset Preferred
Stock is convertible, the Company shall forthwith (a) compute the adjusted
Mandatory Conversion Rate and the Optional Conversion Rate in accordance
herewith and prepare a certificate signed by an officer of the Company setting
forth the adjusted Mandatory Conversion Rate and the Optional Conversion Rate,
describing in reasonable detail the method of calculation used and the facts
requiring such adjustment and upon which such adjustment is based, which
certificate shall be conclusive, final and binding evidence of the correctness
of the adjustment and file with the



                                       14


transfer agent of the Series C Mandatorily Convertible Single Reset Preferred
Stock such certificate and (b) cause a copy of such certificate to be mailed to
each holder of record of the Series C Mandatorily Convertible Single Reset
Preferred Stock as of or promptly after the effective date of such adjustment
and, with respect to adjustments applicable after the Rate Reset Date, make a
prompt public announcement of such adjustment.

         (7) The Company shall at all times reserve and keep available, free
from preemptive rights out of its authorized but unissued shares of Common Stock
for the purpose of issuance upon conversion of the Series C Mandatorily
Convertible Single Reset Preferred Stock a number of shares of Common Stock
equal to the product of (i) the number of shares of Common Stock then
deliverable at such time upon an Optional Conversion of all shares of the Series
C Mandatorily Convertible Single Reset Preferred Stock multiplied by (ii) 1.10.

         (8) The Company will pay any and all documentary stamp or similar issue
or transfer taxes that may be payable in respect of the issuance or delivery of
shares of Common Stock on conversion of shares of the Series C Mandatorily
Convertible Single Reset Preferred Stock pursuant to this Section 6. The Company
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involving the issue and delivery of shares of Common Stock in
the name other than in that which the shares of Series C Mandatorily Convertible
Single Reset Preferred Stock so converted were registered and no such issue and
delivery shall be made unless and until the person requesting such issue has
paid to the Company the amount of any such tax, or has established to the
satisfaction of the Company, that such tax has been paid.

         (9) For the purpose of this Section 6, the term "Common Stock" shall
include any shares of the Company of any class or series which has no preference
or priority in the payment of dividends or in the distribution of assets upon
any voluntary or involuntary liquidation, dissolution or winding up of the
Company and which is not subject to redemption by the Company. However, Common
Stock issuable upon conversion of the Series C Mandatorily Convertible Single
Reset Preferred Stock shall include only shares of the class designated as
Common Stock as of the original date of issuance of the Series C Mandatorily
Convertible Single Reset Preferred Stock, or shares of the Company of any
classes or series resulting from any reclassification or reclassifications
thereof (including reclassifications referred to in clause (iv) of Subsection
6(3)(a)) and which have no preference or priority in the payment of dividends or
in the distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which are not subject to redemption
by the Company, provided that, if at any time, there shall be more than one such
resulting class or series, the shares of such class and series then so issuable
shall be in the same proportion, if possible, or if not possible, in
substantially the same proportion which the total number of shares of such class
and series resulting from all such reclassifications bears to the total number
of shares of all classes and series resulting from all such reclassifications.

         (10) No fractional shares or scrip representing fractional shares shall
be issued upon the conversion of the Series C Mandatorily Convertible Single
Reset Preferred Stock. If any such conversion would otherwise require the
issuance of a fractional share, an amount equal to such fraction multiplied by
the current market price per share of Common Stock (determined as provided in
Subsection 6(4)) of the Common Stock on the date of conversion shall be paid to
the holder in cash by the Company. If on such date there is no current market
price per share of


                                       15


Common Stock, the fair market value of a share of Common Stock (determined as
provided in Subsection 6(4)) on such date, shall be used. If more than one share
of Series C Mandatorily Convertible Single Reset Preferred Stock shall be
surrendered for conversion at one time or for the same holder, the number of
full shares of Common Stock issuable upon conversion thereof shall be computed
on the basis of the aggregate number of shares of Series C Mandatorily
Convertible Single Reset Preferred Stock so surrendered.

