Document:

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                                                                   EXHIBIT 10.31

                               SECOND AMENDMENT TO
                             BUSINESS LOAN AGREEMENT

         THIS SECOND AMENDMENT TO BUSINESS LOAN AGREEMENT (the "Agreement") is
made as of April 28, 2000, by and between GENOMIC SOLUTIONS INC., a Delaware
corporation ("GSI"), GENOMIC SOLUTIONS, LTD., a United Kingdom corporation
("Genomic UK"), GENOMIC SOLUTIONS, K.K., a Japanese corporation ("Genomic
Japan", and together with GSI and Genomic UK, the "Borrowers"), WHITE PINES
LIMITED PARTNERSHIP I, a Michigan limited partnership "WPLP"), PACIFIC CAPITAL,
L.P., a Delaware limited partnership ("Pacific"), and CHASE VENTURE CAPITAL
ASSOCIATES, a California limited partnership ("Chase", and together with WPLP
and Pacific, the "Requisite Lenders").

                                    RECITALS:

         A. Borrowers and Requisite Lenders are parties to a Business Loan
Agreement dated October 28, 1999, as amended by the First Amendment to Business
Loan Agreement dated as of March 24, 2000 (collectively, the "Loan Agreement"),
pursuant to which, among other things, the Requisite Lenders and certain other
persons (collectively, the "Lenders") advanced to Borrowers the sum of Three
Million Five Hundred Thousand Dollars ($3,500,000"), evidenced by Promissory
Notes delivered by Borrowers to Lenders (collectively, the "Promissory Notes").

         B. GSI wishes to increase its existing line of credit loan with
Comerica Bank (the "Bank") from $22,000,000 to $32,000,000, which amount
constitutes Long-Term Debt under the Loan Agreement and would exceed the amount
of Long-Term Debt which Borrowers may allow to exist under Section 9(a)(ii) of
the Loan Agreement. GSI would like to amend Section 9(a)(ii) of the Loan
Agreement to increase the amount of Long-Term Debt, which it may allow to exist
by an additional $10,000,000.

         C. Under Section 14(i) of the Loan Agreement, the Loan Agreement, any
related document and any other agreement between the parties to the Loan
Agreement, may be modified in a writing executed by Borrowers and Lenders owning
not less than two-thirds of the warrants, or shares of GSI's common stock issued
upon exercise of the warrants, issued pursuant to the Loan Agreement. Requisite
Lenders own more than two-thirds of the warrants, or shares of GSI's common
stock issued upon exercise of the warrants, issued pursuant to the Loan
Agreement.

         D. GSI has filed a registration statement with the SEC for a public
offering and sale of its securities for an aggregate amount in excess of
$50,000,000 (the "IPO") and has applied to have such securities listed on the
Nasdaq National Market System. Borrowers and Requisite Lenders have agreed to
amend the Loan Agreement to allow GSI to increase the amount of Long-Term Debt
which it may allow to exist by and additional $10,000,000 and, if an IPO is
consummated and the securities issued by GSI in the IPO is listed on the Nasdaq
National Market System, to amend the Notes to extend the due date of the Notes
to the first anniversary of the date on which the IPO is consummated, all upon
the terms and conditions set forth in this Amendment.

         NOW, THEREFORE, the parties agree as follows:

<PAGE>   2

          1. Amendment of Loan Agreement. Section 9(a)(ii) is hereby amended in
     its entirety to read as follows:

                           "(ii) allow consolidated Long-Term Debt to be greater
         than $15,500,000 at any time during 1999, to be greater than
         $46,500,000 at any time during 2000, to be greater than 47,500,000 at
         any time during 2001, to be greater than 51,500,000 at any time during
         2002 or 2003 or to be greater than 48,500,000 as of December 31, 2003
         or at any time thereafter. "Long-Term Debt" shall mean the sum of (x)
         all bank debt, (y) all liabilities classified as long-term in
         accordance with generally accepted accounting principles, and (z) the
         current portion of any liabilities encompassed by "(y)"."

