2. When making a pass, and you pull beside the rider you are attempting to pass, the pass must be completed within 500 meters. If the caught rider is not passed (is still riding beside you) within 500 meters, the caught rider must sit up and drop back 25 meters before continuing their TT at the pace they were holding.
Interpretation of #2 - If you get caught, and for whatever reason the person who caught you cannot keep the pace they held to catch you in the first place and you find yourself riding side-by-side for 500 meters, the rules favor the passing rider. If you ride side-by-side for too long, the caught rider must give way to the passing rider.
Way to avoid problems and frustrations with #2 - Don't get caught.
How to not get caught and pass properly ... Do as Fabian does: