EEX CORP
8-K, 1998-12-23
CRUDE PETROLEUM & NATURAL GAS
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<PAGE>
                              
             SECURITIES AND EXCHANGE COMMISSION
                              
                      Washington, D.C.
                              
                              
                              
                              
                          FORM 8-K
                              
                       CURRENT REPORT
                              
                              
                              
                              
           Pursuant to Section 13 or 15(d) of the
               Securities Exchange Act of 1934
                              
                              
                              
      Date of Report (Date of earliest event reported)
                      December 22, 1998
                              
                              
                              
                       EEX CORPORATION
   (Exact name of Registrant as specified in its charter)
                              
                              
    Texas                 1-12905            75-2421863
(State or other         (Commission       (I.R.S. Employer
jurisdiction of         File Number)      Identification No.)
incorporation)
                              
                              
                              
2500 CityWest Boulevard, Suite 1400, Houston, Texas    77042
(Address of principal executive offices)          (Zip Code)
                              
                              
                              
Registrant's telephone number, including Area Code  (713)243-3100
                              
                              
                              
<PAGE>

ITEM 5. OTHER EVENTS

On December 22, 1998, EEX Corporation (the "Company")
entered into a Purchase Agreement (the "Purchase Agreement")
with Warburg, Pincus Equity Partners, L.P., a Delaware
limited partnership, Warburg, Pincus Netherlands Equity
Partners I, C.V., a Dutch limited partnership, Warburg,
Pincus Netherlands Equity Partners II, C.V., a Dutch limited
partnership, and Warburg, Pincus Netherlands Equity Partners
III, C.V., a Dutch limited partnership (collectively, the
"Purchaser"). The Purchase Agreement provides that the
Company will receive $150 million and will issue to the
Purchaser 1,500,000 shares of Series B 8% Cumulative
Perpetual Preferred Stock (the "Preferred Stock") and
warrants (the "Warrants")to acquire 21 million shares of the
Company's common stock, par value $0.01 per share (the
"Common Stock"). The description contained herein is
qualified in its entirety by reference to the Purchase
Agreement (including the exhibits thereto),that is filed
with this report and incorporated by reference herein.

Preferred Stock.  Each share of Preferred Stock will have a
stated value of $100 and be entitled to a dividend of 8% per
year, payable quarterly.  The dividend rate will be adjusted
to a market rate not exceeding 18% after seven years or an
earlier Change of Control (as defined in the Purchase
Agreement) under certain circumstances ("Dividend Reset
Date").  Prior to the Dividend Reset Date, the Company may,
at the Company's option, accrue dividends or pay them in
cash, shares of Preferred Stock or shares of Common Stock.
After the Dividend Reset Date, dividends must be paid in
cash.  The Preferred Stock is entitled to a liquidation
preference of $100 per share plus accrued and unpaid
dividends.  The Preferred Stock may be redeemed, in whole
but not in part, by the Company at any time for cash at the
stated value plus accrued and unpaid dividends.  Until the
Dividend Reset Date, holders of the Preferred Stock will be
entitled to cast an aggregate of eight million votes on
matters voted upon by the Common Stock holders and to a
separate class vote on certain matters affecting the
Preferred Stock.

Warrants.  The Warrants will be issued in three series, each
exercisable at any time  beginning 9 months after issue for
$12 per share of Common Stock: (a) Series A Warrants to
acquire 10.5 million shares, exercisable for 10 years; (b)
Series B Warrants to acquire 2.5 million shares, exercisable
for 7 years, and (c) Series C Warrants to acquire 8 million
shares, exercisable for 7 years.  Until approved by the
shareholders of the Company at the next annual meeting, the
Warrants will be exercisable only  in the form of a stock
appreciation right (entitled to receive the difference
between the exercise price and the market price of the
Common Stock on the trading day prior to the date of
exercise).  If the shareholders approve, the Series A and
Series B Warrants will be exercisable for cash or by
utilizing shares of Preferred Stock at the stated value on a
gross or net basis.  The Series C Warrants will be
exercisable only as a stock appreciation right unless the
Company, prior to July 30, 2002, elects to allow the Series
C Warrants to be exercised for cash or by utilizing shares
of Preferred Stock at the stated value on a gross or net
basis.

Other Provisions.  The Company will enter into a
Registration Rights Agreement to register under the
Securities Act of 1933, and maintain the effectiveness of
such registration of, the resale of the Preferred Shares,
the Warrants and Common Stock acquired by Purchaser pursuant
to the Warrants.  In the event of a Change of Control (as
defined in the Purchase Agreement) occurring prior to the
sixth anniversary of the closing of the transaction,
Purchaser will have the right to exchange all or part of the
Preferred Stock and Warrants proportionally for Common Stock
at the rate of one share of Preferred Stock, seven Series A
Warrants and seven Series B or Series C Warrants for
18.6047 shares of Common Stock, provided that the Company
may, under certain circumstances, pay a portion of the
exchange in cash.  The exercise price of the Warrants and

<PAGE>

the exchange formula related to a Change in Control may be
adjusted upon the occurrence of certain events described in
the anti-dilution provisions of the Warrants.  The Purchaser
will have the right to designate 15% (rounded down) of the
Company's directors which, at the closing of the
transaction, will be one of six directors, so long as the
Purchaser continues to own 50% or more of the outstanding
Preferred Stock or Warrants to acquire 15% or more of the
fully diluted Common Stock.  So long as the Purchaser
continues to own Warrants to acquire more than 5% (but less
than 15%) of the fully diluted Common Stock, Purchaser may
designate one director.  The Purchaser has agreed to
standstill provisions for ten years that restrict the Common
Stock that Purchaser may acquire in addition to the
securities acquire pursuant to the Purchase Agreement to 5%
of the outstanding Common Stock, prevent Purchaser from
selling Common Stock or Warrants to an person or group that
would beneficially own more than 10% of the outstanding
Common Stock after the sale, prevent Purchaser from
participating in a "13(d) group" as defined in the Purchase
Agreement, and prevents Purchaser from proposing business
combinations involving the Company or soliciting proxies.
The standstill agreement also limits the Purchaser's voting
rights to one vote less than 20% of the aggregate number of
votes entitled to be cast on any matter by Common Stock
holders or other classes of capital stock.

The closing of the transaction is subject to clearance under
the Hart Scott Rodino Act and to other customary conditions
to closing.


ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS

The following exhibit is attached to this report:

Exhibit No. 99.1   Purchase Agreement, dated as of December
               22, 1998, by and among EEX Corporation , a
               Texas corporation, and Warburg, Pincus Equity
               Partners, L.P., a Delaware limited
               partnership, Warburg, Pincus Netherlands
               Equity Partners I, C.V., a Dutch limited
               partnership, Warburg, Pincus Netherlands
               Equity Partners II, C.V. a Dutch limited
               partnership and Warburg, Pincus Netherlands
               Equity Partners III, C.V., a Dutch limited
               partnership

<PAGE>

                         SIGNATURE

     Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.

                                     EEX Corporation

                                           By: /s/ R. S.Langdon
                                          -------------------
                                          R. S. Langdon
                                          Executive Vice President,
                                          Finance and Aministration,
                                          and Chief Financial Officer





Date:     December 23, 1998







<PAGE>









                       PURCHASE AGREEMENT

                          By and Among

                        EEX Corporation,

             Warburg, Pincus Equity Partners, L.P.,

      Warburg, Pincus Netherlands Equity Partners I, C.V.,

     Warburg, Pincus Netherlands Equity Partners II, C.V.,

                              and

     Warburg, Pincus Netherlands Equity Partners III, C.V.,


        Series B 8% Cumulative Perpetual Preferred Stock
                    Warrants for Common Stock

                       December 22, 1998



                        TABLE OF CONTENTS

ARTICLE I.DEFINITIONS                                           1
     Section 1.1 Definitions                                    1
     Section 1.2 References and Titles                         10

ARTICLE II.PURCHASE OF THE SECURITIES                          11
     Section 2.1 Purchase of the Securities                    11

ARTICLE III.REPRESENTATIONS AND WARRANTIES OF THE COMPANY      11
     Section 3.1 Organization, Standing and Power              11
     Section 3.2 Subsidiaries                                  12
     Section 3.3 Capital Structure                             12
     Section 3.4 Authority; No Violations; Approvals           13
     Section 3.5 SEC Documents                                 15
     Section 3.6 Absence of Certain Changes or Events          16
     Section 3.7 No Undisclosed Material Liabilities           16
     Section 3.8 No Default                                    17
     Section 3.9 Compliance with Applicable Laws               17
     Section 3.10                                      Litigation  18
     Section 3.11                 Title to Oil and Gas Properties  18
     Section 3.12                       Title to Other Properties  19
     Section 3.13                           Intentionally Omitted  19
     Section 3.14                              Certain Agreements  19
     Section 3.15                            Status of Securities  20
     Section 3.16                    Tax Returns and Tax Payments  20
     Section 3.17                          Employee Benefit Plans  21
     Section 3.18                                   Labor Matters  23
     Section 3.19                             Intangible Property  23
     Section 3.20                           Environmental Matters  24
     Section 3.21                                       Insurance  25
     Section 3.22                                     Prepayments  26
     Section 3.23                                  Gas Imbalances  26
     Section 3.24                                  Reserve Report  26
     Section 3.25                             Reverse Stock Split  27
     Section 3.26                           No Brokers or Finders  27
     Section 3.27                                            Vote  27
     Section 3.28                   Amendment to Rights Agreement  27

ARTICLE IV.REPRESENTATIONS AND WARRANTIES OF PURCHASERS        27
     Section 4.1 Organization, Standing and Power              27
     Section 4.2 Authority; Approvals                          28
     Section 4.3 Litigation                                    28
     Section 4.4 Investment Intent                             28
     Section 4.5 Transfer Restrictions                         28
     Section 4.6 Purchaser Status                              29
     Section 4.7 No Brokers or Finders                         30
     Section 4.8 Ownership of Shares                           30
     Section 4.9 Financing                                     30

ARTICLE V.COVENANTS                                            30
     Section 5.1 Confidentiality                               30
     Section 5.2 Affirmative Covenants of the Company          30
     Section 5.3 Negative Covenants of the Company             31
     Section 5.4 Approvals                                     33
     Section 5.5 HSR Act Notification                          33
     Section 5.6 Notification of Certain Matters               33
     Section 5.7 Board of Directors                            34
     Section 5.9 Shareholders Meeting                          35
     Section 5.10                                      Standstill  36
     Section 5.11                   Registration Rights Agreement  38
     Section 5.12                                 Use of Proceeds  38
     Section 5.13                        Share Repurchase Program  38
     Section 5.14                               Change of Control  38
     Section 5.15                               Preemptive Rights  40
     Section 5.16                    Allocation to Stated Surplus  40
     Section 5.17                                    Cooperation.  40

ARTICLE VI.CONDITIONS PRECEDENT TO CLOSING                     41
     Section 6.1 Conditions Precedent to Each Party's Obligation41
     Section 6.2 Conditions Precedent to Obligation of Purchasers
            41
     Section 6.3 Conditions Precedent to Obligations of Company42

ARTICLE VII.CLOSING                                            43
     Section 7.1 Closing                                       43
     Section 7.2 Actions to Occur at the Closing               43

ARTICLE VIII.TERMINATION                                       44
     Section 8.1 Termination                                   44
     Section 8.2 Effect of Termination                         44

ARTICLE IX.RECOVERY OF FEES                                    45

ARTICLE X.MISCELLANEOUS                                        45
     Section 10.1                          Survival of Provisions  45
     Section 10.2              No Waiver; Modification in Writing  45
     Section 10.3                            Specific Performance  46
     Section 10.4                                    Severability  46
     Section 10.5                               Fees and Expenses  46
     Section 10.6                             Parties in Interest  46
     Section 10.7                                         Notices  47
     Section 10.8                                    Counterparts  47
     Section 10.9                                Entire Agreement  47
     Section 10.10                                  Governing Law  48
     Section 10.11                           Public Announcements  48
     Section 10.12                                     Assignment  48
     Section 10.13                 Director and Officer Liability  48
     Section 10.14                                       Headings  48




     Exhibit 6.2(h)      Statement of Resolution
     Exhibit 7.2(b)(ii)(A)    Form of Series A Warrants
     Exhibit 7.2(b)(ii)(B)    Form of Series B Warrants
     Exhibit 7.2(b)(ii)(C)    Form of Series C Warrants
     Exhibit 7.2(b)(iv)  Form of Registration Rights Agreement
                       PURCHASE AGREEMENT


     PURCHASE  AGREEMENT, dated as of December 22, 1998,  by  and
among  EEX Corporation , a Texas corporation (together  with  its
successors,  if any, the "Company"), and Warburg,  Pincus  Equity
Partners,  L.P., a Delaware limited partnership, Warburg,  Pincus
Netherlands Equity Partners I, C.V., a Dutch limited partnership,
Warburg,  Pincus  Netherlands Equity Partners II,  C.V.  a  Dutch
limited  partnership  and  Warburg,  Pincus  Netherlands   Equity
Partners  III,  C.V., a Dutch limited partnership  (collectively,
the "Purchasers").

     In  consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt
of  which  is  hereby acknowledged, the parties hereto  agree  as
follows:

                           ARTICLE I.
                           DEFINITIONS
                                
     Section 1.1    Definitions.  As used in this Agreement,  and
unless  the  context requires a different meaning, the  following
terms have the meanings indicated:

     "Affiliate"  means, with respect to any  Person,  any  other
Person   directly,   or   indirectly   through   one   or    more
intermediaries,  controlling,  controlled  by  or  under   common
control  with  such Person. For purposes of this  definition  and
this   Agreement,  the  term  "control"  (and  correlative  terms
"controlling,"  "controlled by" and "under common control  with")
means  possession  of  the  power, whether  by  contract,  equity
ownership or otherwise, to direct the policies or management of a
Person.

     "Agreement" means this Purchase Agreement, as the  same  may
be  amended,  supplemented  or modified  from  time  to  time  in
accordance with the terms hereof.

     "Approval"  means  any  approval,  authorization,  grant  of
authority,   consent,  order,  qualification,  permit,   license,
variance,  exemption, franchise, concession, certificate,  filing
or  registration or any waiver of the foregoing, or  any  notice,
statement  or  other communication required  to  be  filed  with,
delivered  to  or obtained from any Governmental  Entity  or  any
other Person.

     "Articles  of  Incorporation" means the  Company's  Restated
Articles of Incorporation, as amended from time to time.

     "Authorized  Preferred Stock" has the meaning set  forth  in
Section 3.3(a).

     "Beneficially Own" or "Beneficial Ownership" is  defined  in
Rules  13d-3  and 13d-5 of the Exchange Act, but  without  taking
into  account  any  contractual restrictions  or  limitations  on
voting or other rights.

     "Benefit Plans" has the meaning set forth in Section 3.17.

     "Board" means the Board of Directors of the Company.
     "Business Combination" means (i) any consolidation,  merger,
share   exchange  or  similar  business  combination  transaction
involving  the  Company  with  any  Person  or  (ii)  the   sale,
assignment,  conveyance, transfer, lease or other disposition  by
the Company of all or substantially all of its assets.

     "Business Day" means any day except Saturday, Sunday and any
day  which  shall  be a legal holiday or a day on  which  banking
institutions  in  Houston,  Texas or  New  York  City,  New  York
generally  are authorized or required by law or other  government
actions to close.

     "Bylaws" mean the Company's bylaws, as amended from time  to
time.

     "Capital Stock" means (i) with respect to any Person that is
a   corporation  or  company,  any  and  all  shares,  interests,
participations  or  other  equivalents  (however  designated)  of
capital or capital stock of such Person and (ii) with respect  to
any  Person  that is not a corporation or company,  any  and  all
partnership or other equity interests of such Person.

     "Change  of  Control" shall mean any event constituting  (a)
the consummation of any Business Combination except where (i) the
shareholders  of the Company immediately prior to  such  Business
Combination own (in substantially the same proportion relative to
each   other   as  such  shareholders  owned  the  Common   Stock
immediately  prior to such consummation) (x) forty percent  (40%)
or  more  of the Voting Stock of the surviving entity on  both  a
Modified  Non  Diluted Basis and a Modified Fully  Diluted  Basis
immediately  after  such  Business  Combination,  and  (y)  forty
percent  (40%)  or more of the outstanding common  stock  of  the
surviving  entity  on  both a Modified Non Diluted  Basis  and  a
Modified  Fully  Diluted Basis immediately  after  such  Business
Combination, (ii) the members of the Board immediately  prior  to
the  entering  into  the  agreement  relating  to  such  Business
Combination  constitute at least a majority of the Board  or  the
board of directors of the surviving entity immediately after such
Business Combination, with no agreements or arrangements in place
immediately  after  such consummation that would  result  in  the
members  of the Board immediately prior to the entering into  the
agreement  relating  to  such  Business  Combination  ceasing  to
constitute  at  least a majority of the Board  or  the  board  of
directors  of  the  surviving entity and (iii)  no  Non-Financial
Person  or  13d Group of Non-Financial Persons is the  Beneficial
Owner  of  20% or more of the total outstanding Voting  Stock  or
common  stock of the surviving entity and no Financial Person  or
13d Group of Financial Persons is the Beneficial Owner of 35%  or
more of the total outstanding Voting Stock or common stock of the
surviving entity or (b) any Non-Financial Person or 13d Group  of
Non-Financial Persons acquiring Beneficial Ownership  of  20%  or
more of the total outstanding Voting Stock or Common Stock of the
Company or any Financial Person or 13d Group of Financial Persons
acquiring  Beneficial  Ownership of 35%  or  more  of  the  total
outstanding Voting Stock or Common Stock of the Company.

     "Change of Control Exchange Date" has the meaning set  forth
in Section 5.14.

     "Closing" has the meaning set forth in Section 7.1.

     "Closing Date" has the meaning set forth in Section 7.1.

     "Code"  means the Internal Revenue Code of 1986, as amended,
and the rules and regulations thereunder as in effect on the date
hereof.

     "Common  Stock" means the Company's common stock, par  value
$.01  per  share,  and any Capital Stock for or into  which  such
Common  Stock hereafter is exchanged, converted, reclassified  or
recapitalized  by  the Company or pursuant  to  an  agreement  or
Business Combination to which the Company is a party.

     "Common  Stock Equivalents" means (without duplication  with
any  other Common Stock or common stock, as the case may  be,  or
Common  Stock Equivalents) rights, warrants, options, convertible
securities,  or  exchangeable  securities,  exercisable  for   or
convertible or exchangeable into, directly or indirectly,  Common
Stock or common stock, as the case may be, whether at the time of
issuance  or upon the passage of time or the occurrence  of  some
future event, including the Warrants.

     "Company"  has  the  meaning set forth in  the  introductory
paragraph hereof.

     "Company  Disclosure Schedule" has the meaning set forth  in
Article III.

     "Company  Options"  has the meaning  set  forth  in  Section
3.3(d).

     "Company SEC Documents" has the meaning set forth in Section
3.5.

     "Confidential Information" means all information  about  the
Company   furnished   to  the  Purchasers   or   any   of   their
Representatives by the Company or any of its Representatives, but
shall  exclude information that (i) is in the possession  of  the
Purchasers  or  their Representatives prior to receipt  from  the
Company, (ii) is or becomes available in the public domain, other
than  as a result of an unauthorized disclosure by Purchasers  or
its Representatives, or (iii) is not acquired from the Company or
any  other  person known by the Purchasers or its Representatives
to be subject to a confidentiality agreement with the Company.

     "Contracts"  means  all  agreements,  contracts,  or   other
binding  commitments,  arrangements or  plans,  written  or  oral
(including  any amendments and other modifications  thereto),  to
which  the  Company or any of its Subsidiaries is a party  or  is
otherwise bound.

     "Credit  Agreement"  means, that certain  Credit  Agreement,
dated as of May 1, 1995 among the Company, as borrower, The Chase
Manhattan   Bank,  as  administration  agent,  and  the   lenders
signatory  thereto, as the same may from time to time be  amended
or supplemented.

     "Cure   Period"  has  the  meaning  set  forth  in   Section
8.1(b)(i).

     "Debt" has the meaning set forth in the Credit Agreement.

     "EEX  Rights Agreement" has the meaning set forth in Section
3.28.

     "Environmental  Laws" has the meaning set forth  in  Section
3.20.
     "ERISA" has the meaning set forth in Section 3.17.

     "Exchange Act" means the Securities Exchange Act of 1934, as
amended,  and  the rules and regulations of the  SEC  promulgated
thereunder.

     "Financial  Person" means any Person that (i) is,  or  holds
itself  out  as  being,  engaged primarily  in  the  business  of
investing, reinvesting, owning, holding or trading in securities,
and  (ii) together with its Affiliates is not engaged in (x)  any
significant  activities other than financial services,  insurance
or  investment  activities or (y) directly or indirectly  through
Affiliates  in any industrial activities, including the  oil  and
gas and energy industry.
     
     "Fully-Diluted  Common Stock" means, at any time,  the  then
outstanding Common Stock plus (without duplication) all shares of
Common  Stock issuable upon the exercise of the then  outstanding
Warrants.

     "GAAP" has the meaning set forth in Section 3.5(b).

     "Governmental Entity" means any agency, bureau,  commission,
court,  authority,  department, official, political  subdivision,
tribunal or other instrumentality of any government, whether  (i)
regulatory, administrative or otherwise, (ii) federal,  state  or
local, or (iii) domestic or foreign.

     "Hazardous  Materials" has the meaning set forth in  Section
3.20.

     "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.

     "Hydrocarbons"  means oil, condensate, gas,  casinghead  gas
and other liquid or gaseous hydrocarbons.

     "Intangible Property" has the meaning set forth  in  Section
3.19.

     "Knowledge" of any Person means the actual knowledge of such
Person's executive and financial officers and directors, in  each
case  after  reasonable inquiry of such other  officers  of  such
Person  with  direct  responsibility for  the  Person's  business
relating to such knowledge.

     "Law"  means any constitutional provision, statute or  other
law, ordinance, rule, regulation or interpretation of any thereof
and any Order of any Governmental Entity (including Environmental
Laws) now in effect.

     "Lien"   means  any  mortgage,  lien,  pledge,  encumbrance,
easement, charge or security interest of any kind (including  any
agreement to give any of the foregoing, any conditional  sale  or
other  title  retention  agreement or any  lease  in  the  nature
thereof).

     "Litigation" has the meaning set forth in Section 3.10(a).

     "Market  Price" means, with respect to a particular security
on any given day, the last reported sale price regular way or, in
case  no  such reported sale takes place on such day, the average
of  the  last closing bid and asked prices regular way, in either
case  on the principal national securities exchange on which  the
applicable  securities are listed or admitted to trading,  or  if
not  listed  or  admitted to trading on any  national  securities
exchange, (i) the closing sale price for such day reported by the
NASDAQ  Stock Market, if such security is traded over-the-counter
and  quoted on the NASDAQ Stock Market, or (ii) if such  security
is  so  traded,  but not so quoted, the average  of  the  closing
reported bid and asked prices of such security as reported by the
NASDAQ  Stock Market or any comparable system, or (iii)  if  such
security  is  not  listed  on  the NASDAQ  Stock  Market  or  any
comparable  system,  the average of the  closing  bid  and  asked
prices as furnished by two members of the National Association of
Securities  Dealers,  Inc. selected from  time  to  time  by  the
Company  for  that purpose.  If such security is not  listed  and
traded  in  a  manner that the quotations referred to  above  are
available for the period required hereunder, the Market Price per
share  of such security shall be deemed to be the fair value  per
share  of such security as determined in good faith by the  Board
of Directors of the Company.

     "Material Adverse Effect" or "Material Adverse Change" means
any  effect,  change,  event  or occurrence  that  is  materially
adverse   to  the  business,  operations,  properties,  condition
(financial  or  otherwise),  results  of  operations,  assets  or
liabilities of the Company and its Subsidiaries taken as a  whole
,  but  excluding  any such effect, change, event  or  occurrence
resulting  from  (i)  changes in general economic  conditions  or
(ii)  effects,  changes, events or occurrences in  the  Company's
industry  generally (including without limitation any  regulatory
changes or changes in prices for oil or gas), in each case  which
do not have a materially disproportionate effect on the business,
operations  or  properties of the Company or its Subsidiaries  as
compared to general economic conditions or the Company's industry
as a whole, respectively.

     "Material  Contracts" has the meaning given  it  in  Section
3.14(a).

     "Material  Subsidiary" means any Subsidiary  that,  together
with all Subsidiaries of such Subsidiary, (i) for the most recent
fiscal  year  of the Company accounted for more than  5%  of  the
consolidated  revenues  of the Company and  its  Subsidiaries  or
(ii) at the end of such fiscal year, was the owner (beneficial or
otherwise)  of  more than 5% of the consolidated  assets  of  the
Company  and  its  Subsidiaries all as shown on the  consolidated
financial   statements  of  the  Company  and  its  Subsidiaries;
provided, that notwithstanding the above, Enserch Far East  Ltd.,
EEX  Operating  L.P.  and EEX Operating LLC.  shall  be  Material
Subsidiaries.

     "Modified  Fully-Diluted  Basis" shall  mean  a  calculation
based  on  the then outstanding shares of Voting Stock or  common
stock,  as  the case may be, plus all shares of Voting  Stock  or
common  stock  acquirable  pursuant to, or  constituting,  Common
Stock  Equivalents,  but excluding 50% of  the  Voting  Stock  or
common stock acquirable pursuant to then outstanding Warrants.

     "Modified Non-Diluted Basis" shall mean a calculation  based
on  the  then outstanding shares of Voting Stock or common stock,
as  the  case  may be, and without giving effect  to  outstanding
Common Stock Equivalents, but including (i) 50% of the shares  of
common   stock  then  acquirable  upon  exercise  of   the   then
outstanding  Warrants and (ii) the number  of  shares  of  common
stock  equal to (a) the aggregate Market Price as of the date  of
such   Business  Combination  of  all  shares  of  common   stock
acquirable  upon  exercise  of  all  outstanding  employee  stock
options  of  the relevant entity that have an exercise  price  of
less than the Market Price of common stock as of the date of such
Business  Combination less the aggregate exercises price  of  all
such  options divided by (b) the Market Price of common stock  as
of the date of such Business Combination.

     "New  Securities" means any shares of Capital Stock or other
equity   securities  (within  the  meaning   of   Rule   16a-1(d)
promulgated  under  the  Exchange Act), including  debt  that  is
convertible or exchangeable for Capital Stock and any warrants or
other rights to purchase Capital Stock sold for cash, other  than
securities  marketed  to  at  least  25  investors,  sold  in  an
underwritten  private offering and available for resale  pursuant
to  Rule  144A  or Regulation S promulgated under the  Securities
Act, and securities sold in an underwritten offering pursuant  to
a registration statement effective under the Securities Act.

     "Non-Financial  Person"  means any  Person  that  is  not  a
Financial Person.

     "Oil and Gas Properties" means leasehold and other interests
in  oil, gas and other mineral properties owned or otherwise held
in  the  name of the Company or any of its Subsidiaries including
without  limitation  all  direct and indirect  interests  in  and
rights  with respect to oil, gas, mineral, and related properties
and  assets of any kind and nature, direct or indirect, including
working, leasehold and mineral interests and operating rights and
royalties, overriding royalties, production payments, net  profit
interests   and  other  nonworking  interests  and   nonoperating
interests;  all interests in rights with respect to  Hydrocarbons
and other minerals or revenues therefrom; all Contracts Interests
and  claims and rights thereto, surface interests, fee interests,
reversionary   interests,   reservations,   production    sharing
interests  and  concessions;  all  easements,  rights   of   way,
licenses,  permits, leases, and other interests associated  with,
appurtenant  to, or necessary for the operation  of  any  of  the
foregoing;   and  all  interests  in  equipment   and   machinery
(including  wells,  well equipment and machinery),  oil  and  gas
production,  gathering, transmission, treating,  processing,  and
storage  facilities (including tanks, tank batteries,  pipelines,
and  gathering  systems), pumps, water plants,  electric  plants,
gasoline  and  gas  processing  plants,  refineries,  and   other
tangible   personal  property  and  fixtures   associated   with,
appurtenant  to, or necessary for the operation  of  any  of  the
foregoing, and all material files, records and data owned by,  or
in  the actual or constructive possession of, the Company or  its
Subsidiaries  relating to the foregoing, including  all  material
title records, geological, geophysical and seismic records,  data
and  information, production records, electric logs,  core  data,
pressure  data  and  other related matters of a  non-interpretive
nature associated therewith.

     "Order"  means any decree, injunction, judgment, settlement,
order, ruling, assessment or writ of a court.

     "PBGC" has the meaning given to it in Section 3.17(iii).

     "Permitted Liens" means:

     (a)   Liens  upon any property presently owned or  hereafter
acquired, created at the time of acquisition to secure a  portion
of the purchase price thereof, or existing thereon at the date of
acquisition, whether or not assumed by the Company or one of  its
Material Subsidiaries, provided that every such Lien shall  apply
only to the property so acquired and fixed improvements thereon;

     (b)   any  extension,  renewal, or  refunding  of  any  Lien
permitted by Section 9.02(a) of the Credit Agreement, if  limited
to  the same property subject to, and securing not more than  the
amount secured by, the Lien extended, renewed or refunded;

     (c)  the pledge of current assets in the ordinary course  of
business, to secure current liabilities;

     (d)   Liens upon (i) property, to secure obligations to  pay
all or a part of the purchase price of such property only out  of
or   measured  by  the  production,  or  the  proceeds  of   such
production, from such property of oil or gas or products  or  by-
products thereof, or (ii) the production from property of oil  or
gas  or products or by-products thereof, or the proceeds of  such
production,  to secure obligations to pay all or a  part  of  the
expenses of exploration, drilling or development of such property
only out of such production or the proceeds of such production;

     (e)   mechanics' or materialmen's liens, good faith deposits
in  connection  with  tenders, leases of  real  estate,  bids  or
contracts  (other  than  contracts  for  the  payment  of  money)
deposits  to secure public or statutory obligations, deposits  to
secure, or in lieu of, surety, stay or appeal bonds, and deposits
as  security for the payment of taxes or assessments  or  similar
charges, Liens given in connection with bid or completion  bonds;
provided  that such obligations secured are not yet  due  or  are
being  contested in good faith by appropriate action and  against
which an adequate reserve has been established.

     (f)   any  Lien arising by reason of deposits with,  or  the
giving  of  any  form  of  security to, any  Governmental  Entity
created  or  approved  by Law for any purposes  at  any  time  as
required by Law as a condition to the transaction of any business
or  the  exercise of any privilege or license, or to  enable  the
company  or  a  Subsidiary  to  maintain  self-insurance  or   to
participate in any funds established to cover any insurance risks
or   in  connection  with  workmen's  compensation,  unemployment
insurance, old age pensions or other social security, or to share
in   the   privileges   or   benefits  required   for   companies
participating   in   such  arrangements;   provided   that   such
obligations  secured are not yet due or are  being  contested  in
good  faith  by appropriate action and against which an  adequate
reserve has been established;

     (g)   the  pledge  or  assignment  of  accounts  receivable,
including  customers' installment paper, to banks or others  made
in  the  ordinary  course  of business  (including  to  or  by  a
Subsidiary  which  is  principally engaged  in  the  business  of
financing the business of the Company and its Subsidiaries);

     (h)   the Liens of taxes or assessments for the then current
year  or  not at the time due, or the Liens of Taxes already  due
but  the  validity of which is being contested in good  faith  by
appropriate action and against which an adequate reserve has been
established;

     (i)   any judgment or Lien against the Company or a Material
Subsidiary,  so  long as the finality of such judgment  is  being
contested  in good faith by appropriate action and the  execution
thereon is stayed;

     (j)   assessments or similar encumbrances, the existence  of
which  does  not  impair the value or the  use  of  the  property
subject thereto for the purposes for which it was acquired;

     (k)   landlords'  liens  on fixtures  and  movable  property
located   on  premises  leased  by  the  Company  or  a  Material
Subsidiary in the ordinary course of business so long as the rent
secured thereby is not in default;

     (l)   Liens  on the assets of any limited liability  company
organized under a limited liability company act of any  state  in
which a limited liability company is treated as a partnership for
federal  income tax purposes; provided that neither  the  Company
nor  any  Material  Subsidiary is liable for  the  debt  of  such
limited liability company; and

     (m)   other  Liens on any Properties of the Company  or  any
Subsidiary with an aggregate value not exceeding 1% of  the  book
value of the total assets of the Company on a consolidated basis.

     "Person"  means an individual or a corporation, partnership,
trust,   incorporated  or  unincorporated  association,   limited
liability company, joint venture, joint stock company, government
(or  an  agency or political subdivision thereof) or other entity
of any kind.

     "PS"  means  the Company's Series B 8% Cumulative  Perpetual
Preferred Stock, no par value per share.

     "Purchase  Price"  has  the meaning  set  forth  in  Section
2.1(b).

     "Purchasers"  has the meaning set forth in the  introductory
paragraph hereto.

     "Purchaser's  Expenses"  means all reasonable  out-of-pocket
fees,  costs  and expenses incurred by Purchasers  in  connection
with  its  due diligence efforts or the transactions contemplated
by  this Agreement and the other Transaction Documents, including
(i)  fees,  costs  and expenses of its accountants,  counsel  and
other  similar  advisors and (ii) fees paid to  any  Governmental
Entity  (including fees payable in connection with filings  under
the   HSR  Act  pursuant  to  Section  5.5),  but  excluding  any
commitment,  underwriting fee or similar fees paid by  Purchasers
to  any third party lender or underwriter in connection with  any
debt  financing  obtained  by  Purchasers  with  respect  to  the
transactions contemplated by this Agreement.

     "Registration  Rights  Agreement"  means  the   Registration
Rights Agreement in the form of Exhibit 7.2(b)(iv).

     "Release" has the meaning set forth in Section 3.20.

     "Remedial Action" has the meaning set forth in Section 3.20.

     "Representatives"   of  any  Person  means   the   officers,
directors,  employees, agents and other representatives  of  such
Person.

     "Reserve  Report"  means  the proved  oil  and  gas  reserve
reports concerning the Oil and Gas Properties as of December  31,
1997 and prepared by Netherland, Sewell & Associates.

     "Rights  Agreement"  has the meaning set  forth  in  Section
5.10(d).

     "Rule  144" means Rule 144 under the Securities Act of 1933,
as amended, and any successor rule thereto.

     "SEC" means the Securities and Exchange Commission.

     "Securities" means the Shares and the Warrants.

     "Securities  Act"  means  the Securities  Act  of  1933,  as
amended,  and  the rules and regulations of the  SEC  promulgated
thereunder.

     "Series  A Warrants" means the ten year warrants to purchase
10,500,000  shares of Common Stock, at an exercise price  of  $12
per  share  (as may be adjusted from time to time  as  set  forth
therein), in substantially the form of Exhibit 7.2(b)(ii)(A).

     "Series  B  Warrants"  means  the  seven  year  warrants  to
purchase  2,500,000 shares of Common Stock, at an exercise  price
of  $12  per share (as may be adjusted from time to time  as  set
forth   therein),   in   substantially  the   form   of   Exhibit
7.2(b)(ii)(B).

     "Series  C  Warrants"  means  the  seven  year  warrants  to
purchase  8,000,000 shares of Common Stock, at an exercise  price
of  $12  per share (as may be adjusted from time to time  as  set
forth     therein),    in    substantially    the     form     of
Exhibit 7.2(b)(ii)(C).

     "Shares"  means  the 1.5 million shares of PS  purchased  by
Purchasers pursuant to this Agreement.

     "Statement  of  Resolution"  shall  mean  the  Statement  of
Resolution in the form attached hereto as Exhibit 6.1(h).

     "Stock  Plans"  means  the  Company's  stock  option,  stock
incentive or other similar plans.

     "Subsidiary" means, (i) a corporation, a majority  of  whose
stock  with voting power, under ordinary circumstances, to  elect
directors  is at the time, directly or indirectly, owned  by  the
Company,  by  a Subsidiary of the Company or by the  Company  and
another  Subsidiary,  or  (ii) any other  Person  (other  than  a
corporation)  in which the Company, a Subsidiary or  the  Company
and  a  Subsidiary,  directly  or  indirectly,  at  the  date  of
determination thereof has at least a majority ownership interest.

     "Tax" or "Taxes" has the meaning set forth in Section 3.16.

     "Tax Return" has the meaning set forth in Section 3.16.

     "13d  Group"  means  a group within the meaning  of  Section
13(d)(3) of the Exchange Act.

     "Transaction Documents" means this Agreement, the  Statement
of   Resolution,   the  Warrants  and  the  Registration   Rights
Agreement.

     "Transfer" has the meaning set forth in Section 4.5.

     "Underlying  Shares"  means  the  shares  of  Common   Stock
issuable  upon  exercise of the Warrants in accordance  with  the
terms thereof and any shares of Common Stock paid as dividends on
the PS.

     "Unit"  shall  mean (i) a Series A Warrant  exercisable  for
seven  shares  of  Common  Stock (as such  number  of  shares  is
adjusted  from  time  to  time  pursuant  to  the  terms  of  the
Warrants),  (ii)  a  Series B Warrant or a Series  C  Warrant  in
either case exercisable for seven shares of Common Stock (as such
number  of shares is adjusted from time to time pursuant  to  the
terms of the Warrants) or cash consideration in lieu thereof  and
(iii) one share of PS and the shares (or fraction thereof) of  PS
and Common Stock paid to Purchaser after Closing as dividends  in
respect of one share of PS issued at Closing.

     "Voting  Stock"  of  a Person means Capital  Stock  of  such
Person  of  the  class or classes pursuant to which  the  holders
thereof   have   the   general  voting   power   under   ordinary
circumstances to vote in the election of the board of  directors,
managers or trustees of such Person; provided that if such Person
has   more  than  one  class  or  series  of  Voting  Stock,  any
calculation as to a percentage of such Voting Stock shall be made
with  respect to the percentage of votes entitled to be  cast  in
respect of such Voting Stock in such circumstances.

     "Warburg" has the meaning set forth in Section 5.7(a).

     "Warrants" mean the Series A Warrants, Series B Warrants and
Series C Warrants.

     Section  1.2     References and Titles.  All  references  in
this   Agreement  to  Exhibits,  Schedules,  Articles,  Sections,
subsections,  and  other subdivisions refer to the  corresponding
Exhibits,  Schedules, Articles, Sections, subsections, and  other
subdivisions   of   this  Agreement  unless  expressly   provided
otherwise.   Titles appearing at the beginning of  any  Articles,
Sections,  subsections, or other subdivisions of  this  Agreement
are  for  convenience only, do not constitute any  part  of  such
Articles, Sections, subsections or other subdivisions, and  shall
be disregarded in construing the language contained therein.  The
words  "this  Agreement,"  "herein," "hereby,"  "hereunder,"  and
"hereof," and words of similar import, refer to this Agreement as
a whole and not to any particular subdivision unless expressly so
limited.  The words "this Section," "this subsection," and  words
of  similar  import,  refer only to the Sections  or  subsections
hereof  in which such words occur.  The word "including" (in  its
various forms) means "including without limitation."  Pronouns in
masculine,  feminine,  or neuter genders shall  be  construed  to
state  and include any other gender and words, terms, and  titles
(including  terms defined herein) in the singular form  shall  be
construed  to  include  the plural and  vice  versa,  unless  the
context   otherwise  expressly  requires.   Unless  the   context
otherwise  requires,  all defined terms  contained  herein  shall
include the singular and plural forms of such defined terms.
                           ARTICLE II.
                   PURCHASE OF THE SECURITIES
                                
     Section 2.1    Purchase of the Securities.

     (a)   Subject to the terms and conditions herein set  forth,
the Company will sell to Purchasers, and Purchasers will purchase
from  the  Company,  the  Securities,  as  allocated  among   the
Purchasers as set forth in Exhibit 2.1.

     (b)  The aggregate purchase price payable for the Securities
shall be $150 million (the "Purchase Price").

     (c)  Delivery of the Securities shall be made at Closing  by
delivery  to  Purchasers, against payment of the  Purchase  Price
therefor   as  provided  herein,  of  (i)  one  or   more   share
certificates, registered in the name and amounts requested by the
Purchasers   at  least  two  Business  Days  prior  to   Closing,
representing  an  aggregate  of 1.5  million  shares  of  PS  and
(ii)  the  Warrants, all to be purchased at Closing by Purchasers
hereunder.

     (d)  Payment of the Purchase Price for the Securities to  be
purchased  hereunder shall be made by or on behalf of  Purchasers
by  wire transfer of immediately available funds to an account of
the  Company  (the  number  for which  account  shall  have  been
furnished to Purchasers at least two Business Days prior  to  the
Closing Date).

                          ARTICLE III.
          REPRESENTATIONS AND WARRANTIES OF THE COMPANY
                                
     The Company represents and warrants to Purchasers as follows
(in each case as qualified by matters reflected on the disclosure
schedule  dated as of the date of this Agreement by reference  to
the  Section of this Agreement so qualified and delivered by  the
Company  to  Purchasers prior to the date of this Agreement  (the
"Company  Disclosure  Schedule")  and  made  a  part  hereof   by
reference):

     Section  3.1    Organization, Standing and Power.   Each  of
the  Company  and  each of its Subsidiaries is a  corporation  or
other  entity  duly  organized,  validly  existing  and  in  good
standing  under  the  laws of the jurisdiction  in  which  it  is
incorporated  or  organized and has the  requisite  corporate  or
other  such entity power and authority to own its properties  and
carry on its business as now being conducted. Each of the Company
and each of its Subsidiaries is duly qualified or licensed to  do
business  and is in good standing in each jurisdiction  in  which
the  nature  of its business or the ownership or leasing  of  its
properties makes such qualification or licensing necessary, other
than  in  such jurisdictions where the failure to be so qualified
or  licensed or to be in good standing, individually  or  in  the
aggregate,  has not had and could not reasonably be  expected  to
have  a  Material Adverse Effect.  The Company has  delivered  to
Purchasers prior to the execution of this Agreement complete  and
correct  copies of its Articles of Incorporation and Bylaws  and,
in   the  case  of  the  Company's  Material  Subsidiaries,  made
available  similar organizational documents in each case,  as  in
effect on the date of this Agreement.

     Section  3.2     Subsidiaries.  Schedule 3.2 of the  Company
Disclosure  Schedule sets forth a true and complete list,  as  of
the  date  hereof, of each Material Subsidiary  of  the  Company,
together  with the jurisdiction of incorporation or  organization
and  the  percentage  of  each Material Subsidiary's  outstanding
share capital (or other voting or equity securities or interests,
as  applicable) owned by the Company or another Subsidiary of the
Company.   Except  as set forth in Schedule 3.2  of  the  Company
Disclosure Schedule, all the outstanding shares of share  capital
(or   other   voting  or  equity  securities  or  interests,   as
applicable) of each Material Subsidiary of the Company have  been
validly issued and are fully paid and nonassessable (with respect
to  corporate Subsidiaries) and are owned directly or  indirectly
by  the Company, free and clear of all Liens except for Permitted
Liens.    Except  for  the  shares  or  capital  stock   of   its
Subsidiaries and the partnership interests listed in Schedule 3.2
of  the  Company Disclosure Schedule, as of the date hereof,  the
Company  does  not  own,  directly or indirectly,  any  share  or
capital stock (or other voting or equity securities or interests,
as  applicable)  of  any corporation, limited liability  company,
partnership, joint venture or other entity which is  material  to
the  business  of  the Company and its Subsidiaries  taken  as  a
whole.

     Section 3.3    Capital Structure.

     (a)  The authorized Capital Stock of the Company consists of
150,000,000  shares  of  Common Stock and  10,000,000  shares  of
preferred  stock,  no par value, which may be  divided  into  and
issued  in  one or more series upon the creation thereof  by  the
Board  (the "Authorized Preferred Stock"), of which,  as  of  the
date of this Agreement, (A) 42,383,476 shares of Common Stock are
issued and outstanding, (B) 2,613,662 shares of Common Stock have
been  authorized  and  reserved for issuance  under  the  Benefit
Plans,  (C) 17,204 shares of Common Stock are held by the Company
in its treasury and (D) no shares of Common Stock are held by any
of  the  Company's  Subsidiaries.  Except as  described  in  this
Section 3.3, the Company has no authorized, issued or outstanding
shares or Capital Stock as of the date of this Agreement.

     (b)   As of the date hereof, there are no bonds, debentures,
notes  or  other  indebtedness issued or outstanding  having  the
right to vote on any matters on which holders of Common Stock  or
Authorized Preferred Stock may vote, including without limitation
the  transactions contemplated by this Agreement  and  the  other
Transaction Documents.

     (c)   There  are no restrictions or limitations, contractual
or otherwise, binding upon the Company or any of its Subsidiaries
or  to  which the Company or any of its Subsidiaries  is  subject
that  prohibit  or  limit the enforceability  of  the  terms  and
provisions of the Statement of Resolution or, except as  provided
for in the Warrants, will prohibit or limit the right of a holder
of  Warrants to exercise Warrants for shares of Common Stock; and
the  exercise of any Warrants for shares of Common Stock will not
violate  or result in or constitute a default under any  loan  or
credit agreement, note, bond, mortgage, indenture, lease, permit,
concession, franchise, license or any other contract,  agreement,
arrangement or understanding to which the Company or any  of  its
Subsidiaries  is  a  party  or by which  they  or  any  of  their
properties or assets are bound;

     (d)   There  are  no outstanding warrants,  share  or  stock
options,  share or stock appreciation rights or other  rights  to
receive  or purchase any Capital Stock of the Company or  any  of
its  Subsidiaries  granted  under the Stock  Plans  or  otherwise
except  as set forth in Schedule 3.3(d) of the Company Disclosure
Schedule (such warrants, share or stock options, shares or  stock
appreciation   rights   or   other  rights   disclosed   thereon,
collectively,  the "Company Options").  Except  for  the  Company
Options  and  except  as provided in the Transaction  Agreements,
there  are  no outstanding securities, options, warrants,  calls,
rights, commitments, agreements, arrangements or undertakings  of
any  kind  to which the Company or any of its Subsidiaries  is  a
party or by which any of them is bound obligating the Company  or
any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, any Capital Stock of the Company or of
any  of its Subsidiaries or obligating the Company or any of  its
Subsidiaries  to  issue, grant, extend or  enter  into  any  such
security,  option,  warrant, call, right, commitment,  agreement,
arrangement   or   undertaking.    Except   as   set   forth   in
Schedule 3.3(d) of the Company Disclosure Schedule, there are  no
outstanding    obligations  of  the  Company  or   any   of   its
Subsidiaries (contingent or otherwise) to repurchase,  redeem  or
otherwise acquire any Capital Stock of the Company or any of  its
Subsidiaries or any security exchangeable for or convertible into
such  Capital Stock.  All of the Company's Stock Plans are listed
on Schedule 3.3(d).

     (e)   All  outstanding Capital Stock of the Company and  its
Subsidiaries  are,  and  all shares  which  may  be  issued  upon
exercise  of the Warrants will be, when issued and upon  delivery
of the exercise price, if any, payable with respect thereto, duly
authorized,  validly  issued, fully paid and  nonassessable  and,
except as provided in Section 5.15, not subject to preemptive  or
similar rights.

     (f)    Except  as  contemplated  hereby  or  in  the   other
Transaction Documents or as set forth in Schedule 3.3(f)  of  the
Company  Disclosure  Schedule, there  are  not  any  registration
rights  agreements, shareholder agreements, voting agreements  or
trusts, proxies or other agreements or contractual obligations to
which  the  Company or any Subsidiary is a party  or  bound  with
respect  to the registration with any Government Entity,  or  the
voting or disposition of any Capital Stock of the Company or  any
of  its Subsidiaries and, to the Company's Knowledge there are no
other   shareholder  agreements,  voting  agreements  or  trusts,
proxies or other agreements or contractual obligations among  the
shareholders  of  the  Company with  respect  to  the  voting  or
disposition  of any Capital Stock of the Company or  any  of  its
Subsidiaries.

     Section 3.4    Authority; No Violations; Approvals.

     (a)   The  Board  has  approved this  Agreement,  the  other
Transaction  Documents and the transactions  contemplated  hereby
and  thereby, and declared this Agreement, the other  Transaction
Documents and the transactions contemplated hereby and thereby to
be  in the best interests of the Company.  The Board has approved
the  acquisition of the Securities and, upon any exercise of  the
Warrants  or any declaration of a dividend, the issuance  of  the
Underlying  Shares by the Purchaser hereunder, and this  approval
by  the  Board  satisfies  the approval requirements  of  Article
13.03.A(1) of the Texas Business Corporation Act with respect  to
the  transactions contemplated by this Agreement  (including  the
actions contemplated or referenced in Sections 5.10(a) and 5.15).
The  Board  by  a  vote  of  not less  than  a  majority  of  the
"Continuing  Directors" (as defined in the Company's Articles  of
Incorporation) holding office as of such date expressly approved,
in  advance  of the acquisition of the Securities, the Underlying
Shares and such other acquisition of the Company's securities  as
are  contemplated  by  this Agreement,  this  Agreement  and  the
transactions contemplated by this Agreement.  The Company has all
requisite  corporate  power  and authority  to  enter  into  this
Agreement  and  each of the other Transaction  Documents  and  to
consummate  each  of  the transactions and perform  each  of  the
obligations  contemplated hereby and thereby.  The execution  and
delivery  of  this  Agreement and each of the  other  Transaction
Documents  and  the consummation of each of the transactions  and
the  performance  of each of the obligations contemplated  hereby
and  thereby have been duly authorized by all necessary corporate
action on the part of the Company.  This Agreement has been,  and
prior  to  the Closing the other Transaction Documents  will  be,
duly  executed and delivered by the Company and the Statement  of
Resolution  has  been duly adopted by the Board of  Directors  in
accordance  with  applicable  Law.   Each  of  the  Statement  of
Resolution  and, assuming this Agreement and each  of  the  other
Transaction Documents to which Purchasers are a party  constitute
the  valid  and binding obligations of Purchasers, this Agreement
and  each of the other Transaction Documents constitutes a  valid
and  binding obligation of the Company enforceable in  accordance
with  its  terms, subject, as to enforceability,  to  bankruptcy,
insolvency, reorganization, moratorium and other similar laws  of
general applicability relating to or affecting creditors'  rights
and  to general principles of equity (regardless of whether  such
enforceability  is considered in a proceeding  in  equity  or  at
law).

     (b)   Except as set forth in Schedule 3.4(b) of the  Company
Disclosure Schedule, the execution and delivery of this Agreement
and  each  of the other Transaction Documents does not,  and  the
consummation of the transactions contemplated hereby and  thereby
and  compliance with the provisions hereof and thereof will  not,
conflict  with,  require the consent of any other  Person  to  or
result in any violation of, or default (with or without notice or
lapse  of  time,  or  both) under, or give rise  to  a  right  of
termination,   cancellation  or  acceleration  of  any   material
obligation or to the loss of any material benefit under, or  give
rise to a right of purchase under, result in the creation of  any
Lien  upon any of the properties or assets of the Company or  any
of  its  Subsidiaries under, or otherwise result  in  a  material
detriment  to the Company or any of its Subsidiaries  under,  any
provision of (A) the Articles of Incorporation or Bylaws  or  any
provision  of the comparable organizational documents of  any  of
the  Company's  Subsidiaries, (B) any loan or  credit  agreement,
note,  bond,  mortgage,  indenture,  lease,  instrument,  permit,
concession,  franchise, license or other  contract  or  agreement
arrangement or understanding to which the Company or any  of  its
Subsidiaries is a party or otherwise is bound or by which any  of
them  or  their respective properties are bound or  any  existing
Approval  applicable to the Company or any of  its  Subsidiaries,
(C) any joint venture or other ownership arrangement to which the
Company  or  any of its Subsidiaries is a party or  otherwise  is
bound or by which any of them or their respective properties  are
bound or (D) assuming the Approvals referred to in Section 3.4(c)
are duly and timely obtained or made, any Law or Order applicable
to  the  Company  or  any of its Subsidiaries  or  any  of  their
respective  properties or assets, other  than,  in  the  case  of
clause  (B)  (other  than with respect to any  material  loan  or
credit  agreement,  note,  bond, mortgage  or  indenture  or  any
Material  Contract), (C) or (D), any such conflicts,  violations,
defaults, rights, Liens or detriments, that, individually  or  in
the  aggregate,  (x)  have not had and could  not  reasonably  be
expected to have a Material Adverse Effect, (y) have not impaired
and could not reasonably be expected to impair the ability of the
Company  to  perform its obligations under any of the Transaction
Documents in any material respect, and (z) have not and could not
reasonably  be  expected  to delay in  any  material  respect  or
prevent   the  consummation  of  any  of  the  transactions,   or
performance  of  the  obligations, contemplated  by  any  of  the
Transaction Documents.

     (c)  No Approval from any Governmental Entity is required by
or  with  respect  to the Company or any of its  Subsidiaries  in
connection  with the execution and delivery of this Agreement  or
any other Transaction Document by the Company or the consummation
by  the  Company  of  the  transactions  contemplated  hereby  or
thereby,  except  for:   (A)  if  applicable,  the  filing  of  a
notification  report by the Company under the  HSR  Act  and  the
expiration  or termination of the applicable waiting period  with
respect  thereto; (B) such Approvals as may be  required  by  any
applicable state securities or "blue sky" laws; and (C) any  such
Approvals the failure of which to be made or obtained (1) has not
had  and  could  not reasonably be expected to  have  a  Material
Adverse Effect, (2) has not impaired and could not reasonably  be
expected  to  impair the ability of the Company  to  perform  its
obligations  under  any  of  the  Transaction  Documents  in  any
material  respect  and (3) have not and could not  reasonably  be
expected  to  delay  in  any  material  respect  or  prevent  the
consummation of any of the transactions contemplated  by  any  of
the Transaction Documents.

     Section 3.5    SEC Documents.

     (a)  The Company has made available to Purchasers a true and
complete  copy  of each report, schedule, registration  statement
and  definitive proxy statement filed by the Company with the SEC
since December 31, 1995 (the "Company SEC Documents"), which  are
all  the  documents (other than preliminary materials)  that  the
Company  was  required to file with the SEC  since  December  31,
1995.   As  of their respective dates, the Company SEC  Documents
complied  in all material respects with the requirements  of  the
Securities Act, or the Exchange Act, as the case may be, and  the
rules  and regulations of the SEC thereunder applicable  to  such
Company  SEC  Documents, and none of the  Company  SEC  Documents
contained as of their respective dates any untrue statement of  a
material fact or omitted to state a material fact required to  be
stated  therein or necessary to make the statements  therein,  in
light  of  the  circumstances under which  they  were  made,  not
misleading.

     (b)  The financial statements of the Company included in the
Company SEC Documents, including the notes and schedules thereto,
complied  as to form in all material respects with the rules  and
regulations  of  the SEC with respect thereto, were  prepared  in
accordance  with  United  States  generally  accepted  accounting
principles  ("GAAP")  applied on a consistent  basis  during  the
periods involved (except as may be indicated in the notes thereto
or,  in  the  case of the unaudited statements, as  permitted  by
Rule  10-01 of Regulation S-X of the SEC) and fairly present  the
consolidated   financial  position  of  the   Company   and   its
consolidated  Subsidiaries as of their respective dates  and  the
consolidated  results  of operations and  the  consolidated  cash
flows  of the Company and its consolidated Subsidiaries  for  the
periods   presented   therein  in  accordance   with   applicable
requirements  of  GAAP  (subject, in the case  of  the  unaudited
statements, to normal, recurring adjustments, none of  which  are
material)  applied  on  a  consistent basis  during  the  periods
presented.

     (c)  Except as disclosed in the Company SEC Documents, there
are  no  agreements, arrangements or understandings  between  the
Company  and  any Person who is or was at any time prior  to  the
date hereof  an Affiliate of the Company that are required to  be
disclosed in the Company SEC Documents filed after August 5, 1997
or  would  be  required  to be disclosed in subsequent  documents
filed by the Company with the SEC.

     Section 3.6    Absence of Certain Changes or Events.

     (a)   Except  as  disclosed in Schedule 3.6 of  the  Company
Disclosure Schedule or the Company SEC Documents filed  with  the
SEC  after  December  31, 1997 and prior  to  the  date  of  this
Agreement,  or  except as contemplated by this  Agreement,  since
December 31, 1997, each of the Company and its Subsidiaries  have
conducted their business only in the ordinary course of  business
consistent with past practice, and there has not been:   (i)  any
declaration,  setting aside or payment of any dividend  or  other
distribution (whether in cash, stock or property) with respect to
any  Capital  Stock  of the Company or any of  its  Subsidiaries;
(ii)  any  split, combinations, reclassification or amendment  of
any  term  of any outstanding Capital Stock or other security  of
the Company or any of its Subsidiaries or (other than issuance of
Common  Stock  upon  the  exercise of any  Company  Options)  any
issuance  or the authorization of the issuance of any  securities
of  the  Company  or  any  of  its Subsidiaries,  other  than  in
connection with the transactions contemplated hereby;  (iii)  any
repurchase, redemption or other acquisition by the Company or any
Subsidiary  of  the Company of any outstanding Capital  Stock  or
other securities of the Company or any Subsidiary of the Company,
except as contemplated by the Stock Plans; (iv) (A) any grant  by
the  Company  or  any of its Subsidiaries to any officer  of  the
Company   or   any  of  its  Subsidiaries  of  any  increase   in
compensation,  except  for increases in the  ordinary  course  of
business  consistent  with past practice  or  as  required  under
employment or other agreements or benefit arrangements in  effect
as  of December 31, 1997, or (B) any grant by the Company or  any
of  its  Subsidiaries  to any such officer  of  any  increase  in
severance or termination pay, except as was required or  provided
for   under  any  employment,  severance,  termination  or  other
agreements  or benefit arrangements in effect as of December  31,
1997;  (v)  except as required by a change in GAAP, any  material
change  in  accounting methods, principles or  practices  by  the
Company  or any of its Subsidiaries, (vi) any material casualties
affecting the Company and its Subsidiaries, taken as a whole,  or
any  material  loss,  damage  or  destruction  to  any  of  their
properties or assets, whether covered by insurance or not.

     (b)   Except  as  disclosed in Schedule 3.6 of  the  Company
Disclosure  Schedule  or  the  Company's  consolidated  financial
statements included in the Company's Quarterly Report on Form 10-
Q  for  the  nine months ended September 30, 1998, and the  notes
thereto  since December 31, 1997, there has not been  any  event,
circumstance  or  fact that (x) has had or  could  reasonably  be
expected  to have a Material Adverse Effect, (y) has impaired  or
could reasonably be expected to impair the ability of the Company
to perform its obligations under any of the Transaction Documents
in  any material respect, or (z) could reasonably be expected  to
delay in any material respect or prevent the consummation of  any
of  the  transactions  contemplated by  any  of  the  Transaction
Documents.

     Section 3.7    No Undisclosed Material Liabilities.   Except
as  disclosed in Schedule 3.7 of the Company Disclosure  Schedule
or  the  Company's financial statements included in the Company's
Annual Report on Form 10-K for the year ended December 31,  1997,
and the notes thereto, there are no liabilities or obligations of
the  Company  or any of its Subsidiaries of any kind  whatsoever,
whether  accrued, contingent, absolute, determined,  determinable
or  otherwise,  other than:  (i) liabilities adequately  provided
for  on  the balance sheet of the Company dated as of   September
30, 1998 (including the notes thereto) contained in the Company's
Quarterly Report on Form 10-Q for the nine months ended September
30,  1998;  (ii) liabilities incurred in the ordinary  course  of
business consistent with past practice since September 30,  1998,
which  liabilities, individually or in the aggregate,  could  not
reasonably  be  expected  to  have  a  Material  Adverse  Effect;
(iii)  liabilities arising under the Transaction  Documents;  and
(iv)  liabilities  not  required by  GAAP  to  be  recognized  or
disclosed on a consolidated balance sheet of the Company and  its
consolidated   Subsidiaries  or  in  the  notes  thereto,   which
liabilities,  individually  or  in  the  aggregate,   could   not
reasonably be expected to have a Material Adverse Effect.

     Section 3.8    No Default.  Neither the Company nor  any  of
its  Subsidiaries  is  in  default  or  violation  (and,  to  the
Knowledge  of  the  Company, no event has  occurred  which,  with
notice  or the lapse of time or both, would constitute a  default
or  violation)  of any term, condition or provision  of  (i)  the
Articles  of  Incorporation  or Bylaws  of  the  Company  or  the
comparable  organizational documents of any of its  Subsidiaries,
(ii)   any  loan  or  credit  agreement,  note,  bond,  mortgage,
indenture,  lease,  instrument,  permit,  concession,  franchise,
license   or  any  other  contract,  agreement,  arrangement   or
understanding to which the Company or any of its Subsidiaries  is
a party or by which the Company or any of its Subsidiaries or any
of  their respective properties or assets is bound, or (iii)  any
Order   or  Law  applicable  to  the  Company  or  any   of   its
Subsidiaries,  except in the case of clause (ii) and  (iii),  for
violations  or  defaults that, individually or in the  aggregate,
(x)  have not had and could not reasonably be expected to have  a
Material  Adverse  Effect, (y) have not impaired  and  could  not
reasonably  be expected to impair the ability of the  Company  to
perform its obligations under any of the Transaction Documents in
any  material respect, and (z) have not and could not  reasonably
be  expected  to  delay in any material respect  or  prevent  the
consummation of any of the transactions contemplated  by  any  of
the  Transaction Documents.  The Company (i) is not in breach  of
or   default  under  any  financial  covenant  under  the  Credit
Agreement,  and (ii) except as disclosed in Schedule 3.8  of  the
Company  Disclosure  Schedule,  does  not  believe  that  it   is
reasonably  likely that it will be in breach of or default  under
any  financial covenant under the Credit Agreement as of the next
date  on  which the Company is required to be in compliance  with
any such financial covenants.

     Section 3.9    Compliance with Applicable Laws.

     (a)   The Company and each of its Subsidiaries has in effect
all  Approvals  of  all Governmental Entities necessary  for  the
lawful  conduct  of their respective businesses,  and  there  has
occurred  no default or violation (and, to the Knowledge  of  the
Company, no event has occurred which, with notice or the lapse of
time or both, would constitute a default or violation) under  any
such Approval, except for failures to obtain, or for defaults  or
violations   under,   Approvals  which  failures,   defaults   or
violations,  individually or in the aggregate, (i) have  not  had
and  could not reasonably be expected to have a Material  Adverse
Effect,  (ii)  have  not  impaired and could  not  reasonably  be
expected  to  impair the ability of the Company  to  perform  its
obligations  under  any  of  the  Transaction  Documents  in  any
material  respect, and (iii) could not reasonably be expected  to
delay in any material respect or prevent the consummation of  any
of  the  transactions  contemplated by  any  of  the  Transaction
Documents.

     (b)   Except  as  otherwise disclosed  in  the  Company  SEC
Documents,  the  Company and its Subsidiaries are  in  compliance
with   all  applicable  Laws  and  Orders,  except  for  possible
noncompliance which, individually or in the aggregate,  (i)  have
not  had  and could not reasonably be expected to have a Material
Adverse  Effect, (ii) have not impaired and could not  reasonably
be  expected to impair the ability of the Company to perform  its
obligations  under  any  of  the  Transaction  Documents  in  any
material  respect, and (iii) could not reasonably be expected  to
delay in any material respect or prevent the consummation of  any
of  the  transactions  contemplated by  any  of  the  Transaction
Documents.

     (c)   No  investigation or review by any Governmental Entity
with  respect  to  the  Company, any  of  its  Subsidiaries,  the
transactions  contemplated  by  this  Agreement  and  the   other
Transaction Documents, or the Oil and Gas Properties  is  pending
or,  to  the  Knowledge of the Company, threatened, nor  has  any
Governmental  Entity  notified  the  Company  or   any   of   its
Subsidiaries in writing or, to the Company's Knowledge, otherwise
of  any  intention  to  conduct the same, other  than  those  the
outcome of which, individually or in the aggregate, (i) have  not
had  and  could  not reasonably be expected to  have  a  Material
Adverse  Effect, (ii) have not impaired and could not  reasonably
be  expected to impair the ability of the Company to perform  its
obligations  under  any  of  the  Transaction  Documents  in  any
material  respect, or (iii) could not reasonably be  expected  to
delay in any material respect or prevent the consummation of  any
of  the  transactions  contemplated by  any  of  the  Transaction
Documents.

     Section 3.10   Litigation.

     (a)   Except  as disclosed in the Company SEC  Documents  or
Schedule  3.10 of the Company Disclosure Schedule,  there  is  no
suit,  action, proceeding or indemnification claim, at law or  in
equity, pending before any Governmental Entity or arbitrator, or,
to the Knowledge of the Company, threatened, against or affecting
the Company, any Subsidiary of the Company or any of its Material
Contracts  ("Litigation"),  and  neither  the  Company  nor   any
Subsidiary  is  a party to any Litigation, that (i)  has  had  or
could  reasonably be expected to have a Material Adverse  Effect,
(ii)  has impaired or reasonably could be expected to impair  the
ability  of the Company to perform its obligations under  any  of
the   Transaction   Documents  in  any   material   respect,   or
(iii)  reasonably  could be expected to  delay  in  any  material
respect  or  prevent the consummation of any of the  transactions
contemplated  by any of the Transaction Documents, nor  is  there
any  Order  of any Governmental Entity or arbitrator  outstanding
against  or  binding upon the Company or any  Subsidiary  of  the
Company  or  any of its Material Contracts which (i) has  had  or
could  reasonably be expected to have a Material Adverse  Effect,
(ii)  has impaired or reasonably could be expected to impair  the
ability  of the Company to perform its obligations under  any  of
the   Transaction   Documents  in  any   material   respect,   or
(iii)  reasonably  could be expected to  delay  in  any  material
respect  or  prevent the consummation of any of the  transactions
contemplated by any of the Transaction Documents.

     (b)   Schedule  3.10  of  the  Company  Disclosure  Schedule
contains  an accurate and complete list of all Orders restricting
or limiting in any material respect the business or operations of
the  Company or any of its Subsidiaries, in each case that is not
disclosed  in the Company SEC Documents, to which the Company  or
any of its Subsidiaries is a party or by which the Company or any
of  its  Subsidiaries  or  any  of  their  respective  assets  or
properties are bound.

     Section  3.11   Title to Oil and Gas Properties.  Except  as
set  forth  in Schedule 3.11 of the Company Disclosure  Schedule,
the  Company or its Subsidiaries has title (of a type and  nature
customarily  acceptable to the reasonably  prudent  oil  and  gas
operator  of  oil and gas interests) to all of the  Oil  and  Gas
Properties  classified  as  proved  developed  producing,  proved
developed  nonproducing  and proved undeveloped  in  the  Company
Reserve  Report,  other than properties sold since  December  31,
1997 (each, a "Company Classified Property").

     Section  3.12    Title to Other Properties.  Except  as  set
forth  in  Schedule 3.12 of the Company Disclosure Schedule,  the
Company  or  its  Subsidiaries owns, of  record  (to  the  extent
applicable) and beneficially, all material personal property  and
real  property (other than those constituting Company  Classified
Properties) and has a valid and enforceable leasehold interest in
all   material  leases,  in  each  case,  as  reflected  on   the
consolidated financial statements of the Company included in  the
Company  SEC Documents as being owned or leased by it or  any  of
its Subsidiaries and all such property thereafter acquired by  it
or  any  of  its  Subsidiaries (except to the  extent  that  such
properties  have  thereafter been disposed  of  in  the  ordinary
course  of  business consistent with past practice or  after  the
date  hereof in compliance with Section 5.3), free and  clear  of
any Liens except Permitted Liens.

     Section 3.13   Intentionally Omitted.

     Section 3.14   Certain Agreements.

     (a)   Except as disclosed in the Company's Annual Report  on
Form  10-K  for  the year ended December 31, 1997, the  Company's
Quarterly  Reports on Form 10-Q for the periods ended  March  31,
1998,  June 30, 1998 and September 30, 1998 and Schedule  3.14(a)
of the Company Disclosure Schedule, there are no, whether in oral
or  written form, (A) employment or consulting Contracts  (unless
such  employment  or consulting Contracts are terminable  without
liability or penalty on 30 days or less notice) under or pursuant
to  which the Company is obligated to make payments in excess  of
$500,000 per annum, (B) other Contracts that are material to  the
Company  and  its  Subsidiaries,  taken  as  a  whole,  or  their
respective business, (C) Contracts relating to material leasehold
interests  or (D) Contracts with Affiliates under or pursuant  to
which  the  Company is obligated to make payments  in  excess  of
$100,000 per annum (excluding agreements solely by and among  the
Company  and one or more of its Subsidiaries), in any such  case,
to which the Company or any Subsidiary is a party or to which the
Company  or  any Subsidiary or their respective assets  is  bound
(such Contracts disclosed or required to be disclosed herein,  in
the  Company SEC Documents or in the Company Disclosure Schedule,
the "Material Contracts").  Each Material Contract is a valid and
binding obligation of the Company or one of its Subsidiaries and,
to   the  Company's  Knowledge,  of  each  other  party  thereto,
enforceable  in accordance with its terms, and is in  full  force
and effect.

     (b)   The  Company or the relevant Subsidiary  and,  to  the
Company's  Knowledge, each other party to the Material  Contracts
has  performed in all material respects the obligations  required
to  be  performed by it under the Material Contracts and  is  not
(with  or without lapse of time or the giving of notice, or both)
in  breach  or  default  thereunder.  No party  to  any  Material
Contract  has given written or, to the Company's Knowledge,  oral
notice  of any action to terminate, cancel, rescind or procure  a
judicial reformation thereof.

     (c)  A complete copy of each written Material Contract and a
written description of each oral Material Contract has been  made
available to Purchasers prior to the date of this Agreement.

     (d)   Except as disclosed in the Company's Annual Report  on
Form  10-K for the year ended December 31, 1997, or in any  other
Company SEC Document filed with the SEC after December 31,  1997,
and prior to the date of this Agreement or in Schedule 3.14(d) of
the  Company Disclosure Schedule, none of the Company or  of  its
Subsidiaries is a party to any oral or written agreement, plan or
arrangement   with  any  employee,  consultant   or   independent
contractor  of  the Company or a Subsidiary (A) the  benefits  of
which  are  contingent,  or the terms  of  which  are  materially
altered,  upon, or result from, the occurrence of  a  transaction
involving the Company or a Subsidiary of the nature of any of the
transactions  contemplated by this Agreement or (B)  any  of  the
benefits  of which will be increased, or the vesting of  benefits
of  which  will be accelerated, by the occurrence of any  of  the
transactions  contemplated  by  this  Agreement  or   any   other
Transaction  Documents or the value of any  of  the  benefits  of
which  will be calculated on the basis of any of the transactions
contemplated by this Agreement.  Schedule 3.14(d) of the  Company
Disclosure  Schedule lists each oral and written agreement,  plan
or  arrangement  with  any  employee, consultant  or  independent
contractor  of  the  Company  or any of  its  Subsidiaries  which
provides for aggregate benefits or other amounts payable  by  the
Company  or  any of its Subsidiaries in excess of $500,000  which
are  contingent  upon,  or  will  be  accelerated  by,  or  which
otherwise  will become payable upon the termination of  any  such
employee's employment by or any other service with the Company or
any of its Subsidiaries after, the occurrence of the transactions
contemplated  by  this Agreement or any of the other  Transaction
Documents.

     (e)   The Company has made available to Purchasers (A)  true
and  correct  copies  of all material loan or  credit  agreements
(including   the  Credit  Agreement),  notes,  bonds,  mortgages,
indentures and other agreements and instruments pursuant to which
any Debt of the Company or any of its Subsidiaries is outstanding
or  may  be  incurred and (B) accurate information regarding  the
respective principal amounts currently outstanding thereunder  to
the  extent  materially  different  than  as  set  forth  in  the
financial  statements included in the Company's quarterly  report
on Form 10-Q for the nine months ended September 30, 1998.

     Section 3.15   Status of Securities.  The issuance and  sale
of  the  Securities  and  the reservation  and  issuance  of  the
Underlying  Shares  and any shares of Common Stock  that  may  be
issued  in connection with Section 5.14 have been duly authorized
by  all necessary corporate action on the part of the Company and
the  Shares, when delivered to Purchasers at the Closing  against
payment  therefor  as provided herein, will  be  validly  issued,
fully  paid and non-assessable and the issuance and sale  of  the
Securities and the issuance of the Underlying Shares are not  and
will not be subject to preemptive rights of any Person.

     Section  3.16   Tax Returns and Tax Payments.  The  Company,
each  of  its  Subsidiaries  and  any  affiliated,  consolidated,
combined, unitary or similar group of which the Company or any of
its Subsidiaries is or was a member has timely filed all material
returns,  reports  or statements required to be  filed  with  any
Governmental  Entity  with  respect  to  Taxes  ("Tax   Returns")
required  to be filed by it, and all such Tax Returns  are  true,
correct and complete in all material respects and all Taxes shown
thereon to be due have been paid, except where the failure to  so
have  timely filed, to be true, correct or complete  or  to  have
paid  such Taxes has not had and could not reasonably be expected
to  have  a Material Adverse Effect.  The Company has established
reserves,  to  the extent required by GAAP, with respect  to  the
payment  of  all  material Taxes not yet  due  and  payable  with
respect  to  the  results of operations of the  Company  and  its
Subsidiaries through the date hereof.  No claim for unpaid  Taxes
has  been asserted in writing by a tax authority or has become  a
Lien  (except  for Permitted Liens) against the property  of  the
Company  or any of its Subsidiaries.  No audit of any Tax  Return
of  the  Company  or any of its Subsidiaries or  any  affiliated,
consolidated,  combined, unitary or similar group  in  which  the
Company  or  any of its Subsidiaries is or has been a  member  is
being  conducted by a tax authority, which audit reasonably could
be  expected to have a Material Adverse Effect, and no  extension
of  the  statute of limitations on the assessment of any material
Taxes  has been granted by the Company or any of its Subsidiaries
and currently is in effect.  Except as set forth in Schedule 3.16
the  Disclosure  Schedule neither the  Company  nor  any  of  its
Subsidiaries  is a party to, is bound by, or has  any  obligation
under   any  tax  sharing  or  allocation  agreement  or  similar
agreement or arrangement, other than (x) as among the Company and
its Subsidiaries, and (y) that Tax Allocation Agreement dated  as
of  August  5,  1997, by and among ENSERCH Corporation,  a  Texas
corporation,  Texas Utilities Company, a Texas  corporation,  and
the  Company.   For purposes of this Agreement  "Tax"  means  any
federal,   state,  local  or  foreign  income,  gross   receipts,
property,  sales,  use,  license, excise, franchise,  employment,
payroll,  premium, withholding, alternative or added minimum,  ad
valorem,  transfer or excise tax, or any other tax or other  like
assessment  or charge of any kind whatsoever, together  with  any
interest or penalty, imposed by any Governmental Entity.  To  the
Company's Knowledge, none of the purchase and sale of the Shares,
the  exercise of the Warrants and the consummation of  the  other
transactions  contemplated hereby and by  the  other  Transaction
Documents  are part of a plan (or series of related transactions)
pursuant  to which one or more Persons will acquire, directly  or
indirectly, Capital Stock representing a fifty percent  (50%)  or
greater  interest in the Company, within the meaning  of  Section
355(e) of the Code.

     Section  3.17    Employee  Benefit  Plans.   (a)  Except  as
otherwise disclosed in the Company SEC Documents or Schedule 3.17
of the Company Disclosure Schedule:

          (i)    All  employee  benefit  plans  and  arrangements
     covering  employees  of  the Company  and  its  Subsidiaries
     (collectively,  the  "Benefit  Plans")  are  listed  in  the
     Company  SEC  Documents  or Schedule  3.17  of  the  Company
     Disclosure  Schedule  and complete copies  of  all  material
     Benefit  Plans,  including all amendments,  have  been  made
     available to Purchasers.

          (ii)  To  the  extent  applicable,  the  Benefit  Plans
     comply,  in all material respects, with the requirements  of
     the  Employee  Retirement Income Security Act  of  1974,  as
     amended  ("ERISA"),  and  the Code,  and  any  Benefit  Plan
     intended  to be qualified under Section 401(a) of  the  Code
     satisfies  the  requirements  of  such  Section   has   been
     determined  by  the  Internal  Revenue  Service  to  be   so
     qualified  and  has  not,  since  such  determination,  been
     amended or, to the Knowledge of the Company, operated  in  a
     way which would adversely affect such qualified status.

          (iii)     As to any Benefit Plan subject to Title IV of
     ERISA,  there has been no event or condition which  presents
     the   risk  of  plan  termination,  no  accumulated  funding
     deficiency,  whether or not waived, within  the  meaning  of
     Section  302  of ERISA or Section 412 of the Code  has  been
     incurred, no reportable event within the meaning of  Section
     4043  of  ERISA  (for which the disclosure  requirements  of
     Regulation  section  4043.1  et  seq.,  promulgated  by  the
     Pension Benefit Guaranty Corporation ("PBGC"), have not been
     waived)  has occurred, no notice of intent to terminate  the
     Benefit Plan has been given under Section 4041 of ERISA,  no
     proceeding has been instituted under Section 4042  of  ERISA
     to  terminate the Benefit Plan, no liability to the PBGC has
     been  incurred, and the assets of the Benefit Plan equal  or
     exceed   the   actuarial  present  value  of   the   benefit
     liabilities,  within the meaning of Section 4041  of  ERISA,
     under  the  Benefit  Plan, based upon  reasonable  actuarial
     assumptions  and the asset valuation principles  established
     by  the PBGC, except in each case as, individually or in the
     aggregate, has not had and could not reasonably be  expected
     to have a Material Adverse Effect.

          (iv)  With respect to any employee benefit plan, within
     the meaning of Section 3(3) of ERISA, which is not listed in
     the  Company  SEC Documents or Schedule 3.17 of the  Company
     Disclosure  Schedule but which is sponsored, maintained,  or
     contributed  to,  or  has  been  sponsored,  maintained,  or
     contributed  to within six years prior to the Closing  Date,
     by  any corporation, trade, business, or entity under common
     control  with  the  Company, within the meaning  of  Section
     414(b),  (c)  or (m) of the Code or Section  4001  of  ERISA
     ("Commonly Controlled Entity"), (A) no withdrawal liability,
     within  the  meaning  of Section 4201  of  ERISA,  has  been
     incurred, which withdrawal liability has not been satisfied,
     (B)  no  liability  to  the PBGC has been  incurred  by  any
     Commonly  Controlled Entity, which liability  has  not  been
     satisfied, (C) no accumulated funding deficiency, whether or
     not  waived, within the meaning of Section 302 of  ERISA  or
     Section  412  of  the Code has been incurred,  and  (D)  all
     contributions (including installments) to such plan required
     by  Section  302 of ERISA and Section 412 of the  Code  have
     been timely made, except in each case as, individually or in
     the  aggregate,  has  not had and could  not  reasonably  be
     expected to have a Material Adverse Effect.

          (v)   Neither  a  Benefit  Plan  nor  the  Company  has
     incurred any liability or penalty under Section 4975 of  the
     Code or Section 409 or 502(C)(i) or (L) of ERISA, except  in
     each case as, individually or in the aggregate, has not  had
     and  could  not  reasonably be expected to have  a  Material
     Adverse Effect.

          (vi)   Each  Benefit  Plan  has  been  maintained   and
     administered in all material respects in compliance with its
     terms  and  with ERISA and the Code to the extent applicable
     thereto.

          (vii)     There are no pending nor, to the Knowledge of
     the  Company,  any  threatened claims against  or  otherwise
     involving  any  Benefit Plan and no suit,  action  or  other
     litigation  (excluding claims for benefits incurred  in  the
     ordinary course of Benefit Plan activities) has been brought
     against or with respect to any Benefit Plan, except in  each
     case  as, individually or in the aggregate, has not had  and
     could  not reasonably be expected to have a Material Adverse
     Effect.

          (viii)    All contributions required to be made  as  of
     the  date hereof to the Benefit Plans have been made, except
     in  each case as, individually or in the aggregate, has  not
     had  and could not reasonably be expected to have a Material
     Adverse Effect.

          (ix)  No  employees  of  the  Company  or  any  of  its
     Subsidiaries  are covered by any severance plan  or  similar
     arrangement,  other than payments pursuant to  foreign  law.
     Except  as  disclosed  in Schedule 3.14(d)  of  the  Company
     Disclosure  Schedule,  the execution and  delivery  of  this
     Agreement   and   the  consummation  of   the   transactions
     contemplated hereby will not (A) require the Company to make
     a larger contribution to, or pay greater benefits under, any
     Benefit  Plan  than it otherwise would, (B) create  or  give
     rise  to  additional vested rights or service credits  under
     any  Benefit Plan, or (C) result in all or any part  of  any
     payments made, or that may become payable as a result of the
     transactions contemplated by the Agreement, by  the  Company
     not  to  be deductible by the payor under sections  280G  or
     162(m) of the Code.

          (x)   No  Benefit  Plan  provides  retiree  medical  or
     retiree  life  insurance benefits  to  any  person  and  the
     Company is not contractually obligated to provide any person
     with  medical benefits or life insurance upon retirement  or
     termination   of   employment,   except   as   required   by
     sections 601 through 608 of ERISA and Section 4980B  of  the
     Code.

     (b)   There  exists no event or condition described  in  the
Company's  SEC  Documents  and  Schedule  3.17  of  the   Company
Disclosure Schedule with regard to the matters described in  this
Section 3.17 that, individually or in the aggregate, has  had  or
could  reasonably be expected to have a Material  Adverse  Effect
(after  taking  into  account  the  reserves  set  forth  in  the
financial statements contained in the Company SEC Documents).

     Section  3.18    Labor  Matters.  Except  as  set  forth  in
Schedule  3.18  of  the Company Disclosure  Schedule  or  in  the
Company SEC Documents:

     (a)   there  is no unfair labor practice charge or grievance
arising  out  of  a  collective  bargaining  agreement  or  other
grievance   procedure  against  the  Company  or   any   of   its
Subsidiaries  pending,  or,  to the  Knowledge  of  the  Company,
threatened, that, individually or in the aggregate,  has  had  or
could reasonably be expected to have a Material Adverse Effect;

     (b)  there is no strike, dispute, slowdown, work stoppage or
lockout pending, or, to the Knowledge of the Company, threatened,
against or involving the Company or any of its Subsidiaries that,
individually or in the aggregate, has had or could reasonably  be
expected to have a Material Adverse Effect; or

     (c)   there  is  no  proceeding,  claim,  suit,  action   or
governmental  investigation pending or, to the Knowledge  of  the
Company  threatened, in respect to which any  current  or  former
director, officer, employee or agent of the Company or any of its
Subsidiaries is or may be entitled to claim indemnification  from
the  Company  or  any  of its Subsidiaries pursuant  to  (a)  the
Articles  of  Incorporation or Bylaws of  the  Company,  (b)  any
provision  of the comparable charter or organizational  documents
of  any of its Subsidiaries, (c) any indemnification agreement to
which the Company or any Subsidiary of the Company is a party  or
(d) applicable Law.

     Section  3.19    Intangible Property.  The Company  and  its
Subsidiaries possess or have adequate rights to use all  material
trademarks,  trade  names, patents, service marks,  brand  marks,
brand names, computer programs, databases, industrial designs and
copyrights necessary for the operation of the businesses of  each
of   the   Company   and  its  Subsidiaries  (collectively,   the
"Intangible  Property"), except where the failure to  possess  or
have  adequate rights to use such properties, individually or  in
the  aggregate, has not had and could not reasonably be  expected
to  have  a  Material  Adverse Effect.   All  of  the  Intangible
Property  is owned or licensed by the Company or its Subsidiaries
free  and  clear  of  any  and  all  Liens,  except  those  that,
individually  or  in the aggregate, have not had  and  could  not
reasonably  be  expected to have a Material Adverse  Effect,  and
neither  the  Company nor any such Subsidiary  has  forfeited  or
otherwise  relinquished any Intangible Property which forfeiture,
individually or in the aggregate, has had or could reasonably  be
expected to have a Material Adverse Effect.  Except as set  forth
on  Schedule  3.19,  the use of the Intangible  Property  by  the
Company  or  its Subsidiaries does not, in any material  respect,
conflict  with,  infringe  upon, violate  or  interfere  with  or
constitute  an  appropriation of any right,  title,  interest  or
goodwill,   including  any  trademark,  patent,   service   mark,
copyright or any pending application therefor of any other person
and  there  have been no claims made and neither the Company  nor
any  of its Subsidiaries has received any notice of any claim  or
otherwise knows that any of the Intangible Property is invalid or
conflicts with the asserted rights of any other person or has not
been used or enforced or has failed to have been used or enforced
in a manner that would result in the abandonment, cancellation or
unenforceability  of any of the Intangible Property,  except  for
any  such conflict, infringement, violation, interference, claim,
invalidity,  abandonment, cancellation or unenforceability  that,
individually  or  in the aggregate, has not  had  and  could  not
reasonably be expected to have a Material Adverse Effect.  To the
Company's  Knowledge, the Company will not  suffer  any  Material
Adverse Effect with respect to Year 2000 non-compliance.

     Section 3.20   Environmental Matters.

     For purposes of this Agreement:

          (i)   "Environmental Laws" means all federal, state and
     local  laws,  rules,  regulations,  ordinances,  Orders  and
     decrees  of  any  Governmental Entity, as now  in  existence
     relating  to  pollution or the protection of  human  health,
     safety  or  the  indoor  or outdoor  environment  (including
     ambient  air,  surface  water,  groundwater,  land  surface,
     subsurface  strata, natural resources or  wildlife)  of  any
     jurisdiction  in which the applicable party hereto  owns  or
     operates  assets or conducts business or owned  or  operated
     assets  or  conducted business (whether  or  not  through  a
     predecessor entity), including laws and regulations relating
     to Releases or threatened Releases of Hazardous Materials or
     otherwise   relating   to   the   manufacture,   processing,
     distribution, use, treatment, storage, disposal,  transport,
     generation  or  handling  of Hazardous  Materials,  and  any
     similar  laws,  rules, regulations, ordinances,  Orders  and
     decrees  of any foreign jurisdiction in which the applicable
     party hereto owns or operates assets or conducts business;

          (ii)  "Hazardous  Materials" means (x)  any  petroleum,
     crude  oil  or  derivatives thereof or  petroleum  products,
     radioactive   materials   (including   naturally   occurring
     radioactive  materials), asbestos in any  form  that  is  or
     could  become  friable, urea formaldehyde  foam  insulation,
     polychlorinated biphenyls or transformers or other equipment
     that  contain  dielectric  fluid containing  polychlorinated
     biphenyls, (y) any chemicals, materials or substances  which
     are  now defined as or included in the definition of  "solid
     wastes,"   "hazardous   substances,"   "hazardous   wastes,"
     "hazardous  materials,"  "extremely  hazardous  substances,"
     "restricted hazardous wastes," "toxic substances" or  "toxic
     pollutants,"   or  words  of  similar  import,   under   any
     Environmental  Law  and  (z) any other  chemical,  material,
     substance  or  waste, exposure to which is  now  prohibited,
     limited  or  regulated  under any  Environmental  Law  in  a
     jurisdiction in which the Company or any of its Subsidiaries
     operates.

          (iii)       "Release"   means  any   spill,   effluent,
     emission,  leaking,  pumping, pouring,  emptying,  escaping,
     dumping,  injection, deposit, disposal, discharge,  release,
     dispersal, leaching or migration into the indoor or  outdoor
     environment, or into or out of any property owned,  operated
     or leased by the Company or its Subsidiaries; and

          (iv) "Remedial Action" means all actions, including any
     capital  expenditures, required by a Governmental Entity  or
     required   under  any  Environmental  Law,  or   voluntarily
     undertaken to (w) clean up, remove, treat, or in  any  other
     way  ameliorate  or address any Hazardous Materials  in  the
     indoor  or  outdoor environment; (x) prevent the Release  or
     threat  of Release, or minimize the further Release  of  any
     Hazardous  Material so it does not endanger or  threaten  to
     endanger  the  public or employee health or welfare  or  the
     indoor  or  outdoor  environment; (y)  perform  pre-remedial
     studies  and investigations or post-remedial monitoring  and
     care  pertaining or relating to a Release; or (z) bring  the
     Company  or  its  Subsidiaries  into  compliance  with   any
     Environmental Law.

     Except   as  disclosed  on  Schedule  3.20  of  the  Company
Disclosure Schedule:

     (a)  The operations of the Company and its Subsidiaries have
been  at  all  relevant time in the past, are,  and  as  of  each
Closing Date will be, in compliance with all Environmental  Laws,
except  where the failure to so comply, individually  or  in  the
aggregate,  has not had and could not reasonably be  expected  to
have a Material Adverse Effect;

     (b)   Neither  the  Company nor any of its Subsidiaries  has
caused   the   generation,  treatment,  manufacture,  processing,
distribution,   use,  storage,  discharge,  Release,   transport,
disposal,  handling, or arrangement for transport or disposal  of
any  Hazardous  Materials at or from any  of  its  properties  or
facilities,  except as has not had and could  not  reasonably  be
expected to have a Material Adverse Effect;

     (c)   Neither  the  Company nor any of its Subsidiaries  has
received any written notice from any Governmental Entity or other
third  party alleging any violation by the Company or any of  its
Subsidiaries of, or responsibility or liability of the Company or
any  of  its  Subsidiaries under, any Environmental  Law  or  for
personal injuries, Remedial Action or property damages, which has
had  or  could reasonably be expected to have a Material  Adverse
Effect;

     (d)  The Company and its Subsidiaries are not subject to any
outstanding  written  Orders issued by, or  contracts  with,  any
Governmental  Entity or other person respecting (A) Environmental
Laws,  (B) Remedial Action, (C) any Release or threatened Release
of  a  Hazardous  Material or (D) an assumption of responsibility
for  environmental  liabilities of another  person,  except  such
Orders or contracts the compliance with which, individually or in
the  aggregate, has not had and could not reasonably be  expected
to have a Material Adverse Effect.

     Section  3.21    Insurance.  Schedule 3.21  of  the  Company
Disclosure Schedule sets forth a list of the Company's  and  each
of  its Subsidiaries' material insurance policies.  Each of these
policies  is in full force and effect and all premiums  due  with
respect  to such policies have been paid.  The Company  maintains
insurance  in such amounts, with such deductibles and exclusions,
and  covering  such  risks  as are in  accordance  with  industry
practice for companies engaged in businesses similar to those  of
the Company and each of its Subsidiaries (taking into account the
cost and availability of such insurance).

     Section 3.22   Prepayments.  Except as disclosed in Schedule
3.22,  neither  the Company nor any Subsidiary is  obligated,  by
virtue  of  a  prepayment  arrangement,  make-up  right  under  a
production  sales Contract containing a "take or pay" or  similar
provision,  production  payment  or  any  other  arrangement,  to
deliver   hydrocarbons,  or  proceeds  from  the  sale   thereof,
attributable to any of its properties at some future time without
then  or  thereafter being entitled to received  payment  of  the
contract price therefor.

     Section 3.23   Gas Imbalances.  Except as disclosed  in  the
Company  SEC Documents or Schedule 3.23, neither the Company  nor
any Subsidiary has (i) any obligation to deliver gas from the Oil
and  Gas Properties (or cash in lieu thereof) to other owners  of
interests  in those properties as a result of past production  by
the  Company,  any  Subsidiary or any of  their  predecessors  in
excess  of  the share to which they were entitled  nor  (ii)  any
right  to  receive  deliveries  of  gas  from  the  Oil  and  Gas
Properties  (or  cash  in  lieu thereof)  from  other  owners  of
interests  in those properties as a result of past production  by
the  Company, any Subsidiary or any of their predecessors of less
than  the share to which they were entitled in either case  where
any  such  gas imbalance could reasonably be expected to  have  a
Material Adverse Effect.

     Section 3.24   Reserve Report.  A true, correct and complete
copy of the Reserve Report has been provided to Purchasers.   The
Company's  and  each Subsidiary's ownership of the  Oil  and  Gas
Properties   described  in  the  Reserve  Report   entitles   the
respective  owner  to receive a percentage of the  oil,  gas  and
other  hydrocarbons produced from each well or unit equal to  not
less  than the percentage set forth in the Reserve Report as  the
"Net  Revenue  Interest" for such well  or  unit  and  cause  the
respective owner to be obligated to bear a percentage of the cost
of operation of such well or unit not greater than the percentage
set  forth  in  the Reserve Report as the "Working Interest"  for
such  well  or  unit,  and  to  the extent  such  percentages  of
production which the respective owner is entitled to receive, and
shares  of  expenses which the respective owner  is  obligate  to
bear, may change after the date of such report, such changes were
properly reflected (based on reasonable assumptions) in preparing
such report.  All information supplied (i) by or on behalf of the
Company  and its Subsidiaries to Netherland, Sewell &  Associates
in  connection with such firm's estimates of proved oil  and  gas
reserves  attributable  to the Oil and  Gas  Properties  and  the
preparation  of the Reserve Reports and (ii) by the  Company  and
its  Subsidiaries to Ryder Scott Company in connection  with  its
1998 review of the Company's proved oil and gas reserves and  the
Reserve  Report  was (at the time supplied or,  with  respect  to
Netherland, Sewell & Associates, as modified or amended prior  to
the  issuance of the Company Reserve Report) true and correct  in
all  material  respects and the Company has no Knowledge  of  any
material errors in such information that existed at the  time  of
such   issuance.   Except  for  changes  (including  changes   in
commodity  prices) generally affecting the oil and  gas  industry
and  dispositions  of  Oil  and Gas  Properties  since  the  date
thereof,  there  have been no changes in respect of  the  matters
addressed  in the Reserve Reports that, individually  or  in  the
aggregate, (x) have had or could reasonably be expected to have a
Material Adverse Effect, (y) have impaired or could reasonably be
expected  to  impair the ability of the Company  to  perform  its
obligations  under  any  of  the  Transaction  Documents  in  any
material respect, or (z) have or could reasonably be expected  to
delay in any material respect or prevent the consummation of  any
of  the  transactions  contemplated by  any  of  the  Transaction
Documents.   Set forth in Schedule 3.24 of the Company Disclosure
Schedules  is a list of all material Oil and Gas Properties  that
were  included in the Reserve Reports that have been disposed  of
prior to the date of this Agreement.

     Section  3.25   Reverse Stock Split.  On December  8,  1998,
the  Company's  shareholders approved the 1 for 3  reverse  stock
split recommended by the Board and the appropriate amendments  to
the Company's Restated Articles of Incorporation giving effect to
such  reverse stock split were filed with the Secretary of  State
of the State of Texas.

     Section  3.26    No Brokers or Finders.  No  agent,  broker,
finder  or  investment or commercial banker, or other  Person  or
firm  engaged  by  or  acting on behalf of  the  Company  or  its
Subsidiaries  in  connection with the negotiation,  execution  or
performance  of  this Agreement is or will  be  entitled  to  any
brokerage  or  finder's or similar fee or other commission  as  a
result of this Agreement, the other Transaction Documents or  the
transactions contemplated hereby or thereby, other than any  such
fees or commissions that have been disclosed to Purchasers and as
to which the Company shall have full responsibility.

     Section  3.27    Vote.  Except for the shareholder  approval
necessary  to  permit the Warrants to be exercisable  for  Common
Stock  instead  of cash, there are no approvals required  of  the
holders  of any class or series of shares or stock of the Company
necessary  to  approve  this Agreement or any  other  Transaction
Documents and the transactions contemplated hereby or thereby.

     Section 3.28   Amendment to Rights Agreement.  The Board has
taken  all necessary action to amend the Rights Agreement,  dated
as   of   September  10,  1996,  as  amended  (the  "EEX   Rights
Agreement"), between the Company and Harris Trust Company of  New
York,  as Rights Agent, so that the Purchasers are not "acquiring
persons"  thereunder and that none of the execution and  delivery
of  this  Agreement and the other Transaction Documents  and  the
consummation  of the transactions contemplated hereby  (including
the  exercise  of the Warrants) will cause (i) the rights  issued
pursuant to the Rights Agreement to become exercisable under  the
Rights  Agreement or (ii) the distribution of Rights Certificates
(as defined in the Rights Agreement).

                           ARTICLE IV.
          REPRESENTATIONS AND WARRANTIES OF PURCHASERS
                                
     Each  Purchaser  represents and warrants to the  Company  as
follows:

     Section  4.1    Organization, Standing and Power.  It  is  a
limited partnership duly organized, validly existing, and in good
standing  under the laws of Delaware (in the case of Warburg)  or
the  Netherlands  (in  the  case of  the  Purchasers  other  than
Warburg) and has all requisite partnership power and authority to
own,  lease,  and  operate its properties and  to  carry  on  its
business  as now being conducted and to execute and deliver  this
Agreement  and  the  other Transaction Documents  to  which  such
Purchaser is a party and consummate the transactions contemplated
hereby and thereby.

     Section 4.2    Authority; Approvals.

     (a)   (i)  The execution and delivery of this Agreement  and
the  other Transaction Documents to which it is a party  and  the
purchase  of the Securities to be purchased by it have been  duly
and  properly  authorized,  (ii) this  Agreement  and  the  other
Transaction  Documents  to which it is a  party  have  been  duly
executed  and delivered by it or on its behalf and, assuming  the
accuracy of the representations and warranties of the Company  in
Section  3.4  hereof,  constitute the valid and  legally  binding
obligations  of  such  Purchaser,  enforceable  against   it   in
accordance  with their respective terms, subject  to  bankruptcy,
insolvency, reorganization, moratorium and other similar laws  of
general applicability relating to or affecting creditors'  rights
and  to general principles of equity (regardless of whether  such
enforceability  is considered in a proceeding  in  equity  or  at
law); (iii) the purchase of the Securities to be purchased by  it
does   not  conflict  with  or  violate  (1)  its  organizational
documents   or  (2)  assuming  the  approvals  referred   to   in
Section  4.2(b)  are duly and timely made or  obtained,  any  Law
applicable to it in a manner that could reasonable be expected to
materially  hinder  or  impair  the  completion  of  any  of  the
transactions  contemplated  hereby;  and  (iv)  the  purchase  of
Securities  to be purchased by it does not impose any penalty  or
other  onerous condition on such Purchaser that could  reasonably
be  expected to materially hinder or impact the completion of any
of the transactions contemplated hereby.

     (b)  No Approval from any Governmental Entity is required by
or  with  respect  to  such  Purchaser  in  connection  with  the
execution and delivery by such Purchaser of this Agreement or any
other  Transaction  Document  to which  it  is  a  party  or  the
consummation  by such Purchaser of the transactions  contemplated
hereby or thereby, except for:  (A) if applicable, the filing  of
a  notification report by such Purchaser under the HSR  Act,  and
the  expiration  or termination of the applicable waiting  period
with  respect thereto; (B) such Approvals as may be  required  by
any foreign securities, corporate or other Laws; and (C) any such
Approval the failure of which to be made or obtained (1) has  not
impaired  and  could  not reasonably be expected  to  impair  the
ability of such Purchaser to perform its obligations under any of
the  Transaction Documents in any material respect and (2)  could
not  reasonably be expected to delay in any material  respect  or
prevent  the consummation of any of the transactions contemplated
by any of the Transaction Documents.

     Section  4.3    Litigation.  As of the time of execution  of
this  Agreement,  there  is  no  claim,  action,  suit,  inquiry,
judicial  or  administrative  proceeding  pending  or,   to   the
Knowledge  of such Purchaser, threatened against it  relating  to
any  of  the transactions contemplated by this Agreement  or  any
other Transaction Document.

     Section  4.4     Investment Intent.  The  Securities  to  be
acquired by it hereunder and any Underlying Shares to be acquired
upon the exercise, conversion or exchange of such Securities  are
being  acquired for its own account for investment  and  with  no
intention  of  distributing  or  reselling  such  Securities   or
Underlying Shares or any part thereof or interest therein in  any
transaction which would be in violation of the securities Laws of
the  United  States  of America or any applicable  state  or  any
foreign country or jurisdiction.

     Section  4.5     Transfer Restrictions.  If  such  Purchaser
should decide to dispose of any of the Securities to be purchased
by  it  or  any  Underlying Shares to be issued to  it  upon  the
exercise   or   exchange  of  such  Securities,  such   Purchaser
understands  and  agrees that it may do so only  pursuant  to  an
effective  registration statement under  the  Securities  Act  or
pursuant  to an exemption from registration under the  Securities
Act.   In  connection  with any offer, resale,  pledge  or  other
transfer  (individually and collectively, a  "Transfer")  of  any
Securities  or  Underlying  Shares  other  than  pursuant  to  an
effective  registration statement, the Company may  require  that
the transferor of such Securities or Underlying Shares provide to
the  Company  an  opinion  of  counsel  which  opinion  shall  be
reasonably satisfactory in form and substance to the Company,  to
the  effect  that  such Transfer is being  made  pursuant  to  an
exemption  from,  or  in  a  transaction  not  subject  to,   the
registration  requirements  of  the  Securities   Act   and   any
applicable  state  or  foreign securities Laws.   Such  Purchaser
agrees   to   the   imprinting,  so  long  as   appropriate,   of
substantially  the following legend on certificates  representing
the Securities and any Underlying Shares:

          THE SECURITIES (THE "SECURITIES") EVIDENCED HEREBY HAVE
     NOT  BEEN  REGISTERED UNDER THE SECURITIES ACT OF  1933,  AS
     AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
     OFFERED  OR  SOLD  EXCEPT  AS SET  FORTH  IN  THE  FOLLOWING
     SENTENCE.  BY ITS ACQUISITION HEREOF, THE HOLDER AGREES THAT
     IT  WILL  NOT  OFFER,  RESELL, PLEDGE OR OTHERWISE  TRANSFER
     (INDIVIDUALLY AND COLLECTIVELY, A "TRANSFER") THE SECURITIES
     EVIDENCED  HEREBY,  EXCEPT  (A)  PURSUANT  TO  AN  EFFECTIVE
     REGISTRATION   STATEMENT  UNDER  THE  SECURITIES   ACT,   OR
     (B)  PURSUANT  TO AN EXEMPTION FROM REGISTRATION  UNDER  THE
     SECURITIES  ACT.  IF THE PROPOSED TRANSFER  IS  TO  BE  MADE
     OTHER  THAN  PURSUANT TO CLAUSE (A) ABOVE, THE HOLDER  MUST,
     PRIOR  TO  SUCH  TRANSFER, FURNISH TO THE  COMPANY  AND  THE
     TRANSFER AGENT SUCH CERTIFICATIONS, LEGAL OPINIONS OR  OTHER
     INFORMATION  AS THEY MAY REASONABLY REQUIRE TO CONFIRM  THAT
     SUCH  TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION  FROM,
     OR  IN  A  TRANSACTION  NOT  SUBJECT  TO,  THE  REGISTRATION
     REQUIREMENTS OF THE SECURITIES ACT OR ANY STATE  OR  FOREIGN
     SECURITIES LAW.

     The  legends set forth above may be removed if and when  the
Securities  or Underlying Shares, as the case may be, represented
by  such  certificate are disposed of pursuant  to  an  effective
registration statement under the Securities Act or the opinion of
counsel referred to above has been provided to the Company.   The
Share  certificates and Warrants shall also bear  any  additional
legends   required  by  applicable  federal,  state  or   foreign
securities  Laws,  which  legends may be  removed  when,  in  the
opinion  of  counsel  to  the Company, the  same  are  no  longer
required  under  the applicable requirements of  such  securities
Laws.   Such  Purchaser  agrees  that,  in  connection  with  any
Transfer   of   Securities  by  it  pursuant  to   an   effective
registration statement under the Securities Act, it  will  comply
with  all prospectus delivery requirements of the Securities Act.
The Company makes no representation, warranty or agreement as  to
the  availability  of any exemption from registration  under  the
Securities  Act  with  respect to any  resale  of  Securities  or
Underlying Shares.

     Section  4.6    Purchaser Status.  Such Purchaser represents
and  warrants to, and covenants and agrees with the Company  that
(i)  at  the time it was offered the Securities, it was, (ii)  at
the  date hereof, it is, and (iii) at the Closing Date,  it  will
be,  an  accredited investor as defined in Rule 501(a) under  the
Securities  Act,  and  has  such  knowledge,  sophistication  and
experience in business and financial matters so as to be  capable
of  evaluating  the Company and an investment in the  Securities,
and is able to bear the economic risk of such investment.

     Section  4.7     No  Brokers or Finders.  No agent,  broker,
finder  or  investment or commercial banker, or other  Person  or
firm  engaged  by  or  acting  on behalf  of  such  Purchaser  in
connection with the negotiation, execution or performance of this
Agreement is or will be entitled to any brokerage or finder's  or
similar  fee  or other commission as a result of this  Agreement,
other  than any such fees or commissions that have been disclosed
to  the  Company and as to which such Purchaser shall  have  full
responsibility.

     Section 4.8    Ownership of Shares.  Except as set forth  in
Schedule  4.8  of the Company Disclosure Schedule,  neither  such
Purchaser  nor any of its Affiliates is the beneficial  owner  of
any Capital Stock in the Company.

     Section 4.9    Financing.  Upon the terms and subject to the
conditions  of this Agreement, the Purchasers have  available  to
them  and at the Closing will have all funds necessary to satisfy
its obligations to purchase the Securities hereunder.

                           ARTICLE V.
                            COVENANTS
                                
     Section 5.1    Confidentiality.  For a period of three years
from the date of this Agreement, the Purchasers will refrain, and
will  cause  their  respective Representatives  to  refrain  from
disclosing  to  any  other  Person any Confidential  Information.
Disclosure of Confidential Information will not be deemed to be a
breach  of this Section 5.1 if such disclosure is made  with  the
consent of the Company or pursuant to a subpoena or order  issued
by  a  court  of  competent jurisdiction  or  by  a  judicial  or
administrative or legislative body or committee;  provided  that,
upon receipt by the  Purchasers of any subpoena or order covering
Confidential  Information  of the Company,  the  Purchasers  will
promptly notify the Company of such subpoena or order.   If  this
Agreement  is terminated, the Purchasers further agree that  they
will,  upon the request of the Company, promptly deliver  to  the
Company  all  Confidential  Information,  including  all  copies,
reproductions and extracts thereof in their possession or in  the
possession of any of their Representatives, and, upon the request
of  the  Company,  the Purchasers and their Representatives  will
destroy all other documents or records prepared by the Purchasers
or  their  Representatives that are based  on,  derived  from  or
otherwise  reflect  the Confidential Information.   Each  of  the
Company and the Purchasers hereby agree that the Letter Agreement
dated  June 16, 1998 between the Company and Warburg relating  to
confidentiality and certain other matters is hereby terminated.

     Section  5.2     Affirmative Covenants of the Company.   The
Company  hereby covenants and agrees that, until the  earlier  of
the   Closing  or  the  termination  of  this  Agreement,  unless
otherwise  expressly contemplated by this Agreement or  consented
to  in writing by Purchasers (such consent not to be unreasonably
withheld),  the  Company  will  and  will  cause  each   of   its
Subsidiaries to:

     (a)   operate its business in the usual and ordinary  course
consistent  with  past practices except as contemplated  by  this
Agreement or as provided in or contemplated by Schedule 5.2(a) of
the Company Disclosure Schedule;
     (b)   use  commercially reasonable efforts to  maintain  and
keep  its properties and assets in as good a repair and condition
as at present, ordinary wear and tear excepted; and

     (c)   use  all reasonable efforts to keep in full force  and
effect  insurance  and bonds comparable in amount  and  scope  of
coverage to that currently maintained.

     Section 5.3    Negative Covenants of the Company.

     (a)   Except as expressly contemplated by this Agreement  or
otherwise consented to in writing by Purchasers, from the date of
this Agreement until earlier of the Closing or the termination of
this  Agreement, the Company shall not do, and shall  not  permit
any of its Subsidiaries to do, any of the following:

          (i)   except as set forth in Schedule 5.3(a)(i) of  the
     Company  Disclosure Schedule, acquire or  agree  to  acquire
     (whether  pursuant to a definitive agreement, a  non-binding
     letter  of intent or otherwise), by merging or consolidating
     with,  by  purchasing an equity interest in or a portion  of
     the assets of (including by a "farm-in" of any properties or
     interests),  or  by any other manner, any  business  or  any
     corporation,  partnership,  association  or  other  business
     organization  or division thereof, or otherwise  acquire  or
     agree to acquire any assets of any other Person (other  than
     from  a  Subsidiary of the Company or the purchase of assets
     from suppliers or vendors in the ordinary course of business
     and   other  than  assets  which,  individually  or  in  the
     aggregate, are not material to the business or operations of
     the Company or any of its Subsidiaries);

          (ii) except as set forth in Schedule 5.3(a)(ii) of  the
     Company Disclosure Schedule sell, lease, exchange, mortgage,
     pledge, transfer or otherwise dispose of, or agree to  sell,
     lease,  exchange,  mortgage, pledge, transfer  or  otherwise
     dispose  of (including by a "farm-out" of any properties  or
     interests), any of its assets or any assets of  any  of  its
     Subsidiaries, except for pledges or dispositions  of  assets
     in  the  ordinary course of business and except  for  assets
     which, individually or in the aggregate, are not material to
     the  business  or operations of the Company or  any  of  its
     Subsidiaries;

          (iii)      except as set forth in Schedule  5.3(a)(iii)
     of  the  Company Disclosure Schedule, adopt  or  propose  to
     adopt   any   amendments  to  the  Company's   Articles   of
     Incorporation of Bylaws; other than transactions between the
     Company and one or more of its Subsidiaries or among one  or
     more  of  its Subsidiaries, adopt resolutions authorizing  a
     liquidation,     dissolution,     merger,     consolidation,
     restructuring, recapitalization, or other reorganization  of
     the  Company  or any Subsidiary; or make any other  material
     changes in the Company's capital structure;

          (iv) (i) except as set forth in Schedule 5.3(a)(iv)  of
     the  Company Disclosure Schedule change any of its  material
     accounting  methods, principles, practices  or  policies  or
     (ii) make or rescind any express or deemed election relating
     to  Taxes,  settle  or compromise any claim,  action,  suit,
     Litigation,  audit  or  controversy relating  to  Taxes,  or
     change  any of its methods of reporting income or deductions
     for federal or other income Tax purposes from those employed
     in  the  preparation  of the federal  or  other  income  Tax
     Returns  or  other Tax Returns for the taxable  year  ending
     December 31, 1997, except, in the case of either clause  (i)
     or clause (ii), as may be required by Law or GAAP;

          (v)  other than borrowings in the ordinary course under
     or  permitted by the Credit Agreement, incur any  obligation
     for  borrowed money or purchase money indebtedness,  whether
     or  not  evidenced  by  a note, bond, debenture  or  similar
     instrument or under any financing lease, whether pursuant to
     a sale-and-leaseback transaction or otherwise;

          (vi) except as set forth in Schedule 5.3(a)(vi) of  the
     Company  Disclosure Schedule, make any loans or advances  to
     any  Person,  other than (i) advances to  employees  in  the
     ordinary  and usual course of business and (ii) transactions
     among  or  between the Company and its Subsidiaries  in  the
     ordinary and usual course of the Company's business;

          (vii)     declare or pay any dividend or make any other
     distribution  (whether  in cash,  stock  or  property)  with
     respect  to  its  Capital Stock (or other voting  or  equity
     securities   or  interests,  as  applicable),   other   than
     dividends  paid by any Subsidiary to the Company or  another
     Subsidiary in the ordinary and usual course of the Company's
     business;

          (viii)     except as set forth in Schedule 5.3(a)(viii)
     of  the  Company Disclosure Schedule, enter into, adopt,  or
     (except  as  may be required by law) amend or terminate  any
     Benefit  Plans;  approve, implement or amend any  employment
     severance  arrangements (other than payments made under  the
     Company's  severance plans in effect as of the date  hereof)
     or  discharge or, except to replace any officer or executive
     management personnel who have departed on substantially  the
     same  or  lesser  terms  as the departed  Person,  hire  any
     officers  or  executive management personnel;  authorize  or
     enter into any employment, severance, consulting services or
     other  agreement  with any officers or executive  management
     personnel;  authorize or make any payment to  any  director,
     officer,  shareholder or employee, or any Affiliate  of  the
     foregoing  (whether  as  a  loan or  otherwise)  except  for
     regular compensation and other payments consistent with past
     practice; or except at set forth in Section 5.3(a) (viii) of
     the Company Disclosure Schedule, change the compensation  or
     benefits provided to any director, officer or employee as of
     the date hereof;

          (ix)  materially amend, terminate or fail  to  use  all
     commercially  reasonable efforts to maintain in  full  force
     and  effect and, if applicable, renew any Material  Contract
     (provided that the Company and its Subsidiaries shall not be
     required  to renew any Material Contract on terms  that  are
     less  favorable to the Company or its Subsidiaries), or fail
     to  use  all  commercially reasonable efforts to  prevent  a
     default in any material respect (or take or omit to take any
     action that, with or without the giving of notice or passage
     of  time,  would  constitute a material default)  under  any
     Material Contract;

          (x)   split, combine, reclassify or amend any  term  of
     any  of  its  shares or capital stock (or  other  voting  or
     equity securities or interests, as applicable);

          (xi) except as set forth in Schedule 5.3(a)(xi) of  the
     Company  Disclosure  Schedule, (i) issue,  sell  or  deliver
     (whether  through  the  issuance  or  granting  of  options,
     warrants, commitments, subscriptions, rights to purchase, or
     otherwise)  any  of  its shares or Capital  Stock  or  other
     securities  other  than  (A)  as  contemplated   herein   or
     (B) pursuant to awards issued and outstanding as of the date
     hereof under the Stock Plans or as required under the  terms
     of  any  other  security of the Company  outstanding  as  in
     effect as of the date of this Agreement, or (ii) purchase or
     otherwise  acquire  any  of  its shares  or  capital  stock,
     employee or director stock options, warrants or other equity
     securities  or  debt securities other than pursuant  to  the
     terms thereof as in effect as of the date of this Agreement;
     or

          (xii)      agree in writing or otherwise to do  any  of
     the foregoing.

     Section  5.4    Approvals.  The Company and Purchasers  each
agree to cooperate and use all commercially reasonable efforts to
obtain (and will promptly prepare all registrations, filings  and
applications, requests and notices preliminary to) all  Approvals
that may be necessary or which may be reasonably requested by the
Company or Purchasers to consummate the transactions contemplated
by this Agreement and the other Transaction Documents.

     Section 5.5    HSR Act Notification.  To the extent the  HSR
Act  will  be applicable to the acquisition of the Securities  or
the  Underlying Shares by Purchasers, each of the parties  hereto
shall  (b)  file or cause to be filed, as promptly as practicable
after  the  execution and delivery of this Agreement  and  in  no
event  later  than  five Business Days after  the  date  of  this
Agreement,  with  the  Federal Trade Commission  and  the  United
States  Department  of Justice, all reports and  other  documents
required  to be filed by such party under the HSR Act  concerning
the transactions contemplated hereby and (c) promptly comply with
or  cause  to be complied with any requests by the Federal  Trade
Commission  or  the  United  States  Department  of  Justice  for
additional information concerning the Transaction, in  each  case
so  that the waiting period applicable to this Agreement and  the
Transaction contemplated hereby under the HSR Act shall expire as
soon  as  practicable after the execution and  delivery  of  this
Agreement. Each party hereto agrees to request, and to  cooperate
with  the other party or parties in requesting, early termination
of any applicable waiting period under the HSR Act.  If after the
Closing  and until the earlier to occur of the date on which  the
Warrants   are  fully  exercised  and  the  date  on  which   all
outstanding  Warrants are no longer exercisable, further  filings
are required under the HSR Act so that Purchasers may acquire the
Underlying Shares or otherwise acquire securities pursuant to the
Transaction  Documents, including pursuant to Sections  5.14  and
5.15  hereof,  the  Company will upon the written  request  of  a
Purchaser,  and the Purchasers will upon the written  request  of
the  Company,  (i)  file  or cause to be filed,  as  promptly  as
practicable  after the receipt of such notice  and  in  no  event
later than fifteen Business Days after the receipt of such notice
with   the  Federal  Trade  Commission  and  the  United   States
Department  of Justice, all reports and other documents  required
to  be  filed  by  such party under the HSR  Act  concerning  the
transactions  contemplated in such notice, (ii)  promptly  comply
with  or  cause to be complied with any requests by  the  Federal
Trade  Commission or the United States Department of Justice  for
additional  information  so  that the waiting  period  applicable
thereto  under  the HSR Act shall expire as soon as  practicable,
and  (iii) cooperate with the other Parties in requesting,  early
termination of any applicable waiting period under the  HSR  Act.
The Company will reimburse the Purchasers for any filing fees  in
connection with the first such filings by the Purchasers.

     Section 5.6    Notification of Certain Matters.  The Company
shall give prompt notice to Purchasers, and Purchasers shall give
prompt  notice to the Company, of (a) the occurrence, or  failure
to occur, of any event that causes any representation or warranty
contained  in any Transaction Document to be untrue or inaccurate
in  any  material  respect at any time  from  the  date  of  this
Agreement to the Closing Date and (b) any failure of the  Company
or Purchasers to comply with or satisfy, in any material respect,
any  covenant,  condition or agreement to  be  complied  with  or
satisfied  by it under any Transaction Document.  The  provisions
of   this  Section  5.6  shall  survive  for  so  long   as   any
representation,  warranty, covenant, or agreement  shall  survive
hereunder.

     Section 5.7    Board of Directors.

     (a)   The  Company shall take, or cause to  be  taken,  such
action   as  may  be  necessary  or  advisable  to  ensure   that
simultaneously  with the Closing the Board shall consist  of  six
directorships,  one of which shall be vacant pending  designation
by  Warburg,  Pincus  Equity Partners, L.P.  ("Warburg")  of  one
individual  to serve as a member of the Board of Directors  as  a
part  of  the  class of directors standing for  election  at  the
Company's 1999 annual meeting.

     (b)   At any meeting of the shareholders of the Company held
for  the  purpose  of electing directors of the Company,  Warburg
shall be entitled to nominate for election to the Board, and  the
Company  shall  use its reasonable best efforts to  cause  to  be
nominated  for  election  and to be elected  to  the  Board,  the
following number of individuals:

          (i)   For so long as either (i) the Purchasers own  50%
     or  more  of  the Shares or (ii) the shares of Common  Stock
     Beneficially  Owned  by  the  Purchasers  (calculated  after
     giving  effect  to  the  full exercise  of  all  outstanding
     Securities  then  owned by the Purchasers  at  the  exercise
     price  then  in effect) is equal to or greater than  fifteen
     percent (15%) of the Company's issued and outstanding Common
     Stock  (also  calculated after giving  effect  to  the  full
     exercise  of  all outstanding Securities then owned  by  the
     Purchasers  at  the exercise price then in effect),  Warburg
     shall be entitled to nominate for election to the Board that
     number  of  individuals such that the  aggregate  number  of
     directors  on the Board that represent Warburg after  giving
     effect  to  the  election of such nominees shall  equal  the
     greater  of  (i)  one  director  and  (ii)  that  number  of
     directors  constituting fifteen percent (15%) of  the  total
     Board  seats  of  the  Company after giving  effect  to  the
     election  of  such nominees of Warburg on the Board  rounded
     down  to  the nearest whole number of Board seats; provided,
     however,  that such number of directors shall be reduced  by
     the  number  of  directors that have  been  elected  by  the
     holders  of the PS pursuant to Section 5(D) of the Statement
     of  Resolutions, if any of the PS is owned  by  any  of  the
     Purchasers.

          (ii) For so long as the shares of Common Stock owned by
     the  Purchasers  (calculated  on  the  basis  set  forth  in
     subparagraph  (i) above) is less than fifteen percent  (15%)
     but  more than five percent (5%) of the Company's issued and
     outstanding Common Stock (calculated on the basis set  forth
     in  subparagraph (i) above) and Warburg is not  entitled  to
     elect  directors pursuant to subparagraph (i) above, Warburg
     shall be entitled to nominate one person for election to the
     Board,  unless  at  the  time of  such  election  the  Board
     includes  a  representative of Warburg and such director  is
     not up for re-election; and

          (iii)      For  so  long as the shares of Common  Stock
     owned  by the Purchasers (calculated on the basis set  forth
     in subparagraph (i) above) is more than five percent (5%) of
     the   Company's   issued   and  outstanding   Common   Stock
     (calculated  on  the  basis set forth  in  subparagraph  (i)
     above),   the   Company  shall  (x)  permit  an   authorized
     representative  of  Warburg to attend all  meetings  of  the
     Board  as  an  observer,  (y) upon the  written  request  of
     Warburg,  provide  Warburg with such  notice  of  and  other
     information  with respect to such meetings as are  delivered
     to  the  directors of the Company and (z)  upon the  written
     request   of   Warburg,  notify  Warburg,  within  10   days
     thereafter, of the taking of any written action by the Board
     in  lieu  of  a meeting thereof.  All expenses of  Warburg's
     observer shall be paid by Warburg.

          (iv) In the event that one of Warburg's representatives
     on  the  Board shall resign, be removed or otherwise  become
     unable  to  serve  as  director, then Warburg  may  promptly
     designate  a  replacement for such representative,  and  the
     Company shall take, or cause to be taken, such action as may
     be  necessary  or  advisable to ensure that such  designated
     replacement  shall serve on the Board in the place  of  such
     representative   until   the  next  scheduled   meeting   of
     shareholders held for the purpose of electing directors.  In
     the event that one of Warburg's representatives on the Board
     is unable to attend a meeting of the Board, Warburg shall be
     entitled  to  designate an alternate to attend  and  observe
     such  meeting  of  the  Board.  All  expenses  of  Warburg's
     alternate will be paid by Warburg.

          (v)   Each  of Warburg's representatives on  the  Board
     (not  including  any  alternates  or  observers)  shall   be
     entitled to such compensation as is customarily paid by  the
     Company to the Company's outside directors.

          (vi)  The  provisions of clauses (iv) and (v)  of  this
     Section  5.7(b)  shall survive for so long  as  any  of  the
     provisions   of  clauses  (i),  (ii),  or  (iii)   of   this
     Section 5.7(b) shall apply.

     Section  5.8     Rights Agreements.  The  Company  will  not
further amend the EEX Rights Agreement in a manner, or adopt  any
other  Rights  Agreement,  that  conflicts  with  the  provisions
hereof, including the provisions of Sections 3.28 and 5.10 or  is
more  restrictive than the provisions hereof with respect to  the
percentage of ownership of Capital Stock permitted to be owned by
Purchasers.

     Section 5.9    Shareholders Meeting.  The Company shall duly
call,  give  notice  of,  convene  and  hold  a  meeting  of  its
shareholders to be held within six months after the Closing,  for
the  purpose of obtaining shareholder approval and adoption under
the  rules of the New York Stock Exchange to permit the  Warrants
to  be  exercisable for Common Stock instead of cash (other  than
the  Series  C Warrants which shall remain exercisable  only  for
cash   unless  the  Company  elects  otherwise  in   the   manner
contemplated  by the Series C Warrants).  The Company  shall  use
its  reasonable  best  efforts to obtain  such  approval  of  the
shareholders of the Company and will comply with the requirements
of  the Exchange Act and the New York Stock Exchange with respect
to  the preparation of a proxy statement and the solicitation  of
proxies,   if   any,  in  connection  with  such  vote   of   the
shareholders;  provided  that  no shareholder  approval  obtained
after the six month anniversary of the Closing shall be effective
for  purposes  of  the Warrants.  Prior to  the  meeting  of  the
Company's shareholders pursuant to this Section 5.9, the  Company
shall  file an additional listing application with the NYSE  with
respect  to  the  Underlying Shares (except with respect  to  the
Series  C Warrants) and shall use its reasonable best efforts  to
obtain the approval of the NYSE to the listing of such shares  of
Common Stock.
     Section 5.10   Standstill.

     (a)  The Purchasers, together with any 13d Group of which it
is  a  part,  but excluding any investment company or  affiliated
money  management advisor registered under the Investment Company
Act  of 1940, as amended, or the Investment Advisers Act of 1940,
as amended, agree that they shall not Beneficially Own any Voting
Stock  or Common Stock of the Company other than (i) the  Shares,
(ii)  the Underlying Shares, (iii) all Common Stock and PS issued
as  a  dividend on PS (the "Dividend Shares"), (iv) Capital Stock
of  the Company acquired pursuant to Section 5.14 or Section 5.15
and (v) shares of Common Stock, in addition to those described in
clauses  (i),  (ii),  (iii)  or (iv) above,  not  exceeding  five
percent   (5%)  of  the  issued  and  outstanding  Common   Stock
(calculated at the date of determination), provided  that  in  no
event  shall  the Purchasers Beneficially Own shares  of  Capital
Stock  of the Company that would be entitled to cast thirty  five
percent (35%) or more of the aggregate votes entitled to be  cast
under  ordinary  circumstances with respect to  the  election  of
directors of the Company, except as such ownership is a result of
(v)  any  repurchase  of Capital Stock by the  Company,  (w)  the
receipt,  exercise  or conversion of rights or other  securities,
including the Dividend Shares, issued in respect of the  PS,  the
Warrants  or  the  Underlying Shares, (x) a Business  Combination
between the Company and another Person approved by the Board  and
in  which any Purchaser owns, directly or indirectly, any Capital
Stock of such other Person prior to the approval by the Board  of
such  Business  Combination, (y) Capital  Stock  of  the  Company
acquired  pursuant to Section 5.14 or (z) Capital  Stock  of  the
Company acquired as a result of the election by the Company under
the  Series  C  Warrants  to have such Warrants  exercisable  for
shares of Common Stock.

     (b)   The Purchasers shall not knowingly, after due inquiry,
sell any shares of Common Stock or the Warrants to any Person  or
13d   Group   which  would,  immediately  following  such   sale,
Beneficially Own in excess of ten percent (10%) of the issued and
outstanding Voting Stock or Common Stock of the Company; provided
that,  if such Person or 13d Group is known to the Purchasers  to
be a competitor of the Company in the oil and gas exploration and
production  industry, the foregoing restriction  shall  apply  if
such  Person or 13d Group would, immediately following such sale,
Beneficially Own in excess of five percent (5%) of the issued and
outstanding Voting Stock or Common Stock of the Company.

     (c)   If the Purchasers are not in violation of this Section
5.10,  the  restrictions set forth in Section 5.10(b)  shall  not
apply  to  any transfer of Warrants or Common Stock  (i)  to  any
partner  or wholly-owned subsidiary of any Purchaser that  agrees
to  be bound by the provisions this Section 5.10 as if it were  a
Purchaser for purposes of this Section, (ii) upon consummation of
a  business  combination  or  similar transaction  involving  the
Company, or an agreement relating thereto being approved  by  the
Board, (iii) pursuant to a tender or exchange offer approved  by,
or  recommended by, the Board or pursuant to which the Board  has
formally  expressed  no opinion and remains neutral  toward  such
tender or exchange offer subject to the provisions of Rule  14d-9
promulgated   under  the  Exchange  Act,  (iv)  pursuant   to   a
distribution  by a Purchaser, substantially pro-rata,  to  equity
owners  of  such  Purchaser,  or (v)  pursuant  to  a  bona  fide
underwritten   public  offering  in  which  the  Purchasers   use
reasonable efforts to obtain an agreement by the underwriters  to
make a good faith effort to prevent the sale to any one Person of
more  than five percent (5%) of the issued and outstanding Voting
Stock or Common Stock of the Company.

     (d)   The  restrictions set forth in Section  5.10(b)  shall
terminate  upon  the first to occur of (i) a Change  of  Control,
(ii) the redemption by the Board of rights granted under the  EEX
Rights Agreement or any similar agreement subsequent entered into
or  adopted  by  the  Company (each, a "Rights  Agreement"),  and
(iii)  the  Board's permitting, by amendment  or  waiver  of  any
Rights  Agreement  or otherwise, of any Non-financial  Person  to
Beneficially  Own twenty percent (20%) or more, or any  Financial
Person  to Beneficially Own more than thirty-five percent  (35%),
of the Voting Stock of the Company.

     (e)   In  connection with any matter in which the Purchasers
both (i) have voting rights  which are counted together with  the
voting  rights of the Voting Stock or Common Stock of the Company
and  (ii)  do  not have voting rights as a holder of  the  Shares
counted  separately  as a class, the number of  votes  which  the
Purchasers  shall  be entitled to cast at their  sole  discretion
shall not exceed one vote fewer than twenty percent (20%) of  the
aggregate  number  of votes entitled to be cast  thereon  by  the
Common  Stock  and  all  other classes of Capital  Stock  of  the
Company  entitled to vote on such matter, less the votes entitled
to  be cast by any non-Purchaser constituting a member of any 13d
Group  of  which  Purchaser  is a  member.   If  Purchaser  would
otherwise  be  entitled to cast votes in  excess  of  the  number
calculated pursuant to the previous sentence, then the balance of
such  votes  shall be cast for, against or abstain in respect  of
such matter in the same proportion as the votes cast for, against
or abstain by all other shareholders of the Company.

     (f)   The Purchasers shall not participate in or be a member
of  any  13d  Group  (other than a 13d Group composed  solely  of
themselves and their affiliates) with respect to the Voting Stock
or Common Stock of the Company.

     (g)   The  Purchasers  shall  be  prohibited  from  seeking,
proposing or making any public statement regarding a tender offer
or  Business  Combination involving the Company.  The  Purchasers
shall  use all reasonable efforts to promptly notify the  Company
if  any  of  the  Purchasers' Board representative,  observer  or
alternate  is  approached with respect to  or  made  aware  of  a
proposal regarding any of the foregoing.

     (h)   The  Purchasers shall not be a participant in a  proxy
solicitation with respect to the Capital Stock of the Company  or
subject  its  shares of Capital Stock of the  Company  to  voting
trusts or similar voting agreements.

     (i)   All  of  the  provisions of this  Section  5.10  shall
terminate and be of no further force or effect upon the  earliest
to occur of (i) any date on or after the tenth anniversary of the
Closing  on which the Market Price per share of the Common  Stock
is  at or below twelve dollars ($12.00) (provided that such price
shall be adjusted in same manner as the Exercise Price as defined
in  the Warrants), (ii) any date on which the Purchasers and  any
13d  Group of which they are a member shall Beneficially Own less
than ten percent (10%) of the issued and outstanding Common Stock
of  the  Company, (iii) a Change of Control of the type described
in clause (a) of the definition thereof, (iv) a redemption by the
Board  of  any  rights  granted under any Rights  Agreement,  and
(v)  the  Board permitting by amendment or waiver of  any  Rights
Agreement  or otherwise, any Non-financial Person to Beneficially
Own  twenty  percent  (20%) or more, or any Financial  Person  to
Beneficially  Own  more than thirty-five percent  (35%),  of  the
Voting Stock of the Company.

     (j)   The  Board shall be entitled to waive in  writing  the
Purchasers' compliance with any or all of the provisions of  this
Section 5.10.

     Section  5.11   Registration Rights Agreement.  The  Company
agrees   to  enter  into  a  Registration  Rights  Agreement   in
substantially the form attached hereto as Exhibit 7.2(b)(iv).

     Section  5.12   Use of Proceeds.  The Company shall use  the
proceeds  from  the sale of the Securities for  the  purposes  of
funding  exploration  and  production appraisal  and  development
activities,  for  working  capital  and  for  general   corporate
purposes,  and  not  for the purpose of purchasing  or  otherwise
acquiring securities.

     Section  5.13   Share Repurchase Program.  Until the earlier
to  occur of the tenth anniversary of the Closing and the date on
which  the  Warrants are no longer outstanding, the Company  will
not,  at  any time when the market price of the Company's  Common
Stock is less than $12 per share (as such price is adjusted  from
time to time in the same manner as the Exercise Price pursuant to
the Warrants), conduct any share repurchase or redemption program
or  other acquisition of Common Stock involving, in the aggregate
from the date hereof, an amount greater than $25 million plus the
amount set forth on Schedule 5.13 available as of the date hereof
under  the Company's existing publicly announced share repurchase
program.

     Section  5.14   Change of Control.  If a Change  of  Control
occurs at any time prior to the  sixth anniversary of the Closing
Date,   the Company shall, on or prior to the date of such Change
of  Control,  give written notice of the Change  of  Control  and
state in such notice the consideration the Purchasers may receive
per  Unit in accordance with the provisions of this Section  5.14
(a  "Notice  of  Change of Control") to the  Purchasers  and  the
Purchasers shall have the right to exchange all or, to the extent
provided  for  herein,  a  part of the  Securities  held  by  the
Purchasers on the Change of Control Exchange Date for  shares  of
Common  Stock  (or such other consideration as  is  provided  for
herein) on the terms and conditions set forth below:

          (i)  Upon receipt of a Notice of Change of Control, one
     or  more Purchasers may on or prior to the later of (x)  the
     30th  day following such Purchasers' receipt of a Notice  of
     Change  of  Control  or  (y)  the  10th  day  following  the
     consummation  of  such  Change of Control,  give  notice  (a
     "Purchaser  Election Notice") to the Company (including  any
     successor  resulting from such Change of Control) that  such
     Purchasers  have  elected to exchange the  number  of  Units
     indicated   in  the  Purchaser  Election  Notice   for   the
     consideration provided for therein on the date specified  in
     the  Purchaser  Election  Notice  (the  "Change  of  Control
     Exchange Date"), which Change of Control Exchange Date shall
     be  no  less  than five Business Days nor more  than  twenty
     Business  Days  following  the  Company's  receipt  of   the
     Purchaser  Election  Notice;  provided,  however,  that  the
     Change  of  Control Exchange Date shall be  delayed  to  the
     extent necessary to satisfy the requirements of the HSR  Act
     or applicable securities laws.

          (ii)  On  the  Change  of Control  Exchange  Date,  the
     Purchasers  shall tender to the Company the Units  specified
     in  the Purchaser Election Notice and shall receive from the
     Company 18.6047 duly authorized, validly issued, fully  paid
     and  non assessable shares of Common Stock per Unit tendered
     (such number of shares of Common Stock to be issued per Unit
     shall  be  adjusted from time to time after Closing  in  the
     same  proportion  as the number of shares  of  Common  Stock
     acquirable  upon  exercise  of  the  Warrants  is   adjusted
     pursuant to the terms of the Warrants).

          (iii)      In lieu of receiving shares of Common  Stock
     pursuant  to  subsection  (ii) of this  Section  10.14,  the
     Purchasers shall be entitled to receive the number of shares
     of stock or other securities or property (including cash) to
     which  the Common Stock issuable (at the time of such Change
     of  Control)  upon exchange of the Units in accordance  with
     subsection  (ii) above would have been entitled  to  receive
     upon  such Change of Control.  In determining the  kind  and
     amount  of  stock,  securities or other property  receivable
     upon  consummation of such Change of Control, if the holders
     of  Common Stock have the right to elect the kind or  amount
     of consideration receivable upon consummation of such Change
     of Control, then the Purchasers shall have the right to make
     a similar election as of the Change of Control Exchange Date
     with  respect  to  the number of shares of  stock  or  other
     securities  or  property  into  which  the  Units  shall  be
     exchangeable.

          (iv) The Company shall be prohibited from approving  or
     consummating any transaction that would result in  a  Change
     of   Control  unless  the  Company's  compliance  with   its
     obligations  upon the exercise of Purchasers'  rights  under
     this  Section 5.14 will not violate any applicable  law  and
     will  not breach any material agreement to which the Company
     or any of its Subsidiaries is a party, and if the Company is
     to  merge with or into another entity in connection  with  a
     Change  of Control, then the Company shall obtain  prior  to
     the  consummation  of such merger the written  agreement  of
     such  other  entity that it will comply with the  applicable
     obligations hereunder, including this Section 5.14  and  the
     Company shall deliver such agreement to Purchasers.

          (v)   Notwithstanding subsection (ii) of  this  Section
     10.14, if prior to the Change of Control Exchange Date,  the
     PS shares have been redeemed by the Company, then Purchasers
     may  elect  (by  so  indicating) in the  Purchaser  Election
     Notice  to  either (A) in lieu of tendering  the  number  of
     shares  of  PS referred to in clause (iii) of the definition
     of  Unit, tender the amount of cash that Purchasers received
     from  the Company in respect of such number of shares of  PS
     upon  such redemption or (B) in lieu of tendering the number
     of  shares  of  PS  referred  to  in  clause  (iii)  of  the
     definition of Unit, elect that the Company reduce the number
     of  shares of Common Stock (or if subsection (iii)  of  this
     Section  10.14  is applicable then such other consideration)
     deliverable  to the Purchasers by the number  of  shares  of
     Common  Stock  (or  such  other  consideration)  having   an
     aggregate Market Price as of the date of the consummation of
     the   Change   of  Control  equal  to  the  aggregate   cash
     consideration that Purchasers would have had to pay pursuant
     to clause (A) of this subsection (v) of Section 10.14.

          (vi)  Notwithstanding subsection (ii) of  this  Section
     10.14, if upon the consummation of the exchange pursuant  to
     subsection (ii), Purchasers' ownership of Common Stock would
     result  in a change of control that would cause an event  of
     default  under the Credit Agreement (without regard  to  the
     effects  of  any  amendments or supplements  to  the  Credit
     Agreement made after the date hereof that reduces the  level
     of stock ownership required to result in a change of control
     for  purposes of the Credit Agreement) and if  an  event  of
     default  would  not otherwise occur or exist,  then  on  the
     Change  of Control Exchange Date, the Company may  elect  to
     reduce  the number of shares of Common Stock issued pursuant
     thereto to the extent, but only to the extent, necessary  to
     avoid an event of default under the Credit Agreement, and in
     lieu  of  such  shares  of Common Stock  shall  pay  to  the
     Purchasers  in cash an amount equal to the aggregate  Market
     Price  of  such  shares of Common Stock as at  the  date  of
     consummation of such Change of Control.

          (vii)     In connection with the exchange of Units  for
     Common Stock (or other consideration, if applicable) on  the
     Change  of Control Exchange Date, the Company shall  deliver
     an  opinion  of its regular outside securities  counsel,  or
     other   counsel   reasonably  satisfactory  to   Purchasers,
     covering  such matters as Purchasers reasonably request  and
     shall provide such other incidental documentation reasonably
     requested  by  Purchasers  that  is  customary  for  such  a
     transaction.

     Section  5.15    Preemptive Rights.  Until  the  earlier  to
occur  of  the tenth anniversary of the Closing and the date  the
Purchasers  or  any  13d  Group  of  which  they  are  a   member
Beneficially  Owns less than 10% of the outstanding Common  Stock
of the Company.

     (a)  The Company hereby grants to each of the Purchasers the
right  to  purchase a pro rata share of New Securities which  the
Company may, from time to time, propose to issue, sell or  grant.
Each  Purchasers' pro rata share, for purposes of this right,  is
the  proportion  that (i) the number of shares  of  Fully-Diluted
Common  Stock then owned by such Purchaser immediately  prior  to
the  issuance  of  such New Securities bears to  (ii)  the  total
number of shares of Fully-Diluted Common Stock immediately  prior
to the issuance of such New Securities.

     (b)  If the Company proposes to undertake an issuance of New
Securities,  it shall give each Purchaser written notice  of  its
intention, describing the type of New Securities, and their price
and  the  general terms upon which the Company proposes to  issue
the same.  Each Purchaser shall have 10 days after such notice is
deemed delivered to agree to purchase up to such Purchaser's  pro
rata  share  of such New Securities for the price  and  upon  the
terms  specified in the notice by giving written  notice  to  the
Company  and  stating  the  quantity  of  New  Securities  to  be
purchased.

     (c)  With respect to that portion of the New Securities that
the  Purchasers  fail to exercise their right to purchase  within
such 10-day period, the Company shall have 90 days thereafter  to
sell  such  New  Securities at a price and  upon  terms  no  more
favorable  to  the  purchasers  thereof  than  specified  in  the
Company's  notice to the Purchasers pursuant to  Section  5.15(b)
above.  If the Company has not sold within such 90-day period the
New  Securities  in  accordance with the foregoing,  the  Company
shall  not  thereafter issue or sell any New  Securities  without
first  again  offering such securities to the Purchasers  in  the
manner provided above.

     Section  5.16   Allocation to Stated Surplus.  In connection
with  the issuance of the Shares, the Board  shall determine that
the  amount allocable to stated capital in respect of such Shares
shall not exceed $0.01 per Share.

     Section  5.17   Cooperation.  The Company and the Purchasers
shall   cooperate  in  good  faith  to  establish  promptly   the
appropriate allocation of the Purchase Price between  the  Shares
and the Warrants.

                           ARTICLE VI.
                 CONDITIONS PRECEDENT TO CLOSING
                                
     Section   6.1      Conditions  Precedent  to  Each   Party's
Obligation.   The  respective obligations of Purchasers  and  the
Company  to  effect  the  transactions  contemplated  hereby  are
subject  to the satisfaction on or prior to the Closing  Date  of
the following conditions:

     (a)  Approvals.  All Approvals of, or expirations of waiting
periods  imposed  by, any Governmental Entity necessary  for  the
consummation  of the transactions contemplated by this  Agreement
shall have been filed, occurred, or been obtained, as applicable,
including the expiration or termination of any applicable waiting
period under the HSR Act.

     (b)  No Injunctions or Restraints.  No temporary restraining
order, preliminary or permanent injunction, or other order issued
by  any  court of competent jurisdiction or other legal restraint
or  prohibition  preventing the consummation of the  transactions
contemplated hereby shall be in effect.

     (c)   No  Action.  No action shall have been taken  nor  any
statute,  rule,  or  regulation shall have been  enacted  by  any
Governmental   Entity   that  makes  the  consummation   of   the
transactions contemplated hereby illegal.

     Section   6.2     Conditions  Precedent  to  Obligation   of
Purchasers.    The  obligation  of  Purchasers  to   effect   the
transactions  contemplated by this Agreement is  subject  to  the
satisfaction of the following conditions unless waived, in  whole
or in part, by Purchasers:

     (a)   Representations  and Warranties.  The  representations
and  warranties of the Company set forth in this Agreement  shall
be  true and correct in all respects (provided that, for purposes
of  this  Section 6.2(a), any representation or warranty  of  the
Company  contained  herein  that is qualified  by  a  materiality
standard or a Material Adverse Effect qualification shall be read
without   regard   to  any  such  qualifications   as   if   such
qualifications were not contained therein) as of the date of this
Agreement and as of the Closing Date as though made on and as  of
the Closing Date except for such failures which, individually  or
in  the  aggregate,  have  not had and could  not  reasonably  be
expected to have a Material Adverse Effect, and Purchasers  shall
have  received  a certificate to the foregoing effect  signed  on
behalf of the Company and its Subsidiaries by the chief executive
officer or by the chief financial officer of the Company.

     (b)   Performance  of  Obligations.   The  Company  and  its
subsidiaries  shall have performed in all material  respects  all
obligations  required to be performed by it or  them  under  this
Agreement  prior to the Closing Date, and Purchasers  shall  have
received  a  certificate to such effect signed on behalf  of  the
Company and its Subsidiaries by the chief executive officer or by
the chief financial officer of the Company.

     (c)   No  Adverse  Action or Decision.  There  shall  be  no
action, suit, investigation or proceeding, pending or threatened,
against  or  affecting the Company or any of its Subsidiaries  or
any  of  their respective properties or rights, or any  of  their
Affiliates,  officers or directors, before any court,  arbitrator
or  administrative  or  governmental  body  which  (i)  seeks  to
restrain,  enjoin  or prevent the consummation  of  or  otherwise
affect  the  transactions contemplated by this Agreement  or  the
other  Transaction Documents or (ii) questions  the  validity  or
legality  of any such transaction or seeks to recover damages  or
to obtain other relief in connection with any such transaction.

     (d)   Consents Under Agreements.  Purchasers shall have been
furnished with evidence of all consents or approvals required  to
be  obtained  by  the  Company or any of  its  Subsidiaries  with
respect   to   the  consummation  of  each  of  the  transactions
contemplated  by  this Agreement the failure of which  to  obtain
reasonably  could  be expected to result in  a  Material  Adverse
Effect, and each such consent or approval shall be unconditional.

     (e)    Legal  Opinions.   Purchasers  shall  have   received
(i)  from Janice K. Hartrick, general counsel of the Company  and
its  Subsidiaries, an opinion dated the Closing Date, in form and
substance reasonably acceptable to the Purchasers, and (ii)  from
Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel to the Company
and  its  Subsidiaries, or other counsel to the Company  and  its
Subsidiaries reasonably acceptable to Purchasers an opinion dated
the Closing Date, in form and substance reasonably acceptable  to
the Purchasers.

     (f)   Appointment  to  the  Board.   The  Board  shall  have
appointed the nominee of Warburg to the Board in accordance  with
Section 5.7.

     (g)    Closing   Deliveries.   All  documents,  instruments,
certificates  or  other items required to  be  delivered  by  the
Company pursuant to Section 7.2(b) shall have been delivered.

     (h)   Statement of Resolution.  The Statement of  Resolution
shall have been filed with the Texas Secretary of State.

     Section  6.3     Conditions  Precedent  to  Obligations   of
Company.    The   obligation  of  the  Company  to   effect   the
transactions  contemplated by this Agreement is  subject  to  the
satisfaction of the following conditions unless waived, in  whole
or in part, by the Company:

     (a)   Representations  and Warranties.  The  representations
and warranties of Purchasers set forth in this Agreement shall be
true and correct in all respects (provided that, for purposes  of
this Section 6.3(a), any representation or warranty of Purchasers
contained herein that is qualified by a materiality standard or a
Material  Adverse  Effect qualification  shall  be  read  without
regard to any such qualifications as if such qualifications  were
not contained therein) as of the date of this Agreement and as of
the  Closing  Date as though made on and as of the  Closing  Date
except for such failures which, individually or in the aggregate,
have  not  had  and could not reasonably be expected  to  have  a
Material  Adverse Effect, and the Company shall have  received  a
certificate  to  the  foregoing  effect  signed  on   behalf   of
Purchasers by its general partner.

     (b)   Performance of Obligations of Purchasers.   Purchasers
shall  have  performed in all material respects  the  obligations
required to be performed by it under this Agreement prior to  the
Closing  Date, and the Company shall have received a  certificate
to  such  effect  signed on behalf of Purchasers by  its  general
partner.

     (c)    Closing   Deliveries.   All  documents,  instruments,
certificates   or  other  items  required  to  be  delivered   by
Purchasers pursuant to Section 7.2(a) shall have been delivered.

                          ARTICLE VII.
                             CLOSING

     Section  7.1     Closing.  Subject to  the  satisfaction  or
waiver  of  the conditions set forth in Article VI, the  purchase
and  sale  of  the  Securities  to  be  purchased  by  Purchasers
hereunder (the "Closing") will take place at the offices of Akin,
Gump,  Strauss, Hauer & Feld, L.L.P., 711 Louisiana Street, South
Tower,  Suite 1900, Houston, Texas, 77002, at 10:00  a.m.,  local
time,  on  the  third Business Day following the satisfaction  or
waiver  (subject to applicable Law) of each of the conditions  to
the  obligations  of  the parties to effect the  transactions  to
occur  at  such Closing as set forth in Article VI,  or  on  such
other date as mutually agreed to by the parties hereto.  The date
on which the Closing occurs is herein referred to as the "Closing
Date". All closing transactions at the Closing shall be deemed to
have occurred simultaneously.

     Section 7.2    Actions to Occur at the Closing.

     (a)  At the Closing, Purchasers shall deliver to the Company
the following:

          (i)   Purchase Price.  An amount equal to the  Purchase
     Price for the Securities in accordance with Article II.

          (ii)  Certificates.   The  certificates  described   in
     Sections 6.3(a) and 6.3(b).

          (iii)        Registration   Rights   Agreement.     The
     Registration   Rights  Agreement,  duly  executed   by   the
     Purchasers.

     (b)  At the Closing, the Company shall deliver to Purchasers
(or  to  their  respective designees as indicated otherwise)  the
following:

          (i)  Share Certificates.  Certificates representing the
     Shares.

          (ii) Warrants.

               (A)  The  Series A Warrants, the form of which  is
                    attached hereto as Exhibit 7.2(b)(ii)(A).

               (B)  The  Series B Warrants, the form of which  is
                    attached hereto as Exhibit 7.2(b)(ii)(B).

               (C)  The  Series C Warrants, the form of which  is
                    attached hereto as Exhibit 7.2(b)(ii)(C).
          (iii)        Registration   Rights    Agreement.    The
     Registration Rights Agreement, duly executed.

          (iv)  Certificates.   The  certificates  described   in
     Sections 6.2(a) and 6.2(b).

          (v)   Consents Under Agreements.  The original of  each
     consent or approval, if any, pursuant to Section 6.2(c).

          (vi)  Legal Opinions.  The opinions of counsel referred
     to in Section 6.2(d).

                          ARTICLE VIII.
                           TERMINATION
                                
     Section   8.1      Termination.   This  Agreement   may   be
terminated prior to the Closing:

     (a)  by mutual consent of Purchasers and the Company;

     (b)  by either Purchasers or the Company:

          (i)  in the event of a breach by the other party of any
     representation, warranty, covenant or agreement contained in
     this Agreement which (A) would give rise to the failure of a
     condition set forth in Section 6.2 or 6.3, and (B) cannot be
     cured or, if curable, has not been cured within 20 days (the
     "Cure  Period") following receipt by the breaching party  of
     written notice of such breach;

          (ii)  if  a  court of competent jurisdiction  or  other
     Governmental Entity shall have issued an order,  decree,  or
     ruling  or  taken any other action (which order, decree,  or
     ruling Purchasers and the Company shall use all commercially
     reasonable  efforts  to  lift),  in  each  case  permanently
     restraining,   enjoining,  or  otherwise   prohibiting   the
     transactions contemplated by this Agreement, and such order,
     decree, ruling, or other action shall have become final  and
     nonappealable;  provided,  however,  that   the   right   to
     terminate this Agreement under this clause (ii) shall not be
     available  to  any party whose breach of this Agreement  has
     been  the  cause  of,  or resulted in, such  order,  decree,
     ruling or other action; or

          (iii)      if  the Closing shall not have  occurred  by
     February  15,  1999, provided, however, that  the  right  to
     terminate  this Agreement under this clause (iii) shall  not
     be available to any party whose breach of this Agreement has
     been  the  cause  of,  or resulted in, the  failure  of  the
     Closing to occur on or before such date.

