Document:

<PAGE>   1
[Note: Asterisks denote material omitted that has been separately filed with the
SEC pursuant to a request for confidential treatment.]

                                                                   EXHIBIT 10.40

                            TOLL CONVERSION AGREEMENT

         This Toll Conversion Agreement dated as of June 29, 2001 (this
"Agreement"), is made between ENRON GAS LIQUIDS, INC., a Delaware corporation
("EGLI"), and EOTT ENERGY LIQUIDS, L.P., a Delaware limited partnership
("EOTT").

         WHEREAS, EGLI either owns, or intends to purchase from third parties,
methanol, normal butane, natural gas, and Isobutane Return Stream (as
hereinafter defined) (collectively, "Feedstocks") in accordance with Section
5.1; and

         WHEREAS, EGLI requires the conversion of such Feedstocks to (i) methyl
tertiary butyl ether ("MTBE"), (ii) isobutylene and isobutane ("Isobutylene
Mix"), (iii) mixed butane ("Regen Mix"), (iv) propane and propylene mix ("PP
Mix") and other liquid petroleum gas mix ("LPG Mix") (MTBE, Isobutylene Mix,
Regen Mix, PP Mix, and LPG Mix are collectively referred to herein as "Products"
and Regen Mix, PP Mix, and LPG Mix are referred to herein as the "By-Products");
and

         WHEREAS, EOTT has equipment, processing capacity, and the ability to
otherwise cause the conversion of Feedstocks to Products through contract or
otherwise, and special knowledge and ability concerning the conversion of
Feedstocks to Products; and

         WHEREAS, EGLI intends to receive, deliver, and store such Feedstocks
and Products under the Storage Agreement entered into with EOTT in connection
with this Agreement described below as part of an integrated transaction;

NOW, THEREFORE, for the consideration and pursuant to the mutual covenants
hereinafter set forth, EGLI and EOTT ("Parties", each a "Party") agree as
follows:

1. Definitions.

1.1. As used herein, the following terms shall have the meanings ascribed to
them:

"Adjusted Conversion Fee" has the meaning specified in Section 10.2.

"Agreement" has the meaning specified in the preamble.

 "Bankruptcy Proceeding" means with respect to a Party or entity, such Party or
entity (i) is dissolved (other than pursuant to a consolidation, amalgamation or
merger); (ii) becomes insolvent or is unable to pay its debts or fails or admits
in writing its inability generally to pay its debts as they become due; (iii)
makes a general assignment, arrangement or composition with or for the benefit
of its creditors; (iv) institutes or has instituted against it a proceeding
seeking a

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<PAGE>   2

judgment of insolvency or bankruptcy or any other relief under any bankruptcy or
insolvency law or other similar law affecting creditors' rights, or a petition
is presented for its winding-up or liquidation; (v) has a resolution passed for
its winding-up, official management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (vi) seeks or becomes subject to the
appointment of an administrator, provisional liquidator, conservator, receiver,
trustee, custodian, or other similar official for it or for all or substantially
all its assets; (vii) has a secured party take possession of all or
substantially all its assets or has a distress, execution, attachment,
sequestration, or other legal process levied, enforced, or sued on or against
all or substantially all its assets and such secured party maintains possession,
or any such process is not dismissed, discharged, stayed, or restrained, in each
case within thirty (30) days thereafter; (viii) causes or is subject to any
event with respect to it which, under the applicable laws of any jurisdiction,
has an analogous effect to any of the events specified in clauses (i) to (vii)
(inclusive); or (ix) takes any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the foregoing acts.

         "Business Day" means a day on which the national banks in Houston,
Texas, are open for the transaction of normal banking business; and a Business
Day shall open at 8:00 a.m. and close at 5:00 p.m. Houston time.

         "By-Products" has the meaning specified in the recitals.

         "Contract Year" means the period from July 1, 2001, through June 30,
2002, and the successive periods of one (1) year beginning and ending on the
respective anniversaries of such dates.

         "Conversion Fee" means, for any date of determination, the applicable
conversion fee per MTBE Equivalent Gallon set forth below:

<Table>
<Caption>
                         Date                           Conversion Fee ($)
                         ----                           ------------------
<S>                                                     <C>
             Jul. 1, 2001 - Dec 31, 2002                     [*****]
             Jan. 1, 2003 - Dec 31, 2003                     [*****]
             Jan. 1, 2004 - Dec 31, 2004                     [*****]
             Jan. 1, 2005 - Dec 31, 2005                     [*****]
             Jan. 1, 2006 - Dec 31, 2006                     [*****]
             Jan. 1, 2007 - Dec 31, 2007                     [*****]
             Jan. 1, 2008 - Dec 31, 2008                     [*****]
             Jan. 1, 2009 - Dec 31, 2009                     [*****]
             Jan. 1, 2010 - Dec 31, 2010                     [*****]
             Jan. 1, 2011 - June 30, 2011                    [*****]
</Table>

          "Costs" means any brokerage fees, commissions, and other transactional
costs and expenses reasonably incurred by the Non-Defaulting Party as a result
of entering into new arrangements to replace this Agreement, and Legal Costs
incurred by the Non-Defaulting Party.

-------------
[*****]  Indicates that material has been omitted and confidential treatment
         requested therefore. All such material has been filed separately with
         the Commission pursuant to Rule 24b-2 of the Securities Exchange Act
         of 1934.

                                     - 2 -
<PAGE>   3

         "Credit Rating" means, with respect to any person and on any date of
determination, ratings then assigned by Standard & Poor's or Moody's to such
person's unsecured, senior long-term debt or deposit obligations (not supported
by third party credit enhancement).

         "Delivery Point" means, for any calendar quarter, the applicable point
of delivery for any Feedstock or Products as selected by EOTT or EGLI in
accordance with Section 4.2 from those set forth below:

                  For methanol being delivered to EOTT, the Delivery Point shall
         be either (a) Morgan's Point or (b) a delivery point agreed to by the
         Parties at Houston/Texas City;

                  For natural gas being delivered to EOTT, the Delivery Point
         shall be either (a) the point of interconnection between EGLI's
         delivery pipeline and EOTT's receiving pipeline at Morgan's Point or
         (b) a delivery point agreed to by the Parties at the Houston Ship
         Channel;

                  For normal butane being delivered to EOTT, the Delivery Point
         shall be either (a) the point of interconnection between EGLI's
         delivery pipeline and EOTT's receiving pipeline at Morgan's Point, or
         (b) a delivery point agreed to by the Parties at Mont Belvieu;

                  For Isobutane Return Stream being delivered to EOTT, the
         Delivery Point shall be either (a) a point of interconnection with a
         receiving pipeline of EOTT's at Morgan's Point, or (b) a delivery point
         agreed to by the Parties at Houston/Texas City;

                  For MTBE being delivered to EGLI, the Delivery Point shall be
         either (a) Morgan's Point or (b) a delivery point agreed to by the
         Parties at Houston/Texas City;

                  For Isobutylene Mix being delivered by EOTT on behalf of EGLI,
         the Delivery Point shall be either (a) a point of interconnection with
         a delivery pipeline of EOTT's at Morgan's Point, or (b) a delivery
         point agreed to by the Parties at Mont Belvieu.

                  For LPG Mix being delivered to EGLI, the Delivery Point shall
         be either (a) the point of interconnection between EOTT's delivery
         pipeline and EGLI's receiving pipeline at Morgan's Point, or (b) a
         delivery point agreed to by the Parties at Mont Belvieu.

                  For PP Mix being delivered to EGLI, the Delivery Point shall
         be either (a) Morgan's Point, or (b) a delivery point agreed to by the
         Parties at Houston/Texas City.

                  For Regen Mix being delivered to EGLI, the Delivery Point
         shall be either (a) the point of interconnection between EOTT's
         delivery pipeline and EGLI's receiving pipeline at Morgan's Point, or
         (b) a delivery point agreed to by the Parties at Mont Belvieu.

         "EGLI" has the meaning specified in the preamble.

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<PAGE>   4

         "EGLI Guarantor" means Enron Corp.

         "EGLI Guaranty" means the Guaranty dated as of June 29, 2001, made in
favor of EOTT by the EGLI Guarantor guaranteeing the obligations of EGLI under
this Agreement and the Storage Agreement.

         "EGLI Payment Limit" has the meaning specified in Section 13.2(b).

         "EOTT" has the meaning specified in the preamble.

         "EOTT Excess Fee" has the meaning specified in Section 12.

         "EOTT Guarantor" means EOTT Energy Operating Limited Partnership.

         "EOTT Guaranty" means the Guaranty dated as of June 29, 2001, made in
favor of EGLI by the EOTT Guarantor guaranteeing the obligations of EOTT under
this Agreement and the Storage Agreement.

         "EOTT Payment Limit" has the meaning specified in Section 13.2(a).

         "Early Termination Date" has the meaning specified in Section 13.1.

         "Excess Conversion Fee" means $[*****] per MTBE Equivalent Gallon.

         "Excess Fee" has the meaning specified in Section 12.

         "Excess Production Period" means each of (a) the period from July 1,
2001, to June 30, 2005, (b) the period from July 1, 2005, to June 30, 2008, and
(c) the period from July 1, 2008, to June 30, 2011.

         "Excess Products" has the meaning specified in Section 12.

         "Event of Default" has the meaning specified in Section 13.1.

-------------
[*****]  Indicates that material has been omitted and confidential treatment
         requested therefore. All such material has been filed separately with
         the Commission pursuant to Rule 24b-2 of the Securities Exchange Act
         of 1934.

                                     - 4 -
<PAGE>   5

         "Feedstock Market Price" means, for any Feedstock and for any calendar
quarter of determination, a price per gallon, or in the case of natural gas, a
price per MMBtu, equal to the arithmetic average of the midpoint prices
published as follows for each day of publication during such calendar quarter,
or if any applicable report is no longer published, another industry publication
mutually agreed to by the Parties:

                  With respect to methanol, ICIS-LOR Group LTD.s Methanol Price
         Report in the section under Methanol (US Gulf) Contract Prices (FOB) -
         "Barge" (cts/gal) (rounded to four (4) decimal places);

                  With respect to natural gas, Inside FERC, Houston Ship Channel
         Large Package; and

                  With respect to normal butane, the Oil Price Information
         Service (OPIS), non-TET Average Spot Prices for normal butane.

         "Feedstocks" has the meaning specified in the recitals.

         "Gains" means, with respect to a Party, an amount equal to the present
value of the economic benefit, if any, (exclusive of Costs) to it resulting from
the termination of its obligations under this Agreement, determined in a
commercially reasonable manner.

         "Interest Rate" means, for any date, the per annum rate of interest
equal to the prime lending rate as may from time to time be published in the
Wall Street Journal under "Money Rates" plus two percent (2.00%); provided the
Interest Rate shall never exceed the maximum rate allowed by applicable law.

         "Isobutylene Mix" has the meaning specified in the recitals.

         "Isobutane Return Stream" means the stream of isobutane meeting the
specifications on Schedule A which EGLI causes to be delivered to EOTT at the
applicable Delivery Point.

         "LPG Mix" has the meaning specified in the recitals.

         "Legal Costs" means, with respect to a Party, the reasonable
out-of-pocket expenses incurred by it, including legal fees, by reason of the
enforcement and protection of its rights under this Agreement.

         "Losses" means, with respect to a Party, an amount equal to the present
value of the economic loss, if any, (exclusive of Costs) to it resulting from
the termination of its rights under this Agreement, determined in a commercially
reasonable manner.

         "MTBE" has the meaning specified in the recitals.

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<PAGE>   6

         "MTBE Equivalent Gallon" means (a) for MTBE, 1.00 gallons, and (b) for
isobutylene contained in the Isobutylene Mix, .7874 gallons.

         "MTBE Market Price" means, for any calendar quarter of determination, a
price per gallon equal to the arithmetic average of the midpoint US Gulf Coast,
Waterborne, MTBE, as published in Platt's Oilgram Price Report for each issue
during such calendar quarter, or if such report is no longer published, another
industry publication mutually agreed to by the Parties.

         "Minimum Quarterly Conversion" means, for any calendar quarter, the
amount of MTBE Equivalent Gallons for such calendar quarter listed on Schedule C
attached hereto.

         "Moody's" means Moody's Investors Service, Inc.

         "Morgan's Point" means EOTT's facility adjacent to the Houston Ship
Channel in LaPorte and Morgan's Point, Texas.

         "New Agreement" has the meaning specified in Section 10.1.

         "New Agreement EPC Proposal" has the meaning specified in Section 10.1.

         "New Agreement Effective Date" has the meaning specified in Section
10.2.

         "New Agreement Notification" has the meaning specified in Section 10.1.

         "New Feedstocks" has the meaning specified in Section 10.1.

         "New Products" has the meaning specified in Section 10.1.

         "Non-Conforming Products" has the meaning specified in Section 9.

         "Non-Defaulting Party" has the meaning specified in Section 13.1.

         "PP Mix" has the meaning specified in the recitals.

         "Party" has the meaning specified in the recitals.

         "Permitted Product Quality Reduction" has the meaning specified in
Section 5.1.

         "Products" has the meaning specified in the recitals; provided,
however, that By-Products shall be excluded from all calculations regarding
Products hereunder, except to the extent such calculations expressly reference
and require the inclusion of By-Products.

         "Regen Mix" has the meaning specified in the recitals.

         "Rules" has the meaning specified in Section 20.2.

                                     - 6 -
<PAGE>   7

         "Standard & Poor's" means Standard & Poor's Rating Services, a division
of The McGraw-Hill Companies, Inc.

         "Storage Agreement" means the Mont Belvieu Storage Capacity Purchase
Agreement dated as of June 29, 2001, between EGLI and EOTT.

         "Term" has the meaning specified in Section 3.

         "Transaction Agreement" means this Agreement, the Storage Agreement,
the EOTT Guaranty, and the EGLI Guaranty.

         "Unacceptable EGLI Credit Rating" means, with respect to EGLI
Guarantor, a Credit Rating of BB+ or lower by Standard & Poor's and Ba1 or lower
by Moody's.

         "Unacceptable EOTT Credit Rating" means, with respect to EOTT
Guarantor, a Credit Rating of B+ or lower by Standard & Poor's and B1 or lower
by Moody's.

         "Vessel" means any barge, tow, ship, or tanker, collectively.

         "Yield Factor" means, for each Feedstock, the amount of such Feedstock
required to be provided under Section 5.2 for conversion into one gallon of
MTBE.

1.2. Other terms may be defined elsewhere in this Agreement and shall have the
meaning indicated throughout this Agreement.

2. Representations. Each Party represents and warrants to the other that (a) the
execution, delivery, and performance of this Agreement have been duly authorized
by all necessary corporate or other organizational action on its part and do not
violate or conflict with any law applicable to it, its organizational documents,
or any order or judgment of a court or other agency of government applicable to
it or its assets; (b) its obligations under this Agreement are, subject to
applicable insolvency and bankruptcy laws and general principles of equity,
legally valid and binding obligations, enforceable in accordance with the terms
of this Agreement; and (c) it has obtained, or will have obtained before any
impairment in its capacity to perform hereunder, all necessary governmental and
other third party permits, approvals, and licenses required in connection with
the execution, delivery, and performance of this Agreement.

3. Term. Unless extended pursuant to Section 10, the term of this Agreement
shall be ten (10) Contract Years from July 1, 2001, through June 30, 2011
("Term").

4. Nomination; Delivery Points.

         4.1. At least 30 days prior to the start of any calendar quarter, EGLI
shall communicate to EOTT its preliminary estimate of nominations for the
upcoming calendar quarter. At least 5 days prior to the start of any calendar
month, EGLI shall nominate in writing to EOTT the

                                     - 7 -
<PAGE>   8

amount of Feedstocks, if any, to be converted to Products (other than Regen Mix
and LPG Mix) during such calendar month, the mix of such Products for such
conversion, and the anticipated schedule for such conversion, provided that,
without the consent of EOTT, (a) the mix of such Products from the conversion
may not be less than 85% MTBE (or 78% MTBE to the extent that Isobutane Return
Stream is provided as a Feedstock), (b) if there is any nomination, the
nominated amount of Feedstocks for such calendar month shall be at least 504,000
MTBE Equivalent Gallons of Products, and (c) the nominated amount of Feedstocks
for such calendar month shall result in a daily average conversion of not to
exceed 693,000 MTBE Equivalent Gallons of Products per day. During any calendar
month, EGLI may from time to time adjust its nomination and EOTT shall use all
reasonable efforts to accommodate any such adjustments.

         4.2. Within 2 days after the nomination of an amount of Products by
EGLI under Section 4.1, and after consultation with EGLI, EOTT shall select the
applicable Delivery Points for all Feedstocks and Products except for
Isobutylene Mix. Within 5 days after such selection, EGLI shall select the
applicable Delivery Point for Isobutylene Mix and Isobutane Return Stream. The
Parties shall cooperate to schedule deliveries of Feedstocks and Products for
such calendar quarter.

5. Supply of Feedstocks.

         5.1. (a) To the extent EGLI requests conversion of Feedstocks to
Products hereunder, EGLI shall make all commercially reasonable efforts to
deliver Feedstocks on a reasonably uniform and consistent basis at the
applicable Delivery Point throughout each calendar month, and EGLI and EOTT will
coordinate to schedule the delivery of the Feedstocks in accordance with the
procedures and limitations of the relevant pipeline transporter(s) and loading
and unloading facilities. Notwithstanding the foregoing, if during any calendar
month the nominated amount of Feedstocks would result in a daily average
delivery of Products by EOTT to EGLI of less than 504,000 MTBE Equivalent
Gallons of Products per day, EOTT shall provide to EGLI a commercially
reasonable schedule for the delivery during such calendar month of the nominated
Feedstocks.

         (b) With respect to deliveries of methanol, EOTT shall promptly notify
EGLI when the supply of methanol readily available for delivery falls below
300,000 gallons at the applicable Delivery Points, and to the extent EGLI is
then requiring conversion of Feedstocks into Products by EOTT under this
Agreement, EGLI shall use commercially reasonable efforts to maintain at least
210,000 gallons of methanol readily available for delivery. If EOTT has provided
such notice to EGLI and EGLI nevertheless fails to maintain at least 210,000
gallons of methanol readily available for delivery, then, to the extent, but
only to the extent, EOTT cannot convert Products as required by EGLI in
accordance with this Agreement as a direct result of an inadequate supply of
methanol, EOTT shall not be required to pay liquidated damages under Section
11.3 for the shortfall in Products caused thereby.

         (c) With respect to deliveries of normal butane, EOTT shall promptly
notify EGLI when the supply of normal butane readily available for delivery
falls below 900,000 gallons at the applicable Delivery Points, and to the extent
EGLI is then requiring conversion of Feedstocks into

                                     - 8 -
<PAGE>   9

Products by EOTT under this Agreement, EGLI shall use commercially reasonable
efforts to maintain at least 630,000 gallons of normal butane readily available
for delivery. If EOTT has provided such notice to EGLI and EGLI nevertheless
fails to maintain at least 630,000 gallons of normal butane readily available
for delivery, then, to the extent, but only to the extent, EOTT cannot convert
Products as required by EGLI in accordance with this Agreement as a direct
result of an inadequate supply of normal butane and Isobutane Return Stream,
EOTT shall not be required to pay liquidated damages under Section 11.3 for the
shortfall in Products caused thereby.

         (d) All Feedstocks delivered to EOTT for conversion hereunder shall
meet the applicable Feedstocks specifications set forth on Schedule A attached
hereto; provided however, if any Feedstocks do not conform to such
specifications, EOTT shall promptly notify EGLI of such non-conformity and if so
requested by EGLI and allowed by regulation and law, shall convert such
Feedstocks to Products as commercially reasonable in accordance with this
Agreement. EOTT shall not be liable for any reduction in the quality of the
Products converted from such non-conforming Feedstocks, or for any contamination
of other Products, to the extent, but only to the extent, the reduction in
quality or contamination was caused by the non-conformity of the Feedstocks
(such permitted reduction in quality or excused contamination of other Products
being a "Permitted Product Quality Reduction"). Notwithstanding the foregoing,
EOTT shall not be obligated to accept and convert non-conforming Feedstocks if
the conversion of such non-conforming Feedstocks would damage a facility where
the conversion will occur or would be in violation of any applicable regulation
or law. If EOTT properly rejects any Feedstocks for such reason, then EOTT's
sole and exclusive remedy shall be to return such Feedstocks to EGLI at EGLI's
expense. EGLI shall not be liable for any claim regarding the quality or
quantity of any Feedstocks delivered or for any claim for damage to any facility
where the conversion occurs based upon the characteristics of the Feedstocks,
unless such claim has been submitted by EOTT to EGLI in writing, including
supporting documentation and reasonable details of the facts on which the claim
is based, within 90 days from the date of the certificate of quantity and
quality, certificate of pumping, confirmation of transfer, bill of lading, or
other document as appropriate to the specified delivery method. Should EOTT fail
to submit such claim or provide such documentation and details within this time
period, then such failure shall be deemed a waiver by EOTT of any claim and any
liability of EGLI for any such claim shall automatically be extinguished.
Nothing in this Section shall be deemed to impair EGLI's right to provide
substitute conforming Feedstocks for any non-conforming Feedstocks identified by
EOTT.

         5.2. With respect to the supply of Feedstocks:

                  (a) For each gallon of MTBE that EGLI requests from EOTT
         hereunder, EGLI shall make available to EOTT at the applicable Delivery
         Point for conversion [*****] gallons of normal butane and [*****]
         gallons of methanol.

                  (b) For each gallon of isobutylene that EGLI requests from
         EOTT hereunder, EGLI shall make available to EOTT at the applicable
         Delivery Point for conversion [*****] gallons of normal butane. For
         amounts Isobutylene Mix (other than isobutylene)

-------------
[*****]  Indicates that material has been omitted and confidential treatment
         requested therefore. All such material has been filed separately with
         the Commission pursuant to Rule 24b-2 of the Securities Exchange Act
         of 1934.

                                     - 9 -
<PAGE>   10

         that EGLI requests from EOTT hereunder, EGLI shall make available to
         EOTT at the applicable Delivery Point for conversion [*****] of normal
         butane (or Isobutane Return Stream).

                  (c) For every gallon of Regen Mix that EGLI is required to
         take from EOTT hereunder in accordance with Section 6.2, EGLI shall
         make available to EOTT at the applicable Delivery Point for conversion
         [*****] of normal butane.

                  (d) For each amount of PP Mix that EGLI requests from EOTT
         hereunder, EGLI shall make available to EOTT at the applicable Delivery
         Point for conversion [*****] of natural gas, on an MMBtu basis.

                  (e) Regardless of the amount of Products that EGLI requests
         from EOTT hereunder, EGLI shall supply to EOTT [*****] MMBtus of
         natural gas each day during the term of this Agreement. For each MTBE
         Equivalent Gallon of MTBE or isobutylene in excess of the Minimum
         Quarterly Conversion that EGLI requests from EOTT hereunder, EGLI shall
         make available to EOTT at the applicable Delivery Point for conversion
         an additional [*****] MMBtus of natural gas.

         Except as specified above, EGLI shall not be required to supply any
         Feedstocks in order to receive Products requested from EOTT hereunder,
         including By-Products.

         5.3. To the extent EOTT needs Feedstocks in excess of the amounts
required under Section 5.2 in order to convert and make available the amount of
Products as required by EGLI in accordance with this Agreement, EOTT may (a)
purchase additional Feedstocks for its own account and provide Products as
required hereunder, (b) to the extent made available by EGLI, use such
additional Feedstocks and pay to EGLI in accordance with Section 11.4(b) an
amount equal to the amount of such additional Feedstocks multiplied by the
applicable Feedstock Market Price for such Feedstocks (and EGLI shall be deemed
to have made additional Feedstocks available to EOTT to the extent EGLI delivers
such Feedstocks to or stores such Feedstocks with EOTT, unless EGLI notifies
EOTT otherwise), or (c) to the extent additional Feedstocks are not converted to
provide the required amount of Products, pay liquidated damages for failure to
deliver Products in accordance with Section 11.3. To the extent EOTT converts
and makes available the amount of Products as required by EGLI in accordance
with this Agreement and utilizes less Feedstocks than EGLI is required by
Section 5.2 to make available to EOTT for such conversion, EGLI shall pay to
EOTT an amount equal to the amount of Feedstocks required to be made available
but not utilized by EOTT in converting the amount of Products required by EGLI
in accordance with this Agreement multiplied by the applicable Feedstock Market
Price for such Feedstocks. Nothing in this Section 5.3 shall obligate EGLI to
make available to EOTT Feedstocks in an amount greater than the amounts required
by Section 5.2.

6. Conversion of Feedstocks and Supply of Products.

         6.1 Subject to timely delivery of the required amount and type of
Feedstocks by EGLI, EOTT shall convert the Feedstocks and deliver Products
(other than By-Products) as requested

-------------
[*****]  Indicates that material has been omitted and confidential treatment
         requested therefore. All such material has been filed separately with
         the Commission pursuant to Rule 24b-2 of the Securities Exchange Act
         of 1934.

                                     - 10 -
<PAGE>   11

by EGLI. EOTT shall also deliver or cause to be delivered to EGLI all available
By-Products created in connection with the conversion of other Products.

         6.2. EOTT shall make all reasonable efforts to receive Feedstocks and
deliver Products on a reasonably uniform and consistent basis at the applicable
Delivery Point throughout each calendar month as reasonably requested by EGLI.
EGLI shall make all commercially reasonable efforts to receive Products,
including By-Products, on a reasonably uniform and consistent basis at the
applicable Delivery Point throughout each calendar month. In each case EGLI and
EOTT will coordinate to schedule the delivery and receipt of the Feedstocks and
Products in accordance with the procedures and limitations of the relevant
pipeline transporter(s) and loading and unloading facilities. EOTT represents
and warrants that all Products delivered by EOTT hereunder shall meet the
applicable Products specifications as set forth on Schedule B attached hereto,
subject to any Permitted Product Quality Reduction in accordance with Section
5.1.

         6.3. Performance by EOTT pursuant to this Agreement shall include the
supply of such proper and safe storage facilities, labor, laboratory testing,
auxiliary and technical servicing, and other commercially reasonable services as
reasonably necessary or advisable in connection with this Agreement.

         6.4. Without limiting the obligation of EGLI to pay the Conversion Fee
and any other fees expressly set forth in this Agreement, EOTT acknowledges and
agrees that EGLI shall not be responsible for any costs whatsoever associated
with EOTT's conversion of Feedstocks to Products or other delivery of Products
as required hereunder.

7. Delivery, Risk of Loss, and Title.

         7.1. All quantities of Feedstocks and Products shall be delivered by
the delivering Party to the applicable Delivery Point without delivery cost to
the receiving Party under this Agreement.

         7.2. Each Party represents and warrants that any Feedstocks and
Products delivered and received hereunder shall be delivered and received in
full compliance with all applicable federal and state laws, rules, and
regulations.

         7.3. For the purposes of Section 7.4, risk of loss shall pass from EGLI
to EOTT on Feedstocks delivered by EGLI (a) in the case of delivery by pipeline,
when the Feedstocks are delivered to the first flange of the EOTT's receiving
pipelines at the applicable Delivery Point; and (b) in the case of delivery by
Vessel, at the outlet flange of the storage tank at the applicable Delivery
Point from which such Feedstocks are unloaded from the Vessel. Risk of loss
shall remain with EOTT on all goods in process and Products resulting from
Feedstocks until risk of loss on Products passes to EGLI. Risk of loss shall
pass from EOTT to EGLI on Products delivered by EOTT (x) in the case of delivery
by pipeline, when the Products are delivered to the first flange of EGLI's
receiving pipelines at the applicable Delivery Point; and (y) in the case of
delivery to Vessel, at the outlet flange of the storage tank at the applicable
Delivery Point from which such Products are loaded onto the Vessel.

                                     - 11 -
<PAGE>   12

         7.4 In the event that any Feedstocks, goods-in-process resulting
therefrom, or Products are lost, damaged, destroyed, or otherwise do not result
in Products delivered by EOTT to EGLI in accordance with this Agreement while
risk of loss is held by EOTT, whether by processing inefficiency, casualty,
force majeure, or otherwise, EOTT shall either (a) replace such Feedstocks
(including by purchasing additional Feedstocks from EGLI in accordance with
Section 5.3), goods-in-process resulting therefrom, or Products at EOTT's
expense and deliver Products in accordance with this Agreement, or (b) pay
liquidated damages for failure to deliver Products in accordance with Section
11.3. Notwithstanding the foregoing, EOTT shall have no obligation to pay over
to EGLI any insurance proceeds received by EOTT.

         7.5. Title and Security Interest.

         (a) Notwithstanding the passage of risk of loss and EOTT's possession
of Feedstocks, goods-in process resulting therefrom, and Products, EOTT
recognizes and acknowledges that title to all of the same remains at all times
with EGLI. Notwithstanding the foregoing, however, if title to any Feedstocks,
goods-in-process resulting therefrom, or Products is recharacterized as having
been transferred to EOTT, EGLI and EOTT agree that all such Feedstocks,
goods-in-process resulting therefrom, and Products are subject to the security
interest granted by EOTT to EGLI pursuant to paragraph (b) below. Any such
recharacterization shall be ignored for the purposes of Section 19 on taxes for
the period that such recharacterization remains in effect (but shall not be
ignored if the Parties made a true sale of such Feedstocks, goods-in-process
resulting therefrom, and Products).

