Exhibit 10.2

CONSTRUCTION, OPERATION AND MAINTENANCE AGREEMENT

BY AND BETWEEN

COLUMBIA GAS TRANSMISSION CORPORATION

AND

HARDY STORAGE COMPANY, LLC

DATED NOVEMBER 12, 2004

1

TABLE OF CONTENTS

1. DEFINITIONS AND CONSTRUCTION.

1.1. Definitions.
1.2. Construction.

2. RELATIONSHIP OF THE PARTIES.

2.1. Appointment as Operator.
2.2. Operator’s Authority to Execute Contracts.

3. OPERATION OF THE FACILITIES.

     
3.1.
3.2.
3.3.
  Operator’s Responsibilities.
Reasonable Efforts.
Claims.

4. EMPLOYEES, CONSULTANTS AND SUBCONTRACTORS.

     
4.1.
4.2.
4.3.
4.4.
  Operator’s Employees, Consultants and Subcontractors.
Use of Affiliates or Independent Contractors.
Standards for Operator and its Employees.
Non-Discrimination and Drugs.

5. FINANCIAL AND ACCOUNTING.

     
5.1.
5.2.
5.3.
5.4.
5.5.
  Accounting and Compensation.
Budgets and Reports.
Disputed Charges.
Rate and Tariff Reviews.
Audit and Examination.

6. INTELLECTUAL PROPERTY; LICENSE TO OPERATOR.
7. INDEMNIFICATION.
8. INSURANCE.
9. TERM.
10. SURVIVAL OF OBLIGATIONS.
11. LAW OF THE CONTRACT AND ARBITRATION.

11.1. Law of the Contract.
11.2. Arbitration.

12. SPECIAL AND CONSEQUENTIAL DAMAGES.
13. GENERAL.

     
13.1.
13.2.
13.3.
13.4.
13.5.
13.6.
13.7.
13.8.
13.9.
13.10.
  Effect of Agreement; Amendments.
Notices.
Counterparts.
Waiver.
Assignability; Successors.
Third Persons.
Laws and Regulatory Bodies.
Headings.
Severability.
Further Assurances.

Exhibit A — Accounting Procedure

2

CONSTRUCTION, OPERATION AND MAINTENANCE AGREEMENT

This agreement (“CO&M Agreement”), made and entered into as of the 12th day of
November 2004, is by and between Columbia Gas Transmission Corporation, a
Delaware corporation (“Operator”), and Hardy Storage Company, LLC, a West
Virginia limited liability company (“Company”).

1. DEFINITIONS AND CONSTRUCTION.

1.1. Definitions. The definitions used in the Operating Agreement of the
Company, dated November 12, 2004 (“Operating Agreement”), shall, except as
otherwise specifically provided below, have the same meanings in this CO&M
Agreement:

  1.1.1.   “Accounting Procedure” means the accounting procedure set forth in
Exhibit A.

1.1.2. “Company” is defined in the preamble to this CO&M Agreement.

1.1.3. “CO&M Agreement” is defined in the preamble to this CO&M Agreement.

  1.1.4.   “Decision Notice” has the meaning set forth in Section 11.2.1 of this
CO&M Agreement.

  1.1.5.   “Liabilities” means actions, claims, settlements, judgments, demands,
costs, expenses (including, without limitation, expenses attributable to the
defense of any actions or claims), attorneys’ fees and liabilities.

  1.1.6.   “Month” means a period of time beginning on the first day of a
calendar month and ending at the same time on the first day of the next
succeeding calendar month.

  1.1.7.   “Operating Agreement” means the Operating Agreement of the Company,
dated November 12, 2004, as the same may be amended from time to time.

  1.1.8.   “Operation of the Facilities” means the actions required to plan,
design, construct, test, maintain, repair, replace, improve, expand and/or
operate the Facilities, including, without limitation, the duties identified in
Section 3.1 of this CO&M Agreement.

  1.1.9.   “Operator” means Columbia Gas Transmission Corporation, a Delaware
corporation, and any of its successors or assigns, pursuant to this CO&M
Agreement.

1.1.10. “Party” means the Company or the Operator.

  1.1.11.   “Pre-Arbitration Meeting” has the meaning set forth in
Section 11.2.1 of this CO&M Agreement.

  1.1.12.   “Prohibited Conduct” means any action by the Operator that
constitutes bad faith, gross negligence or willful misconduct.

  1.1.13.   “Required Accounting Practice” means the accounting rules and
regulations, if any, at the time prescribed by the regulatory bodies under the
jurisdiction of which the Company is at the time operating and, to the extent of
matters not covered by such rules and regulations, generally accepted accounting
principles applied on a consistent basis as practiced in the United States at
the time prevailing for companies engaged in a business similar to that of the
Company.

  1.1.14.   “Year” means each twelve (12) Month period beginning on the first
day of a calendar year and ending at the beginning of the first day of the next
calendar year, provided that the first year hereunder shall begin on the date
hereof, and shall end at the beginning of the first day of the following
calendar year, and further provided that the last contract year shall end at the
expiration of the term of this CO&M Agreement pursuant to Section 9 hereof.

1.2. Construction. Whenever the context requires, the gender of all words used
in this CO&M Agreement includes the masculine, feminine and neuter. All
references to Sections refer to sections of this CO&M Agreement (unless the
context clearly indicates otherwise), and all references to Exhibits are to
Exhibits attached to this CO&M Agreement, each of which is made a part hereof
for all purposes.

2. RELATIONSHIP OF THE PARTIES.

2.1. Appointment as Operator. Subject to the terms and conditions of this CO&M
Agreement, the Company hereby appoints the Operator to act hereunder, and the
Operator hereby accepts such appointment and agrees to act pursuant to the
provisions of this CO&M Agreement and the applicable provisions of the Operating
Agreement. In performing services pursuant to this CO&M Agreement, the Operator
shall be an agent of the Company.