     The  right  of any party hereto to terminate this  Agreement
pursuant to this Section 8.1 shall remain operative and  in  full
force  and effect regardless of any investigation made by  or  on
behalf of any party hereto, any person controlling any such party
or  any  of  their  respective  officers,  directors,  employees,
accountants,  consultants,  legal  counsel,  agents,   or   other
representatives whether prior to or after the execution  of  this
Agreement.

     Section 8.2    Effect of Termination.  In the event  of  the
termination  of  this  Agreement, written  notice  thereof  shall
forthwith  be  given to the other party specifying the  provision
hereof  pursuant  to which such termination  is  made,  and  this
Agreement  (except for the provisions of this  Section  8.2,  and
Sections  5.1, 10.5, 10.6, 10.9, 10.10, 10.11, 10.12, and  10.13,
which shall survive such termination) shall forthwith become null
and  void.   Subject to the provisions of Section  10.5,  in  the
event of a termination of this Agreement by either the Company or
Purchasers as provided above, there shall be no liability on  the
part  of  the Company or Purchasers, except for liability arising
out  of  a  willful breach of, or misrepresentation  under,  this
Agreement (but in no event shall any party hereto be entitled  to
recover punitive damages).

                           ARTICLE IX.
                        RECOVERY OF FEES

     Any  Party who shall obtain a final judgment in a  court  of
competent  jurisdiction for the payment  of  damages  by  another
Party  for  a  breach of this Agreement or any other  Transaction
Document shall be entitled to recover reasonable attorneys'  fees
and court costs incurred in connection with the obtaining of such
judgment.

                           ARTICLE X.
                          MISCELLANEOUS

     Section 10.1   Survival of Provisions.

     (a)   The representations and warranties of the Company  and
Purchasers  made herein or in any other Transaction Document  and
the  covenants of the Company and Purchasers to be complied  with
on  or  prior to the Closing Date shall remain operative  and  in
full  force  and  effect pursuant to their terms,  regardless  of
(x)  any investigation made by or on behalf of Purchasers or  the
Company,  as  the case may be, or (y) acceptance of  any  of  the
Securities  and payment by Purchasers therefor, until  April  15,
2000;  provided that the representations and warranties contained
in  Sections  3.1,  3.3, 3.4, 3.15, 3.27 and 3.28  shall  survive
until  the  earlier  to  occur of the tenth  anniversary  of  the
Closing  and  the  date  on  which  none  of  the  Warrants   are
outstanding; and provided, further, that such representations and
warranties shall survive as to any claim or demand made prior  to
their  termination date until such claim or demand is fully  paid
or  otherwise  resolved  by  the parties  hereto  in  writing  or
otherwise;  and  provided, further that the  representations  and
warranties  contained  in Section 3.16 shall  survive  until  the
expiration  of  all applicable statutes of limitation  (including
all  periods  of  extension,  whether  automatic  or  permissive)
affecting or applicable to such representation or warranty.

     (b)   The  covenants  and  agreements  of  the  Company  and
Purchasers contained in this Agreement that, by their terms,  are
to  be  performed  or complied with after the Closing  Date  will
survive until the later of (i) April 15, 2000 and (ii) the period
specified herein with respect to such covenant or agreement;  and
provided,  further,  that  such covenants  and  agreements  shall
survive as to any claim or demand made prior to their termination
date  until  such  claim  or demand is fully  paid  or  otherwise
resolved by the parties hereto in writing or otherwise.

     Section  10.2    No  Waiver; Modification  in  Writing.   No
failure  or  delay on the part of the Company or a  Purchaser  in
exercising any right, power or remedy hereunder shall operate  as
a waiver thereof, nor shall any single or partial exercise of any
such  right,  power  or  remedy preclude  any  other  or  further
exercise  thereof or the exercise of any other  right,  power  or
remedy.  Without limiting the rights that any party may have  for
fraud  under  common law, the remedies provided  for  herein  are
cumulative  and  are  the  exclusive remedies  available  to  the
Company  or  Purchasers at law or in equity.  The  provisions  of
this  Agreement, including the provisions of this  sentence,  may
not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given without
the  written  consent  of  the Company,  on  the  one  hand,  and
Purchasers  or  their  permitted  assigns,  on  the  other  hand,
provided  that notice of any such waiver shall be given  to  each
party  hereto  as set forth below.  Any amendment, supplement  or
modification  of  or to any provision of this Agreement,  or  any
waiver  of  any provision of this Agreement, shall  be  effective
only  in  the specific instance and for the specific purpose  for
which  made  or  given.   Except  where  notice  is  specifically
required  by this Agreement, no notice to or demand on any  party
hereto in any case shall entitle the other party to any other  or
further notice or demand in similar or other circumstances.

     Section  10.3   Specific Performance.  The parties recognize
that  in  the  event the Company or Purchasers should  refuse  to
perform  under  the  provisions of this Agreement  or  any  other
Transaction  Document,  monetary  damages  alone  will   not   be
adequate.   Purchasers or the Company, as the case may be,  shall
therefore  be  entitled, in addition to any other remedies  which
may  be  available, including money damages, to  obtain  specific
performance of the terms of this Agreement.  In the event of  any
action  to  enforce  this  Agreement  or  any  other  Transaction
Document  specifically, the Company and Purchasers  hereby  waive
the defense that there is an adequate remedy at law.

     Section 10.4   Severability.  If any term or other provision
of  this  Agreement  is invalid, illegal, or incapable  of  being
enforced  by  any rule of applicable law, or public  policy,  all
other   conditions  and  provisions  of  this   Agreement   shall
nevertheless  remain  in full force and effect  so  long  as  the
economic  or  legal  substance of the  transactions  contemplated
herein  are not affected in any manner materially adverse to  any
party.   Upon such determination that any term or other provision
is  invalid, illegal, or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement  so
as  to  effect the original intent of the parties as  closely  as
possible  in  a  mutually acceptable manner  in  order  that  the
transactions  contemplated herein are consummated  as  originally
contemplated to the fullest extent possible.

     Section 10.5   Fees and Expenses.  Within 30 days after  the
Closing, the Company shall pay to Purchasers or their designee an
amount equal to the Purchasers' Expenses through the Closing Date
(the  amount of such costs and expenses shall have been furnished
to the Company at least within 25 days after the Closing Date).

     Section 10.6   Parties in Interest.  This Agreement shall be
binding upon and, except as provided below, inure solely  to  the
benefit  of  each party hereto and their successors and  assigns,
and nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.

     Section    10.7     Notices.    All   notices   and    other
communications hereunder shall be in writing and shall be  deemed
given  if  delivered  personally  or  mailed  by  registered   or
certified mail (return receipt requested) to the parties  at  the
following  addresses (or at such other address  for  a  party  as
shall be specified by like notice):

          (a)  If to Purchasers, to:

               Warburg, Pincus Equity Partners, L.P.
               466 Lexington Avenue
               New York, New York  10017
               Attention:  Jeffrey A. Harris
               Facsimile:  (212) 878-6139
               
          (b)  If to the Company, to:

               EEX Corporation
               2500 City West Boulevard, Suite 1400
               Houston, Texas 77042
               Attention: Treasurer
               Facsimile:  (713) 243-3321

               with a copy (which shall not constitute notice  to
the Company) to:

               Akin, Gump, Strauss, Hauer & Feld, L.L.P.
               1700 Pacific Avenue, Suite 4100
               Dallas, Texas 75201
               Attention:  Michael Dillard
               Facsimile:  (214) 969-4343

     Any  of  the above addresses may be changed at any  time  by
notice given as provided above; provided, however, that any  such
notice of change of address shall be effective only upon receipt.
All   notices,  requests  or  instructions  given  in  accordance
herewith  shall  be deemed received on the date of  delivery,  if
hand  delivered,  on  the date of receipt, if  telecopied,  three
Business  Days after the date of mailing, if mailed by registered
or certified mail, return receipt requested, and one Business Day
after  the date of sending, if sent by Federal Express  or  other
recognized overnight courier.

     Section 10.8   Counterparts.  This Agreement may be executed
and  delivered (including by facsimile transmission)  in  one  or
more  counterparts, all of which shall be considered one and  the
same  agreement  and  shall become effective  when  one  or  more
counterparts  have  been  signed  by  each  of  the  parties  and
delivered  to  the  other parties, it being understood  that  all
parties need not sign the same counterpart.

     Section 10.9   Entire Agreement.  This Agreement (which term
shall be deemed to include the Exhibits and Schedules hereto  and
the  other  certificates,  documents  and  instruments  delivered
hereunder)  and  the other Transaction Documents  constitute  the
entire  agreement of the parties hereto and supersede  all  prior
agreements,  letters of intent and understandings,  both  written
and  oral,  among the parties with respect to the subject  matter
hereof.   There are no representations or warranties, agreements,
or  covenants  other  than  those expressly  set  forth  in  this
Agreement and the other Transaction Documents.

     Section  10.10   Governing  Law.  THIS  AGREEMENT  SHALL  BE
GOVERNED  BY  AND CONSTRUED IN ACCORDANCE WITH THE  LAWS  OF  THE
STATE  OF  TEXAS, WITHOUT GIVING EFFECT TO ANY CONFLICTS  OF  LAW
PROVISIONS.

     Section  10.11  Public Announcements.  The Company,  on  the
one  hand, and Purchasers, on the other, shall consult with  each
other  before issuing any press release or otherwise  making  any
public   statements  with  respect  to  this  Agreement  or   the
transactions contemplated hereby, except for statements  required
by Law or by any listing agreements with or rules of any national
securities  exchange  or the National Association  of  Securities
Dealers,  Inc., or made in disclosures reasonably  determined  as
required  to be filed pursuant to the Securities Act of  1933  or
the Securities Exchange Act of 1934.

     Section  10.12  Assignment.  Neither this Agreement nor  any
of  the  rights,  interests, or obligations  hereunder  shall  be
assigned  by  any of the parties hereto, whether by operation  of
Law  or  otherwise; provided, however, that upon  notice  to  the
Company, (a) each Purchaser may assign or delegate any or all  of
its  rights or obligations under this Agreement to any  Affiliate
thereof  and  (b)  nothing  in this Agreement  shall  limit  each
Purchaser's ability to make a collateral assignment of its rights
under  this  Agreement to any institutional lender that  provides
funds  to  Purchasers without the consent of  the  Company.   The
Company  shall  execute  an  acknowledgment  of  such  collateral
assignments in such forms as Purchaser's lenders may from time to
time  reasonably request; provided, however, that unless  written
notice   is  given  to  the  Company  that  any  such  collateral
assignment  has  been  foreclosed  upon,  the  Company  shall  be
entitled  to  deal exclusively with Purchasers as to any  matters
arising  under  this  Agreement or any of  the  other  agreements
delivered  pursuant hereto.  In the event of such an  assignment,
the  provisions of this Agreement shall inure to the  benefit  of
and  be binding on Purchaser's assigns.  Any attempted assignment
in violation of this Section shall be null and void.

     Section   10.13    Director  and  Officer  Liability.    The
directors,  officers,  partners,  members  and  stockholders   of
Purchasers, the Company and their respective Affiliates shall not
have  any  personal  liability or obligation arising  under  this
Agreement  (including any claims that the Company  or  Purchasers
may assert) other than as an assignee of this Agreement.

     Section 10.14  Headings.  The headings of this Agreement are
for  convenience  of  reference only and  are  not  part  of  the
substance of this Agreement.

    [The remainder of this page is intentionally left blank.]
     IN  WITNESS  WHEREOF, each of the parties hereto has  caused
this  Agreement to be executed by its duly authorized officer  as
of the date first written above.

                              EEX CORPORATION


                              By:  /s/Richard S. Langdon
                              Name:     Richard S. Langdon
                              Title:    Executive Vice President
                                     and Chief Financial Officer

                              Warburg,       Pincus        Equity
                              Partners, L.P.
                              By:  Warburg, Pincus & Co.
                              Its:  General Partner

                              By:  /s/ Jeffery A. Harris
                                   Name:  Jeffrey A. Harris
                                   Title:    Partner

                              Warburg, Pincus Netherlands  Equity
                              Partners I, C.V.
                              By:  Warburg, Pincus & Co.
                              Its:  General Partner

                              By:  /s/ Jeffery A. Harris
                                   Name:  Jeffrey A. Harris
                                   Title:    Partner

                              Warburg, Pincus Netherlands  Equity
                              Partners II, C.V.
                              By:  Warburg, Pincus & Co.
                              Its:  General Partner

                              By:  /s/ Jeffery A. Harris
                                   Name:  Jeffrey A. Harris
                                   Title:    Partner

                              Warburg, Pincus Netherlands  Equity
                              Partners III, C.V.
                              By:  Warburg, Pincus & Co.
                              Its:  General Partner

                              By:  /s/ Jeffery A. Harris
                                   Name:  Jeffrey A. Harris
                                   Title:    Partner
                                   
<PAGE>                                   
                                   
                                                   Exhibit 6.2(h)



                    STATEMENT OF RESOLUTION
                               OF
        SERIES B 8% CUMULATIVE PERPETUAL PREFERRED STOCK
                               OF
                        EEX CORPORATION


     PURSUANT  to  the provisions of Article 2.13  of  the  Texas
Business  Corporation  Act,  the  undersigned  corporation   (the
"Company") makes the following statement:

     I.   The name of the Company is EEX Corporation.

     II.   Set  forth  below is a copy of the resolution  of  the
Board of Directors of the Company (the "Resolution") establishing
and designating, and determining the preferences, limitations and
relative   rights  of,  the  Company's  Series  B  8%  Cumulative
Perpetual Preferred Stock, no par value per share:

     "RESOLVED,  that  pursuant to the authority  vested  in  the
Board  of  Directors of the Company by Article IV of the Restated
Articles  of  Incorporation, a series of Preferred Stock  of  the
Company  be, and it hereby is, created out of the authorized  but
unissued  shares  of  the Preferred Stock of  the  Company,  such
series  to  be  designated  "Series  B  8%  Cumulative  Perpetual
Preferred Stock" (the "Series B Preferred Stock"), to consist  of
3,000,000   shares,  no  par  value  per  share,  of  which   the
preferences   and   relative   and   other   rights,   and    the
qualifications, limitations or restrictions thereof, shall be (in
addition  to  those  set  forth  in  the  Restated  Articles   of
Incorporation) as follows:

     1.   Number.  The number of shares constituting the Series B
Preferred  Stock shall be 3,000,000; provided, however, 1,500,000
of  such 3,000,000 shares may only be issued from time to time as
dividends  on the Series B Preferred Stock pursuant to Section  3
of this Statement of Resolution.

     2.    Definitions.   Unless the context otherwise  requires,
when  used  herein  the following terms shall  have  the  meaning
indicated.

     "Affiliate"  means  with respect to any  Person,  any  other
Person   directly,   or   indirectly   through   one   or    more
intermediaries,  controlling,  controlled  by  or  under   common
control  with such Person.  For purposes of this definition,  the
term  "control" (and correlative terms "controlling," "controlled
by"  and  "under  common control with") means possession  of  the
power,  whether  by contract, equity ownership or  otherwise,  to
direct the policies or management of a Person.

     "Articles"  means the Restated Articles of Incorporation  of
the Company.

     "Beneficially Own" or "Beneficial Ownership" is  defined  in
Rules  13d-3  and 13d-5 of the Exchange Act, but  without  taking
into  account  any  contractual restrictions  or  limitations  on
voting or other rights.

     "Board" means the Board of Directors of the Company.

     "Business Combination" means (i) any consolidation,  merger,
share   exchange  or  similar  business  combination  transaction
involving  the  Company  with  any  Person  or  (ii)  the   sale,
assignment  conveyance, transfer, lease or other  disposition  by
the Company of all or substantially all of its assets.

     "Business Day" means any day except Saturday, Sunday and any
day  which  shall  be a legal holiday or a day on  which  banking
institutions  in  Houston,  Texas or  New  York  City,  New  York
generally are authorized or required by law or other governmental
actions to close.

     "Capital Stock" means (i) with respect to any Person that is
a   corporation  or  company,  any  and  all  shares,  interests,
participations  or  other  equivalents  (however  designated)  of
capital or capital stock of such Person and (ii) with respect  to
any  Person  that is not a corporation or company,  any  and  all
partnership or other equity interests of such Person.

     "Change  of  Control" shall mean any event constituting  (a)
the consummation of any Business Combination except where (i) the
shareholders  of the Company immediately prior to  such  Business
Combination own (in substantially the same proportion relative to
each   other   as  such  shareholders  owned  the  Common   Stock
immediately  prior to such consummation) (x) forty percent  (40%)
or  more  of the Voting Stock of the surviving entity on  both  a
Modified  Non  Diluted Basis and a Modified Fully  Diluted  Basis
immediately  after  such  Business  Combination,  and  (y)  forty
percent  (40%)  or more of the outstanding common  stock  of  the
surviving  entity  on  both a Modified Non Diluted  Basis  and  a
Modified  Fully  Diluted Basis immediately  after  such  Business
Combination, (ii) the members of the Board immediately  prior  to
the  entering  into  the  agreement  relating  to  such  Business
Combination  constitute at least a majority of the Board  or  the
board of directors of the surviving entity immediately after such
Business Combination, with no agreements or arrangements in place
immediately  after  such consummation that would  result  in  the
members  of the Board immediately prior to the entering into  the
agreement  relating  to  such  Business  Combination  ceasing  to
constitute  at  least a majority of the Board  or  the  board  of
directors  of  the  surviving entity and (iii)  no  Non-Financial
Person or Group of Non-Financial Persons is the Beneficial  Owner
of  20%  or more of the total outstanding Voting Stock or  common
stock of the surviving entity and no Financial Person or Group of
Financial Persons is the Beneficial Owner of 35% or more  of  the
total  outstanding Voting Stock or common stock of the  surviving
entity  or (b) any Non-Financial Person or Group of Non-Financial
Persons  acquiring Beneficial Ownership of 20%  or  more  of  the
total outstanding Voting Stock or Common Stock of the Company  or
any  Financial  Person  or Group of Financial  Persons  acquiring
Beneficial  Ownership  of 35% or more of  the  total  outstanding
Voting Stock or Common Stock of the Company.

     "Code"  means the Internal Revenue Code of 1986, as amended,
and the rules and regulations thereunder.

     "Common  Stock" means the Company's common stock, par  value
$.01  per  share,  and any Capital Stock for or into  which  such
Common  Stock hereafter is exchanged, converted, reclassified  or
recapitalized  by  the Company or pursuant  to  an  agreement  or
Business Combination to which the Company is a party.

     "Common  Stock Equivalents" means (without duplication  with
any  other Common Stock  or common stock, as the case may be,  or
Common  Stock Equivalents) rights, warrants, options, convertible
securities  or  exchangeable  securities,  exercisable   for   or
convertible or exchangeable into, directly or indirectly,  Common
Stock,  or common stock, as the case may be, whether at the  time
of issuance or upon the passage of time or the occurrence of some
future event, including the Warrants.

     "Company" means EEX Corporation, a Texas corporation.

     "Dividend Payment Date" is defined in Section 3(A).

     "Dividend Period" is defined in Section 3(A).

     "Dividend Rate" means a rate of interest equal to (i)  prior
to the Dividend Reset Date, eight percent (8%) per annum and (ii)
on  or  after  the Dividend Reset Date, the Dividend  Reset  Rate
determined pursuant to Section 4.

     "Exchange Act" means the Securities Exchange Act of 1934, as
amended,  or any successor statute, and the rules and regulations
promulgated thereunder.

     "Financial  Person" means any Person that (i) is,  or  holds
itself  out  as  being,  engaged primarily  in  the  business  of
investing, reinvesting, owning, holding or trading in securities,
and  (ii) together with its Affiliates is not engaged in (x)  any
significant  activities other than financial services,  insurance
or  investment  activities or (y) directly or indirectly  through
Affiliates, in any industrial activities, including the  oil  and
gas and energy industry.

     "Group" means a group as contemplated by Section 13(d)(3) of
the Exchange Act.

     "Holder"  means a holder of record of the Series B Preferred
     Stock.
     
     "Issue  Date" means with respect to any shares of  Series  B
Preferred  Stock the original date of issuance of such shares  of
Series B Preferred Stock.
     
      "Junior Securities" means Capital Stock that, with  respect
to  dividends and distributions upon Liquidation, ranks junior to
the Series B Preferred Stock.

     "Liquidation"    means   the   voluntary   or    involuntary
liquidation, dissolution or winding up of the Company;  provided,
however,  that a merger or share exchange shall not be  deemed  a
Liquidation   nor  shall  the  sale  of  assets   not   requiring
shareholder approval be deemed to be a Liquidation.

     "Liquidation Preference" is defined in Section 6.

     "Majority  of the Series B Preferred Stock" means more  than
50% of the outstanding shares of Series B Preferred Stock.

     "Market Price" means, with respect to a particular security,
on any given day, the last reported sale price regular way or, in
case  no  such reported sale takes place on such day, the average
of  the  last closing bid and asked prices regular way, in either
case  on the principal national securities exchange on which  the
applicable securities is listed or admitted to trading, or if not
listed   or  admitted  to  trading  on  any  national  securities
exchange, (i) the closing sale price for such day reported by the
NASDAQ  Stock  Market if such security is traded over-the-counter
and  quoted in the NASDAQ Stock Market, or (ii) if such  security
is  so  traded,  but not so quoted, the average  of  the  closing
reported bid and asked prices of such security as reported by the
NASDAQ  Stock Market or any comparable system, or (iii)  if  such
security  is  not  listed  on  the NASDAQ  Stock  Market  or  any
comparable  system,  the average of the  closing  bid  and  asked
prices as furnished by two members of the National Association of
Securities  Dealers,  Inc. selected from  time  to  time  by  the
Company  for  that purpose.  If such security is not  listed  and
traded  in  a  manner that the quotations referred to  above  are
available for the period required hereunder, the Market Price per
share  of  Common Stock shall be deemed to be the fair value  per
share  of such security as determined in good faith by the  Board
of Directors of the Company.

     "Modified  Fully-Diluted  Basis" shall  mean  a  calculation
based  on  the then outstanding shares of Voting Stock or  common
stock,  as  the case may be, plus all shares of Voting  Stock  or
common  stock  acquirable  pursuant to, or  constituting,  Common
Stock  Equivalents,  but excluding 50% of  the  Voting  Stock  or
common   stock  acquirable  pursuant  to  the  then   outstanding
Warrants.

     "Modified Non-Diluted Basis" shall mean a calculation  based
on  the  then outstanding shares of Voting Stock or common stock,
as  the  case  may be, and without giving effect  to  outstanding
Common Stock Equivalents, but including (i) 50% of the shares  of
Common   Stock  then  acquirable  upon  exercise  of   the   then
outstanding  Warrants and (ii) the number  of  shares  of  common
stock  equal to (a) the aggregate Market Price as of the date  of
such   Business  Combination  of  all  shares  of  common   stock
acquirable  upon  exercise  of  all  outstanding  employee  stock
options  of  the relevant entity that have an exercise  price  of
less than the Market Price of common stock as of the date of such
Business  Combination less the aggregate exercises price  of  all
such  options divided by (b) the Market Price of common stock  as
of the date of such Business Combination.

     "Non-Financial  Person"  means any  Person  that  is  not  a
Financial Person.

     "Notice of Redemption" is defined in Section 7(B)(i).

     "Parity  Securities" means Capital Stock that, with  respect
to  dividends  or distributions upon Liquidation, is  pari  passu
with the Series B Preferred Stock.

     "Person"  means an individual or a corporation, partnership,
trust,   incorporated  or  unincorporated  association,   limited
liability company, joint venture, joint stock company, government
(or  an  agency or political subdivision thereof) or other entity
of any kind.

     "Profits" means earnings and profits of the Company and  its
Subsidiaries computed in accordance with Section 312 of the Code.

     "Purchase Agreement" means the Purchase Agreement  dated  as
of  December         , 1998 among the Company and the  purchasers
named  therein  pursuant to which 1,500,000 shares  of  Series  B
Preferred Stock and certain other securities are to be issued  by
the Company, including all schedules and exhibits thereto.

     "Purchasers"means  collectively,  Warburg,   Pincus   Equity
Partners, L.P., Warburg, Pincus Equity Partners I, C.V.  Warburg,
Pincus  Equity  Partners  II,  C.V. and  Warburg,  Pincus  Equity
Partners III, C.V.

     "Record Date" is defined in Section 3(A).

     "Redemption Date" is defined in Section 7(B)(i).

     "Redemption Notice" is defined in Section 7(B)(i).

     "Redemption Price" is defined in Section 7(A).

     "Rights  Agreement" means the Rights Agreement dated  as  of
September  10, 1996 between the Company and Harris Trust  Company
of New York, a New York trust company, as amended.

     "Securities  Act"  means  the Securities  Act  of  1933,  as
amended,  or any successor statute, and the rules and regulations
promulgated thereunder.

     "Senior  Securities" means Capital Stock that, with  respect
to  dividends or distributions upon Liquidation, ranks senior  to
the Series B Preferred Stock.

     "Series  B Preferred Stock" means the Series B 8% Cumulative
Perpetual  Preferred Stock of the Company or successor  preferred
stock as contemplated by Section 5(C)(ii)(A).

     "Stated  Value" is an amount equal to $100.00 per  share  of
Series B Preferred Stock.

     "Statement of Resolution" means this Statement of Resolution
of the Series B Preferred Stock.
     
     "Subsidiary" of a Person means (i) a corporation, a majority
of  whose  stock with voting power, under ordinary circumstances,
to  elect directors is at the time of determination, directly  or
indirectly,  owned by such Person or by one or more  Subsidiaries
of  such  Person,  or  (ii)  any  other  entity  (other  than   a
corporation) in which such Person or one or more Subsidiaries  of
such Person, directly or indirectly, at the date of determination
thereof has a least a majority ownership interest.

     "TBCA" means the Texas Business Corporation Act, as amended,
or any successor statute or other legislation.

     "Voting  Stock"  of  a Person means Capital  Stock  of  such
Person  of  the  class or classes pursuant to which  the  holders
thereof   have   the   general  voting   power   under   ordinary
circumstances to vote in the election of the board of  directors,
managers or trustees of such Person.

     "Warrants"  means the warrants to purchase up to  21,000,000
shares  of  Common  Stock, subject to certain conditions,  at  an
initial exercise price of $12 per share (as may be adjusted  from
time  to  time  as set forth therein) which were  issued  to  the
purchasers  named  in  the  Purchase Agreement  pursuant  to  the
Purchase Agreement.

     The foregoing definitions will be equally applicable to both
the singular and plural forms of the defined terms.

     3.   Dividends and Distributions.

          (A)   Subject to the prior preferences and other rights
     of  any  Senior  Securities, the holders  of  the  Series  B
     Preferred  Stock  shall be entitled to receive  out  of  the
     assets  of  the Company legally available for that  purpose,
     dividends  at the Dividend Rate, and, except as provided  in
     Section  3(C),  no more, to be paid in accordance  with  the
     terms of this Section 3.  Such dividends shall be cumulative
     from  the  Issue Date and shall be payable in arrears,  when
     and  as  declared  by  the Board,  on  March  31,  June  30,
     September  30 and December 31 of each year (each  such  date
     being  herein  referred  to as a "Dividend  Payment  Date"),
     commencing  on  March 31, 1999.  The period from  the  Issue
     Date  to the next Dividend Payment Date and quarterly period
     between consecutive Dividend Payment Dates shall hereinafter
     be  referred to as a "Dividend Period."  Each such  dividend
     shall  be  paid  to the holders of record of  the  Series  B
     Preferred Stock as their names appear on the share  register
     of  the  Company on the corresponding Record Date.  As  used
     above,  the  term "Record Date" means, with respect  to  the
     dividend  payable  on March 31, June 30,  September  30  and
     December 31, respectively, of each year, the preceding March
     15,  June  15, September 15 and December 15, or  such  other
     record  date  designated by the Board with  respect  to  the
     dividend  payable on such respective Dividend  Payment  Date
     not  exceeding 30 days preceding such Dividend Payment Date.
     Dividends  on  account  of arrears  for  any  past  Dividend
     Periods  may be declared and paid, together with any accrued
     but  unpaid  interest thereon to and including the  date  of
     payment,  at  any  time, without reference to  any  Dividend
     Payment  Date, to holders of record on a date designated  by
     the  Board, not exceeding 30 days preceding the payment date
     thereof, as may be fixed by the Board.
     
          (B)   In  the  event that dividends  on  the  Series  B
     Preferred  Stock  are to be paid in cash in accordance  with
     Sections 3(E) or 3(F), and full cash dividends are not  paid
     or  made available to the holders of all outstanding  shares
     of   the   Series  B  Preferred  Stock  and  of  any  Parity
     Securities,  and  funds available shall be  insufficient  to
     permit  payment in full in cash to all such holders  of  the
     preferential  amounts to which they are then  entitled,  the
     entire amount available for payment of cash dividends  shall
     be  distributed among the holders of the Series B  Preferred
     Stock and of any Parity Securities ratably in proportion  to
     the   full   amount  to  which  they  would   otherwise   be
     respectively entitled, any remainder not paid in cash to the
     Holders shall cumulate as provided in Section 3(C) below.
     
          (C)   If,  on  any Dividend Payment Date,  the  Company
     fails  to pay dividends, then until the dividends that  were
     scheduled  to be paid on such date are paid, such  dividends
     shall cumulate and shall accrue additional dividends to  and
     including  the date of payment thereof at the Dividend  Rate
     then  in  effect plus, with respect to any dividends payable
     after the Dividend Reset Date, 2% per annum (but in no event
     higher  than  the highest amount permitted under  applicable
     law),  compounded  quarterly,  whether  or  not  earned   or
     declared, payable only in cash (notwithstanding Section 3(E)
     below) with additional dividends thereon for each succeeding
     full  Dividend  Period  during which  such  dividends  shall
     remain unpaid.  Unpaid dividends for any period less than  a
     full  Dividend  Period shall cumulate on a day-to-day  basis
     and shall be computed on the basis of a 360-day year.
     
          (D)   So  long as any shares of the Series B  Preferred
     Stock  shall be outstanding, the Company shall not and shall
     cause  its  Subsidiaries  not to  (i)  declare  or  pay  any
     dividend whatsoever, whether in cash, property or otherwise,
     set aside any cash or property for the payment of dividends,
     or  make  any  other distribution on any Junior  Securities,
     (ii)  declare  or  pay any dividend whatsoever,  whether  in
     cash,  property or otherwise, set aside any cash or property
     for the payment of dividends, or make any other distribution
     on  any Parity Securities, unless declared and paid pro rata
     with  the Series B Preferred Stock in proportion to the full
     amount   to  which  they  would  otherwise  be  respectively
     entitled or (iii) repurchase, redeem or otherwise acquire or
     set  aside  any  cash  or  property for  the  repurchase  or
     redemption  of  any Junior Securities or Parity  Securities,
     unless  in each such case all dividends to which the holders
     of the Series B Preferred Stock shall have been entitled for
     all  previous  Dividend  Periods shall  have  been  paid  or
     declared  and  a  sum of money sufficient  for  the  payment
     thereof shall have been set apart.
     
          (E)   Subject to the election of a Holder provided  for
     in  Section  3(F) below and subject to Section  3(C)  above,
     from the Issue Date through and including the Dividend Reset
     Date,  the  Company shall pay on each Dividend Payment  Date
     accrued  dividends,  at its election,  in  cash,  shares  of
     Series  B  Preferred Stock or shares of Common Stock.   Such
     election  shall  be made on or prior to the earlier  of  the
     date  of  declaration  of such dividend  or  the  applicable
     record date for such dividend, with prompt notice thereafter
     being  given by the Company to the holders of the  Series  B
     Preferred  Stock  of  such  election.  Notwithstanding   the
     foregoing, in the event that the Company shall have declared
     or paid cash dividends on the Common Stock during a Dividend
     Period,  the Company shall pay on the Dividend Payment  Date
     for  such Dividend Period accrued dividends solely in  cash.
     The  number  of  shares of Series B Preferred  Stock  to  be
     issued  in  circumstances  when  dividends  are  paid   with
     additional shares of Series B Preferred Stock will equal the
     cash  amount  of  the  dividend payable,  divided  by  $100,
     rounded to the nearest full share, up or down, after  taking
     into account all shares of Series B Preferred Stock owned by
     the  Holder provided that if the resulting fractional  share
     held  by such Holder equals one-half of a share of Series  B
     Preferred  Stock, such fractional share shall be rounded  up
     to  the  nearest full share.  The number of shares of Common
     Stock to be issued in circumstances when dividends are  paid
     with  shares of Common Stock will equal the cash  amount  of
     the  dividend  payable, divided by the  lesser  of  (i)  the
     Market  Price  of  Common Stock as of the last  trading  day
     immediately  preceding the payment date or (ii) the  average
     Market  Price  of Common Stock for the twenty  (20)  trading
     days  immediately preceding the payment date, rounded up  to
     the  nearest full share. After the Dividend Reset Date,  the
     Company shall pay dividends on the Series B Preferred  Stock
     only  in cash, and the Company shall be mandatorily required
     to pay such dividends on the scheduled Dividend Payment Date
     to  the  fullest  extent permitted by law or,  if  not  then
     permitted  by  law, then as soon thereafter  as  is  legally
     permitted.  The Company shall be required to pay all accrued
     but   unpaid dividends as of the Dividend Reset Date in cash
     on  the next succeeding Dividend Payment Date to the fullest
     extent  permitted by law or, if not then permitted  by  law,
     then as soon thereafter as is legally permitted.
     
          (F)   On  any  Dividend Payment Date occurring  on  any
     December  31  before the Dividend Reset Date, Holders  of  a
     Majority  of  the  Series B Preferred Stock  may  elect,  by
     written notice to the Company on or before five (5) business
     days  preceding  the applicable Record  Date,  to  have  the
     Company  pay  in cash up to the full amount of the  dividend
     payable  on  such  date less any cash  dividends  paid  with
     respect  to  the  previous three Dividend  Periods,  or  the
     portion  thereof  as  shall not exceed the  Profits  of  the
     Company.   To the extent that the Company has not determined
     the  Profits  of the Company for the fiscal year  ending  on
     December  31  of such year as of the applicable Record  Date
     and  has  determined in good faith that it is not reasonably
     certain that it will have Profits sufficient to pay the cash
     dividends requested in the aggregate by the Holders  of  the
     Series  B Preferred Stock, the Company may defer the payment
     of  such  dividend  to  the earlier  of  the  date  of  such
     determination or March 31 of the year following the year  in
     which  such  dividend was to be paid but such deferred  cash
     portion  of  the dividend shall accrue additional  dividends
     thereon  at  the  Dividend Rate.  To  the  extent  that  the
     aggregate cash dividends requested to be paid by all Holders
     exceeds  the  Profits of the Company as so determined,  such
     aggregate  cash  dividends will be reduced and  each  Holder
     requesting  to be paid in cash shall be entitled to  receive
     his  pro  rata portion of the aggregate cash dividends  paid
     based on the dollar amount of cash dividends requested to be
     paid  by each Holder and the remainder shall be paid at  the
     election  of  the  Company  in either  shares  of  Series  B
     Preferred  Stock or shares of Common Stock  as  provided  in
     Section 3(E).  In the event of the approval by the Board  of
     an  agreement providing for a Business Combination, a Holder
     may  elect to have the Company suspend payment of dividends,
     which  shall continue to accrue as provided in Section  3(C)
     at  the Dividend Rate.  If the proposed Business Combination
     is  consummated within 180 days of the date of  approval  by
     the  Board  of  the  agreement providing for  such  Business
     Combination, at the request of Holders of a Majority of  the
     Series  B  Preferred Stock, all accrued but unpaid dividends
     will  be  paid  in cash by the Company upon consummation  of
     such  Business  Combination  or  if  the  proposed  Business
     Combination is not consummated within 180 days of  the  date
     of approval by the Board of the agreement providing for such
     Business  Combination,  all  accrued  but  unpaid  dividends
     (including  dividends  that would  have  been  payable  with
     respect  to  unpaid dividends in Series B  Preferred  Stock)
     will  be  paid  by the Company promptly after expiration  of
     such  180  day  period at the Company's  election  in  cash,
     shares of Series A Preferred Stock or shares of Common Stock
     in accordance with Section 3(E).
     
     4.   Remarketing Procedures.

          (A)  Certain Definitions.
     
     Capitalized terms not defined in this Section 4  shall  have
the  meanings  specified elsewhere herein.  As used  herein,  the
following  terms  shall have the following meanings,  unless  the
context otherwise requires:

     "Existing Holder" shall mean a Person who is a record  owner
of shares of Series B Preferred Stock as of the time in question.

     "Maximum Applicable Rate" shall mean 18% per annum  (but  in
no   event  higher  than  the  highest  amount  permitted   under
applicable law).

     "Minimum Applicable Rate" shall mean 4% per annum.

     "Potential  Holder"  shall mean a prospective  purchaser  of
shares  of  Series B Preferred Stock contacted  by,  or  who  has
contacted,  the  Remarketing Agent or the Company  in  connection
with the Remarketing and who shall have executed and delivered to
the  Remarketing Agent an agreement, prepared by the  Remarketing
Agent, whereby such prospective purchaser shall have agreed  that
it  will be bound by the Remarketing Procedures and that any  Bid
placed  by  it  shall constitute an irrevocable offer  by  it  to
purchase the shares subject to such Bid or such lesser number  of
shares  of  Series B Preferred Stock as it shall be  required  to
purchase   as  a  result  of  such  Remarketing  Procedures   and
containing  such  other  matters as the Remarketing  Agent  shall
specify   that   are  not  inconsistent  with   the   Remarketing
Procedures.

     "Qualifying  Change  of  Control" shall  mean  a  Change  of
Control  if  the  Market  Price of  one  share  of  Common  Stock
immediately prior to the consummation of such Change  of  Control
does not exceed the Threshold Amount.

     "Remarketing" shall mean the operation of the procedures set
forth in this Section 4.

     "Remarketing  Agent"  shall  mean  a  nationally  recognized
investment  banking  firm  or commercial  bank  selected  by  the
Company  (i) whose long-term unsecured debt is rated either  BBB-
or  better  by  Standard & Poor's Corporation  or  any  successor
thereto or baa3 or better by Moody Investors Service, Inc. or any
successor  thereto,  (ii) that has agreed to serve  hereunder  as
Remarketing  Agent,  and  (iii) notice  of  which  selection  and
agreement  has  been given to the Existing Holders  at  least  15
Business Days prior to the Submission Deadline.

     "Remarketing Procedures" shall mean the procedures set forth
in this Section 4.

     "Submission  Deadline" shall mean the earlier of  (i)  10:00
A.M.,  Houston, Texas time on [seventh anniversary of the Closing
Date]  or, if such date is not a Business Day, then at such  time
on  the next succeeding Business Day or (ii) 10:00 A.M., Houston,
Texas time on the thirtieth day following a Qualifying Change  of
Control.

     "Threshold Amount" shall mean $5.375 (provided, however,  if
the Company after [Closing Date] shall (i) declare a dividend  or
make  a  distribution  on its Common Stock in  shares  of  Common
Stock,  (ii)  subdivide or reclassify the outstanding  shares  of
Common Stock into a greater number of shares, or (iii) combine or
reclassify the outstanding Common Stock into a smaller number  of
shares,  then such amount shall be adjusted proportionately)  and
increased  by  8% per annum, compounded quarterly, from  [Closing
Date]  to the day immediately preceding the consummation  of  the
Change of Control.

     (B)  Orders by Existing Holders and Potential Holders.

          (i)   Prior to the Submission Deadline, the Remarketing
     Agent  shall  contact  Potential Holders  to  determine  the
     number  of shares, if any, of Series B Preferred Stock  that
     each  such Potential Holder offers to purchase, at  a  price
     equal  to  the Stated Value per share of Series B  Preferred
     Stock  plus accrued and unpaid dividends thereon as  of  the
     Dividend  Reset Date (the  "Reset Price"), if  the  Dividend
     Reset Rate is not less than the rate per annum specified  by
     such Potential Holder.
     
          (ii)  Prior  to the Submission Deadline, each  Existing
     Holder  may  submit  to  the Remarketing  Agent  in  writing
     information as to:
     
               (1)   the  number of shares, if any, of  Series  B
          Preferred Stock held by such Existing Holder that  such
          Existing  Holder  desires to continue to  hold  without
          regard to the Dividend Reset Rate;
          
               (2)   the  number of shares, if any, of  Series  B
          Preferred Stock held by such Existing Holder that  such
          Existing  Holder desires to continue  to  hold  if  the
          Dividend Reset Rate is not less than the rate per annum
          specified by such Existing Holder; and/or
          
               (3)   the  number of shares, if any, of  Series  B
          Preferred Stock held by such Existing Holder that  such
          Existing  Holder  desires to sell at  the  Reset  Price
          without regard to the Dividend Reset Rate.
          
          For   purposes   hereof,  the  communication   to   the
     Remarketing  Agent of the information referred  to  in  this
     Section  4(B)(ii) is hereinafter referred to as  an  "Order"
     and  each Existing Holder and each Potential Holder  placing
     an  Order is hereinafter referred to as a "Bidder"; an Order
     containing the information referred to in clause (1) of this
     Section  4(B)(ii)  is hereinafter referred  to  as  a  "Hold
     Order";  an  Order containing the information  contained  in
     clause  (2) of this Section 4(B)(ii) is hereinafter referred
     to  as  a  "Bid";  and an Order containing  the  information
     referred  to  in  clause  (3) of this  Section  4(B)(ii)  is
     hereinafter referred to as a "Sell Order".
     
          (C)   Deemed Submission of Orders by Existing  Holders.
     If an Order or Orders covering all of the shares of Series B
     Preferred  Stock held by an Existing Holder is not submitted
     to  the  Remarketing Agent prior to the Submission Deadline,
     the  Remarketing Agent shall deem a Sell Order to have  been
     submitted  on  behalf of such Existing Holder  covering  the
     number  of shares of Series B Preferred Stock held  by  such
     Existing  Holder and not subject to any Order  submitted  to
     the Remarketing Agent.
     
          (D)  Determination of Sufficient Clearing Bids, Winning
     Bid Rate and Dividend Reset Rate.
     
               (i)   Promptly following the Submission  Deadline,
          the   Remarketing  Agent  shall  assemble  all   Orders
          submitted to it (each such Order as submitted or deemed
          submitted   being hereinafter referred to  individually
          as  a  "Submitted Hold Order", a "Submitted Bid"  or  a
          "Submitted  Sell Order", as the case may be,  or  as  a
          "Submitted Order") and shall determine:
          
               (1)   the  excess, if any, of the total number  of
          outstanding shares of Series B Preferred Stock over the
          number  of shares of Series B Preferred Stock that  are
          the subject of Submitted Hold Orders (such excess being
          hereinafter referred to as the "Available Shares");
          
               (2)   from the Submitted Orders whether the number
          of  outstanding shares of Series B Preferred Stock that
          are  the subject of Submitted Bids by Potential Holders
          and  Existing Holders specifying a rate not higher than
          the  Maximum Applicable Rate is equal to or exceeds the
          number  of  outstanding shares of  Series  B  Preferred
          Stock  that  are the subject of Submitted Sell  Orders,
          and  if  such  excess  or  such equality  exists,  such
          Submitted Bids are hereinafter referred to collectively
          as "Sufficient Clearing Bids"); and
          
               (3)  if Sufficient Clearing Bids exist, the lowest
          rate specified in the Submitted Bids (the "Winning  Bid
          Rate") which if:
          
                    (a)  each Submitted Bid from Existing Holders
               specifying  such Winning Bid Rate  and  all  other
               Submitted  Bids  from Existing Holders  specifying
               lower  rates  were  accepted, would  entitle  such
               Existing   Holders  to  continue   to   hold   the
               outstanding  shares of Series  B  Preferred  Stock
               that are the subject of such Submitted Bids; and
               
                    (b)    each   Submitted  Bid  from  Potential
               Holders  specifying such Winning Bid Rate and  all
               other   Submitted  Bids  from  Potential   Holders
               specifying   lower  rates  were  accepted,   would
               entitle  such  Potential Holders to  purchase  the
               shares  of Series B Preferred Stock that  are  the
               subject of such Submitted Bids;
               
               would result in such Existing Holders described in
     subclause  (a) above continuing to hold an aggregate  number
     of outstanding shares of Series B Preferred Stock that, when
     added to the number of shares of Series B Preferred Stock to
     be   purchased  by  such  Potential  Holders  described   in
     subclause (b) above, would equal not less than the Available
     Shares.
     
          (ii) Promptly after the Remarketing Agent has made  the
     determinations pursuant to Section 4(D)(i), the  Remarketing
     Agent shall advise the Company of the Dividend Reset Rate as
     follows:
     
               (1)    if  Sufficient  Clearing  Bids  exist,  the
          Dividend  Reset Rate shall be equal to the Winning  Bid
          Rate so determined; provided, however, that the Winning
          Bid Rate shall not exceed the Maximum Applicable Rate;
          
               (2)  if Sufficient Clearing Bids do not exist, the
          Dividend  Reset  Rate  shall be equal  to  the  Maximum
          Applicable Rate;
          
               (3)  if all of the outstanding shares of Series  B
          Preferred  Stock are subject to Submitted Hold  Orders,
          the  Dividend Reset Rate shall be equal to the  Minimum
          Applicable Rate.
          
          (E)   Acceptance and Rejection of Orders and Allocation
     of Shares.
     
     Based   on  the  determinations  made  pursuant  to  Section
4(D)(i), Submitted Sell Orders shall be accepted or rejected, and
the  Remarketing Agent shall take such other action, as set forth
below:

          (i)   if Sufficient Clearing Bids have been made in the
     Remarketing, subject to the provisions of Section 4(E)(iii),
     Submitted  Bids and Submitted Sell Orders shall be  accepted
     or rejected in the following order of priority and all other
     Submitted Bids shall be rejected:
     
               (1)   the  Submitted Sell Orders of each  Existing
          Holder shall be accepted and the Submitted Bids of each
          Existing Holder specifying any rate that is higher than
          the  Winning Bid Rate shall be rejected, thus requiring
          each  such  Existing  Holder to  sell  the  outstanding
          shares  of  Series B Preferred Stock  subject  to  such
          Submitted Sell Orders or Submitted Bids;
          
               (2)   the  Submitted Bids of each Existing  Holder
          specifying any rate that is lower than the Winning  Bid
          Rate  shall  be  accepted,  thus  entitling  each  such
          Existing  Holder  to continue to hold  the  outstanding
          shares  of  Series B Preferred Stock  subject  to  such
          Submitted Bids;
          
               (3)   the Submitted Bids of each Potential  Holder
          specifying any rate that is lower than the Winning  Bid
          Rate  shall be accepted and such Potential Holder shall
          purchase  the  number of shares of Series  B  Preferred
          Stock subject to such Submitted Bids;
          
               (4)   the  Submitted Bids of each Existing  Holder
          specifying a rate that is equal to the Winning Bid Rate
          shall  be accepted, thus entitling such Existing Holder
          to continue to hold the outstanding shares of Series  B
          Preferred Stock subject to such Submitted Bids,  unless
          the  number of outstanding shares of Series B Preferred
          Stock  subject  to all such Submitted  Bids  placed  by
          Existing  Holders shall be greater than the  excess  of
          the  Available  Shares over the  number  of  shares  of
          Series  B  Preferred Stock subject  to  Submitted  Bids
          described  in  clauses  (2) and  (3)  of  this  Section
          4(E)(i)  (the "Remaining Shares").  In such event  such
          Existing  Holder shall be required to  sell  shares  of
          Series  B  Preferred Stock subject  to  such  Submitted
          Bids,  but  only  in an amount equal to the  difference
          between (1) the number of outstanding shares of  Series
          B  Preferred  Stock then held by such  Existing  Holder
          subject  to such Submitted Bids and (2) the product  of
          (x)  the number of Remaining Shares and (y) a fraction,
          the   numerator  of  which  shall  be  the  number   of
          outstanding shares of Series B Preferred Stock held  by
          such Existing Holder subject to such Submitted Bids and
          the  denominator  of  which  shall  be  the  number  of
          outstanding shares of Series B Preferred Stock  subject
          to  such  Submitted  Bids made  by  all  such  Existing
          Holders that specified a rate equal to the Winning  Bid
          Rate; and
          
               (5)   the Submitted Bids of each Potential  Holder
          specifying a rate that is equal to the Winning Bid Rate
          shall  be accepted, but only in an amount equal to  the
          product  of  (i) the difference between  the  Available
          Shares and the number of outstanding shares of Series B
          Preferred Stock subject to the Submitted Bids described
          in clauses (2), (3) and (4) of this Section 4(E)(i) and
          (ii)  a  fraction, the numerator of which shall be  the
          number  of  outstanding shares of  Series  B  Preferred
          Stock  subject to such Submitted Bids of such Potential
          Holder and the denominator of which shall be the number
          of  outstanding  shares  of Series  B  Preferred  Stock
          subject  to  such  Submitted  Bids  made  by  all  such
          Potential  Holders that specified a rate equal  to  the
          Winning Bid Rate.
          
          (ii) Subject to the provisions of Section 9(E)(iii), if
     Sufficient  Clearing  Bids  have  not  been  made   in   the
     Remarketing, Submitted Bids and Submitted Sell Orders  shall
     be  accepted or rejected in the following order of  priority
     and all other Submitted Bids shall be rejected:
     
               (1)   the  Submitted Bids of each Existing  Holder
          specifying any rate that is equal to or lower than  the
          Maximum   Applicable  Rate  shall  be  accepted,   thus
          entitling such Existing Holder to continue to hold  the
          outstanding shares of Series B Preferred Stock  subject
          to such Submitted Bids;
          
               (2)   the Submitted Bids of each Potential  Holder
          specifying any rate that is equal to or lower than  the
          Maximum   Applicable  Rate  shall  be  accepted,   thus
          entitling   such  Existing  Holder  to   purchase   the
          outstanding shares of Series B Preferred Stock  subject
          to such Submitted Bids; and
          
               (3)   the  Submitted Sell Orders of each  Existing
          Holder  shall  be accepted, and the Submitted  Bids  of
          each Existing Holder specifying any rate that is higher
          than  the  Maximum Applicable Rate shall  be  rejected,
          thus  requiring each such Existing Holder to  sell  the
          outstanding shares of Series B Preferred Stock  subject
          to  such  Submitted Sell Orders and Submitted Bids,  in
          both  cases  only in an amount equal to the  difference
          between (A) the number of outstanding shares of  Series
          B  Preferred  Stock then held by such  Existing  Holder
          subject to such Submitted Sell Orders or Submitted Bids
          and  (B) the product of (x) the difference between  the
          Available   Shares   and  the   aggregate   number   of
          outstanding shares of Series B Preferred Stock  subject
          to  Submitted Bids described in clauses (1) and (2)  of
          this Section 4(E)(ii) and (y) a fraction, the numerator
          of  which shall be the number of outstanding shares  of
          Series  B Preferred Stock held by such Existing  Holder
          subject to such Submitted Sell Orders or Submitted Bids
          and  the  denominator of which shall be the  number  of
          outstanding shares of Series B Preferred Stock  subject
          to all such Submitted Sell Orders and Submitted Bids.
          