         2. Amendment to Notes. If GSI consummates the IPO and lists its
securities on the Nasdaq National Market System, then, effective as of the date
of the consummation of the IPO, the Notes shall be amended and restated in the
form attached hereto as Exhibit A (the "Amended Notes"). Following the
consummation of the IPO, Lenders shall surrender their Notes to Borrowers in
exchange for the Amended Notes. From and after the date of the consummation of
the IPO and until the Notes are surrendered and exchanged for the Amended Notes,
the Notes shall entitle Lenders only to receive payments of principal, interest,
fees and expenses as provided under the terms of the Amended Notes.

         3. Full Force and Effect. The Loan Agreement, as modified by this
Amendment, remains in full force and effect.

         4. Counterparts and Facsimile Signatures. This Amendment may be
executed in any number of counterparts, each of which shall be deemed to be an
original and all of which together shall constitute one instrument. Copies
(whether facsimile, photostatic or otherwise) of signatures to this Agreement
shall be deemed to be originals and may be relied on to the same extent as the
originals.

                                      -2-
<PAGE>   3

         IN WITNESS WHEREOF, the parties have executed this Amendment on the
date first set forth above.

                                      GENOMIC SOLUTIONS INC.

                                      By: /s/
                                         -----------------------------------
                                         Jeffrey S. Williams, President

                                      GENOMIC SOLUTIONS, LTD.

                                      By: Jeffrey S. Williams
                                         -----------------------------------

                                      Its: Chairman
                                         -----------------------------------

                                      GENOMIC SOLUTIONS, K.K.

                                      By: Jeffrey S. Williams
                                         -----------------------------------
                                      Its: Director
                                         -----------------------------------

                                      WHITE PINES LIMITED PARTNERSHIP I

                                      By: White Pines G.P., L.L.C., its general
                                          partner

                                      By:  /s/
                                         -----------------------------------
                                         Daniel Boyle, Vice President

                                      PACIFIC CAPITAL, L.P.

                                      By: WP Pacific G.P., L.L.C., a general
                                          partner

                                      By:  /s/
                                         -----------------------------------
                                         Daniel Boyle, Vice President

                                      CHASE VENTURE CAPITAL ASSOCIATES

                                      By:  Damion Wicker
                                          -----------------------------------
                                      Its: General Partner
                                          -----------------------------------

                                      -3-
<PAGE>   4
                                    EXHIBIT A

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO EFFECTUATE
SUCH TRANSACTION.

                              AMENDED AND RESTATED
                          P R O M I S S O R Y  N O T E
                          ----------------------------

$                                                     Ann Arbor, Michigan
  ----------                                                    , 2000
                                                      ----------

     FOR VALUE RECEIVED, Genomic Solutions, Inc., a Delaware corporation, 4355
Varsity Drive, Suite E, Ann Arbor, Michigan 48108, Genomic Solutions, Ltd., a
United Kingdom corporation, Unit 3, Forge Close, Little End Road, Eaton Socon,
St. Neots, Cambridgeshire, England PE193TP and Genomic Solutions, K.K., a
Japanese corporation, Gotanda Chuo Bldg. 2F, 3-5, Higashigotanda 2-chome,
Shinagawa-ku, Tokyo 141-0022, Japan, jointly and severally, hereinafter
collectively referred to as "Borrower", promise to pay to the order of _______
_________, hereinafter called the "Lender" or holder, the sum of
_______($______) dollars in lawful money of the United States of America, with
interest at the rate of twelve percent (12.0%) per annum on all sums at any time
unpaid, at ____ _____________ or at such other place as the holder hereof may
designate by written notice to the Borrower, with interest from the date of the
disbursement of the loan, until paid.

     Interest shall be payable quarterly in arrears on each March 31, June 30,
September 30 and December 31, commencing June 30, 2000. On each interest payment
date, (i) 7/12ths of the interest payable on such date shall be paid in cash,
and (ii) 5/12ths of the interest payable on such date shall be paid by the
issuance to Lender of a number of shares of common stock of Parent equal to the
amount of such interest divided by the Minimum Company Value, provided that on
each scheduled interest payment date, Lender may upon ten (10) days, prior
written notice to Parent elect not to receive such payment in shares of common
stock of Parent and instead elect to defer payment of 5/12ths of the interest
due on such scheduled interest payment date, which amount shall then be added to
the outstanding principal balance of this Note with effect as of such payment
date. Interest shall be calculated on a 365 day basis on the unpaid principal
balance for the actual days outstanding. For purposes of the foregoing, "Minimum
Company Value" shall be the same amount determined as the Minimum Company Value
in accordance with the provisions of the Warrants attached to the Loan Agreement
(defined below) as Exhibit B (initially $5.00 per share).
<PAGE>   5
     The entire unpaid principal balance plus accrued interest and all other
indebtedness shall be due and payable on the earliest of (i) the first
anniversary of this Note, (ii) the date on which (A) Parent's cash and cash
equivalents fall below $50.0 million, or (B) Parent's board of directors
authorizes any action which would cause Parent's cash and cash equivalents to
fall below $50.0 million, (iii) the effective date, immediately after the
effective time, of any merger or consolidation of Parent, (iv) a transfer of
more than 50% of the issued and outstanding common stock of Parent (if
immediately after the transfer the transferee has control of Parent), or (v) a
sale of substantially all of the assets of Parent.

     Until all indebtedness of Borrower to Lender under this Note has been paid
in full, Parent shall furnish to Lender monthly on or before the 5th business
day of each month during the term of this Note a statement setting forth
Parent's cash and cash equivalents as of the last day of the preceding month. If
at any time during the term of this Note Parent's cash and cash equivalents fall
below $52.0 million, then, until such time as Parent's cash and cash equivalents
equal or exceed $52.0 million, Parent shall furnish to Lender by the close of
business on each Wednesday a statement setting forth Parent's cash and cash
equivalents as of the last day of the preceding week.

     This Note, together with the Amended and Restated Promissory Notes of even
date herewith (the "Other Notes") executed and delivered by Borrower to the
other Lenders, as such term is defined in the Loan Agreement (the "April
Lenders"), amends and restates the Promissory Notes dated as of April 23, 1999,
delivered by Borrower to the April Lenders (the "Original Notes"). This Note and
the Other Notes do not constitute the extinguishment of the debt evidenced by
the Original Notes, but represent a renewal of the Original Notes. Any amount
outstanding under the Original Notes, as of the effective date of this Note,
shall constitute an advance under this Note and the Other Notes.

     Parent granted to Lender a security interest in or lien upon all assets of
Parent as described in the Security Agreement and Assignment and Pledge
Agreement dated April 23, 1999 as security for the payment of the Promissory
Note dated April 23, 1999 delivered by the Borrower to the Lender. Such security
interest and lien continue to secure this Note. Borrower may hereafter grant a
security interest in or lien upon other assets as may be described in any other
security agreement, mortgage, or other document executed at any time by the
Borrower and delivered to the Lender (herein collectively termed "Collateral")
as security for the payment of this Note, and for the payment of all other
liabilities, whether direct, indirect, absolute or contingent, now or hereafter
existing, due to become due, several or otherwise, of the Borrower to the Lender
under the Loan Documents (as defined in the Loan Agreement) (herein termed
"Indebtedness").

     Upon an event of default under any security agreement, the Business Loan
Agreement dated April 23, 1999 between Lender, Borrower and others, as amended
by the First Amendment to Business Loan Agreement dated October 28, 1999, the
Second Amendment to Business Loan Agreement dated as of March 24, 2000 and the
Third Amendment to Business Loan Agreement dated April 28, 2000, by and among
the same parties (collectively, the "Loan Agreement"), or any document given in
connection with the Collateral, which event of default is not cured within any

                                      -2-
<PAGE>   6
applicable grace period, (i) this Note and all Indebtedness shall, at the option
of the Lender, become immediately due and payable in full without notice,
presentation or demand for payment, all such being hereby waived by the Borrower
and in such event, it is agreed that the Lender may exercise all rights and
remedies available to it under any security agreement, hypothecation agreement,
Loan Agreement, or other agreement relating to or otherwise securing any of the
Indebtedness or, which may be available to Lender under the Uniform Commercial
Code as in effect in the State of Michigan or other applicable law, and (ii)
this Note shall thereafter bear interest at the rate of sixteen percent (16%)
per annum until such default is cured. Delay or forbearance by the Lender in the
exercise of any right granted hereunder shall not operate as a waiver thereof.

     A late payment fee in the amount of five percent (5.0%) of the installment
due and owing will be assessed against the Borrower in the event the payment
required hereunder is received by the Lender more than ten (10) days after the
due date.