2.2. Operator’s Authority to Execute Contracts. Subject to the terms of this
CO&M Agreement, contracts in connection with the Operation of the Facilities may
be negotiated and executed or amended by the Operator as agent for the Company.
Copies of all contracts entered into by the Operator on behalf of the Company
shall be provided to the Company. All contracts and permits, if any, relating to
Company business and executed by the Operator prior to the Execution Date, to
the extent assignment of such contracts and permits is allowed by the terms of
such permits and contracts, shall be assigned by the Operator to the Company as
soon as practicable after the Execution Date. If the terms of the permits and
contracts prohibit or limit assignment to the Company, the Operator shall seek
amendment of such permits and contracts to allow assignment to the Company.
Notwithstanding the foregoing, the Operator may obtain services from its
Affiliates pursuant to existing and future agreements between the Operator and
such Affiliates and shall not be required to enter into separate agreements on
behalf of the Company or to assign such agreements to the Company.

3. OPERATION OF THE FACILITIES.

3.1. Operator’s Responsibilities. The Operator shall be responsible for the
Operation of the Facilities, and, subject to the provisions of the Operating
Agreement, the Operator is authorized to undertake all activities reasonably
necessary to fulfill such responsibilities, including, but not limited to:

  3.1.1.   Prepare, file, execute and prosecute applications for the
Authorizations required by the Company and make periodic filings required of the
Company by Governmental Authorities having jurisdiction, including, without
limitation, the preparation, filing, execution and prosecution of the FERC
Application (and any amendments thereto) and the Company’s FERC tariff (and any
amendments thereto).

  3.1.2.   Provide or cause to be provided the day-to-day operating and
maintenance services, administrative liaison and related services to the
Members, Managers, Management Committee and the Company, including, but not
limited to, Customer support, regulatory matters (including rate, tariff and
Certificate filings), legal, land, accounting, electronic bulletin board design
and maintenance, capacity and informational postings, engineering, construction,
repair, replacement, abandonment, inspection, operational planning, budgeting,
tax and technical services, and insurance and regulatory administration and
compliance.

  3.1.3.   Prepare and/or cause to be prepared the engineering design and
specifications for the Facilities.

  3.1.4.   Negotiate and execute contracts for the purchase of materials,
equipment, supplies and services necessary for the Operation of the Facilities.

  3.1.5.   Prepare, negotiate, execute and relinquish in the name of the Company
rights-of-way, land in fee, permits and contracts, and initiate and prosecute
eminent domain proceedings, necessary for the Operation of the Facilities, and
resist the perfection of any involuntary liens against Company property.

  3.1.6.   Construct and/or install, or cause to be constructed and/or
installed, the Facilities, including the negotiation and execution of contracts
therefor.

  3.1.7.   Maintain accurate and itemized accounting records for the Operation
of the Facilities, together with any information reasonably required by the
Company relating to such records, consistent with the applicable provisions of
Section 11 of the Operating Agreement.

  3.1.8.   Prepare the financial and other reports set forth in Section 11 of
the Operating Agreement.

  3.1.9.   Cause the Operation of the Facilities to be in accordance with the
requirements of all Governmental Authorities having jurisdiction, including, but
not limited to, the requirements of the United States Department of
Transportation set forth in 49 CFR Parts 190, 191, 192 and 199 and in accordance
with sound and prudent natural gas pipeline industry practices, and provide or
cause to be provided such appropriate supervisory, audit, administrative,
technical and other services as may be required for the Operation of the
Facilities.

  3.1.10.   Prepare, or cause to be prepared, and file all necessary federal and
state income tax returns and all other tax returns and filings for the Company
(including making the elections set forth in Section 10.4 of the Operating
Agreement). The Company shall furnish to the Operator all pertinent information
in its possession relating to Company operations that is necessary to enable
such returns to be prepared and filed. The Operator shall pay on behalf of the
Company such taxes as are required to be paid by the Company.

  3.1.11.   On behalf of the Company, maintain and administer bank and
investment accounts and arrangements for receipt of Company funds, draw checks
and other orders for the payment of money, and designate individuals with
authority to sign or give instructions with respect to those accounts and
arrangements. The Company’s funds shall not be commingled with funds belonging
to the Operator.

  3.1.12.   On behalf of the Company, market the Company’s services, including,
but not limited to, conducting open seasons for new services, receiving and
responding to requests for new services or changes in existing services, the
negotiation, execution and administration of precedent agreements and Service
Agreements in accordance with FERC’s policies, rules and orders and the
Company’s FERC gas tariff, and the preparation and collection of all bills to
the Customers for services rendered thereunder.

  3.1.13.   On behalf of the Company, negotiate, execute and administer
contracts with pipelines and service providers, including, but not limited to,
operational balancing agreements, capacity leases, storage and transportation
agreements and balancing agreements and to undertake such emergency measures
with third parties necessary to protect the reliability and safety of the
Company’s services.

  3.1.14.   Receive nominations for service, schedule service, issue
confirmations, and administer Customer contracts, including capacity release, in
accordance with the Company’s FERC tariff and FERC policies, rules and orders.

  3.1.15.   Establish such procedures as may be reasonable and appropriate to
comply with or to obtain an exemption from the marketing affiliate rules set
forth in the FERC Order No. 497 as the same may be amended or superseded.

  3.1.16.   Dispatch and allocate natural gas quantities to be received, stored,
transported and redelivered by means of the Facilities.

  3.1.17.   Utilize electronic flow measurement equipment for volume
determinations and natural gas chromatographs, as deemed appropriate by the
Operator, for heating value determinations as described in the Company’s FERC
gas tariff.

  3.1.18.   Except as otherwise provided by applicable laws or governmental
regulations or as otherwise directed by the Company, retain all records, books
of account, Company tax returns, plans, designs, studies, reports and other
documents related to the Operation of the Facilities for three (3) years from
the date of completion of the activity to which such records relate (or such
longer period as may be required by law or the Operating Agreement).