          (iii)      If,  as a result of the procedures described
     in  this Section 4, any Existing Holder would be entitled or
     required  to sell, or any Potential Holder would be entitled
     or  required to purchase, a fraction of a share of Series  B
     Preferred Stock, the Remarketing Agent shall, in such manner
     as, in its sole discretion, it shall determine, round up  or
     down the number of shares of Series B Preferred Stock to  be
     sold or purchased by any Existing Holder or Potential Holder
     of  such  Series  B Preferred Stock so that  the  number  of
     shares of Series B Preferred Stock sold or purchased by each
     Existing Holder or Potential Holder shall be whole shares of
     Series B Preferred Stock.
     
     (F)   Closing  of Remarketing.  If any shares  of  Series  B
Preferred  Stock  are  to  be sold pursuant  to  the  Remarketing
Procedures, then such sale shall be consummated at the offices of
the  Company at 10:00 a.m. Eastern Standard Time on the  Business
Day  next succeeding the Submission Deadline (the "Dividend Reset
Date").   At such closing, all Existing Holders that are to  sell
shares  pursuant  to  the  Remarketing Procedures  shall  deliver
against   payment  in  same  day  funds  the  appropriate   stock
certificates representing the shares of Series B Preferred  Stock
to  be  sold duly endorsed or with appropriate stock powers.   If
any  purchaser fails to purchase shares required to be  purchased
on  the Dividend Reset Date (other than as a result solely  of  a
breach  by  the  applicable Existing Holder  of  its  obligations
hereunder)  and, if the Remarketing Agent does not purchase  such
shares  in  lieu of such purchaser, then the Dividend Reset  Rate
shall  be  the Maximum Applicable Rate notwithstanding the  other
Remarketing Procedures.

     (G)  Certain Matters relating to the Remarketing Agent.   If
there  is  no  Person  serving as Remarketing  Agent  as  of  the
Submission  Deadline  or  if  the Remarketing  Agent  resigns  or
otherwise  refuses  or  is  unable to act  as  Remarketing  Agent
hereunder,  then  the Dividend Reset Rate shall  be  the  Maximum
Applicable Rate.

     5.    Voting  Rights.  The Holders shall have the  following
voting rights with respect thereto:

          (A)   Each  share  of  Series B Preferred  Stock  shall
     entitle the holder thereof to the voting rights required  by
     applicable law.
     
          (B)   Until the Dividend Reset Date, Holders of  shares
     of  the  Series B Preferred Stock shall be entitled to  vote
     upon all matters upon which holders of Common Stock have the
     right  to vote, and Holders shall have that number of  votes
     on all such matters per share of Series B Preferred Stock as
     is  equal to the quotient (but in no event more than  5.334)
     of  (i)  8,000,000 divided by (ii) the number of outstanding
     shares  of  Series B Preferred Stock (provided, however,  if
     the  Company  after  [Closing  Date]  shall  (i)  declare  a
     dividend  or  make  a distribution on its  Common  Stock  in
     shares  of  Common Stock, (ii) subdivide or  reclassify  the
     outstanding shares of Common Stock into a greater number  of
     shares,  or  (iii)  combine  or reclassify  the  outstanding
     Common  Stock  into  a smaller number of shares,  then  such
     quotient shall be adjusted proportionately) as of the record
     date  for the determination of the shareholders entitled  to
     vote  on  such  matters,  or, if  no  such  record  date  is
     established as of the date such vote is taken or any written
     consent  of  shareholders is solicited,  such  votes  to  be
     counted  together  with all other shares  of  capital  stock
     having  general voting powers and not separately as a class.
     Fractional  votes shall not, however, be permitted  and  any
     fractional  voting rights resulting from the  above  formula
     shall be rounded up to the nearest whole number.
     
          (C)   In addition to the voting rights accorded to  the
     Holders of the Series B Preferred Stock in Sections 4(A) and
     4(B),  the consent of the Holders of at least a Majority  of
     the  Series B Preferred Stock, voting separately as a single
     class,  in  person or by proxy, either in writing without  a
     meeting or at an annual or a special meeting of shareholders
     called for the purpose, shall be necessary to (i) amend,  by
     way  of  merger or otherwise, the Articles,  so  as  to  (A)
     affect  adversely the rights, preferences or  privileges  of
     Holders or (B) authorize, create or issue any shares of  (1)
     Parity  Securities that (x) adversely affect the  rights  of
     the  Series B Preferred Stock to vote separately as a  class
     on  any matter or (y) with other existing Parity Securities,
     have an aggregate liquidation preference in excess of $150.0
     million or (2) Senior Securities (or amend the provisions of
     any  existing class of Capital Stock to make such  class  of
     Capital  Stock  a  class of (1) Parity Securities  that  (x)
     adversely affect the rights of the Series B Preferred  Stock
     to  vote  separately as a class on any matter  or  (y)  with
     other   existing  Parity  Securities,  have   an   aggregate
     liquidation  preference in excess of $150.0 million  or  (2)
     Senior   Securities)   or  (ii)  consummate   any   Business
     Combination  (A)  unless (x) the Holders  of  the  Series  B
     Preferred Stock shall have the right to receive or  continue
     to  hold  in  the  surviving corporation  in  such  Business
     Combination  the  same number of shares of  preferred  stock
     with   substantially  the  same  rights,   preferences   and
     privileges,  as  correspond to the Series B Preferred  Stock
     held   immediately   prior  to  such  Business   Combination
     (provided,  however, that if the Company  or  the  surviving
     corporation  becomes a Subsidiary of another corporation  in
     such  Business Combination and the holders of  Common  Stock
     became  entitled  to  receive Capital Stock  in  such  other
     corporation,  then  the holders of the  Series  B  Preferred
     Stock  shall be entitled to receive such shares of preferred
     stock  with  substantially the same rights, preferences  and
     privileges in such other corporation) and (y) such surviving
     or  other  corporation, as the case may be, has  immediately
     after  the  consummation  of such  Business  Combination  no
     Senior  Securities or Parity Securities (other  than  Parity
     Securities having an aggregate liquidation preference not in
     excess  of $150.0 million and which do not adversely  affect
     the   rights  of  the  Series  B  Preferred  Stock  to  vote
     separately  as  a class on any matter) and (B)  unless  such
     Business  Combination would not result in a  breach  of  any
     obligations   of  the  Company  under  this   Statement   of
     Resolution.  In all cases where the Holders have  the  right
     to  vote  separately as a class, all such Holders  shall  be
     entitled to one vote for each share held by them.
     
          (D)   Whenever, at any time or times, dividends payable
     on  any  of the Series B Preferred Stock shall be in arrears
     in  an aggregate amount equivalent to six (6) full quarterly
     dividends, there shall be vested in the Holders,  voting  as
     one  class  and with one vote for each share, the  right  to
     elect  two  directors of the Company.   Such  right  of  the
     Holders  to  vote for the election of two directors  may  be
     exercised  at  any annual meeting or at any special  meeting
     called for such purpose, or at any adjournment thereof until
     all  arrearages and dividends on the outstanding  shares  of
     Series  B  Preferred Stock shall have been paid in  full  or
     declared  and  funds  sufficient  for  the  payment  thereof
     deposited  in trust and when so paid or provided  for,  then
     all  rights  of  the Holders under this Section  5(D)  shall
     cease.   So  long  as  such  right to  vote  continues,  the
     Secretary of the Company may call, and upon written  request
     of  the  Holders  of  ten  percent  (10%)  or  more  of  the
     outstanding Series B Preferred Stock addressed to him at the
     principal  office  of  the Company,  shall  call  a  special
     meeting  of  the  Holders  for  the  election  of  such  two
     directors  as provided herein.  Such meeting shall  be  held
     within  fifty  (50) days after delivery of such  request  to
     such Secretary, at the place and upon the notice provided by
     law  and  in  the Bylaws of the Company for the  holding  of
     meetings of its shareholders.  If at any such meeting or any
     adjournment  thereof the Holders of at least a  majority  of
     the then outstanding shares of Series B Preferred Stock then
     entitled  to  vote  in  such election shall  be  present  or
     represented  by proxy, then, by vote of the  Holders  of  at
     least  the majority of all such shares of Series B Preferred
     Stock  present  or  represented in such  meeting,  the  then
     authorized  number  of  directors of the  Company  shall  be
     increased by two and the Holders of such shares of Series  B
     Preferred  Stock  shall  be  entitled  to  elect  such   two
     additional  directors.   Directors so  elected  shall  serve
     until  the  next  annual meeting or until  their  successors
     shall be elected and shall qualify; provided, however,  that
     whenever  all  arrearages and dividends on  all  outstanding
     shares  of Series B Preferred Stock shall have been paid  or
     declared  and  funds  sufficient  for  the  payment  thereof
     deposited in trust, the term of the office of the persons so
     elected  as  directors shall forthwith  terminate,  and  the
     number of the whole Board shall be reduced accordingly.   In
     case of any vacancy occurring among the directors so elected
     the  remaining director who shall have been so  elected  may
     appoint a successor to hold office for the unexpired term of
     the director whose place shall be vacant.  If both directors
     so  elected by the Holders shall cease to serve as directors
     before  their  term  shall expire, the  Holders  may,  at  a
     special  meeting  of such Holders called as provided  above,
     elect  successors to hold office for the unexpired terms  of
     the  directors whose places shall be vacant.   In  any  vote
     under  this  Section 5(D), each share of Series B  Preferred
     Stock shall be entitled to vote.
     
     6.     Liquidation  Preference.   In  the   event   of   any
Liquidation,  after  payment  or provision  for  payment  by  the
Company of the debts and other liabilities of the Company and the
liquidation  preference  of any Senior  Securities,  each  Holder
shall be entitled to receive an amount in cash for each share  of
the then outstanding Series B Preferred Stock held by such Holder
equal  to the Stated Value per share plus an amount equal to  all
accrued but unpaid dividends thereon, whether or not earnings are
available  in  respect of such dividends or such  dividends  have
been declared, to and including the date full payment is tendered
to the Holders with respect to such Liquidation and no more (such
amount  being referred to herein as the "Liquidation Preference")
before  any  distribution shall be made to  the  holders  of  any
Junior  Securities upon the Liquidation of the Company.  In  case
the  assets  of the Company available for payment to the  Holders
are  insufficient to pay the full Liquidation Preference  on  all
outstanding  shares  of  the Series B  Preferred  Stock  and  all
outstanding Parity Securities in the amounts to which the holders
of  such  shares  are  entitled, then the entire  assets  of  the
Company  available for payment to the Holders will be distributed
ratably among the Holders of the Series B Preferred Stock and the
holders of the Parity Securities, based upon the aggregate amount
due  on  such  shares upon Liquidation.  Written  notice  of  any
Liquidation of the Company, stating a payment date and the  place
where  the distributable amounts shall be payable, shall be given
by  mail,  postage prepaid, not less than 30 days  prior  to  the
payment  date  stated therein, to the Holders of  record  of  the
Series  B  Preferred Stock, if any, at their respective addresses
as the same shall appear on the books of the Company.

     7.   Redemptions.

          (A)   The  Series B Preferred Stock may be redeemed  by
     the  Company  at  any time to the extent  of  funds  legally
     available therefor, in whole but not in part, in the  manner
     provided  for in Section 7, at a redemption price per  share
     equal  to the Stated Value plus accrued but unpaid dividends
     to  and  including the date the redemption  price  is  paid,
     payable in same day funds, (the "Redemption Price").
     
          (B)   Notice of redemption (the "Notice of Redemption")
     of  the  Series  B Preferred Stock shall be sent  by  or  on
     behalf of the Company, by first class mail, postage prepaid,
     to  the Holders of record of the Series B Preferred Stock at
     their  respective  addresses as they  shall  appear  on  the
     records  of the Company, not less than forty-five (45)  days
     nor  more than ninety (90) days prior to the date fixed  for
     redemption  (the  "Redemption  Date")  (1)  notifying   such
     holders  of  the  election of the  Company  to  redeem  such
     shares, of the Redemption Date and the Redemption Price, and
     (2)  stating  the  place or places at  which  the  Series  B
     Preferred  Stock shall, upon presentation and  surrender  of
     the certificates evidencing such shares, be redeemed.
     
          (C)   If Notice of Redemption shall have been given  as
     hereinbefore provided, each Holder shall be entitled to  all
     preferences,  relative  and other rights  accorded  by  this
     resolution  (including the right to receive  dividends)  and
     the  TBCA until and including the Redemption Date.   If  the
     Company  shall  default in making payment on the  Redemption
     Date, then each Holder shall be entitled to all preferences,
     relative  and  other  rights  accorded  by  this  resolution
     (including  the  right to receive dividends)  and  the  TBCA
     until  and including the date (the "Actual Redemption Date")
     when  the  Company actually makes payment of the  Redemption
     Price  to  the Holders.  From and after the Redemption  Date
     or,  if  the  Company  shall default in  making  payment  or
     delivery  as  aforesaid,  the Actual  Redemption  Date,  the
     Series  B  Preferred Stock shall no longer be deemed  to  be
     outstanding, and all rights of the Holders shall  cease  and
     terminate,  except the right of the Holders, upon  surrender
     of  certificates therefor, to receipt of amounts to be  paid
     hereunder.
     
     8.    Limitations on Series B Preferred Stock.  No share  or
shares  of Series B Preferred Stock the Company acquires  through
redemption,  option, exchange or otherwise will be reissued,  and
all such shares will be canceled, retired and eliminated from the
shares  of  Series B Preferred Stock which the  Company  will  be
authorized  to  issue.  The Company will not  issue  any  further
shares of Series B Preferred Stock other than pursuant to Section
3.

     9.    Waivers.   With the written consent of  Holders  of  a
Majority of the Series B Preferred Stock, the obligations of  the
Company  and  the rights of the Holders under this  Statement  of
Resolution  may  be waived (either generally or in  a  particular
instance, either retroactively or prospectively and either for  a
specified period of time or indefinitely).  Upon the effectuation
of  each  such  waiver,  the Company will promptly  give  written
notice  thereof to the Holders who have not previously  consented
thereto in writing.



           Remainder of page intentionally left blank.
                                
                                
                                
     I,  Joseph  T. Leary, being the Vice President, Finance  and
Treasurer of EEX Corporation, do hereby execute this Statement of
Resolution, declaring and certifying that the facts herein stated
are  true,  and accordingly have hereunto set my hand this  _____
day of ____________ 1998.


                                                            
                                   Joseph T. Leary
                                   Vice President and Treasurer




     


<PAGE>



                                       Exhibit 7.2(b)(ii)(A)
                                                            
                   [FORM OF SERIES A WARRANT]
     
     
     THESE  SECURITIES  HAVE NOT BEEN REGISTERED  UNDER  THE
     SECURITIES  ACT  OF 1933, AS AMENDED  (THE  "SECURITIES
     ACT"),  OR  ANY STATE SECURITIES LAWS.  THEY HAVE  BEEN
     ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW  TO,
     OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF
     IN  VIOLATION OF ANY APPLICABLE SECURITIES LAWS.   THEY
     MAY   NOT   BE   SOLD,  OFFERED  FOR   SALE,   PLEDGED,
     HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF
     AN  EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR
     AN   OPINION  OF  COUNSEL,  SATISFACTORY  IN  FORM  AND
     SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS  NOT
     REQUIRED  UNDER  THE SECURITIES ACT AND ANY  APPLICABLE
     STATE SECURITIES LAWS.

                        SERIES A WARRANT

No. 1                                           January ___, 1999

        To Purchase [10,500,000] shares of Common Stock,
          par value $.01 per share, of EEX Corporation

1.   Definitions.  Unless  the context otherwise  required,  when
     used herein the following terms shall have the meaning indicated.

     "Affiliate"  means  with respect to any  Person,  any  other
     Person   directly,  or  indirectly  through  one   or   more
     intermediaries, controlling, controlled by or  under  common
     control  with such Person. For purposes of this  definition,
     the  term  "control"  (and correlative terms  "controlling,"
     "controlled  by"  and  "under common  control  with")  means
     possession  of  the  power,  whether  by  contract,   equity
     ownership or otherwise, to direct the policies or management
     of a Person.
     
     "Beneficially Own" or "Beneficial Ownership" is  defined  in
     Rules  13d-3  and  13d-5 of the Exchange  Act,  but  without
     taking   into   account  any  contractual  restrictions   or
     limitations on voting or other rights.
     
     "Board" means the Board of Directors of the Company.
     
     "Business Combination" means (i) any consolidation,  merger,
     share  exchange or similar business combination  transaction
     involving  the  Company with any Person or  (ii)  the  sale,
     assignment  conveyance, transfer, lease or other disposition
     by the Company of all or substantially all of its assets.
     
     "Business Day" means any day except Saturday, Sunday and any
     day which shall be a legal holiday or a day on which banking
     institutions  in Houston, Texas or New York City,  New  York
     generally  are  authorized  or  required  by  law  or  other
     governmental actions to close.
     
     "Capital Stock" means (i) with respect to any Person that is
     a  corporation  or  company, any and all shares,  interests,
     participations or other equivalents (however designated)  of
     capital  or  capital  stock of such  Person  and  (ii)  with
     respect  to any Person that is not a corporation or company,
     any  and  all partnership or other equity interests of  such
     Person.
     
     
     "Change  of  Control" shall mean any event constituting  (a)
     the  consummation of any Business Combination  except  where
     (i)  the  shareholders of the Company immediately  prior  to
     such  Business  Combination own (in substantially  the  same
     proportion relative to each other as such shareholders owned
     the Common Stock immediately prior to such consummation) (x)
     forty  percent  (40%)  or more of the Voting  Stock  of  the
     surviving entity on both a Modified Non Diluted Basis and  a
     Modified Fully Diluted Basis immediately after such Business
     Combination,  and (y) forty percent (40%)  or  more  of  the
     outstanding common stock of the surviving entity on  both  a
     Modified  Non  Diluted  Basis and a Modified  Fully  Diluted
     Basis immediately after such Business Combination, (ii)  the
     members of the Board immediately prior to the entering  into
     the   agreement   relating  to  such  Business   Combination
     constitute at least a majority of the Board or the board  of
     directors  of  the surviving entity immediately  after  such
     Business Combination, with no agreements or arrangements  in
     place  immediately after such consummation that would result
     in  the  members  of  the  Board immediately  prior  to  the
     entering  into  the  agreement  relating  to  such  Business
     Combination ceasing to constitute at least a majority of the
     Board or the board of directors of the surviving entity  and
     (iii)  no  Non-Financial  Person or Group  of  Non-Financial
     Persons is the Beneficial Owner of 20% or more of the  total
     outstanding  Voting Stock or common stock of  the  surviving
     entity and no Financial Person or Group of Financial Persons
     is  the  Beneficial  Owner  of 35%  or  more  of  the  total
     outstanding  Voting Stock or common stock of  the  surviving
     entity  or  (b)  any Non-Financial Person or Group  of  Non-
     Financial persons acquiring Beneficial Ownership of  20%  or
     more  of the total outstanding Voting Stock or Common  Stock
     of the Company or any Financial Person or Group of Financial
     Persons acquiring Beneficial Ownership of 35% or more of the
     total  outstanding  Voting Stock  or  Common  Stock  of  the
     Company.
     
     "Common  Stock" means the Company's common stock, par  value
     $.01 per share, and any Capital Stock for or into which such
     Common Stock hereafter is exchanged, converted, reclassified
     or  recapitalized by the Company or pursuant to an agreement
     or Business Combination to which the Company is a party.
     
     "Common  Stock Equivalents" means (without duplication  with
     any  other Common Stock or common stock, as the case may be,
     or  Common  Stock  Equivalents) rights,  warrants,  options,
     convertible    securities   or   exchangeable    securities,
     exercisable   for  or  convertible  or  exchangeable   into,
     directly  or indirectly, Common Stock, or common  stock,  as
     the case may be, whether at the time of issuance or upon the
     passage  of  time  or the occurrence of some  future  event,
     including the Warrants.
     
     "Company" means EEX Corporation, a Texas corporation.
     
     "Early  Exercise Event" means the occurrence of any  of  the
     following:  (i)  an  agreement  providing  for  a   Business
     Combination  is  approved  by the  Board  if  such  Business
     Combination,  if consummated, would result in  a  Change  of
     Control, (ii) a Tender Offer for the Company's securities is
     approved or recommended by the Board, (iii) Warburg,  Pincus
     Equity  Partners,  L.P. and its Affiliates Beneficially  Own
     less  than  10%  of  the outstanding  Voting  Stock  of  the
     Company,   (iv)   there  is  a  redemption,  repurchase   or
     reacquisition  by the Company of Rights issued  pursuant  to
     the Rights Agreement or any waiver of the application of the
     Rights  Agreement to any Beneficial Owner or  (v)  any  Non-
     Financial   Person   or   Group  of  Non-Financial   Persons
     Beneficially  Own  more than 20% of the  outstanding  Voting
     Stock  of  the Company or any Financial Person or  Group  of
     Financial  Persons Beneficially Own more  than  35%  of  the
     outstanding Voting Stock of the Company.
     
     "Exchange Act" means the Securities Exchange Act of 1934, as
     amended,  or  any  successor  statute,  and  the  rules  and
     regulations promulgated thereunder.
     
     "Excluded Stock" means (i) shares of Common Stock issued  by
     the  Company as a stock dividend payable in shares of Common
     Stock,   or  upon  any  subdivision  or  split-up   of   the
     outstanding  shares of Capital Stock in each  case  with  is
     subject  to Section 13(B), or upon conversion of  shares  of
     Capital  Stock  (but not the issuance of such Capital  Stock
     which   will  be  subject  to  the  provisions  of   Section
     13(A)(iii)),  (ii) shares of Common Stock to  be  issued  to
     employees, consultants and advisors of the Company  pursuant
     to  options  granted prior to the date of issuance  of  this
     Warrant  and pursuant to options granted after the  date  of
     issuance of this Warrant if the exercise price per share  of
     Common Stock on the date of such grant equals or exceeds the
     Market Price of a share of Common Stock on the date of  such
     grant.
     
     "Exercise Price" has the meaning given to it in Section 2.
     
     "Expiration Time" has the meaning given to it in Section 3.
     
     "Financial  Person" means any Person that (i) is,  or  holds
     itself  out  as being, engaged primarily in the business  of
     investing,  reinvesting,  owning,  holding  or  trading   in
     securities,  and  (ii) together with its Affiliates  is  not
     engaged  in  (x)  any  significant  activities  other   than
     financial  services, insurance or investment  activities  or
     (y)  directly  or  indirectly  through  Affiliates,  in  any
     industrial activities, including the oil and gas and  energy
     industry.
     
     "Group" means a group as contemplated by Section 13(d)(3) of
     the Exchange Act.
     
     "Market Price" means, with respect to a particular security,
     on  any given day, the last reported sale price regular  way
     or,  in case no such reported sale takes place on such  day,
     the average of the last closing bid and asked prices regular
     way,  in  either  case on the principal national  securities
     exchange  on  which the applicable securities is  listed  or
     admitted to trading, or if not listed or admitted to trading
     on  any  national securities exchange, (i) the closing  sale
     price  for  such day reported by the NASDAQ Stock Market  if
     such  security is traded over-the-counter and quoted in  the
     NASDAQ  Stock Market, or (ii) if such security is so traded,
     but  not so quoted, the average of the closing reported  bid
     and  asked prices of such security as reported by the NASDAQ
     Stock  Market  or any comparable system, or  (iii)  if  such
     security  is  not listed on the NASDAQ Stock Market  or  any
     comparable system, the average of the closing bid and  asked
     prices   as  furnished  by  two  members  of  the   National
     Association of Securities Dealers, Inc. selected  from  time
     to  time  by the Company for that purpose.  If such security
     is  not  listed  and traded in a manner that the  quotations
     referred  to  above  are available for the  period  required
     hereunder, the Market Price per share of Common Stock  shall
     be deemed to be the fair value per share of such security as
     determined  in good faith by the Board of Directors  of  the
     Company.
     
     "Modified  Fully-Diluted  Basis" shall  mean  a  calculation
     based  on  the  then outstanding shares of Voting  Stock  or
     common  stock, as the case may be, plus all shares of Voting
     Stock   or   common   stock  acquirable  pursuant   to,   or
     constituting, Common Stock Equivalents, but excluding 50% of
     the  Voting Stock or common stock acquirable pursuant to the
     then outstanding Warrants.
     
     "Modified Non-Diluted Basis" shall mean a calculation  based
     on  the  then outstanding shares of Voting Stock  or  common
     stock,  as  the  case may be, and without giving  effect  to
     outstanding Common Stock Equivalents, but including (i)  50%
     of  the shares of common stock then acquirable upon exercise
     of  the  then  outstanding Warrants and (ii) the  number  of
     shares  of  common  stock equal to (a) the aggregate  Market
     Price  as  of the date of such Business Combination  of  all
     shares  of  common  stock acquirable upon  exercise  of  all
     outstanding  employee stock options of the  relevant  entity
     that have an exercise price of less than the Market Price of
     common  stock  as  of the date of such Business  Combination
     less  the  aggregate  exercises price of  all  such  options
     divided  by (b) the Market Price of common stock as  of  the
     date of such Business Combination.
     
     "Non-Financial  Person"  means any  Person  that  is  not  a
     Financial Person.
     
     "Ordinary  Cash  Dividends"  means  any  cash  dividend   or
     distribution which, when combined on a per share  of  Common
     Stock  basis  with the per share amounts of all  other  cash
     dividends  and cash 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
     Section  13  and  excluding cash dividends or  distributions
     that  resulted in an adjustment to the Exercise Price), does
     not exceed 5% of the Market Price of a share of Common Stock
     on  the  trading  day  immediately  preceding  the  date  of
     declaration of such dividend or distribution.
     
     "Person"  means an individual or a corporation, partnership,
     trust,  incorporated or unincorporated association,  limited
     liability  company,  joint  venture,  joint  stock  company,
     government  (or an agency or political subdivision  thereof)
     or other entity of any kind.
     
     "Preferred Stock" means the Series B 8% Cumulative Perpetual
     Preferred Stock of the Company or successor preferred  stock
     as  contemplated by Section 5(C)(ii)(A) of the Statement  of
     Resolution.
     
     "Pro  Rata  Repurchases" means any  purchase  of  shares  of
     Common  Stock  by  the  Company  or  any  Affiliate  thereof
     pursuant  to any tender offer or exchange offer  subject  to
     Section 13(e) of the Exchange Act, or pursuant to any  other
     offer  available  to  substantially all  holders  of  Common
     Stock,  whether  for cash, shares of capital  stock  of  the
     Company,  other  securities  of the  Company,  evidences  of
     indebtedness of the Company or any other person or any other
     property  (including, without limitation, shares of  capital
     stock,  other securities or evidences of indebtedness  of  a
     subsidiary  of  the  Company), or any  combination  thereof,
     effected   while  this  Warrant  is  outstanding;  provided,
     however,  that "Pro Rata Repurchase" shall not  include  any
     purchase  of shares by the Company or any Affiliate  thereof
     made  in accordance with the requirements of Rule 10b-18  as
     in effect under the Exchange Act. The "Effective Date" of  a
     Pro  Rata  Repurchase shall mean the date of  acceptance  of
     shares for purchase or exchange under any tender or exchange
     offer which is a Pro Rata Repurchase or the date of purchase
     with respect to any Pro Rata Repurchase that is not a tender
     or exchange offer.
     
     "Purchase Agreement" means the Purchase Agreement, dated  as
     of  December 22, 1998, among the Company and the  purchasers
     named therein, including all schedules and exhibits thereto.
     
     "Rights  Agreement" means the Rights Agreement dated  as  of
     September  10,  1996 between the Company  and  Harris  Trust
     Company of New York, a New York trust company, as amended.
     
     "Rights" is defined in Section 14.
     
     "Securities  Act"  means  the Securities  Act  of  1933,  as
     amended,  or  any  successor  statute,  and  the  rules  and
     regulations promulgated thereunder.
     
     "Shares" is defined in Section 2.
     
     "Stated  Value" is an amount equal to $100.00 per  share  of
     Preferred Stock.
     
     "Statement  of Resolution" means the Statement of Resolution
     relating to the Preferred Stock filed with the Secretary  of
     State of the State of Texas on January _____, 1999.
     
     
     "Subsidiary" of a Person means (i) a corporation, a majority
     of   whose   stock   with  voting  power,   under   ordinary
     circumstances,  to  elect  directors  is  at  the  time   of
     determination, directly or indirectly, owned by such  Person
     or  by one or more Subsidiaries of such Person, or (ii)  any
     other entity (other than a corporation) in which such Person
     or  one  or  more Subsidiaries of such Person,  directly  or
     indirectly,  at  the date of determination  thereof  has  at
     least a majority ownership interest.
     
     "Shares" has the meaning given to it in Section 2.
     
     "TBCA" means the Texas Business Corporation Act, as amended,
     or any successor statute or other legislation.
     
     "Tender Offer" means any transaction to which Regulation 14D
     of the Exchange Act applies.
     
     "Voting  Stock"  of  a Person means Capital  Stock  of  such
     Person of the class or classes pursuant to which the holders
     thereof   have  the  general  voting  power  under  ordinary
     circumstances  to  vote  in the election  of  the  board  of
     directors, managers or trustees of such Person.
     
     "Warrantholder" has the meaning given to it in Section 2.
     
     "Warrants"  means collectively this Warrant, the seven  year
     warrants to purchase an aggregate 2,500,000 shares  and  the
     seven-year  warrants  to  purchase  an  aggregate  8,000,000
     shares, all of which were issued to the purchasers named  in
     the Purchase Agreement pursuant to the Purchase Agreement.
     
2.   Number  of Shares; Exercise Price. This certifies that,  for
     value  received,  [Name of Warburg, Pincus  entity]  or  its
     registered assigns (the "Warrantholder") is entitled, upon the
     terms and subject to the conditions hereinafter set forth, to
     acquire from the Company, in whole or in part, up to an aggregate
     of [10,500,000] fully paid and nonassessable shares of Common
     Stock, par value $0.01 per share, (the "Shares") of the Company,
     at a purchase price of $12.00 per Share (the "Exercise Price").
     The  number of Shares and the Exercise Price are subject  to
     adjustment as provided herein, and all references to "Shares",
     "Common Stock" and "Exercise Price" herein shall be deemed to
     include any such adjustment or series of adjustments.

3.   Exercise of Warrant; Term.  The right to purchase the Shares
     represented by this Warrant are exercisable, in whole or  in
     part  by the Warrantholder, at any time or from time to time
     after  the earlier of August 31, 1999 and the occurrence  of
     an  Early  Exercise Event but in no event later  than  11:59
     p.m.  Central  Time, on January ___, 2009  (the  "Expiration
     Time"),  by (a) the surrender of this Warrant and Notice  of
     Exercise  annexed  hereto, duly completed  and  executed  on
     behalf of the Warrantholder, at the office of the Company in
     Houston,  Texas  (or  such other office  or  agency  of  the
     Company  in the United States as it may designate by  notice
     in  writing  to  the  Warrantholder at the  address  of  the
     Warrantholder  appearing on the books of the  Company),  and
     (b)  payment  of  the Exercise Price for the Shares  thereby
     purchased at the election of the Warrantholder in one of the
     following manners:

          (i)  by tendering in cash, by certified or cashier's check or by
            wire transfer payable to the order of the Company; or
          
          (ii) by having the Company withhold shares of Common Stock
            issuable upon exercise of the Warrant equal in value to the
            aggregate Exercise Price as to which this Warrant is so exercised
            based on the Market Price of the Common Stock on the trading day
            prior to the date on which this Warrant and the Notice of
            Exercise are delivered to the Company; or

          (iii)     by tendering to the Company that number of shares of
            Preferred Stock rounded to the nearest whole share equal to the
            aggregate Exercise Price as to which this Warrant is so exercised
            divided by the sum of (1) the Stated Value of the Preferred Stock
            plus (2) any accrued but unpaid dividends thereon.
     
     If  the Warrantholder does not exercise this warrant in  its
     entirety, the Warrantholder will be entitled to receive from
     the  Company  within a reasonable time, not exceeding  three
     (3)  business days, a new warrant in substantially identical
     form for the purchase of that number of Shares equal to  the
     difference  between  the number of Shares  subject  to  this
     Warrant and the number of Shares as to which this Warrant is
     so  exercised. Notwithstanding the foregoing, if the Company
     fails  to  obtain the approval of the Company's shareholders
     of  the issuance of Common Stock pursuant to this Warrant as
     contemplated  by Section 5.9 of the Purchase Agreement,  the
     Warrantholder may only exercise this Warrant in  the  manner
     permitted  by  Section 3(b)(ii) and upon any  such  exercise
     receive, in lieu of the shares of Common Stock, cash  in  an
     amount  equal to the product of (i) the number of shares  of
     Common  Stock  that would have been otherwise  issuable  and
     (ii) the Market Price of the Common Stock on the trading day
     prior  to  the date on which this Warrant and the Notice  of
     Exercise  are  delivered to the Company, such  amount  being
     paid  by certified or cashiers check or by wire transfer  in
     same  day  funds  on the fourth business day following  such
     exercise.

4.   Issuance  of  Shares; Authorization; Listing.   Certificates
     for  Shares  issued upon exercise of this  Warrant  will  be
     issued  in  such  name  or names as  the  Warrantholder  may
     designate  and  will be delivered to such  named  Person  or
     Persons  within a reasonable time, not to exceed  three  (3)
     business days after the date on which this Warrant has  been
     duly exercised in accordance with the terms of this Warrant.
     The  Company hereby represents and warrants that any  Shares
     issued upon the exercise of this Warrant in accordance  with
     the  provisions  of Section 3 will, upon such  exercise,  be
     duly  and  validly  authorized and issued,  fully  paid  and
     nonassessable  and  free from all taxes, liens  and  charges
     (other than liens or charges created by or imposed upon  the
     Warrantholder or taxes in respect of any transfer  occurring
     contemporaneously therewith).  The Company agrees  that  the
     Shares  so issued will be deemed to have been issued to  the
     Warrantholder  as of the close of business on  the  date  on
     which  this  Warrant and payment of the Exercise  Price  are
     delivered  to  the Company in accordance with the  terms  of
     this  Warrant, notwithstanding that the stock transfer books
     of   the   Company  may  then  be  closed  or   certificates
     representing  such Shares may not be actually  delivered  on
     such  date.  The Company will at all times reserve and  keep
     available, out of its authorized but unissued Common  Stock,
     solely for the purpose of providing for the exercise of this
     Warrant,  the  aggregate number of shares  of  Common  Stock
     issuable upon exercise of this Warrant. The Company will (i)
     procure, at its sole expense, the listing of the Shares  and
     other  securities  issuable upon exercise of  this  Warrant,
     subject  to  issuance  or notice of issuance  on  all  stock
     exchanges on which the Common Stock or such other securities
     are  then listed or traded and (ii) maintain the listing  of
     such  Shares  or such other securities after issuance.   The
     Company  will take all action as may be necessary to  ensure
     that  the  Shares  may be issued without  violation  of  any
     applicable  law or regulation or of any requirement  of  any
     securities  exchange  on  which the  Shares  are  listed  or
     traded.

5.   No  Fractional  Shares  or Scrip.  No fractional  Shares  or
     scrip  representing fractional Shares shall be  issued  upon
     any  exercise  of this Warrant.  In lieu of  any  fractional
     Share   to  which  the  Warrantholder  would  otherwise   be
     entitled,  the Warrantholder shall be entitled to receive  a
     cash  payment equal to the Market Price of the Common  Stock
     less the Exercise Price for such fractional share.

6.   No  Rights  as  Shareholders; Transfer Books.  This  Warrant
     does not entitle the Warrantholder to any voting rights or other
     rights as a shareholder of the Company prior to the date  of
     exercise hereof. The Company will at no time close its transfer
     books  against transfer of this Warrant in any manner  which
     interferes with the timely exercise of this Warrant.

7.   Charges, Taxes and Expenses. Certificates for shares  issued
     upon exercise of this Warrant shall be issued in the name of the
     Warrantholder. Issuance of certificates for shares upon  the
     exercise of this Warrant shall be made without charge to the
     Warrantholder for any issue or transfer tax or other incidental
     expense in respect of the issuance of such certificates, all of
     which taxes and expenses shall be paid by the Company.

8.   Transfer/Assignment.  This Warrant and any rights  hereunder
     are not transferable by the Warrantholder, in whole or in part,
     in the absence of any effective registration statement related to
     this Warrant or an opinion of counsel, satisfactory in form and
     substance to the Company, that such registration is not required
     under the Securities Act and any applicable state securities
     laws. Subject to compliance with the preceding sentence, this
     Warrant and all rights hereunder are transferable, in whole or in
     part, upon the books of the Company by the registered holder
     hereof in person or by duly authorized attorney, and  a  new
     warrant shall be made and delivered by the Company, of the same
     tenor and date as this Warrant but registered in the name of the
     transferee, upon surrender of this Warrant, duly endorsed, to the
     office or agency of the Company described in Section 2.  All
     expenses, taxes (other than stock transfer taxes) and  other
     charges payable in connection with the preparation, execution and
     delivery of the new warrants pursuant to this Section 8 shall be
     paid  by the Company. The restrictions imposed by the  first
     sentence of this Section 8 shall terminate as to the Warrant (i)
     when such security has been effectively registered under the
     Securities  Act  and  disposed of  in  accordance  with  the
     registration statement covering such security, or (ii) when, in
     the opinion of counsel for the Company, such restrictions are no
     longer  required  in  order to achieve compliance  with  the
     Securities Act.

9.   Exchange   and  Registry  of  Warrant.   This   Warrant   is
     exchangeable, upon the surrender hereof by the Warrantholder
     at  the office or agency of the Company described in Section
     2,  for  a  new warrant or warrants of like tenor  and  date
     representing the right to purchase in the aggregate  a  like
     number  of shares. The Company shall maintain at the  office
     or agency described in Section 2 a registry showing the name
     and address of the Warrantholder as the registered holder of
     this  Warrant.  This Warrant may be surrendered for exchange
     or  exercise, in accordance with its terms, at the office of
     the  Company, and the Company shall be entitled to  rely  in
     all  respects, prior to written notice to the contrary, upon
     such registry.

10.  Loss,  Theft,  Destruction or Mutilation of  Warrant.   Upon
     receipt  by  the Company of evidence reasonably satisfactory
     to  it of the loss, theft, destruction or mutilation of this
     Warrant,  and  in  the  case of  any  such  loss,  theft  or
     destruction, of an indemnity letter (reasonably satisfactory
     to  the  Company) by an institutional Warrantholder,  or  in
     other  cases,  indemnity or security reasonably satisfactory
     to  it,  and in the case of such mutilation, upon  surrender
     and  cancellation of this Warrant, the Company will make and
     deliver a new warrant or warrants of like tenor and date, in
     lieu of this Warrant.

11.  Saturdays, Sundays, Holidays, etc.  If the last or appointed
     day  for the taking of any action or the expiration  of  any
     right  required or granted herein shall not  be  a  Business
     Day,  then  such action may be taken or such  right  may  be
     exercised on the next succeeding day that is a Business Day.

12.  Rule  144  Information. The Company covenants that  it  will
     file the reports required to be filed by it under the Securities
     Act  and  the  Exchange  Act and the rules  and  regulations
     promulgated thereunder (or, if the Company is not required to
     file  such  reports,  it  will,  upon  the  request  of  any
     Warrantholder, make publicly available such information), and it
     will take such further action as any Warrantholder may reasonably
     request, all to the extent required from time to time to enable
     such holder to sell the Warrants without registration under the
     Securities Act within the limitation of the exemptions provided
     by (i) Rule 144 under the Securities Act, as such Rule may be
     amended from time to time, or (ii) any similar rule or regulation
     hereafter adopted by the Securities and Exchange Commission. Upon
     the request of any Warrantholder, the Company will deliver to
     such Warrantholder a written statement that it has complied with
     such requirements.

13.  Adjustments  and Other Rights. The Exercise  Price  and  the
     number  of  Shares issuable upon exercise  of  this  Warrant
     shall be subject to adjustment from time to time as follows:
     
          (A)  Common Stock Issued at Less than Market Value.  If
     the  Company  issues or sells any Common  Stock  other  than
     Excluded  Stock  without consideration or for  consideration
     per share less than the Market Price of the Common Stock, on
     the  last  trading day immediately preceding such  issuance,
     the  Exercise Price in effect immediately prior to each such
     issuance or sale will immediately (except as provided below)
     be  reduced  to  the  price determined  by  multiplying  the
     Exercise Price, in effect immediately prior to such issuance
     or  sale, by a fraction, (1) the numerator of which shall be
     (x)  the  number  of  shares  of  Common  Stock  outstanding
     immediately  prior  to such issuance or sale  plus  (y)  the
     number  of  shares  of  Common  Stock  which  the  aggregate
     consideration received by the Company for the  total  number
     of  such additional shares of Common Stock so issued or sold
     would  purchase at the Market Price on the last trading  day
     immediately  preceding such issuance or  sale  and  (2)  the
     denominator of which shall be the number of shares of Common
     Stock  outstanding immediately after such issue or sale.  In
     such  event,  the number of shares of Common Stock  issuable
     upon the exercise of this Warrant shall be increased to  the
     number  obtained  by  dividing (i) the product  of  (a)  the
     number  of Shares issuable upon the exercise of this Warrant
     before such adjustment, and (b) the Exercise Price in effect
     immediately  prior  to  the issuance  giving  rise  to  this
     adjustment  by  (ii)  the new Exercise Price  determined  in
     accordance with the immediately preceding sentence. For  the
     purposes  of  any adjustment of the Exercise Price  and  the
     number  of  Shares issuable upon exercise  of  this  Warrant
     pursuant  to  this  Section 13(A), the following  provisions
     shall be applicable:
     
               (i)   In the case of the issuance of Common  Stock
          for  cash, the amount of the consideration received  by
          the  Company  shall be deemed to be the amount  of  the
          cash  proceeds received by the Company for such  Common
          Stock  before  deducting  therefrom  any  discounts  or
          commissions  allowed, paid or incurred by  the  Company
          for  any  underwriting or otherwise in connection  with
          the issuance and sale thereof.
          
               (ii)  In the case of the issuance of Common  Stock
          (otherwise  than  upon  the  conversion  of  shares  of
          Capital Stock or other securities of the Company) for a
          consideration  in  whole or in part  other  than  cash,
          including  securities  acquired  in  exchange  therefor
          (other than securities by their terms so exchangeable),
          the consideration other than cash shall be deemed to be
          the  fair  value thereof as determined  by  the  Board,
          provided,  however, that such fair value as  determined
          by  the  Board  shall not exceed the  aggregate  Market
          Price of the shares of Common Stock being issued as  of
          the  date  the  Board authorizes the issuance  of  such
          shares.
          
               (iii)      In  the  case of the  issuance  of  (a)
          options,  warrants  or  other  rights  to  purchase  or
          acquire  Common  Stock (whether  or  not  at  the  time
          exercisable)   or  (b)  securities   by   their   terms
          convertible  into  or  exchangeable  for  Common  Stock
          (whether   or  not  at  the  time  so  convertible   or
          exchangeable)  or  options,  warrants  or   rights   to
          purchase  such  convertible or exchangeable  securities
          (whether or not at the time exercisable):
          
                    (1)  the  aggregate maximum number of  shares
                         of   Common   Stock   deliverable   upon
                         exercise  of  such options, warrants  or
                         other  rights  to  purchase  or  acquire
                         Common  Stock  shall be deemed  to  have
                         been  issued  at the time such  options,
                         warrants or rights are issued and for  a
                         consideration equal to the consideration
                         (determined  in the manner  provided  in
                         Section  13(A)(i)  and  (ii),  if   any,
                         received   by  the  Company   upon   the
                         issuance  of  such options, warrants  or
                         rights  plus the minimum purchase  price
                         provided  in  such options, warrants  or
                         rights  for  the  Common  Stock  covered
                         thereby;
                         
                    (2)  the  aggregate maximum number of  shares
                         of   Common   Stock   deliverable   upon
                         conversion  of  or in exchange  for  any
                         such    convertible   or    exchangeable
                         securities,  or  upon  the  exercise  of
                         options,  warrants or  other  rights  to
                         purchase or acquire such convertible  or
                         exchangeable    securities    and    the
                         subsequent   conversion   or    exchange
                         thereof,  shall be deemed to  have  been
                         issued at the time such securities  were
                         issued  or  such  options,  warrants  or
                         rights   were   issued   and    for    a
                         consideration     equal      to      the
                         consideration, if any, received  by  the
                         Company  for  any  such  securities  and
                         related  options,  warrants  or   rights
                         (excluding any cash received on  account
                         of    accrued   interest   or    accrued
                         dividends),    plus    the    additional
                         consideration (determined in the  manner
                         provided  in Section 13(A)(i) and  (ii),
                         if  any,  to be received by the  Company
                         upon  the conversion or exchange of such
                         securities, or upon the exercise of  any
                         related  options, warrants or rights  to
                         purchase or acquire such convertible  or
                         exchangeable    securities    and    the
                         subsequent   conversion   or    exchange
                         thereof;
                         
                    (3)  on any change in the number of shares of
                         Common  Stock deliverable upon  exercise
                         of  any such options, warrants or rights
                         or   conversion  or  exchange  of   such
                         convertible  or exchangeable  securities
                         or any change in the consideration to be
                         received   by  the  Company  upon   such
                         exercise,  conversion or  exchange,  but
                         excluding  changes  resulting  from  the
                         anti-dilution provisions thereof (to the
                         extent  comparable to the  anti-dilution
                         provisions   contained   herein),    the
                         Exercise Price and the number of  Shares
                         issuable  upon exercise of this  Warrant
                         as  then  in  effect shall forthwith  be
                         readjusted  to such Exercise  Price  and
                         number  of  Shares as  would  have  been
                         obtained  had  an adjustment  been  made
                         upon   the  issuance  of  such  options,
                         warrants  or rights not exercised  prior
                         to  such  change, or of such convertible
                         or exchangeable securities not converted
                         or  exchanged prior to such change, upon
                         the basis of such change;
                         
                    (4)  on the expiration or cancellation of any
                         such   options,   warrants   or   rights
                         (without  exercise), or the  termination
                         of the right to convert or exchange such
                         convertible  or exchangeable  securities
                         (without   exercise),  if  the  Exercise
                         Price  and the number of Shares issuable
                         upon exercise of this Warrant shall have
                         been adjusted upon the issuance thereof,
                         the  Exercise  Price and the  number  of
                         Shares  issuable upon exercise  of  this
                         Warrant shall forthwith be readjusted to
                         such Exercise Price and number of Shares
                         as  would  have  been  obtained  had  an
                         adjustment  been made upon the  issuance
                         of  such  options, warrants,  rights  or
                         such    convertible   or    exchangeable
                         securities on the basis of the  issuance
                         of  only the number of shares of  Common
                         Stock  actually issued upon the exercise
                         of  such options, warrants or rights, or
                         upon  the conversion or exchange of such
                         convertible  or exchangeable securities;
                         and
                         
                    (5)  if  the Exercise Price and the number of
                         Shares  issuable upon exercise  of  this
                         Warrant  shall  have been adjusted  upon
                         the   issuance  of  any  such   options,
                         warrants,   rights  or  convertible   or
                         exchangeable  securities,   no   further
                         adjustment of the Exercise Price and the
                         number  of Shares issuable upon exercise
                         of  this  Warrant shall be made for  the
                         actual issuance of Common Stock upon the
                         exercise,    conversion   or    exchange
                         thereof;  provided,  however,  that   no
                         increase in the Exercise Price shall  be
                         made  pursuant to subclauses (1) or  (2)
                         of this Section 13(A) (iii).
                         
          (B)   Stock Splits, Subdivisions, Reclassifications  or
     Combinations.  If the Company shall (1) declare a dividend or
     make  a distribution on its Common Stock in shares of Common
     Stock, (2) subdivide or reclassify the outstanding shares of
     Common Stock into a greater number of shares, or (3) combine or
     reclassify the outstanding Common Stock into a smaller number of
     shares, the number of Shares issuable upon exercise of  this
     Warrant at the time of the record date for such dividend  or
     distribution  or  the  effective date of  such  subdivision,
     combination or reclassification shall be proportionately adjusted
     so that the Warrantholder after such date shall be entitled to
     purchase the number of shares of Common Stock which such holder
     would have owned or been entitled to receive after such date had
     this  Warrant been exercised immediately prior to such date.
     Successive adjustments in the Exercise Price shall  be  made
     whenever any event specified above shall occur. In such event the
     Exercise Price in effect at the time of the record date for such
     dividend  or  distribution or the  effective  date  of  such
     subdivision, combination or reclassification shall be adjusted to
     the number obtained by dividing (i) the product of (a) the number
     of Shares issuable upon the exercise of this Warrant before such
     adjustment and (b) the Exercise Price in effect immediately prior
     to the issuance giving rise to this adjustment by (ii) the new
     number of shares issuable upon exercise of the Warrant determined
     pursuant to the immediately preceding sentence.
     
          (C)   Other  Distributions.  In case the Company  shall
     fix  a  record date for the making of a distribution to  all
     holders of shares of its Common Stock (i) of shares  of  any
     class  other  than its Common Stock or (ii) of  evidence  of
     indebtedness of the Company or any Subsidiary  or  (iii)  of
     assets (excluding Ordinary Cash Dividends, and dividends  or
     distributions  referred to in Section  13(B)),  or  (iv)  of
     rights  or warrants (excluding those referred to in  Section
     13(B)),  in  each  such case the Exercise  Price  in  effect
     immediately  prior  thereto  shall  be  reduced  immediately
     thereafter to the price determined by dividing (x) an amount
     equal  to  the difference resulting from (1) the  number  of
     shares  of  Common  Stock outstanding on  such  record  date
     multiplied  by the Exercise Price per share on  such  record
     date,   less  (2)  the  fair  market  value  (as  reasonably
     determined  by  the Board) of said shares  or  evidences  of
     indebtedness  or  assets or rights  or  warrants  to  be  so
     distributed,  by  (y) the number of shares of  Common  Stock
     outstanding  on such record date; such adjustment  shall  be
     made  successively whenever such a record date is fixed.  In
     such  event,  the number of shares of Common Stock  issuable
     upon the exercise of this Warrant shall be increased to  the
     number  obtained  by  dividing (i) the product  of  (a)  the
     number  of Shares issuable upon the exercise of this Warrant
     before such adjustment, and (b) the Exercise Price in effect
     immediately  prior  to  the issuance  giving  rise  to  this
     adjustment  by  (ii)  the new Exercise Price  determined  in
     accordance with the immediately preceding sentence.  In  the
     event  that  such distribution is not so made, the  Exercise
     Price  and  the number of Shares issuable upon  exercise  of
     this  Warrant then in effect shall be readjusted,  effective
     as  of  the date when the Board determines not to distribute
     such  shares, evidences of indebtedness, assets,  rights  or
     warrants,  as  the case may be, to the Exercise  Price  that
     would  then be in effect and the number of Shares that would
     then  be  issuable  upon exercise of this  Warrant  if  such
     record date had not been fixed.
     
          (D)   Certain Repurchases of Common Stock.  In case the
     Company effects a Pro Rata Repurchase of Common Stock,  then
     the  Exercise Price shall be reduced to the price determined
     by  multiplying  the  Exercise Price in  effect  immediately
     prior to the effective date of such Pro Rata Repurchase by a
     fraction of which the numerator shall be  (i) the product of
     (x)  the  number  of  shares  of  Common  Stock  outstanding
     immediately  before  such Pro Rata Repurchase  and  (y)  the
     Market  Price of a share of Common Stock on the trading  day
     immediately preceding the first public announcement  by  the
     Company  or  any of its Affiliates of the intent  to  effect
     such  Pro Rata Repurchase, minus (ii) the aggregate purchase
     price  of  the  Pro  Rata  Repurchase,  and  of  which   the
     denominator shall be the product of (i) the number of shares
     of  Common Stock outstanding immediately prior to  such  Pro
     Rata  Repurchase minus the number of shares of Common  Stock
     so repurchased and (ii) the Market Price per share of Common
     Stock  on  the trading day immediately preceding  the  first
     public  announcement  of such Pro Rata Repurchase.  In  such
     event,  the  number of shares of Common Stock issuable  upon
     the  exercise  of  this Warrant shall be  increased  to  the
     number  obtained  by  dividing (i) the product  of  (a)  the
     number  of Shares issuable upon the exercise of this Warrant
     before such adjustment, and (b) the Exercise Price in effect
     immediately prior to the Pro Rata Repurchase giving rise  to
     this adjustment by (ii) the new Exercise Price determined in
     accordance with the immediately preceding sentence.
     
          (E)   Business  Combinations.  In case of any  Business
     Combination or reclassification of Common Stock (other  than
     a  reclassification of Common Stock referred to  in  Section
     13(B)), any Shares issued or issuable upon exercise of  this
     Warrant  after  the  date  of such Business  Combination  or
     reclassification be exchangeable for the number of shares of
     stock  or  other securities or property (including cash)  to
     which  the  Common  Stock issuable  (at  the  time  of  such
     consolidation,  merger,  sale,  lease  or  conveyance)  upon
     exercise  of this Warrant immediately prior to such Business
     Combination  or  reclassification would have  been  entitled
     upon  such Business Combination or reclassification; and  in
     any such case, if necessary, the provisions set forth herein
     with  respect to the rights and interests thereafter of  the
     Warrantholder shall be appropriately adjusted so  as  to  be
     applicable, as nearly as may reasonably be, to any shares of
     stock or other securities or property thereafter deliverable
     on  the  exercise of this Warrant.  In determining the  kind
     and  amount  of stock, securities or the property receivable
     upon  consummation  of  such Business  Combination,  if  the
     holders of Common Stock have the right to elect the kind  or
     amount of consideration receivable upon consummation of such
     Business Combination, then the Warrantholder shall have  the
     right  to  make  a  similar election upon exercise  of  this
     Warrant  with respect to the number of shares  of  stock  or
     other  securities  or property which the Warrantholder  will
     receive upon exercise of this Warrant.
     
          (F)   Rounding  of  Calculations; Minimum  Adjustments.
     All  calculations under this Section 13 shall be made to the
     nearest one-tenth (1/10th) of a cent or to the nearest  one-
     hundreth  (1/100th) of a share, as the  case  may  be.   Any
     provision    of   this   Section   13   to   the    contrary
     notwithstanding, no adjustment in the Exercise Price or  the
     number  of  Shares  into which this Warrant  is  exercisable
     shall be made if the amount of such adjustment would be less
     than $0.01 or one-tenth (1/10th) of a share of Common Stock,
     respectively,  but any such amount shall be carried  forward
     and  an adjustment with respect thereto shall be made at the
     time  of and together with any subsequent adjustment  which,
     together with such amount and any other amount or amounts so
     carried forward, shall aggregate $0.01 or 1/10th of a  share
     of Common Stock, respectively, or more.
     
          (G)  Timing of Issuance of Additional Common Stock Upon
     Certain Adjustments. In any case in which the provisions  of
     this  Section  13  shall require that  an  adjustment  shall
     become  effective  immediately after a record  date  for  an
     event,  the Company may defer until the occurrence  of  such
     event  (i)  issuing  to the Warrantholder  of  this  Warrant
     exercised  after such record date and before the  occurrence
     of such event the additional shares of Common Stock issuable
     upon  such exercise by reason of the adjustment required  by
     such  event  over  and  above the  shares  of  Common  Stock
     issuable  upon  such exercise before giving effect  to  such
     adjustment and (ii) paying to such Warrantholder any  amount
     of  cash  in  lieu  of a fractional share of  Common  Stock;
     provided,  however,  that  the Company  upon  request  shall
     deliver   to  such  Warrantholder  a  due  bill   or   other
     appropriate instrument evidencing such Warrantholder's right
     to  receive such additional shares, and such cash, upon  the
     occurrence of the event requiring such adjustment.
     
          (H)   Statement  Regarding  Adjustments.  Whenever  the
     Exercise  Price  or  the number of Shares  into  which  this
     Warrant  is  exercisable shall be adjusted  as  provided  in
     Section  13,  the  Company  shall  forthwith  file,  at  the
     principal  office  of  the Company a  statement  showing  in
     reasonable  detail the facts requiring such  adjustment  and
     the Exercise Price that shall be in effect and the number of
     Shares  into  which this Warrant shall be exercisable  after
     such  adjustment and the Company shall also cause a copy  of
     such  statement  to  be sent by mail,  first  class  postage
     prepaid,  to each Warrantholder at the address appearing  in
     the Company's records.
     
          (I)   Notices.   In  the event that the  Company  shall
     propose  to  take any action of the type described  in  this
     Section 13 (but only if the action of the type described  in
     this  Section  13  would  result in  an  adjustment  in  the
     Exercise  Price  or  the number of Shares  into  which  this
     Warrant is exercisable or a change in the type of securities
     or  property to be delivered upon exercise of this Warrant),
     the  Company shall give notice to the Warrantholder, in  the
     manner  set  forth  in  Section 13(H),  which  notice  shall
     specify  the record date, if any, with respect to  any  such
     action and the approximate date on which such action  is  to
     take place.  Such notice shall also set forth the facts with
     respect thereto as shall be reasonably necessary to indicate
     the  effect  on the Exercise Price and the number,  kind  or
     class  of shares or other securities or property which shall
     be deliverable upon exercise of this Warrant. In the case of
     any  action which would require the fixing of a record date,
     such  notice  shall be given at least 10 days prior  to  the
     date  so fixed, and in case of all other action, such notice
     shall be given at least 15 days prior to the taking of  such
     proposed action.  Failure to give such notice, or any defect
     therein,  shall not affect the legality or validity  of  any
     such action.
     
          (J)  No Impairment.  The Company will not, by amendment
     of  its Articles or through any reorganization, transfer  of
     assets, consolidation, merger, dissolution, issue or sale of
     securities or any other voluntary action, avoid or  seek  to
     avoid  the observance or performance of any of the terms  to
     be  observed or performed hereunder by the Company, but will
     at all times in good faith assist in the carrying out of all
     the  provisions of this Warrant and in taking  of  all  such
     action  as  may  be  necessary or appropriate  in  order  to
     protect the rights of the Warrantholder.
     
14.  Rights.   Whenever the Company shall issue shares of  Common
     Stock upon exercise of this Warrant, the Company shall issue,
     together with each such share of Common Stock, one right  to
     purchase Series A Junior Participating Preferred Stock of the
     Company (or other securities in lieu thereof) pursuant to the
     Rights Agreement, or any similar rights issued to holders of
     Common Stock in addition thereto or in the replacement therefor
     (such rights, together with any additional or replacement rights,
     being collectively referred to as the "Rights"), whether or not
     such Rights shall be exercisable at such time, but only if such
     Rights are issued and outstanding and held by the other holders
     of Common Stock (or evidenced by outstanding share certificates
     representing Common Stock) at such time and have not expired or
     been redeemed.
     
15.    Governing  Law.   This Warrant shall be binding  upon  any
     successors  or  assigns of the Company.  This Warrant  shall
     constitute  a contract under the laws of Texas and  for  all
     purposes shall be construed in accordance with and governed by
     the laws of Texas, without giving effect to the conflict of laws
     principles.
     
16.  Attorneys'  Fees.  In any litigation, arbitration  or  court
     proceeding between the Company and the Warrantholder as  the
     holder of this Warrant relating hereto, the prevailing party
     shall be entitled to reasonable attorneys' fees and expenses
     incurred in enforcing this Warrant.

17.  Amendments.  This Warrant may be amended and the  observance
     of any term of this Warrant may be waived only with the written
     consent of the Company and the Warrantholder.

18.  Notice.  All notices hereunder shall be in writing and shall
     be  effective (a) on the day on which delivered if delivered
     personally or transmitted by telex or telegram or telecopier with
     evidence of receipt, (b) one Business Day after the date on which
     the  same  is delivered to a nationally recognized overnight
     courier service with evidence of receipt, or (c) five Business
     Days  after the date on which the same is deposited, postage
     prepaid, in the U.S. mail, sent by certified or registered mail,
     return receipt requested, and addressed to the party  to  be
     notified at the address indicated below for the Company, or at
     the  address for the Warrantholder set forth in the registry
     maintained by the Company pursuant to Section 9, or at such other
     address and/or telecopy or telex number and/or to the attention
     of such other person as the Company or the Warrantholder may
     designate by ten-day advance written notice.

19.  Prohibited  Actions.  The Company agrees that  it  will  not
     take any action which would entitle the Warrantholder to  an
     adjustment of the Exercise Price if the total number of shares of
     Common Stock issuable after such action upon exercise of this
     Warrant,  together  with all shares  of  Common  Stock  then
     outstanding and all shares of Common Stock then issuable upon the
     exercise of all outstanding options, warrants, conversion and
     other rights, would exceed the total number of shares of Common
     Stock then authorized by its Restated Articles of Incorporation.

20.  Entire Agreement. This Warrant and the forms attached hereto
     contain the entire agreement between the parties with respect to
     the  subject  matter  hereof and  supersede  all  prior  and
     contemporaneous  arrangements or undertakings  with  respect
     thereto.


          [Remainder of Page Intentionally Left Blank]

     IN  WITNESS WHEREOF, the Company has caused this Warrant  to
be executed by a duly authorized officer.

Dated:  January ____, 1999

                                   EEX Corporation


                                   
                                   J.T. Leary
                                   Vice President - Finance and
Treasurer

                  [Form of Notice of Exercise]
                                
                                
                              Date:
                                
                                
TO:  EEX Corporation

RE:  Election to Subscribe for and Purchase Common Stock

     The undersigned, pursuant to the provisions set forth in the
attached Warrant, hereby agrees to subscribe for and purchase the
number  of shares of the Common Stock set forth below covered  by
such  Warrant.  The undersigned, in accordance with Section 3  of
the  Warrant,  hereby agrees to pay the aggregate Exercise  Price
for such shares of Common Stock in the manner set forth below.  A
new  warrant  evidencing  the remaining shares  of  Common  Stock
covered  by  such  Warrant,  but  not  yet  subscribed  for   and
purchased, should be issued in the name set forth below.  If  the
new  warrant  is  being  transferred, an opinion  of  counsel  is
attached hereto with respect to the transfer of such warrant.


Number of Shares of Common Stock:

Method of Payment of Exercise Price:

Name and Address of Person to be
Issued New Warrant:






                                                          Holder:
                                                                 
                                                              By:
                                                                 
                                                            Name:
                                                                 
                                                           Title:
                                                                 
<PAGE>                                                                 
                                                                 
                                                                 
                                                                 
                                                                 
                                       Exhibit 7.2(b)(ii)(B)
                                
                   [FORM OF SERIES B WARRANT]
     
     
     THESE  SECURITIES  HAVE NOT BEEN REGISTERED  UNDER  THE
     SECURITIES  ACT  OF 1933, AS AMENDED  (THE  "SECURITIES
     ACT"),  OR  ANY STATE SECURITIES LAWS.  THEY HAVE  BEEN
     ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW  TO,
     OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF
     IN  VIOLATION OF ANY APPLICABLE SECURITIES LAWS.   THEY
     MAY   NOT   BE   SOLD,  OFFERED  FOR   SALE,   PLEDGED,
     HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF
     AN  EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR
     AN   OPINION  OF  COUNSEL,  SATISFACTORY  IN  FORM  AND
     SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS  NOT
     REQUIRED  UNDER  THE SECURITIES ACT AND ANY  APPLICABLE
     STATE SECURITIES LAWS.

                        SERIES B WARRANT

No. 1                                           January ___, 1999

         To Purchase [2,500,000] shares of Common Stock,
          par value $.01 per share, of EEX Corporation

3.   Definitions.  Unless  the context otherwise  required,  when
     used herein the following terms shall have the meaning indicated.

     "Affiliate"  means  with respect to any  Person,  any  other
     Person   directly,  or  indirectly  through  one   or   more
     intermediaries, controlling, controlled by or  under  common
     control  with such Person. For purposes of this  definition,
     the  term  "control"  (and correlative terms  "controlling,"
     "controlled  by"  and  "under common  control  with")  means
     possession  of  the  power,  whether  by  contract,   equity
     ownership or otherwise, to direct the policies or management
     of a Person.
     
     "Beneficially Own" or "Beneficial Ownership" is  defined  in
     Rules  13d-3  and  13d-5 of the Exchange  Act,  but  without
     taking   into   account  any  contractual  restrictions   or
     limitations on voting or other rights.
     
     "Board" means the Board of Directors of the Company.
     
     "Business Combination" means (i) any consolidation,  merger,
     share  exchange or similar business combination  transaction
     involving  the  Company with any Person or  (ii)  the  sale,
     assignment  conveyance, transfer, lease or other disposition
     by the Company of all or substantially all of its assets.
     
     "Business Day" means any day except Saturday, Sunday and any
     day which shall be a legal holiday or a day on which banking
     institutions  in Houston, Texas or New York City,  New  York
     generally  are  authorized  or  required  by  law  or  other
     governmental actions to close.
     
     "Capital Stock" means (i) with respect to any Person that is
     a  corporation  or  company, any and all shares,  interests,
     participations or other equivalents (however designated)  of
     capital  or  capital  stock of such  Person  and  (ii)  with
     respect  to any Person that is not a corporation or company,
     any  and  all partnership or other equity interests of  such
     Person.
     
     
     "Change  of  Control" shall mean any event constituting  (a)
     the  consummation of any Business Combination  except  where
     (i)  the  shareholders of the Company immediately  prior  to
     such  Business  Combination own (in substantially  the  same
     proportion relative to each other as such shareholders owned
     the Common Stock immediately prior to such consummation) (x)
     forty  percent  (40%)  or more of the Voting  Stock  of  the
     surviving entity on both a Modified Non Diluted Basis and  a
     Modified Fully Diluted Basis immediately after such Business
     Combination,  and (y) forty percent (40%)  or  more  of  the
     outstanding common stock of the surviving entity on  both  a
     Modified  Non  Diluted  Basis and a Modified  Fully  Diluted
     Basis immediately after such Business Combination, (ii)  the
     members of the Board immediately prior to the entering  into
     the   agreement   relating  to  such  Business   Combination
     constitute at least a majority of the Board or the board  of
     directors  of  the surviving entity immediately  after  such
     Business Combination, with no agreements or arrangements  in
     place  immediately after such consummation that would result
     in  the  members  of  the  Board immediately  prior  to  the
     entering  into  the  agreement  relating  to  such  Business
     Combination ceasing to constitute at least a majority of the
     Board or the board of directors of the surviving entity  and
     (iii)  no  Non-Financial  Person or Group  of  Non-Financial
     Persons is the Beneficial Owner of 20% or more of the  total
     outstanding  Voting Stock or common stock of  the  surviving
     entity and no Financial Person or Group of Financial Persons
     is  the  Beneficial  Owner  of 35%  or  more  of  the  total
     outstanding  Voting Stock or common stock of  the  surviving
     entity  or  (b)  any Non-Financial Person or Group  of  Non-
     Financial persons acquiring Beneficial Ownership of  20%  or
     more  of the total outstanding Voting Stock or Common  Stock
     of the Company or any Financial Person or Group of Financial
     Persons acquiring Beneficial Ownership of 35% or more of the
     total  outstanding  Voting Stock  or  Common  Stock  of  the
     Company.
     
     "Common  Stock" means the Company's common stock, par  value
     $.01 per share, and any Capital Stock for or into which such
     Common Stock hereafter is exchanged, converted, reclassified
     or  recapitalized by the Company or pursuant to an agreement
     or Business Combination to which the Company is a party.
     
     "Common  Stock Equivalents" means (without duplication  with
     any  other Common Stock or common stock, as the case may be,
     or  Common  Stock  Equivalents) rights,  warrants,  options,
     convertible    securities   or   exchangeable    securities,
     exercisable   for  or  convertible  or  exchangeable   into,
     directly  or indirectly, Common Stock, or common  stock,  as
     the case may be, whether at the time of issuance or upon the
     passage  of  time  or the occurrence of some  future  event,
     including the Warrants.
     
     "Company" means EEX Corporation, a Texas corporation.
     
     "Early  Exercise Event" means the occurrence of any  of  the
     following:  (i)  an  agreement  providing  for  a   Business
     Combination  is  approved  by the  Board  if  such  Business
     Combination,  if consummated, would result in  a  Change  of
     Control, (ii) a Tender Offer for the Company's securities is
     approved or recommended by the Board, (iii) Warburg,  Pincus
     Equity  Partners,  L.P. and its Affiliates Beneficially  Own
     less  than  10%  of  the outstanding  Voting  Stock  of  the
     Company,   (iv)   there  is  a  redemption,  repurchase   or
     reacquisition  by the Company of Rights issued  pursuant  to
     the Rights Agreement or any waiver of the application of the
     Rights  Agreement to any Beneficial Owner or  (v)  any  Non-
     Financial   Person   or   Group  of  Non-Financial   Persons
     Beneficially  Own  more than 20% of the  outstanding  Voting
     Stock  of  the Company or any Financial Person or  Group  of
     Financial  Persons Beneficially Own more  than  35%  of  the
     outstanding Voting Stock of the Company.
     
     "Exchange Act" means the Securities Exchange Act of 1934, as
     amended,  or  any  successor  statute,  and  the  rules  and
     regulations promulgated thereunder.
     
     "Excluded Stock" means (i) shares of Common Stock issued  by
     the  Company as a stock dividend payable in shares of Common
     Stock,   or  upon  any  subdivision  or  split-up   of   the
     outstanding  shares of Capital Stock in each  case  with  is
     subject  to Section 13(B), or upon conversion of  shares  of
     Capital  Stock  (but not the issuance of such Capital  Stock
     which   will  be  subject  to  the  provisions  of   Section
     13(A)(iii)),  (ii) shares of Common Stock to  be  issued  to
     employees, consultants and advisors of the Company  pursuant
     to  options  granted prior to the date of issuance  of  this
     Warrant  and pursuant to options granted after the  date  of
     issuance of this Warrant if the exercise price per share  of
     Common Stock on the date of such grant equals or exceeds the
     Market Price of a share of Common Stock on the date of  such
     grant.
     
     "Exercise Price" has the meaning given to it in Section 2.
     
     "Expiration Time" has the meaning given to it in Section 3.
     
     "Financial  Person" means any Person that (i) is,  or  holds
     itself  out  as being, engaged primarily in the business  of
     investing,  reinvesting,  owning,  holding  or  trading   in
     securities,  and  (ii) together with its Affiliates  is  not
     engaged  in  (x)  any  significant  activities  other   than
     financial  services, insurance or investment  activities  or
     (y)  directly  or  indirectly  through  Affiliates,  in  any
     industrial activities, including the oil and gas and  energy
     industry.
     
     "Group" means a group as contemplated by Section 13(d)(3) of
     the Exchange Act.
     
     "Market Price" means, with respect to a particular security,
     on  any given day, the last reported sale price regular  way
     or,  in case no such reported sale takes place on such  day,
     the average of the last closing bid and asked prices regular
     way,  in  either  case on the principal national  securities
     exchange  on  which the applicable securities is  listed  or
     admitted to trading, or if not listed or admitted to trading
     on  any  national securities exchange, (i) the closing  sale
     price  for  such day reported by the NASDAQ Stock Market  if
     such  security is traded over-the-counter and quoted in  the
     NASDAQ  Stock Market, or (ii) if such security is so traded,
     but  not so quoted, the average of the closing reported  bid
     and  asked prices of such security as reported by the NASDAQ
     Stock  Market  or any comparable system, or  (iii)  if  such
     security  is  not listed on the NASDAQ Stock Market  or  any
     comparable system, the average of the closing bid and  asked
     prices   as  furnished  by  two  members  of  the   National
     Association of Securities Dealers, Inc. selected  from  time
     to  time  by the Company for that purpose.  If such security
     is  not  listed  and traded in a manner that the  quotations
     referred  to  above  are available for the  period  required
     hereunder, the Market Price per share of Common Stock  shall
     be deemed to be the fair value per share of such security as
     determined  in good faith by the Board of Directors  of  the
     Company.
     
     "Modified  Fully-Diluted  Basis" shall  mean  a  calculation
     based  on  the  then outstanding shares of Voting  Stock  or
     common  stock, as the case may be, plus all shares of Voting
     Stock   or   common   stock  acquirable  pursuant   to,   or
     constituting, Common Stock Equivalents, but excluding 50% of
     the  Voting Stock or common stock acquirable pursuant to the
     then outstanding Warrants.
     
     "Modified Non-Diluted Basis" shall mean a calculation  based
     on  the  then outstanding shares of Voting Stock  or  common
     stock,  as  the  case may be, and without giving  effect  to
     outstanding Common Stock Equivalents, but including (i)  50%
     of  the shares of common stock then acquirable upon exercise
     of  the  then  outstanding Warrants and (ii) the  number  of
     shares  of  common  stock equal to (a) the aggregate  Market
     Price  as  of the date of such Business Combination  of  all
     shares  of  common  stock acquirable upon  exercise  of  all
     outstanding  employee stock options of the  relevant  entity
     that have an exercise price of less than the Market Price of
     common  stock  as  of the date of such Business  Combination
     less  the  aggregate  exercises price of  all  such  options
     divided  by (b) the Market Price of common stock as  of  the
     date of such Business Combination.
     
     "Non-Financial  Person"  means any  Person  that  is  not  a
     Financial Person.
     
     "Ordinary  Cash  Dividends"  means  any  cash  dividend   or
     distribution which, when combined on a per share  of  Common
     Stock  basis  with the per share amounts of all  other  cash
     dividends  and cash 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
     Section  13  and  excluding cash dividends or  distributions
     that  resulted in an adjustment to the Exercise Price), does
     not exceed 5% of the Market Price of a share of Common Stock
     on  the  trading  day  immediately  preceding  the  date  of
     declaration of such dividend or distribution.
     
     "Person"  means an individual or a corporation, partnership,
     trust,  incorporated or unincorporated association,  limited
     liability  company,  joint  venture,  joint  stock  company,
     government  (or an agency or political subdivision  thereof)
     or other entity of any kind.
     
     "Preferred Stock" means the Series B 8% Cumulative Perpetual
     Preferred Stock of the Company or successor preferred  stock
     as  contemplated by Section 5(C)(ii)(A) of the Statement  of
     Resolution.
     
     "Pro  Rata  Repurchases" means any  purchase  of  shares  of
     Common  Stock  by  the  Company  or  any  Affiliate  thereof
     pursuant  to any tender offer or exchange offer  subject  to
     Section 13(e) of the Exchange Act, or pursuant to any  other
     offer  available  to  substantially all  holders  of  Common
     Stock,  whether  for cash, shares of capital  stock  of  the
     Company,  other  securities  of the  Company,  evidences  of
     indebtedness of the Company or any other person or any other
     property  (including, without limitation, shares of  capital
     stock,  other securities or evidences of indebtedness  of  a
     subsidiary  of  the  Company), or any  combination  thereof,
     effected   while  this  Warrant  is  outstanding;  provided,
     however,  that "Pro Rata Repurchase" shall not  include  any
     purchase  of shares by the Company or any Affiliate  thereof
     made  in accordance with the requirements of Rule 10b-18  as
     in effect under the Exchange Act. The "Effective Date" of  a
     Pro  Rata  Repurchase shall mean the date of  acceptance  of
     shares for purchase or exchange under any tender or exchange
     offer which is a Pro Rata Repurchase or the date of purchase
     with respect to any Pro Rata Repurchase that is not a tender
     or exchange offer.
     
     "Purchase Agreement" means the Purchase Agreement, dated  as
     of  December 22, 1998, among the Company and the  purchasers
     named therein, including all schedules and exhibits thereto.
     
     "Rights  Agreement" means the Rights Agreement dated  as  of
     September  10,  1996 between the Company  and  Harris  Trust
     Company of New York, a New York trust company, as amended.
     
     "Rights" is defined in Section 14.
     
     "Securities  Act"  means  the Securities  Act  of  1933,  as
     amended,  or  any  successor  statute,  and  the  rules  and
     regulations promulgated thereunder.
     
     "Shares" is defined in Section 2.
     
     "Stated  Value" is an amount equal to $100.00 per  share  of
     Preferred Stock.
     
     "Statement  of Resolution" means the Statement of Resolution
     relating to the Preferred Stock filed with the Secretary  of
     State of the State of Texas on January _____, 1999.
     
     
     "Subsidiary" of a Person means (i) a corporation, a majority
     of   whose   stock   with  voting  power,   under   ordinary
     circumstances,  to  elect  directors  is  at  the  time   of
     determination, directly or indirectly, owned by such  Person
     or  by one or more Subsidiaries of such Person, or (ii)  any
     other entity (other than a corporation) in which such Person
     or  one  or  more Subsidiaries of such Person,  directly  or
     indirectly,  at  the date of determination  thereof  has  at
     least a majority ownership interest.
     
     "Shares" has the meaning given to it in Section 2.
     
     "TBCA" means the Texas Business Corporation Act, as amended,
     or any successor statute or other legislation.
     
     "Tender Offer" means any transaction to which Regulation 14D
     of the Exchange Act applies.
     
     "Voting  Stock"  of  a Person means Capital  Stock  of  such
     Person of the class or classes pursuant to which the holders
     thereof   have  the  general  voting  power  under  ordinary
     circumstances  to  vote  in the election  of  the  board  of
     directors, managers or trustees of such Person.
     
     "Warrantholder" has the meaning given to it in Section 2.
     
     "Warrants"  means collectively this Warrant,  the  ten  year
     warrants to purchase an aggregate 10,500,000 shares and  the
     seven-year  warrants  to  purchase  an  aggregate  8,000,000
     shares, all of which were issued to the purchasers named  in
     the Purchase Agreement pursuant to the Purchase Agreement.
     
4.   Number  of Shares; Exercise Price. This certifies that,  for
     value  received,  [Name of Warburg, Pincus  entity]  or  its
     registered assigns (the "Warrantholder") is entitled, upon the
     terms and subject to the conditions hereinafter set forth, to
     acquire from the Company, in whole or in part, up to an aggregate
     of [2,500,000] fully paid and nonassessable shares of Common
     Stock, par value $0.01 per share, (the "Shares") of the Company,
     at a purchase price of $12.00 per Share (the "Exercise Price").
     The  number of Shares and the Exercise Price are subject  to
     adjustment as provided herein, and all references to "Shares",
     "Common Stock" and "Exercise Price" herein shall be deemed to
     include any such adjustment or series of adjustments.

3.   Exercise of Warrant; Term.  The right to purchase the Shares
     represented by this Warrant are exercisable, in whole or  in
     part  by the Warrantholder, at any time or from time to time
     after  the earlier of August 31, 1999 and the occurrence  of
     an  Early  Exercise Event but in no event later  than  11:59
     p.m.  Central  Time, on January ___, 2006  (the  "Expiration
     Time"),  by (a) the surrender of this Warrant and Notice  of
     Exercise  annexed  hereto, duly completed  and  executed  on
     behalf of the Warrantholder, at the office of the Company in
     Houston,  Texas  (or  such other office  or  agency  of  the
     Company  in the United States as it may designate by  notice
     in  writing  to  the  Warrantholder at the  address  of  the
     Warrantholder  appearing on the books of the  Company),  and
     (b)  payment  of  the Exercise Price for the Shares  thereby
     purchased at the election of the Warrantholder in one of the
     following manners:

          (iv) by tendering in cash, by certified or cashier's check or by
            wire transfer payable to the order of the Company; or
          
          (v)  by having the Company withhold shares of Common Stock
            issuable upon exercise of the Warrant equal in value to the
            aggregate Exercise Price as to which this Warrant is so exercised
            based on the Market Price of the Common Stock on the trading day
            prior to the date on which this Warrant and the Notice of
            Exercise are delivered to the Company; or

          (vi) by tendering to the Company that number of shares of
            Preferred Stock rounded to the nearest whole share equal to the
            aggregate Exercise Price as to which this Warrant is so exercised
            divided by the sum of (1) the Stated Value of the Preferred Stock
            plus (2) any accrued but unpaid dividends thereon.
     
     If  the Warrantholder does not exercise this warrant in  its
     entirety, the Warrantholder will be entitled to receive from
     the  Company  within a reasonable time, not exceeding  three
     (3)  business days, a new warrant in substantially identical
     form for the purchase of that number of Shares equal to  the
     difference  between  the number of Shares  subject  to  this
     Warrant and the number of Shares as to which this Warrant is
     so  exercised. Notwithstanding the foregoing, if the Company
     fails  to  obtain the approval of the Company's shareholders
     of  the issuance of Common Stock pursuant to this Warrant as
     contemplated  by Section 5.9 of the Purchase Agreement,  the
     Warrantholder may only exercise this Warrant in  the  manner
     permitted  by  Section 3(b)(ii) and upon any  such  exercise
     receive, in lieu of the shares of Common Stock, cash  in  an
     amount  equal to the product of (i) the number of shares  of
     Common  Stock  that would have been otherwise  issuable  and
     (ii) the Market Price of the Common Stock on the trading day
     prior  to  the date on which this Warrant and the Notice  of
     Exercise  are  delivered to the Company, such  amount  being
     paid  by certified or cashiers check or by wire transfer  in
     same  day  funds  on the fourth business day following  such
     exercise.

4.   Issuance  of  Shares; Authorization; Listing.   Certificates
     for  Shares  issued upon exercise of this  Warrant  will  be
     issued  in  such  name  or names as  the  Warrantholder  may
     designate  and  will be delivered to such  named  Person  or
     Persons  within a reasonable time, not to exceed  three  (3)
     business days after the date on which this Warrant has  been
     duly exercised in accordance with the terms of this Warrant.
     The  Company hereby represents and warrants that any  Shares
     issued upon the exercise of this Warrant in accordance  with
     the  provisions  of Section 3 will, upon such  exercise,  be
     duly  and  validly  authorized and issued,  fully  paid  and
     nonassessable  and  free from all taxes, liens  and  charges
     (other than liens or charges created by or imposed upon  the
     Warrantholder or taxes in respect of any transfer  occurring
     contemporaneously therewith).  The Company agrees  that  the
     Shares  so issued will be deemed to have been issued to  the
     Warrantholder  as of the close of business on  the  date  on
     which  this  Warrant and payment of the Exercise  Price  are
     delivered  to  the Company in accordance with the  terms  of
     this  Warrant, notwithstanding that the stock transfer books
     of   the   Company  may  then  be  closed  or   certificates
     representing  such Shares may not be actually  delivered  on
     such  date.  The Company will at all times reserve and  keep
     available, out of its authorized but unissued Common  Stock,
     solely for the purpose of providing for the exercise of this
     Warrant,  the  aggregate number of shares  of  Common  Stock
     issuable upon exercise of this Warrant. The Company will (i)
     procure, at its sole expense, the listing of the Shares  and
     other  securities  issuable upon exercise of  this  Warrant,
     subject  to  issuance  or notice of issuance  on  all  stock
     exchanges on which the Common Stock or such other securities
     are  then listed or traded and (ii) maintain the listing  of
     such  Shares  or such other securities after issuance.   The
     Company  will take all action as may be necessary to  ensure
     that  the  Shares  may be issued without  violation  of  any
     applicable  law or regulation or of any requirement  of  any
     securities  exchange  on  which the  Shares  are  listed  or
     traded.

5.   No  Fractional  Shares  or Scrip.  No fractional  Shares  or
     scrip  representing fractional Shares shall be  issued  upon
     any  exercise  of this Warrant.  In lieu of  any  fractional
     Share   to  which  the  Warrantholder  would  otherwise   be
     entitled,  the Warrantholder shall be entitled to receive  a
     cash  payment equal to the Market Price of the Common  Stock
     less the Exercise Price for such fractional share.

9.   No  Rights  as  Shareholders; Transfer Books.  This  Warrant
     does not entitle the Warrantholder to any voting rights or other
     rights as a shareholder of the Company prior to the date  of
     exercise hereof. The Company will at no time close its transfer
     books  against transfer of this Warrant in any manner  which
     interferes with the timely exercise of this Warrant.

10.  Charges, Taxes and Expenses. Certificates for shares  issued
     upon exercise of this Warrant shall be issued in the name of the
     Warrantholder. Issuance of certificates for shares upon  the
     exercise of this Warrant shall be made without charge to the
     Warrantholder for any issue or transfer tax or other incidental
     expense in respect of the issuance of such certificates, all of
     which taxes and expenses shall be paid by the Company.

11.  Transfer/Assignment.  This Warrant and any rights  hereunder
     are not transferable by the Warrantholder, in whole or in part,
     in the absence of any effective registration statement related to
     this Warrant or an opinion of counsel, satisfactory in form and
     substance to the Company, that such registration is not required
     under the Securities Act and any applicable state securities
     laws. Subject to compliance with the preceding sentence, this
     Warrant and all rights hereunder are transferable, in whole or in
     part, upon the books of the Company by the registered holder
     hereof in person or by duly authorized attorney, and  a  new
     warrant shall be made and delivered by the Company, of the same
     tenor and date as this Warrant but registered in the name of the
     transferee, upon surrender of this Warrant, duly endorsed, to the
     office or agency of the Company described in Section 2.  All
     expenses, taxes (other than stock transfer taxes) and  other
     charges payable in connection with the preparation, execution and
     delivery of the new warrants pursuant to this Section 8 shall be
     paid  by the Company. The restrictions imposed by the  first
     sentence of this Section 8 shall terminate as to the Warrant (i)
     when such security has been effectively registered under the
     Securities  Act  and  disposed of  in  accordance  with  the
     registration statement covering such security, or (ii) when, in
     the opinion of counsel for the Company, such restrictions are no
     longer  required  in  order to achieve compliance  with  the
     Securities Act.

9.   Exchange   and  Registry  of  Warrant.   This   Warrant   is
     exchangeable, upon the surrender hereof by the Warrantholder
     at  the office or agency of the Company described in Section
     2,  for  a  new warrant or warrants of like tenor  and  date
     representing the right to purchase in the aggregate  a  like
     number  of shares. The Company shall maintain at the  office
     or agency described in Section 2 a registry showing the name
     and address of the Warrantholder as the registered holder of
     this  Warrant.  This Warrant may be surrendered for exchange
     or  exercise, in accordance with its terms, at the office of
     the  Company, and the Company shall be entitled to  rely  in
     all  respects, prior to written notice to the contrary, upon
     such registry.

10.  Loss,  Theft,  Destruction or Mutilation of  Warrant.   Upon
     receipt  by  the Company of evidence reasonably satisfactory
     to  it of the loss, theft, destruction or mutilation of this
     Warrant,  and  in  the  case of  any  such  loss,  theft  or
     destruction, of an indemnity letter (reasonably satisfactory
     to  the  Company) by an institutional Warrantholder,  or  in
     other  cases,  indemnity or security reasonably satisfactory
     to  it,  and in the case of such mutilation, upon  surrender
     and  cancellation of this Warrant, the Company will make and
     deliver a new warrant or warrants of like tenor and date, in
     lieu of this Warrant.

11.  Saturdays, Sundays, Holidays, etc.  If the last or appointed
     day  for the taking of any action or the expiration  of  any
     right  required or granted herein shall not  be  a  Business
     Day,  then  such action may be taken or such  right  may  be
     exercised on the next succeeding day that is a Business Day.

13.  Rule  144  Information. The Company covenants that  it  will
     file the reports required to be filed by it under the Securities
     Act  and  the  Exchange  Act and the rules  and  regulations
     promulgated thereunder (or, if the Company is not required to
     file  such  reports,  it  will,  upon  the  request  of  any
     Warrantholder, make publicly available such information), and it
     will take such further action as any Warrantholder may reasonably
     request, all to the extent required from time to time to enable
     such holder to sell the Warrants without registration under the
     Securities Act within the limitation of the exemptions provided
     by (i) Rule 144 under the Securities Act, as such Rule may be
     amended from time to time, or (ii) any similar rule or regulation
     hereafter adopted by the Securities and Exchange Commission. Upon
     the request of any Warrantholder, the Company will deliver to
     such Warrantholder a written statement that it has complied with
     such requirements.

13.  Adjustments  and Other Rights. The Exercise  Price  and  the
     number  of  Shares issuable upon exercise  of  this  Warrant
     shall be subject to adjustment from time to time as follows:
     
          (A)  Common Stock Issued at Less than Market Value.  If
     the  Company  issues or sells any Common  Stock  other  than
     Excluded  Stock  without consideration or for  consideration
     per share less than the Market Price of the Common Stock, on
     the  last  trading day immediately preceding such  issuance,
     the  Exercise Price in effect immediately prior to each such
     issuance or sale will immediately (except as provided below)
     be  reduced  to  the  price determined  by  multiplying  the
     Exercise Price, in effect immediately prior to such issuance
     or  sale, by a fraction, (1) the numerator of which shall be
     (x)  the  number  of  shares  of  Common  Stock  outstanding
     immediately  prior  to such issuance or sale  plus  (y)  the
     number  of  shares  of  Common  Stock  which  the  aggregate
     consideration received by the Company for the  total  number
     of  such additional shares of Common Stock so issued or sold
     would  purchase at the Market Price on the last trading  day
     immediately  preceding such issuance or  sale  and  (2)  the
     denominator of which shall be the number of shares of Common
     Stock  outstanding immediately after such issue or sale.  In
     such  event,  the number of shares of Common Stock  issuable
     upon the exercise of this Warrant shall be increased to  the
     number  obtained  by  dividing (i) the product  of  (a)  the
     number  of Shares issuable upon the exercise of this Warrant
     before such adjustment, and (b) the Exercise Price in effect
     immediately  prior  to  the issuance  giving  rise  to  this
     adjustment  by  (ii)  the new Exercise Price  determined  in
     accordance with the immediately preceding sentence. For  the
     purposes  of  any adjustment of the Exercise Price  and  the
     number  of  Shares issuable upon exercise  of  this  Warrant
     pursuant  to  this  Section 13(A), the following  provisions
     shall be applicable:
     
               (i)   In the case of the issuance of Common  Stock
          for  cash, the amount of the consideration received  by
          the  Company  shall be deemed to be the amount  of  the
          cash  proceeds received by the Company for such  Common
          Stock  before  deducting  therefrom  any  discounts  or
          commissions  allowed, paid or incurred by  the  Company
          for  any  underwriting or otherwise in connection  with
          the issuance and sale thereof.
          
               (ii)  In the case of the issuance of Common  Stock
          (otherwise  than  upon  the  conversion  of  shares  of
          Capital Stock or other securities of the Company) for a
          consideration  in  whole or in part  other  than  cash,
          including  securities  acquired  in  exchange  therefor
          (other than securities by their terms so exchangeable),
          the consideration other than cash shall be deemed to be
          the  fair  value thereof as determined  by  the  Board,
          provided,  however, that such fair value as  determined
          by  the  Board  shall not exceed the  aggregate  Market
          Price of the shares of Common Stock being issued as  of
          the  date  the  Board authorizes the issuance  of  such
          shares.
          
               (iii)      In  the  case of the  issuance  of  (a)
          options,  warrants  or  other  rights  to  purchase  or
          acquire  Common  Stock (whether  or  not  at  the  time
          exercisable)   or  (b)  securities   by   their   terms
          convertible  into  or  exchangeable  for  Common  Stock
          (whether   or  not  at  the  time  so  convertible   or
          exchangeable)  or  options,  warrants  or   rights   to
          purchase  such  convertible or exchangeable  securities
          (whether or not at the time exercisable):
          
                    (1)  the  aggregate maximum number of  shares
                         of   Common   Stock   deliverable   upon
                         exercise  of  such options, warrants  or
                         other  rights  to  purchase  or  acquire
                         Common  Stock  shall be deemed  to  have
                         been  issued  at the time such  options,
                         warrants or rights are issued and for  a
                         consideration equal to the consideration
                         (determined  in the manner  provided  in
                         Section  13(A)(i)  and  (ii),  if   any,
                         received   by  the  Company   upon   the
                         issuance  of  such options, warrants  or
                         rights  plus the minimum purchase  price
                         provided  in  such options, warrants  or
                         rights  for  the  Common  Stock  covered
                         thereby;
                         
                    (2)  the  aggregate maximum number of  shares
                         of   Common   Stock   deliverable   upon
                         conversion  of  or in exchange  for  any
                         such    convertible   or    exchangeable
                         securities,  or  upon  the  exercise  of
                         options,  warrants or  other  rights  to
                         purchase or acquire such convertible  or
                         exchangeable    securities    and    the
                         subsequent   conversion   or    exchange
                         thereof,  shall be deemed to  have  been
                         issued at the time such securities  were
                         issued  or  such  options,  warrants  or
                         rights   were   issued   and    for    a
                         consideration     equal      to      the
                         consideration, if any, received  by  the
                         Company  for  any  such  securities  and
                         related  options,  warrants  or   rights
                         (excluding any cash received on  account
                         of    accrued   interest   or    accrued
                         dividends),    plus    the    additional
                         consideration (determined in the  manner
                         provided  in Section 13(A)(i) and  (ii),
                         if  any,  to be received by the  Company
                         upon  the conversion or exchange of such
                         securities, or upon the exercise of  any
                         related  options, warrants or rights  to
                         purchase or acquire such convertible  or
                         exchangeable    securities    and    the
                         subsequent   conversion   or    exchange
                         thereof;
                         
                    (3)  on any change in the number of shares of
                         Common  Stock deliverable upon  exercise
                         of  any such options, warrants or rights
                         or   conversion  or  exchange  of   such
                         convertible  or exchangeable  securities
                         or any change in the consideration to be
                         received   by  the  Company  upon   such
                         exercise,  conversion or  exchange,  but
                         excluding  changes  resulting  from  the
                         anti-dilution provisions thereof (to the
                         extent  comparable to the  anti-dilution
                         provisions   contained   herein),    the
                         Exercise Price and the number of  Shares
                         issuable  upon exercise of this  Warrant
                         as  then  in  effect shall forthwith  be
                         readjusted  to such Exercise  Price  and
                         number  of  Shares as  would  have  been
                         obtained  had  an adjustment  been  made
                         upon   the  issuance  of  such  options,
                         warrants  or rights not exercised  prior
                         to  such  change, or of such convertible
                         or exchangeable securities not converted
                         or  exchanged prior to such change, upon
                         the basis of such change;
                         
                    (4)  on the expiration or cancellation of any
                         such   options,   warrants   or   rights
                         (without  exercise), or the  termination
                         of the right to convert or exchange such
                         convertible  or exchangeable  securities
                         (without   exercise),  if  the  Exercise
                         Price  and the number of Shares issuable
                         upon exercise of this Warrant shall have
                         been adjusted upon the issuance thereof,
                         the  Exercise  Price and the  number  of
                         Shares  issuable upon exercise  of  this
                         Warrant shall forthwith be readjusted to
                         such Exercise Price and number of Shares
                         as  would  have  been  obtained  had  an
                         adjustment  been made upon the  issuance
                         of  such  options, warrants,  rights  or
                         such    convertible   or    exchangeable
                         securities on the basis of the  issuance
                         of  only the number of shares of  Common
                         Stock  actually issued upon the exercise
                         of  such options, warrants or rights, or
                         upon  the conversion or exchange of such
                         convertible  or exchangeable securities;
                         and
                         
                    (5)  if  the Exercise Price and the number of
                         Shares  issuable upon exercise  of  this
                         Warrant  shall  have been adjusted  upon
                         the   issuance  of  any  such   options,
                         warrants,   rights  or  convertible   or
                         exchangeable  securities,   no   further
                         adjustment of the Exercise Price and the
                         number  of Shares issuable upon exercise
                         of  this  Warrant shall be made for  the
                         actual issuance of Common Stock upon the
                         exercise,    conversion   or    exchange
                         thereof;  provided,  however,  that   no
                         increase in the Exercise Price shall  be
                         made  pursuant to subclauses (1) or  (2)
                         of this Section 13(A) (iii).
                         
          (C)   Stock Splits, Subdivisions, Reclassifications  or
     Combinations.  If the Company shall (1) declare a dividend or
     make  a distribution on its Common Stock in shares of Common
     Stock, (2) subdivide or reclassify the outstanding shares of
     Common Stock into a greater number of shares, or (3) combine or
     reclassify the outstanding Common Stock into a smaller number of
     shares, the number of Shares issuable upon exercise of  this
     Warrant at the time of the record date for such dividend  or
     distribution  or  the  effective date of  such  subdivision,
     combination or reclassification shall be proportionately adjusted
     so that the Warrantholder after such date shall be entitled to
     purchase the number of shares of Common Stock which such holder
     would have owned or been entitled to receive after such date had
     this  Warrant been exercised immediately prior to such date.
     Successive adjustments in the Exercise Price shall  be  made
     whenever any event specified above shall occur. In such event the
     Exercise Price in effect at the time of the record date for such
     dividend  or  distribution or the  effective  date  of  such
     subdivision, combination or reclassification shall be adjusted to
     the number obtained by dividing (i) the product of (a) the number
     of Shares issuable upon the exercise of this Warrant before such
     adjustment and (b) the Exercise Price in effect immediately prior
     to the issuance giving rise to this adjustment by (ii) the new
     number of shares issuable upon exercise of the Warrant determined
     pursuant to the immediately preceding sentence.
     
          (C)   Other  Distributions.  In case the Company  shall
     fix  a  record date for the making of a distribution to  all
     holders of shares of its Common Stock (i) of shares  of  any
     class  other  than its Common Stock or (ii) of  evidence  of
     indebtedness of the Company or any Subsidiary  or  (iii)  of
     assets (excluding Ordinary Cash Dividends, and dividends  or
     distributions  referred to in Section  13(B)),  or  (iv)  of
     rights  or warrants (excluding those referred to in  Section
     13(B)),  in  each  such case the Exercise  Price  in  effect
     immediately  prior  thereto  shall  be  reduced  immediately
     thereafter to the price determined by dividing (x) an amount
     equal  to  the difference resulting from (1) the  number  of
     shares  of  Common  Stock outstanding on  such  record  date
     multiplied  by the Exercise Price per share on  such  record
     date,   less  (2)  the  fair  market  value  (as  reasonably
     determined  by  the Board) of said shares  or  evidences  of
     indebtedness  or  assets or rights  or  warrants  to  be  so
     distributed,  by  (y) the number of shares of  Common  Stock
     outstanding  on such record date; such adjustment  shall  be
     made  successively whenever such a record date is fixed.  In
     such  event,  the number of shares of Common Stock  issuable
     upon the exercise of this Warrant shall be increased to  the
     number  obtained  by  dividing (i) the product  of  (a)  the
     number  of Shares issuable upon the exercise of this Warrant
     before such adjustment, and (b) the Exercise Price in effect
     immediately  prior  to  the issuance  giving  rise  to  this
     adjustment  by  (ii)  the new Exercise Price  determined  in
     accordance with the immediately preceding sentence.  In  the
     event  that  such distribution is not so made, the  Exercise
     Price  and  the number of Shares issuable upon  exercise  of
     this  Warrant then in effect shall be readjusted,  effective
     as  of  the date when the Board determines not to distribute
     such  shares, evidences of indebtedness, assets,  rights  or
     warrants,  as  the case may be, to the Exercise  Price  that
     would  then be in effect and the number of Shares that would
     then  be  issuable  upon exercise of this  Warrant  if  such
     record date had not been fixed.
     
