IT CONSOLIDATION AND OPERATIONS

IT CONSOLIDATION AND OPERATIONS
SERVICES AGREEMENT


BY AND BETWEEN


DUKE ENERGY BUSINESS SERVICES, LLC


AND


DUKE ENERGY FIELD SERVICES, LP


DATED AS OF JULY 30, 2003


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TABLE OF CONTENTS


ARTICLE I
THE SERVICES


SECTION 1.1 THE SERVICES....................................................................................1 SECTION 1.2 MODIFICATION OF SERVICES........................................................................2


ARTICLE II
COSTS AND EXPENSES


SECTION 2.1 CHARGES FOR SERVICES............................................................................2 SECTION 2.2 PER UNIT RATE INCREASES.........................................................................2 SECTION 2.3 INVOICES........................................................................................3 SECTION 2.4 AUDIT OF EXPENSES...............................................................................3 SECTION 2.5 ADDITIONAL EQUIPMENT, TECHNOLOGY OR THIRD PARTY SERVICES........................................3 SECTION 2.6 TAXES...........................................................................................3


ARTICLE III
TERM OF AGREEMENT


SECTION 3.1 TERM............................................................................................4 SECTION 3.2 EARLY TERMINATION...............................................................................4


ARTICLE IV
REPRESENTATIVES


SECTION 4.1 REPRESENTATIVES................................................................................4


ARTICLE V
PERFORMANCE STANDARDS


SECTION 5.1 PERFORMANCE STANDARDS...........................................................................4


ARTICLE VI
INDEMNIFICATION


SECTION 6.1 INDEMNIFICATION.................................................................................5 SECTION 6.2 LIMITATION OF DAMAGES...........................................................................5


ARTICLE VII
SCOPE OF AGREEMENT


SECTION 7.1 RELATIONSHIP OF PARTIES.........................................................................5 SECTION 7.2 ACCESS TO OFFICES...............................................................................5 SECTION 7.3 REASONABLE AVAILABILITY OF PERSONNEL............................................................5 SECTION 7.4 SCOPE OF DUKE'S AUTHORITY.......................................................................5 SECTION 7.5 INSURANCE.......................................................................................6 SECTION 7.6 COMPLIANCE WITH AFFILIATE RULES.................................................................6


ARTICLE VIII
CONFIDENTIALITY


SECTION 8.1 CONFIDENTIALITY.................................................................................6


ARTICLE IX
MISCELLANEOUS PROVISIONS


SECTION 9.1 COUNTERPARTS....................................................................................7 SECTION 9.2 GOVERNING LAW; JURISDICTION AND FORUM; WAIVER OF JURY TRIAL.....................................7 SECTION 9.3 ENTIRE AGREEMENT................................................................................7 SECTION 9.4 NOTICES.........................................................................................7 SECTION 9.5 SUCCESSORS AND ASSIGNS..........................................................................8


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SECTION 9.6 HEADINGS; DEFINITIONS...........................................................................8 SECTION 9.7 AMENDMENTS AND WAIVERS..........................................................................8 SECTION 9.8 SEVERABILITY....................................................................................8 SECTION 9.9 INTERPRETATION..................................................................................9 SECTION 9.10 SPECIFIC PERFORMANCE............................................................................9 SECTION 9.11 NO THIRD PARTY BENEFICIARIES....................................................................9 SECTION 9.12 FURTHER ASSURANCES..............................................................................9 SECTION 9.13 FORCE MAJEURE...................................................................................9 SECTION 9.14 ALTERNATIVE DISPUTE RESOLUTION.................................................................10 SECTION 9.15 CONFLICTS OF INTEREST..........................................................................11 SECTION 9.16 CONSTRUCTION...................................................................................11


APPENDIX 1 - IT TRANSFER SERVICES............................................................................___


APPENDIX 2 - IT SERVICES.....................................................................................___


APPENDIX 3 - DISASTER RECOVERY SERVICES......................................................................___


APPENDIX 4 - FINANCIAL AGREEMENT.............................................................................___


APPENDIX 5 - REPRESENTATIVES AND ROLES.......................................................................___


APPENDIX 6 - ENTERPRISE SERVICE MEASURES AND REPORTING.......................................................___


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IT CONSOLIDATION AND OPERATIONS
SERVICES AGREEMENT


This IT CONSOLIDATION AND OPERATIONS SERVICES AGREEMENT (this "Agreement") is made as of the 30th day of July, 2003, by and between Duke Energy Business Services LLC ("Duke") and Duke Energy Field Services, LP (the "Company") (each, a "Party", and together the "Parties").


RECITALS:


WHEREAS, Duke has agreed to assist the Company in transferring and consolidating its information technology operations into Duke's information technology operations and provide future ongoing information technology services to the Company, on such terms as set forth in this Agreement; and


WHEREAS, the Parties believe that the provisions of this Agreement as a whole are fair.


NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:


ARTICLE I


THE SERVICES


Section 1.1 The Services.


(a) Duke agrees to provide the support and services associated with the transfer and consolidation of the Company's information technology operations from Denver, Colorado to Duke's information technology operations in Charlotte, North Carolina, all as described in Appendix 1 (the "IT Transfer Services").


