Document:

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                                                                 EXHIBIT 10.7(b)

                                 FIRST AMENDMENT
                                       TO
                           CONTRIBUTION AND GOVERNANCE
                                   AGREEMENTS

         This First Amendment to Contribution and Governance Agreements (this
"Amendment"), dated as of March 23, 2000, is entered into by and among Phillips
Petroleum Company, a Delaware corporation ("Phillips"), Duke Energy Corporation,
a North Carolina corporation ("Duke") and Duke Energy Field Services, LLC, a
Delaware limited liability company (the "Company").

         WHEREAS, reference is made to (i) that certain Contribution Agreement
by and among Phillips, Duke and the Company dated as of December 16, 1999 (the
"Contribution Agreement") (capitalized terms used but not defined herein shall
have the meaning given thereto in the Contribution Agreement) and (ii) that
certain Governance Agreement by and among Phillips, Duke and the Company dated
as of December 16, 1999 (the "Governance Agreement"); and

         WHEREAS, Phillips, Duke and the Company desire to amend the
Contribution Agreement;

         NOW, THEREFORE, for and in consideration of the mutual benefits to be
derived from this Amendment, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:

                                    ARTICLE I
                                   AMENDMENTS

         1.1 AMENDMENTS TO CONTRIBUTION AGREEMENT. The Contribution Agreement is
hereby amended as follows:

                  1.1.1 Article I is amended by inserting each of the following
         definitions in its appropriate place in alphabetical order:

                           "DEFS Balance Sheet Supplement" shall have the
                  meaning set forth in Section 5.5.

                           "First Amendment" shall mean the First Amendment to
                  Contribution Agreement dated as of March 23, 2000, by and
                  among Duke, Phillips and the Company.

                           "PEC Note" shall mean that certain intercompany note
                  in the principal amount of $10,000,000 from PanEnergy Corp. to
                  TEPPCO Investments.

                           "TCTM" shall mean TCTM, L.P., a Delaware limited
                  partnership.

                           "TE Products" shall mean TE Products Pipeline
                  Company, Limited Partnership, a Delaware limited partnership.

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                           "TEPPCO" shall mean Texas Eastern Products Pipeline
                  Company, a Delaware corporation, or any successor entity.

                           "TEPPCO Excluded Assets and Liabilities" shall mean
                  all assets and Liabilities of TEPPCO other than (i) its
                  interests in and Liabilities arising out of, attributable to
                  or directly relating to TEPPCO Investments, TEPPCO Partners,
                  TE Products, TCTM or any of their respective Subsidiaries or
                  the performance of its duties as a general partner of TEPPCO
                  Partners, TE Products or TCTM, and (ii) the TEPPCO Note.
                  Notwithstanding the foregoing, it is agreed and understood
                  that deferred tax liabilities of TEPPCO for financial
                  accounting purposes, as distinguished from tax liabilities of
                  TEPPCO under the law, shall not be considered "Liabilities of
                  TEPPCO" for purposes of this definition of "TEPPCO Excluded
                  Assets and Liabilities".

                           "TEPPCO Investments" shall mean TEPPCO Investments,
                  Inc., a Delaware corporation, or any successor entity.

                           "TEPPCO Investments Excluded Assets and Liabilities"
                  shall mean all assets and Liabilities of TEPPCO Investments
                  other than the PEC Note and the TEPPCO Note.

                           "TEPPCO Note" shall mean that certain intercompany
                  note in the principal amount of $150,000,000 from TEPPCO to
                  TEPPCO Investments.

                           "TEPPCO Partners" shall mean TEPPCO Partners, L.P., a
                  Delaware limited partnership.

                  1.1.2 Clauses (i) and (ii) of Section 2.1(b) are amended by
         deleting them in their entirety and inserting the following in
         replacement therefor:

                  "(i) the crude oil trucking assets, facilities, operations and
                  directly related Liabilities held by or attributable to Duke
                  Energy Transport and Trading Co., a Colorado corporation
                  ("DETTCO") to be transferred to a DEFS Subsidiary; (ii) (A)
                  each of TEPPCO and TEPPCO Investments to be converted into a
                  limited liability company organized under the laws of the
                  State of Delaware; (B) the TEPPCO Investments Excluded Assets
                  and Liabilities to be transferred out of TEPPCO Investments
                  (and TEPPCO); (C) the TEPPCO Excluded Assets and Liabilities
                  to be transferred out of TEPPCO; (D) all outstanding
                  membership interests in TEPPCO to be transferred to a DEFS
                  Subsidiary; and (E) the obligations of PanEnergy Corp. under
                  the PEC Note to be assumed by the Company;"

                  1.1.3 Clause (i) of Section 3.2(c)(2) is amended by deleting
         "$1,200,000,000" in such clause and inserting "$1,425,000,000" in
         replacement therefor.

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                  1.1.4 Clause (ii) of Section 3.3(a) is amended by inserting
         "(excluding TEPPCO and any Subsidiaries of TEPPCO)" after the words
         "DEFS Subsidiaries" and before the words "as of the Closing Date."

                  1.1.5 Section 5.1(b) is amended by: (1) deleting the first
         occurrence of "DETTCO" in the parenthetical in the first sentence
         thereof and inserting "TEPPCO" in replacement therefor; (2) deleting
         the second occurrence of "DETTCO" in the parenthetical in the first
         sentence thereof and inserting "TEPPCO (excluding TEPPCO Partners, TE
         Products and TCTM and their respective Subsidiaries)" in replacement
         therefor; (3) inserting at the end of the first parenthetical (before
         the closing parenthesis) in the first sentence "; provided, that for
         purposes of the representations and warranties contained in Article V
         and the covenants in Article VI, (x) except as provided in Section 5.5,
         TEPPCO and Subsidiaries of TEPPCO shall be considered DEFS Subsidiaries
         and Subsidiaries of each of DEFS and DEFS Holding, but only from and
         after the date of the First Amendment, and (y) TEPPCO Partners, TE
         Products and TCTM and their respective Subsidiaries shall not be
         considered Subsidiaries of DEFS Holding, DEFS or TEPPCO"; (4) deleting
         "DETTCO and its Subsidiaries" in the third sentence thereof and
         inserting "TEPPCO and its Subsidiaries (other than TEPPCO Partners, TE
         Products and TCTM and their respective Subsidiaries)" in replacement
         therefor; and (4) deleting the three occurrences of "DETTCO" in the
         fourth sentence thereof and inserting "TEPPCO" in replacement therefor.

                  1.1.6 Section 5.5 is amended as follows:

                  (a) The first paragraph is amended by: (1) deleting "TEPPCO
                  which is an Excluded Asset" in the parenthetical in clause (i)
                  thereof and inserting "the Class B Subordinated Units of
                  TEPPCO Partners, L.P., which is part of the Duke Excluded
                  Assets and Liabilities" in replacement therefor; (2) inserting
                  "and the DEFS Balance Sheet Supplement" after the words
                  "Balance Sheet" in the last parenthetical thereof; and (3)
                  inserting a new sentence at end thereof which reads, "Duke
                  shall provide to Phillips as an amendment to the Duke
                  Disclosure Schedule pursuant to Section 1.3 of the First
                  Amendment, an unaudited proforma supplement to the DEFS
                  September 30 Balance Sheet showing proforma adjustments to
                  include the investment in TEPPCO (exclusive of the TEPPCO
                  Excluded Assets and Liabilities and the TEPPCO Investments
                  Excluded Assets and Liabilities) (the "DEFS Balance Sheet
                  Supplement")."

                  (b) The second paragraph is amended by inserting "and the DEFS
                  Balance Sheet Supplement" after the words "Balance Sheet" in
                  clause (i) of the last sentence thereof.

                  1.1.7 Section 5.10(c) is amended by inserting "and the DEFS
         Balance Sheet Supplement" after the words "DEFS September 30 Balance
         Sheet".

                  1.1.8 Section 6.5(h) is amended by deleting "Section
         2.1(b)(i)" in the first sentence thereof and inserting "Section
         2.1(b)(ii)" in replacement therefor.

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                  1.1.9 Section 6.17(a) is amended by (i) inserting "or
         commercial paper" after the words "bank credit" in the first sentence
         thereof and (ii) deleting "$2,400,000,000" in clause (i) thereof and
         inserting "$2,625,000,000" in replacement therefor.

                  1.1.10 Article VI is amended by inserting the following at the
         end thereof:

                  "Section 6.21. TEPPCO Assets. Duke shall cause TEPPCO to own
                  and hold all of the general partner interests in TEPPCO
                  Partners, TE Products and TCTM as of the Closing and to be
                  entitled to all of the benefits of the general partner of such
                  entities."

                  1.1.11 Clause (iii) of Section 9.2(a) is amended by inserting
         ", TEPPCO Excluded Assets and Liabilities and TEPPCO Investments
         Excluded Assets and Liabilities" after the words "Duke Excluded Assets
         and Liabilities" and before the word "and."

                  1.1.12 Section 2.1(c) of Annex B to the Contribution Agreement
         is amended by inserting ", TEPPCO Excluded Assets and Liabilities,
         TEPPCO Investments Excluded Assets and Liabilities" after the words
         "Duke Excluded Assets and Liabilities" and before the words "or their
         transfer."

                  1.1.13 Each of (1) Section 4.1 and (2) Section 4.2 of Annex B
         is amended by inserting "(including any alternative minimum Tax credit
         (whether consolidated, combined, affiliated or unitary or otherwise)
         attributable to payments of alternative minimum Tax with respect to any
         Pre-Closing Period, which credit is utilized in a Post-Closing Period)"
         after the words "Pre-Closing Period" in the second sentence thereof.

                  1.1.14 Section 4.4 of Annex B is amended by (1) inserting "(or
         credit)" after "refund" and (2) inserting "(or utilization)" after
         "receipt".

                  1.1.15 All references in the Contribution Agreement to the
         "Agreement" (and terms referencing the "Agreement" such as "hereof,"
         "hereby," "herein," "hereunder" and similar terms) shall be deemed to
         refer to the Contribution Agreement as amended by this Amendment.
         Notwithstanding the foregoing, references to "the date of this
         Agreement" and similar terms shall refer to the date of the
         Contribution Agreement, provided that to the extent that such
         references are contained in the representations and warranties
         contained in Article V of the Contribution Agreement or in the
         covenants contained in Article VI of the Contribution Agreement and
         refer to any DEFS Subsidiary, DEFS Subsidiaries, or any Subsidiary or
         Subsidiaries of DEFS or DEFS Holding, with regard only to TEPPCO and
         its Subsidiaries (excluding TEPPCO Partners, TE Products and TCTM and
         their respective Subsidiaries), such references shall refer to the date
         of the First Amendment.

