Document:

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                                                                    EXHIBIT 10.8

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                     NGL OUTPUT PURCHASE AND SALE AGREEMENT

                                     Between

                               GPM GAS CORPORATION

                                       and

                       PHILLIPS 66 COMPANY, A DIVISION OF
                           PHILLIPS PETROLEUM COMPANY

                                 JANUARY 1, 2000

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                     NGL OUTPUT PURCHASE AND SALE AGREEMENT

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
ARTICLE                                                                                                           PAGE
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<S>                                                                                                               <C>
I.       Definitions...............................................................................................1
II.      Term......................................................................................................4
III.     Quantity..................................................................................................5
IV.      Price.....................................................................................................10
V.       Quality...................................................................................................12
VI.      Settlement, Invoicing and Payment.........................................................................18
VII.     Measurement, Sampling and Analysis........................................................................19
VIII.    Custody, Title, and Risk of Loss..........................................................................22
IX.      Dispute Resolution........................................................................................23
X.       Force Majeure.............................................................................................26
XI       Taxes.....................................................................................................27
XII.     Notices...................................................................................................27
XIII.    Records and Audit.........................................................................................28
XIV.     Confidentiality...........................................................................................29
XV.      Miscellaneous Provisions..................................................................................30
</TABLE>

Exhibits

Exhibit A         Delivery Points
Exhibit B         Specifications
Exhibit C         Reference Prices
Exhibit D         Transportation and Fractionation Variables
Exhibit E         Provisions Regarding Benedum Analyzer
Exhibit F         Form of Guaranty
Exhibit G         Bushton Plant Systems

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                     NGL OUTPUT PURCHASE AND SALE AGREEMENT

     THIS NGL OUTPUT PURCHASE AND SALE AGREEMENT ("Agreement") is made and
entered into effective as of the1st day of January, 2000 by and between PHILLIPS
66 COMPANY, a division of PHILLIPS PETROLEUM COMPANY, a Delaware corporation
("Buyer"), and GPM GAS CORPORATION, a Delaware corporation ("Seller"). Buyer and
Seller are sometimes referred to individually herein as a "Party" and
collectively as the "Parties."

W I T N E S S E T H:

     WHEREAS, Seller owns or controls and has the right to dispose of certain
quantities of NGL's (as herein defined);

     WHEREAS, Seller may from time to time acquire or develop additional
quantities of NGL's; and

     WHEREAS, Seller desires to sell such NGL's to Buyer, and Buyer desires to
purchase the same from Seller.

     NOW THEREFORE, in consideration of the mutual and dependent promises
contained herein, Seller and Buyer agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

     1.1 The following words and terms, when capitalized herein, shall have the
respective meanings set forth in this Article I:

(a)  "Affiliate" means any company, corporation or other entity which, through
     the ownership of stock or otherwise, directly or indirectly controls, is
     controlled by, or is under common control with, another entity. An entity
     shall be deemed to control another entity if it has the direct or indirect
     right to select the management of such other entity.

(b)  "Arbitration Notice" shall have the meaning set forth in Article IX.

(c)  "Austin Region" means the Giddings Plant and the gas gathering systems
     associated therewith located in Bastrop, Brazos, Burleson, Fayette, Grimes,
     Lavaca, Lee and Washington counties in Texas, and such related counties
     into which Seller or gatherers who are Affiliates of Seller may extend
     their gas gathering systems in south central Texas from time to time.

(d)  "Barrel" or "Bbl" means forty-two (42) U.S. gallons.

<PAGE>   4

(e)  "Business Day" means any Day other than a Saturday, Sunday or legally
     recognized holiday of the United States of America.

(f)  "Calendar Quarter" means a period of three (3) Months commencing on the
     first Day of January, April, July or October in any calendar year.

(g)  "Condensate" means hydrocarbon drip, condensate, compression, and
     stabilizer liquids (excluding slop oil) which are:

     (i)  condensed from natural gas that is produced in association with the
          normal production of crude oil up to, and including, the crude oil
          collection tanks; or

     (ii) condensed from the gas phase associated with the normal production and
          gathering of raw natural gas from the wellhead to the inlet of a
          natural gas processing plant, including liquids collected and removed
          at the inlet receiver.

(h)  "Day" means a period of twenty-four (24) consecutive hours commencing at
     7:00 a.m. central time (either standard or daylight savings, as
     applicable).

(i)  "Delivery Point" means each point of delivery described in Exhibit "A," any
     point of delivery added to this Agreement pursuant to Section 3.5 and any
     other mutually agreeable point of delivery.

(j)  "Effective Date" shall have the meaning set forth in Article II.

(k)  "Force Majeure" shall have the meaning set forth in Article X.

(l)  "Gallon" means a U.S. gallon of two hundred thirty-one (231) cubic inches
     of liquid corrected for temperature to Sixty Degrees Fahrenheit
     (60(degree)F) and at the equilibrium vapor pressure of the liquid.

(m)  "Month" means a period of time commencing on the first Day of a calendar
     month and ending at the beginning of the first Day of the following
     calendar month.

(n)  "New Mexico Region" means the Artesia, Eunice and Linam Ranch Plants, and
     the gas gathering systems associated therewith located in Chaves, Eddy, and
     Lea counties in New Mexico, and Gaines and Loving counties in Texas, and
     such related counties into which Seller or its Affiliates may extend their
     New Mexico gas gathering systems from time to time.

(o)  "New Plant" means a gas processing plant not described on Exhibit "A" at
     which Seller delivers or intends to deliver natural gas, where such natural
     gas originates in whole or in part in the counties where natural gas is
     currently gathered and supplied to Plants which are described on Exhibit
     "A," or into which the same may be extended.

                                      -2-

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(p)  "NGL" or "NGL's" means the raw mixture of natural gas liquids (consisting
     predominantly of ethane (C2), propane (C3), isobutane (i-C4), normal butane
     (n-C4) and pentanes plus (C5+), each of which are hereinafter sometimes
     referred to singularly as an "NGL Component" and collectively as "NGL
     Components") which are (i) condensed, adsorbed or absorbed from or
     separated out of the natural gas when processed in the Plants, or (ii)
     delivered in the form of Y-2 Product.

(q)  "NGL Component Price" means the Monthly price in dollars per Barrel for the
     NGL Components delivered at each Delivery Point, as provided in Article IV.

(r)  "Off-Specification NGL" has the meaning set forth in Article V.

(s)  "Oklahoma Region" means the Kingfisher, Okarche, Mooreland, Cimarron, and
     Binger Plants, and the gas gathering systems associated therewith located
     in Alfalfa, Blaine, Caddo, Canadian, Cleveland, Custer, Dewey, Ellis,
     Garfield, Grady, Kingfisher, Logan, Major, Oklahoma, Roger Mills, Woods and
     Woodward counties of Oklahoma, and such related counties into which Seller
     or its Affiliates may extend their central and western Oklahoma gas
     gathering systems from time to time.

(t)  "Plants" means the gas processing plants and other facilities described in
     Exhibit "A."

(u)  "Panhandle Region" means the Dumas, Rock Creek, and Sherman-Hansford,
     Plants (excluding the Bushton Plant), the Sneed and Gray compressor
     stations, and the gas gathering systems of Seller and its related
     Affiliates associated therewith located in Clark, Comanche, Meade, Morton
     and Seward counties in Kansas, and Beaver, Cimarron, Ellis, Harper, Texas,
     and Woods counties in Oklahoma, and Carson, Dallam, Gray, Hansford,
     Hartley, Hemphill, Hutchinson, Lipscomb, Moore, Ochiltree, Potter, Roberts,
     Sherman, and Wheeler counties in Texas, and such related counties into
     which Seller or its Affiliates may extend their Oklahoma and Texas
     Panhandle, northwest Oklahoma, and southwest Kansas gathering systems from
     time to time.

(v)  "Preexisting Delivery or Sale Obligations" means contracts entered into
     prior to Seller's acquisition of an interest in a gas gathering or
     processing plant asset or prior to Seller's arrangement of deliveries of
     natural gas to a New Plant, that require that (i) the NGL's produced from
     gas gathered in such system, delivered to a New Plant and processed into
     NGL's, or (ii) the NGL's from such New Plant, be delivered or sold to a
     party other than Buyer.

(w)  "Region" shall mean the Austin Region, the New Mexico Region, the Oklahoma
     Region, the Panhandle Region, and the West Texas Region, respectively.

(x)  "Senior Management" means, with respect to Buyer, the Executive Vice
     President in charge of Buyer's Downstream Division and, in the case of
     Seller, its President (or their respective functional successors).

                                      -3-

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(y)  "West Texas Region" means the Fullerton, Goldsmith, Spraberry, and Benedum
     Plants and the gas gathering systems associated therewith located in
     Andrews, Crane, Crockett, Dawson, Ector, Gaines, Glasscock, Howard, Martin,
     Midland, Mitchell, Pecos, Reagan, Sterling, Terry, Upton, Ward, Winkler,
     and Yoakum counties in Texas, and such related counties into which Seller
     may extend its gas gathering system from time to time.

(z)  "Year" means a period of twelve (12) consecutive Months commencing on the
     Effective Date, and shall also include each successive twelve (12) Month
     period during the term hereof.

(aa) "Y-1 Products " means NGL's described in clause (i) of the definition of
     the term "NGL's."

(bb) "Y-2 Products" means Condensate from the Panhandle Region.

References herein to Articles, Sections and Exhibits shall mean the Articles and
Sections of, and the Exhibits attached to, this Agreement. All Exhibits
mentioned in this Agreement are incorporated by reference as if set out herein
in full.

                                   ARTICLE II

                                      TERM

2.1 PRIMARY TERM. This Agreement shall become effective on January 1, 2000 (the
"Effective Date"), regardless of the date of execution, and shall continue for a
primary term of fifteen (15) Years thereafter.

2.2 RENEWAL TERMS; NOTICE OF TERMINATION. The term shall be extended after the
primary term for successive five (5) Year terms, unless written notice of
termination is delivered by either Party to the other not less than three (3)
Years prior to the end of the primary term or any succeeding five (5) Year term.

2.3 PHASE DOWN PERIOD. Commencing with the first year following the term in
which notice of termination has been given, the Phase Down Period shall begin.
The Phase Down Period shall continue for four (4) years, and shall terminate on
the first day of the fifth Year. Not later than one (1) year prior to the
beginning of the Phase Down Period, the Parties shall negotiate with respect to
the quantities of Products to be sold and delivered during each successive year.
In the event that the Parties are unable to agree with respect thereto, the
percentage of the NGL's owned, controlled or otherwise available for sale which
are to be sold and delivered hereunder during each Year of the Phase Down period
shall be equal to the percentages shown in the following table:

                                      -4-

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<TABLE>
<CAPTION>
               Year of Phase Down                Percentage
                    Period
               ------------------                ----------
               <S>                                   <C>
                      1                              80%
               ------------------                ----------
                      2                              60%
               ------------------                ----------
                      3                              40%
               ------------------                ----------
                      4                              20%
               ------------------                ----------
</TABLE>

                                   ARTICLE III

                                    QUANTITY

3.1 SALE AND PURCHASE. Subject to the other provisions of this Agreement, Seller
shall deliver and sell, and Buyer shall receive and purchase, each Month one
hundred percent (100%) of the NGL's owned or controlled, or otherwise available
for sale by Seller, and available at the Delivery Points listed in Exhibit A;
provided, Buyer shall not be obligated to purchase any quantity in excess of the
lesser of (i) the quantities described in Seller's forecasts given under Section
3.3(a) and (ii) the quantity purchased by Buyer from Seller during the preceding
Year. Deliveries and receipts of NGL's will be in approximately uniform and even
quantities throughout each Month.

3.2 EXCEPTIONS. (a) Notwithstanding the provisions of Section 3.1, (i) Seller
shall have the right to deliver NGL's produced at the Plants in kind to
suppliers or their nominees pursuant to arrangements in the normal course of
business in response to competitive market conditions to attract and maintain
natural gas supplies for processing at the Plants, (ii) Seller may exclude from
the volumes of NGL's that would otherwise be deliverable hereunder a volume of
NGL's equal to 4% (four percent) of the total volume of all NGL's which would be
sold to Buyer by Seller from Plants in the New Mexico Region and the West Texas
Region but for the provisions of this Section 3.2 (a) (ii), and (iii) Seller may
sell to others the volumes of NGL's which Buyer does not elect to take under
Section 3.3(d) or otherwise declines or fails to take, which volumes may be
delivered by Seller to alternate purchasers from any Delivery Point. Deliveries
of the volumes described in Section 3.2 (a) (ii) may be made only from the
Eunice and Linam Ranch Plants, in the case of the New Mexico Region, and from
the Fullerton Plant, in the case of the West Texas Region.

(b) Also excluded from commitment under this Agreement for its term are NGL's
derived from the gas production attached to the gathering systems committed
under that certain contract dated as of December 28, 1995, between Enron
Anadarko Gathering Corporation ("Enron Anadarko") and Enron Gas Processing
Company (the Enron Anadarko interest thereunder was assigned to Seller as of
December 31, 1995, and the Enron Gas Processing Co. interest is now held by K N
Processing, Inc.) (the "Bushton Agreement"). Seller warrants that it is not
directly or indirectly currently delivering gas under the Bushton Agreement
except by means of the

                                      -5-

<PAGE>   8

gathering systems described in Exhibit G. Seller shall not directly or
indirectly divert into the gathering systems described in Exhibit G, for
delivery under the Bushton Agreement any gas Seller is not currently delivering
into such systems from Seller's Panhandle and Oklahoma gathering systems. Upon
termination of the Bushton Agreement Seller will evaluate its gathering and
processing alternatives for gas delivered under the Bushton Agreement in good
faith. If in the judgment of Seller it is most economically feasible, Seller
will commence integration and delivery of this gas into its Panhandle and
Oklahoma gathering systems, for ultimate delivery for processing in Plants or
New Plants in the Panhandle and Oklahoma Regions. Seller will not be obliged to
make capital expenditures in excess of Two Million Dollars ($2,000,000) to
integrate Exhibit G systems into its other systems.

(c) Seller covenants to Buyer that it will not enter into business combinations,
contracts or agreements, or otherwise modify its normal business practices,
which have as their purpose or effect the reduction or diversion of the
quantities of NGL's to be delivered and sold by Seller to Buyer hereunder (by
the diversion of raw gas supplies out of any Region, or otherwise), or any
circumvention of Seller's other obligations hereunder.

3.3 DELIVERY SCHEDULING; MAINTENANCE. (a) Seller shall notify Buyer, not later
than sixty (60) Days prior to the commencement of each Year, as to Seller's
forecast of the quantities Seller will have available for delivery to Buyer at
each Plant and at each New Plant and the period during which Seller anticipates
that deliveries will be curtailed from any Plant or New Plant by reason of
planned maintenance or other circumstances. Seller shall thereafter routinely
notify Buyer during such Year with respect to material variations (in excess of
10% at any Plant) in daily NGL production rates from the yearly forecast. Buyer
acknowledges that any such forecasts provided by Seller are estimates only, and
that the actual quantities delivered to Buyer may vary materially from such
estimates.

(b) Seller shall notify Buyer as soon as reasonably possible after it becomes
aware of any planned maintenance or planned temporary shutdown of any of its
Plants or related facilities which may be reasonably expected to limit Seller's
ability to deliver NGL's hereunder; provided, such notice shall be given to
Buyer at least one (1) month prior to any such planned maintenance or planned
temporary shutdown.

(c) Seller shall similarly provide Buyer, as soon as reasonably practicable,
notice of any other maintenance and shutdowns having a similar effect. Each such
notice shall specify the duration of any the maintenance period or temporary
shutdown, and the NGL quantity to be affected, as reasonably estimated by
Seller. During any such period, Buyer shall be free to use the NGL
transportation capacity not used for the receipt of NGL's from Seller for the
receipt and carriage of NGL's from others, provided, at the end of any period of
such maintenance or temporary shutdown, the delivery of NGL's by Seller and
purchases from Buyer shall recommence.

(d) On the basis of the forecast provided by Seller to Buyer pursuant to Section
3.3(a), Buyer shall notify Seller, not later than thirty (30) days prior to the
commencement of each Year, as to the quantity of NGL's Buyer will receive at
each Plant, consistent with Section 3.1 above. Buyer's notice shall also set
forth the period during which Buyer anticipates that receipts will be

                                      -6-

<PAGE>   9

curtailed from any Plant by reason of planned maintenance of its facilities or
other circumstances during such Year. Buyer shall thereafter routinely notify
Seller during such Year with respect to material variations in such forecast.
Seller acknowledges that any such forecasts provided by Buyer are estimates only
and that actual capacity may vary from such estimates. Buyer shall not have any
obligation to accept quantities beyond its existing pipeline capacity, taking
into account operational constraints and Buyer's other NGL purchase obligations.
Buyer shall have no obligation to add pipeline, pumping, fractionation or
associated facilities, or to increase the capacities of existing facilities, in
order to receive additional volumes of NGL produced by Seller.