          (D)   Certain Repurchases of Common Stock.  In case the
     Company effects a Pro Rata Repurchase of Common Stock,  then
     the  Exercise Price shall be reduced to the price determined
     by  multiplying  the  Exercise Price in  effect  immediately
     prior to the effective date of such Pro Rata Repurchase by a
     fraction of which the numerator shall be  (i) the product of
     (x)  the  number  of  shares  of  Common  Stock  outstanding
     immediately  before  such Pro Rata Repurchase  and  (y)  the
     Market  Price of a share of Common Stock on the trading  day
     immediately preceding the first public announcement  by  the
     Company  or  any of its Affiliates of the intent  to  effect
     such  Pro Rata Repurchase, minus (ii) the aggregate purchase
     price  of  the  Pro  Rata  Repurchase,  and  of  which   the
     denominator shall be the product of (i) the number of shares
     of  Common Stock outstanding immediately prior to  such  Pro
     Rata  Repurchase minus the number of shares of Common  Stock
     so repurchased and (ii) the Market Price per share of Common
     Stock  on  the trading day immediately preceding  the  first
     public  announcement  of such Pro Rata Repurchase.  In  such
     event,  the  number of shares of Common Stock issuable  upon
     the  exercise  of  this Warrant shall be  increased  to  the
     number  obtained  by  dividing (i) the product  of  (a)  the
     number  of Shares issuable upon the exercise of this Warrant
     before such adjustment, and (b) the Exercise Price in effect
     immediately prior to the Pro Rata Repurchase giving rise  to
     this adjustment by (ii) the new Exercise Price determined in
     accordance with the immediately preceding sentence.
     
          (E)   Business  Combinations.  In case of any  Business
     Combination or reclassification of Common Stock (other  than
     a  reclassification of Common Stock referred to  in  Section
     13(B)), any Shares issued or issuable upon exercise of  this
     Warrant shall after the date of such Business Combination or
     reclassification  be exchangeable for  into  the  number  of
     shares  of  stock or other securities or property (including
     cash)  to  which the Common Stock issuable (at the  time  of
     such  consolidation, merger, sale, lease or conveyance) upon
     exercise  of this Warrant immediately prior to such Business
     Combination  or  reclassification would have  been  entitled
     upon  such Business Combination or reclassification; and  in
     any such case, if necessary, the provisions set forth herein
     with  respect to the rights and interests thereafter of  the
     Warrantholder shall be appropriately adjusted so  as  to  be
     applicable, as nearly as may reasonably be, to any shares of
     stock or other securities or property thereafter deliverable
     on  the  exercise of this Warrant.  In determining the  kind
     and  amount  of stock, securities or the property receivable
     upon  consummation  of  such Business  Combination,  if  the
     holders of Common Stock have the right to elect the kind  or
     amount of consideration receivable upon consummation of such
     Business Combination, then the Warrantholder shall have  the
     right  to  make  a  similar election upon exercise  of  this
     Warrant  with respect to the number of shares  of  stock  or
     other  securities  or property which the Warrantholder  will
     receive upon exercise of this Warrant.
     
          (F)   Rounding  of  Calculations; Minimum  Adjustments.
     All  calculations under this Section 13 shall be made to the
     nearest one-tenth (1/10th) of a cent or to the nearest  one-
     hundreth  (1/100th) of a share, as the  case  may  be.   Any
     provision    of   this   Section   13   to   the    contrary
     notwithstanding, no adjustment in the Exercise Price or  the
     number  of  Shares  into which this Warrant  is  exercisable
     shall be made if the amount of such adjustment would be less
     than $0.01 or one-tenth (1/10th) of a share of Common Stock,
     respectively,  but any such amount shall be carried  forward
     and  an adjustment with respect thereto shall be made at the
     time  of and together with any subsequent adjustment  which,
     together with such amount and any other amount or amounts so
     carried forward, shall aggregate $0.01 or 1/10th of a  share
     of Common Stock, respectively, or more.
     
          (G)  Timing of Issuance of Additional Common Stock Upon
     Certain Adjustments. In any case in which the provisions  of
     this  Section  13  shall require that  an  adjustment  shall
     become  effective  immediately after a record  date  for  an
     event,  the Company may defer until the occurrence  of  such
     event  (i)  issuing  to the Warrantholder  of  this  Warrant
     exercised  after such record date and before the  occurrence
     of such event the additional shares of Common Stock issuable
     upon  such exercise by reason of the adjustment required  by
     such  event  over  and  above the  shares  of  Common  Stock
     issuable  upon  such exercise before giving effect  to  such
     adjustment and (ii) paying to such Warrantholder any  amount
     of  cash  in  lieu  of a fractional share of  Common  Stock;
     provided,  however,  that  the Company  upon  request  shall
     deliver   to  such  Warrantholder  a  due  bill   or   other
     appropriate instrument evidencing such Warrantholder's right
     to  receive such additional shares, and such cash, upon  the
     occurrence of the event requiring such adjustment.
     
          (H)   Statement  Regarding  Adjustments.  Whenever  the
     Exercise  Price  or  the number of Shares  into  which  this
     Warrant  is  exercisable shall be adjusted  as  provided  in
     Section  13,  the  Company  shall  forthwith  file,  at  the
     principal  office  of  the Company a  statement  showing  in
     reasonable  detail the facts requiring such  adjustment  and
     the Exercise Price that shall be in effect and the number of
     Shares  into  which this Warrant shall be exercisable  after
     such  adjustment and the Company shall also cause a copy  of
     such  statement  to  be sent by mail,  first  class  postage
     prepaid,  to each Warrantholder at the address appearing  in
     the Company's records.
     
          (I)   Notices.   In  the event that the  Company  shall
     propose  to  take any action of the type described  in  this
     Section 13 (but only if the action of the type described  in
     this  Section  13  would  result in  an  adjustment  in  the
     Exercise  Price  or  the number of Shares  into  which  this
     Warrant is exercisable or a change in the type of securities
     or  property to be delivered upon exercise of this Warrant),
     the  Company shall give notice to the Warrantholder, in  the
     manner  set  forth  in  Section 13(H),  which  notice  shall
     specify  the record date, if any, with respect to  any  such
     action and the approximate date on which such action  is  to
     take place.  Such notice shall also set forth the facts with
     respect thereto as shall be reasonably necessary to indicate
     the  effect  on the Exercise Price and the number,  kind  or
     class  of shares or other securities or property which shall
     be deliverable upon exercise of this Warrant. In the case of
     any  action which would require the fixing of a record date,
     such  notice  shall be given at least 10 days prior  to  the
     date  so fixed, and in case of all other action, such notice
     shall be given at least 15 days prior to the taking of  such
     proposed action.  Failure to give such notice, or any defect
     therein,  shall not affect the legality or validity  of  any
     such action.
     
          (J)  No Impairment.  The Company will not, by amendment
     of  its Articles or through any reorganization, transfer  of
     assets, consolidation, merger, dissolution, issue or sale of
     securities or any other voluntary action, avoid or  seek  to
     avoid  the observance or performance of any of the terms  to
     be  observed or performed hereunder by the Company, but will
     at all times in good faith assist in the carrying out of all
     the  provisions of this Warrant and in taking  of  all  such
     action  as  may  be  necessary or appropriate  in  order  to
     protect the rights of the Warrantholder.
     
21.  Rights.   Whenever the Company shall issue shares of  Common
     Stock upon exercise of this Warrant, the Company shall issue,
     together with each such share of Common Stock, one right  to
     purchase Series A Junior Participating Preferred Stock of the
     Company (or other securities in lieu thereof) pursuant to the
     Rights Agreement, or any similar rights issued to holders of
     Common Stock in addition thereto or in the replacement therefor
     (such rights, together with any additional or replacement rights,
     being collectively referred to as the "Rights"), whether or not
     such Rights shall be exercisable at such time, but only if such
     Rights are issued and outstanding and held by the other holders
     of Common Stock (or evidenced by outstanding share certificates
     representing Common Stock) at such time and have not expired or
     been redeemed.
     
22.    Governing  Law.   This Warrant shall be binding  upon  any
     successors  or  assigns of the Company.  This Warrant  shall
     constitute  a contract under the laws of Texas and  for  all
     purposes shall be construed in accordance with and governed by
     the laws of Texas, without giving effect to the conflict of laws
     principles.
     
23.  Attorneys'  Fees.  In any litigation, arbitration  or  court
     proceeding between the Company and the Warrantholder as  the
     holder of this Warrant relating hereto, the prevailing party
     shall be entitled to reasonable attorneys' fees and expenses
     incurred in enforcing this Warrant.

24.  Amendments.  This Warrant may be amended and the  observance
     of any term of this Warrant may be waived only with the written
     consent of the Company and the Warrantholder.

25.  Notice.  All notices hereunder shall be in writing and shall
     be  effective (a) on the day on which delivered if delivered
     personally or transmitted by telex or telegram or telecopier with
     evidence of receipt, (b) one Business Day after the date on which
     the  same  is delivered to a nationally recognized overnight
     courier service with evidence of receipt, or (c) five Business
     Days  after the date on which the same is deposited, postage
     prepaid, in the U.S. mail, sent by certified or registered mail,
     return receipt requested, and addressed to the party  to  be
     notified at the address indicated below for the Company, or at
     the  address for the Warrantholder set forth in the registry
     maintained by the Company pursuant to Section 9, or at such other
     address and/or telecopy or telex number and/or to the attention
     of such other person as the Company or the Warrantholder may
     designate by ten-day advance written notice.

26.  Prohibited  Actions.  The Company agrees that  it  will  not
     take any action which would entitle the Warrantholder to  an
     adjustment of the Exercise Price if the total number of shares of
     Common Stock issuable after such action upon exercise of this
     Warrant,  together  with all shares  of  Common  Stock  then
     outstanding and all shares of Common Stock then issuable upon the
     exercise of all outstanding options, warrants, conversion and
     other rights, would exceed the total number of shares of Common
     Stock then authorized by its Restated Articles of Incorporation.

27.  Entire Agreement. This Warrant and the forms attached hereto
     contain the entire agreement between the parties with respect to
     the  subject  matter  hereof and  supersede  all  prior  and
     contemporaneous  arrangements or undertakings  with  respect
     thereto.


          [Remainder of Page Intentionally Left Blank]

     IN  WITNESS WHEREOF, the Company has caused this Warrant  to
be executed by a duly authorized officer.

Dated:  January ____, 1999

                                   EEX Corporation


                                   
                                   J.T. Leary
                                   Vice President - Finance and
Treasurer

                  [Form of Notice of Exercise]
                                
                                
                              Date:
                                
                                
TO:  EEX Corporation

RE:  Election to Subscribe for and Purchase Common Stock

     The undersigned, pursuant to the provisions set forth in the
attached Warrant, hereby agrees to subscribe for and purchase the
number  of shares of the Common Stock set forth below covered  by
such  Warrant.  The undersigned, in accordance with Section 3  of
the  Warrant,  hereby agrees to pay the aggregate Exercise  Price
for such shares of Common Stock in the manner set forth below.  A
new  warrant  evidencing  the remaining shares  of  Common  Stock
covered  by  such  Warrant,  but  not  yet  subscribed  for   and
purchased, should be issued in the name set forth below.  If  the
new  warrant  is  being  transferred, an opinion  of  counsel  is
attached hereto with respect to the transfer of such warrant.


Number of Shares of Common Stock:

Method of Payment of Exercise Price:

Name and Address of Person to be
Issued New Warrant:






                                                          Holder:
                                                                 
                                                              By:
                                                                 
                                                            Name:
                                                                 
                                                           Title:

<PAGE>                                                                 
     
                                       Exhibit 7.2(b)(ii)(C)
                                
                   [FORM OF SERIES C WARRANT]
     
     
     THESE  SECURITIES  HAVE NOT BEEN REGISTERED  UNDER  THE
     SECURITIES  ACT  OF 1933, AS AMENDED  (THE  "SECURITIES
     ACT"),  OR  ANY STATE SECURITIES LAWS.  THEY HAVE  BEEN
     ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW  TO,
     OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF
     IN  VIOLATION OF ANY APPLICABLE SECURITIES LAWS.   THEY
     MAY   NOT   BE   SOLD,  OFFERED  FOR   SALE,   PLEDGED,
     HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF
     AN  EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR
     AN   OPINION  OF  COUNSEL,  SATISFACTORY  IN  FORM  AND
     SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS  NOT
     REQUIRED  UNDER  THE SECURITIES ACT AND ANY  APPLICABLE
     STATE SECURITIES LAWS.

                        SERIES C WARRANT

No. 1                                           January ___, 1999

         To Purchase [8,000,000] shares of Common Stock,
          par value $.01 per share, of EEX Corporation

5.   Definitions.  Unless  the context otherwise  required,  when
     used herein the following terms shall have the meaning indicated.

     "Affiliate"  means  with respect to any  Person,  any  other
     Person   directly,  or  indirectly  through  one   or   more
     intermediaries, controlling, controlled by or  under  common
     control  with such Person. For purposes of this  definition,
     the  term  "control"  (and correlative terms  "controlling,"
     "controlled  by"  and  "under common  control  with")  means
     possession  of  the  power,  whether  by  contract,   equity
     ownership or otherwise, to direct the policies or management
     of a Person.
     
     "Beneficially Own" or "Beneficial Ownership" is  defined  in
     Rules  13d-3  and  13d-5 of the Exchange  Act,  but  without
     taking   into   account  any  contractual  restrictions   or
     limitations on voting or other rights.
     
     "Board" means the Board of Directors of the Company.
     
     "Business Combination" means (i) any consolidation,  merger,
     share  exchange or similar business combination  transaction
     involving  the  Company with any Person or  (ii)  the  sale,
     assignment  conveyance, transfer, lease or other disposition
     by the Company of all or substantially all of its assets.
     
     "Business Day" means any day except Saturday, Sunday and any
     day which shall be a legal holiday or a day on which banking
     institutions  in Houston, Texas or New York City,  New  York
     generally  are  authorized  or  required  by  law  or  other
     governmental actions to close.
     
     "Capital Stock" means (i) with respect to any Person that is
     a  corporation  or  company, any and all shares,  interests,
     participations or other equivalents (however designated)  of
     capital  or  capital  stock of such  Person  and  (ii)  with
     respect  to any Person that is not a corporation or company,
     any  and  all partnership or other equity interests of  such
     Person.
     
     "Change  of  Control" shall mean any event constituting  (a)
     the  consummation of any Business Combination  except  where
     (i)  the  shareholders of the Company immediately  prior  to
     such  Business  Combination own (in substantially  the  same
     proportion relative to each other as such shareholders owned
     the Common Stock immediately prior to such consummation) (x)
     forty  percent  (40%)  or more of the Voting  Stock  of  the
     surviving entity on both a Modified Non Diluted Basis and  a
     Modified Fully Diluted Basis immediately after such Business
     Combination,  and (y) forty percent (40%)  or  more  of  the
     outstanding common stock of the surviving entity on  both  a
     Modified  Non  Diluted  Basis and a Modified  Fully  Diluted
     Basis immediately after such Business Combination, (ii)  the
     members of the Board immediately prior to the entering  into
     the   agreement   relating  to  such  Business   Combination
     constitute at least a majority of the Board or the board  of
     directors  of  the surviving entity immediately  after  such
     Business Combination, with no agreements or arrangements  in
     place  immediately after such consummation that would result
     in  the  members  of  the  Board immediately  prior  to  the
     entering  into  the  agreement  relating  to  such  Business
     Combination ceasing to constitute at least a majority of the
     Board or the board of directors of the surviving entity  and
     (iii)  no  Non-Financial  Person or Group  of  Non-Financial
     Persons is the Beneficial Owner of 20% or more of the  total
     outstanding  Voting Stock or common stock of  the  surviving
     entity and no Financial Person or Group of Financial Persons
     is  the  Beneficial  Owner  of 35%  or  more  of  the  total
     outstanding  Voting Stock or common stock of  the  surviving
     entity  or  (b)  any Non-Financial Person or Group  of  Non-
     Financial persons acquiring Beneficial Ownership of  20%  or
     more  of the total outstanding Voting Stock or Common  Stock
     of the Company or any Financial Person or Group of Financial
     Persons acquiring Beneficial Ownership of 35% or more of the
     total  outstanding  Voting Stock  or  Common  Stock  of  the
     Company.
     
     "Common  Stock" means the Company's common stock, par  value
     $.01 per share, and any Capital Stock for or into which such
     Common Stock hereafter is exchanged, converted, reclassified
     or  recapitalized by the Company or pursuant to an agreement
     or Business Combination to which the Company is a party.
     
     "Common  Stock Equivalents" means (without duplication  with
     any  other Common Stock or common stock, as the case may be,
     or  Common  Stock  Equivalents) rights,  warrants,  options,
     convertible    securities   or   exchangeable    securities,
     exercisable   for  or  convertible  or  exchangeable   into,
     directly  or indirectly, Common Stock, or common  stock,  as
     the case may be, whether at the time of issuance or upon the
     passage  of  time  or the occurrence of some  future  event,
     including the Warrants.
     
     "Company" means EEX Corporation, a Texas Corporation.
     
     "Early  Exercise Event" means the occurrence of any  of  the
     following:  (i)  an  agreement  providing  for  a   Business
     Combination  is  approved  by the  Board  if  such  Business
     Combination,  if consummated, would result in  a  Change  of
     Control, (ii) a Tender Offer for the Company's securities is
     approved or recommended by the Board, (iii) Warburg,  Pincus
     Equity  Partners,  L.P. and its Affiliates Beneficially  Own
     less  than  10%  of  the outstanding  Voting  Stock  of  the
     Company,   (iv)   there  is  a  redemption,  repurchase   or
     reacquisition  by the Company of Rights issued  pursuant  to
     the Rights Agreement or any waiver of the application of the
     Rights  Agreement to any Beneficial Owner or  (v)  any  Non-
     Financial   Person   or   Group  of  Non-Financial   Persons
     Beneficially  Own  more than 20% of the  outstanding  Voting
     Stock  of  the Company or any Financial Person or  Group  of
     Financial  Persons Beneficially Own more  than  35%  of  the
     outstanding Voting Stock of the Company.
     
     "Exchange Act" means the Securities Exchange Act of 1934, as
     amended,  or  any  successor  statute,  and  the  rules  and
     regulations promulgated thereunder.
     
     "Excluded Stock" means (i) shares of Common Stock issued  by
     the  Company as a stock dividend payable in shares of Common
     Stock,   or  upon  any  subdivision  or  split-up   of   the
     outstanding  shares of Capital Stock in each  case  with  is
     subject  to Section 13(B), or upon conversion of  shares  of
     Capital  Stock  (but not the issuance of such Capital  Stock
     which   will  be  subject  to  the  provisions  of   Section
     13(A)(iii)),  (ii) shares of Common Stock to  be  issued  to
     employees, consultants and advisors of the Company  pursuant
     to  options  granted prior to the date of issuance  of  this
     Warrant  and pursuant to options granted after the  date  of
     issuance of this Warrant if the exercise price per share  of
     Common Stock on the date of such grant equals or exceeds the
     Market Price of a share of Common Stock on the date of  such
     grant.
     
     "Exercise Price" has the meaning given to it in Section 2.
     
     "Expiration Time" has the meaning given to it in Section 3.
     
     "Financial  Person" means any Person that (i) is,  or  holds
     itself  out  as being, engaged primarily in the business  of
     investing,  reinvesting,  owning,  holding  or  trading   in
     securities,  and  (ii) together with its Affiliates  is  not
     engaged  in  (x)  any  significant  activities  other   than
     financial  services, insurance or investment  activities  or
     (y)  directly  or  indirectly  through  Affiliates,  in  any
     industrial activities, including the oil and gas and  energy
     industry.
     
     "Group" means a group as contemplated by Section 13(d)(3) of
     the Exchange Act.
     
     "Market Price" means, with respect to a particular security,
     on  any given day, the last reported sale price regular  way
     or,  in case no such reported sale takes place on such  day,
     the average of the last closing bid and asked prices regular
     way,  in  either  case on the principal national  securities
     exchange  on  which the applicable securities is  listed  or
     admitted to trading, or if not listed or admitted to trading
     on  any  national securities exchange, (i) the closing  sale
     price  for  such day reported by the NASDAQ Stock Market  if
     such  security is traded over-the-counter and quoted in  the
     NASDAQ  Stock Market, or (ii) if such security is so traded,
     but  not so quoted, the average of the closing reported  bid
     and  asked prices of such security as reported by the NASDAQ
     Stock  Market  or any comparable system, or  (iii)  if  such
     security  is  not listed on the NASDAQ Stock Market  or  any
     comparable system, the average of the closing bid and  asked
     prices   as  furnished  by  two  members  of  the   National
     Association of Securities Dealers, Inc. selected  from  time
     to  time  by the Company for that purpose.  If such security
     is  not  listed  and traded in a manner that the  quotations
     referred  to  above  are available for the  period  required
     hereunder, the Market Price per share of Common Stock  shall
     be deemed to be the fair value per share of such security as
     determined  in good faith by the Board of Directors  of  the
     Company.
     
     "Modified  Fully-Diluted  Basis" shall  mean  a  calculation
     based  on  the  then outstanding shares of Voting  Stock  or
     common  stock, as the case may be, plus all shares of Voting
     Stock   or   common   stock  acquirable  pursuant   to,   or
     constituting, Common Stock Equivalents, but excluding 50% of
     the  Voting Stock or common stock acquirable pursuant to the
     then outstanding Warrants.
     
     "Modified Non-Diluted Basis" shall mean a calculation  based
     on  the  then outstanding shares of Voting Stock  or  common
     stock,  as  the  case may be, and without giving  effect  to
     outstanding Common Stock Equivalents, but including (i)  50%
     of  the shares of common stock then acquirable upon exercise
     of  the  then  outstanding Warrants and (ii) the  number  of
     shares  of  common  stock equal to (a) the aggregate  Market
     Price  as  of the date of such Business Combination  of  all
     shares  of  common  stock acquirable upon  exercise  of  all
     outstanding  employee stock options of the  relevant  entity
     that have an exercise price of less than the Market Price of
     common  stock  as  of the date of such Business  Combination
     less  the  aggregate  exercises price of  all  such  options
     divided  by (b) the Market Price of common stock as  of  the
     date of such Business Combination.
     
     "Non-Financial  Person"  means any  Person  that  is  not  a
     Financial Person.
     
     "Ordinary  Cash  Dividends"  means  any  cash  dividend   or
     distribution which, when combined on a per share  of  Common
     Stock  basis  with the per share amounts of all  other  cash
     dividends  and cash 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
     Section  13  and  excluding cash dividends or  distributions
     that  resulted in an adjustment to the Exercise Price), does
     not exceed 5% of the Market Price of a share of Common Stock
     on  the  trading  day  immediately  preceding  the  date  of
     declaration of such dividend or distribution.
     
     "Person"  means an individual or a corporation, partnership,
     trust,  incorporated or unincorporated association,  limited
     liability  company,  joint  venture,  joint  stock  company,
     government  (or an agency or political subdivision  thereof)
     or other entity of any kind.
     
     "Preferred Stock" means the Series B 8% Cumulative Perpetual
     Preferred Stock of the Company or successor preferred  stock
     as  contemplated by Section 5(C)(ii)(A) of the Statement  of
     Resolution.
     
     "Pro  Rata  Repurchases" means any  purchase  of  shares  of
     Common  Stock  by  the  Company  or  any  Affiliate  thereof
     pursuant  to any tender offer or exchange offer  subject  to
     Section 13(e) of the Exchange Act, or pursuant to any  other
     offer  available  to  substantially all  holders  of  Common
     Stock,  whether  for cash, shares of capital  stock  of  the
     Company,  other  securities  of the  Company,  evidences  of
     indebtedness of the Company or any other person or any other
     property  (including, without limitation, shares of  capital
     stock,  other securities or evidences of indebtedness  of  a
     subsidiary  of  the  Company), or any  combination  thereof,
     effected   while  this  Warrant  is  outstanding;  provided,
     however,  that "Pro Rata Repurchase" shall not  include  any
     purchase  of shares by the Company or any Affiliate  thereof
     made  in accordance with the requirements of Rule 10b-18  as
     in effect under the Exchange Act. The "Effective Date" of  a
     Pro  Rata  Repurchase shall mean the date of  acceptance  of
     shares for purchase or exchange under any tender or exchange
     offer which is a Pro Rata Repurchase or the date of purchase
     with respect to any Pro Rata Repurchase that is not a tender
     or exchange offer.
     
     "Purchase Agreement" means the Purchase Agreement, dated  as
     of  December 22, 1998, among the Company and the  purchasers
     named therein, including all schedules and exhibits thereto.
     
     "Rights  Agreement" means the Rights Agreement dated  as  of
     September  10,  1996 between the Company  and  Harris  Trust
     Company of New York, a New York trust company, as amended.
     
     "Rights" is defined in Section 14.
     
     "Securities  Act"  means  the Securities  Act  of  1933,  as
     amended,  or  any  successor  statute,  and  the  rules  and
     regulations promulgated thereunder.
     
     "Shares" is defined in Section 2.
     
     "Stated  Value" is an amount equal to $100.00 per  share  of
     Preferred Stock.
     
     "Statement  of Resolution" means the Statement of Resolution
     relating to the Preferred Stock filed with the Secretary  of
     State of the State of Texas on January _____, 1999.
     
     "Subsidiary" of a Person means (i) a corporation, a majority
     of   whose   stock   with  voting  power,   under   ordinary
     circumstances,  to  elect  directors  is  at  the  time   of
     determination, directly or indirectly, owned by such  Person
     or  by one or more Subsidiaries of such Person, or (ii)  any
     other entity (other than a corporation) in which such Person
     or  one  or  more Subsidiaries of such Person,  directly  or
     indirectly,  at  the date of determination  thereof  has  at
     least a majority ownership interest.
     
     "Shares" has the meaning given to it in Section 2.
     
     "TBCA" means the Texas Business Corporation Act, as amended,
     or any successor statute or other legislation.
     
     "Tender Offer" means any transaction to which Regulation 14D
     of the Exchange Act applies.
     
     "Voting  Stock"  of  a Person means Capital  Stock  of  such
     Person of the class or classes pursuant to which the holders
     thereof   have  the  general  voting  power  under  ordinary
     circumstances  to  vote  in the election  of  the  board  of
     directors, managers or trustees of such Person.
     
     "Warrantholder" has the meaning given to it in Section 2.
     
     "Warrants"  means  collectively this Warrant,  the  10  year
     warrants to purchase an aggregate 10,500,000 shares and  the
     seven  year  warrants  to  purchase an  aggregate  2,500,000
     shares, all of which were issued to the purchasers named  in
     the Purchase Agreement pursuant to the Purchase Agreement.
     
2.   Number  of Shares; Exercise Price. This certifies that,  for
     value  received,  [Name of Warburg, Pincus  entity]  or  its
     registered  assigns (the "Warrantholder") is entitled,  upon
     the  terms  and  subject to the conditions  hereinafter  set
     forth, to acquire from the Company, in whole or in part,  up
     to  an aggregate of [8,000,000] fully paid and nonassessable
     shares  of  Common Stock, par value $0.01  per  share,  (the
     "Shares") of the Company, at a purchase price of $12.00  per
     Share  (the "Exercise Price"). The number of Shares and  the
     Exercise Price are subject to adjustment as provided herein,
     and all references to "Shares", "Common Stock" and "Exercise
     Price" herein shall be deemed to include any such adjustment
     or series of adjustments.

3.   Exercise of Warrant; Term.  The right to purchase the Shares
     represented by this Warrant are exercisable, in whole or  in
     part  by the Warrantholder, at any time or from time to time
     after  the earlier of August 31, 1999 and the occurrence  of
     an  Early  Exercise Event but in no event later  than  11:59
     p.m.  Central  Time, on January ___, 2006  (the  "Expiration
     Time"),  by (a) the surrender of this Warrant and Notice  of
     Exercise  annexed  hereto, duly completed  and  executed  on
     behalf of the Warrantholder, at the office of the Company in
     Houston,  Texas  (or  such other office  or  agency  of  the
     Company  in the United States as it may designate by  notice
     in  writing  to  the  Warrantholder at the  address  of  the
     Warrantholder  appearing on the books of the  Company),  and
     (b)  payment  of  the Exercise Price for the Shares  thereby
     purchased at the election of the Warrantholder in one of the
     following manners:

          (vii)     by tendering in cash, by certified or cashier's check
            or by wire transfer payable to the order of the Company; or
          
          (viii)    by having the Company withhold shares of Common Stock
            issuable upon exercise of the Warrant equal in value to the
            aggregate Exercise Price as to which this Warrant is so exercised
            based on the Market Price of the Common Stock on the trading day
            prior to the date on which this Warrant and the Notice of
            Exercise are delivered to the Company; or


          (ix) by tendering to the Company that number of shares of
            Preferred Stock rounded to the nearest whole share equal to the
            aggregate Exercise Price as to which this Warrant is so exercised
            divided by the sum of (1) the Stated Value of the Preferred Stock
            plus (2) any accrued but unpaid dividends thereon.
     
     If  the Warrantholder does not exercise this warrant in  its
     entirety, the Warrantholder will be entitled to receive from
     the  Company  within a reasonable time, not exceeding  three
     (3)  business days, a new warrant in substantially identical
     form for the purchase of that number of Shares equal to  the
     difference  between  the number of Shares  subject  to  this
     Warrant and the number of Shares as to which this Warrant is
     so exercised. Notwithstanding the foregoing, unless prior to
     July 30, 2002, the Company elects to permit the exercise  of
     this Warrant as otherwise contemplated by this Section 3  by
     written notice to the Warrantholders, the Warrantholder  may
     only  exercise  this  Warrant in  the  manner  permitted  by
     Section 3(b)(ii) and upon any such exercise receive, in lieu
     of  the  shares of Common Stock, cash in an amount equal  to
     the product of (i) the number of shares of Common Stock that
     would have been otherwise issuable and (ii) the Market Price
     on  the  trading day prior to the date on which this Warrant
     and  the  Notice of Exercise are delivered to  the  Company,
     such amount being paid by certified or cashiers check or  by
     wire  transfer in same day funds on the fourth business  day
     following such exercise.

4.   Issuance  of  Shares; Authorization; Listing.   Certificates
     for  Shares  issued upon exercise of this  Warrant  will  be
     issued  in  such  name  or names as  the  Warrantholder  may
     designate  and  will be delivered to such  named  Person  or
     Persons  within a reasonable time, not to exceed  three  (3)
     business days after the date on which this Warrant has  been
     duly exercised in accordance with the terms of this Warrant.
     The  Company hereby represents and warrants that any  Shares
     issued upon the exercise of this Warrant in accordance  with
     the  provisions  of Section 3 will, upon such  exercise,  be
     duly  and  validly  authorized and issued,  fully  paid  and
     nonassessable  and  free from all taxes, liens  and  charges
     (other than liens or charges created by or imposed upon  the
     Warrantholder or taxes in respect of any transfer  occurring
     contemporaneously therewith).  The Company agrees  that  the
     Shares  so issued will be deemed to have been issued to  the
     Warrantholder  as of the close of business on  the  date  on
     which  this  Warrant and payment of the Exercise  Price  are
     delivered  to  the Company in accordance with the  terms  of
     this  Warrant, notwithstanding that the stock transfer books
     of   the   Company  may  then  be  closed  or   certificates
     representing  such Shares may not be actually  delivered  on
     such  date.  The Company will at all times reserve and  keep
     available, out of its authorized but unissued Common  Stock,
     solely for the purpose of providing for the exercise of this
     Warrant,  the  aggregate number of shares  of  Common  Stock
     issuable upon exercise of this Warrant. The Company will (i)
     procure, at its sole expense, the listing of the Shares  and
     other  securities  issuable upon exercise of  this  Warrant,
     subject  to  issuance  or notice of issuance  on  all  stock
     exchanges on which the Common Stock or such other securities
     are  then listed or traded and (ii) maintain the listing  of
     such  Shares  or such other securities after issuance.   The
     Company  will take all action as may be necessary to  ensure
     that  the  Shares  may be issued without  violation  of  any
     applicable  law or regulation or of any requirement  of  any
     securities  exchange  on  which the  Shares  are  listed  or
     traded.

5.   No  Fractional  Shares  or Scrip.  No fractional  Shares  or
     scrip  representing fractional Shares shall be  issued  upon
     any  exercise  of this Warrant.  In lieu of  any  fractional
     Share   to  which  the  Warrantholder  would  otherwise   be
     entitled,  the Warrantholder shall be entitled to receive  a
     cash  payment equal to the Market Price of the Common  Stock
     less the Exercise Price for such fractional share.

12.  No  Rights  as  Shareholders; Transfer Books.  This  Warrant
     does not entitle the Warrantholder to any voting rights or other
     rights as a shareholder of the Company prior to the date  of
     exercise hereof. The Company will at no time close its transfer
     books  against transfer of this Warrant in any manner  which
     interferes with the timely exercise of this Warrant.

13.  Charges, Taxes and Expenses. Certificates for shares  issued
     upon exercise of this Warrant shall be issued in the name of the
     Warrantholder. Issuance of certificates for shares upon  the
     exercise of this Warrant shall be made without charge to the
     Warrantholder for any issue or transfer tax or other incidental
     expense in respect of the issuance of such certificates, all of
     which taxes and expenses shall be paid by the Company.

14.  Transfer/Assignment.  This Warrant and any rights  hereunder
     are not transferable by the Warrantholder, in whole or in part,
     in the absence of any effective registration statement related to
     this Warrant or an opinion of counsel, satisfactory in form and
     substance to the Company, that such registration is not required
     under the Securities Act and any applicable state securities
     laws. Subject to compliance with the preceding sentence, this
     Warrant and all rights hereunder are transferable, in whole or in
     part, upon the books of the Company by the registered holder
     hereof in person or by duly authorized attorney, and  a  new
     warrant shall be made and delivered by the Company, of the same
     tenor and date as this Warrant but registered in the name of the
     transferee, upon surrender of this Warrant, duly endorsed, to the
     office or agency of the Company described in Section 2.  All
     expenses, taxes (other than stock transfer taxes) and  other
     charges payable in connection with the preparation, execution and
     delivery of the new warrants pursuant to this Section 8 shall be
     paid  by the Company. The restrictions imposed by the  first
     sentence of this Section 8 shall terminate as to the Warrant (i)
     when such security has been effectively registered under the
     Securities  Act  and  disposed of  in  accordance  with  the
     registration statement covering such security, or (ii) when, in
     the opinion of counsel for the Company, such restrictions are no
     longer  required  in  order to achieve compliance  with  the
     Securities Act.

9.   Exchange   and  Registry  of  Warrant.   This   Warrant   is
     exchangeable, upon the surrender hereof by the Warrantholder
     at  the office or agency of the Company described in Section
     2,  for  a  new warrant or warrants of like tenor  and  date
     representing the right to purchase in the aggregate  a  like
     number  of shares. The Company shall maintain at the  office
     or agency described in Section 2 a registry showing the name
     and address of the Warrantholder as the registered holder of
     this  Warrant.  This Warrant may be surrendered for exchange
     or  exercise, in accordance with its terms, at the office of
     the  Company, and the Company shall be entitled to  rely  in
     all  respects, prior to written notice to the contrary, upon
     such registry.

10.  Loss,  Theft,  Destruction or Mutilation of  Warrant.   Upon
     receipt  by  the Company of evidence reasonably satisfactory
     to  it of the loss, theft, destruction or mutilation of this
     Warrant,  and  in  the  case of  any  such  loss,  theft  or
     destruction, of an indemnity letter (reasonably satisfactory
     to  the  Company) by an institutional Warrantholder,  or  in
     other  cases,  indemnity or security reasonably satisfactory
     to  it,  and in the case of such mutilation, upon  surrender
     and  cancellation of this Warrant, the Company will make and
     deliver a new warrant or warrants of like tenor and date, in
     lieu of this Warrant.

11.  Saturdays, Sundays, Holidays, etc.  If the last or appointed
     day  for the taking of any action or the expiration  of  any
     right  required or granted herein shall not  be  a  Business
     Day,  then  such action may be taken or such  right  may  be
     exercised on the next succeeding day that is a Business Day.

14.  Rule  144  Information. The Company covenants that  it  will
     file the reports required to be filed by it under the Securities
     Act  and  the  Exchange  Act and the rules  and  regulations
     promulgated thereunder (or, if the Company is not required to
     file  such  reports,  it  will,  upon  the  request  of  any
     Warrantholder, make publicly available such information), and it
     will take such further action as any Warrantholder may reasonably
     request, all to the extent required from time to time to enable
     such holder to sell the Warrants without registration under the
     Securities Act within the limitation of the exemptions provided
     by (i) Rule 144 under the Securities Act, as such Rule may be
     amended from time to time, or (ii) any similar rule or regulation
     hereafter adopted by the Securities and Exchange Commission. Upon
     the request of any Warrantholder, the Company will deliver to
     such Warrantholder a written statement that it has complied with
     such requirements.

13.  Adjustments  and Other Rights. The Exercise  Price  and  the
     number  of  Shares issuable upon exercise  of  this  Warrant
     shall be subject to adjustment from time to time as follows:
     
           (A) Common Stock Issued at Less than Market Value.  If
     the  Company  issues or sells any Common  Stock  other  than
     Excluded  Stock  without consideration or for  consideration
     per share less than the Market Price of the Common Stock, on
     the  last  trading day immediately preceding such  issuance,
     the  Exercise Price in effect immediately prior to each such
     issuance or sale will immediately (except as provided below)
     be  reduced  to  the  price determined  by  multiplying  the
     Exercise Price, in effect immediately prior to such issuance
     or  sale, by a fraction, (1) the numerator of which shall be
     (x)  the  number  of  shares  of  Common  Stock  outstanding
     immediately  prior  to such issuance or sale  plus  (y)  the
     number  of  shares  of  Common  Stock  which  the  aggregate
     consideration received by the Company for the  total  number
     of  such additional shares of Common Stock so issued or sold
     would  purchase at the Market Price on the last trading  day
     immediately  preceding such issuance or  sale  and  (2)  the
     denominator of which shall be the number of shares of Common
     Stock  outstanding immediately after such issue or sale.  In
     such  event,  the number of shares of Common Stock  issuable
     upon the exercise of this Warrant shall be increased to  the
     number  obtained  by  dividing (i) the product  of  (a)  the
     number  of Shares issuable upon the exercise of this Warrant
     before such adjustment, and (b) the Exercise Price in effect
     immediately  prior  to  the issuance  giving  rise  to  this
     adjustment  by  (ii)  the new Exercise Price  determined  in
     accordance with the immediately preceding sentence. For  the
     purposes  of  any adjustment of the Exercise Price  and  the
     number  of  Shares issuable upon exercise  of  this  Warrant
     pursuant  to  this  Section 13(A), the following  provisions
     shall be applicable:
     
               (i)   In the case of the issuance of Common  Stock
          for  cash, the amount of the consideration received  by
          the  Company  shall be deemed to be the amount  of  the
          cash  proceeds received by the Company for such  Common
          Stock  before  deducting  therefrom  any  discounts  or
          commissions  allowed, paid or incurred by  the  Company
          for  any  underwriting or otherwise in connection  with
          the issuance and sale thereof.
          
               (ii)  In the case of the issuance of Common  Stock
          (otherwise  than  upon  the  conversion  of  shares  of
          Capital Stock or other securities of the Company) for a
          consideration  in  whole or in part  other  than  cash,
          including  securities  acquired  in  exchange  therefor
          (other than securities by their terms so exchangeable),
          the consideration other than cash shall be deemed to be
          the  fair  value thereof as determined  by  the  Board,
          provided,  however, that such fair value as  determined
          by  the  Board  shall not exceed the  aggregate  Market
          Price of the shares of Common Stock being issued as  of
          the  date  the  Board authorizes the issuance  of  such
          shares.
          
               (iii)      In  the  case of the  issuance  of  (a)
          options,  warrants  or  other  rights  to  purchase  or
          acquire  Common  Stock (whether  or  not  at  the  time
          exercisable)   or  (b)  securities   by   their   terms
          convertible  into  or  exchangeable  for  Common  Stock
          (whether   or  not  at  the  time  so  convertible   or
          exchangeable)  or  options,  warrants  or   rights   to
          purchase  such  convertible or exchangeable  securities
          (whether or not at the time exercisable):
          
                    (1)  the  aggregate maximum number of  shares
                         of   Common   Stock   deliverable   upon
                         exercise  of  such options, warrants  or
                         other  rights  to  purchase  or  acquire
                         Common  Stock  shall be deemed  to  have
                         been  issued  at the time such  options,
                         warrants or rights are issued and for  a
                         consideration equal to the consideration
                         (determined  in the manner  provided  in
                         Section  13(A)(i)  and  (ii),  if   any,
                         received   by  the  Company   upon   the
                         issuance  of  such options, warrants  or
                         rights  plus the minimum purchase  price
                         provided  in  such options, warrants  or
                         rights  for  the  Common  Stock  covered
                         thereby;
                         
                    (2)  the  aggregate maximum number of  shares
                         of   Common   Stock   deliverable   upon
                         conversion  of  or in exchange  for  any
                         such    convertible   or    exchangeable
                         securities,  or  upon  the  exercise  of
                         options,  warrants or  other  rights  to
                         purchase or acquire such convertible  or
                         exchangeable    securities    and    the
                         subsequent   conversion   or    exchange
                         thereof,  shall be deemed to  have  been
                         issued at the time such securities  were
                         issued  or  such  options,  warrants  or
                         rights   were   issued   and    for    a
                         consideration     equal      to      the
                         consideration, if any, received  by  the
                         Company  for  any  such  securities  and
                         related  options,  warrants  or   rights
                         (excluding any cash received on  account
                         of    accrued   interest   or    accrued
                         dividends),    plus    the    additional
                         consideration (determined in the  manner
                         provided  in Section 13(A)(i) and  (ii),
                         if  any,  to be received by the  Company
                         upon  the conversion or exchange of such
                         securities, or upon the exercise of  any
                         related  options, warrants or rights  to
                         purchase or acquire such convertible  or
                         exchangeable    securities    and    the
                         subsequent   conversion   or    exchange
                         thereof;
                         
                    (3)  on any change in the number of shares of
                         Common  Stock deliverable upon  exercise
                         of  any such options, warrants or rights
                         or   conversion  or  exchange  of   such
                         convertible  or exchangeable  securities
                         or any change in the consideration to be
                         received   by  the  Company  upon   such
                         exercise,  conversion or  exchange,  but
                         excluding  changes  resulting  from  the
                         anti-dilution provisions thereof (to the
                         extent  comparable to the  anti-dilution
                         provisions   contained   herein),    the
                         Exercise Price and the number of  Shares
                         issuable  upon exercise of this  Warrant
                         as  then  in  effect shall forthwith  be
                         readjusted  to such Exercise  Price  and
                         number  of  Shares as  would  have  been
                         obtained  had  an adjustment  been  made
                         upon   the  issuance  of  such  options,
                         warrants  or rights not exercised  prior
                         to  such  change, or of such convertible
                         or exchangeable securities not converted
                         or  exchanged prior to such change, upon
                         the basis of such change;
                         
                    (4)  on the expiration or cancellation of any
                         such   options,   warrants   or   rights
                         (without  exercise), or the  termination
                         of the right to convert or exchange such
                         convertible  or exchangeable  securities
                         (without   exercise),  if  the  Exercise
                         Price  and the number of Shares issuable
                         upon exercise of this Warrant shall have
                         been adjusted upon the issuance thereof,
                         the  Exercise  Price and the  number  of
                         Shares  issuable upon exercise  of  this
                         Warrant shall forthwith be readjusted to
                         such Exercise Price and number of Shares
                         as  would  have  been  obtained  had  an
                         adjustment  been made upon the  issuance
                         of  such  options, warrants,  rights  or
                         such    convertible   or    exchangeable
                         securities on the basis of the  issuance
                         of  only the number of shares of  Common
                         Stock  actually issued upon the exercise
                         of  such options, warrants or rights, or
                         upon  the conversion or exchange of such
                         convertible  or exchangeable securities;
                         and
                         
                    (5)  if  the Exercise Price and the number of
                         Shares  issuable upon exercise  of  this
                         Warrant  shall  have been adjusted  upon
                         the   issuance  of  any  such   options,
                         warrants,   rights  or  convertible   or
                         exchangeable  securities,   no   further
                         adjustment of the Exercise Price and the
                         number  of Shares issuable upon exercise
                         of  this  Warrant shall be made for  the
                         actual issuance of Common Stock upon the
                         exercise,    conversion   or    exchange
                         thereof;  provided,  however,  that   no
                         increase in the Exercise Price shall  be
                         made  pursuant to subclauses (1) or  (2)
                         of this Section 13(A) (iii).
                         
          (D)   Stock Splits, Subdivisions, Reclassifications  or
     Combinations.  If the Company shall (1) declare a dividend or
     make  a distribution on its Common Stock in shares of Common
     Stock, (2) subdivide or reclassify the outstanding shares of
     Common Stock into a greater number of shares, or (3) combine or
     reclassify the outstanding Common Stock into a smaller number of
     shares, the number of Shares issuable upon exercise of  this
     Warrant at the time of the record date for such dividend  or
     distribution  or  the  effective date of  such  subdivision,
     combination or reclassification shall be proportionately adjusted
     so that the Warrantholder after such date shall be entitled to
     purchase the number of shares of Common Stock which such holder
     would have owned or been entitled to receive after such date had
     this  Warrant been exercised immediately prior to such date.
     Successive adjustments in the Exercise Price shall  be  made
     whenever any event specified above shall occur. In such event the
     Exercise Price in effect at the time of the record date for such
     dividend  or  distribution or the  effective  date  of  such
     subdivision, combination or reclassification shall be adjusted to
     the number obtained by dividing (i) the product of (a) the number
     of Shares issuable upon the exercise of this Warrant before such
     adjustment and (b) the Exercise Price in effect immediately prior
     to the issuance giving rise to this adjustment by (ii) the new
     number of shares issuable upon exercise of the Warrant determined
     pursuant to the immediately preceding sentence.
     
          (C)   Other  Distributions.  In case the Company  shall
     fix  a  record date for the making of a distribution to  all
     holders of shares of its Common Stock (i) of shares  of  any
     class  other  than its Common Stock or (ii) of  evidence  of
     indebtedness of the Company or any Subsidiary  or  (iii)  of
     assets (excluding Ordinary Cash Dividends, and dividends  or
     distributions  referred to in Section  13(B)),  or  (iv)  of
     rights  or warrants (excluding those referred to in  Section
     13(B)),  in  each  such case the Exercise  Price  in  effect
     immediately  prior  thereto  shall  be  reduced  immediately
     thereafter to the price determined by dividing (x) an amount
     equal  to  the difference resulting from (1) the  number  of
     shares  of  Common  Stock outstanding on  such  record  date
     multiplied  by the Exercise Price per share on  such  record
     date,   less  (2)  the  fair  market  value  (as  reasonably
     determined  by  the Board) of said shares  or  evidences  of
     indebtedness  or  assets or rights  or  warrants  to  be  so
     distributed,  by  (y) the number of shares of  Common  Stock
     outstanding  on such record date; such adjustment  shall  be
     made  successively whenever such a record date is fixed.  In
     such  event,  the number of shares of Common Stock  issuable
     upon the exercise of this Warrant shall be increased to  the
     number  obtained  by  dividing (i) the product  of  (a)  the
     number  of Shares issuable upon the exercise of this Warrant
     before such adjustment, and (b) the Exercise Price in effect
     immediately  prior  to  the issuance  giving  rise  to  this
     adjustment  by  (ii)  the new Exercise Price  determined  in
     accordance with the immediately preceding sentence.  In  the
     event  that  such distribution is not so made, the  Exercise
     Price  and  the number of Shares issuable upon  exercise  of
     this  Warrant then in effect shall be readjusted,  effective
     as  of  the date when the Board determines not to distribute
     such  shares, evidences of indebtedness, assets,  rights  or
     warrants,  as  the case may be, to the Exercise  Price  that
     would  then be in effect and the number of Shares that would
     then  be  issuable  upon exercise of this  Warrant  if  such
     record date had not been fixed.
     
          (D)   Certain Repurchases of Common Stock.  In case the
     Company effects a Pro Rata Repurchase of Common Stock,  then
     the  Exercise Price shall be reduced to the price determined
     by  multiplying  the  Exercise Price in  effect  immediately
     prior to the effective date of such Pro Rata Repurchase by a
     fraction of which the numerator shall be  (i) the product of
     (x)  the  number  of  shares  of  Common  Stock  outstanding
     immediately  before  such Pro Rata Repurchase  and  (y)  the
     Market  Price of a share of Common Stock on the trading  day
     immediately preceding the first public announcement  by  the
     Company  or  any of its Affiliates of the intent  to  effect
     such  Pro Rata Repurchase, minus (ii) the aggregate purchase
     price  of  the  Pro  Rata  Repurchase,  and  of  which   the
     denominator shall be the product of (i) the number of shares
     of  Common Stock outstanding immediately prior to  such  Pro
     Rata  Repurchase minus the number of shares of Common  Stock
     so repurchased and (ii) the Market Price per share of Common
     Stock  on  the trading day immediately preceding  the  first
     public  announcement  of such Pro Rata Repurchase.  In  such
     event,  the  number of shares of Common Stock issuable  upon
     the  exercise  of  this Warrant shall be  increased  to  the
     number  obtained  by  dividing (i) the product  of  (a)  the
     number  of Shares issuable upon the exercise of this Warrant
     before such adjustment, and (b) the Exercise Price in effect
     immediately prior to the Pro Rata Repurchase giving rise  to
     this adjustment by (ii) the new Exercise Price determined in
     accordance with the immediately preceding sentence.
     
          (E)   Business  Combinations.  In case of any  Business
     Combination or reclassification of Common Stock (other  than
     a  reclassification of Common Stock referred to  in  Section
     13(B)), any Shares issued or issuable upon exercise of  this
     Warrant shall after the date of such Business Combination or
     reclassification be exchangeable for the number of shares of
     stock  or  other securities or property (including cash)  to
     which  the  Common  Stock issuable  (at  the  time  of  such
     consolidation,  merger,  sale,  lease  or  conveyance)  upon
     exercise  of this Warrant immediately prior to such Business
     Combination  or  reclassification would have  been  entitled
     upon  such Business Combination or reclassification; and  in
     any such case, if necessary, the provisions set forth herein
     with  respect to the rights and interests thereafter of  the
     Warrantholder shall be appropriately adjusted so  as  to  be
     applicable, as nearly as may reasonably be, to any shares of
     stock or other securities or property thereafter deliverable
     on  the  exercise of this Warrant.  In determining the  kind
     and  amount  of stock, securities or the property receivable
     upon  consummation  of  such Business  Combination,  if  the
     holders of Common Stock have the right to elect the kind  or
     amount of consideration receivable upon consummation of such
     Business Combination, then the Warrantholder shall have  the
     right  to  make  a  similar election upon exercise  of  this
     Warrant  with respect to the number of shares  of  stock  or
     other  securities  or property which the Warrantholder  will
     receive upon exercise of this Warrant.
     