     Provided that all interest payments on this Note shall then be current,
Borrower may prepay this Note in whole at any time or in part from time to time.
This Note is one of various promissory notes executed and delivered by Borrower
pursuant to the Loan Agreement. Borrower shall not prepay this Note in whole or
in part unless Borrower shall concurrently prepay in whole or a prorata part of
all other promissory notes originally executed and delivered by Borrower on the
same date as this Note.

     Notwithstanding any provision to the contrary, it is the intent of the
Lender and Borrower that neither the Lender nor any subsequent holder shall be
entitled to receive, collect, reserve or apply, as interest, any amount in
excess of the maximum lawful rate of interest permitted to be charged by
applicable law or regulations, as amended or enacted from time to time. In the
event the Note calls for an interest payment that exceeds the maximum lawful
rate of interest then applicable, such interest shall not be received,
collected, charged, or reserved until such time as that interest, together with
all other interest then payable, falls within the applicable maximum lawful rate
of interest. In the event the Lender, or any subsequent holder, receives any
such interest in excess of the then maximum lawful rate of interest, such amount
which would be excessive interest shall be deemed a partial prepayment of
principal and treated hereunder as such, or, if the principal indebtedness
evidenced hereby is paid in full, any remaining excess funds shall immediately
be paid to the Borrower.

     Borrower hereby waives presentment, demand, protest and notice of dishonor
and agrees that Borrower shall not be released or discharged by reason of any
release, sale or non-action with respect to the Collateral or other undertakings
securing this Note.

     The security rights of Lender and its assigns shall not be impaired by
Lender's sale, hypothecation, or rehypothecation of any Note of the Borrower or
any item of the Collateral, or by any indulgence, including but not limited to:
(i) any renewal, extension, or modification which Lender may grant with respect
to the Indebtedness or any part thereof, (ii) any surrender, compromise,
release, renewal, extension, exchange, or substitution which Lender may grant in
respect to the Collateral, or (iii) any indulgence granted in respect of any
endorser, co-maker,

                                      -3-
<PAGE>   7
guarantor or surety. The purchaser, assignee, transferee, or pledgee of this
Note, the Collateral, any guarantee, and any other document (or any of them),
sold, assigned, transferred, pledged, or repledged, shall forthwith become
vested with and entitled to exercise all the powers and rights given by this
Note and all Loan Documents of the undersigned to Lender, as if said purchaser,
assignee, transferee, or pledgee were originally named as payee in this Note and
in the Loan Documents.

     This Note shall be construed, interpreted and enforced in accordance with
the laws of the State of Michigan without regard to its conflict of laws
principles. Borrower expressly submits to the jurisdiction and venue in the
Federal or state courts of the State of Michigan by process served by mail on
Borrower at the address set forth above.

     This Note has been negotiated between Borrower and Lender and shall be
deemed to be mutually drafted by them.

     IN WITNESS WHEREOF, this Note has been executed by the duly authorized
officers of the Borrower.

                                   GENOMIC SOLUTIONS INC.

                                   By:
                                      ------------------------------------------
                                           Jeffrey S. Williams, President

                                   GENOMIC SOLUTIONS, LTD

                                   By:
                                      ------------------------------------------

                                   Its:
                                       -----------------------------------------

                                   GENOMIC SOLUTIONS, K.K.

                                   By:
                                      ------------------------------------------

                                   Its:
                                       -----------------------------------------

                                       -4-<PAGE>   1
                                                                   EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into this 1st day
of April, 2000, by and between DUKE ENERGY FIELD SERVICES ASSETS, L.L.C. ("DEFS
Assets"), with its principal executive offices in Denver, Colorado, and Michael
J. Panatier ("Executive").

         WHEREAS, Executive is now and for a number of years has been in the
employ of GPM, a division of Phillips Petroleum Company ("Phillips"); and

         WHEREAS Duke Energy Corporation ("Duke Energy") and Phillips have
announced their intention to create a joint venture combining certain assets
into a company called Duke Energy Field Services, L.L.C. ("DEFS, L.L.C."); and

         WHEREAS DEFS Assets desires to continue the employment of Executive
and to receive the benefit of the Executive's knowledge, experience, reputation
and contacts; and

         WHEREAS, the parties desire that this Agreement set forth the terms
and conditions of Executive's employment by DEFS Assets and that it represents
the entire agreement of the parties with respect to that subject;

         NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

         1. Employment. Upon the satisfactory completion of the planned joint
venture transaction between Duke Energy and Phillips, DEFS Assets hereby
employs Executive, and Executive hereby accepts such employment, upon the terms
and conditions set forth herein.

