GENERAL TERMS AND CONDITIONS For the Purchase … LPG GTCs (06.10... · GENERAL TERMS AND...

Phillips 66 Company – Liquefied Petroleum Gas General Terms and Conditions

Effective July 1, 2016

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Phillips 66 Company GENERAL TERMS AND CONDITIONS

For the Purchase and Sale of

Liquefied Petroleum Gas

1. DEFINITIONS

(a) “Affiliate” means, in relation to any Party, any entity or person directly or indirectly

controlled by the Party, any entity or person that directly or indirectly controls the Party,

or any entity or person directly or indirectly under common control with the Party. For

this purpose, “control” of any Party, entity or person means ownership of at least fifty

percent (50%) of the voting power of the Party, entity or person.

(b) “API” means American Petroleum Institute.

(c) “ASTM” means ASTM International, f/k/a American Society for Testing and Materials.

(d) “Barrel” means 42 United States Gallons measured at a temperature of 60 degrees

Fahrenheit (60°F) and an absolute pressure of 29.92 inches of mercury.

(e) “Business Day” means a day on which U.S. Federal Reserve member banks in New York

City are open for business.

(f) “Buyer” means the Party obligated to buy Product under the terms of a Transaction.

(g) “Confirmation” means any writing evidencing the Transaction, which may be sent by

facsimile or any other mutually acceptable electronic means.

(h) “Day” and “Month” mean a calendar day and a calendar month respectively.

(i) “Delivery Location” means the Port of Freeport in Freeport, Texas, unless otherwise

specified in a Confirmation.

(j) “Delivery Period” means the period specified for delivery of the Product in a

Confirmation.

(k) “Gallons” means 231 cubic inches of liquid measured at a temperature of 60 degrees

Fahrenheit (60°F) and at the equilibrium vapor pressure of the liquid.

(l) “Metric Ton” or “MT” means a mass of one thousand (1,000) kilograms, or two

thousand, two hundred four point six two three pounds of fully refrigerated (1) Propane



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Product at a temperature of minus forty-two degrees Celsius (-42° C) and a pressure

below the vaporization point of the propane Product, loaded onto the Vessel and (2)

Butane Product at a temperature of minus five degrees Celsius (-5° C) and a pressure

below the vaporization point of the Butane Product loaded onto the Vessel.

(m) “Parties” shall mean Buyer and Seller, collectively, and “Party” means either Buyer or

Seller, individually. “Phillips 66” means Phillips 66 Company and “Counterparty”

means the other Party to a Transaction. For the purposes of Section 14, the term Party or

Parties includes all others for whose actions a Party may be held accountable.

(n) “Product” or “Products” means either or both fully refrigerated butane and/or fully

refrigerated propane, in either case meeting the specifications set forth in the

Confirmation.

(o) “Seller” means the Party obligated to sell Product under a Transaction, and unless

specified otherwise in the Confirmation, shall be Phillips 66.

(p) “Taxes” means any and all federal, state and local, statutory, governmental, impositions,

duties, tariffs, levies, fees and charges of every description, including all aviation fuel,

special fuel, diesel, excise, environmental, spill, gross earnings, gross receipts, sales and

use taxes, in each case, wherever imposed, and all penalties, charges, costs and interest

payable in connection with any failure to pay or delay in paying them and any deductions

or withholdings of any sort, provided, however, that Taxes shall not include (x) property

taxes, which taxes are governed by the state or local law applicable thereto, (y) taxes

based on or measured by the income, gross receipts or net worth of either Party), and (z)

fees, imposts or charges of whatsoever nature (including rates, tolls, and dues of every

description) in respect of a Vessel entering or leaving the loading or discharge port and

approaching and leaving Seller’s facilities, including charges imposed by fire boats, tugs

and escort or other support vessels, the applicable coast guard, linesmen, a pilot, and any

other person assisting a Vessel to enter or leave the loading discharge port and

approaching and leaving Seller’s facilities. The term “Taxable” shall be construed

accordingly.

(q) “Terminal Operator” means the person, which may be Seller or an Affiliate of Seller,

having responsibility for the day to day operations of the terminal, pier, wharf or offshore

loading platform at the Port of Freeport in Freeport, Texas.

(r) “Transaction” means the agreement for the purchase or sale of Products, which may be

evidenced by Confirmation and shall be governed by these General Terms and

Conditions.

(s) “U.S.” means United States of America, and every reference to money or price pertains

to U.S. currency.

(t) “Vessel” means a tankship or barge employed for the purpose of transporting Product.



