IT SERVICES AGREEMENT 

	THIS IT SERVICES AGREEMENT (“Agreement”), by and (i) between ______________  AEP Energy Services, Inc., an Ohio corporation (“"Company”"), a _______________ and ______________, (“Newco”), a ___________________and (ii) Enron North America Corp., a Delaware corporation (“Enron”), is effective as of ______________(the “Effective Date”).  Company and Newco Enron  are  individually a “Party”,  and collectively referred to herein asthe “Company GroupParties.”.

	WHEREAS, Enron Corp., an affiliate of Enron, and ________________, an affiliate of the Company, have entered into a Purchase and Sale Agreement (the "PSA") of even date herewith pursuant to which Enron Corp. has agreed to sell all of the issued and outstanding shares of common stock of Houston Pipe Line Company ("HPL") and all of the issued and outstanding member interests of Newco  to _________________ as of the Closing Date, as defined in the PSA;

 WHEREAS, Enron and Company Group 	WHEREAS, Enron and Company  desire by their execution of this Agreement to evidence their understanding about Company Group’'s   acceptance, possession and use of certain products (“Products Applications”) (as defined below) and Enron’s providing certain Services (as defined below) to the Company Groupand, after the Closing Date, to HPL and Newco.  Capitalized terms not otherwise defined in the body of this Agreement shall have the meaning ascribed to such terms in Schedule I.

	NOW, THEREFORE, in consideration of the foregoing premises, and the mutual promises and covenants contained herein, the partiesParties agree as follows:

SECTION 1.  SERVICES PROVIDED BY ENRON

In exchange for the compensation described herein, Enron agrees to provide or cause its affiliates to provide Company and after the Closing Date, HPL and Newco (as used herein, the "Company Group" refers to the Company prior to the Closing Date, and to HPL and Newco after the Closing Date) certain installation, training and maintenance services together with providing the Company Group as of the Closing Date  the ability to remotely access and use the Applications (as specified in Exhibit A hereto) (collectively, the “Services”).  Enron shall also provide certain other services (for additional compensation) as also described in Exhibit A (“Additional Services”) (the Applications, Services, and Additional Services being hereinafter collectively referred to as “All Services”).  Additional Services shall be provided to the extent requested by the Company Group from time to time.  The Services provided Company Group hereunder shall be those described on Exhibit A attached hereto. 

Enron will assign one person to act as the project manager for All Services.  The Company Group will assign one person to act as  its primary contact person.

SECTION 2.  LIMITED LICENSE AGREEMENT

	2.1	Limited License in Furtherance of Services Provided.  Enron grants Company Group, subject to the provisions of this Agreement, a non-exclusive, non-transferable, limited license to remotely access and use the Applications (as defined in Exhibit A hereto) as of the Closing Date in furtherance of the Company Group’s own natural gas trading, natural gas hedging, natural gas storage and natural gas transportation business and in accordance with this Agreement.  The Parties acknowledge that one or more affiliates of the Company Group may engage in one or more of the above activities for the benefit of the Company Group. The use of the Services (including the Applications) shall be limited  related to the Company Group’s performance of the Company Group’s Business.  “Company Group’s Business” means the Company’s Group’s internal processing of information derived from Company Group’s operation of the HPL Assets and Leased Assets (as such terms are defined in Schedule I), and sales and purchases of physical natural gas and related financial products but only as such transactions relate to natural gas transported by the HPL Assets and/or stored in Leased Assets.  A portion of the Company Group’s payment of the IT Fee in accordance herewith shall be deemed to be a licensing fee for this limited license to remote access to and of the Applications and other technology and products provided by Enron hereunder except for Third Party Expenses, as hereinafter defined, (or otherwise provided in Exhibit A).  Company Group agrees that the Company Group will use the Services solely for the purposes expressly permitted herein.  Without limiting the foregoing, Company Group agrees that Company Group will not permit any third party to access the Applications or to use the Services in any other manner.  As used herein, “third party” shall not include employees or consultants of the Company Group or its affiliates. This limited license shall terminate upon any termination of this Agreement and shall terminate only as to Newco upon.  After the Newco TerminationClosing Date in accordance with Section 7.4 below.  The, the obligations of Company Group under this Agreement are the joint and several obligations of each of CompanyHPL and Newco.

	2.2	Services Proprietary to Enron.  The Company Group agrees that (1) the Applications are proprietary to Enron and none of them shall have any right, title or interest in the Applications except to remotely access and use the Applications in accordance herewith; (2) all applicable common law and statutory rights in and to the Applications (in any form or medium, including without limitation all source code and object code), including, without limitation, all rights and copyrights, shall be and will remain the property of Enron; (3) all Applications may contain proprietary information, including trade secrets, know-how and confidential information that is and shall remain the exclusive property of Enron; (4) the Company Group, together with all its employees, officers, agents and other representatives shall maintain the confidentiality of this information to any third party unless specifically authorized herein  in accordance with Section 10.11 of this Agreement; and (5) the Company Group shall not in any way download, copy, duplicate, reproduce, modify, de-compile or otherwise reverse engineer any Application, portion thereof, or function provided thereby.  The Services include only the right to have the data supplied by the Company Group processed Except as contemplated byprovided in Section 6 of this Agreement and otherwise, the Services do not include any right to access Enron’s data processing site, the processing software comprising the Applications or to access any data other than data stored at Enron’s facilities directly related to the Company Group’s Business.

SECTION 3.  PERFORMANCE OF SERVICES

	3.1 	Installation.  Enron agrees to complete installation of, and cause to be fully functional, the Applications for the Company Group as of a date (the "Installation Date") no later than thirty (30) days prior to the Closing Date.  On or prior to the Installation Date, Enron shall demonstrate to the satisfaction of the Company, and upon the Company being so satisfied, the Company shall certify to Enron, that the Applications have been so installed and are fully functional such that the Company Group will be able to remotely access and use the Applications for the purposes described in Section 2.1 of this Agreement.
 
