Tres Palacios Gas Storage LLC

Original Volume No. 1

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Effective Date: 08/01/2008, Docket: RP08-424-000, Status: Effective

Original Sheet No. 109 Original Sheet No. 109

GENERAL TERMS AND CONDITIONS

(Continued)

(5) If Prospective Customer has an on-going business relationship

with TRES PALACIOS, no delinquent balances shall be outstanding

for services TRES PALACIOS shall have previously performed and

Customer shall have paid its account in the past according to the

established terms and not made deductions or withheld payment for

claims not authorized by contract;

(6) Prospective Customer shall confirm in writing that no

significant collection lawsuits or judgments are outstanding which

would seriously reflect upon the business entity's ability to

remain solvent;

(7) For prospective Customers that are state-regulated local

distribution companies, documentation provided by each state

regulatory commission (or equivalent authority) having

jurisdiction over the local distribution company's rates

establishing the existence and effectiveness of an authorized gas

cost recovery mechanism which (x) provides for full recovery of

both gas commodity and transportation capacity costs and (y) is

afforded regulatory asset accounting treatment in accordance with

Generally Accepted Accounting Principles;

(8) A Statement of prospective Customer's legal composition and a

statement of the length of time Customer's business has been in

operation; and

(9) Such other information as may be mutually agreed to by TRES

PALACIOS and prospective Customer.

(h) In the event prospective Customer cannot provide

the information specified in Section 3.3(g) above, it shall, if

applicable, provide that information for its parent company.

(i) TRES PALACIOS shall not be required to perform or

to continue service under any Rate Schedule on behalf of any

Customer or prospective Customer which is or has become insolvent

or which, at TRES PALACIOS' request, fails to demonstrate

creditworthiness in accordance with Section 3.3, and TRES PALACIOS

may take such action as is permitted in Section 28.2 of these

General Terms and Conditions; provided, however, that such

Customer or prospective Customer may receive service under any

Rate Schedule if it provides Financial Assurances pursuant to

Section 31. For purposes of this Section 3.3(i), the insolvency

of a Customer or prospective Customer shall be conclusively

demonstrated by the filing by Customer, or any parent entity

thereof or guarantor of Customer, of a voluntary petition in

bankruptcy or the entry of a decree or order by a court having

jurisdiction in the premises adjudging the Customer, or any parent

entity thereof or guarantor of Customer, bankrupt or insolvent, or

approving, as properly filed, a petition seeking reorganization,

arrangement, adjustment or composition of or in respect of the

Customer, or any parent entity thereof or guarantor of Customer,

under the U.S. Bankruptcy Code or any other applicable