                                                                              1
<PAGE>   2

         2. Position and Duties.

                  (a) Position. At all times during the term of employment
under this Agreement, Executive shall hold a position of responsibility and
importance with the functions, duties and responsibility of Vice Chairman of
the Board of DEFS, L.L.C. and will report directly to the position of Chairman,
President and CEO. It is expressly understood that nothing in the immediately
foregoing sentence shall preclude the Board of Directors of DEFS, L.L.C.
("Board") from making such organizational and reporting changes as well as
promotions as the Board may in good faith deem desirable for the good of DEFS,
L.L.C. The parties acknowledge that Executive's duties and responsibilities
enumerated herein with respect to DEFS, L.L.C. will be transferred to a new
entity to be formed and to be known as Duke Energy Field Services Corporation
("DEFS Corporation").

                  (b) Duties. Executive's duties shall include, in addition to
those enumerated in the governing documents of DEFS, L.L.C., managing such
functions or segments of DEFS, L.L.C.'s business as may be directed from
time-to-time by the Chairman of the Board. Executive acknowledges and agrees
that whatever his duties hereunder may be he owes DEFS, L.L.C. a duty of
loyalty, fidelity and allegiance to act at all times in the best interests of
DEFS, L.L.C. and to do no act that would injure DEFS, L.L.C.'s reputation.

                  (c) Performance. Throughout the period of employment
Executive shall devote his full time and undivided attention during normal
business hours to the business and affairs of DEFS, L.L.C., except for
reasonable vacation periods and except for periods of illness or incapacity.
Executive may reasonably participate as a member in community, civic or similar
organizations and may pursue personal investments that do not interfere with
the normal business activities of DEFS, L.L.C., DEFS Corporation, or Duke
Energy.

                  (d) Loyal and Conscientious Performance. Executive shall act
at all times in compliance with the policies, rules and decisions adopted from
time-to-time by DEFS, L.L.C. and perform all duties and obligations required of
him by this Agreement in a loyal and conscientious manner.

                  (e) Location. Executive's office shall be located in Houston,
Texas or such other location as the Board may designate and the Executive
agree.

                                                                              2
<PAGE>   3

                  (f) Authority. Executive shall be vested with all authority
reasonably necessary to carry out his duties and responsibilities as set forth
in this Section 2.

         3. Term of Employment. The term of employment pursuant to this
Agreement shall commence on the effective date of the joint venture transaction
between Duke Energy and Phillips and shall continue for a period of two (2)
years thereafter unless this Agreement is otherwise amended pursuant to its
terms.

         4. Base Compensation. Executive's monthly base salary is $32,000. This
base compensation will be payable in installments as specified by the policies
of DEFS Assets and subject to applicable state and federal income tax and
social security tax withholding requirements. Executive's base salary shall be
subject to increases recommended by the Compensation Committee of the Board of
Directors of DEFS, L.L.C. ("Compensation Committee"), and approved by the Board
which shall review the Executive's salary and total compensation periodically.

         5. Annual Cash Incentive Payment. Executive shall be eligible to
participate in the annual bonus program for executive officers of DEFS Assets.
The target under such bonus shall be 60% of base salary. Such bonus shall be
determined under the provisions of the incentive plan established by the
Compensation Committee of the Board of Directors.

         6. Long Term Incentive. Commencing with the public offering of DEFS
Corporation shares, Executive shall receive stock grants annually with a value
as determined by DEFS Corporation to be 220% of base salary, composed of stock
options valued at 150% of base salary and restricted stock valued at 70% of
base salary. The Compensation Committee will determine the specific provisions
of the awards; provided, however, that any awards made during the initial term
of this Agreement will vest on the second anniversary of the public offering.
The terms of the awards will govern their administration; provided, however,
that if Executive violates any restrictive covenants as provided in Sections 9
or 10 of this Agreement, during the term of employment specified in

                                                                              3
<PAGE>   4

Section 3 of this Agreement or within a six-month period following termination
of employment for any reason, Executive will repay any income realized or
realizable from the long-term incentive awards granted under this Section 6.

           7. Retention Award. Executive will be awarded a restricted stock
retention award (the "Retention Award") valued by DEFS Corporation at 250% of
base salary on the date of the public offering. One-half of the Retention award
will vest on the first anniversary of the effective date of this Agreement and
one-half will vest on the second anniversary of the effective date of this
Agreement. Vesting of the Retention Award will occur only if Executive is an
active employee on the vesting date. If the Executive violates any restrictive
covenants as provided in Sections 9 or 10 of this Agreement, during the term of
employment specified in Section 3 of this Agreement or within a six-month
period following termination of employment for any reason, Executive will repay
any income realized or realizable from the Retention Award.

         8. Executive Benefits. Executive shall participate in all benefit
plans available to similarly-situated executives of DEFS Assets. The
availability and terms of such benefit plans are set by the Compensation
Committee and subject to change from time-to-time. There is no assurance that
the benefit plans will not be changed or eliminated.

         9. Confidentiality. Executive shall not, at any time, use (other than
in the ordinary course of fulfilling his duties as an employee of DEFS Assets),
divulge or otherwise disclose, either directly or indirectly, any confidential
or proprietary information (including without limitation any customer or
prospect list, supplier list, acquisition or merger targets, business plans or
strategies, data, records, or financial information) concerning the business,
policies or operations of DEFS, L.L.C., or its affiliates, which Executive may
have learned on or prior to the date hereof or during the term of Executive's
employment by DEFS L.L.C. (as employee, consultant, shareholder, officer,
controlling person, agent or otherwise) and which information is not generally
known to the public. Executive's obligations under this Section 9 shall survive
any termination of his employment.

                                                                              4
<PAGE>   5

           10. Covenant Not To Compete. In exchange for the consideration being
paid under this Agreement and in order to protect the goodwill, business and
privacy interests of DEFS, L.L.C., DEFS Corporation, and their affiliates,
Executive shall not, for a period of six (6) months following the termination
of Executive's employment for any reason, engage in the following activities in
any locality:

                  (a) Executive shall not be employed by or render services to
a third party or on a self-employed basis involving the same type of work and
responsibilities he performed for DEFS, L.L.C., including but not limited to
the management of enterprises engaged in the transportation of natural gas and
the gathering, processing, transportation and marketing of natural gas liquids
and condensate.

                  (b) Executive shall not compete in any form or fashion with
DEFS, L.L.C. by utilizing or disclosing or causing to be utilized or disclosed
DEFS, L.L.C.'s trade secrets or confidential and proprietary information.

                  (c) Executive shall not solicit, directly or indirectly,
DEFS, L.L.C.'s customers, suppliers, or employees.

         Except as otherwise provided in Section 11 hereof, the provisions of
this Section 10 shall survive the termination of this Agreement.

         11. Termination.

                  (a) Notwithstanding anything to the contrary contained
herein, Executive may terminate his employment at any time by (i) resigning or
(ii) for cause. For the purposes of this subsection 11(a), "cause" is defined
as the failure of DEFS Assets to fulfill its obligations under any of the
provisions of this Agreement, including, but not limited to, compensation,
benefits, awarding titles or changing reporting relationships.

                  (b) Executive's employment may be terminated by DEFS Assets
at any time as follows:

                           (i) due to the death of Executive;

                           (ii) due to a disability which prevents Executive
from performing the essential functions of his full duties for a period of
ninety (90) consecutive business days at anytime during the term of this
Agreement;

                                                                              5
<PAGE>   6

                           (iii) for cause, which shall mean (w) the willful
and continued failure by Executive to substantially perform his duties with
DEFS, L.L.C. or its affiliates (other than any such failure resulting from his
incapacity due to physical or mental illness) after demand for substantial
performance is delivered to him by the Chairman which specifically identifies
the manner in which DEFS, L.L.C. believes the Executive has not substantially
performed his duties, (x) the willful engaging by the Executive in gross
misconduct materially and demonstrably injurious to the property or business of
DEFS, L.L.C. or any of its affiliates, (y) the willful material violation of
paragraphs 9 or 10, or (z) fraud, misappropriation or commission of felony. For
purposes of this subsection, no act or failure to act on the Executive's part
will be considered "willful" unless done or omitted to be done, by him not in
good faith and without reasonable belief that his action or omission was in the
best interest of DEFS, L.L.C. or its affiliates or not opposed to the interests
of DEFS, L.L.C. or its affiliates.

