U-T Offshore System, L.L.C.

Third Revised Volume No. 1

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Effective Date: 11/01/1993, Docket: RS92- 88-006, Status: Effective

Original Sheet No. 58 Original Sheet No. 58 : Superseded

GENERAL TERMS AND CONDITIONS

(Continued)

16.9 Right of First Refusal of Existing Shipper.

(a) Within 15 days following the close of the posting period specified in subsection 16.4

above, U-TOS 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).

(b) Within seven (7) days following receipt of the particulars forwarded by U-TOS

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 U-TOS, 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 U-TOS shall execute a Transportation Agreement with the

Existing Shipper that contains the reservation charge, transaction term, and other

acceptable provisions of its matching bid. If, following exercise of the Existing

Shipper's right of first refusal, the capacity that remains available is greater than

the capacity requested in the highest Qualified Bid, then capacity shall be awarded

to such highest bid. The same procedure shall be followed for the Qualified Bid with

the next highest Net Present Value. Such awards of available capacity shall continue

until the award of capacity to a Qualified Bid with the next highest Net Present

Value would cause the remaining available capacity to be exceeded. U-TOS shall

execute a Transportation Agreement with any Qualified Bidder that is awarded

capacity, containing the reservation charge, transaction term, and other acceptable

provisions of its Qualified Bid.

16.10 Continuation of Service Under Existing Agreement. Upon completion of the posting,

competitive bidding, and right of first refusal procedures of this Section 16, if there is

remaining capacity under the existing Transportation Agreement between U-TOS and the

Existing Shipper, and U-TOS and the Existing Shipper have not otherwise agreed on terms

for continued firm service that are different than the terms in the existing

Transportation Agreement, and neither U-TOS nor the Existing Shipper has given notice, or

subsequently gives notice, of termination of the existing Transportation Agreement

pursuant to the terms of that Agreement, then the existing Agreement shall continue to

apply to the remaining capacity from year to year, in accordance with its terms, provided,

however, if no bids were received for the capacity under the existing Transportation

Agreement, then the Existing Shipper, upon its written agreement to pay the maximum

reservation charge, may retain such capacity for such additional fixed period as it

designates and, at the end of such additional fixed period, again exercise a right of

first refusal under this Section 16 for such capacity. U-TOS reserves the right to

initiate the posting, competitive bidding, and right of first refusal procedures of this

Section 16 in advance of any successive extension of the existing Transportation

Agreement.

17. CAPACITY RELEASE

17.1 Eligibility. Subject to the procedures and conditions set forth in the following

subsections of this Section 17, any holder of firm capacity rights under Rate Schedule FT

of this tariff, including any person that acquired such rights through release pursuant to

such procedures and conditions, may release all such rights, or a part thereof, to another

person. Any such person that seeks to release firm capacity rights is hereinafter

referred to as a "Releasing Shipper." The person to whom such rights are released is

hereinafter referred to as the "Replacement Shipper." For the purposes of certain

provisions of this Section 17, the "Replacement Shipper" may be referred to as the

"Prearranged Shipper" as that term is defined in subsection 17.4 of this Section 17, where

applicable.