 3.1 	3.2	Nature/Quality of Services.  Enron shall perform the Services in substantially the same quality and manner as comparable services provided by Enron to its affiliates.  Company Group will not provide Enron with any training or instructions with respect to the Services.  Company Group is responsible for providing any equipment, materials, or supplies to its router that Enron reasonably determines is necessary to perform the Services, except as otherwise set forth on Exhibit A attached hereto.  Enron has all necessary licenses, permits, and registrations required to perform the Services.  Except as otherwise provided in Exhibit A, the parties will mutually agree upon the terms and conditions (including pricing) upon which Enron would provide any services in addition to those specified on Exhibit A.  

 3.2 	3.3	Provision of Information.  Any data, information, equipment, or general directions necessary for Enron to perform the Services shall be submitted by Company Group in a timely manner.  

3.4	3.33.4	Access.  The Company Group will permit Enron’s employees, agents, representatives, affiliates, contractors and subcontractors to have reasonable access to the Company Group’s premises to the extent necessary to perform the Services.
3.5	Laws and Regulations. The Company Group represents and 
	3.4	Laws and Regulations. The Company Group represents and agrees that it and the other Company Group entities   will use the Services provided hereunder only in accordance with this Agreement and with all applicable federal, state, and local laws and regulations, and in accordance with the conditions, rules, regulations, license or contractual restrictions and   specifications that may be set forth in any manuals, materials, documents, or instructions in existence on the date of this Agreement and furnished or communicated by Enron to the Company Group on an ongoing basis throughout the Term (defined below) of this Agreement and in accordance with any applicable third-party licenses.  Enron reserves the right to take all actions, including termination of any particular Service, that it reasonably believes to be necessary to assure compliance with the foregoing.,  provided that Enron shall provide written notice if any such actions will affect the Services. not take any such action unless Enron has provided written notice  to the Company Group describing Enron's proposed actions, including the basis therefore, and the  Company Group, or Enron and the Company Group, has failed to resolve any related matter within  the thirty (30) day period following the Company Group's receipt of such notice.  .

Enron represents and agrees that it will provide All Services hereunder only in accordance with this Agreement and with all applicable federal, state, and local laws and regulations, and in accordance with  the specifications that may be set forth in any manuals, materials, documents, or instructions in existence on the date of this Agreement and on an ongoing basis throughout the Term (defined below) of this Agreement.  The Company Group reserves the right to take all actions, including termination of any particular Service, provided that the Company Group shall not take any such action unless  the Company Group has provided written notice to Enron describing the Company Group's proposed actions, including the basis therefore, and   Enron, or Enron and the Company Group, has failed  to resolve any related matter within  the thirty (30) day period following Enron's receipt of such notice. 

SECTION 4.  COMPENSATION

	4.1	Price of the Services.  In consideration for the Services and Application useApplications provided by Enron to the Company Group in accordance with this Agreement, the Company Group agrees to pay Enron the fees (the “IT Fee”) described on Exhibit B hereto.

	4.2	Third Party Expenses.  Except for those third-party products and services expressly referenced in Exhibit A as being included within the Services, Company Group agrees to reimburse Enron for the actual cost incurred by Enron   for any goods or materials purchased or software or technology licensed by Enron for use by Company Group   in the course and scope of performance of the Services, and all expenses actually incurred by Enron   for outsourced Services or other goods, services or utilities provided by third party providers, provided (i)  the costs or expenses were incurred solely for the benefit of the Company Group and (ii) the Company Group has otherwise requested in writing that Enron incur such cost or expenses or the Company. Group has previously approved such cost or expenses in writing.  All of the foregoing are hereinafter   collectively referred to in this Agreement as “Third-Party Expenses”.  

SECTION 5.  PAYMENT OF CHARGES AND REIMBURSEMENTS

	5.1	Payment for Services.  The IT Fee shall be payable monthly in advance.  Accordingly, provided that the Closing is completed as further described below, on the Effective  Closing Date and on or before the same day of each calendar month during the Term, Company Group shall pay Enron an amount equal to the monthly IT Fee set forth in Exhibit B. In addition, on the Effective Date, Company Group shall pay to Enron   fifty percent (50%) of the one-time setup fee specified in Exhibit B.   The remaining fifty percent (50%) of the setup fee shall be payable on the Closing Date provided that (i) the Closing, as defined in the PSA, is consummated on the Closing Date and (ii) the Applications have been installed and are fully functional in accordance with Section 3.1 hereof..On a monthly basis, Enron shall provide Company Group with a detailed written invoice for Third-Party Expenses incurred by Enron   during the preceding month and other charges due Enron hereunder, if any.  Company Group shall remit any amounts due on or before the 20th day after the receipt of Enron’s invoice.  If Company Group fails to pay any undisputed payment or other sum when due, Company Group also shall pay to Enron interest thereon from the due date thereof to the date of payment at a rate equal to the lesser of (a) 12% per annum or (b) the maximum rate permitted by applicable law.  All payments hereunder shall be payable by wire transfer to the account of Enron set forth below, or at such other place or account as Enron may from time to time designate in writing.

Bank of America
ABA No. 111 000012
Account No. 3750469477

SECTION 6.  RECORDS AND AUDITS

	6.1	For at least  seven years after the termination of any Service or of this Agreement, as well as for the time period required by applicable laws,  Enron shall maintain records and other evidence sufficient to accurately and properly reflect the transactions entered into by the Company Group and its agents utilizing the Applications, which records are further described in Section 11 hereof.   Only Company Group employees and those technical employees or  representatives of Enron who are necessarily involved with the implementation of this Agreement shall have access  to such records and evidence.  Access to such records and evidence shall be provided during the period in which the records and evidence are maintained at all reasonable times during business hours for the purpose of auditing and verifying the accuracy of transactions, and verifying that the Data is secure by virtue of the firewall as further described in Section 8.5 (b).

	6.2	For at least two years after the termination of any Service or of this Agreement, as well as for the time period required by applicable laws, each partyParty shall maintain records and other evidence sufficient to accurately and properly reflect the performance of the Services and the amounts due in accordance with this Agreement.  Each party or its  The employees and representatives of Enron and the Company Group shall have access to such records and evidence at all reasonable times during business hours to such records for the purpose of auditing and verifying the accuracy of the invoices.   and verifying that Enron has met its performance obligations as set forth in this Agreement,

	6.3	Any audits performed by or on behalf of a party shall be at that partyParty’s sole cost and expense, unless, with respect to invoices, any such audits reveals a variance of more than five percent of the total amount  due and owing the auditing party and such amount was not caused by an invoicing error by the auditing party.  