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2. TITLE AND RISK OF LOSS

2.1 As of the date of delivery of each cargo of Product sold hereunder, Seller represents and

warrants that it has good title free and clear of any liens or encumbrances to such

Product, and that Seller has full right and authority to transfer such title and effect

delivery of such Product to Buyer.

2.2 All Product sold hereunder shall be “FOB , Port of Freeport, Texas” or “CFR.” The term

“FOB” and “CFR,” shall have the meaning ascribed to such terms in Incoterms-2010

edition for waterborne purchases and sales. Title and risk of loss shall pass from Seller to

Buyer as Product passes the Vessel’s permanent manifold flange at the load port, in

Freeport, Texas.

3. QUANTITY AND QUALITY DETERMINATION

3.1 All Product delivered by Seller to Buyer shall meet the quality specifications set forth in

the Confirmation of the Transaction. Buyer shall have the right to accept or reject

deliveries of off-spec Product.

3.2 Buyer may appoint a mutually acceptable Independent Inspection Company (“IIC”), the

costs of which shall be shared equally by the Parties, to witness and verify the Terminal’s

quantity and quality determination of the of Product received and delivered. Quantity as

determined by the IIC shall be final and binding on all Parties and shall be the basis for

preparing relevant shipping documents and invoices save fraud and/or manifest error. If,

for any reason an IIC is not in attendance, then quantity as determined by the Terminal

Operator shall be final and binding on all Parties and shall be the basis for preparing

relevant shipping documents and invoices absent fraud and/or manifest error. Each Party

shall have the right to witness the measurement processes, provided adequate notification

is given to interested parties.

All measurement & sampling equipment, procedures, calculations, and practices

(whether performed by IIC or by the Terminal Operator) shall be performed in

conformance with the most current International measurement, sampling and analysis

standards (API Manual of Petroleum Measurement Standards (MPMS), The Energy

Institute Hydrocarbon Management (HM), ISO and ASTM. Volumes shall be adjusted

from observed conditions to standard volumes and weight in accordance with the latest

revision of API MPMS Chapter 11 (e.g. Table 24E or 54E, etc. whichever table is

applicable to that loading).

3.3 All measurements for marine cargoes shall be determined by one of the following

methods in descending order of preference;

(a) Meters. Meters at or near the point of transfer shall determine the quantity of

cargo received or delivered. The IIC shall, where possible, verify the accuracy of



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all relevant metering equipment, including temperature and pressure measurement

devices, transmitters and calculations as well as corresponding meter proving and

calibration documentation.

(b) Vessel Measurements. i.) In the event meters are not available during any part of

the transfer, quantity shall be based on the volumes as determined from

measurements of the Vessel before and after the transfer as per API MPMS

17.10.2 (Measurement of Refrigerated and/or Pressurized Cargoes On Board

Marine Gas Carriers – Part 2 – Liquefied Petroleum and Chemical Gases).

(c) Agreement between Parties. In the event, the IIC determines that the above

custody transfer measurement points are inaccurate or are not representative of

the volume(s) of cargo transferred, the Parties shall be notified by the IIC and the

Parties shall agree to negotiate in good faith and without prejudice, a new basis

for custody transfer volumes.

3.4 Quality determination of all receipts and deliveries for marine cargoes shall be based on a

qualified laboratory’s analyses performed on representative samples obtained by the

following methods in descending order of preference:

(a) In-line Sampler. A representative sample of the cargo delivered or received shall

be obtained via flow-proportional in-line sampler that performs according to API

MPMS 8.2 and/or corresponding GPA (GPA 2166) or ISO standard to comply

with regulatory requirements.

(b) Agreement between Parties. In the event, the IIC determines that the above

custody transfer samples are not representative of the quality of cargo

transferred, the Parties agree to negotiate in good faith and without prejudice, a

new basis for quality determination.

4. CLAIMS

Notice of claim as to defect in quantity or quality with respect to any cargo of Product shall be

made in writing to Seller immediately after such apparent defect is discovered. Any such notice

of claim shall be followed promptly by a formal written claim with all necessary details to

properly process such claim. IF NO FORMAL WRITTEN CLAIM IS RECEIVED WITHIN

NINETY (90) DAYS AFTER DELIVERY OF THE PRODUCT TO THE BUYER, THE

CLAIM SHALL BE DEEMED TO HAVE BEEN WAIVED. The date of the completion of

loading or completion of delivery shall be deemed to be “hoses off” on the pertinent Vessel’s

statement of facts. Laytime and demurrage claims, if any, shall be submitted in reasonable detail

within ninety (90) days from the completion of loading/discharge.