(e) Buyer shall notify Seller as soon as reasonably possible after it becomes
aware of any planned maintenance or planned temporary shutdown of any of its NGL
pipelines or related facilities which may be reasonably expected to limit
Buyer's ability to take NGL's hereunder; provided, such notice shall be given to
Seller at least one (1) month prior to any such planned maintenance or planned
temporary shutdown. Buyer shall similarly provide Seller, as soon as reasonably
practicable, notice of any other maintenance and temporary shutdowns having a
similar effect. Each such notice shall specify the duration of any such
maintenance period or temporary shutdown and the quantity to be affected, as
reasonably estimated by Buyer. During any such period, Seller shall be free to
sell and deliver to third parties quantities of NGL's that would otherwise be
deliverable to Buyer hereunder; provided, at the end of any period of such
maintenance or temporary shutdown, the delivery and receipt of any such volumes
shall recommence.

(f) Buyer and Seller will reasonably cooperate with each other to the greatest
extent practicable to schedule planned maintenance and other planned outages
simultaneously in order to minimize overall down time.

3.4 NEW PLANTS; ADDITIONAL NGL'S SOURCES. Buyer shall have the right to purchase
NGL's that Seller produces, controls or otherwise has available for sale at New
Plants as indicated below. Seller shall provide written notice to Buyer of its
intent to have NGL's available for sale from any such New Plant. Such notice
shall be provided as soon as reasonably possible upon Seller's becoming aware
that such volumes are or will be available. The notice shall include an estimate
of the NGL's expected to be available for sale for a five-year period from the
New Plant and information about any Preexisting Delivery or Sale Obligations.
Upon receipt of any such notice from Seller the following shall apply:

     (i) Except as provided in clause (ii) of this Section 3.4, Buyer may notify
         Seller within sixty (60) Days that it wishes to acquire such volumes
         and will pay the expense of connecting new or additional pipeline
         facilities or otherwise arranging for the receipt of such volumes
         through existing facilities. Upon Seller's receipt of Buyer's notice,
         the volumes of NGL's available from such New Plant shall be committed
         for sale and delivery under this Agreement. The Market Reference Price
         for such volumes shall be the Market Reference Price applicable to the
         Region in which, or which is geographically nearest, the location of
         the New Plant, and the Transportation and Market Frac Prices to be
         utilized in the calculation of the net price payable shall be the
         prices applicable to the Plant geographically nearest the New Plant.

                                       -7-

<PAGE>   10

     (ii)  If the New Plant has an existing pipeline and connection by means of
           which such NGL's may be transported, Buyer may purchase the volumes
           available on the terms described in clause (i) of this Section 3.4;
           provided, the Transportation Price applicable to determination of the
           net purchase price shall be equal to the tariff payable in respect of
           shipments on such pipeline. The Market Reference Price and Market
           Frac Price shall be as provided in clause (i) of this Section 3.4.

     (iii) In the event that Buyer does not notify Seller that it wishes to
           purchase such NGL's pursuant to clauses (i) or (ii) of this Section
           3.4, and no NGL pipeline and connection is readily available for the
           transportation of such volumes into Buyer's NGL gathering system,
           Seller may negotiate for the sale of the New Plant NGL volumes with
           Buyer and other potential NGL purchasers on mutually agreeable
           prices, terms and conditions of sale. If such negotiations do not
           result in an agreement between Buyer and Seller for the affected
           volumes of NGL's, prior to entering into any binding agreement with
           another purchaser for the sale of the New Plant volumes, Seller shall
           offer in writing to sell them to Buyer at the prices and upon the
           terms and conditions which Seller is willing to accept that have been
           offered by a competing purchaser. Seller's notice shall include all
           of the terms and conditions of the proposed alternate sale agreement.
           Buyer shall then have the option, exercisable for thirty (30) days
           following the date of Buyer's receipt of Seller's notice of the
           competing proposal to purchase the affected New Plant volumes by
           agreeing to match all price and other terms and conditions of sale
           contained in such competing proposal, except that the provisions of
           Article IX of this Agreement shall be deemed to have been included
           and shall control over any conflicting dispute resolution terms of
           the competing offer. If Buyer desires to match the competing offer,
           Buyer shall so notify Seller in writing during the option period, and
           the offer from Seller and its acceptance from Buyer through the
           option exercise shall become the new agreement between the parties
           concerning the sale and purchase of the affected New Plant NGL's.

Upon the commitment of NGL's pursuant to subsection (i) or (ii) of this Section
3.4, a Delivery Point for the New Plant will be added to Exhibit A with the
initial Transportation and Fractionation variables being as hereinabove
provided. If a New Plant is added to this Agreement under this Section, of if
any quantities are sold from a New Plant pursuant to clause (iii) above, Seller
shall not allow the term of any Preexisting Delivery or Sale Obligations
applicable to such New Plant to be extended without Buyer's consent unless under
such Preexisting Delivery or Sale Obligations the other Party has the unilateral
right to cause such extension to occur. If Buyer elects not to acquire NGL's
from a New Plant incident to the exercise of its rights under this Section 3.4,
Seller shall be free to sell such NGL's elsewhere.

3.5 INCREASES IN NGL PRODUCTION CAPACITY. (a) In the event that Seller
anticipates a material increase in the quantity of NGL's available for sale at
any given Plant, then Seller shall provide Buyer with written notice of such
increased quantity and the date on which the same will

                                      -8-

<PAGE>   11

become available. Within sixty (60) Days after the receipt of Seller's notice,
Buyer shall notify Seller in writing of: (i) whether or not Buyer desires to
take such increased quantity, and (ii) the nature and extent of any additional
facilities which are required to be built for Buyer to receive the same.

(b) If Buyer notifies Seller within such sixty (60) Day period that Buyer
desires to receive such increased quantity at such Plant and no material
incremental facilities are required, then such increased quantity shall be
committed to this Agreement as and when it becomes available.

(c) If Buyer notifies Seller within such sixty (60) Day period that Buyer
desires to receive such increased quantity at such Plant and incremental
facilities are required, then the Parties shall negotiate to determine the
arrangements which will be applicable to such incremental facilities (including,
but not limited to, responsibility for construction and maintenance costs, the
time period required to design, build and place the facilities into service, and
any specific throughput or capital recovery commitments, if any). If the Parties
are able to reach agreement on such incremental facility arrangements within
sixty (60) Days of Seller's receipt of Buyer's notice, then the Parties shall
execute any necessary documents evidencing such agreement and such increased
quantity shall be committed to this Agreement as and when they become available.
If the Parties are unable to reach agreement on such incremental facility
arrangements within sixty (60) Days of Seller's receipt of Buyer's notice, then
such a determination with respect to such arrangements shall be made pursuant to
Section 9.1 if requested by either Party.

(d) If Buyer notifies Seller within such sixty (60) Day period that Buyer does
not presently desire to receive such increased quantities at such Plant, and no
incremental facilities are required to make delivery of such increased
quantities from such Plant (e.g. a third party pipeline has available capacity),
then Seller shall have the right to make alternate arrangements for the delivery
and sale of such increased quantities for a reasonable period of time beginning
on the date at which such increased quantities become available to Seller and
continuing through the next point in time when new Transportation and Market
Frac prices become effective for such Plant pursuant to Section 4.5; provided,
such alternate arrangements may extend for a period up to, but not in excess of,
three (3) years if necessary to the making of such arrangements. At such point
in time at which the Transportation and Market Frac prices for such Plant are
being negotiated pursuant to Section 4.5 (or upon the expiration of Seller's
alternate sales arrangements, if later), Buyer shall notify Seller in writing if
Buyer desires to purchase and receive such increased quantities at such Plant.
If Buyer provides such notice to Seller the increased quantity shall thereafter
be committed to this Agreement beginning on the first Day of the Year in which
such new price becomes effective (or upon the expiration of Seller's alternate
sales arrangements, if later). If Buyer does not provide such notice to Seller
within such time period, then such increased quantities may thereafter be
released from this Agreement and Seller shall have the right to make any
arrangements its deems necessary for the delivery and sale thereof.

(e) If Buyer fails to respond to Seller within sixty (60) Days of Buyer's
receipt of Seller's initial notice of increased quantities, then such increased
quantity may be released from this Agreement and Seller shall have the right to
make any arrangements it deems necessary for the delivery and sale thereof.

                                      -9-

<PAGE>   12

3.6 NGL TRANSPORTATION CAPACITY. Buyer shall have the first right to use the
existing and available capacity of common carrier pipelines at the Delivery
Points specified for each Region to the extent necessary to receive and buy the
required quantity of NGL's from Seller pursuant to this Agreement.

3.7 PLANT, PIPELINE, AND OTHER FACILITIES CHANGES AND SHUTDOWNS; UNECONOMICAL
OPERATIONS. Nothing herein shall be construed as (i) prohibiting Seller from
reconfiguring or enlarging its Plants, or curtailing or terminating, the
operation thereof, or (ii) prohibiting Buyer from reconfiguring or enlarging its
NGL pipeline, gathering or fractionation facilities, or curtailing or
terminating the operation thereof where, in either such case, the same is in the
reasonable judgment of the Party owning such facilities, required by economic or
operating conditions. Incident to the sale or other disposition of any of its
Plants, Seller shall assign this Agreement in part to the asset purchaser
insofar as it applies to the affected Plant or Plants, or otherwise require that
the purchaser of such Plant(s) agree that Buyer shall have a continuing right to
purchase the NGL's produced therefrom on the same terms and conditions as apply
to the sale and purchase of NGL's hereunder; provided, no such assignment or
other arrangements shall relieve Seller of any of its obligations hereunder
except as stated in Section 15.4.

                                   ARTICLE IV

                                      PRICE

4.1 GENERAL PRICE FORMULA. Prices payable hereunder shall be based on the number
of Barrels of each NGL Component delivered each Month. Except as provided in
Section 4.2, for each NGL Component Barrel sold and delivered by Seller to Buyer
each Month, Buyer shall pay to Seller a price determined under the following
formula:

               NGL               Market
               Component     =  Reference         x 0.42 - T&F Fee,
               Price, $/Bbl     Price, Cents/Gal           $/Bbl

Where:

    The Market Reference Price is the OPIS Price for the NGL Component in
    question, determined as provided in Section 4.3; and

    The T&F Fee is the sum of the Transportation and Market Frac prices
    applicable to the Region and NGL Component for which the calculation is
    being made, as set forth in Exhibit D.

                                      -10-

<PAGE>   13

4.2 PANHANDLE REGION Y-2 PRODUCT PRICE. For each NGL Component Barrel of
pentanes plus sold by Buyer to Seller and delivered into the Panhandle Region
Y-2 Product system, Buyer shall pay to Seller a price determined under the
following formula:

               NGL              Market
               Component     =  Reference      -  T&F Fee,
               Price, $/Bbl     Price, $/Bbl;     $/Bbl

Where:

    The Market Reference Price is the WTI NYMEX Price, determined as provided in
    Section 4.4; and

    The T&F Fee is the sum of the Transportation and Market Frac prices
    applicable to Y-2 pentanes plus under the heading "NGL Component" in the
    Panhandle Region, as set forth in Exhibit D.

4.3 OPIS PRICE. The OPIS Price for each NGL Component is the arithmetic average
of the midpoints of the daily high and low quotations applicable to the NGL
Component and Region in question, determined from Exhibit C, and as reported by
Oil Price Information Service ("OPIS"), on each Day during the Month of delivery
for which such price is quoted using the "Any Current Month" column. The
arithmetic average shall be expressed in U.S. Dollars to five (5) decimal places
(for example $0.34567). Where Exhibit C indicates that more than one quotation
category is to be used for the pricing of any NGL Component, each category shall
be used to the extent indicated.

4.4 WTI NYMEX PRICE. The WTI NYMEX Price is the arithmetic average of the prompt
Month settlement prices for West Texas Intermediate Crude Oil ("WTI") futures
contracts on the New York Mercantile Exchange ("NYMEX") quoted on each Day
during the Month of delivery, expressed in U.S. Dollars to five (5) decimal
places. The "prompt Month," for purposes hereof, is the earliest Month for which
a settlement price is quoted (ordinarily the Month following the Month of
delivery in the case of settlement prices quoted during the first twenty (20)
Days of the Month of delivery, and the second Month following the Month of
delivery in the case of settlement prices quoted during the remaining Days in
the Month of delivery).

4.5 RENEGOTIATIONS OF TRANSPORTATION AND MARKET FRAC PRICES. Not more frequently
than once each Year, beginning with the Year commencing on the Second (2nd)
anniversary of the Effective Date, the Transportation and Market Frac prices
described in Exhibit D may be adjusted pursuant to this Section 4.6. Such
adjustment shall be made upon the giving of notice by either Party to the other
not later than one hundred twenty (120) Days prior to the first (1st) Day of the
Year in which such adjustment is to apply. The Parties shall thereupon attempt
to agree with respect to the revised amounts, which shall be applicable with
respect to the pricing of deliveries commencing on the first (1st) Day of the
following Year. In the event that the Parties are unable to reach agreement
prior to the first (1st) Day of the Month immediately preceding the beginning of
such Year, then the Parties shall resolve any disputes or differences regarding
either

                                      -11-

<PAGE>   14

any Transportation price, or any Market Frac price, or both, pursuant to the
dispute resolution procedures described in Section 9.1. Pending renegotiation,
or resolution pursuant to the procedures described in Section 9.1, the prices
previously in effect shall continue to be paid on an interim basis, with
retroactive adjustments and resulting payments to be made promptly following
establishment of the new pricing criteria.

4.6 MARKET PRICE QUOTATION TERMINATIONS AND CHANGES. (a) In the event that OPIS
should cease publication of the price quotations used for any NGL Component, or
in the event that the trading of WTI futures contracts on the NYMEX should
cease, the Parties shall promptly agree upon an alternate source of price
quotations to be utilized, which source shall be capable of being applied in a
manner that will produce prices which fairly represent the value of the NGL at
the applicable pricing point or market reference point for which the original
information is no longer available. In the event that the Parties are unable to
agree with respect to the same within thirty (30) Days, the selection of a new
price source, together with its method of application, shall be determined
pursuant to the provisions of Section 9.1.

(b) In the event either Party believes in good faith that (i) the applicable
OPIS Price, or any successor to the OPIS Price established hereunder for any NGL
Component is no longer reflective of the market price for such NGL Component at
the pricing point or market reference point to which such OPIS Price, or
successor to such OPIS Price, applies, or (ii) the WTI NYMEX Price or any
successor to the WTI NYMEX Price established hereunder is no longer reflective
of the market price for sweet crude oil in the mid continent region of the
United States, such Party shall so notify the other Party. The Parties shall
then promptly agree upon an alternate source of price quotations to be used,
which source shall be capable of being applied in a manner that will produce
prices which fairly present the value of (x) the applicable NGL at the
applicable market reference point or (y) sweet crude oil in the mid continent
region of the United States, as applicable. In the event the Parties are unable
to agree to the same within thirty (30) Days, the selection of a new price
source, together with its application, shall be determined pursuant to the
provisions of Section 9.1. Neither Party may seek any selection of a new price
source for any given Market Reference Price pursuant to this Section 4.5(b) more
frequently that once in any period of two (2) Years.

                                    ARTICLE V

                                     QUALITY

5.1 GENERAL QUALITY REQUIREMENT; DELIVERY PRESSURE. Without prejudice to the
provisions of Article VI, the NGL's delivered by Seller to Buyer under this
Agreement shall conform at all times to the specifications set forth in Exhibits
B-1 and B-2, and shall be delivered at a pressure sufficient to effect delivery
at the Delivery Points; provided however, Seller shall not deliver NGL at a
given Delivery Point at a pressure in excess of the applicable maximum pressure
for such Delivery Point indicated in Exhibit A. In those instances in which
Seller delivers NGL's to Buyer at Delivery Points connected to facilities owned
and operated by parties other than Buyer or its Affiliates, the NGL's so
delivered shall conform to the specifications imposed by such parties. Whether
any NGL conforms to such specifications shall be determined pursuant to this

                                      -12-

<PAGE>   15

Article V and Article VII. Any NGL's not so conforming shall be deemed
Off-Specification NGL's.

5.2 QUALITY DETERMINATION METHODS. Except as provided in Sections 5.5 and 5.6
regarding free water, the quality characteristics of the NGL's at any given
Delivery Point shall be determined by Buyer (a) through laboratory analysis of
hydrocarbon composite samples associated with each such inspection location, (b)
by field testing of random spot samples, and (c) by laboratory analysis of
random spot samples.

    (i)   TESTS OF COMPOSITE SAMPLES. If laboratory analysis of a composite
          sample from any inspection location results in a finding that the
          sample fails to meet the product specifications set forth in Exhibit
          B-1 in the case of Y-1 Product, or Exhibit B-2 in the case of Y-2
          Product, then the NGL's delivered at such inspection location shall be
          deemed to be Off-Specification NGL's. The number of Barrels of NGL's
          deemed to be Off-Specification NGL's shall be equal to the total
          number of Barrels indicated by flow measurement readings over the time
          period during which such composite sample was collected (ordinarily
          approximately 15 days).

