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

Third Revised Volume No. 1

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Effective Date: 06/01/1997, Docket: RP97-146-001, Status: Effective

First Revised Sheet No. 64 First Revised Sheet No. 64 : Superseded

Superseding: Substitute Original Sheet No. 64

GENERAL TERMS AND CONDITIONS

(Continued)

(iii) The Qualified Bid or applicable Prearranged Transaction with the

highest Net Present Value shall be the winning bid, except that any

Qualified Bid with a higher Net Present Value than a Prearranged

Transaction for the same capacity shall be subject to the right of

first refusal of the Prearranged Shipper in that Prearranged

Transaction under subsection 17.7(c) of this Section 17.

(iv) If, following identification of the highest-value Qualified Bid or

Prearranged Transaction, the capacity that remains available for

release under the Release Proposal is greater than the capacity

requested in the Qualified Bid or Prearranged Transaction with the

next highest Net Present Value, then capacity shall also be awarded

to such next highest bid. This procedure shall continue until the

award of capacity to a Qualified Bid or Prearranged Transaction with

the next highest Net Present Value would cause the remaining

available capacity under the Release Proposal to be exceeded.

described in subsection 17.7(a) or 17.7(b) result in selection of a

Qualified Bid with a higher value than a Prearranged Transaction for the

same capacity, then U-TOS shall provide the Prearranged Shipper in the

Prearranged Transaction with the terms and conditions of such

highest-value Qualified Bid. Such information shall be communicated via

U-TOS' Electronic Delivery Mechanism by 3 p.m. Central Time on the

business day prior to the nomination deadline applicable to the effective

date of the release. If the Prearranged Shipper elects to match the

highest-value Qualified Bid, it shall inform U-TOS via U-TOS' Electronic

Delivery Mechanism by 4 p.m. Central Time on the business day prior to the

nomination deadline applicable to the effective date of the release, of

its unconditional agreement to match or exceed such terms and conditions.

A Prearranged Shipper that matches or exceeds a highest-value Qualified

Bid shall be granted the first award of available capacity under the

Release Proposal. If the Prearranged Shipper declines to match the

highest-value Qualified Bid, then the first award of available capacity

shall be granted to the Qualified Bidder that made such highest-value

Qualified Bid.

(d) Notification of Winners. U-TOS shall notify winning Qualified Bidders

and/or Prearranged Shippers, via U-TOS' Electronic Delivery Mechanism by

5 p.m. Central Time on the business day prior to the nomination deadline

applicable to the effective date of the release, of their award of

capacity. An award of released capacity shall be deemed to occur on the

date that such notification occurs, or, in the case of a short-term

Prearranged Transaction, on the date that U-TOS receives the associated

Release Proposal from the Releasing Shipper. The effective date of the

release shall be determined in accordance with subsection 17.8 of this

Section 17.

(e) U-TOS shall post the winning bid, including the name of the winning

bidder, on its Electronic Delivery Mechanism for five (5) days.

17.8 Effecting Service for the Replacement Shipper.

(a) A release of capacity under this Section 17 shall become effective on the

later of: (1)-the date specified for such release in the Release

Proposal/Prearranged Transaction, as applicable; (2)-the date that U-TOS

receives a Rate Schedule FT Transportation Agreement that has been