	6.4	Each partyParty shall have the right to audit the other partyParty’s books for a period of two years after the termination ofdirectly related to this Agreement for   the purpose of verifying the accuracy of the invoices  periods set forth above , except in those circumstances where contracts with third parties limit the audit period to less than two yearsa lesser period  and the Parties have been informed in writing of such limitation.  The provisions of this Section shall survive the termination of this Agreement.

SECTION 7.  TERMINATION; CANCELLATION OR REDUCTION OF SERVICES

	7.1	Term of Agreement.  The initial term (the “Initial Term”) of this Agreement shall commence as of the Effective Date and unless sooner terminated in accordance with the terms of this Agreement, shall terminate three (3) years after the Effective Date.  This Agreement shall terminate if the Closing, as defined in the PSA, does not occur.  At any time after six (6) months after the Effective Date, (i) Company Group may terminate this Agreement for any reason whatsoever or for no reason by giving Enron at least sixty (60) days prior written notice to that effect and (ii) Enron may terminate this Agreement for any reason whatsoever or for no reason by giving Company Group at least ninety  two hundred seventy (90270) days prior written notice to that effect.  If this Agreement has not been terminated in accordance with the terms hereof, then this Agreement shall automatically renew for periods of one year (each, a “Renewal Term”).  The Initial Term and any Renewal Terms are collectively referred to herein as the “Term”.  Within 20 days after termination, Company Group shall pay for all undisputed charges determined pursuant to Section 5 and incurred up to the date of termination.  

	7.2	Termination for Non-Payment.  If Company Group fails to pay any undisputed amounts due hereunder within ten (10) days after receiving written notice specifying such failure, then Enron may, by giving Company at least thirty (30) days advance written notice thereof, terminate this Agreement as of the date specified in such notice.

	7.3	Termination for Cause. If either party materially defaults in its performance under this Agreement (except for nonpayment of amounts due to Enron which is governed by Section 7.2), and fails either substantially to cure such default within thirty (30) days after receiving written notice specifying the default or, for those defaults that cannot reasonably be cured within thirty (30) days, promptly to commence curing such default and thereafter proceed with all due diligence substantially to cure the default, then the party not in default may terminate this Agreement by written notice to the defaulting party.

	7.4	Newco Termination Event.  This Agreement shall terminate as to Newco if and when Newco first does any natural gas marketing, purchasing or trading business (“Unrelated Business”) which is not directly related to the natural gas transportation systems owned by the Company or the storage and transportation systems which are the subject of the Lease Agreement.   Newco will provide written notice to Enron at least thirty (30) days prior to commencement of any Unrelated Business.  The date on which Newco commences any Unrelated Business is referred to herein as the “Newco Termination Date”.  The obligations of Company shall be unaffected by the termination of this Agreement as to Newco pursuant to this Section 7.4.

r
SECTION 8.  INDEMNIFICATION; LIMITATION OF LIABILITY; DISCLAIMERS

	8.1 Indemnity; Intellectual Property. Enron shall defend, indemnify, and hold harmless  the Company Group against any damages, liabilities, costs, and expenses (including reasonable attorneys’ fees)  arising out of or relating to any allegation  that any Application, Service or Additional Service provided by Enron infringes upon any patent, trademark, copyright, trade secrets, or other intellectual property of a third party. 
In the event the Parties agree that any Application, Service, or Additional Service becomes or , in Enron’s  reasonable opinion, is likely to become the subject of an infringement or misappropriation claim, or the subject of an injunction preventing the use of said software or related service as contemplated in this Agreement, Enron may, at its option and expense  (i) procure for the Company Group the right to use the Application, Service, or Additional Service, or (ii) replace or modify the Application, Service, or Additional Service so that it avoids the alleged violation of the intellectual property rights being asserted without, in the reasonable opinion of the Parties,  compromising its functionality.
 
8.1	Indemnity for Enron.8.2Indemnity for Enron.  COMPANY GROUP AGREES TO 
RELEASE, PROTECT, DEFEND, INDEMNIFY, AND HOLD HARMLESS ENRON AND ITS EMPLOYEES, OFFICERS, DIRECTORS, AGENTS AND REPRESENTATIVES (COLLECTIVELY, THE “ENRON PARTIES”), AT COMPANY GROUP'S COST AND EXPENSE, FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS OR CAUSES OF ACTION (COLLECTIVELY, “CLAIMS”) ARISING OUT OF THE SERVICES PROVIDED UNDER THIS AGREEMENT, EVEN IF CAUSED, IN WHOLE OR IN PART, BY THE NEGLIGENCE OF ANY ENRON PARTY, EXCEPT TO THE EXTENT THAT SUCH CLAIMS ARISE AS A RESULTARISING OUT OF THE GROSS NEGLIGENCEACTION OR WILLFUL MISCONDUCT OF AN ENRON PARTY.INACTION OF THE COMPANY GROUP RELATING TO  THIS AGREEMENT. COMPANY GROUP WILL REIMBURSE THE ENRON PARTIES FOR ANY AND ALL COSTS, LIABILITIES, JUDGMENTS, AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND COSTS) REASONABLY INCURRED BY THE ENRON PARTIES IN CONNECTION WITH THE INVESTIGATING, PREPARING FOR, AND DEFENDING AGAINST ANY SUCH CLAIM, WHETHER OR NOT RESULTING IN ANY LIABILITY, AND ANY AMOUNT PAID IN SETTLEMENT OF ANY LITIGATION, COMMENCED OR THREATENED, OR OF ANY SUCH CLAIM IF SUCH SETTLEMENT IS EFFECTED WITH THE WRITTEN CONSENT OF COMPANY GROUP.  