5. PAYMENT

5.1 The payment due date shall be on the date specified in the applicable Confirmation.

5.2 Upon request Seller shall provide the following documents: Seller’s invoice and three of

three (3/3) properly issued and endorsed clean original bills of lading, certificates of



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quantity, quality, and origin, or equivalent documents as issued by the loading terminal,

or in lieu of temporarily missing documents, Seller’s letter of indemnity in form set forth

herein in Section 5.6. If Seller is unable to determine the actual price at the time of

invoice, Seller shall issue a provisional invoice based upon the prior Month’s price.

Seller shall promptly issue a final invoice after the invoice amount may be calculated,

and the final invoice shall be substituted for the provisional invoice. In the event that

Buyer shall have paid prior to the receipt of the final invoice, then Seller shall refund any

overpayment and Buyer shall pay any deficiency in payment no later than five days after

the final invoice has been sent to Buyer by Seller.

5.3 All payments shall be made by wire transfer of immediately available funds in U.S.

Dollars to Seller at such address or depository as Seller may designate in writing.

5.4 If the payment due date falls on a Day that is not a Business Day, payment shall be made

to Seller on the last Business Day prior to such payment due date.

5.5 Any amount payable for any cargo of Product or otherwise payable by Buyer to Seller

hereunder shall, if not paid when due, bear interest from the due date until the date

payment is received by Seller at an annual rate (based on a 360-day year) equal to the

rate of two (2) percentage points above the prime rate of interest effective for the

payment due date as published in the Wall Street Journal, but not more than the

maximum rate of interest permitted under applicable law. Buyer shall pay such interest

within five (5) Business Days following receipt of Seller’s invoice for such interest. If

Buyer, in good faith, disputes the accuracy of the amount due pursuant to any invoice,

Buyer will timely pay the undisputed amount and provide a written explanation of the

nature of the dispute along with supporting documentation acceptable in industry

practice. If it is determined that Buyer owes the disputed amount, then Buyer shall pay

interest in accordance with this Section on such disputed amount from and including the

originally scheduled due date to but excluding the date paid.

5.6 Form of Letter of Indemnity:

Any letter of indemnity provided by Seller shall be in the following form:

In consideration of your paying for the cargo of [VOLUME] U.S. Metric Tons of

[TYPE OF PRODUCT] which sailed from [PORT] on [VESSEL] on [BILL OF

LADING DATE] loaded with the cargo when the full set of bills of lading and

original shipping documents for the cargo have not been delivered to you at the

time payment is due under our contract dated [CONTRACT DATE]:

We hereby warrant to you that at the time property passed as specified under the

terms of the contract, we had the right to sell the cargo to you, and we had

unencumbered title to the cargo.

We hereby irrevocably and unconditionally undertake to indemnify you and hold

you harmless against any claim made against you by anyone as a result of breach by

us of any of our warranties as set out above; and all loss, costs (including, but not

limited to, reasonable attorneys’ fees), damages, and expenses which you may



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suffer, incur, or be put to which are not too remote as a result of our failure to

deliver the above document(s) in accordance with the contract.

This indemnity shall terminate on delivery by us of the aforesaid document(s).

This indemnity shall be governed by and construed in accordance with laws of the

State of New York and all disputes, controversies, or claims arising out of or in

relation to this warranty or the breach, termination, or validity hereof shall be

subject to the non-exclusive jurisdiction of the courts of the State of New York and

the United States District Court located in the Borough of Manhattan in New York

City.

Signed: [NAME]

[POSITION]

Company: __________________

6. CREDIT

6.1 Phillips 66 shall have the right from time to time to request pertinent financial

information from the Buyer to assure Phillips 66 of the Buyer’s creditworthiness.

6.2 If at any time Counterparty exceeds the credit line then in effect as from time to time

established by Phillips 66, Phillips 66 may immediately require the Counterparty to

provide Performance Assurance. “Performance Assurance” shall mean at Phillips 66’s

option: (a) prepayment for the applicable Transaction(s), (b) cash collateral in an amount

acceptable to Phillips 66, or (c) an irrevocable standby letter of credit in Phillips 66’s

favor in an amount acceptable to Phillips 66 and in a form and substance specified by

Phillips 66 and issued or confirmed by a bank acceptable to Phillips 66 (an “L/C”).

