Export Compliance and Sanctions, Anti-Corruption, Anti-Boycott, Conflicts of Interest/Principles of Conduct, Violation and Remedy Provisions

11/22/2017 – Present

Export Compliance and Sanctions.  In the event that the commodity subject to this agreement is to be exported, each Party warrants to the other Party that it, and each other person or entity for whose actions such Party may be held accountable, will comply with all applicable laws, regulations, rules and requirements relating to export and re-export control and sanctions, including but not limited to the U.S. Export Administration Regulations, U.S. Treasury Department’s Office of Foreign Assets Control regulations, the U.S. International Traffic in Arms Regulations (together, “”Export and Sanctions Law””).  Nothing shall be shipped to, transshipped through, or sourced from, directly or indirectly, any country, company or individual or for any end-use that is prohibited under Export and Sanctions Law.  If either Party or any other person or entity for whose actions such Party may be held accountable is or becomes identified on any government export denial, blocked, debarred, Specially Designated National, or other similar list, the other Party may terminate this agreement upon written notice to the other Party at any time.  Each Party shall be excused from performance of any obligation under this agreement if such performance is prohibited under Export and Sanctions Law.

Anti-Corruption.  Each Party shall comply with all applicable anti-bribery and anti-money laundering laws, rules, and regulations of the United States, United Kingdom, European Union or any member state thereof, the Republic of Singapore, Canada, and any other similar laws in all applicable jurisdictions, including without limitation, the currently effective or successor versions of the U.S. Foreign Corrupt Practices Act, the UK Bribery Act 2010, UK anti-money laundering and anti-terrorism laws and regulations, the Canadian Corruption of Foreign Public Officials Act, and the Singapore Prevention of Corruption Act.
 
Anti-Boycott.  Nothing in this agreement is intended to be, or shall be construed as, an agreement by either Party to take or refrain from taking any action that is or would be prohibited by or penalized under U.S. anti-boycott laws, rules, or regulations.
 
Conflicts of Interest/Principles of Conduct.  Neither Party shall, directly or indirectly, pay salaries, commissions or fees, or make payments or rebates to employees or officers of the other Party; or favor employees or officers of the other Party or their designees with gifts or entertainment of unreasonable cost or value or services or goods sold at less than full market value; or enter into business arrangements with employees or officers of the other Party unless such employees or officers are acting as representatives of the other Party.  Phillips 66 and its subsidiaries are committed to the highest standard of business ethics and conduct.  Expectations of business partners of Phillips 66 and its subsidiaries can be found in the Phillips 66 Business Partner Principles of Conduct, available at WWW.PHILLIPS66.COM.  

Violation and Remedy Provisions.  Either Party may terminate this agreement immediately upon written notice to the other Party if the other Party is in breach of the above clauses or fails to cooperate by providing information demonstrating compliance herewith.  Violation of these clauses shall be deemed a material breach of this agreement.  Each Party agrees to indemnify the other Party for any fines, penalties, claims, losses, damages, costs (including legal costs), expenses, and liabilities that may arise as a result of the indemnifying Party’s breach of its obligations under these clauses.

U.S. Exports Clause

10/20/2023 – Present

USPPI (US Principal Party of Interest)/ FPPI (Foreign Principal Party of Interest) Export Filings

When Phillips 66 Company (P66) sells a commodity for export from the United States to a non-U.S. counterparty responsible for the movement of the commodity and pays associated freight charges, the non-U.S. counterparty is the Foreign Principal Party in Interest (FPPI), and P66 is the U.S.  Principal Party in Interest (USPPI). The FPPI authorizes P66 to prepare and file with the U.S. government the required export documentation where applicable, including the Electronic Export Information (EEI). The FPPI confirms that this written authorization does not authorize Phillips 66 to determine export licensing requirements as defined in 15 CFR 758.3(b) for export transactions facilitated on your behalf.

The FPPI is responsible for the accuracy of the information associated with the sale that is required to be provided to P66 for the EEI filing. If the FPPI authorizes a U.S. agent other than P66 to submit EEI filings, counterparty’s agent is responsible for EEI filings and any other required export documentation with the U.S. government. In these cases, the FPPI must provide P66 with the authorized agent’s contact information so that P66 may provide the agent with all P66-required EEI information.

When P66 sells a commodity for export from the U.S. to a U.S. counterparty, and the U.S. counterparty is responsible for the movement of the commodity and pays associated freight costs, the U.S. counterparty is the USPPI responsible for preparing and filing an EEI and any other required documentation with the U.S. Government.

When P66 sells a commodity for export from the U.S. to a U.S. counterparty and P66 is responsible for the movement of the commodity and pays associated freight costs, P66 is the USPPI responsible for preparing and filing an EEI and any other required documentation with the U.S. Government.