8.3 Indemnity for the Company Group.  ENRON AGREES TO
RELEASE, PROTECT, DEFEND, INDEMNIFY, AND HOLD HARMLESS THE COMPANY GROUP AND ITS EMPLOYEES, OFFICERS, DIRECTORS, AGENTS AND REPRESENTATIVES (COLLECTIVELY, THE “COMPANY PARTIES”), AT ENRON'S COST AND EXPENSE, FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS OR CAUSES OF ACTION (COLLECTIVELY, “CLAIMS”) TO THE EXTENT ARISING OUT OF THE ACTION OR INACTION OF ENRON RELATING TO  THIS AGREEMENT. ENRON WILL REIMBURSE THE COMPANY PARTIES FOR ANY AND ALL COSTS, LIABILITIES, JUDGMENTS, AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND COSTS) REASONABLY INCURRED BY THE COMPANY PARTIES IN CONNECTION WITH THE INVESTIGATING, PREPARING FOR, AND DEFENDING AGAINST ANY SUCH CLAIM, WHETHER OR NOT RESULTING IN ANY LIABILITY, AND ANY AMOUNT PAID IN SETTLEMENT OF ANY LITIGATION, COMMENCED OR THREATENED, OR OF ANY SUCH CLAIM IF SUCH SETTLEMENT IS EFFECTED WITH THE WRITTEN CONSENT OF ENRON.  

 8.2 8.4 Limitation of Warranty and of Liability.  IF ENRON BECOMES LIABLE TO COMPANY GROUP UNDER THIS AGREEMENT FOR ANY REASON, WHETHER ARISING BY NEGLIGENCE (BUT EXCLUDING GROSS NEGLIGENCE, INTENDED CONDUCT WILLFUL MISCONDUCT, OR FRAUD)  OR OTHERWISE, SUCH LIABILITY SHALL NOT EXCEED IN THE AGGREGATE FOR ALL EVENTS THE IT FEE AND SET-UP FEE PAID OR TO BE PAID TO ENRON HEREUNDER FOR THE MOST CURRENT CONTRACT YEAR DURING WHICH ANY OF SUCH EVENTS OCCURRED.TERM OF THIS AGREEMENT.  ADDITIONALLY, THE LIMITATION SET FORTH IN THIS SECTION 8.4 SHALL NOT APPLY TO THE INDEMNIFICATION OBLIGATIONS OF SECTION 8.1 OR A VIOLATION OF SECTION 8.5 (B) OR SECTION 10.11 HEREOF..  

	IF THE COMPANY GROUP BECOMES LIABLE TO ENRON UNDER THIS AGREEMENT FOR ANY REASON, WHETHER ARISING BY NEGLIGENCE (BUT EXCLUDING GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR FRAUD)  OR OTHERWISE, SUCH LIABILITY SHALL NOT EXCEED IN THE AGGREGATE FOR ALL EVENTS THE IT FEE AND SET-UP FEE PAID OR TO BE PAID TO ENRON HEREUNDER FOR THE TERM OF THIS AGREEMENT. ADDITIONALLY, THE LIMITATION SET FORTH IN THIS SECTION 8.4 SHALL NOT APPLY TO A VIOLATION OF SECTION 10.11 HEREOF..  

	8.38.5	Warranty.  

	(a) Enron represents, warrants, and agrees that All Services will be performed in a professional and workmanlike manner consistent with industry standards in effect at the time the same are rendered.   

	(b) Enron  represents, warrants, and agrees  (i) that it will establish a firewall sufficient to protect the confidentiality of the Data, as hereinafter defined, from disclosure to any individuals   other than those technical employees or representatives referenced in Section 6.1 of this Agreement who require access to the Data  for the sole purpose of providing the Applications, Services, or Additional Services to the Company Group, (ii) that it will expressly prohibit any other individuals .from having access to the Data, and (iii) that it will expressly prohibit those technical employees or representatives referenced in Section 6.1 of this Agreement from disclosing any information pertaining to the transactions entered into or considered by the Company Group and its agents to any other individuals or entities.

	(c) Enron represents, warrants, and agrees that upon installing the Applications and providing the services to the Company Group, the Company Group shall have been furnished all Applications and Services required to manage and operate the HPL Assets and the Leased Assets.
 
EXCEPT AS EXPRESSLY PROVIDED HEREIN, ENRON DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, IN FACT OR BY OPERATION OF LAW OR OTHERWISE, CONTAINED IN OR DERIVED FROM THIS AGREEMENT, ANY OF THE EXHIBITS ATTACHED HERETO OR IN ANY OTHER MATERIALS, BROCHURES, PRESENTATIONS OR OTHER DOCUMENTS OR COMMUNICATIONS WHETHER ORAL OR WRITTEN, INCLUDING WITHOUT LIMITATION IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

8.48.6	No Special Damages. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY DAMAGES ARISING OUT OF THE OTHER PARTY’S GROSS NEGLIGENCE OR WILFULL MISCONDUCT.  ENRON   EXCEPT FOR A PARTY'S GROSS NEGLIGENCE, FRAUD, OR WILLFUL MISCONDUCT OR FOR VIOLATIONS OF SECTION 10.11, NEITHER PARTY SHALL NOT   BE LIABLE TO COMPANY GROUP THE OTHER PARTY  FOR  ANY INDIRECT, INCIDENTAL, EXEMPLARY CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES ARISING OUT OF THIS AGREEMENT OR ANY BREACH THEREOF EVEN IF ENRON  THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILTY OF THE OCCURRENCE OF SUCH DAMAGES.

8.58.7	Savings Clause.  The parties hereto agree that the indemnities and limitations of liability in this Agreement shall be effective only to the maximum extent, scope, or amount permitted by applicable law, and should be so construed, interpreted, or enforced.  If any provision or portion of the indemnity or limitation language in this Agreement is determined to exceed the extent, scope, or amount permitted by the applicable law, or found to be void, unenforceable, or against public policy, the language in this Agreement shall be construed, interpreted, or enforced so as to preserve to the maximum extent, scope or amount possible, the indemnity or limitation which is permitted by the applicable law.  Only those portions found to be void, unenforceable, or against public policy shall be deleted and the remainder of the language shall be read and enforced to the fullest extent possible under the applicable law. 

SECTION 9.  CHANGE OF CONTROL

	Upon a Change of Control (as defined below) of Company Group, Enron may terminate this Agreement upon thirty (30) days prior written notice, provided that Company Group may require Enron to continue to provide the Services for a period of six months after such Change of Control, and Enron shall assist Company Group in the transition of such Services during such six month period with all of the foregoing being provided by Enron subject to the terms and conditions of this Agreement.  For purposes of this Section 9, “Change of Control” shall mean (i) the sale to a  nonaffiliated third party of all or substantially all of the HPL and Leased Assets, (ii) a change of control, directly or indirectly, of Company or Newco including without limitation any change in persons or  to provide nonaffiliated entities with power to direct or cause the direction of management or policies of the Company  or Newco, or (iii) any change (  nonaffiliated entity acquiring 20% or more on an accumulative basis) inof the ownership of equity interests in the Company or Newco).  