  3.1.19.   Report to the Company as soon as practicable all non-routine
occurrences that the Operator determines may have a significant adverse impact
upon the Operation of the Facilities, make any necessary repairs as a result of
such occurrences as the Operator reasonably deems necessary, and make a
follow-up report at an appropriate time on the Operator’s response to each
non-routine occurrence; provided, however, that the Operator shall obtain the
prior approval of the Company prior to performing repairs with an estimated cost
of over $100,000 unless the non-routine occurrence is of a nature that immediate
repair is required, in which event the Operator may make such repair without
such prior approval but shall provide a complete and accurate report to the
Company of such repair as soon as practicable thereafter.

  3.1.20.   Perform any required major equipment overhaul and replacement;
provided, however, that unless already previously approved by the Company in a
budget submitted by the Operator, the Operator shall obtain the prior approval
of the Company prior to performing such overhaul or replacement with an
estimated cost of over $100,000 unless such overhaul or replacement is of a
nature that immediate action must be taken, in which event the Operator may
perform such overhaul or replacement without such prior approval but shall
provide a complete and accurate report to the Company of all such actions as
soon as practicable thereafter.

  3.1.21.   Perform such other duties as are reasonably necessary or appropriate
and enter into such other arrangements as reasonably requested by the Company to
discharge the Operator’s responsibilities under this CO&M Agreement and the
Operating Agreement.

3.2. Reasonable Efforts. Operator agrees to design the Facilities and to use
reasonable efforts to operate the Facilities in such a manner to provide
services as required in the Service Agreements, the Company’s FERC gas tariff,
and FERC’s policies, rules and orders.

3.3. Claims. Any and all claims against the Company instituted by anyone other
than the Operator arising out of the Operation of the Facilities that are not
covered by insurance in accordance with Section 8 of this CO&M Agreement shall
be settled or litigated and defended by the Operator in accordance with its best
judgment and discretion except when (a) the amount involved is stated to be (or
estimated to be, as the case may be) greater than $100,000, or (b) criminal
sanction is sought. The settlement or defense of any claim described in (a) or
(b) above shall be decided by the Members pursuant to the Operating Agreement.

4. EMPLOYEES, CONSULTANTS AND SUBCONTRACTORS.

4.1. Operator’s Employees, Consultants and Subcontractors. The Operator shall
employ or retain and have supervision over the Persons (including consultants
and professional service or other organizations) required or deemed advisable by
the Operator to perform its duties and responsibilities hereunder in an
efficient and economically prudent manner. The Operator shall pay all reasonable
expenses in connection therewith, including compensation, salaries, wages,
overhead and administrative expenses incurred by the Operator, and if
applicable, social security taxes, workers’ compensation insurance, retirement
and insurance benefits and other such expenses. The compensation for the
Operator’s employees shall be determined by the Operator, provided that the
amount and terms of such compensation shall be comparable to those prevailing
for the Operator’s other employees who are not providing services to the
Company. Subject to the other provisions of this CO&M Agreement, all authorized
expenses pursuant to this Section 4.1 shall be reimbursed to the Operator by the
Company as provided in the Accounting Procedure.

4.2. Use of Affiliates or Independent Contractors. The Operator may utilize, as
it reasonably deems necessary or appropriate, the services of any independent
contractors or of its or any Member’s Affiliates; provided, however, that such
services of the Operator’s or any Member’s Affiliates must be utilized on terms
comparable to similar arrangements that the Operator may have for services that
are not being provided to the Company.

4.3. Standards for Operator and its Employees. The Operator shall perform its
services and carry out its responsibilities hereunder, and shall require all of
its employees and contractors, subcontractors and materialmen furnishing labor,
material or services for the Operation of the Facilities to carry out their
respective responsibilities in accordance with sound, workmanlike and prudent
practices of the natural gas pipeline industry and in compliance with the
Company’s FERC gas tariff, policies, rules and orders of FERC and the U.S.
Department of Transportation and all relevant laws, statutes, ordinances, safety
codes, regulations, rules and Authorizations of Governmental Authorities having
jurisdiction applicable to the Facilities.

4.4. Non-Discrimination and Drugs. In performing under this CO&M Agreement, the
Operator shall not discriminate against any employee or applicant for employment
because of race, creed, color, religion, sex, national origin, age or
disability, and will comply with all provisions of Executive Order 11246 of
September 24, 1965 and any successor order thereto, to the extent that such
provisions are applicable to the Operator or the Company. The Company and the
Operator do not condone in any way the use of illegal drugs or controlled
substances. Any Person known by the Operator to be in possession of any illegal
drug or controlled substance will be removed by the Operator and not permitted
to work on or with respect to the Facilities. In addition, the Operator shall
meet all the applicable requirements imposed by the Department of Transportation
as specified in 49 C.F.R., Parts 40 and 199. Furthermore, upon request and to
the extent permitted by law, the Operator will furnish the Company copies of the
records of employee drug test results required to be kept under the provisions
of 49 C.F.R. Part 199. The provisions of this Section 4.4 shall be applicable to
any contractors, consultants and subcontractors retained in connection herewith,
and the Operator shall cause the agreements with any contractor, consultant or
subcontractor to contain similar language.

5. FINANCIAL AND ACCOUNTING.

5.1. Accounting and Compensation.

  5.1.1.   The Operator shall maintain accounts for the Company in accordance
with the FERC Uniform System of Accounts and other Required Accounting Practices
and shall keep a full and complete account of all costs, expenses and
expenditures incurred by it in connection with its obligations hereunder in the
manner set forth in the Accounting Procedure.

  5.1.2.   The Company will pay the Operator at the rate and in the manner set
forth in the Accounting Procedure. For any variable costs paid by the Company,
the Operator is required to keep documentation sufficient to demonstrate that
any such variable costs were reasonably incurred in connection with the
Operation of the Facilities or otherwise to fulfill the Operator’s duties under
this CO&M Agreement and the Operating Agreement. The Company is not obligated to
pay Operator for any variable costs arising out of Prohibited Conduct or valid
claims for non-payment of any and all contributions, withholding deductions or
taxes measured by the wages, salaries or compensation paid to Persons employed
by the Operator or any of its Affiliates in connection herewith.