Counterparty grants to Phillips 66 a continuing first priority security interest, lien on and

right of setoff against all Performance Assurance in the form of cash transferred by

Counterparty to Phillips 66. All bank charges attendant to an L/C shall be for the account

of Counterparty. Delivery of the L/C, shall be made within two Business Days of such

request by Phillips 66, but all other Performance Assurances shall be provided by the

close of business on the Business Day following demand. Phillips 66 may immediately

suspend deliveries or receipts to or from Counterparty pending receipt of any

Performance Assurance. Any demurrage resulting from delays to a Vessel pending

receipt by Phillips 66 of Performance Assurance shall be for account of Counterparty.

Counterparty acknowledges that the credit line may be a negative amount and Phillips 66

may require Performance Assurance to be in an amount that is sufficient to cover the

anticipated exposure.

6.3 In addition to the foregoing, Phillips 66 shall have the right at any time to require

Counterparty to deliver a parent company guaranty in the form and substance satisfactory

to Phillips 66. Such guarantee shall be of the prompt payment, when due, of any and all

present or future indebtedness of Counterparty, including any amounts owed for damages

resulting from a failure of Counterparty to perform its obligations hereunder or

otherwise.



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6.4 Without limiting any other rights hereunder, Phillips 66 may require a separate

agreement pertaining to the margining and collateralization of exposure related all

Transaction between the Parties.

7. FORCE MAJEURE

7.1 Except for an obligation to make payments hereunder for Product received or pursuant to

Sections 8 or 9, a Party shall be excused from the performance of its obligation to deliver

or receive Product, to the extent its performance arises from a cause reasonably beyond

its control, and which, by the exercise of due diligence, such Party could not have

remedied, avoided or overcome. Force majeure may be due to any of the following:

(a) compliance (voluntary or involuntary) with laws, decrees, guidelines, requests, or

the like, of any government or person purporting to act therefore, or of

international organizations of which the United States is a member;

(b) restriction or cessation of production of Product due to the imposition of

conditions or requirements by any government or any person purporting to act

under the color or claim of any governmental authority which makes it necessary

to cease or to reduce the production of the Product;

(c) hostilities of war (declared or undeclared), embargoes, blockades, civil unrest,

riots or disorders, terrorism, or sabotage;

(d) fires, explosions, lightning, maritime peril, collisions, storms, landslides,

earthquakes, floods, adverse weather conditions and other acts of nature that

affect a broad geographic area;

(e) strikes, lockouts, or other labor difficulties (whether or not involving employees

of Seller or Buyer);

(f) disruption or breakdown of production or transportation facilities, equipment,

labor or materials;

(g) closing or restrictions on the use of harbors; and/or

(h) any other cause whether or not of the same class or kind, reasonably beyond the

control of either Party that prevents or interferes with the performance of such

Party’s delivery or receipt obligations.

7.2 Neither Party shall be entitled to declare an event of force majeure if performance is

affected by any or all of the following circumstances: (i) the Party claiming force

majeure excuse failed to remedy the condition and to resume the performance of such

obligations with reasonable dispatch; (ii) Seller’s ability to sell Product at a higher or

more advantageous price than the price, or Buyer’s ability to purchase Product at a lower

or more advantageous price than the price, (iii) the loss of Buyer’s market(s) or Buyer’s

inability to use or resell Product purchased hereunder, except, in either case, as provided

in Section 11.2; or (iv) the loss or failure of Seller’s Product supply or depletion of

reserves, except, in either case, as provided in Section 7.1.

7.3 In the event that either Party must invoke the provisions in this Section, such Party shall

use commercially reasonable efforts to give to the other Party, first verbally and then in



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writing, notice of the underlying circumstances of the particular cause(s) of force

majeure, and the expected duration thereof. The Party claiming force majeure will also

use commercially reasonable efforts to give the other Party notice of termination of the

events of force majeure and the date when performance is expected to resume.

7.4 The Party claiming force majeure shall also be liable for any costs of transportation that

could not reasonably be prevented, including pipeline imbalance changes, rail detention

charges or similar charges.

8. DELIVERY AND RECEIPT FAILURES

8.1 Unless excused by force majeure or if Seller shall be a Defaulting Party, as such term is

defined in Section 9, if after Buyer has nominated the quantity to be purchased from

Seller, and Buyer actually takes delivery of a quantity of Product that is less than the

Product nominated for delivery, subject to any volumetric tolerance specified in the

Confirmation, Buyer shall pay within five Business Days after receipt of notice of the

amount due, an amount equal to the terminal fee, as specified in the Confirmation, for

each Gallon not received, or if no terminal fee is specified, the difference between the

contract price per Gallon specified for such transaction and the market price for each

Gallon of Product not received. If Buyer notifies Seller prior to nomination that it will

not be receiving all or part of the contract quantity, the remedy shall be as specified in the

applicable Confirmation. If no remedy is set forth, then the provisions of this Section

shall apply as though the entire contract quantity had been nominated.

8.2 Unless excused by force majeure or if Buyer shall be a Defaulting Party, as such term is

defined in Section 9, if Seller fails to deliver the volume of Product nominated by Buyer,

Seller shall pay within five Business Days of receipt of notice of the amount due, an

amount equal to the terminal fee, as specified in the Confirmation, for each Gallon not

delivered, or if no terminal fee is specified, the difference between the market price for

each Gallon of Product not delivered and the contract price per Gallon specified for such

transaction.

8.3 A failure by a non-performing Party to pay the damages set forth herein, shall be a failure

to pay for the purposes of Section 9.

9. DEFAULT

9.1 If either Party (the “Defaulting Party”) or any guarantor, as applicable, shall with respect

to any Transaction or other agreement between the Parties: (a) fail to pay in accordance

with the agreed upon terms, and such failure is not cured within two Business Days after

written notice; (b) breach of any non-payment obligation contained herein or any other

agreement between the Parties, other than either an obligation to deliver or receive

Product, the sole remedy of which shall be specified in Section 8, or otherwise specified

as an Event of Default, if not cured within two Business Days after written notice; (c) fail

to provide Performance Assurances in accordance with Section 6.2; (d) fail to comply



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with any other credit requirement and such failure continues for two Business Days after

written notice; (e) make an assignment or any general arrangement for the benefit of

creditors; (f) become bankrupt or insolvent, however evidenced, or be unable to pay its

debts as they fall due; (g) file a petition or otherwise commence a proceeding under any

bankruptcy, insolvency or similar law, or have any such petition filed or proceeding

commenced against it; and/or (h) have a liquidator, administrator, receiver or trustee

appointed with respect to it or any substantial portion of its property or assets; (in each

case, an “Event of Default”) then the other Party (the “Non-Defaulting Party”) may on

written notice to the Defaulting Party (except in the case of default specified in clauses

(e-h) above in which case no notice is required):

(a) designate a Day to terminate all Transactions between the Parties (collectively,

the “Terminated Transactions”) and calculate its Termination Payment, as defined

below;

(b) if the Defaulting Party is Buyer and Seller has delivered Products to Buyer under

a Transaction, the Seller may take possession of the Products and/or collect upon

any security provided on behalf of Buyer; and

(c) set off or aggregate as appropriate, all other amounts then owing between the

Parties hereunder or otherwise, and at the election of the Non-Defaulting Party

amounts, if any, owed by the Non-Defaulting Party and/or its Affiliates to the

Defaulting Party or by the Defaulting Party to the Non-Defaulting Party and/or its

Affiliates, so that all such amounts are aggregated and/or netted to a single

liquidated amount payable by one Party to the other.

9.2 The net amount due after such liquidation shall be paid by the close of business on the

next Business Day. The “Termination Payment” in respect of the Terminated

Transactions shall be (a) the amount owed on or before the termination date, whether or

not then due, by each Party with respect to all Product delivered and received under such

Terminated Transaction, but not yet paid for, (b) the difference between the Market

Value and the Contract Value for each Terminated Transaction, (c) any other amounts

owed by the Parties and (d) any other damages, costs or expenses incurred by the Non-

Defaulting Party as a result of the early termination of each Transaction being

terminated, including, without duplication, any damages, losses and expenses incurred in

connection with the liquidation of hedges related to such terminated Transactions.

“Market Value” means the amount of the Product remaining to be delivered or purchased

under a Terminated Transaction multiplied by the market price for an equivalent

transaction at the Delivery Location as determined by the Non-Defaulting Party in a

commercially reasonable manner. “Contract Value” means the amount of the Product

remaining to be delivered or purchased under a Terminated Transaction multiplied by the

agreed upon price.

9.3 After an Event of Default, the Non-Defaulting Party (at its election) shall have a general

right of setoff with respect to any or all amounts owing between the Parties (whether with

respect to any Terminated Transaction, any other transaction or otherwise and whether or

not then due). After an Event of Default, the Defaulting Party is also responsible for any



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other costs and expenses (including, without limitation, reasonable attorneys’ fees and

disbursements) incurred by the Non-Defaulting Party in connection with such Default.