         1.2 SPECIFIC AMENDMENTS TO THE DUKE DISCLOSURE SCHEDULE. Schedule
2.1(d) of the Duke Disclosure Schedule is amended by deleting "Class B TEPPCO
Units owned by DETTCO".

         1.3 DELIVERY OF AMENDMENTS TO THE DUKE DISCLOSURE SCHEDULE. The Parties
agree that prior to the earlier of (x) March 24, 2000 or (y) five days prior to
the Closing Date, Duke may amend

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the Duke Disclosure Schedule as necessary to reflect the matters addressed in
this Amendment (it being understood and agreed that Schedule 5.10 of the Duke
Disclosure Schedule need not include contracts of TEPPCO Partners, TE Products
or TCTM for which TEPPCO also is obligated or liable by virtue of its status as
the general partner of TEPPCO Partners, TE Products or TCTM), with each
amendment subject to the approval of Phillips, which approval shall not be
unreasonably withheld. If Phillips withholds its approval for any such
amendment, then in addition to any other remedies available to it, Duke shall
have the right to terminate this Amendment. Upon any such termination, this
Amendment shall be null and void and of no further force and effect, and the
Contribution Agreement shall continue in effect as it existed prior to this
Amendment.

         1.4 AMENDMENTS TO GOVERNANCE AGREEMENT. Annex F to the Governance
Agreement is hereby amended by: (1) deleting "$3,360,500,000" in each of (x)
clause (a) of Section 1.2 thereof and (y) the second sentence of Section 2.3
thereof and inserting, in each case, "$3,585,500,000" in replacement therefor
and (2) deleting the second occurrence of the words "shall treat" in clause (E)
of Section 4.2 thereof.

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

         2.1 REPRESENTATIONS AND WARRANTIES OF PHILLIPS. Phillips hereby
represents and warrants to each of Duke and the Company that (1) it has full
corporate power and authority to execute and deliver this Amendment, (2) the
execution and delivery of this Amendment have been duly and validly approved by
all corporate action on the part of Phillips, (3) this Amendment has been duly
and validly executed and delivered by Phillips and, assuming due authorization,
execution and delivery by Duke and the Company, constitutes a valid and binding
obligation of Phillips, enforceable against Phillips in accordance with its
terms and (4) the execution and delivery of this Amendment by Phillips do not,
(A) constitute a breach or violation of, or a default under, the certificate of
incorporation or by-laws or other organizational documents of Phillips or PGC,
(B) constitute a breach or violation of, or a default under, or trigger any
"change of control" rights or remedies under, or give rise to any Lien, any
acceleration of remedies, any buy-out right or any right of first offer or
refusal or of termination under, any indenture, license, contract, agreement or
other instrument to which PGC or of any of its Subsidiaries is a party or by
which any of them or their respective properties or assets may be bound, or (C)
assuming compliance with the applicable requirements of the HSR Act, violate any
law, rule, regulation, judgment, decree or order applicable to Phillips, PGC or
any of the PGC Subsidiaries or any of their respective properties or assets,
except in the case of (B) and (C) above for such breaches, violations, defaults,
liens, accelerations or rights as would not reasonably be expected, individually
or in the aggregate, to result in a Material Adverse Effect on the PGC
Subsidiaries or to adversely affect the ability of Phillips to consummate the
transactions contemplated by the Contribution Agreement as amended by this
Amendment.

         2.2. REPRESENTATIONS AND WARRANTIES OF DUKE. Duke hereby represents and
warrants to each of Phillips and the Company that (1) each of Duke and the
Company has full corporate power and authority to execute and deliver this
Amendment, (2) the execution and delivery of this Amendment have been duly and
validly approved by all corporate action on the part of each of Duke and the
Company, (3) this Amendment has been duly and validly executed and delivered by
each

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of Duke and the Company and, assuming due authorization, execution and delivery
by Phillips, constitutes a valid and binding obligation of each of Duke and the
Company, enforceable against each of Duke and the Company in accordance with its
terms and (4) the execution and delivery of this Amendment by Duke do not, (A)
constitute a breach or violation of, or a default under, the certificate of
incorporation or by-laws or other organizational documents of Duke or DEFS
Holding, (B) constitute a breach or violation of, or a default under, or trigger
any "change of control" rights or remedies under, or give rise to any Lien, any
acceleration of remedies, any buy-out right or any right of first offer or
refusal or of termination under, any indenture, license, contract, agreement or
other instrument to which DEFS Holding or of any of its Subsidiaries is a party
or by which any of them or their respective properties or assets may be bound,
or (C) assuming compliance with the applicable requirements of the HSR Act,
violate any law, rule, regulation, judgment, decree or order applicable to Duke,
DEFS Holding or any of the DEFS Subsidiaries or any of their respective
properties or assets, except in the case of (B) and (C) above for such breaches,
violations, defaults, liens, accelerations or rights as would not reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect on DEFS or to adversely affect the ability of Duke to consummate the
transactions contemplated by the Contribution Agreement as amended by this
Amendment.