         (b) As security for the obligations of EOTT hereunder and under the
Storage Agreement, together with any increases, extensions, and rearrangements
of such obligations, EOTT hereby grants to EGLI a first priority security
interest in all of EOTT's present and future right, title, and interest in and
to the following collateral: (i) all Feedstocks, goods-in-process resulting
therefrom, and Products, and all ethane, natural gasoline, and liquid petroleum
gases, in either case owned by EOTT (including any of the same deemed owned by
EOTT as a result of the same being recharacterized as property of EOTT), (ii)
all payments under any insurance, indemnity, warranty, or guaranty of or for the
foregoing, (iii) all books and records of EOTT relating to the foregoing
(including hardware and software), and (iv) all products thereof. In connection
with the foregoing, EOTT shall execute, deliver, and file such financing
statements pursuant to the Uniform Commercial Code and take such other actions
as are reasonably requested by EGLI and necessary to perfect the foregoing
interest. EOTT shall not grant or permit any other security interest, lien, or
any other encumbrance to attach to or be filed against any of the foregoing
collateral, and EOTT hereby waives any warehouseman's or similar liens it may
have, whether now or hereafter arising on such collateral.

         (c) Upon any Event of Default by EOTT hereunder, and also upon
termination of this Agreement by either party, EGLI may exercise all the rights
and remedies of a secured party under the Uniform Commercial Code or other
applicable laws. Such remedies shall be cumulative with all other remedies of
EGLI hereunder or under any other agreements with EOTT and no delay in enforcing
the foregoing shall act as a waiver of EGLI's rights hereunder or thereunder.

                                     - 12 -
<PAGE>   13

         (d) Provided that EOTT complies with the foregoing and does not impair
EGLI's title to Feedstocks, goods-in process resulting therefrom, or Products,
EOTT shall have the right to effectuate conversion of EGLI's Feedstocks at third
party facilities, but use of such third party facilities shall not release EOTT
from any of its obligations hereunder. Further, in the event that EOTT can not
convert or can not cause the conversion of Feedstocks into Products, EOTT may,
with EGLI's consent, which shall not be unreasonably withheld, sell the
applicable amount of Feedstocks required for conversion into Products hereunder
and purchase such Products on the open market for delivery to EGLI for the
purposes of complying with EOTT's obligations under this Agreement.

8. Measuring Quantity and Quality.

         8.1. Inspector. EOTT shall appoint a licensed independent inspector,
reasonably acceptable to EGLI, to verify the quantity of all Feedstocks and
Products delivered at the applicable Delivery Point. The total cost of such
independent inspector at the applicable Delivery Point shall be shared equally
between EOTT and EGLI. The quality of all Feedstocks and Products shall be
tested by EOTT at EOTT's expense and the results of such testing shall be
delivered to EGLI within five (5) days of discharge or delivery and shall be
final and binding on both EOTT and EGLI, absent fraud or manifest error. Should
either Party reasonably request any additional testing of quality by an
independent third party, the cost of such independent testing shall be borne by
the requesting Party.

         8.2. Standards. All measurements and tests for quantity and quality
shall be made in accordance with the standard measuring, sampling, and other
testing procedures in effect for such Feedstocks and Products at the Delivery
Point at the time of delivery. Volumes shall be corrected to 60 degrees
Fahrenheit and converted into gallons in accordance with the latest ASTM-IP test
methods and the latest edition of API volume correction factors then in effect.
Both Parties may have a representative present at the applicable Delivery Point
to witness all measurements and tests.

         8.3. Quantity. With respect to Feedstocks delivered by Vessel and
Products delivered to Vessel, the independent inspector shall gauge and record
inactive shore tank measurements immediately before and immediately after the
unloading of Feedstocks or the loading of Products to determine the volume
unloaded or loaded (adjusted for slack volume in shorelines, if any), or by
meters, if meters are available. With respect to Feedstocks or Products
delivered by pipeline, the volume delivered will be determined through meters or
by measuring storage tanks from or to which delivery is made.

         8.4. Quality. With respect to Feedstocks delivered by Vessel,
representative samples will be drawn from either the unloading line or from the
Vessel from which delivery is made. With respect to Products delivered to
Vessel, representative samples will be drawn either from the loading line or
from the shore tanks from which delivery is made. With respect to Feedstocks or
Products delivered by pipeline, representative samples will be drawn either from
the delivery line or from the storage tanks from which delivery is made.

                                     - 13 -
<PAGE>   14

         8.5. Products Claims. With respect to the delivery of Products,
including Products converted from non-conforming Feedstocks in accordance with
Section 5.1, EOTT shall not be liable for any claim regarding the quality or
quantity of any Products delivered, unless such claim has been submitted by EGLI
to EOTT in writing, including supporting documentation and reasonable details of
the facts on which the claim is based, within 90 days from the date of the
certificate of quantity and quality, certificate of pumping, confirmation of
transfer, bill of lading, or other document as appropriate to the specified
delivery method. Should EGLI fail to submit such claim or provide such
documentation and details within this time period, then such failure shall be
deemed a waiver by EGLI of any such quantity or quality claim and any liability
of EOTT for any such claim shall automatically be extinguished.

         9. Rejection Rights. If EOTT delivers to EGLI Products that do not
conform to the quality specifications set forth on Schedule B or, with respect
to Products subject to a Permitted Product Quality Reduction in accordance with
Section 5.1, to such quality specifications as are required therefor, or are
otherwise defective (the "Non-Conforming Products"), EGLI shall be entitled to
request a reduction in the Conversion Fee applicable to such Non-Conforming
Products by an amount that reflects the decreased value of such Non-Conforming
Products, as agreed to by the Parties. If the Parties are unable to agree to the
amount of such reduction within 48 hours after EGLI's request for such
reduction, no reduction in Conversion Fees shall be effected but at the close of
the applicable calendar quarter, EGLI shall be entitled to payment by EOTT of
liquidated damages in an amount determined by the following formula:

         Liquidated Damages for Non-Conforming Productsq = NCPq x MTBEMPq - RVq

         Where:

         NCPq              =        The quantity of Non-Conforming Products in
                                    MTBE Equivalent Gallons for which a
                                    reduction in Conversion Fees was not agreed
                                    to during calendar quarter q (expressed in
                                    gallons)

         MTBEMPq           =        The MTBE Market Price for calendar quarter q
                                    (expressed in $ per gallon)

         RVq               =        The Resale Value for the Non-Conforming
                                    Products for which a reduction in Conversion
                                    Fees was not agreed to during calendar
                                    quarter q, if any, which was actually
                                    obtained or could have been obtained by EGLI
                                    upon resale to third parties at any time
                                    selected by EGLI during calendar quarter q,
                                    as determined by EGLI in a commercially
                                    reasonable manner (expressed in $)

(For purposes of illustration only, a sample calculation is provided on Schedule
D attached hereto.)

                                     - 14 -
<PAGE>   15

         Notwithstanding the foregoing, EGLI shall not be obligated to accept
Non-Conforming Products if such Non-Conforming Products would damage any
facilities that would transport, store, or use such Products, unless such
Non-Conforming Products directly result from the conversion of non-conforming
Feedstocks which EGLI requires EOTT to convert in accordance with Section 5.1.
If EGLI properly rejects any Products for such reason, then EOTT, after
discussion with EGLI, shall dispose of such Products at EOTT's expense and shall
pay any liquidated damages for failure to convert Products in accordance with
Section 11.3 and any payments for additional Feedstocks in accordance with
Section 5.3.

10. Option for Conversion of other Products.

         10.1. At any time during this Agreement, EGLI shall have the option to
require EOTT, subject to the terms below, to enter into an amendment and
restatement of this Agreement providing for an adjustment of the Products to
isooctane, isobutylene, isobutane or any other set of products (the "New
Products") that EGLI may reasonably request and a corresponding change in
Feedstocks (the "New Feedstocks"). To the extent owned by EOTT, EGLI shall have
the right to access Morgan's Point to determine whether or not to exercise the
option and conduct preliminary engineering regarding the same. Upon notification
to EOTT of EGLI's intent to exercise this option (the "New Agreement
Notification"), an independent engineering firm, mutually agreed to by the
Parties, will be appointed to prepare a turnkey construction contract bid
containing market based commercially reasonable performance guarantees to
convert Morgan's Point or another facility mutually agreed to by the Parties
(the "New Agreement EPC Proposal") and the parties will prepare an amendment and
restatement of this Agreement (the "New Agreement") subject to the terms below.
If during any calendar quarter between the New Agreement Notification and the
New Agreement Effective Date, as defined below, EOTT is unable to deliver an
amount of Products at least equal to the Minimum Quarterly Conversion under this
Agreement, and such failure is due to events caused by EGLI's exercise of its
option, then EGLI shall nevertheless be required to pay to EOTT for such
calendar quarter the Conversion Fee for an amount of Products equal to the
applicable Minimum Quarterly Conversion.

         10.2. The Conversion Fee under the New Agreement will be adjusted (the
"Adjusted Conversion Fee") to be effective as of the date of first delivery of
the New Feedstocks to EOTT, as mutually agreed to by the Parties (the "New
Agreement Effective Date"). The Adjusted Conversion Fee will be a stated amount
calculated to reflect (1) a market rate of return to EOTT consistent with this
Agreement on the sum of (a) the cost to convert Morgan's Point or the facility
agreed to by the Parties as obtained in the New Agreement EPC Proposal plus any
additional costs to convert, including but not limited to, direct costs, testing
costs and feedstock costs related to testing, and (b) the termination amount
that would have been due under Section 14 of this Agreement as of the New
Agreement Effective Date less $[*****], and (2) commercially reasonable
operating and maintenance costs for the facility as determined by an independent
third party. The Parties to this Agreement recognize that the specific terms
defining the Adjusted Conversion Fee are subject to further analysis; however,
the Parties agree that the risks and rewards of the New Agreement shall be
consistent with this Agreement. The Adjusted Conversion Fee will be paid by EGLI
on terms consistent with this Agreement. Liquidated

-------------
[*****]  Indicates that material has been omitted and confidential treatment
         requested therefore. All such material has been filed separately with
         the Commission pursuant to Rule 24b-2 of the Securities Exchange Act
         of 1934.

                                     - 15 -
<PAGE>   16

damages for EOTT's failure to convert the New Feedstocks into New Products under
the New Agreement will be calculated in a manner consistent with the provisions
under this Agreement. The initial term of the New Agreement will be ten years
from the New Agreement Effective Date.

         10.3. EOTT may satisfy its obligations under the New Agreement without
actually converting Morgan's Point or any other facility.

         11. Conversion Fee and Terms of Payment.

         11.1. Conversion Fee. For each calendar quarter, EGLI shall pay to EOTT
(a) for each MTBE Equivalent Gallon of Products (other than By-Products) up to
the applicable Minimum Quarterly Conversion delivered by EOTT hereunder and made
available to EGLI, a fee equal to the applicable Conversion Fee and (b) for each
MTBE Equivalent Gallon of Products (other than By-Products) in excess of the
applicable Minimum Quarterly Conversion delivered by EOTT hereunder and made
available to EGLI, a fee equal to the Excess Conversion Fee. Notwithstanding any
other provision of this Agreement, no Conversion Fee, liquidated damages,
termination amounts, or other consideration hereunder (except for supply of
Feedstocks in accordance with Section 5.2) shall be due to EOTT with respect to
By-Products.

         11.2. Unavailability of Feedstocks. During any calendar quarter, if (a)
EGLI does not request conversion of Feedstocks into Products (other than
By-Products) in an amount at least equal to the applicable Minimum Quarterly
Conversion, (b) EGLI fails to deliver adequate quantities of Feedstocks in
accordance with Section 5.1 for conversion into such Products in an amount at
least equal to the applicable Minimum Quarterly Conversion for any reason, or
(c) EOTT cannot convert Feedstocks into such Products in an amount at least
equal to the applicable Minimum Quarterly Conversion as a result of EGLI's
failure to accept such Products in accordance with Section 6.2, EGLI shall
nevertheless be required to pay to EOTT for such calendar quarter the Conversion
Fee for an amount of such Products equal to the applicable Minimum Quarterly
Conversion. The matters described in clauses (a) through (c) shall not
constitute "Event of Default" hereunder, and timely payment of such amount shall
be EOTT's sole and exclusive remedy with respect thereto.

         11.3. Liquidated Damages for Failure to Convert. For any calendar
quarter, to the extent EGLI requests conversion of Feedstocks into Products
(other than By-Products) and has made available sufficient Feedstocks in
accordance with the terms of this Agreement, if EOTT fails, whether due to force
majeure or otherwise, to convert Feedstocks and make available such Products, or
otherwise make available such Products in accordance with Section 7.5(d), EOTT
shall pay to EGLI liquidated damages calculated as follows for the amount of
such Products not made available up to the Minimum Quarterly Conversion (such

                                     - 16 -
<PAGE>   17

Products not made available during such calendar quarter up to the Minimum
Quarterly Conversion being the "Deficiency"):

        Liquidated Damagesq   =  Dq x  [MTBEMPq - ((SIGMA)(YFf x FSMPfq) + CFq)]

        Where:

        Dq                    =  Deficiency in MTBE Equivalent Gallons during
                                 calendar quarter q (expressed in gallons)

        MTBEMPq               =  MTBE Market Price for calendar quarter q
                                 (expressed in $ per gallon)

        (SIGMA)(YFf x FSMPfq) =  The sum of the products of YFf and FSMPfq for
                                 the Feedstocks normal butane and methanol for
                                 calendar quarter q

        YFf                   =  The Yield Factor for Feedstock f (expressed in
                                 gallons per gallon)

        FSMPfq                =  The Feedstock Market Price for Feedstock f
                                 during calendar quarter q (expressed in $ per
                                 gallon)

        CFq                   =  The Conversion Fee applicable to calendar
                                 quarter q (expressed in $ per gallon)

        (For purposes of illustration only, a sample calculation is provided on
        Schedule D attached hereto.)

         Except as otherwise provided in Section 13.1(v), any such failure shall
not itself constitute an "Event of Default" hereunder, and timely payment of
such amount shall be EGLI's sole and exclusive remedy with respect to thereto.
To the extent EOTT fails to provide to EGLI all available By-Products resulting
from the conversion of Feedstocks into Products under this Agreement, EOTT shall
pay to EGLI actual damages.

         11.4. Invoices and Payments.

         (a) For each calendar month during the Term of this Agreement, no later
than the 15th day of the calendar month immediately following such calendar
month, EOTT shall provide to EGLI an invoice for Conversion Fees in an amount
equal to the product of the applicable Conversion Fee and 1/3rd of the
applicable Minimum Quarterly Conversion. No later than 5 days after receipt of
such invoice, EGLI shall pay the amount set forth on such invoice.