9.4 In addition to the remedies set forth above, immediately upon the occurrence of any

event that would give rise to an Event of Default with either or both the lapse of time or

the giving of notice, the Non-Defaulting Party may suspend all performance under the

affected Transaction and/or any other Transaction between the Parties.

9.5 The Parties intend that: (a) each Transaction shall constitute a “forward contract”; (b)

these General Terms and Conditions shall constitute a “master netting agreement”; (c)

each Party shall be a “forward contract merchant” and a “master netting agreement

participant”; (d) all payments made or to be made by one Party to the other Party

pursuant to any Transaction and/or these General Terms and Conditions constitute

“settlement payments”; and (e) any transfer of credit support, including Performance

Assurance, constitutes “margin payments” as such terms are defined in Title 11 of the

United States Code, as amended from time to time (the “Bankruptcy Code”).

Additionally, each Party’s rights under this Section constitute a “contractual right to

liquidate” the Transactions within the meaning of Section 556 of the Bankruptcy Code.

All Transactions are entered into in reliance on the fact that the General Terms and

Conditions and all Transactions thereunder form a single integrated agreement between

the Parties. Upon a Party becoming bankrupt, the other Party shall be entitled to exercise

its rights and remedies under these General Terms and Conditions in accordance with the

safe harbor provisions of the Bankruptcy Code.”

9.6 The Non-Defaulting Party’s rights under this Section shall be in addition to, and not in

limitation or exclusion of, any other rights which the Non-Defaulting Party may have

(whether by agreement, operation of law or otherwise).

10. GOVERNING LAW

10.1 These General Terms and Conditions, and each Confirmation and/or Transaction shall be

governed by and construed in accordance with the laws of the State of New York without

reference to its law on conflicts other than §5-1401 of the New York General Obligations

Law.

10.2 The Parties agree that the United Nations Convention on Contracts for the International

Sale of Goods shall not in any way apply to, or govern any Transaction, Confirmation

and/or these General Terms and Conditions.

10.3 The Parties will attempt in good faith to resolve any controversy or claim (“Dispute”)

arising out of or relating to these General Terms and Conditions, any Confirmation

and/or Transaction promptly by negotiations. If a Dispute should arise, the

representatives of the Parties who negotiated the same, or their respective successors

(“Principal Contacts”), will meet at least once and will attempt to resolve the Dispute.

Either Principal Contact may request that the other meet within fourteen (14) Days, at a



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mutually agreed time. If the Dispute has not been resolved within twenty (20) Days of

their first meeting, the Principal Contacts shall refer it to senior executives of their

respective companies who shall have authority to settle the Dispute (the “Senior

Executives”). The Principal Contacts shall promptly prepare and exchange memoranda

stating the issues in dispute and their positions, summarizing the negotiations which have

taken place, and attaching relevant documents. The Senior Executives will meet for

negotiations within fourteen (14) Days of the end of the 20-day period referred to above,

at a mutually agreed time and place. If the Dispute has not been resolved within thirty

(30) Days of the meeting of the Senior Executives (which period may be extended by

mutual agreement), the Dispute will be determined by binding arbitration in accordance

with the Dispute Resolution Procedures attached hereto as Exhibit A.

11. TAXES

11.1 Seller shall pay, reimburse, indemnify, defend and hold harmless Buyer for any and all

applicable Taxes, including all taxes assessed on or in connection with production,

extraction, processing, manufacture or transport of Product (including, without limitation,

assuring that severance taxes, royalties, working interest payments and similar burdens

imposed with relation to extraction and production of same are borne by Seller or prior

suppliers of same) with respect to the Product(s) delivered hereunder, the taxable incident

of which occurs before the transfer of title to the Product(s) to Buyer. Seller shall not be

obligated to indemnify or hold harmless Buyer for any Taxes levied or imposed by any

governmental authority in any country and payable by Buyer (i) which do not directly

relate to the performance by Buyer of its obligations hereunder, or (ii) resulting from the

creation of a permanent establishment, trade or business or presence by Buyer (or any

Affiliate thereof).

11.2 Buyer shall pay, reimburse, indemnify, defend and hold harmless Seller for: any and all

applicable Taxes with respect to the Product(s) delivered hereunder, the taxable incident

of which occurs at or after transfer of title to the Product(s), including, but not limited to,

all Taxes related to the export of the Product. Buyer shall not be obligated to indemnify

or hold harmless Seller for any Taxes levied or imposed by any governmental authority

in any country and payable by Seller (i) which does not directly relate to the performance

by Seller of its obligations hereunder, or (ii) resulting from the creation of a permanent

establishment, trade or business or presence by Seller (or any affiliate thereof). If Buyer

claims exemption from any Taxes or fees, Buyer shall provide Seller with the

appropriately executed exemption certificates.