         (11) All shares of the Series C Mandatorily Convertible Single Reset
Preferred Stock purchased or otherwise acquired by the Company (including shares
surrendered for conversion) shall be canceled and thereupon restored to the
status of authorized but unissued shares of Preferred Stock undesignated as to
series.

         (12) No adjustment in the Mandatory Conversion Rate and the Optional
Conversion Rate shall be required unless such adjustment (plus any adjustments
not previously made by reason of this Subsection 6(12)) would require an
increase or decrease of at least 1% in the number of shares of Common Stock into
which each share of the Series C Mandatorily Convertible Single Reset Preferred
Stock is then convertible; provided, however, that any adjustments which by
reason of this Subsection 6(12) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment and provided further
that any adjustment shall be required and made in accordance with the provisions
of Subsection 6(3) not later than such time as may be required in order to
preserve the tax free nature of a distribution to the holders of shares of
Common Stock. If any action or transaction would require adjustment to the
Mandatory Conversion Rate or the Optional Conversion Rate pursuant to this
Section 6, only one adjustment shall be made and such adjustment shall be the
amount of the adjustment that has the highest absolute value. All calculations
under this Section 6 shall be made to the nearest one-hundredth of a share of
Common Stock.

         (13) The Board of Directors may make such upward adjustments in the
Mandatory Conversion Rate and the Optional Conversion Rate, in addition to those
required by this Section 6, as shall be determined by the Board of Directors, as
evidenced by a resolution of the Board of Directors, to be advisable in order
that any stock dividends, subdivisions of shares, distribution of rights to
purchase stock or securities, or distribution of securities convertible into or
exchangeable for stock (or any transaction that could be treated as any of the
foregoing transactions pursuant to Section 305 of the Internal Revenue Code of
1986, as amended) made by the Company to its stockholders after the Rate Reset
Date shall not be taxable. The determination of the Board of Directors as to
whether an adjustment should be made pursuant to the provisions of this
Subsection 6(13), and if so, as to what adjustment should be made and when,
shall be conclusive, final and binding on the Company and all stockholders of
the Company.

         (14) In any case in which Section 6 shall require that an adjustment as
a result of any event become effective at the opening of business on the
Business Day next following a record date and the date fixed for conversion
occurs after such record date, but before the occurrence of such event, the
Company may, in its sole discretion, elect to defer (A) issuing to the holder of
any converted Series C Mandatorily Convertible Single Reset Preferred Stock the
additional shares of Common Stock issuable upon such conversion over the shares
of Common Stock issuable before giving effect to such adjustments and (B) paying
to such holder any amount in




                                       16


cash in lieu of a fractional share of Common Stock pursuant to Subsection 6(10),
in each case until after the occurrence of such event.

         (15) Notwithstanding the foregoing provisions of this Section 6, no
adjustment of the Optional Conversion Rate or the Mandatory Conversion Rate
shall be required to be made upon the issuance of any shares of Common Stock
pursuant to any present or future plan providing for the reinvestment of
dividends or interest payable on securities of the Company and the investment of
additional optional amounts in shares of Common Stock under any such plan or
upon the issuance of shares of Common Stock (or securities, rights, warrants,
options or similar rights, which are convertible or exercisable for shares of
Common Stock) pursuant to any compensatory plan of the Company.

         (16) Notwithstanding any other provision of this Section 6, the
issuance or distribution of Rights shall not be deemed to constitute an issuance
or a distribution or dividend of rights, warrants, or other securities to which
any of the adjustment provisions described above applies until the occurrence of
the earliest Rights Event.

         (17) For purposes of this Section 6, shares of Common Stock owned by,
or held for the account of, the Company, a Subsidiary or another entity of which
a majority of the common stock or common equity interests are owned, directly or
indirectly, by the Company shall be deemed to be not outstanding.

                  Section 7. Voting Rights. The holders of Series C Mandatorily
Convertible Single Reset Preferred Stock shall have no right to vote except as
otherwise specifically provided herein, in the Company's Restated Certificate of
Incorporation or as required by statute.