                           (iv) for any reason other than death, disability or
for cause.

                  (c) In the event of Executive's resignation or early
termination pursuant to subsections 11(b)(i), (ii), or (iii) directly above,
Executive shall be entitled only to his base salary earned through the date of
termination. Executive's rights to any bonus shall be forfeited, but the
termination shall not affect any rights of Executive that have been vested
under any employee benefit plan or arrangement.

                  (d) In the event that DEFS Assets terminates Executive
pursuant to subsection 11(b)(iv) above, or Executive voluntarily resigns
pursuant to subsection 11(a) (ii) above, Executive shall be entitled to
severance in accordance with the provisions of Section 12 of this Agreement.

                  (e) In the event DEFS Assets decides to terminate Executive,
DEFS Assets will cooperate with Executive in determining when and how to
announce such termination. Executive shall not receive any compensation for any
period of time post-termination, except for the severance benefits provided in
Section 12 hereof.

         12. Severance Payment.

                  (a) In the event Executive terminates his employment pursuant
to subsection 11(a)(i) hereof within 12 months of the effective date of this
Agreement, he

                                                                              6
<PAGE>   7

shall forfeit the Retention Award under Section 7 hereof and other long term
incentives granted pursuant to the provisions of Section 6 hereof.

                  (b) In the event DEFS Assets terminates the employment of
Executive within 12 months of the effective date of this Agreement pursuant to
the provisions of subsection 11(b)(iii) hereof, Executive shall forfeit the
Retention Award under Section 7 hereof and other long term incentives granted
pursuant to the provisions of Section 6 hereof.

                  (c) In the event (i) DEFS Assets terminates the employment of
Executive prior to the expiration of the term specified in Section 3 hereof
pursuant to the provisions of subsection 11(b)(iv) hereof or (ii) Executive
terminates his employment prior to the expiration of the term specified in
Section 3 hereof pursuant to the provisions of subsection 11(a)(ii) hereof, the
Retention Award under Section 7 and other long term incentives granted
Executive pursuant to the provisions of Section 6 hereof shall immediately vest
and Executive shall be paid a pro-rata bonus earned during the year of
termination of his employment.

                  (d) In the event (i) Executive terminates his employment
pursuant to subsection 11(a)(i) hereof after the expiration of 12 or more
months after the effective date of this Agreement but prior to the expiration
of the term specified in Section 3 hereof, or (ii) DEFS Assets terminates the
employment of Executive pursuant to the provisions of subsection 11(b)(iii)
hereof, Executive shall forfeit any long term incentive awards issued pursuant
to the provisions of Section 6 hereof and one-half of the Retention Award under
Section 7 hereof.

         13. Change In Control.

                  (a) In the event of a Change in Control of DEFS Corporation
prior to the expiration of the term of this Agreement pursuant to Section 3
hereof, should Executive's employment be terminated (a) pursuant to subsection
11(b)(iv) hereof, or (b) by Executive pursuant to subsection 11(a)(ii) hereof,
all long term incentive awards and any unvested restricted stock awards issued
pursuant to the provisions of Section 6 and 7 hereof shall immediately vest. In
addition, Executive shall be entitled to a lump sum severance payment equal to
two hundred percent (200%) of his base annual salary in effect at the

                                                                              7
<PAGE>   8

time of termination plus his target bonus. Finally, for a period of up to two
years following such termination of employment, the Executive shall be eligible
to participate in the group medical plan sponsored by DEFS Assets for its
employees, or its equivalent on the same basis as active employees of DEFS
Assets unless the Executive becomes eligible to participate in the group
medical plan offered by a subsequent employer.

                  (b) For the purposes of this Section 13, a "change in
control" is defined as:

                           (i) the consummation of a merger or consolidation of
DEFS Corporation with one or more corporations, business trusts, common law
trusts or unincorporated businesses, including, without limitation, a general
partnership or limited partnership, pursuant to a written agreement of merger
or consolidation in which DEFS Corporation is not the surviving entity or in
which DEFS Corporation survives only as a subsidiary of another entity; or

                           (ii) any person other than Duke Energy or Phillips
is or becomes the beneficial owner, directly or indirectly, of securities of
DEFS Corporation representing more than 50% of the combined voting power of
DEFS Corporation's then outstanding voting securities; or

                           (iii) all or substantially all of the assets and
business of DEFS Corporation are sold, transferred or assigned to, or otherwise
acquired by, any other person or persons other than Duke Energy or Phillips; or

                           (iv) the dissolution or liquidation of DEFS
Corporation; or

                           (v) adoption by the Board of Directors of DEFS
Corporation of a resolution to the effect that any person other than Duke
Energy or Phillips has acquired effective control of the business and affairs
of DEFS Corporation.