11.3 In the event either Buyer or Seller becomes aware of a potential or actual liability to

make any payment of Taxes which might give rise to a claim, it shall give notice of the

circumstances to the other Party as soon as reasonably practicable, in order to allow both

Parties reasonable opportunity to seek to minimize their liability for such Taxes, acting

always in compliance with the laws of the relevant governmental authority. Each Party

shall give the other Party such assistance as is reasonable in the circumstances in this

regard, and Buyer or Seller (as appropriate) shall not make any payment of such Taxes



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until the due date on which such Taxes are due and payable in accordance with the

relevant tax regulations unless an early payment could result in a reduction of the liability

to such Taxes.

11.4 Seller reserves the right to claim, to receive, and to retain drawbacks on imported duty-

paid merchandise used in the manufacture of Product it delivers to Buyer, and to the

extent Buyer has such rights, Buyer hereby assigns such rights to Seller. Whenever

Product is exported, the Buyer shall promptly notify the Seller and shall, on request,

execute claim forms in favor of Seller to enable it to establish its drawback rights under

custom regulations. When applicable to Product produced by Phillips 66, Buyer shall

furnish Seller a copy of the non-negotiable bill of lading for the export of the Products,

an assignment of export drawback rights for U.S. Customs and Border Protection and any

forms required by governmental authorities covering each batch of Products sold to and

exported by Buyer or any of Buyer’s subsidiaries or licensees, each fully completed and

properly executed by all necessary parties and endorsed to Seller, where appropriate.

12. SAFETY DATA SHEETS

Seller has provided or shall provide Buyer upon Buyer’s request with Seller’s Safety

Data Sheets (“SDS”) for the Product to be delivered hereunder. Nothing herein shall

excuse Buyer from complying with all laws, regulations and decrees which may require

Buyer to provide its employees, agents, contractors, users and customers who may come

into contact with the Product with a copy of the SDS and any other safety information

provided to it by Seller, and/or which require Buyer to ensure that the recommendations

relating to the handling of the Product are followed. Compliance with any

recommendation contained in the SDS or other safety information shall not excuse Buyer

from complying with all laws, statutes, regulations or decrees of any state or territory

having jurisdiction over Buyer.

13. INDEMNITY, LIMITATION OF LIABILITY AND INSURANCE

13.1 Seller and Buyer mutually covenant to protect, defend, indemnify and hold each other

harmless from and against any and all claims, demands, suits, losses, expenses (including

without limitation, costs of defense, attorney’s fees and interest), damages, fines,

penalties, causes of action and liabilities of every type and character, including but not

limited to personal injury or death to any person including employees of either Party or

loss or damage to any personal or real property, caused by, arising out of or resulting

from the acts or omissions of negligence or willful acts of such indemnifying Party, its

officers, employees or agents with respect to the purchase and sale of Product hereunder.

In the event the Parties are jointly and/or concurrently negligent, each Party shall

indemnify the other Party to the extent of its negligent acts or omissions or willful acts.

13.2 EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER PARTY SHALL BE

LIABLE FOR ANY PROSPECTIVE OR LOST PROFITS OR SPECIAL, INDIRECT,

INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES.



Page 13 of 18

13.3 Unless Buyer is self-insured and has provided Seller evidence of such self-insurance

reasonably acceptable to Seller, Buyer agrees at its own expense to procure and maintain

or cause its agents, contractors and their subcontractors, and representative to procure

and maintain insurance coverage. Such insurance shall be in compliance with the

requirements of the law of the state in which delivery of the Product will occur with

respect to the receipt of Product hereunder and/or activities related thereto. Buyer

acknowledges and agrees that Seller shall not insure Buyer’s products, servants and/or

property of others in connection with these General Terms and Conditions, any

Confirmation and/or Transaction.

14. EXPORT COMPLIANCE, SANCTIONS, ANTI-CORRUPTION AND ANTI-

BOYCOTT

14.1 Each Party warrants to the other that it 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 is or becomes identified on any government export denial, blocked, debarred,

Specially Designated National, or other similar list, the other Party may terminate any

Transaction subject to these General Terms and Conditions upon written notice to the

other at any time. Each Party shall be excused from performance of any obligation under

the affected Transaction if such performance is prohibited under Export and Sanctions

Law.