SECTION 10.  MISCELLANEOUS

	10.1	Independent Contractor.  

		(a)	The Services performed by Enron shall be as an independent contractor.

		(b)	In its capacity as provider of the Services under this Agreement, Enron is not an agent, partner, or joint venturer of Company Group, and nothing in this Agreement will cause Enron to be an agent, partner, or joint venturer of Company Group.

(c)	Company Group shall be responsible for payment of all sales, excise or use taxes arising out of Enron’s activities under this Agreement but not any  tax assessed based on Enron’s net income.

	10.2	Assignment.  This Agreement, including, without limitation, the indemnification provisions, shall inure to and bind the permitted successors and assigns of the parties hereto; provided, neither party shall assign or transfer this Agreement, in whole or in part, without the prior written approval of the other party in its sole discretion; provided further, however, that  either EnronParty may transfer its interest to any parent or affiliate by assignment, merger or otherwise without the prior approval of the Company Group other Party.  A transfer in violation hereof shall be void.  Nothing herein shall be construed as limiting Enron’s rights to subcontract the Services.

	10.3	Governing Law. This Agreement shall be governed by, and construed, enforced and performed in accordance with, the law of the State of Texas (excluding its conflicts of law principles), and as expressly provided in respect of the arbitration of disputes, federal law.

	10.4	Force Majeure.  The   No partiesParty shall not   have any obligation to perform any specific Service hereunder if its failure to do so is caused by or results from any act of God, governmental action, natural disaster, strikes, or failure of essential equipment, utilities or services beyond the control of the Party claiming force majeure, or any other cause or circumstance beyond the control of the parties  such Party.  During the term of the force majeure, no partyParty will have to pay for the specific Service which is subject to the force majeure.  

	10.5	Notices.   Except as otherwise provided herein, all notices and communications made pursuant to this Agreement shall be made as specified below. All notices and communications are required to be in writing and shall be delivered in written form by letter, facsimile or other documentary form.  Notice by hand delivery shall be deemed to have been received by the close of the day on which it was hand delivered  or such earlier time confirmed by the receiving party.  Notice by overnight mail or courier shall be deemed given on the date of delivery.  Any notice made by facsimile shall be deemed received simultaneously with the transmission thereof if delivery of such facsimile is confirmed.  Any party hereto may change its address, phone and facsimile numbers, or designation of contact persons by providing notice in accordance with this section.

ENRON:				COMPANY:

	Mr. Brian Redmond			Mr. David Banks
	Enron North America Corp.		AEP Energy Services Inc.
	1400 Smith Street			1 Riverside Plaza
	Houston, Texas 77002			Columbus, Ohio 43215
	Telecopy:713/646-3234			Telecopy 614/324-5090
	Telephone:713/853-1839		Telephone 614/324-5063

	with a copy to:

	NEWCO:
	10.6	Severability.  In the event any portion of this Agreement, or the application thereof to any person or circumstance, shall be determined to be invalid or unenforceable, that portion or application of this Agreement will be null and void, and the remainder of this Agreement will continue to be valid and enforceable to the extent permitted by applicable law.

	10.7	Waiver. Forbearance or indulgence of any person in any regard whatsoever in this Agreement shall not constitute a waiver or change of the covenant or condition to be performed by any other person to which the same may apply.  No waiver or consent by any person of any term or breach hereunder by any other person shall operate as a waiver or consent of any other term or breach, whether of a like or different nature.

10.8	Execution/Document.  The headings used herein are for reference purposes only. This Agreement constitutes the entire agreement among the parties hereto relating to the subject matter hereby contemplated and no other prior or contemporaneous agreements or representations (whether oral or written) have been made concerning the subject matter, or in connection with the execution.  The parties hereto shall deliver any documents reasonably required to be delivered in this Agreement concurrent with the execution of this Agreement.  No modification of this Agreement shall be enforceable, unless in writing and executed by the persons sought to be bound thereby.  The provisions shall not impart rights enforceable by any person not a signatory or not bound as a signatory, or not a permitted successor or assignee of a signatory bound hereto.  

	10.9	Survival; Limitations Period.  Notwithstanding any other provisions in this Agreement, all indemnity, limitation of liability and confidentiality obligations set forth in this Agreement shall survive the termination or expiration of this Agreement, in whole or in part.  Such confidentiality obligations shall expire two (2) years after the termination of the retention period for records pertaining to transactions set forth in Section 6 of this Agreement.  COMPANY GROUP  NEITHER PARTY MAY NOT   ASSERT ANY CAUSE OF ACTION AGAINST ENRON  ANY OTHER PARTY ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OF WHICH THE COMPANY GROUP  FIRST PARTY ACTUALLY KNEW OR SHOULD HAVE KNOWN MORE   THAN TWO (2) YEARS PRIOR TO SUCH ASSERTION.

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

	10.11	Arbitration.  

(a)	Any claim, action, dispute or controversy of any kind arising out of or relating to this Agreement or concerning any aspect of performance by any party under the terms of this Agreement (a “Dispute”) shall be resolved by mandatory and binding arbitration administered by the American Arbitration Association (the “AAA”) pursuant to the Federal Arbitration Act (Title 9 of the United States Code) in accordance with this Agreement and the then-applicable Commercial Arbitration Rules of the AAA.  The parties acknowledge and agree that the transactions evidenced and contemplated hereby involve “commerce” as contemplated in Section 2 of the Federal Arbitration Act.  If Title 9 of the United States Code is inapplicable to any such Dispute for any reason, such arbitration shall be conducted pursuant to the Texas General Arbitration Act (V.T.C.A., Civil Practice & Remedies Code Section 171.0001, et. seq. Vernon 1997), this Agreement and the then-applicable Commercial Arbitration Rules of the AAA.  To the extent that any inconsistency exists between this Agreement and the foregoing statute or rules, this Agreement shall control.  Judgment upon the award rendered by the arbitrators acting pursuant to this Agreement may be entered in, and enforced by, any court having jurisdiction, absent manifest disregard by such arbitrators of applicable law; provided, however, that the arbitrators shall not amend, supplement or reform in any manner any of the rights or obligations of any party hereunder or the enforceability of any of the terms or provisions of this Agreement.  Any arbitration proceedings under this Agreement shall be conducted in Houston, Texas, before three (3) arbitrators (selected as set forth in subsection (b) below), who have no direct or indirect relationship with any party or any party’s affiliates.

(b)	The arbitration shall be conducted by three (3) arbitrators.  The party initiating arbitration (the “Claimant”) shall appoint its arbitrator in its request for arbitration (the “Request”).  The other party (the “Respondent”) shall appoint its arbitrator within thirty (30) days after receipt of the Request and shall notify the Claimant of such appointment in writing.  If the Respondent fails to appoint an arbitrator within such thirty (30) day period, the AAA shall appoint an arbitrator on behalf of the Respondent, which arbitrator shall be deemed to have been appointed by the Respondent.  The two (2) party-appointed arbitrators shall not be required to be neutral.  The two (2) party-appointed arbitrators shall appoint a third arbitrator within thirty (30) days after the appointment of the Respondent’s arbitrator.  When the third arbitrator has accepted the appointment, the two (2) party-appointed arbitrators shall promptly notify the parties of the appointment.  If the two (2) party-appointed arbitrators fail to appoint a third arbitrator or to notify the parties within the time period prescribed above, then the appointment of the third arbitrator shall be made by the AAA, which shall promptly notify the parties of the appointment.  The third arbitrator shall act as chair of the panel.

(c)	Each party shall bear its own expenses of the arbitration, including, without limitation, fees and expenses of counsel incident to any mediation or arbitration.  The fees and expenses of the arbitrators and the AAA shall be borne equally by the parties.  The arbitrators shall have the power and authority to award expenses to the prevailing party if the arbitrators elect to do so, but in no event shall any party be liable to another party, except with respect to a liability imposed as a result of a third-party claim or allegation for any exemplary, punitive, special, indirect, consequential, remote, or speculative damages, even if caused by the sole, joint, and/or concurrent negligence, strict liability, or other fault of such party.

10.13. 10.11.	Confidentiality.

(a)	Enron and Company Group will maintain in confidence Each Party, and will cause theirincluding its respective employees, officers, directors, affiliates, lenders, representatives and agents, towill maintain in confidence, any written, oral or other information obtained in confidence from the other party  disclosing Party hereto in connection with this Agreement or the transactions  work contemplated hereby unless such information is already known to such party  non-disclosing Party prior to the date hereof, is obtained by a person not otherwise bound by a duty of confidentiality or becomes publicly available through no breach of this Agreement by such partyor any other confidentiality agreement , unless the use of such information is necessary or appropriate in making any filing or obtaining any consent or approval required for the consummation of the transactions contemplated hereby, or unless the furnishing or use of such information is required by any legal proceeding, rule, regulation or applicable law, provided that prior to furnishing or using such information in connection with any legal proceeding, rule, regulation or applicable law, the disclosing partyParty shall give the non-disclosing partyParty prompt written notice in advance of the required disclosure so that an appropriate protective order may be sought by the non-disclosing partyParty, if appropriate.  

(b)	Either partyParty shall be entitled to all remedies available at law or in equity to enforce, or seek relief in connection with, the rights and obligations set forth in this Section, including injunction and temporary restraint. 

(c)	The partiesParties acknowledge that trademarks, trade names, service marks, copyrights, programs, software (including but not limited to source code and scripts), specifications, systems designs, applications, routines, sub‑ routines, techniques, enhancements, documentation, manuals, ideas or formulas developed, provided or utilized by Enron in providing the Services or developed by Enron or its providers and provided in connection with this Agreement shall remain the sole and exclusive property of Enron or its providers.

(d)	Any and all tangible and/or electronic forms of confidential information, 
(including without limitation, copies, work papers, records and other information developed therefrom), shall immediately be destroyed or returned to the disclosing Party in accordance with said Party’s written instructions.

(d) (e)	Nothing in this Section 10.1310.11 shall operate to amend, restrict or supersede any other agreement between the parties and/or any of their affiliates relating to confidentiality, proprietary rights or other matters covered by this Agreement, and any such other agreement shall remain in full force and effect.

10.14.10.12.	Non-Solicitation.

In consideration of the disclosure of confidential information and in furtherance of the obligations of the Company Group under Section 10.13 of this Agreement, the Company Group  neither Party shall not   directly or indirectly solicit for employment or hire or utilize the services of any employee, agent, representative or consultant   of Enron  the other Party who is or was primarily engaged in any work performed  providing or receiving the Applications, Services, or Additional Services under this Agreement during the time any work is being performed and for one year  six months after the completion of Services, or assist any third party so doing. The Company GroupEach Party agrees that in the event it violates the provisions of this clause, it will pay to Enron party  the other  Party as liquidated damages, and not as a penalty, an amount equal to one hundred fifty   percent (150100%) of any such employee's then current base annual salary.  Nothing herein shall be deemed to prohibit a Party from hiring any employee, agent, representative or consultant who (i) initiates discussions regarding such employment without any direct or indirect solicitation by such Party, (ii) responds  to any general public advertisement placed by such Party, or (iii) has been terminated by the other Party prior to commencement of employment discussions.

10.14. 10.13.	Trade and Export Regulations.

The Company Group acknowledges that its use of the Services is subject to the trade and export regulations and laws of the United States (collectively, the “U.S Trade Laws”).  The Company Group agrees that it will not use or attempt to use the Services to enter into transactions or otherwise engage in prohibited activities with the governments of or persons subject to the laws of any country subject to a sanction program pursuant to the U.S. Trade Laws or persons listed on the list of Specially Designated Nationals List, the Denied Parties List, the Debarred Parties List, or the Entities List published from time-to-time by the government of the United States.  The Company Group agrees that it is responsible for satisfying any specific licensing requirements that may be applicable to its goods and services.

SECTION 11.  DATA MANAGEMENT

11.1	Data Property of Company Group.  Enron acknowledges that the Company Group 
is the owner of the data pertaining to the Company Group’s transactions utilizing the Applications, Services, or Additional Services (the “Data”) and the Company Group reserves all intellectual property rights which may exist in the Data.  Enron agrees to use its best efforts to preserve the integrity of the Data and to prevent any corruption or loss of the Data.  Enron will manage the Data in a manner consistent with its management of data integrity for the Enron affiliates.