5.2. Budgets and Reports. The Operator shall on a timely basis prepare and
deliver to the Company for approval an annual Operating Budget pursuant to
Section 7.6 of the Operating Agreement. Such budgets shall be prepared in
sufficient detail to satisfy the requirements of any lending institution
providing financing for the Facilities. The Operator shall also prepare and
deliver to each Member such forecasts, cash flow projections and financial and
operating reports with respect to the Company as from time to time may be
reasonably requested by the Company.

5.3. Disputed Charges. The Company may, within the audit period referred to in
Section 5.5 hereof, take written exception to any bill or statement rendered by
the Operator for any variable costs on the ground that the same was not
appropriate for reimbursement under the terms of Section 5.1.2 above. The
Company shall nevertheless pay in full when due the amount of all statements
submitted in good faith by the Operator. Such payment shall not be deemed a
waiver of the right of the Company to recoup any contested portion of any bill
or statement; provided, however, that if the amount as to which such written
exception is taken or any part thereof is ultimately determined in accordance
with Section 11.2 of this CO&M Agreement not to be appropriate for reimbursement
under the terms of Section 5.1.2 of this CO&M Agreement, such amount or portion
thereof (as the case may be) shall be refunded by the Operator to the Company,
together with interest thereon at the lesser of the prime rate of Wachovia Bank,
N.A. (or its successor) as of the date on which the dispute began, or the
maximum interest rate allowed for this purpose pursuant to West Virginia law.

5.4. Rate and Tariff Reviews. The Operator shall review from time to time the
rates and fees charged for the Company’s services, and the terms and conditions
for such services and any new services deemed appropriate by the Operator and,
subject to the receipt of any required Regulatory Approvals and the terms of any
Service Agreement, revise such rates, fees, terms and conditions as the Operator
may deem appropriate for the Company.

5.5. Audit and Examination. The Company or any Member whose Sharing Ratio is at
least 25%, after thirty (30) days’ notice in writing to the Operator, shall have
the right during normal business hours to audit or examine, at the expense of
the party requesting the audit, all books and records maintained by the
Operator, as well as the relevant books of account of the Operator’s
contractors, relating to the Operation of the Facilities; provided, however,
that the total number of full audits commenced in any Year pursuant to this
Section 5.5 shall not exceed two. Such right shall include the right to meet
with the Operator’s internal and independent auditors to discuss matters
relevant to the audit or examination. The Company shall have two Years after the
close of a Year in which to make an audit of the Operator’s records for such
Year; provided, however, that any audits relating to construction costs may be
made up to two Years after the in-service date of the Facilities (not including
any Modifications) or after the date that construction of the Modification in
question was completed, as certified in writing by the Operator, in the case of
a Modification.

6. INTELLECTUAL PROPERTY; LICENSE TO OPERATOR.

Each Member hereby grants to the operator an irrevocable, royalty-free,
non-exclusive and non-assignable license to use, during the term of this CO&M
Agreement, any Confidential Information provided to the Company or the Operator
by said Member and designated as such by said Member. For purposes of this
Section 6, Confidential Information shall include, but shall not be limited to,
inventions (whether patented or not) and copyrighted or copyrightable material.
As a condition precedent to the effectiveness of such license to use, the
Operator hereby expressly agrees that it will utilize such Confidential
Information solely in connection with the performance of its duties hereunder
and further expressly agrees that it will be subject to and bound by the
provisions set forth in Section 4.7.2 of the Operating Agreement as if it were a
Member. Upon termination of this CO&M Agreement or its removal as Operator, such
license shall terminate and, upon the request of the Company, the Operator shall
either return all Confidential Information that has been provided to it,
together with all reproductions thereof in the Operator’s possession, pursuant
to such license to use, to the Member from whom it obtained such Confidential
Information or certify to such Member that it has been destroyed.

7. INDEMNIFICATION.

The Company agrees to indemnify, hold harmless and defend the Operator and its
Affiliates and their respective officers, directors, employees and agents (but
not including any Member of the Company, in its capacity as such) from and
against, and the indemnified parties shall have no liability to the Company for,
any and all Liabilities incurred arising out of or relating to this CO&M
Agreement or the Operation of the Facilities, regardless of cause; provided,
however, that the Company shall not be required to indemnify or hold harmless
the indemnified parties from or against any Liabilities attributable to the
actions or omissions of Operator in maintaining and administering accounts and
arrangements as set forth in Section 3.1.11 of this CO&M Agreement; provided,
further, that the Company shall not be required to indemnify or hold harmless
the indemnified parties from or against any Liabilities attributable to
Prohibited Conduct or valid claims for non-payment of any and all contributions,
withholding deductions or taxes measured by the wages, salaries or compensation
paid to Persons employed by the Operator or any of its Affiliates in connection
herewith. In the event applicable law limits in any way the extent to which
indemnification may be provided to an indemnitee, this Section 7 shall be
automatically amended, in keeping with the express intent of the parties hereto,
as necessary to render all the remainder of this CO&M Agreement valid and
enforceable and to provide that the indemnifications provided herein shall
extend and be effective only to the maximum extent permitted by such law. Upon
notice therefor, the Company shall advance to the indemnified party the costs of
any Liabilities for which indemnification is to be sought hereunder upon the
execution by the indemnified party of a written undertaking to repay any costs
for which indemnification pursuant to this Section 7 is determined to be
improper by mutual agreement or pursuant to the procedures set forth in
Section 11.2 of this CO&M Agreement, together with interest thereon at the
Default Rate. With respect to any Liabilities asserted against any indemnified
party for which indemnification may be sought hereunder, the Company shall not,
without the indemnified party’s prior written consent, settle or compromise such
Liability or consent to entry of any judgment in respect thereof which imposes
any future obligation on the indemnified party or which does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
indemnified party a release from all Liabilities asserted by such claimant. The
Company (a) shall have the right to defend, at its cost and expense, such
Liabilities in all appropriate Proceedings, and (b) shall have full control
(including choice of counsel) of such defense and Proceedings, including any
compromise or settlement thereof (subject to the foregoing provisions of this
Section 7), and the indemnified parties shall cooperate in such defense in all
reasonable ways. The Company shall not be required to provide indemnification
pursuant to this Section 7 to the extent, if any, that the Liabilities in
question are not borne or incurred by the indemnified parties because of the
availability of insurance proceeds from the insurance required in Section 8.2 of
this CO&M Agreement to the indemnified parties.