          (F)   Rounding  of  Calculations; Minimum  Adjustments.
     All  calculations under this Section 13 shall be made to the
     nearest one-tenth (1/10th) of a cent or to the nearest  one-
     hundreth  (1/100th) of a share, as the  case  may  be.   Any
     provision    of   this   Section   13   to   the    contrary
     notwithstanding, no adjustment in the Exercise Price or  the
     number  of  Shares  into which this Warrant  is  exercisable
     shall be made if the amount of such adjustment would be less
     than $0.01 or one-tenth (1/10th) of a share of Common Stock,
     respectively,  but any such amount shall be carried  forward
     and  an adjustment with respect thereto shall be made at the
     time  of and together with any subsequent adjustment  which,
     together with such amount and any other amount or amounts so
     carried forward, shall aggregate $0.01 or 1/10th of a  share
     of Common Stock, respectively, or more.
     
          
          
          (G)  Timing of Issuance of Additional Common Stock Upon
     Certain Adjustments. In any case in which the provisions  of
     this  Section  13  shall require that  an  adjustment  shall
     become  effective  immediately after a record  date  for  an
     event,  the Company may defer until the occurrence  of  such
     event  (i)  issuing  to the Warrantholder  of  this  Warrant
     exercised  after such record date and before the  occurrence
     of such event the additional shares of Common Stock issuable
     upon  such exercise by reason of the adjustment required  by
     such  event  over  and  above the  shares  of  Common  Stock
     issuable  upon  such exercise before giving effect  to  such
     adjustment and (ii) paying to such Warrantholder any  amount
     of  cash  in  lieu  of a fractional share of  Common  Stock;
     provided,  however,  that  the Company  upon  request  shall
     deliver   to  such  Warrantholder  a  due  bill   or   other
     appropriate instrument evidencing such Warrantholder's right
     to  receive such additional shares, and such cash, upon  the
     occurrence of the event requiring such adjustment.
     
          (H)   Statement  Regarding  Adjustments.  Whenever  the
     Exercise  Price  or  the number of Shares  into  which  this
     Warrant  is  exercisable shall be adjusted  as  provided  in
     Section  13,  the  Company  shall  forthwith  file,  at  the
     principal  office  of  the Company a  statement  showing  in
     reasonable  detail the facts requiring such  adjustment  and
     the Exercise Price that shall be in effect and the number of
     Shares  into  which this Warrant shall be exercisable  after
     such  adjustment and the Company shall also cause a copy  of
     such  statement  to  be sent by mail,  first  class  postage
     prepaid,  to each Warrantholder at the address appearing  in
     the Company's records.
     
          (I)   Notices.   In  the event that the  Company  shall
     propose  to  take any action of the type described  in  this
     Section 13 (but only if the action of the type described  in
     this  Section  13  would  result in  an  adjustment  in  the
     Exercise  Price  or  the number of Shares  into  which  this
     Warrant is exercisable or a change in the type of securities
     or  property to be delivered upon exercise of this Warrant),
     the  Company shall give notice to the Warrantholder, in  the
     manner  set  forth  in  Section 13(H),  which  notice  shall
     specify  the record date, if any, with respect to  any  such
     action and the approximate date on which such action  is  to
     take place.  Such notice shall also set forth the facts with
     respect thereto as shall be reasonably necessary to indicate
     the  effect  on the Exercise Price and the number,  kind  or
     class  of shares or other securities or property which shall
     be deliverable upon exercise of this Warrant. In the case of
     any  action which would require the fixing of a record date,
     such  notice  shall be given at least 10 days prior  to  the
     date  so fixed, and in case of all other action, such notice
     shall be given at least 15 days prior to the taking of  such
     proposed action.  Failure to give such notice, or any defect
     therein,  shall not affect the legality or validity  of  any
     such action.
     
          (J)  No Impairment.  The Company will not, by amendment
     of  its Articles or through any reorganization, transfer  of
     assets, consolidation, merger, dissolution, issue or sale of
     securities or any other voluntary action, avoid or  seek  to
     avoid  the observance or performance of any of the terms  to
     be  observed or performed hereunder by the Company, but will
     at all times in good faith assist in the carrying out of all
     the  provisions of this Warrant and in taking  of  all  such
     action  as  may  be  necessary or appropriate  in  order  to
     protect the rights of the Warrantholder.
     
14.  Rights.   Whenever the Company shall issue shares of  Common
     Stock  upon  exercise  of this Warrant,  the  Company  shall
     issue,  together with each such share of Common  Stock,  one
     right  to  purchase Series A Junior Participating  Preferred
     Stock  of  the Company (or other securities in lieu thereof)
     pursuant  to  the  Rights Agreement, or any  similar  rights
     issued to holders of Common Stock in addition thereto or  in
     the  replacement  therefor (such rights, together  with  any
     additional   or   replacement  rights,  being   collectively
     referred  to  as the "Rights"), whether or not  such  Rights
     shall  be exercisable at such time, but only if such  Rights
     are issued and outstanding and held by the other holders  of
     Common Stock (or evidenced by outstanding share certificates
     representing Common Stock) at such time and have not expired
     or been redeemed.
     
15.  Governing  Law.   This  Warrant shall be  binding  upon  any
     successors  or  assigns of the Company.  This Warrant  shall
     constitute  a contract under the laws of Texas and  for  all
     purposes  shall be construed in accordance with and governed
     by  the laws of Texas, without giving effect to the conflict
     of laws principles.
     

  16.   Attorneys' Fees.  In any litigation, arbitration or court
     proceeding between the Company and the Warrantholder as  the
     holder of this Warrant relating hereto, the prevailing party
     shall be entitled to reasonable attorneys' fees and expenses
     incurred in enforcing this Warrant.

  17.  Amendments.  This Warrant may be amended and the observance
     of any term of this Warrant may be waived only with the written
     consent of the Company and the Warrantholder.

  18.  Notice.  All notices hereunder shall be in writing and shall
     be  effective (a) on the day on which delivered if delivered
     personally or transmitted by telex or telegram or telecopier with
     evidence of receipt, (b) one Business Day after the date on which
     the  same  is delivered to a nationally recognized overnight
     courier service with evidence of receipt, or (c) five Business
     Days  after the date on which the same is deposited, postage
     prepaid, in the U.S. mail, sent by certified or registered mail,
     return receipt requested, and addressed to the party  to  be
     notified at the address indicated below for the Company, or at
     the  address for the Warrantholder set forth in the registry
     maintained by the Company pursuant to Section 9, or at such other
     address and/or telecopy or telex number and/or to the attention
     of such other person as the Company or the Warrantholder may
     designate by ten-day advance written notice.

  19.   Prohibited Actions.  The Company agrees that it will  not
     take any action which would entitle the Warrantholder to  an
     adjustment of the Exercise Price if the total number of shares of
     Common Stock issuable after such action upon exercise of this
     Warrant,  together  with all shares  of  Common  Stock  then
     outstanding and all shares of Common Stock then issuable upon the
     exercise of all outstanding options, warrants, conversion and
     other rights, would exceed the total number of shares of Common
     Stock then authorized by its Restated Articles of Incorporation.

  20.  Entire Agreement. This Warrant and the forms attached hereto
     contain the entire agreement between the parties with respect to
     the  subject  matter  hereof and  supersede  all  prior  and
     contemporaneous  arrangements or undertakings  with  respect
     thereto.


          [Remainder of Page Intentionally Left Blank]

     IN  WITNESS WHEREOF, the Company has caused this Warrant  to
be executed by a duly authorized officer.

Dated:  January ____, 1999

                                   EEX Corporation


                                   
                                   J.T. Leary
                                   Vice President - Finance and
Treasurer

                   [Form of Notice of Exercise]
                                 
                                 
                               Date:
                                 
                                 
TO:  EEX Corporation

RE:  Election to Subscribe for and Purchase Common Stock

      The undersigned, pursuant to the provisions set forth in the
attached Warrant, hereby agrees to subscribe for and purchase  the
number  of  shares of the Common Stock set forth below covered  by
such  Warrant.  The undersigned, in accordance with Section  3  of
the Warrant, hereby agrees to pay the aggregate Exercise Price for
such shares of Common Stock in the manner set forth below.  A  new
warrant evidencing the remaining shares of Common Stock covered by
such Warrant, but not yet subscribed for and purchased, should  be
issued  in the name set forth below.  If the new warrant is  being
transferred, an opinion of counsel is attached hereto with respect
to the transfer of such warrant.


Number of Shares of Common Stock:

Method of Payment of Exercise Price:

Name and Address of Person to be
Issued New Warrant:






                                                           Holder:
                                                                  
                                                               By:
                                                                  
                                                             Name:
                                                                  
                                                            Title:


                                                Exhibit 7.2(b)(iv)
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
<PAGE>                                 
                                 
                                 
                                 
                   REGISTRATION RIGHTS AGREEMENT
                                 
                           by and among
                                 
                         EEX CORPORATION,
                                 
              WARBURG, PINCUS EQUITY PARTNERS, L.P.,
       WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS I, C.V.,
       WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS II, C.V.,
                                and
       WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS III, C.V.
                                 
                                 
                                 
                   Dated as of January ___, 1999
                                 
                                 
                                 
                                 
                                 
                         TABLE OF CONTENTS
                                 
1.   Definitions.   1

2.   Securities Subject to this Agreement.   2
     (a)    Registrable Securities                              2
     (b)    Holders of Registrable Securities                   2

3.   Demand Registration.     2
     (a)    Requests for Registration                           2
     (b)    Number of Registrations                             3
     (c)    Effective Registration Expenses                     3
     (d)    No Rights of Company or Other Securityholders to
            Piggyback on
            Demand Registrations                                3
     (e)    Priority on Demand Registrations.                   3
     (f)    Selection of Underwriters                           4
     (g)    Other Registration Rights Agreements                4

4.   Piggyback Registrations. 4
     (a)    Right to Piggyback                                  4
     (b)    Piggyback Expenses                                  4
     (c)    Priority on Primary Registrations                   4
     (d)    Priority on Secondary Registrations                 5
     (e)    Underwritten Offering of Different Classes of
            Securities                                          5
     (f)    Selection of Underwriters                           5

5.   Registration on Form S-3.     5

6.   Holdback Agreements.     6
     (a)    Restrictions on Public Sale by Holder of Registrable
            Securities                                          6
     (b)    Restrictions on Public Sale by the Company          6
     (c)    Deferral of Filing; Suspension of Shelf Registration
            Statement                                           6

7.   Registration Procedures. 7

8.   Registration Expenses.   9

9.   Indemnification; Contribution.     10
     (a)    Indemnification by Company                         10
     (b)    Indemnification by Holder of Registrable Securities10
     (c)    Conduct of Indemnification Proceedings             10
     (d)    Contribution                                       11

10.  Rule 144. 11

11.  Participation in Underwritten Registrations. 12

12.  Miscellaneous. 12
     (a)    Right to Suspend.                                  12
     (b)    Remedies                                           12
     (c)    Amendments and Waivers                             12
     (d)    Registrable Securities Held by the Company or its
            Affiliates                                         12
     (e)    Notices                                            13
     (f)    Successors and Assigns                             13
     (g)    Counterparts                                       13
     (h)    Headings                                           13
     (i)    Governing Law; Jurisdiction                        13
     (j)    Severability                                       13
     (k)    Entire Agreement                                   13
     (l)    Attorney's Fees                                    13
     
                   REGISTRATION RIGHTS AGREEMENT
                                 
     This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made
and  entered into this ____ day of January 1999, by and among  EEX
Corporation,  a  Texas corporation (the "Company"),  and  Warburg,
Pincus  Equity  Partners,  L.P., a Delaware  limited  partnership,
Warburg,  Pincus  Netherlands Equity Partners  I,  C.V.,  a  Dutch
limited  partnership, Warburg, Pincus Netherlands Equity  Partners
II,  C.V.,  a  Dutch  limited  partnership,  and  Warburg,  Pincus
Netherlands   Equity   Partners  III,  C.V.,   a   Dutch   limited
partnership, (collectively, the "Purchaser").

                             RECITALS:
                                 
     This  Agreement  is made pursuant to the Purchase  Agreement,
dated December 22, 1998 between the Company and the Purchaser (the
"Purchase Agreement").  In order to induce the Purchaser to  enter
into the Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement.  The execution of
this  Agreement is a condition to the closing under  the  Purchase
Agreement.

                            AGREEMENT:
                                 
     The parties hereby agree as follows:

1.   Definitions.

     (a)  As used in this Agreement, the following terms will have
the following meanings:

     "Demand  Registration" has the meaning set forth  in  Section
3(a).

     "Exchange Act" means the Securities Exchange Act of 1934,  as
amended from time to time.

     "Majority" means 51% or more.

     "Person"  means  any  individual,  partnership,  corporation,
trust or unincorporated organization, or a government or agency or
political subdivision thereof.

     "Piggyback Registration" has the meaning set forth in Section
4(a).

     "Preferred Stock" means shares of the Company's Series  B  8%
Cumulative Perpetual Preferred Stock.

     "Registration Expenses" has the meaning set forth in  Section
8(a).

     "Registration Notice" has the meaning set forth in Section 5.

     "Registrable  Securities"  means (i)  the  Shares,  (ii)  the
Warrants and (iii) any securities issued or issuable with  respect
to  the  Shares or the Warrants by way of exercise, stock dividend
or  stock  split  or in connection with a combination  of  shares,
recapitalization, merger, consolidation or other reorganization.

     "Restricted Securities" means the Registrable Securities upon
original  issuance thereof, subject to the provisions  of  Section
2(a).

     "Securities Act" means the Securities Act of 1933, as amended
from time to time.

     "SEC" means the Securities and Exchange Commission.

     "Shares" means the shares of Preferred Stock issued and  sold
pursuant  to the Purchase Agreement and shares of Preferred  Stock
or Common Stock issued or issuable as a dividend on such shares.

     "Underwritten registration" or "underwritten offering"  means
any  registration  in  which securities of the  Company  are  sold
pursuant to a firm commitment underwriting.

     "Warrants" means the warrants issued and sold pursuant to the
Purchase Ageement.

     (b)  All  undefined capitalized terms used herein shall  have
the meaning set forth in the Purchase Agreement.

2.   Securities Subject to this Agreement.

     (a)   Registrable Securities.  The securities entitled to the
benefits  of  this Agreement are the Registrable  Securities  but,
with  respect to any particular Registrable Security, only so long
as  such  security  continues  to be  a  Restricted  Security.   A
Registrable Security ceases to be a Restricted Security  when  (i)
it  has  been effectively registered under the Securities Act  and
disposed of in accordance with the registration statement covering
it,  (ii)  has  been  sold pursuant to Rule 144  (or  any  similar
provisions then in force) under the Securities Act or (iii) it has
otherwise been transferred and a new certificate or other evidence
of  ownership for it not bearing the legend set forth  in  Section
4.5  of the Purchase Agreement (or other legend of similar import)
has been delivered (not subject to any stop transfer order) by  or
on  behalf  of  the Company and no other restriction  on  transfer
exists.

(b)  Holders of Registrable Securities.  A Person is deemed to be
a holder of Registrable Securities whenever such Person owns
Registrable Securities or has the right to acquire such
Registrable Securities, disregarding any legal restrictions upon
the exercise of such right, whether or not such acquisition has
actually been effected.
3.   Demand Registration.

     (a)   Requests for Registration.  Subject to the provisions of
Section  3(b),  any  holder or holders  of  the  then  outstanding
Registrable  Securities may request at any time a registration  by
the  Company  under  the Securities Act of  all  or  part  of  his
Registrable Securities (a "Demand Registration").  Within ten days
after  receipt  of  such request, the Company will  serve  written
notice  by overnight carrier of such registration request  to  all
holders  of  Registrable  Securities  and  will,  subject  to  the
provisions  of  Section  3(b), include in  such  registration  all
Registrable  Securities  with respect to  which  the  Company  has
received written requests for inclusion therein within 15 business
days  after distribution to the applicable holder of the Company's
notice.   All  requests made pursuant to this  Section  3(a)  will
specify the amount of Registrable Securities to be registered  and
will  also  specify  the intended method of  disposition  thereof;
provided, however, that such method of disposition will be limited
to  an  underwritten offering if requested by  the  holders  of  a
Majority of the Registrable Securities requested to be included in
such registration.

(b)  Number of Registrations.  The holders of Registrable
Securities will be entitled to request an aggregate of three
Demand Registrations. A registration initiated as a Demand
Registration will not constitute a Demand Registration (i) unless
such registration has been declared effective by the SEC and
remains effective for the period set forth in Section 7(a)(iii);
provided, however, that, if more than 10% of the Registrable
Securities requested to be included in a Demand Registration which
is an underwritten registration can be excluded therefrom by
reason of the provisions of Section 3(e), the holders of
Registrable Securities will be entitled to one additional Demand
Registration (in which the Company will pay the Registration
Expenses) and (ii) if after such registration has been declared
effective by the SEC it is subject to any stop order, injunction
or other adverse order or action of the SEC or other governmental
authority.
(c)  Effective Registration Expenses.  Except as provided in
Section 3(d), any registration initiated as a Demand Registration,
the Company will pay all Registration Expenses, whether or not the
registration has been declared effective.
(d)  No Rights of Company or Other Securityholders to Piggyback on
Demand Registrations.  Neither the Company nor any of its
securityholders (other than the holders of Registrable Securities
in such capacity) has any right to include any of the Company's
securities in a registration statement initiated as a Demand
Registration under this Section 3, unless (i) such securities are
of the same class as the Registrable Securities being registered,
(ii) the holders of a Majority of the Registrable Securities being
registered in such registration consent to such inclusion in
writing, subject to Section 3(e), (iii) if such Demand
Registration is an underwritten offering, the managing
underwriters agree that some or all of such securities can be
included without adversely affecting such offering or offering
price and (iv) the Company or the selling securityholders, as
applicable, agree to sell their securities on the same terms and
conditions as apply to Registrable Securities and the holders of
such Registrable Securities.  If any securityholders of the
Company (other than the holders of Registrable Securities in such
capacity) register securities of the Company in a Demand
Registration (in accordance with the provisions of this Section
3(d)), such securityholders will pay the fees and expenses of
counsel to such securityholders and their pro rata share of the
Registration Expenses if such pro rata share of the Registration
Expenses for such registration are not paid by the Company for any
reason.
(e)  Priority on Demand Registrations.  If a Demand Registration
is an underwritten offering and the managing underwriters advise
the Company and the selling holders of the Registrable Securities
in writing that in their opinion the number of Registrable
Securities requested to be included exceeds the number of
securities which can be sold in such offering without adversely
affecting the proposed offering or the offering price, the Company
will include in such registration the number of Registrable
Securities which in the opinion of such underwriters can be sold
without adversely affecting the proposed offering or the offering
price, and such securities will be allocated pro rata among the
holders of Registrable Securities on the basis of the number of
the Registrable Securities requested to be included in such
registration by their respective holders.  If securities (other
than Registrable Securities) are proposed to be included by the
Company or its other securityholders in a Demand Registration
which is an underwritten offering (subject to and in accordance
with the provisions of Section 3(d)) and the managing underwriters
advise the Company and the selling holders of Registrable
Securities in writing that some but not all of said other
securities can be sold without adversely affecting the proposed
offering or the offering price in such underwritten offering, in
addition to all of the Registrable Securities being registered,
those securities which are permitted to be included will be
allocated (i) first, to the Company and (ii) second, to the
securityholders of such securities, allocated among them in such
proportions as such securityholders and the Company may agree.
(f)   Selection of Underwriters.  If any Demand Registration is an
underwritten offering, or a best efforts underwritten offering,
the investment banker or investment bankers and manager or
managers that will administer the offering will be selected by the
holders of a Majority of the Registrable Securities requested to
be included in such offering; provided, however, such investment
bankers and managers must be reasonably satisfactory to the
Company.
(g)  Other Registration Rights Agreements.  Without the prior
written consent of the holders of a Majority of the Registrable
Securities, the Company will neither enter into any new
registration rights agreements that conflict with the terms of
this Agreement nor permit the exercise of any other registration
rights in a manner that conflicts with the terms of the
registration rights granted hereunder.
4.   Piggyback Registrations.

     (a)   Right  to Piggyback.  Whenever the Company proposes  to
register  any  securities  under the Securities  Act,  other  than
pursuant  to  a Demand Registration under Section 3 (a  "Piggyback
Registration"),  the  Company will  give  written  notice  to  all
holders of Registrable Securities of its intention to effect  such
a  registration  not later than the earlier to occur  of  (i)  the
tenth  day following receipt by the Company of notice of  exercise
of  other demand registration rights or (ii) 45 days prior to  the
anticipated  filing date.  Subject to the provisions  of  Sections
4(c)   and  (d),  the  Company  will  include  in  such  Piggyback
Registration all Registrable Securities with respect to which  the
Company has received written requests for inclusion therein within
ten  business days after the receipt by the applicable  holder  of
Registrable  Securities of the Company's notice.  The  holders  of
Registrable Securities will be permitted to withdraw  all  or  any
part  of  such  holder's Registrable Securities from  a  Piggyback
Registration  at  any  time  prior  to  the  date  such  Piggyback
Registration  becomes  effective with the  SEC.   If  a  Piggyback
Registration  is  an  underwritten  offering  effected  under  (i)
Section  4(c),  all Persons whose securities are included  in  the
Piggyback  Registration will be obligated to sell their securities
on  the same terms and conditions as apply to the securities being
issued  and sold by the Company or (ii) Section 4(d), all  Persons
whose  securities are included in the Piggyback Registration  will
be  obligated  to  sell their securities on  the  same  terms  and
conditions as apply to the securities being sold by the Person  or
Persons  who  initiated the Piggyback Registration  under  Section
4(d).

(b)  Piggyback Expenses.  The Registration Expenses of the holders
of Registrable Securities included in a Piggyback Registration
will be paid by the Company.
(c)  Priority on Primary Registrations.  If a Piggyback
Registration is an underwritten registration on behalf of the
Company, and the managing underwriters advise the Company in
writing that in their opinion the total number or dollar amount of
securities requested to be included in such registration exceeds
the number or dollar amount of securities which can be sold in
such offering without adversely affecting the offering or the
offering price, the Company will include in such registration: (i)
first, all securities the Company proposes to sell, (ii) second,
up to the full number or dollar amount of Registrable Securities
requested to be included in such registration in excess of the
number or dollar amount of securities the Company proposes to sell
which, in the opinion of such underwriters, can be sold without
adversely affecting the offering or the offering price (allocated
pro rata among the holders of such Registrable Securities on the
basis of the dollar amount or number of Securities requested to be
included therein by each such holder) and (iii) third, such other
securities (provided such securities are of the same class as the
securities being sold by the Company) as are requested to be
included in such registration equal to the balance, if any,
allocated among the holders of such securities in such proportions
as the Company and such holders may agree.
(d)  Priority on Secondary Registrations.  If a Piggyback
Registration is an underwritten secondary registration on behalf
of holders of the Company's securities, and the managing
underwriters advise the Company in writing that in their opinion
the dollar amount or number of securities requested to be included
in such registration exceeds the dollar amount or number of
securities which can be sold in such offering without adversely
affecting the offering or the offering price, the Company will
include in such registration (i) first, the number or dollar
amount of securities which in the opinion of such underwriters can
be sold without adversely affecting the offering or the offering
price of the securities intended to be included therein on behalf
of the holders of the Company's securities, allocated among the
holders of such securities in such proportions as the Company and
such holders may agree, and (ii) to the extent of the balance, if
any, the Registrable Securities requested to be included in such
registration, allocated pro rata among the holders of such
Registrable Securities on the basis of the dollar amount or number
of securities requested to be included therein by each such
holder.
(e)  Underwritten Offering of Different Classes of Securities.
Notwithstanding anything to the contrary in this Section 4, if a
Piggyback Registration is an underwritten offering of a class of
securities of the Company different from the Registrable
Securities proposed to be included in such offering and the
managing underwriters advise that in their opinion Registrable
Securities of a different class cannot be included in such
offering without adversely affecting the offering or the offering
price, then the holders of the Registrable Securities shall not be
entitled to include Registrable Securities in such registration.
(f)  Selection of Underwriters.  If any Piggyback Registration is
an underwritten offering, the Company will have the sole right to
select the investment banker or investment bankers and manager or
managers to administer the offering.
5.   Registration on Form S-3.

     As  one of its Demand Registration rights provided in Section
3,  a  holder  of the Registrable Securities shall be entitled  to
request  by  a  notice  in  writing to the Company  ("Registration
Notice") that the Company register for resale all or a portion  of
their  Registrable  Securities on Form S-3 (or any  similar  short
form registration) if the Company and the transaction then qualify
for  the  use of such short form registration. On receipt  of  the
Registration Notice, the Company will notify all of the holders of
Registrable   Securities  entitled  to  notice   of   a   proposed
registration  pursuant  to  Section 3(a)  of  such  request.  Upon
receipt  by  the Company of the Registration Notice,  the  Company
will, subject to Section 6(c) and Section 12(a) use its reasonable
best efforts to file a registration statement on Form S-3 (or  any
similar  short form registration) in accordance with the terms  of
this  Section  5  as  soon as practicable after  receipt  of  such
Registration  Notice. The Company will, subject to  Sections  6(c)
and  12(a),  use  its  reasonable best  efforts  to  maintain  the
effectiveness of the registration statement until the  earlier  of
(i)  [the  tenth anniversary of the closing date] (to the  fullest
extent permitted by law) or (ii) the date on which the holders  of
the  Registrable Securities Beneficially Own 5%  or  less  of  the
Common  Stock.  All Registration Expenses shall be  borne  by  the
Company,   except  for  underwriting  commissions  and   discounts
attributable  to  Registrable  Securities  sold  by  the   holders
thereof,  which discounts and commissions shall be  paid  by  such
holders.   The  Company  and other holders of  securities  of  the
Company may not register securities under a registration statement
filed  pursuant to this Section 5, without the consent of at least
a Majority of the Registrable Securities.  A holder of Registrable
Securities  that are covered by a registration statement  pursuant
to  this Section 5 will give the Company at least 48 hours written
notice prior to any resales by such holder thereunder.

6.   Holdback Agreements.

     (a)   Restrictions  on Public Sale by Holder  of  Registrable
Securities.  Each holder of Registrable Securities agrees  not  to
effect any public sale or distribution of equity securities of the
Company   (other  than  any  distribution  of  equity  securities,
substantially  pro  rata, to its partners or any  public  sale  or
distribution  of  Preferred Stock), including a sale  pursuant  to
Rule  144  under  the  Securities Act, during  the  90-day  period
beginning  on  the  effective  date  of  any  underwritten  Demand
Registration or any underwritten Piggyback Registration in which a
holder  of  Registrable  Securities  is  entitled  to  participate
(except  as part of such underwritten registration), to  the  full
extent  of the Registrable Securities requested by such holder  to
be  included  in such registration statement. Any such restriction
as  contemplated by this Section 6(a) may only apply once  in  any
twelve month period.

(b)  Restrictions on Public Sale by the Company.  Except for any
resales by the holder of Registrable Securities made pursuant to
Section 5, the Company agrees not to offer, register or effect any
sale or distribution on behalf of itself or on behalf of another
security holder of the Company's equity securities, or any
securities convertible into or exchangeable or exercisable for
such equity securities during the 90-day period beginning on (i)
the effective date of any underwritten Demand Registration or any
underwritten Piggyback Registration (except as part of such
underwritten registration or as part of an employee benefit plan
registered pursuant to registrations on Form S-8 or any successor
form to Form S-8) or (ii) the pricing of an underwritten offering
pursuant to a shelf registration statement filed pursuant to
Section 5.  Any such restriction as contemplated by this Section
6(b) may only apply once in any twelve month period.
(c)  Deferral of Filing; Suspension of Shelf Registration
Statement.  The Company may, subject to the last sentence of this
Section 6(c), defer the filing (but not the preparation) of a
registration statement required by Section 3 or Section 5 until a
date not later than 90 days (less the number of days during the
previous twelve months that the use of a prospectus was suspended
pursuant to this Section 6(c) or Section 12(a)) after the date of
receipt by the Company of a request for a Demand Registration if
at the time the Company receives such request the Company is
engaged in confidential negotiations or other confidential
business activities, disclosure of which would be required in such
registration statement (but would not be required if such
registration statement were not filed) and the Board of Directors
of the Company determines in good faith that such disclosure would
be materially detrimental to the Company and its shareholders. A
deferral of the filing of a registration statement shall be filed
forthwith if the negotiations or other activities are disclosed or
terminated. In order to defer the filing of a registration
statement pursuant to this Section 6(c), the Company shall
promptly, upon determining to seek such deferral, deliver to each
requesting holder a certificate signed by the President or Chief
Financial Officer of the Company stating that the Company is
deferring such filing pursuant to this Section 6(c).  Within 20
days after receiving such certificate, the requesting holder may
withdraw such request by giving notice to the Company; if
withdrawn, the request for a Demand Registration shall be deemed
not to have been made for all purposes of this Agreement. In
addition, if the Company receives notice of a proposed sale under
a shelf registration statement filed pursuant to Section 5, the
Company may, subject to the last sentence of this Section 6(c),
give notice to the holder requesting such sale that such sale
under such shelf registration statement must be deferred and not
made for up to 90 days (less the number of days during the
previous twelve months that the use of a prospectus was suspended
pursuant to this Section 6(c) or Section 12(a)) after the date of
receipt by the Company of such notice of proposed sale if at the
time the Company receives such notice, the Company is engaged in
confidential negotiations or other confidential business
activities, disclosure of which would be required to be made in
the prospectus included in such shelf registration statement (but
would not be required if such sale were not made) in order to
prevent such prospectus from containing any untrue statement of a
material fact or omitting to state any material fact necessary to
make the statements therein not misleading and the Board of
Directors of the Company determines in good faith that such
disclosure would be materially detrimental to the Company. A
deferral of such proposed sale pursuant to this Section 6(c) shall
be lifted, and the sale may be forthwith made if the negotiations
or other activities are disclosed or terminated. In order to defer
the proposed sale pursuant to this Section 6(c), the Company shall
promptly, upon determining to seek such deferral, deliver to such
requesting holder, a certificate signed by the President or Chief
Financial Officer of the Company stating that the Company is
deferring such proposed sale pursuant to this Section 6(c).  The
Company may defer the filing of a Demand Registration Statement
only once during any twelve month period.
7.   Registration Procedures.

     (a)   Whenever  the  holders of Registrable  Securities  have
requested  that  any  Registrable  Securities  be  registered   in
accordance  with the terms and conditions of this  Agreement,  the
Company  will use its best efforts to effect the registration  and
to  permit  the sale of such Registrable Securities in  accordance
with  the  intended  method of disposition thereof,  and  pursuant
thereto the Company will as expeditiously as possible:

          (i)   prepare and file with the SEC, not later than 30 days after
     receipt of a request to file a registration statement with respect
     to such Registrable Securities, a registration statement with
     respect to such Registrable Securities, and use its best efforts
     to  cause  such  registration statement to become  effective;
     provided, however, before filing a registration statement  or
     prospectus or any amendments or supplements thereto, the Company
     will furnish to the counsel selected in accordance with Section
     8(b) by the holders of a Majority of the Registrable Securities
     being registered in such registration statement copies of all such
     documents proposed to be filed, which documents will be subject to
     the review of such counsel; each such registration statement will
     be  on a form for which the Company then qualifies, which  is
     available for the sale of the Registrable Securities in accordance
     with the intended method of disposition thereof and which  is
     reasonably satisfactory to the holders of a Majority  of  the
     Registrable  Securities  being registered  (or  the  managing
     underwriters in the case of a firm or best efforts underwriting
     offering);
     
          (ii) notify each seller of Registrable Securities of any stop
     order issued by the SEC and take all reasonable actions required
     to prevent the entry of such stop order or to remove it at the
     earliest possible time if entered;

          (iii)     prepare and file with the SEC such amendments and
     supplements to such registration statement and the prospectus used
     in  connection  therewith as may be necessary  to  keep  such
     registration statement effective for a period of not less than 90
     days, or such shorter period as may be required if all Registrable
     Securities covered by such registration statement are sold prior
     to the expiration of such 90-day period (except in connection with
     an  underwritten  offering, in which case  such  registration
     statement shall be kept effective as long as the underwriters
     reasonably request in the underwriting agreement), and comply with
     the  provisions  of the Securities Act with  respect  to  the
     disposition  of  all securities covered by such  registration
     statement during such period in accordance with the  intended
     methods of disposition by the sellers thereof set forth in such
     registration statement;

          (iv) furnish to each seller of Registrable Securities such number
     of  copies of such registration statement, each amendment and
     supplement thereto (in each case including all exhibits thereto),
     the prospectus included in such registration statement (including
     each preliminary prospectus) and such other documents as such
     seller  may  reasonably request in order  to  facilitate  the
     disposition of the Registrable Securities owned by such seller;

          (v)  use its best efforts to register or qualify such Registrable
     Securities under such other securities or blue sky laws of such
     jurisdictions as any seller reasonably requests and do any and all
     other  acts  and things which may be reasonably necessary  or
     advisable to enable such seller to consummate the disposition in
     such jurisdictions of the Registrable Securities owned by such
     seller; provided, however, that the Company will not be required
     to (i) qualify generally to do business in any jurisdiction where
     it would not otherwise be required to qualify but for this Section
     7(a)(v), (ii) subject itself to taxation in any such jurisdiction
     or  (iii)  consent to general service of process in any  such
     jurisdiction;

          (vi) use its best efforts to cause the Registrable Securities
     covered by such registration statement to be registered with or
     approved by such other governmental agencies or authorities as may
     be necessary to enable the seller or sellers thereof to consummate
     the disposition of such Registrable Securities;

          (vii)     notify each seller of such Registrable Securities, at
     any time when a prospectus relating thereto is required to be
     delivered under the Securities Act, of the happening of any event
     as a result of which the prospectus included in such registration
     statement  or any document incorporated therein by  reference
     contains an untrue statement of a material fact or omits to state
     any material fact necessary to make the statements therein not
     misleading,  and prepare and file promptly  with  the  SEC  a
     supplement or amendment to such prospectus or any such document
     incorporated therein by reference so that, as thereafter delivered
     to the purchasers of such Registrable Securities, such prospectus
     will not contain an untrue statement of a material fact or omit to
     state any material fact necessary to make the statements therein
     not misleading;

          (viii)    cause all such Registrable Securities to be listed on
     each securities exchange on which similar securities issued by the
     Company are then listed;

          (ix) provide a transfer agent and registrar for all Registrable
     Securities and a CUSIP number for all such Registrable Securities,
     in  each  case  not  later than the effective  date  of  such
     registration statement;

          (x)  enter into such customary agreements (including  an
     underwriting agreement in customary form) and take all such other
     actions in connection therewith as the holders of a Majority of
     the Registrable Securities being registered or the underwriters,
     if any, reasonably request in order to expedite or facilitate the
     disposition of such Registrable Securities;

          (xi) make available for inspection by any seller of Registrable
     Securities,  any underwriter participating in any disposition
     pursuant  to  such registration statement, and any  attorney,
     accountant  or  other agent retained by any  such  seller  or
     underwriter, all financial and other records, pertinent corporate
     documents and properties of the Company, and cause the Company's
     officers,  directors and employees to supply all  information
     reasonably requested by any such seller, underwriter, attorney,
     accountant  or  agent  in connection with  such  registration
     statement;

          (xii)     obtain a cold comfort letter from the Company's
     independent public accountants in customary form and covering such
     matters of the type customarily covered by cold comfort letters as
     the holders of a Majority of the Registrable Securities being
     registered or the managing underwriters reasonably request; and

          (xiii)    otherwise use its reasonable best efforts to comply with
     all  applicable rules and regulations of the  SEC,  and  make
     available  to  its  security holders, as soon  as  reasonably
     practicable, an earnings statement covering the period of at least
     twelve months, but not more than eighteen months, beginning with
     the  first month after the effective date of the Registration
     Statement, which earnings statement will satisfy the provisions of
     Section 11(a) of the Securities Act.

     (b)   The  Company  may  require each seller  of  Registrable
Securities  as  to  which any registration is  being  effected  to
furnish to the Company such information regarding the distribution
of such securities as the Company may from time to time reasonably
request.

8.   Registration Expenses.

     (a)  All expenses incident to the Company's performance of or
compliance  with this Agreement, including without limitation  all
registration and filing fees, fees and expenses of compliance with
securities  or  blue  sky  laws  (including  reasonable  fees  and
disbursements  of counsel for the underwriters in connection  with
blue  sky  qualifications of the Registrable Securities), printing
expenses, messenger, telephone and delivery expenses, and fees and
disbursements  of  counsel for the Company  and  counsel  for  the
sellers  of  the Registrable Securities (subject to the provisions
of   Section  8(b))  and  of  all  independent  certified   public
accountants (including the expenses of any special audit or  "cold
comfort"  letters  required by or incident to  such  performance),
underwriters  (excluding discounts and commissions  but  including
liability  insurance  if  the  Company  so  desires  or   if   the
underwriters so require), the reasonable fees and expenses of  any
special experts retained by the Company or at the request  of  the
managing  underwriters  in connection with such  registration  and
fees  and  expenses of other Persons retained by the Company  (all
such  expenses being herein called "Registration Expenses"),  will
be  borne  as provided in this Agreement, except that the  Company
will,  in any event, pay its internal expenses (including, without
limitation,  all  salaries  and  expenses  of  its  officers   and
employees  performing legal or accounting duties), the expense  of
any  annual audit, the expense of liability insurance referred  to
above  and the fees and expenses incurred in connection  with  the
listing  of  the  securities to be registered on  each  securities
exchange  on  which similar securities issued by the  Company  are
then listed.

(b)  In connection with each registration hereunder, the Company
will reimburse the holders of Registrable Securities being
registered in such registration for the reasonable fees and
disbursements of no more than one counsel (or more than one
counsel if an actual conflict exists among such selling holders)
chosen by the holders of a Majority of the Registrable Securities
being registered.
9.   Indemnification; Contribution.

     (a)  Indemnification by Company.  The Company agrees to indemnify
to  the  full  extent permitted by law, each holder of Registrable
Securities,  its officers, directors and constituent partners  and
each  Person who controls such holder (within the meaning  of  the
Securities  Act and the Exchange Act) against all losses,  claims,
damages,  liabilities and expenses (or actions in respect thereof)
arising  out  of  or  based  upon any  untrue  or  alleged  untrue
statement  of  a  material  fact  contained  in  any  registration
statement, prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact required  to  be
stated  therein  or necessary to make the statements  therein  not
misleading,  except  insofar as the  same  are  contained  in  any
information  furnished in writing to the Company  by  such  holder
expressly  for use therein or caused by such holder's  failure  to
deliver a copy of the registration statement or prospectus or  any
amendments or supplements thereto after the Company has  furnished
such  holder with a sufficient number of copies of the  same.  The
Company will reimburse each holder of Registrable Securities,  its
officers, directors, constituent partners and controlling  Persons
for  any  legal and other expenses as incurred in connection  with
investigating  or  defending  any such  losses,  claims,  damages,
liabilities,  expenses  or  actions. In  connection  with  a  firm
commitment or best efforts underwritten offering, the Company will
indemnify  the underwriters or agents, their officers,  directors,
constituent   partners   and  each  Person   who   controls   such
underwriters  (within the meaning of the Securities  Act  and  the
Exchange  Act) or agents to the same extent as provided above  (or
such greater extent as may be customarily required by the managing
underwriters) with respect to the indemnification of  the  holders
of Registrable Securities.

     (b)  Indemnification by Holder of Registrable Securities.  In
connection  with any registration statement in which a  holder  of
Registrable  Securities is participating, each  such  holder  will
furnish  to the Company in writing such information and affidavits
as  the Company reasonably requests for use in connection with any
such registration statement or prospectus and agrees to indemnify,
to  the  extent  permitted by law, the Company, its directors  and
officers  and  each  Person who controls the Company  (within  the
meaning  of  the Securities Act and the Exchange Act) against  any
losses,  claims, damages, liabilities and expenses resulting  from
any  untrue or alleged untrue statement of a material fact or  any
omission  or  alleged omission of a material fact required  to  be
stated  in  the  registration  statement  or  prospectus  or   any
amendment thereof or supplement thereto or necessary to  make  the
statements therein not misleading, to the extent, but only to  the
extent, that such untrue statement or omission is contained in any
written   information  or  affidavit  furnished  by  such   holder
specifically for such registration statement and then only to  the
extent  of the net proceeds received by such holder of Registrable
Securities. The holders of Registrable Securities will  reimburse,
to  the  extent  of the net proceeds received by  the  holders  of
Registrable  Securities, the Company, its officers, directors  and
controlling  persons for any legal and other expenses as  incurred
in  connection  with investigation or defending any  such  losses,
claims, damages, liabilities, expenses or actions.

(c)  Conduct of Indemnification Proceedings.  Any Person entitled
to indemnification hereunder will (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks
indemnification (but omission of such notice shall not relieve the
indemnifying party from liability hereunder except to the extent
such indemnifying party is actually prejudiced by such failure to
give notice) and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest may exist between such
indemnified and indemnifying parties with respect to such claim,
permit such indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party.  If
such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any
settlement made without its consent (but such consent will not be
unreasonably withheld).  No indemnifying party will consent to
entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of an
unconditional release from all liability in respect to such claim
or litigation.  An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated
to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to
such claim, unless an actual conflict of interest exists between
such indemnified party and any other of such indemnified parties
with respect to such claim, in which event the indemnifying party
will be obligated to pay the fees and expenses of such additional
counsel or counsels.
(d)  Contribution.  If the indemnification provided for in Section
9(a) is unavailable or insufficient to hold harmless each of the
indemnified parties against any losses, claims, damages,
liabilities and expenses (or actions in respect thereof) to which
such persons may become subject under the Securities Act, then the
indemnifying party shall, in lieu of indemnifying each party
entitled to indemnification hereunder, contribute to the amount
paid or payable by such party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying
party on the one hand and such indemnified persons on the other in
connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages,
liabilities or expenses. The relative fault of such persons shall
be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact, or omission
or alleged omission to state a material fact, relates to
information supplied by or concerning the indemnifying party on
the one hand, or by such indemnified person on the other, and such
person's relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9(d) were determined by pro
rata allocation or by any other allocation that does not take into
account the equitable considerations referred to in this Section
9(d). No person guilty of fraudulent misrepresentation within the
meaning of the Act shall be entitled to contribution from any
person that is not guilty of such fraudulent misrepresentation.
10.  Rule 144.

     The  Company covenants that it will file the reports required
to  be  filed by it under the Securities Act and the Exchange  Act
and  the rules and regulations adopted by the SEC thereunder  (or,
if the Company is not required to file such reports, it will, upon
the request of any holder of Registrable Securities, make publicly
available such information), and it will take such further  action
as  any  holder of Registrable Securities may reasonably  request,
all to the extent required from time to time to enable such holder
to  sell  Registrable  Securities without registration  under  the
Securities Act within the limitation of the exemptions provided by
(i) Rule 144 under the Securities Act, as such Rule may be amended
from  time  to  time,  or  (ii)  any similar  rule  or  regulation
hereafter  adopted by the SEC. Upon the request of any  holder  of
Registrable Securities, the Company will deliver to such holder  a
written statement that it has complied with such requirements.

11.  Participation in Underwritten Registrations.

     No  Person  may participate in any underwritten  registration
hereunder  unless  such Person (i) agrees to  sell  such  Person's
securities  on the basis provided in any underwriting arrangements
approved  by  the  Persons  entitled  hereunder  to  approve  such
arrangements  and  (ii)  completes  and  executes  all   customary
questionnaires,  powers of attorney, underwriting  agreements  and
other  documents  required under the terms  of  such  underwriting
arrangements.

12.  Miscellaneous.

     (a)  Right to Suspend.  The Company may, by notice in writing to
each  holder  of  Registrable Securities, require  the  holder  of
Registrable  Securities to suspend use of any prospectus  included
in  a  registration  statement  filed  hereunder  if  the  Company
reasonably  determines that it contains an untrue statement  of  a
material  fact  or omits to state any material fact  necessary  to
make the statements therein not misleading or that any transaction
in  which  the  Company  is engaged or proposes  to  engage  would
require  an  amendment  to  such  registration  statement   or   a
supplement  to  such prospectus (including any such  amendment  or
supplement  made through incorporation by reference  to  a  report
filed  under  Section  13 of the Exchange Act).   Each  holder  of
Registrable  Securities agrees that, upon receipt  of  any  notice
from  the  Company  of  the happening of any  event  of  the  kind
described  in  this  Section  12(a), such  holder  will  forthwith
discontinue disposition of Registrable Securities pursuant to  the
registration statement covering such Registrable Securities  until
such holder's receipt of the copies of a properly supplemented  or
amended  prospectus,  and, if so directed  by  the  Company,  such
holder  will  deliver  to  the  Company  all  copies,  other  than
permanent  file copies, then in such holder's possession,  of  the
most recent prospectus covering such Registrable Securities at the
time  of  receipt of such notice.  In the event the Company  gives
any  such  notice, the time period mentioned in Section 7(a)(iii),
if  applicable, will be extended by the number of days during  the
period from and including the date of the giving of such notice to
and  including the date when each seller of Registrable Securities
covered by such registration statement has received the copies  of
such  supplemented or amended prospectus.  The Company  agrees  to
use its reasonable best efforts to cause any suspension of use  of
any  prospectus pursuant to this paragraph to be as short a period
of time as possible.

(b)  Remedies.  Each holder of Registrable Securities, in addition
to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of
its rights under this Agreement.
(c)  Amendments and Waivers.  The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given unless
the Company has obtained the written consent of at least a
Majority of the outstanding Registrable Securities.
(d)  Registrable Securities Held by the Company or its Affiliates.
For the purposes of Section 3(b), when determining whether the
required minimum principal amount or number of Registrable
Securities has been requested to be included in a Demand
Registration, Registrable Securities held by the Company or any
affiliate thereof (other than a Purchaser, if it is such an
affiliate), unless they are requested to be included in a
registration statement, will not be counted for the purposes of
determining whether such required minimum number or principal
amount of Registrable Securities has been requested to be so
included.  Whenever the consent or approval of holders of all or
any specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company or any of
its affiliates (other than a Purchaser if it is such an affiliate)
will not be counted in determining whether such consent or
approval was given by such holders.
(e)  Notices.  All notices hereunder shall be in writing and shall
be effective (a) on the day on which delivered if delivered
personally or transmitted by telex or telegram or telecopier with
evidence of receipt, (b) one business day after the date on which
the same is delivered to a nationally recognized overnight courier
service with evidence of receipt, or (c) five business days after
the date on which the same is deposited, postage prepaid, in the
U.S. mail, sent by certified or registered mail, return receipt
requested, and addressed to the party to be notified at the
address indicated below for the Company, or at the address for the
holder of the Registrable Securities set forth in a registry
maintained by the Company, or at such other address and/or
telecopy or telex number and/or to the attention of such other
person as the Company or the holder of the Registrable Securities
may designate by ten-day advance written notice.
(f)  Successors and Assigns.  This Agreement will inure to the
benefit of and be binding upon the successors and assigns of each
of the parties, including without limitation and without the need
for an express assignment, subsequent holders of Registrable
Securities.

     (g)  Counterparts.  This Agreement may be executed in any number
of   counterparts   and  by  the  parties   hereto   in   separate
counterparts, each of which when so executed will be deemed to  be
an  original  and all of which taken together will constitute  one
and the same agreement.

(h)  Headings.  The headings in this Agreement are for convenience
of reference only and will not limit or otherwise affect the
meaning hereof.
(i)  Governing Law; Jurisdiction.  This Agreement will be governed
by and construed in accordance with the laws of the State of
Texas, without giving effect to conflict of law principles.  Any
holder of Registrable Securities may bring any action or
proceeding to enforce or arising out of this Agreement or in the
instruments and agreements annexed hereto in any court of
competent jurisdiction.
(j)  Severability.  In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the
validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained
herein will not be affected or impaired thereby.
(k)  Entire Agreement.  This Agreement is intended by the parties
as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject
matter contained herein.  There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred
to herein with respect to the registration rights granted by the
Company with respect to the securities sold pursuant to the
Purchase Agreement.  This Agreement supersedes all prior
agreements and understandings between the parties with respect to
such subject matter.
(l)  Attorney's Fees.  In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision
hereof or thereof is validly asserted as a defense, the successful
party will be entitled to recover reasonable attorney's fees in
addition to any other available remedy.


              Remainder of page intentionally blank.
                                 
     IN  WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.

                              EEX CORPORATION
                              
                              
                              
                              Richard S. Langdon
                              Executive Vice President, Finance
                              and Administration and Chief
                              Financial Officer
                              
                              
                              WARBURG, PINCUS EQUITY PARTNERS,
                              L.P.
                              By: Warburg, Pincus & Co.
                              Its: General Partner
                              
                              
                              
                              Jeffrey A. Harris
                              Partner
                              
                              
                              
                              WARBURG, PINCUS NETHERLANDS EQUITY
                              PARTNERS I, C.V.
                              By: Warburg, Pincus & Co.
                              Its: General Partner
                              
                              
                              
                              Jeffrey A. Harris
                              Partner
                              
                              
                              
                              WARBURG, PINCUS NETHERLANDS EQUITY
                              PARTNERS II, C.V.
                              By: Warburg, Pincus & Co.
                              Its: General Partner
                              
                              
                              
                              Jeffrey A. Harris
                              Partner
                              WARBURG, PINCUS NETHERLANDS EQUITY
                              PARTNERS III, C.V.
                              By: Warburg, Pincus & Co.
                              Its: General Partner
                              
                              
                              
                              Jeffrey A. Harris
                              Partner




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