         (1) So long as any shares of Series C Mandatorily Convertible Single
Reset Preferred Stock are outstanding, in addition to any other vote or consent
of shareholders required in the Company's Restated Certificate of Incorporation
or by law, the affirmative vote of the holders of at least a majority of the
Series C Mandatorily Convertible Single Reset Preferred Stock, given in person
or by proxy, either pursuant to a consent in writing without a meeting (if
permitted by law) and the Company's Restated Certificate of Incorporation or by
vote at any meeting called for the purpose, shall be necessary for effecting or
validating:

         (a) any amendment, alteration or repeal of any of the provisions of the
Company's Restated Certificate of Incorporation which affects adversely the
powers, rights or preferences of the holders of the Series C Mandatorily
Convertible Single Reset Preferred Stock or reduces the minimum time required
for any notice to which holders of Series C Mandatorily Convertible Single Reset
Preferred Stock then outstanding may be entitled; provided, that the amendment
of the provisions of the Company's Restated Certificate of Incorporation so as
to authorize or create, or to increase the authorized amount of any junior stock
or parity stock (including additional shares of Series B Mandatorily Convertible
Single Reset Preferred Stock or Series C Mandatorily Convertible Single Reset
Preferred Stock) shall not be deemed to affect adversely the powers, rights or
preferences of the holders of the Series C Mandatorily Convertible Single Reset
Preferred Stock and shall not be subject to approval by the holders of the
Series C Mandatorily Convertible Single Reset Preferred Stock and such holders
shall not be entitled to vote thereon to the fullest extent permitted by law.



                                       17


         (b) the authorization, creation or issuance of, or the increase in the
authorized amount of, any stock of any class or series, or any security
convertible into stock of any class or series, ranking senior (as to receipt of
dividends, upon liquidation, dissolution or winding up or otherwise) to the
Series C Mandatorily Convertible Single Reset Preferred Stock; or

         (c) the merger or consolidation of the Company with or into any other
corporation or other entity, unless in connection with such merger or
consolidation each holder of shares of Series C Mandatorily Convertible Single
Reset Preferred Stock immediately preceding such merger or consolidation shall
either (I) with respect to a merger or consolidation consummated prior to, on or
after the Rate Reset Date, receive or continue to hold in the surviving or
resulting corporation or other entity the same number of shares, with
substantially the same rights and preferences (except as contemplated by
Subsection 6(5) and except for those rights and preferences that could be
affected without the vote of the holders of the Series C Mandatorily Convertible
Single Reset Preferred Stock, such as the authorization and issuance of parity
stock or junior stock), as correspond to the shares of Series C Mandatorily
Convertible Single Reset Preferred Stock held immediately prior to such merger
or consolidation or (II) with respect to a merger or consolidation consummated
after the Rate Reset Date, receive the kind and amount of securities, cash and
other property that would have been receivable upon consummation of such merger
or consolidation by such holder (subject to the assumptions set forth in
Subsection 6(5)) if the Mandatory Conversion had occurred immediately prior to
the consummation of such merger or consolidation and the Mandatory Conversion
Rate was determined as of such time (and if clause (I) or (II) are applicable,
then such merger or consolidation or shall not be subject to approval by the
holders of the Series C Mandatorily Convertible Single Reset Preferred Stock and
such holders shall not be entitled to vote thereon).