8. INSURANCE.

  8.1.   During the construction of the Facilities, the Operator shall cause to
be carried and maintained, either directly or through the contractor(s) building
the Facilities, builders risk insurance, including the perils of flood and
earthquake, if available and deemed affordable, and including mutually
acceptable sub-limits of offsite storage and transit for the full replacement
value of the work with all coinsurance waived and “permission to occupy”
granted. The insurance shall name the Operator and the Company as insureds, as
their respective interests may appear.

  8.2.   At all times during the Operation of the Facilities, the Operator shall
provide (a) workers’ compensation insurance granting full compensation under the
worker’s compensation law of any state in which operations are conducted, and
(b) employer’s liability insurance with limits of not less than $2,000,000 per
occurrence for all of the Operator’s employees engaged in work on the
Facilities, and (c) automobile liability insurance for all vehicles owned or
used by the Operator, covering injuries to or death of Persons and damage to
property, with a combined single limit of not less than $2,000,000 per
occurrence.

  8.3.   If permitted by applicable law, the Operator may self-insure the
workers’ compensation, employer’s liability insurance, and automobile liability
insurance required above and up to $1,000,000 per occurrence, or such other
amounts as the Company authorizes by Supermajority Vote, of the general
liability insurance required in Section 8.4 below.

  8.4.   To be effective as of the Execution Date, the Operator shall procure
and maintain for the benefit of the Company and the Operator general liability
and/or excess liability insurance with limits of not less than $10,000,000 per
occurrence for bodily injury and property damage combined. The Company and the
Operator will be the named insureds under such insurance policy(ies). The
Operator’s parent and Affiliates and the Members will be named as additional
insureds under such insurance policy(ies). Such insurance policy(ies) will be
worded to provide primary insurance to the named insureds and the above
additional insureds with respect to the Operation of the Facilities, and to
waive any rights of subrogation against the above additional insureds. Within
fifteen (15) days after the execution of this CO&M Agreement, and annually
thereafter, Operator will have a certificate of insurance issued evidencing this
insurance upon the specific request of the Company or any Member whose Sharing
Ratio is at least 25%.

  8.5.   The Operator will procure and maintain for the benefit of and on behalf
of the Company and the Operator all-risk property insurance covering the
Facilities with no co-insurance, including coverage for boiler and machinery,
business interruption (at the Company’s option) and natural gas in the
possession of the Company. This insurance will be placed into effect
simultaneously with the termination of the builder’s risk insurance the Operator
is required to maintain under Section 8.1 of this CO&M Agreement. The Company
and the Operator will be the named insureds and loss payees under such insurance
policy. This insurance policy will provide a waiver of any rights of subrogation
against the Operator’s Parent and Affiliates and the Members. Any insurance
proceeds for any losses under this policy will be applied against the cost to
repair or replace the Facilities.

  8.6.   All policies of insurance shall be written with carriers holding a
current Best’s rating of at least “A” (or if not so rated, has a
creditworthiness comparable to such an “A” rated carrier), and shall afford at
least 60-days written notice in the event of cancellation, non-renewal or
material reduction in the coverage required hereunder. The costs for premiums,
deductibles and self-insured retentions for the insurance maintained by the
Operator pursuant to this CO&M Agreement shall be reimbursable costs pursuant to
Section 5 of this CO&M Agreement. In addition, in the event the Operator
self-insures the general liability insurance required above as herein permitted,
the Operator shall be reimbursed as provided in Section 3.2.7 of the Accounting
Procedure.

9. TERM.

This CO&M Agreement shall be effective as of the date hereof and shall continue
for the term of the Company as provided in the Company’s Articles of
Organization; provided, however, that this CO&M Agreement shall be terminated
earlier upon the first to occur of the following: (a) the Operator’s Affiliate
(or any successor Affiliate of the Operator) that is a Member ceases to be a
Member; or (b) the Operator commits a material default under this CO&M Agreement
and such material default continues for a period of 120 days after notice
thereof by the Company to the Operator (provided, however, that no termination
shall occur if the Operator has initiated action to cure such material default
but, despite its good faith efforts, it has been unable to complete such cure
within such 120 day period).

10. SURVIVAL OF OBLIGATIONS.

The termination of this CO&M Agreement shall not discharge any Party from any
obligation that it owes to any other Party by reason of any transaction,
commitment or agreement entered into, or any Liabilities that shall occur or
arise (or the circumstances, events or basis of which shall occur or arise)
prior to such termination. It is the intent of the Parties that any obligation
owed by a Party to the other Party (whether the same shall be known or unknown
at the time of termination hereof, or whether the circumstances, events or basis
of the same shall be known or unknown at the termination hereof) shall survive
the time of termination of this CO&M Agreement.

11. LAW OF THE CONTRACT AND ARBITRATION.

11.1. Law of the Contract. THIS CO&M AGREEMENT IS GOVERNED BY AND SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WEST VIRGINIA, EXCLUDING
ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THIS CO&M AGREEMENT TO THE LAW OF ANOTHER JURISDICTION.

11.2. Arbitration.

  11.2.1.   In the event that the Parties are unable to agree on any matter
relating to this CO&M Agreement, the Company or the Operator may upon notice
given to the other call for submission of such matter to arbitration. The Party
requesting arbitration shall set forth in such notice in adequate detail the
issues to be arbitrated, and within ten (10) days from the receipt of such
notice, the other Party may set forth in adequate detail additional related
issues to be arbitrated. Within ten (10) days after the giving of such latter
notice, each Party shall furnish to the other Party a notice (“Decision Notice”)
setting forth the decision (on a word-for-word basis) that such Party wishes the
arbitrator(s) to make with respect to the issues to be arbitrated. Within ten
(10) days after the giving of the latter of the two Decision Notices, the
Parties shall attend a meeting (“Pre-Arbitration Meeting”) at a mutually
acceptable time and place to discuss fully the content of such Decision Notices
and based thereon determine whether either or both wish to modify their Decision
Notices in any way. Any such modifications shall be discussed with each other,
so that when each Party finalizes its Decision Notice, it shall do so with full
knowledge of the content of the other Party’s final Decision Notice. The
finalization of such Decision Notices and the delivery of same by each Party to
the other shall occur at the Pre-Arbitration Meeting unless by mutual agreement
they agree to have one or more additional Pre-Arbitration Meetings for such
purposes. If arbitration is invoked by either Party, the decision of the
arbitrators shall be final and binding upon all Parties, and neither Party shall
seek to have the applicable issues litigated rather than arbitrated (except as
may be otherwise required by law).