	11.2	Back-up Copies.  Enron shall ensure that back-up copies of the Data are made no less frequently  than  copies of data are made by Enron  for its affiliates, but in no event less frequently than the end of each working day. Enron shall make a full back-up copy of the Data on a weekly basis, which shall be recorded on media from which the Data can be re-loaded in the event of any corruption or loss of Data.

	11.3	kData Retention.  Enron shall retain and preserve the Data for a period of seven (7) 
years from the date of the related transaction.  At the end of the retention period, Enron shall request the Company Group’s approval before disposing of the Data.  If the Company Group refuses to approve of the disposal, Enron may deliver the Data to the Company Group.

	11.4  Data Recovery.  Enron shall ensure that Data may be recoverable by the Company Group in the same manner and within the same time period that data would be recoverable by Enron's affiliates.

	IN WITNESS WHEREOF, the parties have executed this Agreement, to be effective as of  the Effective Date.

COMPANY:						ENRON;

								Enron North America Corp.

By:  							By:  					
Name:							Name:  Brian L. Redmond
Title:  							Title:  Managing Director
Date:  							Date:  

NEWCO:

By:				
Name:				
Title:				
Date:				

Exhibit A
Description of Applications and Other Services
Subject to the terms and conditions of the Agreement, Enron and the Company Group agree as follows:

Gas Management Systems –Enron will provide Company Group with the ability to access remotely the Enron Gas Management applications for use in the Company Group’s Business.  These natural gas management applications consist of Enron’s Unify and the Global Databases which provide the following functionality:

Application	Area Supported	Functionality				
Unify MOPS	Marketing Logistics	Nominations
Unify POPS	Pipeline Logistics	Volume Confirmations & Allocations
Unify Volume Management	Volume Management	Imbalance Management
Unify Settlements	Gas Settlements	Invoicing & Payments
Unify Accounting	Gas Accounting	Accruals 
Global Contracts Database	Global Contracts	Online Contract Data Maintenance
Global Facilities Database	Global Facilities	Online Meter or Facility Data Maintenance
Global Counterparty Database	Global Counterparty	Online Customer Data Maintenance
Global Common Codes Database	All	Table of Codes used for all of the foregoing 
		Applications 
Unify Tables	[Enron to insert]	[Enron to insert]

Gas Trading Systems –Enron will provide Company Group with the ability to access remotely the Enron Gas Trading & Risk Management applications for use in the Company Group’s Business.  These consist of Enron’s Sitara & ERMS applications and provide the following functionality:

Application	Area Supported		Functionality			
Sitara Trade Blotter	Gas Trading		Trade Capture
Sitara Deal Manager	Gas Trading		Deal Maintenance
Sitara Physical Position Manager	Gas Trading		Real Time Physical Positions
Sitara Deal Ticker 	Gas Trading		Real Time Deal Ticker
Sitara Portfolio Manager	Gas Trading		Portfolio Definition and Maintenance
ERMS Valuation (Gas)	Risk Management		MTM Valuation
ERMS Reporting (Gas)	Risk Management		Daily Position Reporting

Credit Aggregation System          Trading/Risk Management      Real Time Credit System	

Enron will provide the Company Group with forty desktop computers formatted for using the Gas Management Systems and Gas Trading Systems.

Other Systems – Enron will provide Company Group with the ability to access remotely these additional applications for use in the Company Group’s Business.  These consist of the following applications and provided the following functionality:

Application	Area Supported		Functionality			
CPR
Phoenix
SCADA Wunderware

(Other Systems – Continued)

Application	Area Supported		Functionality			
DCAB
DCAF
EDI Hub
MIPS/PGAS
TARP/IRIS/Right of Way

Availability
The above described natural gas applications (“Applications”) will be available seven days per week, twenty-four hours per day time   except for scheduled maintenance and unscheduled downtime provided that scheduled maintenance will be scheduled for evenings and weekends to the extent commercially feasible.  In the event of any downtime, Enron agrees to use its best efforts to restore full operations to the Company Group as promptly as possible, but in no event shall such restoration time exceed the time that would be required by Enron to restore full operations to any of its affiliates in similar circumstances..

Named Users; System Setup Services
The Services include partitioning existing HPL data into the Company Group databases and the set up of the databases requiring the loading of existing Company Group data and relevant Company Group data into the Applications.  Enron will not provide price curves or any non-HPL Global Counterparty information.  The Services also include setup of up to fifty  seventy-five (5075) Company Group individual employees (“Named Users”) with security access to the Services and the Company Group’s information as defined by the Company’s management.  Only Named Users may access and use the Services.  Company Group will administer the allocation to its employees of Named User status and will notify Enron when a Named User is added or removed with Enron having at least two business days to implement such changes.

Licensing
All licensing fees (which are not Third Party Expenses) for the Company Group’s remote access and use of the Applications is  are included within the IT Fee.  The Company Group is not responsible for the licensing fees for any of the applications expressly described in this list of Services.

Common System
The Applications and related systems will not be exclusive to Company Group and Company Group and others will share a common system infrastructure.

Infrastructure
The Services include remote access to that hardware and those Applications reasonably   required to support the Gas Management and Trading systems related to the Company Group’s Business such that the Company Group will receive the Services in substantially the same quality and manner as comparable services are provided by Enron to its affiliates, including, but not limited to:
•	Network and server hardware
•	Network and server software
•	Disk space for Company Group data

Back-end Support
The Services also include support for the following:
•	Network hardware/software support (including break/fix service)
•	Server hardware/software support for UNIX and NT (system administration)
•	Database administration
•	Data administration
•	Gas Management/Trading System maintenance, bug fix, and improvements not specific to Company Group.
•	All necessary non-Enron licenses to support the described applications (database, operating system, etc.).

Enron agrees to  use its best efforts  to correct any Company Group problem with the Services or the Additional Services that will have an immediate and substantial financial impact on the Company Group or will significantly impair the functionality of the Applications. Enron shall devote such efforts and resources to correct the problem as if it would to correct any Enron affiliate problem, but in any event, it shall commence correcting the problem no later than one hour after being notified by the Company Group of a problem. 

