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. 157 Original Sheet No. 157

GENERAL TERMS AND CONDITIONS

(Continued)

31.9 If prior to initiation of service Customer does not

have an Acceptable Credit Rating, then, as a condition of TRES

PALACIOS initiating service, Customer shall provide TRES PALACIOS

with one or more of the forms of Financial Assurances provided in

this Section 31.

31.10 A Customer that does not have, or at any time fails

to maintain, an Acceptable Credit Rating shall provide to TRES

PALACIOS, to secure its obligation to TRES PALACIOS pursuant to

each of Customer's Storage Service Agreements, one or more of the

following forms of Financial Assurances:

(a) An irrevocable Letter of Credit, subject to the

following:

(1) each Letter of Credit shall be in effect for the lesser of

one (1) year or for the Term of the transaction plus 120 days. If

the Term of the transaction plus 120 days is greater than one (1)

year, Customer shall ensure that its obligation to TRES PALACIOS

is secured continuously, and accordingly shall provide TRES

PALACIOS with a replacement Letter of Credit no later than 120

days prior to the expiration of the then-effective Letter of

Credit. TRES PALACIOS will return the expiring Letter of Credit

to Customer within five (5) days of the date the Replacement

Letter of Credit becomes effective;

(2) each Letter of Credit shall be in form and substance

satisfactory to TRES PALACIOS, and shall provide for partial

drawdowns and, without limiting the generality of the foregoing,

shall be issued by a financial institution acceptable to TRES

PALACIOS that is rated at least BBB- by Standard and Poor's

Corporation and Baa3 by Moody's Investor Services, Inc.; and

(3) in addition to all other remedies available to TRES PALACIOS

at law or in equity, if Customer fails to provide a replacement

Letter of Credit in accordance with this Section 31.10(a), TRES

PALACIOS may draw upon the expiring Letter of Credit to the full

amount thereof and apply the funds so drawn in payment in whole or

in part of the obligations of Customer under each or any of

Customer's Storage Service Agreements.

(b) Customer shall provide to TRES PALACIOS, to

secure its obligation to TRES PALACIOS pursuant to each of

Customer's Storage Service Agreements, a Guaranty granted to TRES

PALACIOS by Customer's direct or indirect parent (the

"Guarantor"), provided that the amount of such Guaranty shall not

exceed the Unsecured Collateral Limit for such parent determined

using the above criteria and parent's Credit Rating. The Guaranty

shall be in a form acceptable to TRES PALACIOS and the provisions

of this Section shall apply to the Guarantor as if the Guarantor

were the Customer;

(c) If Customer has requested, TRES PALACIOS may accept

other forms of Financial Assurances to secure Customer's

obligations under the Storage Service Agreements, provided that

TRES PALACIOS may reject or accept such other forms of Financial

Assurances in a manner that is not unduly discriminatory;