  11.2.2.   It is the intent of the Parties that, to the extent practicable,
such binding arbitration shall be conducted by a Person knowledgeable and
experienced in the type of matter that is the subject of the dispute. In the
event the Parties are unable to agree upon such Person within ten days after the
last Pre-Arbitration Meeting held pursuant to Section 11.2.1 above, then each
Party shall select a Person that it believes has the qualifications set forth
above as its designated arbitrator (which selection shall be accomplished by
notifying the other Party of the identity of such Person), and such arbitrators
so designated shall mutually agree upon a similarly qualified third Person to
complete the arbitration panel; provided, however, that if one of the Parties
fails to select its designated arbitrator as specified herein within ten
(10) days of receiving notice from the other Party that such other Party has
selected its designated arbitrator, then the arbitration provided for herein
shall be conducted by the one arbitrator so designated. In the event that the
Persons selected by the Parties are unable to agree on a third member of the
panel within ten (10) days after the selection of the latter of the two
arbitrators, such Person shall be designated by the American Arbitration
Association upon application of either Party or both Parties. Upon final
selection of the entire panel, such panel shall, as expeditiously as possible
(and if possible, within ninety (90) days after the selection of the last
arbitrator), render a decision on the matter submitted for arbitration. Such
panel shall be required to adopt either the decision set forth in the Operator’s
final Decision Notice or the decision set forth in the Company’s final Decision
Notice and shall have no power whatsoever to reach any other result. Such panel
shall adopt the decision that in its judgment is the more fair, equitable and in
conformity with this CO&M Agreement. The arbitration shall be conducted in
Charleston, West Virginia, in accordance with the commercial arbitration rules
of the American Arbitration Association.

  11.2.3.   Upon the determination of any such dispute, the arbitrators shall
bill the costs attributable to such binding arbitration to the losing Party;
provided, however, that the arbitrators shall be empowered to apportion such
costs between the Parties if they deem it appropriate.

  11.2.4.   It is the intent of the Parties that, once arbitration is invoked by
either Party pursuant to the provisions of this Section 11, the matters set for
arbitration shall be decided as set forth herein, and they shall not seek to
have this Section 11 rendered unenforceable or to have such matter decided in
any other way; provided, however, that nothing herein shall prevent the Parties
from negotiating a settlement of any issue at any time.

  11.2.5.   Without limiting any of the foregoing, for purposes of this CO&M
Agreement an independent determination of whether an action or failure to act
constitutes Prohibited Conduct shall be made by arbitration pursuant to this
Section 11, without regard to the findings of any court or administrative body
or the settlement or compromise of any claim (other than a settlement of the
type referred to in Section 11.2.4 above).

12. SPECIAL AND CONSEQUENTIAL DAMAGES. The indemnification provided in Section 7
of this CO&M Agreement shall include without limitation claims made by any
Person for special, indirect, consequential or punitive damages; otherwise,
neither Party shall have any liability hereunder to the other Party for any
special, indirect, consequential or punitive damages.

13. GENERAL.

13.1. Effect of Agreement; Amendments. This CO&M Agreement, together with the
definitions in the Operating Agreement, constitutes the entire agreement among
the Parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral and written, among the Parties with respect
to the subject matter hereof. This CO&M Agreement can be amended, restated or
supplemented only by the written agreement of the Operator and the Company.

13.2. Notices. Except as expressly set forth to the contrary in this CO&M
Agreement, all notices, requests, or consents provided for or permitted to be
given under this CO&M Agreement must be in writing. Notices and other
communications will be deemed to have been given (a) on the date when delivered
by hand or by means of electronic transmission (and followed by electronic
confirmation of receipt), (b) on the date after the day when deposited for
delivery with a nationally recognized air courier, or (c) on the third Business
Day after being deposited in the United States mail, postage prepaid return
receipt requested. All notices, requests, and consents to be sent to the
Operator must be given to the Operator at the following addresses:

Columbia Gas Transmission Corporation
Post Office Box 1273
Charleston, West Virginia 25325-1273
Attention: Manager-Customer Services, if by mail

or

304-357-3527, Attn: Manager-Customer Services, if by facsimile transmission

and if regarding billing and invoicing matters to:

Columbia Gas Transmission Corporation
12801 Fair Lakes Parkway
Fairfax, VA 22033
Attn: Vice President, Marketing

if by mail

or

703-227-3377

Fax number

Attn: Vice President Marketing

if by facsimile transmission.

All notices, requests, and consents to be sent to the Company must be given to
the Management Committee at the following addresses:

Hardy Storage Company, LLC
12801 Fair Lakes Parkway
Fairfax, VA 22033

if by mail

or

703-227-3377 if by facsimile transmission.

Whenever any notice is required to be given by law or this CO&M Agreement, a
written waiver thereof, signed by the Person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice.

13.3. Counterparts. This CO&M Agreement may be executed in any number of
counterparts with the same effect as if all Parties had signed the same
document. Each counterpart shall be deemed an original, but all of which
together shall constitute one and the same instrument.

13.4. Waiver. A waiver or consent, expressed or implied, to or of any breach or
default by any Person in the performance by the Person of its obligations with
respect to the Company or the Operator is not a consent or waiver to or of any
other breach or default in the performance by that Person of the same or any
other obligations of that Person with respect to the Company or the Operator.
Failure on the part of a Person to complain of any act of any Person or to
declare any Person in default with respect to the Company or the Operator,
irrespective of how long that failure continues, does not constitute a waiver by
the Person of its rights with respect to that default until the applicable
statute-of-limitations period has run.