    (ii)  FIELD TESTING - SPOT SAMPLES. If any field testing of any spot sample
          at an inspection location results in a finding that the sample fails
          to meet the specifications for corrosion, product temperature, color
          or deleterious substances (including suspended solids/particulates),
          the NGL's so delivered shall also be deemed to be Off-Specification
          NGL's. The number of Barrels of NGL's deemed to be Off-Specification
          NGL's shall be equal to the total number of Barrels of NGL's delivered
          at such inspection location from the date on which the last conforming
          sample was taken at such inspection location to the date on which the
          non-conforming sample was obtained, but not in excess of fifteen (15)
          days prior to the date on which such sample was obtained:.

    (iii) LABORATORY TESTING - SPOT SAMPLES If laboratory testing of any spot
          sample of NGL's taken by Buyer at an inspection location results in a
          finding that the sample fails to meet any of the specifications other
          than those characteristics tested in the field pursuant to Section
          5.2(ii), the NGL's so delivered shall be deemed to be
          Off-Specification NGL's. Subject to the succeeding sentences of this
          clause 5.2(iii), number of Barrels of NGL's deemed to be
          Off-Specification NGL's shall be equal to the number of Barrels
          delivered during the period beginning on the date on which such spot
          sample was taken, and ending on the date on which the next spot sample
          at such location conforms to the specification. Promptly upon
          determining that any sample fails to meet the specifications, Buyer
          shall advise Seller of the same. Seller shall then use all reasonable
          efforts to correct the circumstances causing such sample to be off
          specification, and shall test for the characteristics that have caused
          Buyer's sample to be off-specification. When Seller has determined, in
          good faith, that such circumstances have been corrected, as evidenced
          by Seller's tests, it shall so notify Buyer, and Buyer shall once
          again obtain a spot sample from the same inspection location. In the
          event

                                      -13-

<PAGE>   16

          that such sample is determined to be on-specification, then such NGL's
          shall be deemed to have been Off-Specification NGL's only from the
          date on which the original sample was taken up to the date of Seller's
          notice that it has corrected the circumstances causing the same to be
          off specification.

5.3 QUALITY ADJUSTMENT FEE. Without prejudice to Buyer's other rights and
remedies hereunder, Buyer shall have the right to reject any Off-Specification
NGL. In the event that Buyer accepts delivery of any Off-Specification NGL,
Buyer shall deduct, from the price that would otherwise be payable if such NGL
had conformed to the requirements of Article 5.1, a quality adjustment fee equal
to fifty cents ($0.50) for each Barrel of Off-Specification NGL delivered;
provided however, in the event the Off-Specification NGL is delivered into a
third party pipeline at a Delivery Point and such third party pipeline imposes a
fee or other charge as a result of such Off-Specification NGL, no such quality
adjustment fee shall be assessed by Buyer, but Seller shall be responsible for
any third party pipeline fee or charge pursuant to Section 5.4 below. The
quality adjustment fee is not imposed as a penalty, but in recognition of the
facts that (a) the determination of the actual depreciation in value experienced
would be difficult or impossible to determine, and (b) the Parties have agreed
that the amount of such deduction is reasonable. Acceptance of Off-Specification
NGL, and/or the payment or deduction of the quality adjustment fee, shall not
constitute a waiver of Buyer's right to require that all future deliveries meet
the quality specification requirements of this Agreement, nor shall the
occurrence of such events constitute a license to Seller to make further
deliveries of Off-Specification NGL.

5.4 INDEMNIFICATION. (a) Without prejudice to Section 5.3 but subject to other
provisions of this Section 5.4, as to all Off-Specification NGL's for which
Buyer elects to accept delivery, Seller shall protect, indemnify, defend, and
hold Buyer, its Affiliates (other than Seller), and their respective directors,
officers, and employees (the "Buyer Indemnitees") harmless from and against any
and all claims, debts, suits, costs (including legal fees and court costs),
expenses, liabilities and causes of action threatened or asserted by any party
other than Buyer or Buyer's Affiliates (collectively "Third Party Claims") and
which are associated with or attributable to the delivery of Off-Specification
NGL's. The foregoing indemnity, defense and hold harmless obligations shall
apply irrespective of whether Seller at Buyer's request or Buyer has delivered
Off-Specification NGL's to the third party asserting it has suffered damage,
costs and expenses (including third party NGL pipeline carriers, fractionation,
storage or similar facilities imposing fees or other charges or otherwise
seeking the recovery of expenses, costs or damages).

(b) The following limitations apply to Seller's obligations under this Section
5.4:

    (i)   Buyer's rights are limited to Third Party Claims attributable to
          damage occurring downstream of the Delivery Points and up to and
          including the finished NGL storage facilities associated with any NGL
          fractionation facilities, and shall not extend to Third Party Claims
          attributable to damage downstream of such finished NGL storage
          facilities;

                                      -14-

<PAGE>   17

    (ii)  Seller will have no duty of indemnification for claims, debts, suits,
          costs, (including legal fees and court costs), expenses and
          liabilities resulting from spillage or mishandling of NGL's downstream
          from the Delivery Points, or with respect to matters not arising from
          the off quality nature of NGL's delivered by Seller; and

    (iii) the quality adjustment fees deducted from payments to Seller or
          otherwise collected by Buyer under this Agreement in respect of the
          Off-Specification NGL's that caused such Third Party Claims to arise
          shall be deducted from any amounts due from Seller under this Section
          5.4.

(c) Buyer, Buyer's Affiliates and their respective directors, officers, agents
and employees are the "Indemnified Party" and Seller is the "Indemnifying Party"
for purposes of this subsection. All Claims by the Indemnified Party under this
Section shall be asserted and resolved as follows:

    (i)   In the event of the assertion of any Third Party Claim which could
          give rise to damages for which the Indemnifying Party could be liable
          to an Indemnified Party under this Agreement, the Indemnified Party
          shall with reasonable promptness send to the Indemnifying Party, a
          written notice specifying the nature and amount or estimated amount
          thereof (which amount or estimated amount shall not be conclusive of
          the final amount, if any, of such claim, demand or proceeding) (a
          "Claim Notice"); provided, that a delay in notifying the Indemnifying
          Party shall not relieve the Indemnifying Party of its obligations
          under this Agreement except to the extend that (and only to the extent
          that) such failure shall have caused the damages for which the
          Indemnifying Party is obligated to be greater than such damages would
          have been had the Indemnified Party given the Indemnifying Party
          timely notice.

    (ii)  In the event of a Third Party Claim, the Indemnifying Party shall be
          entitled to appoint counsel of the Indemnifying Party's choice at the
          expense of the Indemnifying Party to represent the Indemnified Party
          and any others the Indemnifying Party may reasonably designate in
          connection with such Third Party Claim (in which case the Indemnifying
          Party shall not thereafter be responsible for the fees and expenses of
          any separate counsel retained by any Indemnified Party except as set
          forth below) provided that such counsel is reasonably acceptable to
          the Indemnified Party. Notwithstanding an Indemnifying Party's
          election to appoint counsel to represent an Indemnified Party in
          connection with a Third Party Claim, an Indemnified Party shall have
          the right to employ separate counsel, and the Indemnifying Party shall
          bear the reasonable fees, costs and expenses of such separate counsel
          if (A) the use of counsel selected by the Indemnifying Party to
          represent the Indemnified Party would present such counsel with a
          conflict of interest or (B) the Indemnifying Party shall not have
          employed counsel to represent the Indemnified Party within a
          reasonable time after notice of such Third Party Claim. If requested
          by the Indemnifying Party, the Indemnified Party agrees to cooperate
          with the Indemnifying Party and its counsel in

                                      -15-

<PAGE>   18

          contesting any Third Party Claim which the Indemnifying Party defends
          or, if appropriate and related to the Third Party Claim in question,
          in making any counterclaim against the person asserting the Third
          Party Claim, or any cross-complaint against any person. No Third Party
          Claim may be settled or compromised by the Indemnified Party without
          the prior written consent of the Indemnifying Party, which consent
          shall not be unreasonably withheld or delayed or by the Indemnifying
          Party without the prior written consent of the Indemnified Party,
          which consent shall not be unreasonably withheld or delayed. In the
          event the Indemnified Party settles or compromises or consents to the
          entry of any judgment with respect to any Third Party Claim without
          the prior written consent of the Indemnifying Party, that Indemnified
          Party shall be deemed to have waived all rights against the
          Indemnifying Party for indemnification under this Section 5.4.

    (iii) From and after the delivery of a Claim Notice under this Agreement, at
          the reasonable request of the Indemnifying Party, each Indemnified
          Party shall grant the Indemnifying Party and its representatives all
          reasonable access to the books, records and properties of such
          Indemnified Party to the extent reasonably related to the matters to
          which the Claim Notice relates. All such access shall be granted
          during normal business hours and shall be granted under conditions
          that will not unreasonably interfere with the business and operations
          of such Indemnified Party. The Indemnifying Party will not, and shall
          require that its representatives do not, use (except in connection
          with such Claim Notice) or disclose to any third person other than the
          Indemnifying Party's representatives (except as may be required by
          applicable Law) any information obtained pursuant to this section 5.4
          which is designated as confidential by an Indemnified Party.

5.5 FREE WATER IN Y-1 PRODUCT. Buyer shall inspect for the presence of moisture
(free water) in Y-1 Products at the time at which composite samples are taken
pursuant to Section 7.7 and at such other times as Buyer may determine. No
moisture (free water) shall be deemed to be contained within the Y-1 Product
being inspected if no more than one (1) tablespoon of a second phase liquid
comprised of free water, methanol, glycol, amine, or other aqueous solutions is
present within the fluid sample drained from the bottom of the meter strainer
basket located at the Delivery Point. If more than one (1) tablespoon of any
such substances is visibly present in the inspection container, then the NGL's
so delivered shall be deemed to be Off Specification NGL's. The number of
Barrels of NGL's deemed to be Off-Specification NGL's shall be equal to one half
(1/2) of the total number of Barrels delivered, as indicated by flow measurement
readings over the composite sampling measurement period in which the free water
was discovered.

5.6 FREE WATER IN Y-2 PRODUCT. (a) Seller shall filter all Y-2 Product prior to
delivery. A filter equipped with a 60-micron or finer size filtration media
shall be employed. Seller shall employ processing steps in the Panhandle Region
to ensure that any Y-2 Product delivered by Seller to Buyer contains negligible
amounts of free water or aqueous solutions at the temperature and pressure
conditions prevailing at the Delivery Points.

                                      -16-

<PAGE>   19

(b) As soon as practicable following the Effective Date, Buyer shall install at
the Panhandle Region Delivery Points AGAR OW-101 watercut monitoring equipment.
Such equipment shall be initially installed at that Y-2 Product Delivery Point
at which the greatest quantities of Y-2 Product are delivered and sequentially
thereafter at each Delivery Point at which the next greatest quantity is
delivered. The cost for acquisition and installation of the initial equipment
shall be shared equally by the Parties. Subsequent acquisition and installation
costs shall be borne by Buyer. On the last Day of the sixth (6th) full Month
following the installation of the last such meter to be installed at presently
existing Delivery Points, the cumulative weighted average percentage of water in
each Barrel of Y-2 Product delivered at such Delivery Points shall be
determined, and one hundred fifty percent (150%) of such percentage shall
thereafter be the maximum allowable percentage to be utilized for determination
of whether Y-2 Product meets the specification therefor with respect to water;
provided, such percentage shall not be in less than 0.30 liquid volume percent
or greater than 2.0 liquid volume percent. Y-2 Product delivered thereafter
which contains water in excess of the percentage so determined shall be deemed
to be Off-Specification NGL.

(c) During the period beginning on the Effective Date and ending on the last Day
of the sixth (6th) full Month following the installation of the last watercut
monitor (the "Test Period"), Buyer shall deduct from the metered quantity of Y-2
Product delivered hereunder a quantity equal to 0.5 liquid volume percent
thereof. Beginning on the first Day of the Month following the Test Period and
continuing thereafter, Buyer shall deduct from the metered quantity of Y-2
Product delivered hereunder each Month, at each Delivery Point, a quantity equal
to the percentage of water indicated as being present in the Y-2 Product at that
Delivery Point by the water monitoring equipment. Without prejudice to the
provisions of Section 5.2, such monitoring equipment shall in addition be
utilized thereafter for purposes of determining whether Y-2 Product delivered at
such Delivery Point is Off-Specification NGL.

(d) Not later than thirty (30) Days following conclusion of the Test Period, the
Parties shall confer with one another to determine whether the equipment
described in the Section 5.7 is reasonably measuring the quantity of water in
Y-2 Product. If the Parties agree that such measurement is materially
inaccurate, they shall select an alternate methodology for the measurement of
water. In the event the Parties do not agree, the matter may be submitted to an
expert appointed pursuant to Section 9.1(a) within sixty (60) Days thereafter.
The expert shall determine whether the equipment so installed and utilized is
reasonably measuring the water content. In the event, and only in the event,
that the expert determines that the water content is not being reasonably
measured, the expert shall specify alternate equipment to be utilized and
methodologies to be utilized thereafter.

5.7 METHANE IN ETHANE QUALITY INCENTIVE BONUS. (a) If (w) NGL's delivered by
Seller at New Mexico and West Texas Region Delivery Points (other than the
Benedum Plant), as analyzed by Buyer at the Benedum Analyzer, (x) NGL's
delivered by Seller at the Benedum Plant, as analyzed separately by Buyer at the
Benedum Plant, (y) Y-1 Product delivered by Seller at the Dumas and
Sherman-Hansford Plants, as analyzed by Buyer at the Borger fractionator, and
(z) NGL's delivered by Seller at the Giddings Plant, in any Month, in no event
exceed a methane to ethane peak ratio value of 1.75 liquid volume percent (1.75
LV%) at the applicable location, and if the cumulative average of all such
deliveries at the applicable location during the Month

                                      -17-

<PAGE>   20

has a methane to ethane ratio value less than or equal to 1.25 liquid volume
percent (1.25 LV%), then Buyer shall pay to Seller a quality incentive bonus for
deliveries at the applicable locations equal to the product of:

    (i)   one and one quarter percent (1.25%) of the Barrels of ethane contained
          within the NGL's that meet the foregoing qualifications and which are
          measured at the applicable location during the Month; and

    (ii)  the corresponding purchase price per Barrel for ethane determined
          pursuant to Article IV, using the price for Linam Ranch Delivery Point
          ethane in the case of the West Texas and New Mexico Regions (in the
          case of NGL's tested at Benedum), the price for Benedum Plant
          deliveries in the case of deliveries at the Benedum Plant, the price
          for Panhandle Region Y-1 Product deliveries at the Sherman-Hansford
          Delivery Point in the case of deliveries to Borger, and the price for
          Giddings Delivery Point ethane in the case of deliveries from the
          Giddings Delivery Point.

Provisions regarding the operation of the installation and operation of the
Benedum Analyzer are more specifically set forth in Exhibit E.

(b) It is recognized by the Parties that analysis equipment equivalent to the
Benedum Analyzer will not be installed at Buyer's Borger NGL fractionator prior
to the Effective Date. Such equipment shall be obtained and installed as soon as
reasonably practicable thereafter, and the same shall be operated pursuant to
procedures similar to those utilized with the Benedum Analyzer. Beginning with
the date on which such equipment is installed and ready for use at the Borger
fractionator, whether deliveries of Y-1 Product from the Dumas and
Sherman-Hansford Plants shall receive the incentive bonus described in Section
5.8(a) shall be determined by analysis of the Y-1 Product stream at the Borger
Fractionator. Until such time as such analysis equipment becomes operational,
the peak ratio value requirement that would otherwise apply to such deliveries
shall not apply, and testing of NGL's, for purposes of this Section 5.7, shall
be conducted on the basis of samples taken from the inspection locations at the
Dumas and Sherman-Hansford Plants.

5.8 METHANE IN ETHANE, NON-AFFILIATED NGL PIPELINES. In the event that
operators of pipelines (other than Buyer or its Affiliates) to which NGL is
delivered at Delivery Points other than those described in Section 5.7 consider
methane to be ethane, for volume measurement purposes, if the NGL delivered
meets the specifications in place at such Delivery Point, Buyer will similarly
consider such methane to be ethane for purposes of determining the volume of
ethane delivered and sold hereunder.