         (b) For each calendar quarter during the Term of this Agreement, no
later than the 15th day of the calendar month immediately following such
calendar quarter, each Party shall provide the other Party, if necessary, with
an invoice setting forth, as appropriate,

             (i)   the applicable Conversion Fee payable by EGLI for all
                   Products actually delivered and made available at each
                   Delivery Point owed under Section 11.1(a), or otherwise
                   payable under Section 11.2, during the previous calendar
                   quarter for which payment has not already been invoiced and
                   made pursuant to paragraph (a) above (or if the amounts paid
                   under

                                     - 17 -
<PAGE>   18

                   paragraph (a) above exceed the amounts owed under Section
                   11.1(a) and 11.2, the refund owed by EOTT);

             (ii)  the amount payable by EGLI, if any, with respect to the
                   Excess Conversion Fees in accordance with Section 11.1(b);

             (iii) the amount payable by EOTT, if any, for agreed upon
                   reductions in Conversion Fees for Non-Conforming Products in
                   accordance with Section 9;

             (iv)  any reimbursement owed by either Party for the costs of the
                   independent inspector in accordance with Section 8 or for
                   taxes in accordance with Section 19;

             (v)   the amount payable by either Party, if any, in accordance
                   with Section 5.3;

             (vi)  the liquidated damages payments, if any, payable by either
                   Party in accordance with Sections 9 and 11.3; and

             (vii) the amount payable by EGLI, if any, with respect to the EOTT
                   Excess Fee in accordance with Section 12.

         No later than 5 days after receipt of a Party's invoice, the receiving
Party shall pay the amount set forth on such invoice.

         (c) Each Party shall provide the other Party from time to time, if
necessary, with an invoice setting forth any other amounts payable under this
Agreement not discussed in paragraphs (a) or (b) above. Such payments shall be
due as set forth in this Agreement, but if any due date is not set forth in this
Agreement, then not later than 10 days after receipt of the invoice.

         (d) All payments due shall be made by wire transfer in immediately
available United States funds to the applicable payment address and account
specified by the payee. If any payment is due on a date other than a business
day, the payment shall be due on the following business day.

         (e) In the event of any dispute as to any portion of an invoice, the
Party disputing the invoice shall pay the undisputed amounts in full at the time
such payment should be made in accordance with this Agreement and shall notify
the other Party of the portion of the invoice in dispute, in which case the
Parties shall discuss the invoice within 5 days in an attempt to resolve the
dispute, but if such discussion does not resolve the dispute then the provisions
of Section 20.2 shall apply. The resolution of the disputed amount shall include
interest at the Interest Rate.

         (f) Any payments not made when due shall bear interest, from the date
such payment is due until paid in full, at the Interest Rate.

                                     - 18 -
<PAGE>   19

         11.5. Netting and Setoff. If the Parties are each required to pay any
amount on the same day or in the same month, then such amounts with respect to
each Party shall be aggregated and the Parties may discharge their obligations
to pay through netting, in which case the Party, if any, owing the greater
aggregate amount may pay to the other Party the difference between the amounts
owed. Each Party reserves to itself all rights, setoffs, counterclaims,
combination of accounts, liens, and other remedies and defenses which such Party
has or may be entitled to (whether by operation of law or otherwise). The
obligations to make payments under this Agreement may be offset against each
other, set off, or recouped therefrom.

         11.6. Credit Support. If at any time the EOTT Guarantor has an
Unacceptable EOTT Credit Rating or no Credit Rating, then within 5 days after
the occurrence of such circumstance and as long as such circumstance shall
exist, at EGLI's request, EOTT shall cause to be issued and maintained for the
benefit of EGLI an irrevocable letter of credit in an amount reasonably
requested by EGLI not to exceed $[*****], having an effective period of one
year, issued by a bank reasonably acceptable to EGLI, and otherwise having terms
and conditions reasonably acceptable to EGLI. The letter of credit may be drawn
upon by EGLI if EOTT fails to pay any amount owed to EGLI hereunder. In the
event the letter of credit is drawn to satisfy any of EOTT's obligations, EOTT
shall promptly, but in no event more than 5 days following the date that the
letter of credit is drawn, restore the letter of credit to its original amount.
The letter of credit may be drawn upon in part or in full by EGLI if EOTT fails
to maintain the letter of credit as required or EOTT fails to renew the letter
of credit at least 20 days prior to its expiration, in which case EGLI may hold
the proceeds thereof for application from time to time for the obligations of
EOTT under this Agreement until the letter of credit is restored, in each case
without limiting EOTT's obligation to maintain the letter of credit as required
or any Event of Default applicable thereto.

         If at any time the EGLI Guarantor has an Unacceptable EGLI Credit
Rating or no Credit Rating, then within 5 days after the occurrence of such
circumstance and as long as such circumstance shall exist, at EOTT's request,
EGLI shall cause to be issued and maintained for the benefit of EOTT an
irrevocable letter of credit in an amount reasonably requested by EOTT not to
exceed $[*****], having an effective period of one year, issued by bank
reasonably acceptable to EOTT, and otherwise having terms and conditions
reasonably acceptable to EOTT. The letter of credit may be drawn upon by EOTT if
EGLI fails to pay any amount owed to EOTT hereunder. In the event the letter of
credit is drawn to satisfy any of EGLI's obligations, EGLI shall promptly, but
in no event more than 5 days following the date that the letter of credit is
drawn, restore the letter of credit to its original amount. The letter of credit
may be drawn upon in part or in full by EOTT if EGLI fails to maintain the
letter of credit as required or EGLI fails to renew the letter of credit at
least 20 days prior to its expiration, in which case EOTT may hold the proceeds
thereof for application from time to time for the obligations of EGLI under this
Agreement until the letter of credit is restored, in each case without limiting
EGLI's obligation to maintain the letter of credit as required or any Event of
Default applicable thereto.

12. Excess Products Delivery. For any calendar quarter during each Excess
Production Period, if EOTT delivers and makes available to EGLI Products (other
than By-Products) in excess of the applicable Minimum Quarterly Conversion
("Excess Products"), EGLI shall, within

-------------
[*****]  Indicates that material has been omitted and confidential treatment
         requested therefore. All such material has been filed separately with
         the Commission pursuant to Rule 24b-2 of the Securities Exchange Act
         of 1934.

                                     - 19 -
<PAGE>   20

15 days after each calendar quarter, calculate an amount ("Excess Fee")
determined by the following formula:

      Excess Feeq           = EPq x  [MTBEMPq - (ECFq + ((SIGMA)(YFf x FSMPfq))]

      Where:

      EPq                   = The Excess Products in MTBE Equivalent Gallons for
                              calendar quarter q (expressed in gallons)

      MTBEMPq               = The MTBE Market Price for calendar quarter q
                              (expressed in $ per gallon)

      ECFq                  = The Excess Conversion Fee for calendar quarter q
                              (expressed in $ per gallon)

      (SIGMA)(YFf x FSMPfq) = The sum of the products of YFf and FSMPfq for the
                              Feedstocks normal butane and methanol for calendar
                              quarter q

      YFf                   = The Yield Factor for Feedstock f (expressed in
                              gallons per gallon)

      FSMPfq                = The Feedstock Market Price for Feedstock f during
                              calendar quarter q (expressed in $ per gallon)

      (For purposes of illustration only, a sample calculation is provided on
      Schedule D attached hereto.)

                  The positive Excess Fee, if any, for each calendar quarter
shall be allocated among EOTT ("EOTT Excess Fee") and EGLI in accordance with
this Section, and EGLI shall pay to EOTT the EOTT Excess Fee as so allocated at
the end of each calendar quarter. For any calendar quarter during each Excess
Production Period: (a) EOTT shall be allocated 90% of any Excess Fee until the
cumulative EOTT Excess Fee for such Excess Production Period is equal to
$2,500,000; (b) thereafter, for additional Excess Fees, EOTT shall be allocated
50% of any Excess Fee until the cumulative EOTT Excess Fee for such Excess
Production Period is equal to $5,000,000; and (c) thereafter, for additional
Excess Fees, EOTT shall be allocated 25% of any Excess Fee. In no event shall
any negative Excess Fee be allocated to EOTT.

13. Events of Default, Remedies and Limitation of Liability.

         13.1. Events of Default. An event of default ("Event of Default") with
respect to a Party (the "Defaulting Party") shall mean any of the following: (i)
the failure of Defaulting Party to pay when due any required payment under this
Agreement and such failure is not remedied within 5 days after written notice
thereof; (ii) the failure of the Defaulting Party to comply with its other

                                     - 20 -
<PAGE>   21

respective obligations under this Agreement and such failure continues uncured
for 30 days after written notice thereof; (iii) the Defaulting Party shall be
subject to a Bankruptcy Proceeding; (iv) any representation or warranty made by
a Party under this Agreement shall prove to be untrue or misleading in any
material respect when made or repeated or deemed to have been made or repeated;
(v) with respect to EOTT, and provided Feedstocks are provided in accordance
with this Agreement, EOTT's failure to deliver or delivery of non-conforming
Products that have been requested by EGLI in accordance with this Agreement in
an amount exceeding 50% of the applicable Minimum Quarterly Conversion during
any 4 out of 8 consecutive calendar quarters during the first two Contract
Years, or 50% of the applicable Minimum Quarterly Conversion during any 2 out of
4 consecutive calendar quarters thereafter, in each case for reasons other than
force majeure; (vi) with respect to EOTT, the EOTT Guarantor shall give notice
to revoke or revoke the EOTT Guaranty or challenge the EOTT Guaranty, the EOTT
Guaranty shall cease to be in full force and effect, the EOTT Guarantor shall
breach its obligations under the EOTT Guaranty, the EOTT Guarantor shall be
subject to a Bankruptcy Proceeding, or any representation or warranty made by
the EOTT Guarantor in the EOTT Guaranty shall prove to be untrue or misleading
in any material respect when made or repeated or deemed to have been made or
repeated; (vii) with respect to EGLI, the EGLI Guarantor shall give notice to
revoke or revoke the EGLI Guaranty or challenge the EGLI Guaranty, the EGLI
Guaranty shall cease to be in full force and effect, the EGLI Guarantor shall
breach its obligations under the EGLI Guaranty, the EGLI Guarantor shall be
subject to a Bankruptcy Proceeding, or any representation or warranty made by
the EGLI Guarantor in the EGLI Guaranty shall prove to be untrue or misleading
in any material respect when made or repeated or deemed to have been made or
repeated; (viii) with respect to EOTT, any default, event of default,
termination event, or other similar condition or event (however described) shall
occur or exist under any other Transaction Agreement with respect to EOTT or the
EOTT Guarantor provided that any applicable grace or cure periods have expired;
or (ix) with respect to EGLI, any default, event of default, termination event,
or other similar condition or event (however described) shall occur or exist
under any other Transaction Agreement with respect to EGLI or the EGLI Guarantor
provided that any applicable grace or cure periods have expired.

         Upon the occurrence and during the continuation of an Event of Default
as to the Defaulting Party, the other Party (the "Non-Defaulting Party") may, in
its sole discretion, (a) accelerate and liquidate the Parties' respective
obligations under this Agreement by establishing, and notifying the Defaulting
Party of, an early termination date (which shall be no earlier than the date of
such notice and no later than 90 days after the date of such notice) on which
this Agreement shall terminate ("Early Termination Date"), (b) withhold any
payments due to the Defaulting Party until such Event of Default is cured, or
(c) set off against any amounts due to the Defaulting Party any or all amounts
which the Defaulting Party owes to the Non-Defaulting Party (without prejudice
and in addition to any right of setoff, combination of accounts, lien, or other
right to which the Non-Defaulting Party is at any time otherwise entitled
(whether by operation of law, contract, or otherwise)). If notice of an Early
Termination Date is given under this Section 13.1, the Early Termination Date
will occur on the designated date, whether or not the relevant Event(s) of
Default is then continuing. Any rights of a Non-Defaulting Party under this
Section 13.1 shall be in addition to such Non-Defaulting Party's other rights
under this Agreement, at law or in equity.

                                     - 21 -
<PAGE>   22

         13.2. Early Termination Amount.

         (a) If an Early Termination Date is established, and the Defaulting
Party is EOTT, EGLI shall in good faith calculate its Gains, Losses, and Costs
resulting from the termination of this Agreement, and then notify EOTT of the
net amount owed or owing, not to exceed an amount owed by EOTT equal to the
amount calculated in accordance with Schedule F attached hereto for the calendar
quarter in which this Agreement terminates pursuant to this Section 13.2 (the
"EOTT Payment Limit"). In determining Gains and Losses for such purpose, EGLI
shall (i) use published forward price curves for the market price of Products
and Feedstocks to the extent available, and, to the extent published forward
price curves are not available, forward price curves for the market price of
Products and Feedstocks as developed by an independent third party which has
experience in evaluating forward price curves for Feedstocks and Products,
mutually agreed to by the Parties, and (ii) determine the present value of any
future amounts using a discount rate of 14%. If EGLI's aggregate Losses and
Costs exceed its aggregate Gains, EOTT shall, within five (5) days of its
receipt of such notice, pay the net amount to EGLI, subject to the EOTT Payment
Limit. If EGLI's aggregate Gains exceed its aggregate Losses and Costs resulting
from such early termination, EOTT shall have no payment obligation under this
Section.

         (b) If an Early Termination Date is established, and the Defaulting
Party is EGLI, EOTT shall in good faith calculate its Gains, Losses, and Costs
resulting from the termination of this Agreement, and then notify EGLI of the
net amount owed or owing, not to exceed an amount owed by EGLI equal to the
present value of a payment stream equal to the applicable Minimum Quarterly
Conversion multiplied by the Conversion Fee at the time of the determination for
each of the calendar quarters which would have been remaining in the Term of
this Agreement but for the establishment of an Early Termination Date (such
present value amount being the "EGLI Payment Limit"). In determining Gains and
Losses for such purpose, EOTT shall determine the present value of any future
amounts using a discount rate of 14% and such Losses shall exclude any amounts
related to the permanent shut down of the facilities or termination of long-term
contracts EOTT has used to convert Products hereunder, but shall include
$[*****] for general damages. If EOTT's aggregate Losses and Costs exceed its
aggregate Gains, EGLI shall, within five (5) days of its receipt of such notice,
pay the net amount to EOTT, subject to the EGLI Payment Limit, unless EGLI then
elects to voluntarily terminate this Agreement in accordance with Section 14, in
which case the provisions of Section 14 shall control. If EOTT's aggregate Gains
exceed its aggregate Losses and Costs resulting from such early termination,
EGLI shall have no payment obligation under this Section.

         (c) In either case, the Non-Defaulting Party shall determine its Gains,
Losses, and Costs as of the Early Termination Date, or, if that is not possible,
at the earliest date thereafter that is reasonably possible.

         13.3. Damages Stipulation. Each Party stipulates that the payment
obligations set forth in this Agreement, including in Sections 9, 11.2, 11.3,
and 13.2, for the damages incurred are a reasonable approximation of the
anticipated harm or loss and acknowledges the difficulty of

-------------
[*****]  Indicates that material has been omitted and confidential treatment
         requested therefore. All such material has been filed separately with
         the Commission pursuant to Rule 24b-2 of the Securities Exchange Act
         of 1934.

                                     - 22 -
<PAGE>   23

estimation or calculation of actual damages, and each Party hereby waives the
right to contest such payments as unenforceable, an unreasonable penalty, or
otherwise.

         13.4. Expenses. The Defaulting Party will, on demand, reimburse,
indemnify, and hold harmless the Non-Defaulting Party for and against all
reasonable out-of-pocket expenses, including Legal Costs, incurred by the
Non-Defaulting Party in the enforcement and protection of its rights under this
Agreement by reason of an Event of Default, including costs of collection.

         13.5. Limitation of Liability. THE PARTIES CONFIRM THAT THE EXPRESS
REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT INCLUDING IN
SECTIONS 9, 11.2, 11.3, AND 13.2, SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR
BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS
HEREIN PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY, THE LIABLE PARTY'S LIABILITY SHALL BE LIMITED AS SET FORTH IN
SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED
UNLESS OTHERWISE PROVIDED IN THIS AGREEMENT. IF NO REMEDY OR MEASURE OF DAMAGES
IS EXPRESSLY HEREIN PROVIDED, THE LIABLE PARTY'S LIABILITY SHALL BE LIMITED TO
DIRECT ACTUAL DAMAGES ONLY. EXCEPT TO THE EXTENT SET FORTH IN AN EXPRESS REMEDY
OR MEASURE OF DAMAGES, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS
OR BUSINESS INTERRUPTION DAMAGES, WHETHER BY STATUTE, IN TORT OR IN CONTRACT,
UNDER OR RELATED TO THIS AGREEMENT, INCLUDING UNDER ANY INDEMNITY PROVISION OR
OTHERWISE.

14. Voluntary Termination. At any time beginning after the end of the third
Contract Year, upon written notice to EOTT given at any time before a New
Agreement has become effective, EGLI may voluntarily terminate this Agreement
under this paragraph beginning on a date selected by EGLI that is 90 days or
more after such notice is given. At any time when an Early Termination Date is
established and the Defaulting Party is EGLI, upon written notice to EOTT given
at any time before a New Agreement has become effective, EGLI may voluntarily
terminate this Agreement under this paragraph on such Early Termination Date.
Upon termination pursuant to this paragraph, EGLI shall pay to EOTT an amount
equal to the amount listed on Schedule E attached hereto for the calendar
quarter in which this Agreement terminates pursuant to this paragraph.

15. Force Majeure. Except to the extent provided in Section 13.1(v), force
majeure or shutdown of any facilities shall not be an excuse for either Party's
obligations hereunder or any Event of Default hereunder, and each Party hereby
irrevocably waives any right to claim excuse hereunder for the same.

                                     - 23 -
<PAGE>   24

16. Indemnity.

         16.1. EOTT shall indemnify, defend, and hold harmless EGLI from and
against any and all losses, claims, demands, penalties, liability, suits,
damages, judgments, costs, or expenses (including costs of defense, settlement,
and reasonable attorney's fees) arising out of or related to (a) Any injury or
death of persons or damage to property caused by or happening in connection with
EOTT's storage or conversion operations hereunder unless and to the extent that
the same is caused by EGLI's gross negligence or willful misconduct; (b)
infringement or claimed infringement of U.S. patents by virtue of the methods or
processes employed by EOTT's conversion of EGLI's Feedstocks or employed by
third parties for the production of Products for supply to EGLI (c) any claims
whatsoever by any third party (including without limitation, any governmental
agency or instrumentality) arising out of, related to, or in connection with any
acts or omissions of EOTT regarding the operation of Morgan's Point and in
particular (i) any corrective action required to be taken pursuant to the
Resource Conservation and Recovery Act or the state equivalent to address any
release of any contaminating or hazardous substance; (ii) the cost of removing
from the Morgan's Point any waste material; and (iii) any contamination or
alleged contamination of air, water, subsurface water, or soils caused by
operation of the Morgan's Point or the production of Products.

         16.2. EOTT, its successors and assigns hereby waive and release and
agree not to make any claim against or seek recovery from EGLI including any
recovery claim under CERCLA or any state or local equivalent against EGLI for
the deficiencies against which EOTT has agreed to indemnify EGLI herein.

17. Insurance. EOTT shall obtain and maintain in full force and effect property,
liability, and business interruption insurance in amounts adequate to insure
against any loss or damage associated with its control and possession of the
Feedstocks, goods-in-process resulting therefrom, and Products, including damage
to property, injury and/or death to persons, contractual liabilities for
indemnities under this Agreement, and environmental liabilities. Such insurance
policies shall (a) provide that such insurance shall not be canceled by the
insurance carrier unless 30 days prior notice has been given to EGLI, (b) be
primary and non-contributory to any insurance maintained by EGLI, (c) be
endorsed to name EGLI as an additional insured and to waive all rights of
subrogation against EGLI, and (d) be issued by insurance companies reasonably
satisfactory to EGLI. Without creating any obligation or right of EGLI, the EGLI
Guarantor, or another party to provide the required insurance for EOTT, and
without limiting EOTT's obligation with respect to the required insurance
hereunder, this requirement may be satisfied to the extent a third party
provides such insurance on behalf of EOTT at EOTT's cost.

18. Audit Rights. Each Party (and its representatives) has the right, at its
sole expense during normal working hours and upon reasonable advance notice, to
examine the records of the other Party, but only to the extent reasonably
necessary to verify the accuracy of any statement, charge, or computation made
pursuant to this Agreement. If requested, a Party shall provide to the other
Party inventory and conversion reports and statements for the two-year period
preceding the audit date evidencing the quantities of Feedstocks or Products
delivered or received at the Delivery Point(s). If any such examination reveals
any inaccuracy in any statement, the necessary adjustments in such statements
and the payments thereof will be promptly made and shall bear interest
calculated at the Interest Rate from the date the overpayment or underpayment
was made until paid; provided, however, that no adjustment for any statement or
payment will be made

                                     - 24 -
<PAGE>   25

unless objection to the accuracy thereof was made prior to the lapse of two
years from the rendition thereof; and provided further, that for the purpose of
such statement and payment objections, this Section will survive any termination
of this Agreement.

19. Taxes. Each Party shall be responsible for taxes imposed on its revenues and
profits from its activities hereunder and each Party's ownership, if any, of the
Feedstocks, goods-in-process resulting therefrom, Products, and the property it
owns, including Morgan's Point.

20. Miscellaneous.

         20.1. Assignment. The rights and obligations of either Party under this
Agreement may be assigned and delegated only with the prior written consent of
the other Party. No delegation of obligations hereunder shall be effective
unless the entity assuming the obligations agrees in writing to be bound by the
terms and conditions hereof. Notwithstanding the foregoing, (a) the rights and
obligations of EGLI under this Agreement may be assigned and delegated to any
subsidiary, affiliate, or entity directly or indirectly controlled by or under
the direction or management of, or formed for the purposes of a financing
transaction by, a subsidiary or affiliate of Enron Corp. or to any entity
purchasing all or substantially all of the assets of EGLI, in each case without
the prior written consent of EOTT, provided, however, that the obligations of
EGLI shall be not be released unless the entity assuming the obligations has the
same financial capacity to perform under this Agreement or such assignee
provides a guaranty by a financially responsible party upon substantially the
same terms and conditions as the EGLI Guaranty, and (b) the rights and
obligations of EOTT under this Agreement may be assigned and delegated to any
wholly owned subsidiary of EOTT or the EOTT Guarantor, in each case without the
prior written consent of EGLI. All covenants, terms, conditions, and provisions
of this Agreement shall be binding upon the Parties hereto and shall extend to
and be binding upon the successors and permitted assigns of the Parties hereto.
Without limiting the foregoing, EGLI may have EOTT convert Feedstocks owned by
third parties into Products for such third parties pursuant to EGLI's rights
under this Agreement.

         20.2. Arbitration. ANY AND ALL DISPUTES ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT, INCLUDING ANY QUESTION REGARDING ITS EXISTENCE, VALIDITY,
OR TERMINATION, SHALL BE RESOLVED BY BINDING ARBITRATION GOVERNED BY THE FEDERAL
ARBITRATION ACT AND CONDUCTED IN ACCORDANCE WITH THE AMERICAN ARBITRATION
ASSOCIATION COMMERCIAL ARBITRATION RULES ("RULES"), WHICH RULES ARE DEEMED TO BE
INCORPORATED BY REFERENCE INTO THIS CLAUSE. THE NUMBER OF ARBITRATORS SHALL BE
THREE, EACH PARTY HAVING THE RIGHT TO APPOINT ONE ARBITRATOR, WHO SHALL TOGETHER
APPOINT A THIRD NEUTRAL ARBITRATOR WITH AT LEAST FIVE YEARS EXPERIENCE IN THE
INDUSTRY WITHIN 30 DAYS IN ACCORDANCE WITH THE RULES. THE LOCATION OF
ARBITRATION HEARINGS SHALL ALTERNATE BETWEEN THE OFFICES OF EGLI AND EOTT, THE
FIRST BEING HELD AT EOTT'S OFFICES. THE PARTIES HEREBY EXPRESSLY WAIVE ANY RIGHT
OF APPEAL TO ANY COURT. THERE WILL BE NO WRITTEN TRANSCRIPT OR RECORD OF THE
ARBITRATION PROCEEDING. THE

                                     - 25 -
<PAGE>   26

ARBITRATORS WILL ONLY MAKE THEIR AWARD AND WILL NOT RENDER A WRITTEN OPINION
EXPLAINING THEIR AWARD. IT IS EXPRESSLY AGREED THAT THE ARBITRATORS SHALL HAVE
NO AUTHORITY TO AWARD ATTORNEY'S FEES (EXCEPT FOR LEGAL COSTS EXPRESSLY PROVIDED
FOR HEREIN), OR CONSEQUENTIAL, SPECIAL, INDIRECT, TREBLE, EXEMPLARY OR PUNITIVE
DAMAGES OF ANY TYPE, THE PARTIES HEREBY WAIVING THEIR RIGHTS, IF ANY, TO RECOVER
ATTORNEY'S FEES (EXCEPT FOR LEGAL COSTS EXPRESSLY PROVIDED FOR HEREIN) AND
CONSEQUENTIAL, SPECIAL, INDIRECT, TREBLE, EXEMPLARY AND PUNITIVE DAMAGES WITH
RESPECT TO THIS AGREEMENT. ALL OF THE ARBITRATORS' ORDERS AND DECISIONS MAY BE
ENFORCEABLE IN, AND JUDGMENT UPON ANY AWARD RENDERED IN THE ARBITRATION
PROCEEDING MAY BE CONFIRMED AND ENTERED BY ANY COURT HAVING PROPER JURISDICTION.
THE PARTIES AGREE THAT ALL ARBITRATION PROCEEDINGS CONDUCTED HEREUNDER AND THE
DECISION OF THE ARBITRATORS SHALL BE KEPT CONFIDENTIAL AND NOT DISCLOSED, EXCEPT
TO A PARTY'S AFFILIATES, ACCOUNTANTS, AND LAWYERS.

         20.3. Choice of Law. This Agreement shall be governed by, and
construed, enforced, and performed in accordance with Texas law without regard
to its principles on conflicts of law which would select another law.

         20.4. Notices. All notices, requests, statements, or payments under
this Agreement shall be made to the addresses specified set forth below. Unless
expressly provided otherwise, notices shall be in writing and delivered by
letter, facsimile, or other documentary form. Notice by facsimile or hand
delivery shall be deemed to have been received by the close of the Business Day
on which it was transmitted or hand delivered (unless transmitted or hand
delivered after the close of the Business Day, in which case it shall be deemed
received at the close of the next Business Day). Notice by overnight mail or
overnight courier shall be deemed to have been received one Business Day after
it was sent. A Party may change its address by providing notice thereof in
accordance with this Section.

         If to EGLI:

                  Enron Gas Liquids, Inc.
                  Attention: Operations Manager
                  1400 Smith Street
                  Houston, Texas 77002
                  Phone: 713.853.6461
                  Fax: 713.853.9169

                  With a copy to:

                  Enron Global Markets LLC
                  Attention:  Vice President & General Counsel
                  1400 Smith Street
                  Houston, Texas 77002
                  Fax:  713.646.3490

                                     - 26 -
<PAGE>   27

         If to EOTT:

                  EOTT Energy Liquids, L.P.
                  Attention:        Vice President & General Counsel
                  If by courier:    2000 W. Sam Houston Parkway S., Suite 400
                                    Houston, Texas 77042
                  If by mail:       P.O. Box 4666
                                    Houston, Texas 77210-4666
                  Phone:            713.993.5027
                  Fax:              713.993.5813

         20.5. Entire Agreement; Amendments; Interpretation. This Agreement
including the Schedules hereto constitute the entire agreement between the
Parties relating to the subject matter contemplated by this Agreement and
supersedes any prior or contemporaneous agreements or representations affecting
the same subject matter. No amendment, modification, or change to this Agreement
shall be enforceable unless reduced to a writing executed by the Party against
whom such amendment, modification, or change is sought to be enforced. The
Parties acknowledge that each Party and its counsel have reviewed and revised
this Agreement and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting Party shall not be used in
interpretation of this Agreement.

         20.6. Counterparts; Severability; Survival. This Agreement may be
executed in several counterparts, each of which is an original and all of which
constitute one and the same instrument. Except as may otherwise be stated
herein, any provision or Section hereof that is declared or rendered unlawful by
any applicable court of law or regulatory agency, or deemed unlawful because of
a statutory change, will not otherwise affect the lawful obligations that arise
under this Agreement. If any provision of this Agreement is declared unlawful,
the Parties will promptly renegotiate to restore this Agreement as near as
possible to its original intent and effect. All indemnities and audit rights
shall survive the termination of this Agreement in full for a period of two
years.

         20.7. Non-Waiver; Duty to Mitigate; No Partnership or Third Party
Beneficiaries. No waiver by any Party of any of its rights with respect to the
other Party or with respect to any matter or default arising in connection with
this Agreement shall be construed as a waiver of any subsequent right, matter,
or default whether of a like kind or different nature. Any waiver shall be in
writing signed by the waiving Party. Each Party agrees that it has a duty to
mitigate damages. Nothing contained in this Agreement shall be construed or
constitute any Party as the employee, agent, partner, joint venturer, or
contractor of any other Party. This Agreement is made and entered into for the
sole protection and legal benefit of the Parties, and their permitted successors
and assigns, and no other person shall be a direct or indirect legal beneficiary
of, or have any direct or indirect cause of action or claim in connection with,
this Agreement.

                     [remainder of page intentionally blank]

                                     - 27 -
<PAGE>   28
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by a duly authorized representative as of the day and year first above written.