13.5. Assignability; Successors. This CO&M Agreement may not be assigned by
either Party without the written consent of the other Party; provided, however,
that such consent shall not be withheld unreasonably; provided, further, that
this CO&M Agreement may be pledged by the Company without the consent of the
Operator in connection with any Financing Commitment ; provided, further, that
this CO&M agreement may be assigned by the Company to a corporate entity formed
pursuant to Section 4.1.1(ii) of the Operating Agreement. This CO&M Agreement
and all of the obligations and rights herein established shall extend to and be
binding upon and shall inure to the benefit of the respective successors and
permitted assigns of the respective Parties hereto. Unless otherwise agreed, any
assignment of this CO&M Agreement shall not relieve the assigning Party of any
of its obligations hereunder.

13.6. Third Persons. Except as expressly provided in this CO&M Agreement,
nothing in this CO&M Agreement shall provide any benefit to any third party or
entitle any third party to any claim, cause of action, remedy or right of any
kind, it being the intent of the Parties that this CO&M Agreement shall not be
construed as a third party beneficiary contract. In the specific event that the
Operator’s affiliates own fifty percent (50%) or more of the Membership
Interests in the Company, any other Member of the Company that holds more than
forty-five percent (45%) of the Membership Interests in the Company may
independently invoke arbitration against the Operator pursuant to Section 11.2
regarding any breach of this CO&M Agreement by the Operator if such Member first
makes written demand on the Company to invoke arbitration with respect to the
breach of this CO&M Agreement by the Operator specified in such demand letter
and within thirty (30) days after such demand, the Company fails to take action
to cause the Operator to cure such breach of this CO&M Agreement or to invoke
arbitration to enforce the Company’s rights against the Operator for such breach
of this CO&M Agreement. In the event the Company invokes arbitration, the
Company shall diligently pursue such proceeding and shall not agree to a
dismissal or settlement of such proceeding without the written consent of the
Member who requested the institution of arbitration.

13.7. Laws and Regulatory Bodies. This CO&M Agreement and the obligations of the
Parties hereunder are subject to all applicable laws, rules, orders and
regulations of Governmental Authorities having jurisdiction, and to the extent
of conflict, such laws, rules, orders and regulations of governmental
authorities having jurisdiction shall control.

13.8. Headings. Headings and captions are for reference purposes only and shall
not affect the meaning or interpretation of this CO&M Agreement.

13.9. Severability. If any provision of this CO&M Agreement or the application
thereof to any Person or circumstance is held invalid or unenforceable to any
extent, the remainder of this CO&M Agreement and the application of that
provision to other Persons or circumstances are not affected thereby and that
provision shall be enforced to the greatest extent permitted by law.

13.10. Further Assurances. In connection with this CO&M Agreement and the
transactions contemplated hereby, each Party shall execute and deliver any
additional instruments and documents and perform any acts and things as may be
necessary or appropriate to effectuate and perform the terms and provisions of
this CO&M Agreement and those transactions.

IN WITNESS WHEREOF, the Parties have caused this CO&M Agreement to be executed
by their duly authorized representatives as of the date first above written.

         
 
  COMPANY:

 
  Hardy Storage Company, LLC

 
  By each of its Members:

 
  COLUMBIA HARDY

 
  By: /s/ Glen L. Kettering

 
  Name: Glen L. Kettering

 
  Title: President

OPERATOR:
    —  
Columbia Gas Transmission Corporation
  PIEDMONT HARDY

By: /s/ Glen L. Kettering
  By: /s/ Kevin M. O’Hara

 
       
Name: Glen L. Kettering
  Name: Kevin M. O’Hara

 
       
Title: President
  Title: Vice President
     

3

EXHIBIT A

TO

CONSTRUCTION, OPERATION AND MAINTENANCE AGREEMENT

ACCOUNTING PROCEDURE

1. GENERAL PROVISIONS

  1.1.   Statements and Billings. Commencing on the twentieth Business Day of
the first full Month after the Execution Date, the Operator shall bill the
Company on the twentieth Business Day of each Month or as soon as practicable
thereafter for the variable costs and the fixed fee for the preceding Month,
including any adjustment that may be necessary to correct prior billings. If
requested by the Company, the Operator will promptly provide reasonably
sufficient support for the variable costs included on a bill. The bills for the
variable costs will be summarized by appropriate classifications indicative of
the nature thereof and will be accompanied by such detail and supporting
documentation as the Company may reasonably request.

  1.2.   Payment by Company. The Company shall pay all bills presented by the
Operator as provided in the CO&M Agreement and the Operating Agreement on or
before the fifteenth (15th) Day after the bill is received. If payment is not
made within such time, the unpaid balance shall bear interest until paid at the
Default Rate.

  1.3.   Financial Records. The Operator shall maintain accurate books and
records in accordance with Required Accounting Practice covering all of the
Company’s activities and the Operator’s actions under the CO&M Agreement.

  1.4.   Interest-Bearing Account. To the extent practicable, the funds of the
Company will be held in one or more interest-bearing accounts.

2. CAPITAL ITEMS

  2.1.   Transferred Property. To the extent the Operator or any of its
Affiliates owns real and/or personal property necessary or desirable for the
Operation of the Facilities, the Operator or such Affiliate may transfer such
property to the Company in accordance with the provisions of the Operating
Agreement and, if such property may be capitalized under Required Accounting
Practice, then the Operator will do so on the books of the Company.

  2.2.   Natural Gas. The cost of natural gas utilized for installation,
purging, testing, storage field base gas (whether injected or purchased in
place) and natural gas used for line pack of the Facilities shall be a capital
item.

  2.3.   Information Systems. Any major modification to information systems
requiring information processing and/or programming services shall be a capital
item.