                                   ARTICLE VI

                        SETTLEMENT, INVOICING AND PAYMENT

6.1 INVOICE AND PAYMENT DATES. Promptly, but no later than five (5) Business
Days after the last Day of each Month, Buyer shall submit to Seller a settlement
statement, broken down on

                                      -18-

<PAGE>   21

an NGL Component basis by Delivery Point, for the NGL Component prices and the
gross metered quantity of NGL's delivered by Seller to Buyer hereunder during
the preceding Month. On or after the seventh (7th) Business Day after the last
Day of each Month, Seller shall submit to Buyer an invoice broken down on an NGL
Component basis by Delivery Point, for the quantity and price of NGL's delivered
by Seller and sold to Buyer during the preceding Month, and the best available
estimate of the distribution of ownership of any in-kind NGL's delivered to
Buyer but owned by third parties on a Component basis at each Delivery Point,
together with any corrections of the same for differences between actual
ownership distributions subsequently determined by Seller and prior estimates
previously provided by Seller and recorded by Buyer during the previous Month.
Payment by Buyer to Seller for NGL's sold shall be made on the seventeenth
(17th) Business Day of the Month following the Month of delivery, provided that
Seller's invoice has been timely received. Estimated quantities will be
corrected in the following Month's business. Upon written notice to Seller,
Buyer may withhold from, and offset against, any amounts payable to Seller
hereunder, any amounts payable by Seller to Buyer under this Agreement or under
any other agreement between Buyer and Seller or Seller's Affiliates.

6.2 PAYMENT METHOD; INTEREST RATE. Buyer shall make payment to Seller for NGL
delivered and sold under this Agreement by wire transfer of immediately
available funds to such bank and account as Seller may from time to time
designate by notice to Buyer. Amounts not paid by either Party when due shall
bear interest equal to the Prime Rate plus one percent (1%), or the maximum
lawful rate of interest, whichever is less. For purposes hereof, "Prime Rate"
shall mean that rate published as the consensus Prime Rate by the Wall Street
Journal in its Money Rates Statistics on the date on which payment is due or, in
the event that such rate is not published on the due date, on the next date
thereafter for which it is published.

                                   ARTICLE VII

                       MEASUREMENT, SAMPLING AND ANALYSIS

7.1 MEASUREMENT, SAMPLING, AND ANALYSIS STANDARDS. Sections 7.2 through 7.17 set
forth the measurement, sampling and analysis standards and procedures applicable
to those Delivery Points at which Buyer or its Affiliates are the owners or
operators. Other Delivery Points are owned or operated by other parties, and
measurement, sampling and analysis standards and procedures associated with such
Delivery Points may differ from the standards and procedures specified in this
Agreement. The Parties nevertheless agree that in each such instance in which
deliveries are to be made at a Delivery Point owned or operated by a third
party, measurement, sampling and analysis performed by such third party shall be
final and binding on the Parties with respect to volumes sold hereunder at such
Delivery Point.

7.2 METERS. The volume and density of NGL's delivered to Buyer by Seller shall
be determined by Buyer or its representative at each Delivery Point using
turbine meter mass measurement facilities of components of standard make
installed, operated and maintained in accordance with the latest edition of
Manual of Petroleum Measurement Standards ("API Manual") and the latest revision
of Gas Processors Association ("GPA") Publication 8182-95.

                                      -19-

<PAGE>   22

7.3 PULSATION. To maintain effective measurement at each Delivery Point, Seller
or its representative shall use reasonable efforts to operate its pumping
facilities to minimize any pulsation effects on the subsequent NGL measurement.

7.4 MINIMUM PRESSURE. Seller shall maintain a minimum pressure at each Delivery
Point equal to twice the pressure drop across the meter at maximum operating
flow rates plus 1.25 times the equilibrium vapor pressure of the NGL product at
the measured temperature at said Delivery Point.

7.5 DELIVERY TICKETS. Buyer or its representative shall record the totalizer
reading daily at a time specified by Buyer or its representative and promptly
inform Seller of this reading when deliveries are being made. Delivery tickets
shall be written at 7:00 a.m. Central Time the first Day of each Month and
whenever the composite sample is removed from the sample container, or as
mutually agreed. Delivery tickets shall be written by Buyer, witnessed by Seller
and copies forwarded immediately to Seller. In the case when mode of operation
changes, such as de-ethanization, Seller will notify Buyer in advance of the
pending change, and Buyer agrees to pull sample and write a meter delivery
ticket representing the period prior to the operation change.

7.6 SAMPLING DEVICES. Buyer or its representative shall furnish or cause to be
furnished an automatic sampling device for obtaining representative samples of
the product delivered hereunder in accordance with the latest revision of GPA
Publication 2174-93. Such sampling device shall be located at each Delivery
Point to extract samples in proportion to the volume of NGL's delivered. The
sampling period for each accounting Month shall extend over the mutually agreed
ticket period and shall be deemed to be representative of the deliveries for the
current accounting Month.

7.7 SAMPLING AND COMPOSITION DETERMINATIONS. The composition of the deliveries
of NGL's from Seller to Buyer hereunder shall be determined in order to
establish the weight percent of the various hydrocarbons contained therein.
Buyer or its representative shall remove composite samples twice each Month,
once on or about the first Day of such Month and once on or about the middle of
such Month, or as otherwise agreed by the Parties. Two (2) separate composite
samples shall be removed from the automatic sampling device in accordance with
the latest revision of GPA Publication 2174-93, one (1) sample for laboratory
analysis, and the second to be retained for referee or joint analysis. Provided
that Seller furnishes to Buyer a sample cylinder during each period, Buyer shall
remove a third composite sample for Seller at each measurement location for
which such sample cylinder is furnished. Buyer will notify Seller five (5) Days
prior to the withdrawing of the NGL samples. Seller or its representative may
witness the withdrawing of the NGL samples. The Buyer's representative sample of
NGL's for each sampling period shall be analyzed by Buyer or its representative
by means of the latest revision of GPA Publication 2177-95, or 2186-95, for
extended analysis of NGL mixtures by gas chromatography. The results of this
analysis of the representative sample shall be forwarded by Buyer to Seller.
Seller may, within twenty (20) Days after receipt of such analysis, challenge
Buyer's analysis by submitting a written objection. If Buyer and Seller cannot
agree on the analysis for that sampling period, then Buyer shall submit the
referee sample to a mutually agreed upon independent laboratory for analysis.
The referee sample analysis results shall be accepted by Buyer and Seller as
final and conclusive. Charges made by such independent

                                      -20-

<PAGE>   23

laboratory shall be borne equally by Buyer and Seller. If Seller does not
challenge the analysis made by Buyer within the twenty (20) Day period following
Seller's receipt of Buyer's analysis, the analysis made by Buyer shall be final
and conclusive. At least every six (6) Months, a sample will be taken for
extended analysis in compliance with the latest revision of GPA Publication
2186-95, to determine the average molecular weight and the weight in pounds per
barrel of the hexane and heavier fractions for use during instances in which GPA
method 2177-95 is used as the analysis method. Such molecular weight and the
weight in pounds per barrel of hexane and heavier fractions shall be used until
the next extended analysis.

7.8 NO SAMPLE. If, for any reason, there is a failure to have a representative
sample for any given period, then an average of the last preceding three
analyses which were acceptable to both Parties during which the Plant was in the
same operating mode shall be substituted for such period unless another method
is agreed upon by both Parties.

7.9 COMPOSITION CALCULATION. The respective quantities of carbon dioxide,
nitrogen, methane, ethane, propane, isobutane, normal butane and pentanes and
heavier hydrocarbons delivered shall be computed by Buyer or its representative
in accordance with the latest revision of GPA Publication 8173-94. The constants
to be used in the calculations to determine the quantities in gallons of the
deliveries shall be those listed in the latest revision of GPA Publication
2145-96.

7.10 MEASUREMENT EQUIPMENT TESTING. All liquid measurement equipment shall be
proved by Buyer or its representative at least once each thirty (30) Days and
prior to any changes in flow rate which may affect metering accuracy after
giving at least five (5) Days notice to Seller as to the date and hour of each
such test. If Seller so desires, it shall be entitled to have representatives
present to witness all provings, but the calibration and repair of the
measurement equipment shall be the responsibility of Buyer or its designee.

7.11 MEASUREMENT EQUIPMENT TOLERANCES AND CORRECTIONS. The average of five (5)
consecutive calibration tests will be taken to obtain the meter correction
factor for the turbine meter if (1) the five calibration tests are within 0.05%
of each other, and (2) the average of the five calibration tests produces a
correction factor within 0.25% of the meter correction factor determined during
the previous period. The average of two (2) consecutive calibration tests will
be used to obtain the density meter correction factor if (1) the two calibration
tests are with 0.05% of each other and (2) the correction factor obtained is
within 0.25% of the density meter correction factor used during the previous
period. Any deviation greater than the above is not acceptable unless otherwise
mutually agreed upon between Buyer and Seller. Buyer or its representative shall
have the responsibility to immediately effect any required equipment
replacement, maintenance or repairs.

7.12 CORRECTION OF PRIOR DELIVERIES. If, upon calibration tests, the turbine
meter or the density meter does not meet with requirements given above, the
factor(s) shall be corrected for a period that shall be agreed upon. In the
event the Parties are not able to reach agreement, the correction shall extend
over one-half (1/2) of the throughput in pounds since the last calibration of
the equipment.

                                      -21-

<PAGE>   24

7.13 SPECIAL CALIBRATION TESTS. Either Party may request special calibration
tests of the measurement facilities in addition to the regular Monthly tests.
The expense of such special test shall be borne by the Party requesting same,
unless such test shows that the measurement facilities are in error by more than
one-half percent (0.5%) by "mass" measurement, in which case the expense of the
special test shall be borne by Buyer.

7.14 CORRECTION OF MASS MEASUREMENT ERRORS. If any special test shows that the
measurement facilities are in error one-half percent (0.5%) or less by "mass"
measurement, previous calibration factors of such equipment shall be considered
as correct. However, the measurement facilities shall be properly adjusted at
once to record accurately. If any special test shows that the measurement
facilities are in error by more than one-half percent (0.5%) by "mass"
measurement, the equipment shall be properly calibrated at once to record
accurately and the previous "mass" readings of such equipment shall be corrected
to zero error for any period which is known or agreed upon. In case said period
is not known or agreed upon, such correction shall be for one-half of the
throughput in pounds since the last calibration of the equipment.

7.15 OUT OF SERVICE CORRECTIONS. The computed NGL Component volumes delivered
during any period the measurement system is out of service or in need of repair
shall be estimated by Buyer or its representative by one of the following
methods, in the order stated:

    (i)   by using the data recorded by any check measuring equipment installed
          and accurately registering;

    (ii)  by correcting the error if the percentage of error is ascertained by
          calibration, test, or mathematical calculation; or

    (iii) by comparison with deliveries during a period under similar conditions
          when the measurement system was registering accurately.

7.16 SELLER ACCESS. Seller shall be provided measurement information, including
access to Buyer's measuring facilities' data transmission signal.

7.17 NOTIFICATION OF OPERATIONAL CONDITIONS. Seller shall promptly notify Buyer
of any operational conditions that may affect NGL specifications. Seller shall
use its best reasonable efforts to remedy any such specification problems.

                                  ARTICLE VIII

                         CUSTODY, TITLE AND RISK OF LOSS

8.1 TITLE PASSAGE. Custody, title and risk of loss to the NGL's delivered by
Seller to Buyer under this Agreement shall pass from Seller to Buyer at the
Delivery Points.

8.2 WARRANTY OF TITLE. Seller hereby warrants that it has title to the NGL's
sold by it hereunder and the right to sell the same, and warrants that all such
NGL's are owned by Seller

                                      -22-

<PAGE>   25

free and clear from all liens, encumbrances and adverse claims. Seller will
defend, indemnify, and save Buyer, its affiliates, and their officers, agents,
and employees harmless from all suits, claims, liens, damages, costs (including
attorneys' fees and costs of litigation), losses, expenses, and encumbrances of
whatsoever nature arising from and out of claims of any or all persons of and
concerning title to NGL's delivered to Buyer and claims for royalties, taxes,
license fees, payments and other charges thereon applicable before the title
transfers to Buyer.

                                   ARTICLE IX

                               DISPUTE RESOLUTION

9.1 NEGOTIATIONS/EXPERT REFERRAL FOR CERTAIN DISPUTES. (a) This Section 9.1
shall apply with respect to those matters referred to in Section 3.5(c), 4.5,
4.6, 5.6 and Exhibit E on which the Parties are required to reach agreement, and
those matters described in Article VII. In order to come to agreement on any
issue arising under or relating to those provisions, either Party may make a
written request to the other requesting a meeting of the Parties' respective
Senior Management with respect to Sections 4.5 and 4.6 and operational managers
with respect to Article VII for the purpose of discussing and resolving the
same. Such Senior Management or operational managers shall meet within five (5)
Business Days thereafter by teleconference or at a location selected by the
requesting Party and reasonably convenient for both Buyer and Seller. If such
meeting fails to result in an agreement within seven (7) Days thereafter, either
Party (the "Initiating Party") may request in writing that the matter be
referred to an expert.

(b) An expert is a person generally recognized as an expert in the field or
fields of expertise relevant to the issue on which the Parties are required to
come to agreement. Without the specific agreement of both Parties, no person
shall serve as an expert who has ever been previously employed or hired as a
consultant for either of the Parties. In the event that the Parties cannot agree
on the expert within seven (7) Days after the Initiating Party's request for
referral, then either Party may obtain a designation of an expert pursuant to
the following procedure. The Center for Public Resources Institute for Dispute
Resolution (the "Institute") shall be requested by the Initiating Party to
provide the names of seven individuals who are experts in the relevant field. No
expert shall be a current or former director, officer or employee of either
Party or its Affiliates; an attorney (or member of a law firm) who has rendered
legal services to either Party or its Affiliates within the preceding three
Years; or an owner of any of the common stock of either Party, or its
Affiliates. The Parties shall alternate the striking of single names from the
list of experts (with the Initiating Party striking the first name) until only
one (1) expert remains on the list, and such expert shall resolve the matter at
issue. Each Party shall have one (1) Business Day to strike a name, with the
first name to be struck on the seventh (7th) Day following the date on which the
list shall have been received by both Parties. If a Party does not strike a name
within such one (1) Day period such Party's right to strike a name on such Day
shall be forfeited. If the expert selected by this process cannot serve for any
reason, then the person whose name was the last name stricken by the Parties
from the list of experts shall be selected as the arbitrator instead. If that
person cannot serve for any reason then the Parties will obtain a new list of
arbitrators from the Institute and will repeat the striking process set forth
herein.

                                      -23-

<PAGE>   26

(c) Once designated, the expert will consult with both Parties (provided there
shall be no ex parte communications) and review all relevant material submitted
by each Party (with any information provided to the expert also to be provided
to the other Party). Oral submissions to the expert may be made by
representatives of both Parties as long as both Parties are present at the time
of such oral submissions, and such submissions shall be completed within sixty
(60) Days following selection of the expert. Subject to the prior written
approval of Buyer and Seller, the expert may obtain independent or technical
advice as he or she may deem necessary. Following consideration of the
submissions of the Parties, the expert shall issue his decision, including a
written statement of findings and reasons, and the same shall thereupon
constitute the agreement of the Parties regarding that matter. Except with
respect to determinations under Section 4.5, the Parties waive any right of
appeal which they may have either with respect to the selection the expert and
the findings and determinations of the expert. Either Party, if dissatisfied
with a determination under Section 4.5, may appeal the same by arbitration under
Section 9.2.

(d) Each Party shall bear its respective costs, and the Parties shall share
equally the cost of the expert and any independent advisers consulted by the
expert.

9.2 NEGOTIATIONS/BINDING ARBITRATION OF OTHER DISPUTES. Except with respect to
the matters described in Section 9.1(a), any dispute, controversy or claim
arising out of or relating to this Agreement, or the breach or performance
hereof, including, but not limited to, any disputes concerning the
interpretation of the terms and provisions hereof, shall be resolved through the
use of the following procedures:

    (a)   The Parties will initially attempt in good faith to resolve any
          disputes, controversy or claim arising out of or relating to this
          Agreement.

    (b)   Should the Parties directly involved in any dispute, controversy or
          claim be unable to resolve same within a reasonable period of time,
          such dispute, controversy or claim shall be submitted to the Senior
          Management with such explanation or documentation as the Parties deem
          appropriate to aid the Senior Management in their consideration of the
          issues presented. The date the matter is first submitted to the Senior
          Management shall be referred to as the "Submission Date." The Senior
          Management shall attempt in good faith, through the process of
          discussion and negotiation, to resolve any dispute, controversy, or
          claim presented to it within forty-five (45) Days after the Submission
          Date.

    (c)   If the Senior Management cannot so resolve any dispute, controversy,
          or claim submitted to it within forty-five (45) Days after the
          Submission Date, either Party may request that the matter be resolved
          through arbitration by submitting a written notice (the "Arbitration
          Notice") to the other. Any arbitration that is conducted hereunder
          shall be governed by the Federal Arbitration Act, 9 U.S.C. Sections
          1-16, et seq., and will not be governed by the arbitration acts,
          statutes or rules of any other jurisdiction.