         (2) (a) In the event that full cumulative dividends on the Series C
Mandatorily Convertible Single Reset Preferred Stock are not paid and are in
arrears for six consecutive quarterly dividend periods following the Rate Reset
Date, the number of directors of the Company constituting the entire Board of
Directors shall be increased by two persons and the holders of shares of the
Series C Mandatorily Convertible Single Reset Preferred Stock, voting separately
as a class (together with the holders of shares of all other series of capital
stock of the Company, including the Series A Junior Participating Preferred
Stock and Series B Mandatorily Convertible Single Reset Preferred Stock or,
having the then present right to elect one or more directors as a result of a
dividend arrearage but not then entitled to other separate voting rights to
elect one or more directors in the event of such an arrearage (herein referred
to as "Class Voting Stock")), shall have the right to elect such additional two
directors to fill such positions at any regular meeting of shareholders or
special meeting held in place thereof, or at a special meeting called as
provided in Subsection 7(2)(c). Whenever all arrearages of dividends on the
Series C Mandatorily Convertible Single Reset Preferred Stock then outstanding
shall have been paid or declared and irrevocably set apart for payment, then the
right of the holders of shares of the Series C Mandatorily Convertible Single
Reset Preferred Stock to elect such additional two directors shall cease (but
subject always to the same provisions for the vesting of such voting rights in
the case of any similar future arrearages in dividends), and the terms of office
of all persons previously elected as directors by the holders of shares of the
Series C Mandatorily Convertible Single Reset Preferred Stock and such other
Class Voting Stock shall forthwith terminate and the number of the Board of
Directors shall be reduced accordingly.



                                       18


         (b) At any time after the voting power referred to in Subsection
7(2)(a) shall have been so vested in the holders of shares of the Series C
Mandatorily Convertible Single Reset Preferred Stock, the Secretary of the
Company may, and upon the written request of any holder or the holders of at
least 10% of the number of shares of Series C Mandatorily Convertible Single
Reset Preferred Stock then outstanding (addressed to the Secretary at the
principal executive office of the Company) shall, call a special meeting of the
holders of shares of the Series C Mandatorily Convertible Single Reset Preferred
Stock and all other Class Voting Stock for the election of the directors to be
elected by them pursuant to Subsection 7(2)(a); provided that the Secretary
shall not be required to call such special meeting if the request for such
meeting is received less than 45 calendar days before the date fixed for the
next ensuing annual meeting of shareholders. Such call shall be made by notice
similar to that provided in the bylaws of the Company for a special meeting of
the shareholders or as required by law. Subject to the foregoing provisions, if
any such special meeting required to be called as above provided shall not be
called by the Secretary within 20 calendar days after receipt of an appropriate
request, then any holder of shares of Series C Mandatorily Convertible Single
Reset Preferred Stock may call such meeting, upon the notice above provided, and
for that purpose shall have access to the stock books and records of the
Company. Except as otherwise provided by law, at any such meeting, the holders
of a majority of the number of shares of Series C Mandatorily Convertible Single
Reset Preferred Stock and such other Class Voting Stock then outstanding shall
constitute a quorum for the purpose of electing directors as contemplated in
Subsection 7(2)(a). If at any such meeting or adjournment thereof, a quorum of
such holders of Series C Mandatorily Convertible Single Reset Preferred Stock
and, if applicable, such other Class Voting Stock shall not be present, no
election of directors by the Series C Mandatorily Convertible Single Reset
Preferred Stock and, if applicable, such other Class Voting Stock shall take
place, and any such meeting may be adjourned from time to time for periods not
exceeding 30 calendar days until a quorum of the Series C Mandatorily
Convertible Single Reset Preferred Stock and, if applicable, the Class Voting
Stock is present at such adjourned meeting. Unless otherwise provided by law or
the Company's Restated Certificate of Incorporation, directors to be elected by
the holders of shares of Series C Mandatorily Convertible Single Reset Preferred
Stock and, if applicable, such other Class Voting Stock shall be elected by a
plurality of the votes cast by such holders at a meeting at which a quorum is
present. Notwithstanding the foregoing, the absence of a quorum of the Series C
Mandatorily Convertible Single Reset Preferred Stock and, if applicable, such
other Class Voting Stock shall not prevent the voting of, including the election
of, directors by the holders of Common Stock and other classes of capital stock
at such meeting.

         (c) Any director who shall have been elected by holders of shares of
Series C Mandatorily Convertible Single Reset Preferred Stock voting separately
as a class, together, if applicable, with the holders of one or more other
series of Class Voting Stock, or any director so elected as provided below, may
be removed at any time during a class voting period, either for or without
cause, by, and only by, the affirmative vote of the holders of a majority of the
number of shares of Series C Mandatorily Convertible Single Reset Preferred
Stock then outstanding, voting separately as a class, together, if applicable,
with the holders of all other series of Class Voting Stock then outstanding,
given at a special meeting of such shareholders called for such purpose, and any
vacancy thereby created may be filled during such class voting period only by
the holder of shares of Series C Mandatorily Convertible Single Reset Preferred
Stock and, if applicable the other series, if any, of Class Voting Stock. In
case any vacancy (other than as provided in the preceding sentence) shall occur
among the directors elected by the holders of




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shares of the Series C Mandatorily Convertible Single Reset Preferred Stock
(and, if applicable, such other Class Voting Stock), a successor shall be
elected by the Board of Directors to serve until the next annual meeting of the
shareholders or special meeting held in place thereof upon the nomination of the
then remaining director elected by the holders of the Series C Mandatorily
Convertible Single Reset Preferred Stock (and, if applicable, such other Class
Voting Stock) or the successor of such remaining director.

         (d) Holders of Series C Mandatorily Convertible Single Reset Preferred
Stock shall not be entitled to receive notice of any meeting of shareholders at
which they are not entitled to vote or consent except as otherwise provided by
applicable law.

                  Section 8. Other Rights. Shares of Series C Mandatorily
Convertible Single Reset Preferred Stock shall not have any relative,
participating, optional or other special rights or powers other than as set
forth herein, in the Company's Restated Certificate of Incorporation or as
required by law.

                  Section 9. Notices. Subsequent to the Rate Reset Date, at any
time while any shares of Series C Mandatorily Convertible Single Reset Preferred
Stock are outstanding, (i) the Company shall declare a dividend (or any other
distribution) on its Common Stock, excluding any cash dividends, (ii) the
Company shall authorize the issuance to all holders of its Common Stock of
rights or warrants to subscribe for or purchase shares of Common Stock or of
securities exercisable for, convertible into, or exchangeable for, shares of
Common Stock or (iii) the Company shall authorize any reclassification of its
Common Stock (other than a subdivision or combination thereof) or any
consolidation or merger to which the Company is a party and for which approval
of any stockholders of the Company is required (except for a merger of the
Company into one of its subsidiaries solely for the purpose of changing the
corporate name or corporate domicile of the Company to another state of the
United States and in connection with which there is no substantive change in the
rights or privileges of any securities of the Company other than changes
resulting from differences in the corporate statutes of the then existing and
the new state of domicile), or the sale or transfer to another corporation of
the property of the Company as an entirety or substantially as an entirety, then
the Company shall cause to be filed at each office or agency maintained for the
purpose of conversion of the Series C Mandatorily Convertible Single Reset
Preferred Stock, and shall cause to be mailed to the holders of Series C
Mandatorily Convertible Single Reset Preferred Stock at their last addresses as
they shall appear on the stock register, at least 10 days before the date
hereinafter specified (or the earlier of the dates hereinafter specified, in the
event that more than one date is specified), a notice stating (A) the date on
which a record is to be taken for the purpose of such dividend, distribution,
rights or warrants, or, if a record is not to be taken the date as of which the
holders of Common Stock of record to be entitled to such dividend, distribution,
rights or warrants are to be determined, or (B) the date on which any such
reclassification, consolidation, merger, sale or transfer is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property (including cash), if any, deliverable upon such reclassification,
consolidation, merger, sale or transfer. The failure to give or receive the
notice required hereby or any defect therein shall not affect the legality or
validity of such dividend, distribution, right or warrant or other action.




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                  IN WITNESS WHEREOF, EL PASO CORPORATION has caused this
Certificate of Designation, Preferences and Rights of Series C Mandatorily
Convertible Single Reset Preferred Stock to be executed by its Vice President,
Associate General Counsel and Corporate Secretary this 31st day of October,
2001.

                                             EL PASO CORPORATION


                                             /s/ David L. Siddall
                                             -----------------------------------
                                             David L. Siddall
                                             Vice President, Associate General
                                                Counsel and Corporate Secretary



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