(b) Duke agrees to provide to the Company the information technology services described in Appendices 2 and 3 (together with the IT Transfer Services referred to herein as the "Services"), for the term described in Section 3.1.


(c) Duke shall perform the Services for the Company with the same degree of care, skill and prudence customarily exercised by it for its own operations, consistent with industry practices, in compliance with statutory and regulatory requirements.


(d) If Duke is unable to perform the Services in accordance with Section 1.1(a) and (b), then Duke shall hire the personnel required to provide such Services. Duke is authorized to provide any part of the Services either from its own resources and employees, or, by a subcontractor(s). Subcontractor(s) shall be made subject to no less stringent performance requirements than Duke is required to comply with under this Agreement, including confidentiality and compliance with statutory and regulatory requirements.


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(e) In accordance with the terms and conditions of this Agreement and the Services described in Appendices 1, 2 and 3, Duke shall provide records, financial information, or other information that is reasonably requested by the Company to support the Services which may not have been kept or reported in the ordinary course of business by Duke, even if not provided to the Company prior to the date hereof. Notwithstanding the foregoing, in the event that the records, financial information or other information requested by the Company is not contemplated by the Services or the rate sheet, then Duke and the Company will negotiate in good faith the terms whereby such information will be provided.


Section 1.2 Modification of Services. During the term of this Agreement, the Company shall have the right to enter into other contracts with third parties in connection with the Services described in this Agreement, provided the Company receives Duke's prior written consent, which consent shall not be unreasonably withheld. If the Company and Duke mutually agree, after a reasonable transition period, the Parties may terminate any Services provided for in this Agreement. Any changes in the scope of the Services and associated changes in the applicable rates shall be in writing signed by an authorized representative of each Party prior to implementation or effectiveness of such changes.


ARTICLE II


COSTS AND EXPENSES


Section 2.1 Charges for Services. Duke shall charge the Company for the Services provided under this Agreement in accordance with the rates described in Appendices 2, 3 and 4; provided, however, if any personnel or assets of Duke Power ("Duke Power"), a division of Duke Energy Corporation and a public utility regulated by the North Carolina Utilities Commission ("NCUC"), the South Carolina Public Service Commission ("SCPSC") and the Federal Energy Regulatory Commission ("FERC"), are used in the provision of the Services, Duke shall charge the Company and the Company shall pay Duke in accordance with Duke's North Carolina and FERC Codes of Conduct and any other applicable regulatory rules governing affiliate transactions. Notwithstanding the foregoing, in no event shall the Company be responsible for directly paying any salaries, wages, benefits, withholding, severance payments or any other compensation or payments with respect to the employees of Duke.


Section 2.2 Per Unit Rate Increases. The per unit rates charged for the Services shall remain in effect for each calendar year during the term of this Agreement. During the term of this Agreement, the rates may be adjusted once annually, provided that no increase in the per unit rate listed in Appendices 2, 3 and 4 shall exceed the most recent yearly increase in the Consumer Price Index ("CPI") over the prior calendar year (calendar year 2002 shall be used to establish 2004 rates and calendar year 2003 shall be used to establish 2005 rates). For purposes of this Section 2.2, the CPI shall be a change in the CPI, U.S. City Average, All Items. Duke shall provide the Company with written notice of any proposed increase in the per unit rates by October 15 of the calendar year prior to the year when such increase is to become effective (the "Fee Notice"). The Parties shall come to a final agreement on any such increase in the per unit rates within 30 days following the Company's receipt of the Fee Notice. In addition, Duke agrees that during the term of this Agreement neither changes in Duke's per unit rate calculation algorithms for the Services nor changes in the way Duke establishes per unit rates, will increase the cost of previously offered services.


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Section 2.3 Invoices. Duke shall prepare and deliver to the Company a monthly invoice by the twenty-fifth day of the month following the service month that describes the Services provided by Duke and the amount charged to the Company hereunder. Each invoice shall be due and payable within 20 days after receipt by the Company. Duke shall use its reasonable efforts to invoice all Services no later than 60 days after the performance of such Services. The Company shall promptly and diligently pay all amounts due to Duke under this Agreement and any amounts due and owed to Duke which are over 30 days past due during the first two billing periods or 20 days past due after the first two billing periods shall accrue late fees calculated at the average of the Prime Rates as reported in the Wall Street Journal during such past due payment period. In the event of the early termination of any Services hereunder, the Company shall pay Duke for only those Services and costs (or portions hereof) that have been (i) properly performed prior to such termination and (ii) properly committed to in writing by Duke prior to the receipt of such termination notice.


Section 2.4 Audit of Expenses. Duke shall maintain complete and accurate records of and supporting documentation for all amounts billable to the Company hereunder and shall retain such records for a period of at least two years following the date of the inclusion in any invoice sent to the Company. Duke agrees to provide the Company with documentation and other information with respect to each invoice as may be reasonably requested by the Company to verify that Duke's charges to the Company are accurate, correct and valid in accordance with the provisi ...