                                      -24-

<PAGE>   27

    (d)   The Arbitration Notice shall name the noticing Party's arbitrator and
          shall contain a statement of the issue(s) presented for arbitration.
          Within fifteen (15) Days of receipt of an Arbitration Notice, the
          other Party shall name its arbitrator by written notice to the other
          Party and may designate any additional issue(s) for arbitration. The
          two named arbitrators shall select the third arbitrator within fifteen
          (15) Days after the date on which the second arbitrator was named.
          Should the two arbitrators fail to agree on the selection of the third
          arbitrator, either Party shall be entitled to request the Senior Judge
          of the United States District Court for the Southern District of Texas
          to select the third arbitrator. All arbitrators shall be qualified by
          education or experience within the natural gas or natural gas liquids
          industry to decide the issues presented for arbitration. No arbitrator
          shall be: a current or former director, officer or employee of either
          Party or its Affiliates; an attorney (or member of a law firm) who has
          rendered legal services to either Party or its Affiliates within the
          preceding three Years; or an owner of any of the common stock of
          either Party, or its Affiliates.

    (e)   The three arbitrators shall commence the arbitration proceedings
          within twenty-five (25) Days following the appointment of the third
          arbitrator. The arbitration proceedings shall be held in Dallas,
          Texas. The arbitrators shall have the authority to establish rules and
          procedures governing the arbitration proceedings. Each Party shall
          have the opportunity to present its evidence at the hearing. The
          arbitrators may call for the submission of pre-hearing statements of
          position and legal authority. The arbitrators' decision must be
          rendered within thirty (30) Days following the conclusion of the
          hearing or submission of evidence, but no later than ninety (90) Days
          after appointment of the third arbitrator.

    (f)   The decision of the arbitrators, or a majority of them, shall be in
          writing, shall include a statement of findings and reasons, and shall
          be final and binding upon the Parties as to the issue(s) submitted.
          The cost of the hearing shall be shared equally by the Parties, and
          each Party shall be responsible for its own expenses and those of its
          counsel or other representatives. Each Party hereby irrevocably
          waives, to the fullest extent permitted by law, any objection it may
          have to the arbitrability of any such disputes, controversies or
          claims and further agrees that a final determination in any such
          arbitration proceeding shall be conclusive and binding upon each
          Party. Judgment on the award rendered by the arbitrator may be entered
          in any court having jurisdiction thereof. The prevailing Party shall
          be entitled to recover reasonable attorneys' fees and court costs in
          any court proceeding relating to the enforcement or collection of any
          award or judgment rendered by the arbitration panel under this
          Agreement.

    (g)   All deadlines specified herein may be extended by mutual written
          agreement of the Parties. The procedures specified herein shall be the
          sole and exclusive procedures for the resolution of disputes between
          the Parties arising out of or relating to this Agreement; provided,
          however, that a Party may seek a preliminary injunction or other
          preliminary judicial relief if in its judgment such action is
          necessary to avoid irreparable damage. Despite such action, the
          Parties

                                      -25-

<PAGE>   28

          will continue to participate in good faith in the procedures specified
          herein. All applicable statutes of limitation, including, without
          limitation, contractual limitation periods provided for in this
          Agreement, shall be tolled while the procedures specified in this
          Section are pending. The Parties will take all actions, if any,
          necessary to effectuate the tolling of any applicable statutes of
          limitation.

9.3 CONTINUED PERFORMANCE. While any matter under dispute is being resolved
pursuant to the provisions of this Article IX, the Parties shall continue to
perform their obligations hereunder.

                                    ARTICLE X

                                  FORCE MAJEURE

10.1 SUSPENSION OF PERFORMANCE. In the event either Party is rendered unable,
wholly or in part, by Force Majeure to carry out its obligations under this
Agreement, other than to make payments of money when due, such Party shall give
notice and full particulars of such Force Majeure event to the other Party as
soon as reasonably possible after the occurrence of the cause relied on, and the
obligations of the Parties, so far as they are affected by such Force Majeure,
shall be suspended during the continuance of any inability so caused but for no
longer period, and such cause shall as far as possible be remedied with all
reasonable dispatch. The Party giving notice shall cooperate in assisting the
other Party to maintain its operations and throughput including access to owned,
affiliated, and third Party systems.

10.2 FORCE MAJEURE DEFINITION. The term "Force Majeure," as employed herein,
shall mean an act of God; strike, lockout or other industrial disturbance; act
of the public enemy; war; blockade; riot; lightning; fire; storm, flood;
explosion; malfunction or a necessity for making repairs to lines of pipe,
pumps, compressors, valves, gauges, or any equipment used thereon; action, order
or regulation by any government or governmental agency which prevents in whole
or in part performance hereunder; and any other sudden, accidental and
unanticipated event, matter or cause, whether or not of the same class or kind
as set forth above, which is not within the control of the Party affected
thereby, and the effects of which cannot be overcome by the exercise of due
diligence.

10.3 LABOR MATTERS EXCEPTION. The settlement of strikes or lockouts shall be
entirely within the discretion of the Party having the difficulty, and the above
requirement that any Force Majeure shall be remedied with all reasonable
dispatch shall not require the settlement of strikes or lockouts by acceding to
the demands of the opposing Party when such course is inadvisable in the
discretion of the Party having the difficulty.

10.4 INTERIM ACTIONS. During the period for which either Party is prevented,
either in whole or in part, by reason of Force Majeure, from performing its
obligations under this Agreement, the other Party may make such reasonable and
temporary, alternative arrangements for the delivery or receipt of NGL to the
extent affected by such Force Majeure (or, in the case of Buyer, the acquisition
of the same from third parties). Upon the termination or cessation of such

                                      -26-

<PAGE>   29

circumstances, the Parties shall resume the performance of their obligations
hereunder (subject to the fulfillment of any remaining obligations under such
reasonable and temporary, alternative arrangements made as a result of such
Force Majeure.

                                   ARTICLE XI

                                      TAXES

11.1 SELLER TAXES. Seller shall pay all taxes, fees or other similar levies
(except sales and use taxes, or any taxes equivalent thereto and imposed in lieu
thereof, all such excluded taxes being referred to as "Sales & Use Taxes") which
may be assessed or otherwise applicable to the NGL's delivered to Buyer
hereunder prior to delivery to Buyer, and, in the event the Buyer is required by
law to pay any of said taxes, fees or other similar levies, Seller shall
reimburse Buyer for such payments.

11.2 BUYER TAXES. Buyer shall pay all taxes, fees or other similar levies which
may be assessed or otherwise applicable to the NGL's delivered to Buyer
hereunder at and after delivery to Buyer, and, in the event Seller is required
by law to pay any of said taxes, fees or other similar levies, Buyer shall
reimburse Seller for such payment.

11.3 EXEMPTION CERTIFICATES. Buyer shall provide Seller with an exemption
certificate(s), if any, in a form acceptable to the appropriate taxing authority
for sales of NGL under this Agreement, and shall be responsible for the payment
of Sales and Use Taxes for sales of NGL hereunder if it fails to do so, or if
such taxes are otherwise assessed on such sales.

11.4 INCOME TAXES. Neither Party shall be responsible for any taxes of the other
Party measured by the income of such Party.

                                   ARTICLE XII

                                     NOTICES

12.1 ADDRESSES. All notices or communications between the Parties required or
allowed under this Agreement shall be in writing and shall be sent by certified
United States mail (Return Receipt Requested) or first class United States mail,
in each case with postage prepaid, by a facsimile transmission with receipt
confirmed, or by overnight courier, addressed as follows:

                                      -27-

<PAGE>   30

IF TO Buyer:

PHILLIPS 66 COMPANY
Attn:  Manager of Natural Gas Liquids
788-B Adams Building
Bartlesville, Oklahoma 74004
Fax Number: (918) 662-2178

IF TO Seller:

Correspondence:

GPM Gas Corporation
Attn: Gas Marketing
1300 Post Oak Blvd., Suite 800
Houston, TX 77056

Fax Number: (713) 297-5964

Payments:

Chase Manhattan Bank
New York, New York
ABA No. 021000021,
For credit to GPM Gas Corporation,
Account 144-033-880

12.2 TIME OF NOTICE. Any notice or communication shall be deemed to have been
properly given when received. Any notice or communication successfully
transmitted by facsimile after 5:00 p.m. on a given Business Day, as evidenced
by automatic confirmation produced by the sender's transmission equipment, shall
be deemed received on the next succeeding Business Day.

12.3 CHANGE OF ADDRESS. Either Party may change its notice address by giving
notice to the other Party in the manner set forth hereinabove; provided,
however, that no change of address notice shall be effective until received by
the other Party. Each Party shall provide the other with all names, telephone
and facsimile numbers necessary for its performance under this Agreement.

                                  ARTICLE XIII

                                RECORDS AND AUDIT

13.1 Buyer and Seller shall maintain true and correct sets of records pertaining
to performance of this Agreement and all transactions related thereto, and agree
to retain all such records for a

                                      -28-

<PAGE>   31

period of not less than two (2) years following the end of the production Month.
Any representative or representatives authorized by either Party may audit any
and all such records of the other Party at any reasonable time or times during
performance of this Agreement and during the two-year period after completion of
performance, for purposes of determining compliance with the terms hereof and to
verify that no illegal or unauthorized payments or rebates have been paid to or
by an employee or agent of either Party hereto.

                                   ARTICLE XIV

                                 CONFIDENTIALITY

14.1 CONFIDENTIAL MATTERS. The terms of this Agreement, including, but not
limited to the price paid for NGL's, the quantities of NGL's purchased or sold
and all other terms of this Agreement shall be kept confidential by the Parties
hereto, except (i) as provided in Section 14.2, (ii) to the extent such
information must be disclosed for the purpose of effectuating transportation of
NGL's, (iii) as may be required to be disclosed by order of any court or other
governmental authority (a "Compelled Disclosure"), (iv) for disclosure to
Seller's or Buyer's respective attorneys and consultants or to any lenders and
their attorneys or consultants in connection with any equity and debt financing
of Seller or Buyer, or (v) as required in connection with Seller's or Buyer's
risk management activity. Before any disclosure of the terms of this Agreement
(other than a Compelled Disclosure), the Party disclosing the terms shall
require that the third Party receiving the information execute a confidentiality
statement containing terms substantially the same as those in this Article XIV.
If either Party or any of its officers, directors, employees, agents or advisors
become required to disclose any terms of this Agreement to third Parties
pursuant to a Compelled Disclosure, the disclosing Party will give the other
Party prompt notice of that fact, shall furnish only that portion of the
Agreement which it is legally required to furnish, and shall exercise all
reasonable efforts to obtain assurance that confidential treatment will be
accorded such information by appropriate protective order or otherwise.

14.2 NOTICE. In the event that interrogatories, requests for production of
documents, document subpoenas, civil investigative demands or similar processes
call for Seller or Buyer, in the opinion of counsel, to disclose any
confidential information in connection with this Agreement, it is agreed that
the Party from whom such disclosure is sought will provide the other Party with
prompt notice of such process so that the other Party may seek an appropriate
protective order. The Party seeking the protective order agrees to keep the
other Party informed of the progress on and the terms of any such protective
order. In the event such protective order is not obtained, the Party from whom
such disclosure is sought shall not be liable for complying with such legal
process.

                                      -29-

<PAGE>   32

                                   ARTICLE XV

                            MISCELLANEOUS PROVISIONS

15.1 PARTIAL INVALIDITY. If any provision hereof is found by final and
unappealable order or award to be non-enforceable, for any reason whatsoever, it
shall be adjusted rather than voided, if possible, in order to achieve the
intent of the Parties. In any event, all other provisions of this Agreement
shall be deemed valid, binding and enforceable to the full extent allowed by
law.

15.2 DEFAULT AND NONWAIVER. The failure of either Party to enforce any of the
provisions of this Agreement at any time shall not be construed to be a waiver
of such provision unless so notified by such Party in writing. No waiver of any
breach of this Agreement shall be held to be a waiver of any other breach.

15.3 ENTIRE AGREEMENT. This Agreement contains the entire and only agreement
between the Parties concerning the subject matter hereof, and it supersedes any
prior correspondence, communications, agreements and understandings, whether
oral or written, between the Parties. In order to be binding upon Buyer or
Seller, any modification or amendment to this Agreement, or of any of the
provisions hereof, must be in writing signed by both Parties. As of the
Effective Date, this Agreement supersedes and replaces that certain Natural Gas
Liquids Output Purchase and Sale Agreement, as amended, that was effective as of
January 1, 1992.

15.4 ASSIGNMENT, SUCCESSORS. The terms, conditions and provisions of this
Agreement shall inure to the benefit of the Parties hereto and their respective
successors and assigns. Neither Party shall assign this Agreement, in whole or
in part, without the other Party's prior written consent except to an Affiliate.
Notwithstanding the foregoing, however, either Party may assign all or any part
of its rights and obligations hereunder (and cause a novation of this Agreement
to occur with respect to the rights and obligations so assigned) incident to a
sale, transfer, amalgamation, joint venture or other restructuring involving all
or a material portion of its assets related, in the case of Buyer, to its
petrochemical production activities or its refining, marketing and
transportation activities, or, in the case of Seller, to its NGL production
activities, provided that (i) the transferee or other successor entity resulting
from such transaction agrees to assume the assigning Party's rights and
obligations hereunder (and to become a party hereto pursuant to a novation of
this Agreement with respect to the rights and obligations so assigned) as of the
effective date of any such transaction, and (ii) the assignee has a rating on
its senior, secured debt that is not below investment grade (currently BBB- as
measured by Standard & Poor's Corporation). In the event that the assignee does
not have such rating, such assignment may nevertheless be made provided that, in
the case of an assignment by Seller, performance of the assignee's obligations
is guaranteed by Seller and, in the case of an assignment by Buyer, such
performance is guaranteed by Buyer. Any such guarantees shall extend to the
matters described in the form of the guarantee attached hereto as Exhibit F, and
shall remain in effect until such time, if any, as the assignee achieves an
investment grade rating for its senior secured debt. For greater certainty,
either Party's right to assign may be exercised with respect to all Regions, or
with respect to any specified Region or Regions.

                                      -30-

<PAGE>   33

15.5 LAWS AND REGULATIONS. This Agreement is in all respects subject to all
Federal, State and local laws and all directives, regulations and orders issued
or published by any Federal, State or local board, commission, or agency

15.6 GOVERNING LAW. REGARDLESS OF THE PLACE OF CONTRACTING, PLACE(S) OF
PERFORMANCE, OR OTHERWISE, THIS AGREEMENT, AND ALL AMENDMENTS, MODIFICATIONS,
ALTERATIONS OR SUPPLEMENTS THERETO, IF ANY, AND ALL QUESTIONS AS TO THE NATURE,
VALIDITY AND INTERPRETATION OF ANY OF THE FOREGOING SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF TEXAS WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAWS.

15.7 HEADINGS. The Article and Section headings of this Agreement have been
inserted only to facilitate reference and shall have no bearing on the
construction and interpretation of this Agreement

15.8 NO THIRD PARTY BENEFICIARIES. This Agreement is entered into for the
benefit of the Parties, their successors and permitted assigns, and nothing in
this Agreement shall be construed as creating any rights or benefits in or to
any third Party.

15.9 SURVIVAL. Any provision of this Agreement that expressly or by implication
comes into or remains in force following the termination or expiration of this
Agreement shall survive the termination or expiration of this Agreement as set
forth in such provisions.

15.10 COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

     IN WITNESS WHEREOF, the Parties have set their hands by their duly
authorized officials as of the date set forth above.