The Parties agree that all U.S. exports must be in accordance with the U.S. Export Administration Regulations. Diversions or transshipments contrary to U.S. law are prohibited. Counterparty is responsible for all compliance requirements related to importation into the destination country.

Importer of Record Counterparty is Importer of Record)

10/1/2019 – Present

Counterparty is the importer of record and responsible for U.S. customs broker and US import fees. Seller warrants country of origin of product and that product does not originate from any country subject to U.S. economic sanctions or embargoes.  Seller agrees to provide Buyer a completed certificate of origin prior to discharge of Product at Buyer’s U.S. facility.  Seller agrees to provide, upon request, other written information and records evidencing the origin, manufacture, chain of custody and shipment of the Product pursuant within 21 days of receipt from Buyer if Buyer needs the information to respond to a request for information from U.S. Customs and Border Protection.

For imports from Canada into the United States for which counterparty is the Importer of Record for U.S. C.B.P. reporting purposes, counterparty is a Canadian company, and Phillips 66 is designated as the ultimate consignee on the Customs Entry, counterparty shall send notification to DOEREPORTING@P66.COM within two business days of entry summary which shall include counterparty name, merchandise country of origin, entry number, port code of entry, product type, quantity, API gravity, and sulfur content for each product shipment.

Importer of Record (Phillips 66 Company is Importer of Record)

10/1/2019 – Present

Phillips 66 is the importer of record and responsible for U.S. customs broker and US import fees. Seller warrants country of origin of product and that product does not originate from any country subject to U.S. economic sanctions or embargoes.  Seller agrees to provide Buyer a completed certificate of origin prior to discharge of Product at Buyer’s U.S. facility.  Seller agrees to provide, upon request, other written information and records evidencing the origin, manufacture, chain of custody and shipment of the Product pursuant within 21 days of receipt from Buyer if Buyer needs the information to respond to a request for information from U.S. Customs and Border Protection.

For imports from Canada into the United States for which counterparty is the Importer of Record for U.S. C.B.P. reporting purposes, counterparty is a Canadian company, and Phillips 66 is designated as the ultimate consignee on the Customs Entry, counterparty shall send notification to DOEREPORTING@P66.COM within two business days of entry summary which shall include counterparty name, merchandise country of origin, entry number, port code of entry, product type, quantity, API gravity, and sulfur content for each product shipment.

When Phillips 66 Company (P66) transacts in a commodity for export with a U.S. counterparty and the U.S. counterparty is responsible for the movement of the commodity and pays associated freight costs, the U.S. counterparty is considered the U.S. Principal Party in Interest (USPPI) and responsible for preparing and filing the EEI and any other required export documentation with the U.S. Government. Counterparty is also responsible for all compliance requirements related to importation into the destination country.

Market Disruption

4/1/2018 – Present

If the price of the product specified in a transaction confirmation is based upon a specified index and there is a Market Disruption Event, as defined below, each party has the right to notify the other in writing of such. Thereafter, the parties shall negotiate in good faith to agree on a replacement price or on a method for determining a replacement price for the affected time period. If with respect to Market Disruption Event described in clause (a) and temporary Market Disruption Events described in clauses (c) and (d), the parties have not so agreed on or before the second business day following the affected day, then the replacement price shall be determined within the next two following business days with each party obtaining, in good faith and from non- affiliated market participants in the relevant market, up to two quotes for prices of the product for the affected day of a similar quality and quantity in the geographical location closest in proximity to the delivery location and averaging the quotes received. If either party fails to provide up to two quotes, then the simple average of all quotes obtained shall determine the replacement price for the affected index price.

For all other Market Disruption Events, if the parties have not so agreed to a replacement index on or before thirty days following the business day on which the initial written notice was provided, either party has the right to submit the issue to the American Arbitration Association (“AAA”) for resolution regardless of the method for dispute resolution specified herein. The arbitration will be held in Houston, TX or such other location as the parties may agree. The matter will be determined by one arbitrator (“Arbitrator”) pursuant to the AAA’s Commercial Arbitration Rules in effect as of the date the affected transaction was entered into. The resulting decision of the Arbitrator shall be the final, binding, and non-appealable and the exclusive remedy between the parties regarding this issue. If the parties fail to appoint the Arbitrator within fifteen days after the AAA receives the notice of arbitration (the “Arbitration Commencement Date”), each party shall submit to the AAA a list containing the names of three persons to serve as the Arbitrator, and the AAA will appoint the Arbitrator from the submitted names within forty-five days after the Arbitration Commencement Date, or if no names are submitted, the AAA shall appoint the Arbitrator it deems appropriate. Within sixty days after the Arbitration Commencement Date, each party shall submit to the Arbitrator in writing its proposed resolution to such dispute and any relevant information. Within ninety days after the Arbitration Commencement Date, the Arbitrator shall select the resolution proposed by one of the parties. If only one party submits a proposed resolution, the Arbitrator shall select that resolution as its decision.