                                   ARTICLE III
                                  MISCELLANEOUS

         3.1 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties hereto and delivered (including by facsimile) to the other party.

         3.2 GOVERNING LAW. (a) This Amendment shall be governed by and
construed in accordance with the laws of the State of Delaware without reference
to the choice of law principles thereof.

                  (b) Each party hereto irrevocably submits to the jurisdiction
of any Delaware state court or any federal court sitting in the State of
Delaware in any action arising out of or relating to this Amendment, and hereby
irrevocably agrees that all claims in respect of such action may be heard and
determined in such Delaware state or federal court. Each party hereto hereby
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding. The
parties hereto further agree, to the extent permitted by law, that final and
unappealable judgment against any of them in any action or proceeding
contemplated above shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States by suit on the judgment, a
certified copy of which shall be conclusive evidence of the fact and amount of
such judgment.

                  (c) To the extent that any party hereto has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect

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to itself or its property, each party hereto hereby irrevocably waives such
immunity in respect of its obligations with respect to this Amendment.

                  (d) Each party hereto waives, to the fullest extent permitted
by applicable law, any right it may have to a trial by jury in respect of any
action, suit or proceeding arising out of or relating to this Amendment. Each
party hereto certifies that it has been induced to enter into this Amendment by,
among other things, the mutual waivers and certifications set forth above in
this Section 3.2.

         3.3 ENTIRE AGREEMENT. This Amendment, the Contribution Agreement and
the Governance Agreement, and the schedules and exhibits hereto and thereto,
together with the Confidentiality Agreements dated August 11, 1999 and August
26, 1999 between Duke and Phillips, contain the entire agreement between the
parties with respect to the subject matter hereof and there are no agreements,
understandings, representations or warranties between the parties other than
those set forth or referred to herein.

         3.4 NOTICES. The provisions of Section 12.5 of the Contribution
Agreement are hereby incorporated herein.

         3.5 SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns; provided, however, that no party hereto will assign its
rights or delegate any or all of its obligations under this Amendment without
the express prior written consent of each other party hereto.

         3.6 AMENDMENTS AND WAIVERS. This Amendment may not be modified or
amended except by an instrument or instruments in writing signed by all parties
hereto. Any party hereto may, only by an instrument in writing, waive compliance
by the other parties hereto with any term or provision of this Amendment on the
part of another party hereto to be performed or complied with. The waiver by any
party hereto of a breach of any term or provision of this Amendment shall not be
construed as a waiver of any subsequent breach. Except as otherwise expressly
provided herein, no failure to exercise, delay in exercising or single or
partial exercise of any right, power or remedy by any party, and no course of
dealing between the parties, shall constitute a waiver of any such right, power
or remedy.

         3.7 SEVERABILITY. If any provision of this Amendment shall be held
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions of this Amendment shall not be affected thereby, and there
shall be deemed substituted for the provision at issue a valid, legal and
enforceable provision as similar as possible to the provision at issue.

         3.8 HEADINGS; DEFINITIONS. The Section and Article headings contained
in this Amendment are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Amendment. All capitalized terms
defined herein are equally applicable to both the singular and plural forms of
such terms.

         3.9 INTERPRETATION. In the event an ambiguity or question of intent or
interpretation arises, this Amendment shall be construed as if drafted jointly
by the parties and no presumption or

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burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Amendment. The phrase "including" shall be
deemed to be followed by "without limitation."

         3.10 RATIFICATION. Except as amended hereby, the Contribution Agreement
and the Governance Agreement shall remain in full force and effect as previously
executed by the parties, and the parties hereby ratify the Contribution
Agreement and the Governance Agreement as amended hereby.

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         IN WITNESS WHEREOF, each of the undersigned, intending to be legally
bound, has caused this Amendment to be duly executed and delivered on the date
first set forth above.

                                        PHILLIPS PETROLEUM COMPANY

                                        By: /s/ JOHN A. CARRIG
                                           ------------------------------------
                                        Name:   John A. Carrig
                                             ----------------------------------
                                        Title:  Vice President and Treasurer
                                              ---------------------------------

                                        DUKE ENERGY CORPORATION

                                        By: /s/ RICHARD K. MCGEE
                                           ------------------------------------
                                        Name:   Richard K. McGee
                                             ----------------------------------
                                        Title:  Vice President
                                              ---------------------------------

                                        DUKE ENERGY FIELD SERVICES, LLC

                                        By:  /s/ DAVID D. FREDERICK
                                           ------------------------------------
                                        Name:    David D. Frederick
                                             ----------------------------------
                                        Title:  Sr. Vice President and
                                                Chief Financial Officer
                                              ---------------------------------

                                       9<PAGE>   1
                                                                    EXHIBIT 10.9

                             SULFUR SALES AGREEMENT

     THIS AGREEMENT is entered into this 1st day of October, 1999, but is
effective as of January 1, 1999, regardless of the date of execution, by and
between PHILLIPS 66 COMPANY, a division of Phillips Petroleum Company, a
Delaware corporation ("Buyer"), and GPM GAS CORPORATION, a Delaware corporation
("GPM").