PHILLIPS 66 COMPANY, a division of     GPM GAS CORPORATION
PHILLIPS PETROLEUM COMPANY

By: /s/ B.Z. PARKER                    By: /s/ M.J. PANATIER
    -------------------------------        --------------------------------
Title: Executive Vice President        Title: President
       ----------------------------           -----------------------------

Executed on: December 1, 1999          Executed on: December 2, 1999
             ----------------------                 -----------------------

                                      -31-

<PAGE>   34

                                   EXHIBIT A
                                 DELIVERY POINT

<TABLE>
<CAPTION>
                            CONTRACT                               METER ID                MAXIMUM                     APPROXIMATE
    DELIVERY POINT           REGION              LOCATION             NO.      OPERATOR   OPERATING       NGL            HISTORIC
                                                                                          PRESSURE       GRADE        QUANTITY SOLD
                                                                                           (PSIG)                         (BPD)
                                                                                        (See Note 1)
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
<S>                        <C>               <C>                     <C>        <C>        <C>             <C>           <C>
Sherman-Hansford Plant     Panhandle         Hansford Co., TX        9614       Buyer      1,440           Y-1           13,100
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
      Dumas Plant          Panhandle          Moore Co., TX          9617       Buyer      1,125           Y-1            6,400
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
   Rock Creek Plant        Panhandle        Hutchinson Co., TX       9619       Buyer      1,430           Y-1           15,600
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
   Region Total Y-1        Panhandle             Various           Various     Various    Various          Y-1           35,100
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
Sherman-Hansford Plant     Panhandle         Hansford Co., TX        9875       Buyer        750           Y-2            1,200
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
      Dumas Plant          Panhandle          Moore Co., TX          9946       Buyer      1,115           Y-2              600
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
 Sneed Station/Treater     Panhandle          Moore Co., TX          9957       Buyer      1,180           Y-2            1,100
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
   Rock Creek Plant        Panhandle        Hutchinson Co., TX       9959       Buyer        570           Y-2            1,600
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
     Gray Booster          Panhandle           Gray Co., TX          9855       Buyer      1,395           Y-2            1,500
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
   Region Total Y-2        Panhandle             Various           Various     Various    Various          Y-2            6,000
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
     Okarche Plant         Oklahoma         Kingfisher Co., OK       9510       Other      1,320           Y-1           10,700
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
   Kingfisher Plant        Oklahoma         Kingfisher Co., OK       9530       Other      1,320           Y-1            9,400
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
   Mooreland to Koch       Oklahoma          Woodward Co., OK        Koch       Other     Per Koch         Y-1            6,000
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
    Cimarron Plant         Oklahoma          Woodward Co., OK        Koch       Other     Per Koch         Y-1              500
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
     Binger Plant          Oklahoma           Caddo Co., OK          Koch       Other     Per Koch         Y-1              200
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
     Region Total          Oklahoma              Various           Various     Various    Various          Y-1           26,800
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
     Artesia Plant        New Mexico           Eddy Co., NM          9839       Buyer      1,045           Y-1            4,200
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
     Eunice Plant         New Mexico           Lea Co., NM           9883       Buyer      1,045           Y-1            8,900
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
    Eunice to WTPL        New Mexico           Lea Co., NM           WTPL       Other     Per WTPL         Y-1       Included above
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
      Linam Ranch         New Mexico           Lea Co., NM           9626       Buyer      1,045           Y-1           12,900
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
  Linam Ranch to Koch     New Mexico           Lea Co., NM           Koch       Other     Per Koch         Y-1       Included above
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
  Linam Ranch to WTPL     New Mexico           Lea Co., NM           WTPL       Other     Per WTPL         Y-1       Included above
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
     Region Total         New Mexico             Various           Various     Various    Various          Y-1           26,000
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
    Fullerton Plant       West Texas         Andrews Co., TX         9829       Buyer      1,045           Y-1           10,200
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
   Fullerton to WTPL      West Texas         Andrews Co., TX         WTPL       Other     Per WTPL         Y-1       Included above
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
    Goldsmith Plant       West Texas          Ector Co., TX          9943       Buyer      1,100           Y-1           17,300
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
   Goldsmith to Koch      West Texas          Ector Co., TX          Koch       Other     Per Koch         Y-1       Included above
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
    Spraberry Plant       West Texas         Midland Co., TX         9546       Buyer      1,100           Y-1            7,400
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
     Benedum Plant        West Texas          Upton Co., TX          9906       Buyer      1,125           Y-1            5,300
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
     Region Total         West Texas             Various           Various     Various    Various          Y-1           40,200
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------

----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
    Giddings Plant          Austin           Bastrop Co., TX         9918       Buyer      1,335           Y-1            8,000
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------

----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
    Combined Total        All Regions            Various           Various     Various    Various        Y-1/Y-2        142,100
----------------------- ----------------- ----------------------- ---------- ---------- -------------- --------- ------------------
</TABLE>

(1) Buyer reserves the right to modify the maximum operating pressure at each
    Delivery Point. Buyer shall provide to Seller reasonable notice of any such
    modifications.

<PAGE>   35

                                   EXHIBIT B-1
                     NGL/Y-1 PRODUCTS QUALITY SPECIFICATIONS
                              SCOPE AND APPLICATION

<TABLE>
<CAPTION>
NGL CHARACTERISTICS                                    MINIMUM    MAXIMUM      TEST METHOD
==================================================== ========== ============ ====================
<S>                                                                 <C>          <C>
 1. COMPOSITION (LV%)
---------------------------------------------------- ---------- ------------ --------------------
     Carbon Dioxide, LV% of ethane volume: (Note 1)                 0.35         GPA 2186
---------------------------------------------------- ---------- ------------ --------------------
     Methane, LV% of total volume, or                               0.50         GPA 2186
---------------------------------------------------- ---------- ------------ --------------------
      LV% of ethane volume, if greater: (Note 1)                    1.50         GPA 2186
---------------------------------------------------- ---------- ------------ --------------------
     Ethane:                                                         N/A         GPA 2186
---------------------------------------------------- ---------- ------------ --------------------
     Aromatics:                                                     10.0         GPA 2186
---------------------------------------------------- ---------- ------------ --------------------
     Olefins:                                                        1.0         GPA 2186
---------------------------------------------------- ---------- ------------ --------------------
 2. VAPOR PRESSURE, psig @100(0)F:                                   600        ASTM D-1267
---------------------------------------------------- ---------- ------------ --------------------
 3. CORROSION, copper strip @100(0)F:                               No.1        ASTM D-1838
---------------------------------------------------- ---------- ------------ --------------------
 4. TOTAL SULFUR, ppmw:                                            1,200        ASTM D-2784
---------------------------------------------------- ---------- ------------ --------------------
 5. HYDROGEN SULFIDE:                                  Pass           --        ASTM D-2420
---------------------------------------------------- ---------- ------------ --------------------
 6. RESIDUAL MATTER,
---------------------------------------------------- ---------- ------------ --------------------
     Oil stain observation:                            Pass           --        ASTM D-2158
---------------------------------------------------- ---------- ------------ --------------------
 7. DISTILLATION,  End point,(0)F:                                   375        ASTM D-2887
---------------------------------------------------- ---------- ------------ --------------------
 8. COLOR, Saybolt No.:                                 +25           --     ASTM D-156(Note 2)
---------------------------------------------------- ---------- ------------ --------------------
     or, by colorimeter method, %:  (Note 4)            100           --        NGL-96-02-R1
---------------------------------------------------- ---------- ------------ --------------------
 9. MOISTURE CONTENT,
---------------------------------------------------- ---------- ------------ --------------------
     free water at delivery conditions:                  --         (Note 5)    NGL-96-01-R1
---------------------------------------------------- ---------- ------------ --------------------
10. TEMPERATURE, degrees F:
Ethane (mu) 50 mole %                                    40           90         Inspection
Ethane < 50 mole %                                       40          110
---------------------------------------------------- ---------- ------------ --------------------
11.  OTHER DELETERIOUS SUBSTANCES:                         See note 3           NGL-96-01-R1
==================================================== ========== ============ ====================
</TABLE>

NOTES:

(1) Methane, carbon dioxide and water shall have no value.

(2) Test modified by first weathering sample to ambient temperature and pressure
    conditions.

(3) The product shall contain no substances which may reasonably have a
    deleterious effect upon the operation of the pipelines and NGL processing
    facilities, or upon the fractionated products derived therefrom.

(4) 100% specification is for a colorimeter calibrated such that distilled water
    reference standard reads 100% on 0-200% digital instrument scale, or the
    specification shall be 80% for a colorimeter calibrated such that distilled
    water reads 80% on 0-100% analog instrument scale.

(5) See Section 5.6 on determination of free water.

<PAGE>   36

                                   EXHIBIT B-2
                       Y-2 PRODUCTS QUALITY SPECIFICATIONS
                              SCOPE AND APPLICATION

<TABLE>
<CAPTION>
NGL CHARACTERISTICS                                    RESULT             TEST METHOD
                                                                        LATEST REVISION
============================================== ======================= ===================
<S>                                                     <C>                <C>
NGL CHARACTERISTICS - FIELD TESTS
---------------------------------------------- ----------------------- -------------------
   Visual inspection,
---------------------------------------------- ----------------------- -------------------
     Suspended solids / particulate matter:              None              NGL-96-01-R1
---------------------------------------------- ----------------------- -------------------
     Deleterious substances (Note 4):                    None              NGL-96-01-R1
---------------------------------------------- ----------------------- -------------------
   Color, by colorimeter method, % (Note 6)             25 min.            NGL-96-02-R1
---------------------------------------------- ----------------------- -------------------
   NGL temperature, deg F:                         40 min. / 100 max.       Inspection
---------------------------------------------- ----------------------- -------------------

---------------------------------------------- ----------------------- -------------------
NGL CHARACTERISTICS - LAB TESTS
---------------------------------------------- ----------------------- -------------------
   Compositional Analysis, LV%
---------------------------------------------- ----------------------- -------------------
     Methane (Note 1):                                0.50 max.             GPA 2186
---------------------------------------------- ----------------------- -------------------
     Methane plus ethane (Note 1):                    2.00 max.             GPA 2186
---------------------------------------------- ----------------------- -------------------
     Carbon dioxide (Note 1):                         0.10 max.             GPA 2186
---------------------------------------------- ----------------------- -------------------
     Olefins:                                         0.20 max.             GPA 2186
---------------------------------------------- ----------------------- -------------------
     Water (Note 1):                                   Report               (Note 5)
---------------------------------------------- ----------------------- -------------------
   Calculated Parameters (Note 2),
---------------------------------------------- ----------------------- -------------------
     Vapor pressure, psia @ 100 F:                     100 max.             GPA 2186
---------------------------------------------- ----------------------- -------------------
     Average molecular weight of C6+:                  110 max.             GPA 2186
---------------------------------------------- ----------------------- -------------------
   Total sulfur, ppmw:                               1,200 max.            ASTM D-2784
---------------------------------------------- ----------------------- -------------------

---------------------------------------------- ----------------------- -------------------
     Total fluorides, ppmw:                             10 max              UOP-619
---------------------------------------------- ----------------------- -------------------
     Volatile fluorides, ppmw (Note 3):               0.10 max.             UOP-619
---------------------------------------------- ----------------------- -------------------
   Non-volatile matter, ppmw                         1,000 max.           PPCO SLP-1629
---------------------------------------------- ----------------------- -------------------
   Distillation end point, deg F:                    375 F max.            ASTM D-2887
============================================== ======================= ===================
</TABLE>

NOTES:   (1) Water, methane, and carbon dioxide shall have no value.

         (2) Vapor pressure and average molecular weight parameters are
             determined by calculations based upon GLC compositional analysis of
             sample.

         (3) Fluoride compounds present in portion of Product sample with
             boiling points of less than 100 deg F are limited to 0.10 ppmw
             maximum.

         (4) All products shall contain no substances which may reasonably have
             a deleterious effect upon the operation of the pipeline and NGL
             processing facilities, or upon the fractionated products derived
             therefrom.

         (5) See Section 5.7 regarding determination of water in Y-2 product.

         (6) 25% specification is for a digital colorimeter calibrated such that
             the distilled water reference standard reads 100% on a 0200%
             digital instrument scale. Product sample shall be weathered to
             ambient temperature and pressure conditions prior to test.

<PAGE>   37

                                    EXHIBIT C
                                REFERENCE PRICES

<TABLE>
<CAPTION>
Y-1 NGL Component      Oklahoma                  Panhandle                 West Texas, Austin and New Mexico
-----------------   ---------------     -----------------------------      ---------------------------------

<S>                 <C>                 <C>                                <C>
                      OPIS Conway/            OPIS MONT Belvieu                        OPIS Belvieu
    Ethane             Group 140                   EP Mix                             50% as EP Mix
                      Ethane MAPCO                                                 50% as Purity Ethane

                      OPIS Conway/             28.2% of Ethane
                       Group 140        as OPIS Belvieu Propane, TET,                  OPIS Belvieu
    Propane          Propane MAPCO      and remainder as OPIS Conway/                  TET Propane
                                        Group 140 Propane (See Note)

                      OPIS Conway/              OPIS Conway/
   i-Butane            Group 140                  Group 140                            OPIS Belvieu
                    Isobutane MAPCO            Isobutane MAPCO                      Non-TET Isobutane

   n-Butane           OPIS Conway/              OPIS Conway/                           OPIS Belvieu
                       Group 140                  Group 140
                    N. Butane MAPCO            N. Butane MAPCO                       Non-TET n-Butane

 Pentanes Plus        OPIS Conway/              OPIS Conway/
                       Group 140                  Group 140                            OPIS Belvieu
                      N. Gas MAPCO              N. Gas MAPCO                          Non-TET N. Gas

-----------------   ---------------     -----------------------------      ---------------------------------

<CAPTION>
Y-2 NGL Component        Oklahoma                  Panhandle               West Texas, Austin and New Mexico
-----------------   ---------------     -----------------------------      ---------------------------------

<S>                 <C>                 <C>                                <C>
                                                OPIS Conway/
    Ethane                --                      Group 140                                --
                                                Ethane MAPCO

    Propane                                     OPIS Conway/
                          --                      Group 140                                --
                                                Propane MAPCO

   i-Butane                                     OPIS Conway/
                          --                      Group 140                                --
                                                  Isobutane

   n-Butane                                     OPIS Conway/
                          --                      Group 140                                --
                                               N. Butane MAPCO

 Pentanes Plus            --                    WTI Crude Oil                              --
                                              NYMEX Daily Close
-----------------   ---------------     -----------------------------      ---------------------------------
</TABLE>

<PAGE>   38

Note:. In the Panhandle Region, a portion of the propane contained in Y-1
product, if any, up to 28.2% of the relative amount of ethane present, will be
valued as OPIS Mt. Belvieu price and the remainder as Conway propane. An example
of the determination of such quantity is as follows:

<TABLE>
<CAPTION>
   NGL Components                Barrels
<S>                              <C>
      Methane                      1,250
       Ethane                     97,150  x 0.282 = 27,396.3
      Propane                    101,100
      i-Butane                    20,100
      n-Butane                    47,700
     Pentanes+                    32,700
     Total Y-1                   300,000

Portion priced as Belvieu Propane   =27,396.3
Portion priced as Conway Propane    =73,703.7
                                    ---------
Total Propane                       100,100.0
</TABLE>

Note: 0.282 is a constant equal to the ratio of propane in EP mix (assumed to be
0.220 for purposes of this Agreement) to ethane in EP Mix (assumed to be 0.780
for purposes of this Agreement), as produced at Buyer's Borger NGL fractionator,
or 0.220/0.780 = 0.282.

<PAGE>   39

                                    Exhibit D
                   TRANSPORTATION AND FRACTIONATION VARIABLES

<TABLE>
<CAPTION>
================ ======================= ===================== ====================== ================= ==================
    Region             Plant Name           NGL Component        Market Reference      Transportation      Market Frac
                                                                       Price
---------------- ----------------------- --------------------- ---------------------- ----------------- ------------------
<S>              <C>                          <C>                  <C>                     <C>               <C>
                                             C2 in EP Mix          Belvieu OPIS            $1.050            $0.580
   Panhandle         Rock Creek Y-1          C3 in EP Mix          Belvieu OPIS            $1.050            $0.580
                                           Residual C3-C5+          Conway OPIS            $0.500            $0.580

                      Sherhan Y-1            C2 in EP Mix          Belvieu OPIS            $1.150            $0.580
                     and Dumas Y-1           C3 in EP Mix          Belvieu OPIS            $1.150            $0.580
                                           Residual C3-C5+          Conway OPIS            $0.610            $0.580

                 Williams Skellytown        All Components          Conway OPIS            $0.500            $0.580
                 (Note 1)

                     Sherhan, Dumas          C2-C4 in Y-2           Conway OPIS            $0.610            $0.580
                 Sneed, Rock Creek and      Pentanes Plus            WTI NYMEX             $1.950            $0.900
                        Gray Y-2
---------------- ----------------------- --------------------- ---------------------- ----------------- ------------------
  New Mexico            Artesia             All Components         Belvieu OPIS            $0.930            $0.660

                         Eunice             All Components         Belvieu OPIS            $0.660            $0.660

                      Linam Ranch           All Components         Belvieu OPIS            $0.640            $0.660

                    Seminole Clemens        All Components         Belvieu OPIS            $0.100            $0.660
                        (Note 1)
---------------- ----------------------- --------------------- ---------------------- ----------------- ------------------
  West Texas           Fullerton            All Components         Belvieu OPIS            $0.660            $0.660

                       Goldsmith            All Components         Belvieu OPIS            $0.620            $0.660

                       Spraberry            All Components         Belvieu OPIS            $0.660            $0.660

                        Benedum             All Components         Belvieu OPIS            $0.660            $0.660

                    Seminole Clemens        All Components         Belvieu OPIS            $0.100            $0.660
                        (Note 1)
---------------- ----------------------- --------------------- ---------------------- ----------------- ------------------
    Austin              Giddings            All Components         Belvieu OPIS            $0.500            $0.660

                    Seminole Clemens        All Components         Belvieu OPIS            $0.100            $0.660
                        (Note 1)
---------------- ----------------------- --------------------- ---------------------- ----------------- ------------------
   Oklahoma            Kingfisher           All Components          Conway OPIS            $0.470            $0.580

                        Okarche             All Components          Conway OPIS            $0.470            $0.580

                       Mooreland            All Components          Conway OPIS           See (a)            See (a)

                        Cimarron            All Components          Conway OPIS           See (a)            See (a)

