High Island Offshore System, L.L.C.

Third Revised Volume No. 1

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Effective Date: 04/07/1999, Docket: GT99- 17-000, Status: Effective

Original Sheet No. 120 Original Sheet No. 120 : Effective

GENERAL TERMS AND CONDITIONS

(Continued)

conditional award of capacity to a Qualified Bid

with the next highest Net Present Value would cause

the remaining available capacity to be exceeded.

16.8(c) If there are two or more Qualified Bids with equal

Net Present Values, then the capacity shall be

awarded conditionally to the Qualified Bidder whose

Qualified Bid was received first during the posting

period, and if two or more such Qualified Bids of

equal value were received on the same day, the

capacity shall be conditionally allocated between

or among them on a pro rata basis.

16.9 Right of First Refusal of Existing Shipper.

16.9(a) Within 15 days following the close of the posting

period specified in subsection 16.4 above, HIOS

shall forward to the Existing Shipper, by mail or

facsimile, the particulars of the Qualified Bid(s)

representing the highest bid, without revealing the

identity of the Qualified Bidder(s).

16.9(b) Within seven (7) days following receipt of the

particulars forwarded by HIOS pursuant to

subsection 16.9(a), the Existing Shipper may match

the highest bid(s) for the capacity by submitting a

binding written offer to HIOS, by mail or

facsimile, to accept the reservation charge and

transaction term provisions of the highest bid(s),

for the amount of capacity covered by the bid(s)

that the Existing Shipper wishes to retain,

provided, however, that in order to retain the

capacity, the Existing Shipper need not match a

proposed transaction term in excess of 20 years in

duration. If the Existing Shipper matches the

highest bid(s), then the affected capacity

shall be retained by that shipper, and HIOS