     WHEREAS, the parties desire to update and replace the previous contract
between them for the sale from GPM to Buyer of Molten Sulfur with this
Agreement;

     NOW THEREFORE, for and In consideration of the mutual promises and
covenants herein contained, the parties agree as follows:

                          ARTICLE I: SALE AND PURCHASE

     1.1 GPM shall sell and deliver and Buyer shall purchase, receive, and pay,
on the terms and conditions set forth herein, the Molten Sulfur ("Product") as
set forth in the Attachment, which is incorporated by reference herein.

                              ARTICLE II: QUANTITY

     2.1 The quantity of each Product to be sold and purchased hereunder shall
be the full output of Product at GPM gas processing plants, as more fully stated
in the Attachment.

     2.2 For planning purposes only, GPM shall be responsible for providing to
Buyer on or before the first business day of each calendar month a forecast for
the next succeeding three-month period of anticipated Product sales or
deliveries under the terms of this Agreement.

                                ARTICLE III: TERM

     3.1 Unless otherwise set forth in the Attachment to this Agreement, this
Agreement shall be effective from the date set forth in the first paragraph of
this Agreement (the "Effective Date") and it shall remain in full force and
effect for a period of one (1) year, then from month to month thereafter;
provided however, that either Buyer or GPM may terminate this Agreement as of
the end of the primary term or as of the end of any month thereafter by
providing the other party with at least six (6) months advance written notice of
termination.

                                ARTICLE IV: PRICE

     4.1 The purchase price of or pricing formula for, the Product hereunder
shall be as set forth on the Attachment.

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                            ARTICLE V: SPECIFICATIONS

     5.1 The specifications for the Product to be delivered hereunder shall be
as set forth on the Attachment.

                     ARTICLE VI: DELIVERY AND TITLE TRANSFER

     6.1 GPM shall deliver to Buyer the Product at the custody transfer point or
points set forth on the Attachment or at such other location(s) as may be
mutually agreed (each, a "Delivery Point"), in a manner typical of industry
practice for pressure and temperature. Additionally, the description and each
location where the volume, pressure, and temperature of the Product are measured
(if required) shall be referred to herein as a "Measurement Point." The
Attachment shall designate whether title to, possession of, and risk of loss of
the Product shall pass from GPM to Buyer at either the designated Delivery Point
or the Measurement Point, respectively (the "Title Transfer Point"). GPM shall
have responsibility for and retain any liability with respect to the Product
prior to its delivery to Buyer at its designated Title Transfer Point(s), and
Buyer shall have responsibility for and assume any liability with respect to the
Product at and after its delivery to Buyer at its designated Title Transfer
Point(s).

                       ARTICLE VII: INVOICING AND PAYMENT

     7.1 GPM shall invoice Buyer separately, for the Product sold and purchased
hereunder no more often than once during each calendar month for the preceding
month's sales. Such invoices shall be dispatched promptly by GPM, electronically
[electronic data interchange ("EDI") or equivalent] or otherwise, so as to be
received by Buyer within five (5) business days after the last day of the prior
calendar month. Buyer shall make payment to GPM on or before the 15th day
following Buyer's receipt of each invoice by EDI or equivalent wire transfer or
other means satisfactory to GPM, of immediately available funds to GPM's account
at such bank or depository as is designated in the invoice. If Buyer fails to
pay any amounts due and owing, such overdue amounts shall accrue interest at the
Default Rate from the due date, which interest shall be paid at the same time as
such overdue monthly payment is paid. In no event shall the Default Rate exceed
the maximum legal interest rate permitted under Texas law. "Default Rate" shall
mean a simple interest rate per annum (no compounding) equal to or lesser of (i)
two (2) points over prime, base, or equivalent annual rate published or
announced from time to time by The Chase Manhattan Bank, N.A. (or any successor
thereto) at its principal New York City office or such other bank as may be
agreed upon by the parties as in effect for any given day based on a year of
three hundred sixty (360) days (whether or not such rate is actually charged by
The Chase Manhattan Bank, N.A., or such other bank, as the case may be) or (ii)
the maximum rate permitted by applicable law.

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     7.2 If Buyer, in good faith, disputes the amount of any statement or any
part thereof, Buyer shall pay to GPM such amount as Buyer concedes to be
correct, provided however, that if Buyer disputes the amount due, Buyer must
provide reasonable supporting documentation acceptable in industry practice to
explain the amount paid. If it is ultimately determined that Buyer owes the
disputed amount, immediately upon such determination, Buyer shall pay GPM that
amount with interest as calculated above.

     7.3 If GPM has a reasonable doubt as to Buyer's financial responsibility
 .and so advises Buyer; GPM may decline to make deliveries of Product except for
pre-payment, cash payable on delivery, or other mutually acceptable security. If
Buyer satisfies GPM, in GPM's reasonable opinion, as to Buyer's financial
responsibility, GPM may resume deliveries hereunder based on the terms provided
in the first paragraph of this Article VII. Additionally, GPM may withhold or
suspend deliveries, in addition to any and all other remedies available
hereunder in this Article VII, if (1) Buyer files a petition or otherwise
commences, authorizes, or acquiesces in the commencement of a proceeding or
cause under any bankruptcy or similar law for the protection of creditors or has
such petition filed or proceeding commenced against it, or (2) Buyer becomes
bankrupt or insolvent (however evidenced). GPM may exercise its rights under
this Article VII at any time and from time to time during the term of this
Agreement.