                         Binger             All Components          Conway OPIS           See (b)            See (b)

                      Conway Frac           All Components          Conway OPIS            $0.100            $0.580
---------------- ----------------------- --------------------- ---------------------- ----------------- ------------------

<CAPTION>
================ ======================= ============================================================
    Region             Plant Name           Market Basis for Transportation fee Deduction
---------------- ----------------------- ------------------------------------------------------------
<S>              <C>                        <C>
                                            Negotiated settlement
   Panhandle         Rock Creek Y-1         Negotiated settlement
                                            Negotiated settlement

                      Sherhan Y-1           Negotiated settlement
                     and Dumas Y-1          Negotiated settlement
                                            Negotiated settlement

                 Williams Skellytown        Panhandle Base T&F Fee
                 (Note 1)

                     Sherhan, Dumas         Same as Sherhan-Dumas Y-1 C3+ components
                 Sneed, Rock Creek and      Total Transportation plus market frac equals $2.85
                        Gray Y-2
---------------- ----------------------- ------------------------------------------------------------
  New Mexico            Artesia             West Texas Pipeline LP Indian Basin to Mt. Belvieu tariff

                         Eunice             West Texas Pipeline LP Eunice to Mt. Belvieu tariff

                      Linam Ranch           Koch Chaparral Linam Ranch to Mt. Belvieu tariff

                    Seminole Clemens        $0.100/Bbl Handling Fee
                        (Note 1)
---------------- ----------------------- ------------------------------------------------------------
  West Texas           Fullerton            West Texas Pipeline LP Fullerton to Mt. Belvieu tariff

                       Goldsmith            Koch Chaparral Goldsmith to Mt. Belvieu tariff

                       Spraberry            West Texas Pipeline LP Fullerton to Mt. Belvieu tariff

                        Benedum             West Texas Pipeline LP Fullerton to Mt. Belvieu tariff

                    Seminole Clemens        $0.100/Bbl Handling Fee
                        (Note 1)
---------------- ----------------------- ------------------------------------------------------------
    Austin              Giddings            Negotiated settlement

                    Seminole Clemens        $0.100/Bbl Handling Fee
                        (Note 1)
---------------- ----------------------- ------------------------------------------------------------
   Oklahoma            Kingfisher           Chisholm tariff plus negotiated settlement

                        Okarche             Chisholm tariff plus negotiated settlement

                       Mooreland            (a) T & F to be same as deducts in prevailing PPCO/Koch
                                            agreement

                        Cimarron            (a) T & F to be same as deducts in prevailing PPCO/Koch
                                            agreement

                         Binger             (b) T & F calculated as OPIS less actual Buyer's netback,
                                            plus $0.05/Bbl

                      Conway Frac           $0.100/Bbl Handling Fee
---------------- ----------------------- ------------------------------------------------------------
</TABLE>

Note 1. Applicable only if deliveries made at these locations with Buyer's
consent.

<PAGE>   40

                                    EXHIBIT E
                    PROVISIONS REGARDING THE BENEDUM ANALYZER

1. Buyer will install an on-line analyzer instrument (the "Benedum Analyzer")
capable of sampling and measuring the NGL Components which are contained within
the aggregate NGL stream comprised predominately of NGL's from Seller's Plants
which are contained and flowing within Buyer's pipeline number 80-1-6, and
separately NGL's from Seller's Benedum plant. The Benedum Analyzer will be
located at or near the point at which such pipeline flows into Buyer's Benedum,
Texas Terminal. Buyer currently contemplates that it will set the instrument to
obtain and analyze NGL samples at approximately fifteen (15) minute intervals
throughout each Day (any such analysis being hereinafter referred to as a
"Periodic Analysis"). Buyer may, however, from time to time alter the sampling
and analysis frequency to such other intervals as, in Buyer's reasonable
judgment, will be sufficient for the provision of data from which Buyer may
calculate the components and other characteristics of the NGL's received at the
Benedum Plant each Day (each such calculated analysis being hereinafter referred
to as a "Daily Analysis"). The samples so obtained will be analyzed by a gas
chromatograph comprising an integral part of the instrument.

2. The Benedum Analyzer shall be utilized to determine, pursuant to Section 5.8,
the methane to ethane ratios of NGL's delivered from Seller's Plants within the
West Texas and New Mexico Regions which are contained and flowing within Buyer's
Spraberry Lateral pipeline number 80-1-6 at the Benedum terminal and, by
separate analysis, those NGL's delivered from Seller's Benedum Plant

3. Buyer may infrequently from time to time reverse the direction of flow of its
Mextex pipeline system such that NGL's from Buyer's Mextex system are introduced
into and commingled with Seller's NGL deliveries from the New Mexico and West
Texas Regions. In such event, Buyer shall notify Seller as to the time and
duration that the Mextex line reversal is expected to occur, and during the
period beginning the day the Mextex line is actually reversed and extending
until the fifth (5th) Day after the end of such reversal, the 1.75LV% peak ratio
value and the maximum methane to ethane ration of 1.25LV% shall not apply, and
the quality incentive bonus shall be calculated on the basis of the ethane
contained within the stream, as measured at the Benedum Analyzer.

4. In the event Buyer makes a connection with a third party plant such that
material quantities of NGL's from a party other than Seller or Seller's
Affiliates are routinely commingled with the NGL's delivered by Seller to Buyer
from the New Mexico or West Texas Regions, Buyer shall notify Seller with
respect to the same and the Parties shall agree as to how to accommodate the
additional third party NGL's with regard to testing of methane to ethane ratios
at the Benedum Analyzer for Seller's NGL's in line 80-1-6 . If the Parties fail
to reach agreement on a suitable alternate determination method, then the matter
shall be resolved pursuant to the dispute resolution procedure described in
Section 9.1(a) hereof.

<PAGE>   41

                                    EXHIBIT F

                                FORM OF GUARANTEE

     Whereas GPM Gas Corporation ("Subsidiary") [or Phillips 66 Company with
     appropriate changes to references to the parties in the text below] has
     entered into an NGL Supply Agreement (the "Agreement") with Phillips
     Petroleum Company ("Phillips") for the sale and delivery of certain natural
     gas liquids (NGL's) produced in the states of Texas, Oklahoma and New
     Mexico;

     Whereas, a ___________ ("Aquirer") has acquired all of the issued and
     outstanding shares of stock of Subsidiary;

     Whereas, ____________ Aquirer is an (indirect) subsidiary of parent of
     __________("Parent');

     Whereas the Parent desires that all of the rights and obligations under the
     Agreement be rights and obligations of Subsidiary; and

     Whereas, Phillips does not object to the Subsidiary's enjoying the rights
     and bearing the obligations under the Agreement, provided that such
     obligations are guaranteed by the Parent, and Parent is willing to
     guarantee those obligations as hereinafter provided;

     NOW THEREFORE, in consideration of Phillips' acquiescence to the
     Subsidiary's remaining as the party to the Agreement, and as the Seller
     thereunder, Parent agrees as follows:

1.   Parent hereby, as a primary obligor, unconditionally and irrevocably
     guarantees to Phillips the due, faithful and timely performance by the
     Subsidiary (and by all other Affiliates as defined in the Agreement of the
     Parent to which the Subsidiary might in the future assign rights or
     obligations under the Agreement) of all obligations of the Subsidiary (or
     such other Affiliates) under and arising out of the Agreement.

2.   Parent further guarantees that Parent will provide the Subsidiary (directly
     or through other Affiliates of the Parent) all resources reasonably
     required in order for the Subsidiary to fulfill its obligations under the
     Agreement.

3.   This Guarantee is a continuing guarantee and shall remain in force until
     all obligations of the Subsidiary under the Agreement have been discharged
     in full.

4.   This Guarantee and the obligations of Parent hereunder shall not be
     affected by any act, omission or circumstance which, but for this
     provision, might operate to release or otherwise exonerate the Parent from
     its obligations hereunder or affect

<PAGE>   42

     such obligations including without limitation (i) the bankruptcy or
     insolvency of the Subsidiary, or any amendment, modification, extension,
     waiver, indulgence (including extension of time) or concession made or
     granted to Subsidiary, (ii) the taking, variation, compromise, renewal or
     release of, or refusal or neglect to perfect or enforce, the Agreement or
     any rights, remedies or securities against or granted by Subsidiary, or
     (iii) the unenforceability of any obligations of Subsidiary under the
     Agreement.

5.   The Parent waives any right it may have to require Phillips to proceed
     against or claim payment from Subsidiary or enforce any guarantee or
     security granted by any other person before making a demand against Parent
     under this Guarantee.

6.   Each demand by Phillips for payment under this Guarantee shall be made in
     writing addressed as follows:

     Parent shall promptly notify Phillips of any change in its address for the
     presentation of demands hereunder.

7.   This Guarantee shall be governed by and construed and interpreted in
     accordance with the laws of the State of Texas applicable to contracts made
     and to be enforced in such jurisdiction. Parent and Phillips hereby submit
     to the exclusive jurisdiction of the United States District Court for the
     ___________ District of __________ (or, in the event that such court lacks
     jurisdiction, to the courts of general jurisdiction of the State of _______
     sitting in ___________) for purposes of the enforcement of this Guarantee
     and the resolution of any claim, dispute or controversy arising hereunder.

8.   Phillips shall give Parent not less than thirty-(30) days' written notice
     before commencing any proceedings to enforce this Guarantee.

     Executed as of the __ day of ___________, ______.

     (Parent )

     By:
        -------------------------------

     Title:
           ----------------------------

<PAGE>   43

                                    EXHIBIT G
                              BUSHTON PLANT SYSTEMS

                     GPM Panhandle Region Gathering Systems
                          Purchased from Enron and ANR

<TABLE>
<S>                                   <C>
------------------------------------- ----------------------------------------------------
Beaver County #5                      Mendota
------------------------------------- ----------------------------------------------------
Beaver County #6                      Red Deer
------------------------------------- ----------------------------------------------------
Beaver County #7                      Griggs
------------------------------------- ----------------------------------------------------
Beaver County #9                      Morrison
------------------------------------- ----------------------------------------------------
Woodward County #1                    NNG/GPM Kaiser-Francis Baker 1-10
------------------------------------- ----------------------------------------------------
Woodward County #2                    NNG Weber #23-7
------------------------------------- ----------------------------------------------------
Woodward County #3                    NNG Dude Wilson
------------------------------------- ----------------------------------------------------
Beaver County #11                     Beaver County #1
------------------------------------- ----------------------------------------------------
Beaver County #12                     NNG/GPM Paulson #1-2 PDC
------------------------------------- ----------------------------------------------------
Beaver County #13                     Harvey/Thurmond
------------------------------------- ----------------------------------------------------
Spearman Compressor                   NNG/Dewey #1 PDC
------------------------------------- ----------------------------------------------------
ANR/GPM Lovedale                      GPM/NNG State of Texas I/C
------------------------------------- ----------------------------------------------------
ANR/GPM North Lovedale                Bridges B-17
------------------------------------- ----------------------------------------------------
ANR/GPM Laverne                       NNG/GPM THIERSTEIN PDC
------------------------------------- ----------------------------------------------------
ANR/GPM Lovedale C                    NNG/GPM JAHNEL PDC
------------------------------------- ----------------------------------------------------
East Clinton                          NNG/GPM MALES/EARLE PDC
------------------------------------- ----------------------------------------------------
CCPL Redmoon                          NNG/GPM MATHERS 1-27 PDC
------------------------------------- ----------------------------------------------------
Turkey Gathering                      NNG/GPM MOLLY #1 PDC
------------------------------------- ----------------------------------------------------
Burnett Compressor                    NNG/GPM THOMAS HILL #1
------------------------------------- ----------------------------------------------------
BOYD UNIT INTERCONNECT                NNG/GPM GUENZAL/SPURLIN PDC
------------------------------------- ----------------------------------------------------
Gregory #2-16 NNG/GPM PDC             NNG/GPM MERRICK PDC
------------------------------------- ----------------------------------------------------
Farnsworth (NNG)                      NNG/GPM ROGER MILLS PDC
------------------------------------- ----------------------------------------------------
Lipscomb County #2                    NNG/GPM FEE PDC
------------------------------------- ----------------------------------------------------
Clark County #1                       NNG/GPM SANDERS A-74 PDC
------------------------------------- ----------------------------------------------------
Clark County #2                       NNG/GPM LEELAND PDC
------------------------------------- ----------------------------------------------------
Beaver County #15                     NNG/GPM BOX ELDER PDC
------------------------------------- ----------------------------------------------------
Ellis County #1                       Hemphill County #1
------------------------------------- ----------------------------------------------------
Ellis County #2                       NNG/GPM Logsdon #1-4 PDC
------------------------------------- ----------------------------------------------------
Ellis County #3                       NNG/GPM Cates PDC
------------------------------------- ----------------------------------------------------
Ellis County #4                       Hemphill County #2
------------------------------------- ----------------------------------------------------
NNG/GPM Feil #1 PDC                   Hemphill County #3
------------------------------------- ----------------------------------------------------
Doby, Glenwood, Hamm, Stockholm       Hutchinson County #1
------------------------------------- ----------------------------------------------------
Lips/Higgins/Bussard Delivery         Beaver County #2
------------------------------------- ----------------------------------------------------
Lockhart (PH Lateral P-1)             Lipscomb County #1
------------------------------------- ----------------------------------------------------
Coburn Delivery Point                 Beaver County #3
------------------------------------- ----------------------------------------------------
Feldman                               Northrup
------------------------------------- ----------------------------------------------------
Wiggins Delivery Point
------------------------------------- ----------------------------------------------------
Mathers Humphries
------------------------------------- ----------------------------------------------------
Leedy/Beal
------------------------------------- ----------------------------------------------------
Blackketter Delivery Point
------------------------------------- ----------------------------------------------------
Hammon
------------------------------------- ----------------------------------------------------
Canadian (Parnell, Parsell, Waka)     O:\LEGAL\GPM Stock-JV deals CONF\NGL Agreement final
                                      11-30-99.doc
------------------------------------- ----------------------------------------------------
</TABLE>
<PAGE>   44

                               AMENDMENT NO. 1 TO
                     NGL OUTPUT PURCHASE AND SALE AGREEMENT

         This Amendment No. 1 dated as of December 16, 1999, amends the NGL
OUTPUT PURCHASE AND SALE AGREEMENT ("Agreement") executed by the parties on
December 1 and 2, 1999, and dated as of January 1, 2000, by and between PHILLIPS
66 COMPANY, a division of PHILLIPS PETROLEUM COMPANY, a Delaware corporation
("Buyer"), and GPM GAS CORPORATION, a Delaware corporation ("Seller"). Buyer and
Seller are sometimes referred to individually herein as a "Party" and
collectively as the "Parties."

         Phillips Petroleum Company ("Phillips") is considering entering into a
Contribution Agreement and related agreements with Duke Energy Corporation
("Duke") under which Duke and Phillips would contribute subsidiaries owning gas
gathering and processing assets including Seller to a new holding company
("Holding Company"). Under the contemplated agreement, Duke Energy Field
Services Inc. and its related subsidiaries (collectively "DEFS") would also be
contributed to the Holding Company. This Amendment No. 1 shall only be effective
if the Holding Company is formed and DEFS and its subsidiaries and the Phillips
subsidiaries are contributed to it.

         In consideration of the premises and of the mutual covenants contained
herein, the parties agree to amend the Agreement as follows:

         1. DEFS EXCLUSION FROM COMMITMENT. (a) Buyer and Seller agree that
subject to the other provisions of this Amendment, and in particular except as
stated in Paragraph 3 below, NGL production from facilities owned or controlled
by DEFS as of the date of contribution of DEFS and its subsidiaries to the
Holding Company shall not be committed or dedicated under the Agreement, even if
after the formation of the Holding Company DEFS or companies included in DEFS
are merged with Seller or DEFS gathering facilities are otherwise integrated
with those of Seller. Notwithstanding the foregoing, any additions to the NGL
production facilities or changes in the gas plant supplies owned and controlled
by DEFS that occur during the interim period between the effective date of the
Agreement and the date of contribution of DEFS and its subsidiaries to the
Holding Company to the extent that they involve any NGL's that are owned or
controlled or purchased or exchanged by Phillips as of the date of the Agreement
shall remain committed and dedicated to Phillips under the respective
controlling agreements.

         (b) The definition of "New Plants" in Section 1.1(o) of the Agreement
is revised to read as follows:

         (o) New Plant" means a gas processing plant not described on  "A" at
             which Seller delivers or intends to deliver natural gas located
             within the counties listed in the definition of each Region and all
             areas within 25 miles of those counties.

<PAGE>   45

         2. DIVERSION. Section 3.2(c) is revised to read as follows:

                  (c) Seller covenants to Buyer that it will not enter into
         business combinations, contracts or agreements, or otherwise modify its
         normal business practices, which have as their purpose or as a
         significant effect the reduction or diversion of the quantities of
         NGL's to be delivered and sold by Seller to Buyer hereunder (by the
         diversion of raw gas supplies out of any Region, or otherwise), or any
         circumvention of Seller's other obligations hereunder.