                  (c) The term "beneficial owner" shall have the meaning set
forth in Section 13(d) of the Securities Exchange Act of 1934, as amended and
in the regulations promulgated thereunder. The term "person" shall mean an
individual, corporation, partnership, trust, unincorporated organization,
association or other entity; provided that the term "person" shall not include
(i) Duke Energy, (ii) Phillips, (iii) any affiliate of Duke, or (iv) any
affiliate of Phillips, or (v) any employee benefit plan maintained by Duke or
any affiliate of Duke, or (vi) any employee benefit plan maintained by Phillips
or any affiliate of

                                                                              8
<PAGE>   9

Phillips. The term "affiliate" or "affiliated" as used in this Agreement shall
mean when used with respect to a specified person or entity, any other person
or entity directly or indirectly controlled by, controlling, or under direct or
indirect common control with the specified person or entity. For the purpose of
this Section 13, "control" or "controlled" when used with respect to any
specified person or entity means the power to direct the management and
policies of that person or entity whether through the ownership of voting
securities, membership interest or by contract.

             (d) Notwithstanding the provisions of this Section 13, a "change in
control" shall not include a change in the ownership interest of Duke Energy or
Phillips, nor shall it include a change in the percentage of ownership interest
of DEFS Corporation by either Duke Energy or Phillips.

         14. Notice. Any notice to be given hereunder by either party to the
other party may be effectuated either by personal delivery in writing or by
mail, registered or certified, postage prepaid, with return receipt requested.
Mailed notices shall be addressed to the parties at the following addresses:

                  If to DEFS, L.L.C.:
                  J. W.  Mogg
                  Chairman of the Board
                  Duke Energy Field Services, Inc.
                  370 17th Street, Suite 900
                  Denver, CO 80202

                  If to Executive:
                  Mr. Michael J. Panatier
                  Vice Chairman
                  Duke Energy Field Services, Inc.
                  (address)
                  Houston, Texas (zip)

                                                                              9
<PAGE>   10

         15. Waiver of Breach. The waiver by any party to a breach of any
provision in this Agreement cannot operate or be construed as a waiver of any
subsequent breach by a party.

         16. Severability. The invalidity or unenforceability of any particular
provision in this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if the invalid or
unenforceable provision were omitted.

         17. Entire Agreement. Except as otherwise provided herein, this
Agreement contains the entire understanding of the parties as to the employment
of Executive, superseding all prior understandings and agreements, and no
modifications or amendments of the terms and conditions herein shall be
effective unless in writing and signed by the parties or their respective duly
authorized agents.

         18. Governing Law. This Agreement shall be interpreted, construed and
governed according to the laws of the State of Colorado, without reference to
conflicts of law principles thereof.

         19. Dispute Resolution. In the event any dispute arises concerning the
provisions of this Agreement or Executive's employment with DEFS, L.L.C., the
parties agree that such dispute shall be resolved in accordance with the
Employment Dispute Resolution procedures of the American Arbitration
Association and that any arbitration pursuant to such procedures shall be held
in Denver, Colorado.

         20. Consent to Jurisdiction. Employee hereby consents to the
nonexclusive jurisdiction of any state court within Denver, Colorado or any
federal court located within the same city for any proceeding instituted
hereunder or arising out of or in connection with this Agreement.

                                                                             10
<PAGE>   11

         21. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their permitted successors,
assigns, legal representatives and heirs, but neither this Agreement nor any
rights hereunder shall be assignable by Executive.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

                                     DUKE ENERGY FIELD SERVICES, INC.

                                     By: /s/ J. W. Mogg
                                         ------------------------------
                                             J. W. Mogg

                                         EXECUTIVE

                                     By: /s/ Michael J. Panatier
                                         ------------------------------
                                             Michael J. Panatier

                                                                             11

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