3. COSTS AND EXPENSES

Subject to the limitations hereafter prescribed and the provisions of the CO&M
Agreement, the Operator shall charge the Company for all costs and expenses
provided for in Section 5.1.2 of the CO&M Agreement, including, but not limited
to, the following items:

  3.1.   Fixed Costs. For each full month for which Operator sends the Company a
bill, it will bill the Company the sum of $41,677 for the first twelve months
following the date of the CO&M Agreement, and for each partial month a prorated
amount. The amount to be billed under this Section 3.1 will escalate at the rate
of 3% annually for each subsequent twelve-month period. The amounts billed under
this Section 3.1 are designed to cover the following costs and expenses incurred
by Operator:

  3.1.1.   Rentals. All allocations made by the Operator’s Affiliates for space
occupied by the Operator’s employees who are primarily dedicated to the
Operation of the Facilities.

  3.1.2.   Administrative Services. All costs incurred by Operator with respect
to services that do not relate specifically to the field operations of the
Company, including:

  3.1.2.1.   Executive, Financial, Human Resources, Information Technology,
In-house Legal, Community and Government Affairs, Regulatory Affairs and
Strategic Planning Services;

  3.1.2.2.   Commercial, Gas Control, Rates, Facility Planning, Marketing and
Price Desk Services;

  3.1.2.3.   Engineering, Land, and general management of the Field Services
personnel whose services are included in 3.2 below.

  3.1.3.   Services. The cost of contract services, including audit fees, and
utilities procured from outside sources and not related to actual field
operations.

  3.1.4.   Other Costs. All other costs incurred by Operator to provide the
services required under the CO&M Agreement and not specifically addressed in 3.2
below.

  3.2.   Variable Costs. On a monthly basis, Operator will bill the Company for
the actual costs incurred in the prior month for the following categories of
costs and expenses:

  3.2.1.   Purchase of Materials. It is contemplated that most material,
equipment and supplies will be owned by the Company and purchased or furnished
for its account. So far as is reasonably practical and consistent with
efficient, safe and economical operation as determined by the Operator, only
such material shall be obtained for the Facilities as may be required for the
prudent and reliable operation of the Facilities, including a reasonable supply
of spare parts, and the accumulation of surplus stock shall be avoided. To the
extent reasonably possible, the Operator shall take advantage of discounts
available by early payments and pass such benefits on to the Company. However,
Company may purchase material, equipment and supplies from Operator or
Operator’s Affiliates, in which case the price to be charged the Company will
equal the cost to Operator or its Affiliate, plus an appropriate purchasing and
stores overhead ordinarily in use by the Operator or Affiliate

  3.2.2.   Labor Costs. A prorated portion of the following labor costs for
employees of Operator or Operator’s Affiliates who provide actual field
operation services for Company, based on time sheets prepared by those
employees:

  3.2.2.1.   Salaries and wages, which shall be loaded to include the Operator’s
actual costs of bonuses, holiday, vacation, sickness and jury service benefits
and other customary allowances for time not worked and training required under
Federal or state regulations or by company policy;

  3.2.2.2.   Expenditures or contributions made pursuant to assessments imposed
by a Governmental Authority that are applicable to salaries, wages and costs,
including, but not limited to, FICA taxes and federal and state unemployment
taxes; and

  3.2.2.3.   The costs of plans incurred by or on behalf of the Operator for
workers’ compensation, employers’ group life insurance, hospitalization,
disability, pension, retirement, savings and other benefit plans.

  3.2.3.   Reimbursable Expenses of Employees. Reasonable personal expenses of
employees of Operator or Operator’s Affiliates, whose labor costs are chargeable
to Company under 3.2.2 above. As used herein, the term “personal expenses” shall
mean out-of-pocket expenditures incurred by Operator’s or Operator’s Affiliate’s
employees in the performance of their duties and for which such employees are
reimbursed. The Operator shall maintain documentation for such expenses in
accordance with the standards of the Internal Revenue Service.

  3.2.4.   Transportation. Transportation of employees, equipment and material
and supplies necessary for the Operation of the Facilities.

  3.2.5.   Legal Expenses and Claims. All third party costs and expenses of
handling, investigating and settling litigation or claims arising by reason of
the Operation of the Facilities or necessary to protect or recover any
Facilities or property, including, but not limited to, attorney’s fees, court
costs, costs of investigation or procuring evidence and any judgments paid or
amounts paid in settlement or satisfaction of any such litigation or claims. All
judgments received or amounts received in settlement of litigation with respect
to any claim asserted on behalf of the Company shall be for the benefit of and
shall be remitted to the Company.

  3.2.6.   Taxes. All taxes (except those measured by income) of every kind and
nature assessed or levied upon or incurred in connection with the Operation of
the Facilities or on the Facilities or other property of the Company and which
taxes have been paid by the Operator for the benefit of the Company, including
charges for late payment arising from extensions of the time for filing that are
caused by the Company, or that result from the Operator’s good faith efforts to
contest the amount or application of any tax.

  3.2.7.   Insurance. Net of any returns, refunds or dividends, all premiums,
deductibles and self insured retentions paid and expenses incurred for insurance
required to be carried under this CO&M Agreement.

  3.2.8.   Permits, Licenses and Bond. Cost of permits, licenses and bond
premiums necessary in the performance of the Operator’s duties.

  3.2.9.   Storage Well Leases. Costs associated with the maintenance of
underground storage lease rights and payments for storage well rentals.

  3.2.10.   Equipment Rentals. Costs associated with periodic rental of
equipment for the Operator to perform its operations and maintenance duties
under the CO&M Agreement.

  3.2.11.   Outside Services. Cost associated with utilizing outside services as
permitted by Section 4.2 of the CO&M Agreement to assist with the operation and
maintenance of the storage facilities, rights-of-ways and fluid disposal.

  3.2.12.   Special Purpose Vehicles. Costs associated with the operation of
special purpose vehicles to assist with the operation and maintenance of the
storage facilities, rights-of-ways and fluid disposal.

  3.2.13.   General Tools. Costs associated with the general equipment tools
utilized by the Operator’s personnel and that are necessary for the Operation of
the Facility.

  3.2.14.   Process Energy Used. Costs associated with the non-prime mover
electrical power used for the Operations of the Facility.

4