         3. INCREASES IN NGL PRODUCTION CAPACITY. Sections 3.4 and 3.5 of the
Agreement are amended as follows. After formation of the Holding Company, in the
event Seller or Holding Company anticipates or causes an increase in the
quantity of NGL's at any source of NGL production committed under the Agreement
or at any DEFS NGL production source and such increase results from any single
addition of processed gas volumes of 10 MMcf per day or more at the time of the
addition, Buyer shall have the right to purchase 40% of the NGL's associated
with those increased volumes under the Agreement. The provisions of Section 3.4
will apply to these additions for purposes of arranging for purchase, sale and
delivery of the affected NGL's to Buyer.

         4. PLANT CONSOLIDATIONS WITH DEFS. The contemplated Holding Company
will desire to achieve operating efficiencies resulting from the combination of
assets, and may consider consolidations of Seller and DEFS assets as permitted
in Section 3.7 of the Agreement. In the event the Holding Company causes one or
more consolidations of its owned or controlled gas gathering and processing
assets between former DEFS facilities and Seller facilities, the volume of NGL
production committed to Buyer under this Agreement affected by such a
consolidation will be equal to a percentage of future production from the
consolidated facilities where such percentage shall be calculated by taking the
volume of NGL production committed to Buyer at the consolidated facilities
divided by the total NGL production of the consolidated facilities, both
determined where applicable over the prior 12 months. Sample calculations of
such volumes and percentage are shown in two illustrative examples attached to
and incorporated by reference in this Amendment.

         5. INDEMNIFICATION PROCEDURES. The last sentence of Section 5.4(c)(iii)
is amended to read as follows:

         Provided however, the Indemnifying Party and its representatives shall
         have the right to use or disclose to any third party information deemed
         confidential by the Indemnified Party if the Indemnifying Party has
         undertaken reasonable measures to protect the confidential nature of
         the information during the proceedings.

         6. BUYER OFFSETS. The last sentence of Section 6.1 is modified to read
as follows:

                                       2

<PAGE>   46

         Upon written notice to Seller, Buyer may withhold from and offset
         against any amounts payable to Seller hereunder, any amounts payable by
         Seller to Buyer under this Agreement or under any other agreement
         between Buyer and Seller or Seller's affiliates other than affiliates
         of Duke Energy Corporation not included in the Holding Company provided
         for in the Contribution Agreement between Phillips and Duke Energy
         Corporation, et al. dated as of December 16, 1999.

         7. BUYER INDEMNIFICATION, NGL HANDLING. The following sentences are
added to the end of Section 8.2, Warranty of Title:

         Buyer will defend, indemnify, and save Seller, its affiliates, and
         their officers, agents, and employees harmless from all suits, claims,
         liens, damages, costs (including attorneys' fees and costs of
         litigation), losses, expenses, and encumbrances of whatsoever nature
         arising from and out of claims of any or all persons of and concerning
         title to NGL's delivered to Buyer and claims for royalties, taxes,
         license fees, payments and other charges thereon applicable after the
         title transfers to Buyer; provided however, that this sentence shall
         not apply, and Seller shall indemnify Buyer and the Buyer Indemnitees
         for Off-Specification NGL's as stated in Section 5.4. The
         indemnification procedures of Section 5.4(c) will apply to requests for
         indemnification under this Section 8.2.

         8. EXHIBIT F FORM OF GUARANTEE. The Guarantee in the form of Exhibit F
if required shall be executed by Seller's direct parent company, and no parent
of that company shall be required to execute a Guarantee in the form of Exhibit
F.

         9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         10. SCOPE. The Agreement is amended to the extent noted herein. In all
other respects, it is confirmed and shall continue in full force and effect.

         IN WITNESS WHEREOF, the Parties have set their hands by their duly
authorized officials as of the date set forth above.

PHILLIPS 66 COMPANY, a division of        GPM GAS CORPORATION
PHILLIPS PETROLEUM COMPANY

By:  /s/ B.Z. PARKER                      By:  /s/ M.J. PANATIER
    ---------------------------------        ----------------------------------
Title:  Executive Vice President          Title:  President
      -------------------------------           -------------------------------

Executed on:  December 1, 1999            Executed on:  December 2, 1999
            -------------------------                 -------------------------

                                       3

<PAGE>   47

                         ATTACHMENT A TO AMENDMENT NO. 1
                    TO NGL OUTPUT PURCHASE AND SALE AGREEMENT

Provided below are two examples illustrating how the percentage and committed
volumes are to be determined under Section 3.7 of the Agreement as amended by
Paragraph 4 of this Amendment.

EXAMPLE 1.   GPM OR GPM NON-OPERATED PLANT NGL'S DISPLACED TO DEF'S PLANT.

<TABLE>
<S>                                                                             <C>
             Date of Displacement is 6/15/2000

             NGL Production for the period June 1999 through May 2000.

                       GPM CO-OWNED PLANT, PARTIALLY COMMITTED                      BBLS/YR.

             GPM Owned and Controlled NGL's to Phillips                             1,768,425
             In-Kind NGL's due GPM contracted to Third Parties                        141,620
             Uncommitted Portion that is Co-owner Owned                             2,464,845
                                                                                    ---------
             Total NGL's from Plant                                                 4,374,890

                                     DEFS PLANT                                       BBLS/YR.

             DEFS Owned and Controlled NGL's                                        1,200,485
             In-Kind NGL's due DEFS contracted to Third Parties                     4,550,820
                                                                                    ---------
             Total NGL's from Plant                                                 5,751,305

                        SHARE TO BE COMMITTED TO PHILLIPS
                             (1,768,425 + 141,620) /
              (1,768,425 + 141,620 + 5,751,305) WHICH EQUALS 24.93%

             NGL production during a month subsequent to the displacement

                        CONSOLIDATED PRODUCTION AT DEFS PLANT                         BBLS/MO.

             DEFS Owned and Controlled NGL's                                          100,000
             In-Kind NGL's due DEFS Affiliated Third Parties                          380,000
             Uncommitted Portion that is GPM Co-owner Owned                                 0
             Additional NGL's due to Consolidation                                    165,000
                                                                                      -------
             Total NGL's from Plant                                                   645,000

                 MONTHLY VOLUMES DELIVERED AND SOLD TO PHILLIPS
                          (645,000 X 0.2493) = 160,804
</TABLE>

                                       4

<PAGE>   48

EXAMPLE 2.   DEFS PLANT NGL'S DISPLACED TO GPM PLANT CONTAINING DISPLACED DEFS
             NGL'S.

<TABLE>
<S>                                                                               <C>
             Date of Displacement is 6/15/2001

             NLG Production for the period June 2000 through May 2001.

                           GPM PLANT COMMITTED TO PHILLIPS                          BBLS/YR.

             GPM Owned and Controlled NGL's TO PHILLIPS                             3,593,425
             In-Kind NGL's due GPM contracted  to Third Parties                       506,620
             DEFS Owned and Controlled Uncommitted NGL's                            1,204,135
                                                                                    ---------
             Total NGL's from Plant                                                 5,304,180

                                     DEFS PLANT                                       BBLS/YR.

             DEFS Owned and Controlled NGL's                                        1,200,485
             In-Kind NGL's due DEFS contracted to Third Parties                     4,550,820
                                                                                    ---------
             Total NGL's from Plant                                                 5,751,305

                        SHARE TO BE COMMITTED TO PHILLIPS
                             (3,593,425 + 506,620) /
                   (5,304,180 + 5,751,305) WHICH EQUALS 37.09%

             NGL production during a month subsequent to the displacement

                           CONSOLIDATED NGL'S AT GPM PLANT                            BBLS/MO.

             GPM Owned and Controlled NGL's                                           300,000
             In-Kind NGL's due Third Parties by GPM                                    42,000
             DEFS Owned and Controlled Uncommitted NGL'S                              100,000
             Additional NGL's due to Consolidation                                    480,000
                                                                                      -------
             Total NGL's from Plant                                                   922,000

                 MONTHLY VOLUMES DELIVERED AND SOLD TO PHILLIPS
                          (922,000 X 0.3709) = 341,934
</TABLE>

                                       5<PAGE>   1

                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made and entered into this 21st day of April 1999
by and between AMERICAN ENERGY SERVICES, INC. a corporation, ("Company"); and
ROBERT S. LOVE ("Employee"). In consideration of the mutual promises and
covenants contained herein Company and Employee agree as follows:

SCOPE, NATURE, AND DUTIES OF EMPLOYMENT

Company hereby employs Employee, and Employee accepts such employment, to render
CFO services to Company ("Services"). The Services may be described in more
detail on the attached Exhibit A. Company shall have the power to determine the
specific duties to be performed by Employee, and the means and the manner by
which those duties shall be performed. The power to supervise the duties to be
performed, the manner of performing such duties, and the terms for performance
of such duties shall be exercised by Company. Hours of employment shall be
determined by Company within the reasonable standards within the profession.

EMPLOYEE'S RESPONSIBILITIES

Employee will:

          (A)  Use Employee's best efforts to perform the Services;

          (B)  Devote Employee's full working time and attention to the services
               Employee provides to Company. During the term of this Agreement,
               Employee shall not, without the written consent of Company,
               directly or indirectly render services of a professional nature
               to or for any person or firm for compensation, or engage in any
               practice that competes in Company's interest.

TERM

The term of this Agreement shall begin on the below-stated effective date and
shall continue until terminated as provided by this Agreement.

COMPENSATION

          BASIS SALARY For all services rendered by Employee under this
          Agreement, Company will pay Employee basic salary of SEVENTY-FIVE
          THOUSAND DOLLARS and NO CENTS ($75,000) per year, payable weekly
          beginning on the effective date of this Agreement. The basic salary
          may be changed by mutual agreement of the parties at any time.

          FRINGE BENEFITS As further consideration for the performance by
          Employee under and pursuant to this Agreement, Company shall, within a
          reasonable time after the effective date of this Agreement, provide
          for Employee the following further benefits and any additional
          benefits that may from time to time be made available by Company to
          employees employed by Company. In addition, Robert S. Love will be
          granted options on 40,000 shares of AES common stock to be vested each
          year by grant of 8,000 shares at an option price if $1.00 per share.

OFFICE FACILITIES

Company shall operate and maintain facilities, and shall provide at its expense,
equipment and supplies, suitable to Employee's position and adequate for the
performance of Employee's duties under and pursuant to this Agreement.

<PAGE>   2

FEES

All fees and compensation received or realized by Company as a result of the
rendition of professional services by Employee under and pursuant to this
Agreement shall belong and be paid and delivered to Company.

VACATION

Employee shall be entitled to be paid annual vacation of one week during the
first year and two weeks each year during the continuance of this Agreement.
Without Company's consent, vacation time may not be accumulated, but must be
taken in the year earned. Employee's vacation will be scheduled at those times
most convenient to Company's business as determined by its Board of Directors.
In addition, Employee shall be allowed FIVE (5) days each year to attend
professional meetings or seminars, provided, that attendance at such meetings or
seminars shall be planned for minimum interference in the business of employer.

TERMINATION

This Agreement shall be terminated immediately:

          (A)  If Employee breaches any of Employee's agreements, obligations,
               representations, or warranties herein.

          (B)  If Employee dies.

          (C)  If Employee fails, is unable to, or refuses to faithfully or
               diligently perform the duties required under and pursuant to this
               Agreement.

Company may terminate this Agreement at will upon THIRTY (30) days written
notice to Employee.

Upon termination, the salary due Employee shall be full compensation in payment
for all Employee's claims under this Agreement.

CONFIDENTIAL INFORMATION

Employee agrees to hold all Confidential Information in trust and strict
confidence for Company and its clients, without disclosing such Confidential
Information to any third parties. Confidential Information includes, but is not
limited to: any information that deals with or relates to Company or Company's
clients' past, present, or future business processes or plans; ideas, know-how,
specifications, customer lists, marketing plans, procedures, and software
programs; and financial or other trade secret information.

Confidential Information will not include that information defined as
Confidential Information above which entered the public domain without
Employee's breach of any obligation to Company or Company's clients; became
known to Employee prior to Company or Company's clients disclosure of such
information to Employee; became known to Employee from a source other than
Company or Company's clients, other than by breach of an obligation of
confidentiality; or was independently developed by Employee without reference to
Confidential Information.

Employee may disclose Confidential information as required by governmental or
judicial order, provided Employee give Company prompt notice of such order and
complies with any protective order ( or equivalent) imposed on such disclosure.
Employee may not disclose any Confidential Information to third parties for
three (3) years following the date of its disclosure by Company or Company's
clients to Employee, except to Company consultants, if any, as provided below.
Employee may only use the Confidential Information in connection with Employee's
performance of the Services.

Employee will take reasonable security precautions, at least as great as the
precautions Employee takes to protect Employee's own Confidential Information,
to protect the Company's Confidential Information. Employee may disclose
Confidential Information only to Employee consultants, if any, on a need-to-know
bases. Employee will execute appropriate written agreements with Employee's
consultants and employees, if any, sufficient to enable Employee to comply with
all the provisions of this Agreement. Employee will return all originals,
copies, reproductions, and

<PAGE>   3

summaries of Confidential Information at Company's or Company's clients' request
or, at Company's option, certify the destruction of the same.

These obligations are supplementary to and in addition to any obligations
Employee may have assumed to Company by executing a Nondisclosure Agreement with
Company.

Employee acknowledges that monetary damages may not be a sufficient remedy for
unauthorized disclosure or use of Confidential Information, and the Company
and/or Company's clients will be entitled, without waiving any other rights or
remedies, to such relief as may be deemed proper by a court of competent
jurisdiction. Employee hereby waives the claim that Company or Company's clients
have an adequate remedy at law or in damages with respect to any action
involving unauthorized disclosure or use of Confidential Information.

REPRESENTATIONS AND WARRANTIES

Company represents and warrants that it is a business, duly licensed and in good
standing under the laws of the State of Texas, and has all the requisite power
and authority to execute and perform all of its obligations under this
Agreement.

Employee represents and warrants that:

          (A)  Employee has the full power and authority to enter into this
               Agreement.

          (B)  Employee's performance of the Services for Company will not
               violate any agreement with a prior employer, or with another
               person or firm.

          (C)  Employee is not subject to any existing confidentiality agreement
               or obligation that has not been fully disclosed to Company.

          (D)  In performing the services for Company, Employee will not use or
               infringe, or cause Company or Company's clients to use or
               infringe, any patent, copyright, trademark, trade secret, or
               other proprietary right belonging to any third part, unless
               Employee obtains in writing all the necessary waivers and
               releases for such use.

INDEMNIFICATION

Employee agrees that Employee will indemnify and defend Company and Company's
clients against any liability, claim, and expense (including reasonable
attorney's fees) arising out of any act or omission on Employee's part in
carrying out Employee's activities under this Agreement or any breach of the
representations and warranties contained in this Agreement.

MISCELLANEOUS PROVISIONS

This Agreement supersedes any and all oral or written communications between
Employee and Company regarding the subject matter of this Agreement, except any
nondisclosure agreement between Employee and Company, and contains the entire
agreement for these Services. Company may, from time to time, require changes in
the Services, provided such changes are mutually agreed upon by Company and
Employee and are incorporated by written amendments referencing or incorporating
this Agreement.

In any litigation arising out of this Agreement, the prevailing party will be
entitled to recover all reasonable attorney's fees and expenses of litigation,
including fees and appeal or petition for review. Venue in any legal action will
exist exclusively in state or federal courts in Houston, Texas. The
unenforceability, invalidity, illegality, or termination of any provision of
this Agreement will not render any other provision of this Agreement
unenforceable, invalid, or illegal, or terminate this Agreement or other rights
or obligations of Company or Employee. This agreement will be governed by the
laws of the State of Texas and applicable United States Federal Law.

This agreement is executed as of the date indicated below (April 21, 1999).

<PAGE>   4
This Agreement creates personal rights, and may not be transferred or assigned
without the express prior written consent of the other party; except that
Company may transfer its rights and delegate its obligations to any corporate
successor of Company. AES agrees to purchase liability insurance for corporate
personnel such as CFO, CEO, etc. to offset any possible legal exposure, coming
from execution of duties; within 90 dys of the signing of this agreement.

In addition, Employee is eligible to provided with bonuses or other compensation
as approved by the Board of Directors. Company will provide Employee with the
cost of tollway costs (EZ Tag), CPA review courses and exams, cellular phone for
business purposes, and other expense as mutually agreed upon between Employee
and Company.

IN WITNESS WHEREOF, the parties have executed this agreement on this 21st day of
April 1999.

Employer:

/s/ PAT S. ELLIOTT, PRESIDENT for AMERICAN ENERGY SERVICES, INC.

Employee:

/s/  ROBERT S. LOVE

<PAGE>   5

                             DESCRIPTION OF SERVICES

Overall financial, accounting and MIS management, strategic planning, banking
relations, budget management, cost accounting and financial reporting.

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