A “Market Disruption Event” means, with respect to a specified index, any of the following events: (a) the failure of the index to announce or publish information necessary for determining the contract price; (b) the failure of trading to commence or the permanent discontinuation or material suspension of trading on the exchange or market acting as the index; (c) the temporary or permanent discontinuance or unavailability of the index; (d) the temporary or permanent closing of any exchange acting as the index; (e) a material change in the formula for or the method of determining the index has occurred; or (f) either party believes in good faith that the index is no longer representative of the market price for such product.

Tax Obligations and Shipment Destination Charges

1/1/2003 – Present

FOB/CFR/CIF: Seller shall be liable for all taxes, duties and other such charges applicable to the Product sold hereunder prior to the load port.  Buyer shall be liable for all taxes, duties and other such charges applicable to the sale and/or delivery of Product at or after the load port including assessments and other charges on the mode of transportation and any taxes on freight.

Shipment Destination Charges: If Buyer and Seller agree to the change the Delivery Point at Buyer’s request, Buyer agrees it shall be liable for all taxes, duties and other charges applicable to the sale and/or delivery of Product to such changed Delivery Point including assessments and other charges on the mode of transportation.

Exemption Certificate: Buyer shall furnish Seller with satisfactory exemption certificates where exemption from taxes is claimed.  Unless Buyer has timely furnished such exemption certificates, Buyer shall pay invoices, in full when due, without set off or deduction.

Title Transfer (DAT)

10/29/2012 – Present

Seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination. Delivered price does not include governmental taxes or fees incident to the transfer of title to Product imposed by law on Seller which taxes or fees Buyer shall reimburse seller.

Title Transfer (DAT)

10/29/2012 – Present

Seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at the named terminal at the named port or place of destination. Delivered price does not include governmental taxes or fees incident to the transfer of title to Product imposed by law on Seller which taxes or fees Buyer shall reimburse seller.

Title Transfer (DES)

1/1/2003 – Present

Price does not include governmental taxes or fees incident to the transfer of title to Product imposed by law on Seller which taxes or fees Buyer shall reimburse seller.

Volumetric Calculations

11/29/2014 – Present

All measurement equipment, procedures, calculations, and practices shall conform to the most current API Manual of Petroleum Measurement Standards (MPMS) and the latest revision of the ASTM Standards.

Lease Sanctions

9/1/2017 – present

SANCTIONS AND CONFLICT OF INTEREST

Sanctions.   If either Party or any other person or entity for whose actions such Party may be held accountable, is or becomes identified on any government export denial, blocked, debarred, Specially Designated National, or other similar list, it shall be considered a material breach of this agreement.  The non-breaching Party may terminate this agreement immediately upon written notice to the other Party.  Each Party shall be excused from performance of any obligation under this agreement if such performance is prohibited under applicable sanctions laws.  Each Party agrees to indemnify the other Party for any fines, penalties, claims, losses, damages, costs (including legal costs), expenses, and liabilities that may arise as a result of the indemnifying Party’s breach of its obligations under these clauses. 

Conflicts of Interest/Principles of Conduct.  Neither Party shall, directly or indirectly, pay salaries, commissions or fees, or make payments or rebates to employees or officers of the other Party; or favor employees or officers of the other Party or their designees with gifts or entertainment of unreasonable cost or value or services or goods sold at less than full market value; or enter into business arrangements with employees or officers of the other Party unless such employees or officers are acting as representatives of the other Party.  Phillips 66 and its subsidiaries are committed to the highest standard of business ethics and conduct.  Expectations of business partners of Phillips 66 and its subsidiaries can be found in the Phillips 66 Business Partner Principles of Conduct, available at WWW.PHILLIPS66.COM.

Order of Preference. In the event of a conflict between this section and any other provision hereof, the terms of this section shall prevail.

OPERATOR CHANGES

In the event that Phillips 66 is the buyer under this transaction and the lease(s) set forth in the attached Exhibit(s) are sold or assigned to a third party (“New Owner”) and the New Owner notifies Phillips 66 of such, Phillips 66 shall be permitted to cancel this Agreement with respect to the affected leases(s) upon written notice to you.  Phillips 66 shall be permitted to make the effective date of cancellation consistent with the date on which the New Owner became the owner of such lease(s), as communicated by the New Owner to Phillips 66.