                                     ENRON GAS LIQUIDS, INC.

                                     By: /s/ JOHN NOWLAN
                                         ---------------------------------------
                                     Name:   John Nowlan
                                           -------------------------------------
                                     Title:  Vice President
                                            ------------------------------------

                                     EOTT ENERGY LIQUIDS, L.P.

                                     By: EOTT ENERGY GENERAL PARTNER, L.L.C.,
                                     its General Partner

                                     By: /s/ DANA R. GIBBS
                                        ----------------------------------------
                                     Name:   Dana R. Gibbs
                                          --------------------------------------
                                     Title:  President & COO
                                           -------------------------------------

                                     - 28 -
<PAGE>   29
                                   Schedule A
                            Feedstocks Specifications

                         METHANOL QUALITY SPECIFICATIONS

FORMULA: CH3  OH            MOL. WT.: 32.04

FORM: Liquid

<Table>
<Caption>
                                                                            Test Method
                                                                            -----------
<S>                    <C>                                                  <C>
Suspended Solids       Free from suspended matter

Appearance             Clear, colorless, liquid                                 (1)

Odor                   No foreign odor; characteristic                        D-1296

Methanol               99.90% by wt. Minimum                                    (2)

Distillation Range     1 degrees C. max., to include 64.6 +/- 0.1 degrees C
                       @ 760mm                                                D-1078

Specific Gravity       0.7892 maximum @ 25 degrees C                           E-346

Color                  5 APHA, maximum                                        D-1209

Acidity                0.003% by wt. Maximum; as acetic acid                  D-1613

Alkalinity             0.0003% by wt. Maximum; as ammonia                     D-1614

Acetone                0.003% by wt. Maximum                                  D-1612

Carbonizables          20 APHA, maximum                                        E-346

Hydrocarbons           Clear when diluted 1:2 with water, after 30 minutes     E-346

Non-Volatile Matter    0.001% by wt. Maximum                                  D-1353

Permanganate Time      50 minutes minimum (0.02% KMnO4 @ 15 degrees C)        D-1363

Water                  0.05% by wt. Maximum when shipped                       E-203

Metals                 1.0 ppm wt., maximum; as sodium, zinc, iron
</Table>

----------
Notes:

(1) Visual

(2) By Difference

Note: These specifications define only a basic purity for this product. The
product is to be free of any contaminants that might render the product
unsuitable for use.

Note: For each nomination of Feedstocks, EGLI will designate the source of such
Feedstocks.

Note: In the event the source of methanol changes, the Parties will cooperate to
develop a new specifications and Yield Ratios for methanol.

                                      -1-
<PAGE>   30

                      NORMAL BUTANE QUALITY SPECIFICATIONS

<Table>
<Caption>
                Product Characteristics                        Normal Butane   Test Method
------------------------------------------------------------   -------------   -----------
<S>                                                            <C>             <C>
Composition:
Liquid Volume %
         Normal Butane, Min.                                       94.0%       ASTM D-2163
         Propane & Lighter, Max.                                    0.5%
         Isobutane, Max.                                            6.0%
         Pentanes, Max.                                             1.5%
         Hexanes & Heavier, Max.                                   0.05%
         Total Olefins, Max.                                        .35%
                  Isobutylene, Max.                                 .02%
                  Butadiene,& Other Diolefins, Max.                .002%
Vapor Pressure @ 100 Degrees F, Max.                              50 psig      ASTM D-1267
Volatile Residue:  Temp @ 95% Evaporation,  Degrees F, Max.
                                                                    +36        ASTM D-1837

Corrosion, Copper Strip, Max.                                       No. 1      ASTM D-1838
Free Water Content                                                  None
Total Oxygenates, ppm wt., Max.                                     20.0       UOP-845
         (Methanol, CO2, Heavy Alcohols, Ethers, Glycols)
                  Methanol, ppm wt., Max.                           20.0
                  IPA and Heavier Alcohols, ppm wt., Max.           5.0
                  MTBE and Other Ethers, ppm wt., Max.              2.0
                  Other Oxygenates, ppm wt., Max.                   5.0
Total Sulphur, ppm wt., Max.                                         90        ASTM D-2784
Fluorides, ppm wt., Max.                                            1.0          UOP-619
Fuel Bound Nitrogen, ppm wt., Max.                                  0.5        ASTM D-4629
Metals, ppb wt., Max.                                                15          UOP-834
                                                                                 UOP-906
</Table>

----------
Note: These specifications define only a basic purity for this product. The
product is to be free of any contaminants that might render the product
unsuitable for isomerization.

                                      -2-
<PAGE>   31

                       NATURAL GAS QUALITY SPECIFICATIONS

1.   Total heating value of not less than nine hundred fifty (950) British
     Thermal Units per cubic foot; nor more than eleven hundred fifty (1,150)
     British Thermal Units per cubic foot.

2.   Commercially free of all dust, hydrocarbon liquids, water, suspended
     matter, all gums and gum forming constituents and any other objectionable
     substances.

3.   Contain no more than twenty (20) grains of total sulfur, nor more than one
     (1) grain of hydrocarbon sulfide per one hundred (100) standard cubic feet.

4.   Have a temperature of not more than one hundred twenty degrees Fahrenheit
     (120 F) or less than forty degrees Fahrenheit (40 F).

5.   Not contain more than seven (7) pounds of entrained water vapor per million
     cubic feet.

                                      -3-
<PAGE>   32

                     ISOBUTANE RETURN STREAM SPECIFICATIONS

<Table>
<Caption>
           Component                   Concentration Limits                    Test Method
           ---------                   --------------------                    -----------
<S>                                    <C>                                     <C>
Isobutane                                    No Limit             Wasson ECE G.C. Application
Isobutylene                                  No Limit             Wasson ECE G.C. Application
Other C4 Olefins                       3.5 wt. % (maximum)        Wasson ECE G.C. Application
Normal Butane                          4.0 wt. % (maximum)        Wasson ECE G.C. Application
C3 and Lighter                         9.0 wt. % (maximum)        Wasson ECE G.C. Application
C5 and Heavier                         1.0 wt. % (maximum)        Wasson ECE G.C. Application
Butadiene                              0.5 wt. % (maximum)        Wasson ECE G.C. Application
Oxidex Oxygenates                     100 wt. ppm (maximum)       Wasson ECE G.C. Application
Free Water                                     None               Visual Check
Nitrogen Compounds                    3.5 wt. NIL (Proposed)      ASTM D4629-71
Halides                               1.0 wt. ppm (maximum)       UOP 779-77
Aluminum                              1.5 wt. ppm (maximum)       IP 377
Sodium                                1.0 wt. ppm (maximum)       UOP 249
Sulfur Compounds                      3.0 wt. ppm (maximum)       ASTM D-3246
Mercury                               20.0 wt. ppb (maximum)      UOP 391-81
Arsenic                               1.0 wt. ppb (maximum)       UOP 391-81
Lead                                  20.0 wt. ppb (maximum)      UOP 391-81
Iron                                  0.5 wt. ppb (maximum)       UOP 391-81
Copper                                1.0 wt. ppb (maximum)       UOP 391-81
Corrosion, Copper Strip                     No. 1 max             ASTM D-1638
Nitriles                               0 wt. Ppm (maximum)        ASTM D-4629
</Table>

                                      -4-
<PAGE>   33

                                   Schedule B
                             Products Specifications
                           MTBE QUALITY SPECIFICATIONS

<Table>
<Caption>
    Product Characteristics            MTBE             Test Method
    -----------------------            ----             -----------

<S>                                 <C>              <C>
MTBE - Minimum                      95.0 wt. %        EGP Fuels/EOTT
Methanol - Maximum                   .5 wt. %         EGP Fuels/EOTT
Water - Maximum                     0.15 wt. %           GC Method
Other                                   *                GC Method
RVP, PSIA - Maximum                     9             ASTM D-5191-96
Sulfur - Maximum                      10 ppm
</Table>

Contaminants - The product shall be free of dirt, scale, rust and all other
types of solid contaminants.

* The balance of the composition of the MTBE shall consist of small quantities
of various Olefins, Hydro Carbons and other Oxygenates directly associated with
the manufacturing process and suitable for gasoline blending.

                                      -1-
<PAGE>   34

                     ISOBUTYLENE MIX QUALITY SPECIFICATIONS

<Table>
<Caption>
        Component                     Concentration Limits            Typical              Test Method
        ---------                     --------------------            -------              -----------

<S>                                   <C>                           <C>              <C>
Isobutane                                    No Limit                49.0 wt. %      Wasson ECE G.C. Application
Isobutylene                            39.2 wt. % (minimum)          43.8 wt. %      Wasson ECE G.C. Application
Other C4 Olefins                       2.28 wt. % (maximum)          1.39 wt. %      Wasson ECE G.C. Application
Normal Butane                          2.54 wt. % (maximum)           1.4 wt. %      Wasson ECE G.C. Application
C3 and Lighter                         4.5 wt. % (maximum)            4.2 wt. %      Wasson ECE G.C. Application
C5 and Heavier                         0.6 wt. % (maximum)           0.02 wt. %      Wasson ECE G.C. Application
Butadiene                              0.28 wt. % (maximum)          0.07 wt. %      Wasson ECE G.C. Application
Oxidex Oxygenates                     50.0 wt. Ppm (maximum)         0.0 wt. Ppm     Wasson ECE G.C. Application
Free Water                                     None                     None         Visual Check
Nitrogen Compounds                    2.24 wt. Ppm (maximum)        <1.0 wt. Ppm     ASTM D4629-71
Halides                               0.6 wt. ppm (maximum)         <0.1 wt. Ppm     UOP 779-77
Aluminum                              1.0 wt. ppm (maximum)          0.0 wt. Ppm     IP 377
Sodium                                0.6 wt. ppm (maximum)          0.0 wt. Ppm     UOP 249
Sulfur Compounds                      2.0 wt. ppm (maximum)         <1.0 wt. Ppm     ASTM D-3246
Mercury                               12.0 wt. ppb (maximum)         0.0 wt. Ppb     UOP 391-81
Arsenic                               1.0 wt. ppb (maximum)          0.0 wt. Ppb     UOP 391-81
Lead                                  12.0 wt. ppb (maximum)         0.0 wt. Ppb     UOP 391-81
Iron                                  0.3 wt. ppb (maximum)          0.0 wt. Ppm     UOP 391-81
Copper                                1.0 wt. ppb (maximum)          0.0 wt. Ppb     UOP 391-81
Corrosion, Copper Strip                     No. 1 max                    <1          ASTM D-1838
Nitriles                               0 wt. ppm (maximum)           0.0 wt. Ppm     ASTM D-4629
</Table>

                                      -2-
<PAGE>   35

                         LPG MIX QUALITY SPECIFICATIONS

Composition, Liquid %

<Table>
<Caption>

PRODUCT CHARACTERISTICS                     METHOD                     VALUE
-----------------------                     ------                     -----

<S>                                         <C>                      <C>
PROPANE                                     ASTM D - 2163              90.0 MIN.

PROPYLENE                                                               5.0 MAX.

BUTANE & HEAVIER                                                        2.5  MAX.

SPECIFIC GRAVITY @ 60 F                     ASTM D - 1657             0.510 MAX.
                                                                      0.500 MIN

VAPOR PRESSURE @ 100 F, PSIG                ASTM D- 1267 - 84           208 MAX.
</Table>

                                      -3-
<PAGE>   36

                        REGEN MIX QUALITY SPECIFICATIONS

<Table>
<Caption>

PRODUCT CHARACTERISTICS                     METHOD                    VALUE
-----------------------                     ------                    -----

<S>                                        <C>                        <C>
1. COMPOSITION (LIQUID VOLUME):             GPA 2166

         CARBON DIOXIDE (MAX)                                         0.35%
         METHANE (MAX.)                                               1.50%
         AROMATICS (MAX.)                                             10.0%
         OLEFINS (MAX.)                                                  1%

2. HALIDES (WT. % MAX.)                     UOP 619                    1.0 PPM

3. VAPOR PRESSURE @ 100 F                   ASTM D-1267                600
     PSIG (MAX.)

4. CORROSIVENESS                            ASTM D-1838
         COPPER STRIP @ 100 F                                         NO. 1

5. VOLATILE SULFUR                          ASTM D-2784               NILL
</Table>

                                      -4-
<PAGE>   37

                         PP MIX QUALITY SPECIFICATIONS

<Table>
<Caption>

PRODUCT CHARACTERISTICS                     AVG.              MIN.              MAX.
-----------------------                     ----              ----              ----

<S>                                         <C>               <C>               <C>
METHANE                                     0.16              0.00              0.60

ETHANE                                      2.47              1.36              3.31

PROPANE                                     0.07              0.00              0.11

PROPENE                                    22.50             14.89             25.27

ISO-BUTANE                                  4.61              0.00             26.77

ISO-BUTENE                                  0.01              0.00              0.06

DI-METHYL-ETHER                                             20,000 PPM        50,000 PPM

GROSS HEATING VALUE:

AVERAGE                    90,313 BTU.

MAXIMUM                    92,401 BTU.

MINIMUM                    92,096 BTU.
</Table>

                                      -5-
<PAGE>   38

                                   Schedule C
                          Minimum Quarterly Conversions

<Table>
<Caption>

         Calendar
         Quarter                    Minimum Quarterly Conversion
         Beginning:                 (in MTBE Equivalent Gallons)
         ---------                  ----------------------------

<S>                                <C>
         2001 JUL.                            [*****]
         2001 OCT.                            [*****]
         2002 JAN.                            [*****]
         2002 APR.                            [*****]
         2002 JUL.                            [*****]
         2002 OCT.                            [*****]
         2003 JAN.                            [*****]
         2003 APR.                            [*****]
         2003 JUL.                            [*****]
         2003 OCT.                            [*****]
         2004 JAN.                            [*****]
         2004 APR.                            [*****]
         2004 JUL.                            [*****]
         2004 OCT.                            [*****]
         2005 JAN.                            [*****]
         2005 APR.                            [*****]
         2005 JUL.                            [*****]
         2005 OCT.                            [*****]
         2006 JAN.                            [*****]
         2006 APR.                            [*****]
         2006 JUL.                            [*****]
         2006 OCT.                            [*****]
         2007 JAN.                            [*****]
         2007 APR.                            [*****]
         2007 JUL.                            [*****]
         2007 OCT.                            [*****]
         2008 JAN.                            [*****]
         2008 APR.                            [*****]
         2008 JUL.                            [*****]
         2008 OCT.                            [*****]
         2009 JAN.                            [*****]
         2009 APR.                            [*****]
         2009 JUL.                            [*****]
         2009 OCT.                            [*****]
         2010 JAN.                            [*****]
         2010 APR.                            [*****]
         2010 JUL.                            [*****]
         2010 OCT.                            [*****]
         2011 JAN.                            [*****]
         2011 APR.                            [*****]
</Table>

Notwithstanding the Minimum Quarterly Conversions listed above, if prior to
September 30 of any Contract Year, EOTT and EGLI mutually agree to interchange
the Minimum Quarterly Conversion for the second quarter of such Contract Year
with the Minimum Quarterly Conversion of the third quarter of such Contract
Year, such Minimum Quarterly Conversions shall be deemed changed for purposes of
this Agreement.

-------------
[*****]  Indicates that material has been omitted and confidential treatment
         requested therefore. All such material has been filed separately with
         the Commission pursuant to Rule 24b-2 of the Securities Exchange Act
         of 1934.

                                      -1-
<PAGE>   39

                                   Schedule D
                              Example Calculations
               TOLLING CONVERSION AGREEMENT - CALCULATION EXHIBITS

Section 9:  Liquidated Damages for Non-Conforming Products

EOTT shall pay to EGLI:

<Table>
<S>                      <C>                      <C>                           <C>
    LDs for non-         Quantity of non-           MTBE market price for        Resale value for non-
conforming products  =   conforming product   x   calendar quarter ($/gallon) -  conforming products
</Table>

EXAMPLE:

Assumptions:

         Quantity of non-conforming product = 2,000,000 gallons
         MTBE market price for calendar quarter q = $1.25/gallon
         Resale value = $2,000,000 = (2,000,000 gallons x $1.00/gallon)

Liquidated Damages:

<Table>
<S>                      <C>                 <C>                 <C>
    LDs for non-
conforming products  =   2,000,000      x    $1.25/gallon   -    $2,000,000
</Table>

<Table>
<S>                      <C>
    LDs for non-
conforming products  =   $500,000
</Table>

                                      -1-

<PAGE>   40

Section 11.3:  Liquidated Damage for Failure to Convert

EOTT shall pay to EGLI:

<Table>
<S>           <C>                            <C>                   <C>               <C>                            <C>
                Total Deficiencies in        [MTBE market price    (  (              Feedstock market price)         Applicable)]
Liquidated  =  MTBE Equivalent Gallons    x  [for calendar       - (E (Yield    x    for feedstock f during)    +    conversion)]
Damages        during calendar quarter q     [quarter ($/gallons)  (  (factor        calender quarter q    )              fee  )]
</Table>

EXAMPLE:

Assumptions:

         Total Deficiencies in calendar quarter q = 5,000,000 gallons

         MTBE market price = $1.30/gallon

         E (Yield Factors x Feedstocks market prices) = $[*****]/gallon

         Conversion Fee = $[*****]/gallon

Liquidated Damages:

Liquidated
Damages   =    5,000,000   x  [$1.30 - ($[*****] + $[*****])]

Liquidated
Damages   =    5,000,000   x  $[*****]

Liquidated
Damages   =    $[*****]

-------------
[*****]  Indicates that material has been omitted and confidential treatment
         requested therefore. All such material has been filed separately with
         the Commission pursuant to Rule 24b-2 of the Securities Exchange Act
         of 1934.
                                      -2-

<PAGE>   41

Section 12:  Excess Products Delivery

EGLI shall pay to EOTT its allocable share of the Excess Fee ("EOTT Excess
Fee"):

<Table>
<S>           <C>                            <C>                    <C>              <C>               <C>
                  Excess products in         [MTBE market price     (  Excess        (  (              Feedstock market price))]
Excess      =  MTBE equivalent gallons    x  [for calendar       -  (conversion   +  (E (Yield    x    for feedstock f during))]
 Fee           for calendar quarter q        [quarter ($/gallons)   (   fee          (  (factor        calender quarter q    ))]
</Table>

EXAMPLE:

Assumptions:

         Excess products = 5,000,000 gallons
         MTBE market price = $1.30/gallon
         E  (Yield Factors x Feedstocks market prices) = $[*****]/gallon

Excess Fee:

Excess
  Fee        =    5,000,000   x  [$1.30 - ($0.04 - $[*****])]

Excess
  Fee        =    5,000,000   x  $[*****]

Excess
  Fee        =    $[*******]

If no Excess Fee has yet been allocated for the Excess Production Period, the
EOTT Excess Fee would be 90% of the Excess Fee, or $[*****] and EGLI would pay
this amount to EOTT.

-------------
[*****]  Indicates that material has been omitted and confidential treatment
         requested therefore. All such material has been filed separately with
         the Commission pursuant to Rule 24b-2 of the Securities Exchange Act
         of 1934.

                                      -3-

<PAGE>   42

                                   Schedule E
                    Section 14 Voluntary Termination Amounts

<Table>
<Caption>
Calendar
Quarter                              Voluntary
Beginning:                       Termination Amount
---------                        ------------------
<S>                              <C>
2001 JUL.                             $[*****]
2001 OCT.                             $[*****]
2002 JAN                              $[*****]
2002 APR.                             $[*****]
2002 JUL.                             $[*****]
2002 OCT.                             $[*****]
2003 JAN                              $[*****]
2003 APR.                             $[*****]
2003 JUL.                             $[*****]
2003 OCT.                             $[*****]
2004 JAN                              $[*****]
2004 APR.                             $[*****]
2004 JUL.                             $[*****]
2004 OCT.                             $[*****]
2005 JAN                              $[*****]
2005 APR.                             $[*****]
2005 JUL.                             $[*****]
2005 OCT.                             $[*****]
2006 JAN                              $[*****]
2006 APR.                             $[*****]
2006 JUL.                             $[*****]
2006 OCT.                             $[*****]
2007 JAN                              $[*****]
2007 APR.                             $[*****]
2007 JUL.                             $[*****]
2007 OCT.                             $[*****]
2008 JAN                              $[*****]
2008 APR.                             $[*****]
2008 JUL.                             $[*****]
2008 OCT.                             $[*****]
2009 JAN                              $[*****]
2009 APR.                             $[*****]
2009 JUL.                             $[*****]
2009 OCT.                             $[*****]
2010 JAN                              $[*****]
2010 APR.                             $[*****]
2010 JUL.                             $[*****]
2010 OCT.                             $[*****]
2011 JAN                              $[*****]
2011 APR.                             $[*****]
</Table>

-------------
[*****]  Indicates that material has been omitted and confidential treatment
         requested therefore. All such material has been filed separately with
         the Commission pursuant to Rule 24b-2 of the Securities Exchange Act
         of 1934.

                                      -1-

<PAGE>   43

                                   Schedule F
                               EOTT Payment Limit

The EOTT Payment Limit shall be equal to the product of (a) the termination rate
listed below for the calendar quarter during which the Early Termination Date
occurs, and (b) the sum of the remaining Minimum Quarterly Conversions which
EOTT would have been required to convert but for the establishment of an Early
Termination Date (plus any unconverted volumes for the calendar quarter during
which the Early Termination Date occurs).

<Table>
<Caption>
Calendar
Quarter                              Termination Rate
Beginning:                   (in $ per MTBE Equivalent Gallon)
----------                   ---------------------------------
<S>                          <C>
2001 JUL.                                  $[*****]
2001 OCT.                                  $[*****]
2002 JAN                                   $[*****]
2002 APR.                                  $[*****]
2002 JUL.                                  $[*****]
2002 OCT.                                  $[*****]
2003 JAN                                   $[*****]
2003 APR.                                  $[*****]
2003 JUL.                                  $[*****]
2003 OCT.                                  $[*****]
2004 JAN                                   $[*****]
2004 APR.                                  $[*****]
2004 JUL.                                  $[*****]
2004 OCT.                                  $[*****]
2005 JAN                                   $[*****]
2005 APR.                                  $[*****]
2005 JUL.                                  $[*****]
2005 OCT.                                  $[*****]
2006 JAN                                   $[*****]
2006 APR.                                  $[*****]
2006 JUL.                                  $[*****]
2006 OCT.                                  $[*****]
2007 JAN                                   $[*****]
2007 APR.                                  $[*****]
2007 JUL.                                  $[*****]
2007 OCT.                                  $[*****]
2008 JAN                                   $[*****]
2008 APR.                                  $[*****]
2008 JUL.                                  $[*****]
2008 OCT.                                  $[*****]
2009 JAN                                   $[*****]
2009 APR.                                  $[*****]
2009 JUL.                                  $[*****]
2009 OCT.                                  $[*****]
2010 JAN                                   $[*****]
2010 APR.                                  $[*****]
2010 JUL.                                  $[*****]
2010 OCT.                                  $[*****]
2011 JAN                                   $[*****]
2011 APR.                                  $[*****]
</Table>

-------------
[*****]  Indicates that material has been omitted and confidential treatment
         requested therefore. All such material has been filed separately with
         the Commission pursuant to Rule 24b-2 of the Securities Exchange Act
         of 1934.

                                      -2-<PAGE>   1

                                                                   EXHIBIT 10.41

                        ADMINISTRATIVE SERVICES AGREEMENT

          THIS ADMINISTRATIVE SERVICES AGREEMENT (this "Agreement") is entered
into effective as of July 1, 2001 and is by and between EOTT ENERGY CORP., a
Delaware corporation (the "Administrator") and EOTT ENERGY GENERAL PARTNER,
L.L.C., a Delaware limited liability company (the "OLP General Partner") and the
general partner of EOTT Energy Liquids, L.P. (the "Energy OLP").

                                    RECITALS:

          The OLP General Partner has been vested with all management powers
over the business and affairs of the Energy OLP.

          The OLP General Partner proposes to contract with the Administrator
for the provision of services in connection with the day-to-day business and
affairs of the Energy OLP and any other Person that may become an OLP in the
future.

          The Administrator and the OLP General Partner desire by their
execution of this Agreement to evidence their understanding with respect to the
terms and conditions upon which the Administrator and its Affiliates (as defined
below) will provide services on behalf of the OLP General Partner to any OLP in
connection with the day-to-day business and affairs of such OLP.

          NOW, THEREFORE, in consideration of the premises and the covenants,
conditions, and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

         1.1 DEFINITIONS. (a) Capitalized terms used herein but not defined
elsewhere shall have the following meanings.

         (b) As used in this Agreement, the following terms shall have the
respective meanings set forth below:

         "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with, the Person in question; provided however, that for the purposes of this
Agreement, the OLP General Partner and any Person controlled by the OLP General
Partner or any OLP shall be deemed not to be Affiliates of the Administrator.

         "OLP" shall mean the Energy OLP and any other partnership or other
entity of which the OLP General Partner becomes the general partner, managing
general partner or manager or for which it becomes responsible for performing
similar management functions.

<PAGE>   2

                                   ARTICLE II
                                    SERVICES

         2.1 TERM; SERVICES. In exchange for the reimbursement described in
Section 3.1, the Administrator agrees to provide the OLP General Partner with
the administrative services listed below and such additional services as the OLP
General Partner may establish and authorize the Administrator to provide from
time to time (the services to be provided by the Administrator being herein
referred to as the "Services"):

         (i)   The day-to-day supervision, administrative liaison and related
               services, including, without limitation legal, accounting,
               planning support, budgeting support, technical, insurance
               administration, treasury services, tax and external audit
               services required in connection with the business and affairs of
               the OLP General Partner.

         (ii)  The preparation for signature by an authorized officer of all
               documents and instruments required to be signed by or otherwise
               appropriate for signature by the OLP General Partner.

         (iii) The maintenance of capital accounts for each owner of any OLP
               that is required to maintain capital accounts.

         (iv)  The calculation of Available Cash of any OLP that is required to
               calculate Available Cash and the making of all distributions of
               cash authorized by the OLP General Partner or otherwise required
               to be made.

         (v)   The taking or provision of custody of funds, notes, drafts,
               acceptances, commercial paper and other securities belonging to
               any OLP; maintain bank accounts in one or more banking
               institutions; deposit funds of the OLP General Partner or any OLP
               in its respective accounts and disburse funds therefrom, in each
               case as necessary to satisfy the obligations of each of them in
               connection with the conduct of its business and affairs; invest
               available funds of the OLP General Partner or any OLP; and keep
               appropriate records in connection with all the above
               transactions.

         (vi)  The maintenance of all books and records relating to the business
               and affairs of the OLP General Partner and any OLP.

         (vii) The preparation and submission each year of an estimate of
               distributable cash flows, operating expenses, equity earnings,
               investment income, interest expense, direct charges, equity
               contributions and capital expenditures (and a financing plan
               relating to such contributions or expenditures, if necessary) of
               any OLP that the Administrator anticipates for the ensuing
               calendar year. Except as the OLP General

                                       2
<PAGE>   3

               Partner may otherwise direct, any budgets approved by the OLP
               General Partner shall constitute authorization of the
               Administrator to incur the expenditures contained therein on
               behalf of the OLP General Partner, the OLP or a Partnership
               Entity.

        (viii) The preparation of all tax returns and the administration of the
               tax matters relating to any OLP

          (ix) The transfer of interests or issuance of new interests in any OLP
               and the admission of substitute or new partners, members or
               shareholders, as authorized by the OLP General Partner.

           (x) The conduct of such internal audits as may be requested from time
               to time by the OLP General Partner.

         The above Services will be performed in accordance with such policies
and directives as may be issued from time to time by the OLP General Partner.

         2.2 AFFILIATES. At its election, the Administrator may cause one or
more of its Affiliates or third-party contractors to provide the Services:
provided, however, that the Administrator shall remain responsible for the
provision of the Services in accordance with this Agreement.

                                   ARTICLE III
                   FINANCIAL, ACCOUNTING AND BILLING PRACTICES

         3.1 ACCOUNTING AND COMPENSATION. (a) The Administrator shall keep a
full and complete account of all costs, expenses and expenditures incurred by it
in connection with the provision of Services hereunder in the manner set forth
in the Accounting Procedure set forth on Exhibit A hereto (the "Accounting
Procedure").

         (b) As compensation for the provision of the Services by the
Administrator, the OLP General Partner agrees to reimburse the Administrator for
all reasonable and proper costs, expenses and expenditures incurred by the
Administrator or its Affiliates in connection with the provision of Services to
such entity at the rate and in the manner set forth in the Accounting Procedure
(the aggregate amount of all such costs and expenses being herein referred to as
the "Reimbursement Amount"); provided, however, that costs incurred by the
Administrator under Section 4.3(d) shall not be reimbursed by the OLP General
Partner. In addition, the OLP General Partner shall pay all sales, use, excise,
value added or similar taxes, if any, that may be applicable from time to time
in respect of the Services provided to it by the Administrator or its
Affiliates. It is the intent of the parties that the Administrator shall carry
out its Services hereunder on a fully reimbursed basis without profit or loss.
To the extent that a deviation from this standard occurs, appropriate
adjustments will promptly be made.

         (c) To the extent that the Administrator enters into activities other
than the discharge of its responsibilities under this Agreement, the
Administrator shall separately account for all such

                                       3
<PAGE>   4

costs, expenses and expenditures, and the OLP General Partner shall not be
billed for such costs, expenses or expenditures.