     7.4 To the extent that any pricing under this Agreement is to be calculated
based upon historical cost, price, or other information (collectively,
"Historical Costs") that is in the possession of one party, upon request the
party possessing such Historical Costs shall promptly deliver to the other party
each month such information as required for calculating the purchase price for
the Product and preparing invoices with respect to such Product.

                               ARTICLE VIII: TAXES

     8.1 Buyer shall be responsible for the payment or satisfaction of any and
all taxes (including any increase in or additional tax of charge or charge
imposed) which may be imposed by Federal, State, or local taxation authorities
upon or after title to sulfur delivered hereunder has passed to Buyer, and shall
either (1) pay or (2) demonstrate its exemption from any sales taxes imposed
upon or levied coincident with the transfer of title to sulfur delivered from
GPM to Buyer, including but not limited to sales, use, gross receipts or other
similar taxes, but excluding income, excess profit, franchise, severance or
production taxes. Buyer shall indemnify, defend, and hold GPM harmless from any
and all liability for such taxes for which Buyer is responsible herein.

     8.2 All other taxes, fees, or governmental charges assessed on the Product
at or before its sale to Buyer shall be assumed by and paid by GPM, and GPM
shall indemnify, defend, and hold Buyer harmless from any and all liability for
such taxes for which GPM is responsible.

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                           ARTICLE IX: RECORDS; AUDIT

     9.1 Except as otherwise required by law, rule, or regulation, each party
shall maintain true and correct records pertaining to this Agreement and all
transactions related thereto and shall maintain such records for a period of at
least two (2) years from the date of their origination or receipt. On written
request by either party and at its expense, either party may have its
representatives audit the records of the other party relating to performance of
this Agreement at any reasonable time during the term of this Agreement and for
two (2) years thereafter for the purpose of confirming the accuracy of such
records and the manner in which such records have been used in the
administration of this Agreement; provided however, that such accountants shall
not disclose to the party requesting the audit any confidential information
obtained during such audit and shall promptly report to both Buyer and GPM only
the results of the audit and whether same shows compliance with the terms of
this Agreement, or as the case may be, a report setting forth the facts
detailing the failure to comply with the terms of this Agreement. Unless
required by legal or administrative process, a party as well as its agents,
representatives, employees, auditors, independent contractors, officers, and
directors who obtain actual or constructive knowledge of any information
obtained relative to any audit, shall treat and shall be required by the party
to this Agreement with which they are employed or retained to treat, as
confidential and not disclose, divulge, reveal, or report, directly or
indirectly, to any third party any information obtained during any audit without
the other party's prior written consent. If any legal or administrative process
requires disclosure of any information obtained during any audit, a party shall
provide prompt written notice to the other party of such process, thereby
permitting the other party to seek a protective order or other appropriate
remedy as it deems necessary in its sole discretion.

                               ARTICLE X: NOTICES

     10.1 All notices provided for herein shall be considered as properly given
if in writing and delivered personally or sent by overnight courier, telex, fax,
or first class mail with postage prepaid, duly directed to the addresses of the
parties hereto as set forth below:

                                       4
<PAGE>   5
Buyer:   Phillips 66 Company
         889 Adams Bldg.
         Bartlesville, OK 74004
         Attn:   Sulfur Marketing Manager
         Phone:  (918) 661-8962
         Fax:    (918) 661-8379

GPM:     GPM Gas Corporation
         1300 Post Oak Blvd., Suite 800
         Houston, TX 77056
         Attn:   Gas Marketing
         Phone:  (713) 297-6000
         Fax:    (713) 297-5964

or at such other address as either party shall from time to time designate for
the purpose by written notice to the other party.

                               ARTICLE XI: CLAIMS

     11.1 Neither GPM nor Buyer shall be liable to the other for any variation
in quality or quantity of any Product unless the other party provides it with
written notice of the nature and details of the claim within 366 days of the
date of receipt of the affected Product or the date such Product was due to be
delivered.

     11.2 Except as otherwise provided in this Agreement, the remedies available
to each party for any claims regarding a Product (including, but not limited to,
any claims of property damage, personal injury, or wrongful death due to a
breach of warranty or contract, negligence, or strict liability, and claims for
losses or damages resulting from the processing, subsequent use, or distribution
of the Product, or for failure to, timely deliver or accept delivery of the
Product) shall be as provided for under Article II of the Business and Commerce
Code of the State of Texas as in effect on the date of this Agreement (hereafter
referred to as the "UCC").

     11.3 Neither party shall be liable to the other for any lost profits or any
indirect, consequential, special, incidental, or contingent damages in
connection with the sale or purchase of any Product. Neither party shall be
entitled to terminate this Agreement for the other's failure to perform unless
such nonperforming party evinces a clear intention to no longer be bound to
perform a material obligation under the terms of this Agreement. In no event
shall Buyer or GPM be liable for exemplary or punitive damages, whether or not
caused by, or resulting from the negligence or other wrongdoing of either party
in connection with the sale or purchase of any Product.