Misc.
•	Company Group will be required to provide all office equipment and a standard suite of desktop applications reasonably designated by Enron from time to time and which currently includes the following Microsoft Office Products:  Excel, Word and PowerPoint.

•	The Company Group will be required to have access to EDI services for communication of nomination and scheduled volumes to the Company Group.

•	Enron’s standard remote access application (which currently is Microsoft’s Terminal Server) will be provided by Enron.

•	Enron will provide network cabling, routers, and computing infrastructure at Enron’s site as necessary for Company Group to remotely access the Applications.  The Company Group will be responsible for any additional communications costs including lease lines and related network infrastructure to the Company Group’s router, these costs will be included within Third Party Expenses.

•	Enron will provide one daya maximum of  five days of training to   25 employees in the use of the Sitara, Unify, and Risk Management Applications.  Explanation of added system functionality will be provided online on a separate hourly charge basis.  

•	Enron will provide  10 copies of any applicable user manuals.  The Company Group shall have the right to reproduce such manuals as it deems necessary.

•	Additional training will be available for Company Group employees at a cost of $500 per employee. 

•	Enron will provide customer software development services for modifications to Enron proprietary Applications requested by Company Group from time to time.  Company Group must submit a detailed user requirement description in connection with any such request.  Enron will then provide an estimate of ethe costs to provide such modifications using an hourly rate of $200150 per hour.  If agreed to by the parties, Enron will provide the development services and implementation at an hourly rate of $200150 per hour and. With the Company Group’s prior written approval, Company Group will pay for the actual hours expended by Enron personnel whether more or less than  if such hours exceed the estimate.  Company Group will pay for the actual hours expended by Enron personnel if such hours are less than the estimate.   Enron’s agreement to provide development services is subject to the reasonable availability of the personnel to perform such  such services.  Company Group Company Group employees must test and approve all modifications prior to implementation and provide reasonable cooperation and assistance in connection with the development and implementation of any modifications.  Enron agrees to provide customer software development services prior to the Closing Date as required by the Company Group for the purposes of interfacing the Applications with the Company Group's credit and accounting systems.

•	Except for software upgrades to the Applications specified in this Exhibit A made generally available to Enron and its affiliates at no additional cost to Enron and which will be provided to the Company Group at no additional charge, all hardware and software upgrades and additional hardware or software acquired by Enron on behalf of Company Group will be considered Third Party Expenses and be at the expense of the Company Group.

•	Enron reserves the right to change any and/or all Applications without the consent of the Company Group provided the functions provided herein continue to be provided and Enron provides, for the training fees specified herein, the requisite retraining of Company Group personnel.  Enron will provide, at no cost to Company Group, changes to any manuals and documentation resulting from any changes to the Applications.

•	For each Contract Year during the Term, the Company Group agrees that the software development services fees set forth in this Exhibit A shall automatically increase by 10% of the amount of the fees in effect  be adjusted at the end of the previouseach Contract Year in proportion to any increase or decrease in the Implicit Price Deflator of the Gross National Product, Table 7.3, as first published by the U. S. Department of Labor.

Exhibit B

For the first eight months following the Effective  Closing Date (providing that the Applications have been demonstrated to be fully functional in accordance with Section 5.1) , the monthly IT Fee shall be $100,000.  Thereafter, during the Term, the monthly IT Fee shall be $200,000.150,000.  

The one-time setup fee is $525,000525,000, which shall be payable in accordance with Section 5.1.:

These prices assume that no more than 3Bcf of natural gas transaction in any one day will be processed and no more than 5075 Named Users.  Prior to conducting  transactions in excess of this volume,  Enron and Company Group must mutually agree in writing upon the additional IT Fees to be paid by Company Group therefor.    Prior to the addition of Named Users in excess of 50,75, Enron and Company Group must mutually agree in writing upon the additional IT Fees to be paid by Company Group therefor.

•	*“Contract Year” means the twelve-month period following the Effective Date and, 
•	*“Contract Year” means the twelve-month period following the Effective Date and, thereafter, each twelve-month period following the annual anniversary of the Effective Date.  For each Contract Year during any Renewal Term, Company Group agrees that the IT Fee shall automatically increase by 10% of the amount of the IT Fee in effectbe adjusted at the end of the previouseach Contract Year in proportion to any increase or decrease in the Implicit Price Deflator of the Gross National Product, Table 7.3, as first published by the U.   S. Department of Labor.  The IT Fee covers only the use of those Applications and the provision of only those Services expressly designated as being included with the IT Fee in Exhibit A.

Schedule I

Definitions

1.	Purchase and Sale Agreement	shall mean that certain Purchase and Sale Agreement by and between Enron Corporation, as Seller and [_____________] as Buyer, whereby Seller as the owner of  (i) all the equity of Houston Pipe Line Company (the “Company”) and (ii) all of the issued and outstanding member interests in [______________], a Delaware limited liability company (“Newco”) conveyed its interests in the Company and Newco to [____________].

2.	Right to Use Agreement shall mean that one certain Right to Use Agreement by and between [Leasco] and the Company, of even date with the Purchase and Sale Agreement.

3.	Lease Agreement1.	Sublease Agreement shall mean that one certain [___________]

4. 2.	HPL Assets shall mean all Houston Pipe Line Company pipeline systems assets owned by the Company on [_______, 2001].

5. 3.	Leased Assets shall mean all assets leased by HPL from Leasco pursuant to the terms of the Lease Agreement, together with the Cushion Gas and the assets used to provide the electric compression and transportation Servicesservices (as defined in the Right to Use Agreement).

Document comparison done by DeltaView on Friday, December 01, 2000 12:09:40
Input:	
Document 1	::ODMA\PCDOCS\HN\44057\1 	
Document 2	::ODMA\PCDOCS\HN\44056\1 	

Legend:	
Insertion 	
Deletion 	
Moved from 	
Moved to 	
Format change 	
Inserted cell	 	
Deleted cell	 	
Moved cell		
Split/Merged cell		
Padding cell		

Statistics:	
Insertions	239	(28.31%)	
Deletions	173	(13.40%)	
Moves	8	(0.58%)	
Matched	225	(57.71%)	
Format changed	0	(0.00%)