         (b)   3.2 INVOICES. (a) The Administrator shall bill the OLP General
Partner for its Services at such times as it deems appropriate, and the OLP
General Partner shall promptly transmit payment for all bills presented.

         (c) Payment of any such bills shall not prejudice the right of the OLP
General Partner to protest or question the correctness thereto; provided,
however, all bills and statements rendered to the OLP General Partner by the
Administrator during any calendar year shall conclusively be presumed to be true
and correct after 24 months following the end of any such calendar year, unless
prior to the end of said 24-month period the OLP General Partner takes written
exception thereto and makes claim on the Administrator for adjustment. No
adjustment favorable to the Administrator shall be made unless written notice of
such adjustment is received by the OLP General Partner within the same
prescribed period.

         3.3   DISPUTES; DEFAULT. The OLP General Partner may, within the time
period provided in Section 3.4, take written exception to any bill or statement
rendered by the Administrator for any expenditure or any part hereof, on the
grounds that the same was not a reasonable, authorized, and proper cost incurred
by the Administrator in connection with the provision of the Services. The OLP
General Partner shall nevertheless pay in full when due the amount of all
statements submitted by the Administrator. Such payment shall not be deemed a
waiver of the right of the OLP General Partner to recoup any contested portion
of any bill or statement. If, however, the amount as to which such written
exception is taken or any part thereof is ultimately determined by the OLP
General Partner not to be a reasonable, authorized, and proper expense incurred
by the Administrator in connection with the provision of the Services, such
amount or portion thereof (as the case may be) shall be refunded by the
Administrator to the OLP General Partner together with interest thereon at a
rate (which in no event shall be higher than the maximum rate permitted by
applicable law) equal to the prime rate charged by Citibank, N.A. in New York,
New York from time to time to responsible commercial and industrial borrowers
during the period from the date of payment by the OLP General Partner to the
date of refund by the Administrator.

         3.4   AUDIT. The OLP General Partner, after fifteen (15) days' notice
in writing to the Administrator, shall have the right during normal business
hours to audit, at its own expense or at the expense of any OLP, all books and
records of the Administrator. Such audits shall not be commenced more often than
twice each calendar year. The OLP General Partner shall have two (2) years after
the close of a calendar year in which to make an audit of the Administrator's
records for such calendar year. Absent fraud or intentional concealment or
misrepresentation by the Administrator or its employees, the Administrator shall
neither be required nor permitted to adjust any item unless a claim therefore is
presented or adjustment is initiated within two (2) year after the close of the
calendar year in which the statement therefor is rendered, and in the absence of
such timely claims or adjustments, the bills and statements rendered shall be
conclusively established as correct. The Administrator shall obtain similar
rights from contractors, consultants and suppliers engaged to perform any of the
Services on behalf of the Administrator.

                                       4

<PAGE>   5

                                   ARTICLE IV
                     REPORTING, RECORDS AND RESPONSIBILITIES

         4.1   REPORTS TO COMMITTEES. The Administrator shall make reports to
and consult with any committee established from time to time by the OLP General
Partner or an OLP in the form and at the times requested by such committee.

         4.2   MAINTENANCE OF RECORDS; ACCESS TO INFORMATION AND MATERIALS. (a)
The Administrator shall maintain accurate books and records in accordance with
generally accepted accounting principles and practices covering all of the
Administrator's actions under this Agreement.

         (b) The Administrator shall have access to any records, information or
other input from the OLP General Partner and any OLP that is necessary for the
Administrator to perform the Services. If the OLP General Partner or an OLP
fails to make available or supply such information or input and such failure
renders the Administrator's performance of any Services unreasonably difficult,
the Administrator, upon reasonable notice to the applicable party, may refuse to
perform such Services.

         4.3   WARRANTY; LIMITATION OF LIABILITY; NATURE OF RELATIONSHIP;
INDEMNITY. (a) The Administrator represents that it will discharge its duties
hereunder in good faith and with reasonable diligence. EXCEPT AS SET FORTH IN
THE IMMEDIATELY PRECEDING SENTENCE, THE ADMINISTRATOR MAKES NO (AND HEREBY
DISCLAIMS AND NEGATES ANY AND ALL) WARRANTIES OR REPRESENTATIONS WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES. IN NO EVENT SHALL THE
ADMINISTRATOR OR ITS AFFILIATES BE LIABLE TO THE OLP GENERAL PARTNER, ANY OLP OR
ANY OTHER PERSON FOR ANY INCIDENTAL, CONSEQUENTIAL, OR SPECIAL DAMAGES RESULTING
FROM ANY ERROR IN THE PERFORMANCE OF THE SERVICES, REGARDLESS OF WHETHER THE
ADMINISTRATOR, ITS AFFILATES, OR OTHERS MAY BE WHOLLY, CONCURRENTLY, PARTIALLY,
OR SOLELY NEGLIGENT OR OTHERWISE AT FAULT; PROVIDED HOWEVER, THAT THE
ADMINISTRATOR SHALL BE LIABLE FOR ANY DAMAGES ARISING OUT OF ITS GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.

         (b) The relationship of the Administrator and its Affiliates with the
OLP General Partner established under this Agreement will be that of an
independent contractor, and in no event shall any party hereto be deemed a
partner, co-venturer or agent of the other party hereto.

         (c) The OLP General Partner agrees, with respect to the Services
provided to such entity hereunder, to indemnity, defend and hold harmless the
Administrator and its Affiliates, and their respective employees, officers,
directors, representatives and agents, from and against all claims, losses,
costs, damages and expenses (including. without limitation, attorneys' fees and
expenses), penalties and liabilities (collectively, "Liabilities") arising out
of the acts (or failure to act) by any such persons or entities in connector
with the performance by such persons or entities of such Services, REGARDLESS OF
WHETHER THE ADMINISTRATOR OR SUCH OTHER PERSONS OR ENTITIES MAY BE WHOLLY,
CONCURRENTLY,

                                       5

<PAGE>   6

PARTIALLY OR SOLELY NEGLIGENT OR OTHERWISE AT FAULT IN CONNECTION THEREWITH;
PROVIDED, HOWEVER, THAT THE ADMINISTRATOR SHALL NOT BE INDEMNIFIED FOR THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE ADMINISTRATOR OR ITS AFFILIATES.

         (d) The Administrator shall indemnity, defend and hold the OLP General
Partner, any OLP and their respective employees, directors, officers,
representatives and agents harmless from and against all Liabilities arising out
of the performance of this Agreement and resulting from the gross negligence or
willful misconduct of the Administrator or its Affiliates.

         4.5   FORCE MAJEURE. The Administrator shall have no obligation to
perform the Services if its failure to do so is caused by or results from any
act of God, governmental action, natural disaster, strike, failure of essential
equipment, or any other cause or circumstance, whether similar or dissimilar to
the foregoing causes or circumstances, beyond the reasonable control of the
Administrator REGARDLESS OF WHETHER THE ADMINISTRATOR MAY BE WHOLLY,
CONCURRENTLY, PARTIALLY OR SOLELY NEGLIGENT OR OTHERWISE AT FAULT IN CONNECTION
WITH SUCH FAILURE TO PERFORM THE SERVICES EXCEPT TO THE EXTENT THAT THE FAILURE
WAS CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE ADMINISTRATOR OR
ITS AFFILIATES.

         4.6   CONFIDENTIALITY. Because the information and knowledge gained
during the performance of services hereunder may consist of valuable propriety
information, the misuse or disclosure of which could cause substantial damage to
the OLP General Partner or an OLP, any and all information obtained by the
Administrator in performance of the obligations hereunder shall be held in
strict confidence by the Administrator, its employees or agents except as needed
to comply with the purposes of this Agreement. Any contracts entered into by the
Administrator related to its obligations under this Agreement shall contain a
provision which similarly restricts the use and disclosure of such information,
unless such contract relates to matters that will not involve access by the
contracting party to any confidential information regarding the business of the
OLP General Partner or any OLP.

                                    ARTICLE V
                                  MISCELLANEOUS

         5.1   CHOICE OF LAW. This Agreement shall be subject to and governed by
the laws of the State of Texas, excluding any conflicts-of-law rule or principle
that might refer the construction or interpretation of this Agreement to the
laws of another state

         5.2   ENTIRE AGREEMENT; SUPERSEDURE. This Agreement constitutes the
entire agreement of the parties relating to the matters contained herein,
superseding all prior contracts or agreements, whether oral or written, relating
to the matters contained herein.

         5.4   EFFECT OF WAIVER OR CONSENT. No waiver or consent, express or
implied, by any party to or of any breach or default by any Person in the
performance by such Person of its obligations hereunder shall be deemed or
construed to be a consent or waiver to or of any other breach or default in the
performance by such Person of the same or any other obligations of such

                                       6
<PAGE>   7

Person hereunder. Failure on the part of a party to complain of any act of any
Person or to declare any Person in default, irrespective of how long such
failure continues, shall not constitute a waiver by such party of its rights
hereunder until the applicable statute of limitations period has run.

         5.5   AMENDMENT AND TERMINATION. This Agreement may be amended from
time to time only by a written amendment signed by the OLP General Partner and
the Administrator. Either the OLP General Partner or the Administrator may
terminate this Agreement at any time upon thirty (30) days' written notice.

         5.6   ASSIGNMENT. Except for the right of the Administrator to
cause one or more of its Affiliates to perform certain of the Services, no party
shall have the right to assign its rights or obligations under this Agreement
without the consent of the other party hereto.

         5.7   COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all signatory parties had signed the
same document. All counterparts shall be construed together and shall constitute
one and the same instrument.

         5.8   SEVERABILITY. If any provision of this Agreement or the
application thereof to any Person or circumstance shall be held invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to other Persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.

         5.9   GENDER; ARTICLES AND SECTIONS. Whenever the context requires
the gender of all words used in this Agreement shall include the masculine,
feminine and neuter, and the number of all words shall include the singular and
the plural. All references to Article numbers and Section numbers refer to
Articles and Sections of this Agreement.

         5.10  FURTHER ASSURANCES. In connection with this Agreement and all
transactions contemplated by this Agreement, each signatory party hereto agrees
to execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions and conditions of this Agreement and
all such transactions.

         5.11  WITHHOLDING OR GRANTING OF CONSENT. Each party may, with respect
to any consent or approval that it is entitled to grant pursuant to this
Agreement, grant or withhold such consent or approval in its sole and
uncontrolled discretion, with or without cause, and subject to such conditions
as it shall deem appropriate.

         5.12  LAWS AND REGULATIONS. Notwithstanding any provision of this
Agreement to the contrary, no party hereto shall be required to take any act or
fail to take any act, under this Agreement it the effect thereof would be to
cause such party to be in violation of any applicable law, statute, rule or
regulation.

         5.14  NEGATION OF RIGHTS OF LIMITED PARTNERS, ASSIGNEES, AND THIRD
PARTIES. The provisions of this Agreement are enforceable solely by the parties
to this Agreement, and no Limited Partner, Assignee or other Person shall have
the right, separate and apart from the OLP

                                       7
<PAGE>   8

General Partner, to enforce any provision of this Agreement or to compel any
party to this Agreement to comply with the terms of this Agreement.

          IN WITNESS WHEREOF, the parties have executed this Agreement on, and
effective as of, the Closing Date.

                                      EOTT ENERGY CORP.

                                      By:    /s/  DANA R. GIBBS
                                         --------------------------------------
                                      Name:  Dana R. Gibbs
                                           -------------------------------------
                                      Title: Chief Operating Officer
                                            ------------------------------------

                                      Address for Notice:

                                      P.O Box 4666
                                      Houston, Texas 77210-4666
                                      Attention:  Chief Operating Officer
                                      Fax No.:  (713) 402-5426

                                      EOTT ENERGY GENERAL PARTNER L.L.C.

                                      By:    /s/  DANA R. GIBBS
                                         ---------------------------------------
                                      Name:  Dana R. Gibbs
                                           -------------------------------------
                                      Title: Chief Operating Officer
                                            ------------------------------------

                                      Address for Notice:

                                      P.O Box 4666
                                      Houston, Texas 77210-4666
                                      Attention:  Chief Operating Officer
                                      Fax No.: (713) 402-5426

Attachment
  Exhibit A - Accounting Procedures

                                       8
<PAGE>   9

                                    EXHIBIT A

                                       to

                        ADMINISTRATIVE SERVICES AGREEMENT

                              ACCOUNTING PROCEDURES

            Subject to the limitations hereinafter prescribed and the provisions
of the Administrative Services Agreement (the "Agreement") to which this
Accounting Procedure is an exhibit, the Administrator shall charge the OLP
General Partner for all costs and expenses incurred by the Administrator (except
those costs incurred pursuant to Section 4.3(d) of the Agreement) in connection
with the performance of its duties and responsibilities under the Agreement,
including, but not limited to, the following items:

        a.  Administrative and General Expense. All administrative and
            general expenditures, including salaries and related benefits and
            expenses of personnel who render services related to the
            administration of the OLP General Partner, including, but not
            limited to, Accounting, Administrative, Marketing, Personnel, Legal,
            Risk Management, Treasury and Audit, will be charged on the basis of
            costs incurred. Such expenditures related to personnel who are not
            employed full time in rendering services to the OLP General Partner
            under the Agreement shall be allocated to the OLP General Partner in
            a fair and reasonable manner.

        b.  Reimbursable Expenses of Employees.  Reasonable personal expenses of
            employees whose salaries and wages are chargeable under paragraph a.
            above; provided, however, that such expenses shall be reimbursed
            only to the extent such expense relates to the provision of the
            Services.

        c.  Services.  The cost of contract services and utilities procured from
            outside sources.

        d.  Legal Expenses and Claims. All fees and expenses of outside legal
            counsel engaged to handle matters for the OLP General Partner. All
            costs and expenses of handling, investigation and settling
            litigation or claims at the request of the OLP General Partner,
            including, but not limited, to, attorneys' fees, court cost, cost of
            investigation or procuring evidence and any judgments paid or
            amounts paid in settlement or satisfaction of any such litigation or
            claims. The Administrator shall credit the OLP General Partner for
            judgments received or amounts received in settlement of any such
            litigation.

        e.  Taxes.  All taxes of every kind and nature assessed or levied upon
            or incurred in connection with the provision of the Services and
            which taxes have been paid by the Administrator for the benefit of
            the OLP General Partner, including charges for late payment arising
            from extensions of the time for filing which is caused by the OLP
            General Partner.

                                       9

<PAGE>   10

        f.  Insurance.  Net of any returns, refunds or dividends, all premiums
            paid and expenses incurred for insurance carried for the benefit of
            the OLP General Partner or an OLP.

        g.  Permits, Licenses and Bond.  Cost of permits, licenses and bond
            premiums necessary in the performance of the Administrator's duties
            under the Agreement.

        h.  Rentals.  All rentals paid by the Administrator.

                                       10

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