                                       5
<PAGE>   6
                           ARTICLE XII: FORCE MAJEURE

     12.1 No failure or omission to carry out or to observe any of the terms,
provisions, or conditions of this Agreement, except the failure to make payment
for sums due hereunder, shall give rise to any claim by GPM or Buyer against
the other, or be deemed a breach of this Agreement, if the same shall have been
or shall be caused by or arise out of any event of force majeure, which term as
used herein shall include (but only to the extent that the affected party is
unable to perform due to causes and events that are beyond the reasonable
control of the affected party), but not be limited to, war, hostilities, acts of
the public enemy or of belligerents, sabotage, blockage, revolution,
insurrection, riot or disorder, requisitions or rationing, whether imposed by
law, decree, or regulations or by voluntary cooperation of industry at the
insistence or request of any governmental authority or person purporting to act
therefor; compliance with allocation programs, voluntary or mandatory, including
reduction or cessation of production by reason of imposition by any governmental
authority or person purporting to act with government authority, acts of God,
fire, frost, earthquake, storm, or lightning, epidemic, quarantine, strikes or
combination of workmen lockouts or other labor disturbances, explosion,
accidents by fire or otherwise to pipe, storage facilities, installations,
machinery, plant outages (either unanticipated or for purposes of preventive
maintenance), delays in acquiring or inability to acquire permits or licenses
necessary to enable the parties hereto to perform, lack of adequate fuel, power,
raw materials, labor, containers or transportation facilities, delays or
shortages caused by breakdowns, failures or unavailability of materials or
equipment breakage, mechanical breakdowns or accident to machinery; failure, or,
inability of a plant, terminal, equipment, or any component therein including,
without limitation, computers or computer systems or components, computer chips,
hardware or software applications to property and correctly receive, process,
transmit, or provide electronic data; delay, breakdown, or destruction of a
plant, terminal, or equipment; provided however, that the party so affected
thereby will exercise reasonable efforts pursuant to prudent industry practice
to prevent the occurrence of the force majeure event and to cure the event of
force majeure as quickly as possible so that the party so affected will be able
to carry out and observe all of the terms, provisions, and conditions of this
Agreement, but such party shall not be required to settle any labor disputes
giving rise to an event of force majeure hereunder.

                              ARTICLE XIII: WAIVER

     13.1 No waiver of any breach of this Agreement shall be held to be a waiver
of any other or subsequent breach. The right of either party to require strict
performance by the other party of any or all obligations imposed upon such other
party by this Agreement shall not in any way be affected by previous waiver,
forbearance, or course of dealing.

                                       6
<PAGE>   7
                             ARTICLE XIV: WARRANTIES

     14.1 GPM warrants that Product will be produced in accordance with its
designated specifications set forth in the Attachment and in compliance with the
requirements of the Fair Labor Standards Act of 1938, as amended, and that GPM
will convey good and unencumbered title thereto.

     14.2 THE FOREGOING WARRANTIES ARE EXCLUSIVE, AND ARE IN LIEU OF ALL OTHER
WARRANTIES (WHETHER WRITTEN OR ORAL, EXPRESS OR IMPLIED), INCLUDING, WITHOUT
LIMITATION, WARRANTY OF MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE.

                      ARTICLE XV: MISCELLANEOUS PROVISIONS

     15.1 Conflict of Interest. Neither Buyer nor GPM shall, and neither party
shall require that its subcontractors shall, pay any commissions, fees, or grant
any rebates to any employee, officer, or agent of the other party nor favor
employees, officers, or agents of the other party with gifts or entertainment of
significant cost or value, nor enter into any business arrangement with
employees, officers, or agents of the other party other than as a representative
of the other party, without the other party's written approval.

     15.2 Assignment. All of the terms, conditions, and provisions hereof shall
extend to and be binding upon the respective parties hereto, their successors
and assigns; provided however, that neither party shall assign this Agreement or
any interest herein without the prior written consent of the other party, which
shall not unreasonably be withheld or delayed; except that either party may,
without the consent of the other, assign this Agreement or any interest herein
to (i) a successor of all or a material portion of its business to which this
Agreement relates, (ii) a new business entity resulting from a merger or joint
venture involving a party to this Agreement or all or substantially all of its
business and assets, or (iii) to a person, firm, or legal entity acquiring all
or substantially all or a material portion of the business and assets of a party
to which this Agreement relates.

     15.3 Entire Agreement. This instrument (including the Attachment hereto)
contains the entire Agreement between the parties regarding the sale, purchase,
and delivery of Product during the term hereof; and all prior promises,
agreements, or warranties, written or verbal, for the sale of Product shall be
canceled and superseded hereby and shall be of no further force or effect unless
embodied herein. No modifications of this Agreement shall be valid unless in
writing and signed by both parties, and no modifications shall be effected by
the acknowledgment or acceptance of any purchase orders or printed forms
containing different conditions. If there is any conflict between the terms set
forth

                                       7
<PAGE>   8
in this Agreement and the Attachment, the terms set forth in the Attachment
shall govern.

     15.4 Applicable Law. THE VALIDITY, INTERPRETATION, AND PERFORMANCE OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT REFERENCE
TO PRINCIPLES OF CONFLICTS OF LAW.

     15.5 No Third Party Beneficiaries. Nothing in this Agreement is intended or
will be construed to confer upon or give any person or entity other than the
parties any rights or remedies under or by reason of this Agreement or any
transaction contemplated hereby.

                                       8
<PAGE>   9
     15.6 Counterparts. This Agreement and any amendment thereto may be executed
in one or more counterparts, each of which when so executed shall be deemed to
be an original but all of which taken together shall constitute one and the same
agreement.

     15.7 Severability. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any rule or law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party.

     IN WITNESS WHEREOF, this Agreement is executed for each party by and
through its respective officers duly authorized, as of the date first above
written.

                                             GPM GAS CORPORATION

                                             By: /s/ CHRISTOPHER WREN
                                                --------------------------------
                                             Name:  Christopher Wren
                                                  ------------------------------
                                             Title:  Vice President
                                                   -----------------------------

                                             PHILLIPS 66 COMPANY division
                                             of Phillips Petroleum Company

                                             By:  /s/ J.E. BINCKLEY
                                                --------------------------------
                                             Name:  J.E. Binckley
                                                  ------------------------------
                                             Title:  Sulfur Marketing Manager
                                                   -----------------------------

                                       9
<PAGE>   10
                        GPM - PHILLIPS 66 COMPANY SULFUR
                      SALES AGREEMENT DATED OCTOBER 1, 1999

                                  ATTACHMENT 1

Product:            Molten Sulfur

Buyer:              Phillips 66 Company

Seller:             GPM Gas Corporation

Volume:             Full Output of molten sulfur of existing and existing and
                    future GPM-operated gas Processing plants. The presently
                    operating GPM Plants producing molten sulfur include the
                    Artesia, Eunice, and Linam Ranch Plants in southeast New
                    Mexico and the Fullerton and Goldsmith Plants in West Texas.

Forecasting Party:  GPM

Price:              (a) Buyers Plant Netback Price less the higher of 5% or
                    $1/long ton. The "Plant Netback Price" is defined as Buyer's
                    actual gross resale price for the Product, less freight,
                    discounts, allowances, and taxes borne by Buyer on sales of
                    Product hereunder and not recovered by Buyer on resale.
                    Buyer will market the Product diligently and in good faith
                    consistently with its marketing of the same Product and
                    similar products from other sources.

                    (b) Buyer shall be entitled to a minimum net purchase/resale
                    margin of $1/long ton. In the case of any resale of Product
                    which does not allow Buyer to recover its out of pocket
                    costs for freight, discounts, allowances, and taxes borne by
                    Buyer and not recovered by Buyer on resale of Product plus
                    $1/long ton out of resale revenues, the price shall be
                    reduced accordingly, and GPM shall reimburse Buyer as
                    necessary to allow Buyer to recover a net position on the
                    purchase and resale of $1/long ton of Product

                    (c) Buyer shall notify GPM in writing as soon as Buyer gains
                    knowledge of the situation of each instance in which a
                    reduction of the Plant Netback Price is expected or will be
                    experienced under the preceding subparagraph. Subject to the
                    minimum duration of any firm resale commitments that have
                    been made by Buyer, not to exceed ninety (90) days, Buyer
                    shall then afford GPM an opportunity to make its own Product
                    sales or alternate disposition arrangements in lieu of
                    deliveries to Buyer at Plant Netback Prices reduced under
                    subparagraph (b) above. If the subparagraph (b) price
                    reduction continues for a period of three (3) months, then
                    GPM shall thereafter have a right to terminate this
                    Agreement

<PAGE>   11
                    upon ninety (90) days advance written notice to Buyer
                    effective as of the end of a month.

Measurement Method: Tank truck scales

Pressure Requirements:  None

Temperature Requirements:  Between 280 degrees F to 300 degrees F

Delivery Point/     At the point that Product passes through the threshold of
Title Transfer      manway of the truck designated
Point:

Measurement Point:  Goldsmith, Texas Plant - truck customer weighted at tank
                    truck scales at Martin Gas Plant near Odessa, Texas.
                    Artesia, New Mexico Plant - tank truck scales at Martin Gas
                    Dayton Rack near Artesia, New Mexico.
                    All Plants* - Rail cars will be weighed at tank truck scales
                    in Seagraves, Texas or at the GPM's Douro Rack near Odessa,
                    Texas.

                    *Present Plants:  Goldsmith Plant - Goldsmith, Texas
                                      Eunice Plant, Oil Center, New Mexico
                                      Linam Ranch Plant - Hobbs, New Mexico
                                      Fullerton Plant - Andrews, Texas

Title Transfer Point:  Delivery Point

Special Provisions:   For as long as GPM produces this Product during the term
                      of this Agreement, Buyer shall retain exclusive right to
                      sell this product. In the event GPM shall provide Buyer
                      with a least twelve (12) months prior notification before
                      discontinuing the manufacture of the Product.

Specifications:
         Purity       99.5%
         Carbon       0.25% max
         Ash          0.05% max
         Acidity      0.001% max
         Tellurium    0.002% max
         Selenium     0.002% max

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