14.2 The Parties warrant to each other that they shall comply with all applicable anti-bribery

and anti-money laundering laws, rules, and regulations of the United States, European

Union or any member state, the Republic of Singapore, and any other similar laws in all

applicable jurisdictions. These laws include, without limitation, the currently effective or

successor versions of the U.S. Foreign Corrupt Practices Act; the UK Bribery Act 2010;

the UK Money Laundering Regulations 2007; the UK Anti-Terrorism, Crime, and

Security Act 2001; the Proceeds of Crime Act 2002; and the Singapore Penal Code.

14.3 Nothing in these General Terms and Conditions 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 or regulations.

14.4 Neither Party shall directly or indirectly, pay salaries, commissions, or fees, or make

payments or rebates to employees or officers of the other Party, nor favor employees,

officers, or the designees thereof of the other Party with gifts or entertainment of

unreasonable cost or value, or with services or goods sold at less than full market value,



Page 14 of 18

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.

14.5 Either Party may terminate the affected Transactions immediately upon written notice to

the other, if the other Party is in breach of the above clauses or fails to cooperate by

providing information demonstrating compliance. Violation of these clauses shall be

deemed a material breach of these General Terms and Conditions. Each Party agrees to

indemnify the other 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.

14.6 In the event of a conflict between this section and any other provision, the terms of this

Section 14 shall prevail.

15. NEW OR CHANGED REGULATIONS

15.1 It is understood by the Parties that Seller is entering into each Transaction in reliance on

the laws, rules, regulations, decrees, agreements, concessions and arrangements

(hereinafter called “Regulations”) in effect on the date hereof with governments,

governmental instrumentalities or public authorities affecting the Product sold hereunder

including, but without limitation to the generality of the foregoing, those relating to the

production, acquisition, gathering, manufacturing, transportation, storage, export, trading

or delivery thereof, insofar as such regulations affect Seller or Seller’s Supplier.

15.2 In the event that at any time and from time to time any regulations are changed or new

regulations become effective, whether by law, decree or regulation or by response to the

insistence or request of any governmental or public authority or any person purporting to

act therefore, and the material effect of such changed or new regulations (a) is not covered

by any other provision hereunder, and (b) has a material adverse economic effect upon

Seller, Seller shall have the option to request re-negotiation of the prices or other pertinent

terms hereunder. Such option may be exercised by Seller at any time after such changed

or new regulation is promulgated, by written notice of desire to re-negotiate, such notice

to contain the new prices or terms desired by Seller.

15.3 If the Parties do not agree upon new prices or terms satisfactory to both within thirty (30)

days after Seller gives such notice, Seller shall have the right to terminate the affected

Transaction at the end of the said 30-day period. Any Product delivered during such 30-

day period shall be sold and purchased at the price and on the terms applying hereunder

without any adjustment in respect of the new or changed regulations concerned.

16. AUDIT

In addition to provisions set forth in Section 14, during the Audit Period at any reasonable time,

but not more than two times per year, each Party shall have the right to audit the books and

records of the other Party relating to performance of the Transactions. The audited Party shall



Page 15 of 18

fully cooperate with the auditing Party to accomplish the audit as expeditiously as possible.

Either Party may retain outside auditors or inspectors, the costs and fees of which shall be borne

by the Party employing the outside auditor or inspector. Each Party agrees to be bound and shall

cause any independent auditors or inspectors to be bound by the confidentiality obligations

contained herein. Either Party may witness any inspection at its own expense. Each Party shall

retain all such books and records during the Audit Period. Unless a claim had been made during

the Audit Period, upon the conclusion of the Audit Period, all statements, invoices and charges

shall be conclusive and final.

17. CONFIDENTIALITY

Neither Party shall disclose the terms or conditions of any Transaction to any third party (other

than the Party’s employees, lenders, counsel, accountants or advisors that have a need to know

such information and have agreed to keep it confidential), except in order to comply with any

applicable law, regulation, any exchange or in connection with any court or regulatory

proceeding; provided, however each Party shall, to the extent practicable, use reasonable efforts

to prevent or limit the disclosure. Notwithstanding the foregoing, a Party may elect to report a

Transaction to a price index publication in which case the Product description, volume, price,

delivery point and delivery date may be disclosed but the identity of the counterparty shall

remain confidential. The Parties shall be entitled to all remedies available at law or in equity to

enforce, or seek relief in connection with this confidentiality obligation.

18. MARKET DISRUPTION

If the price of the Product specified in a Confirmation is based upon a specified index and there

is a Market Disruption Event, as defined below, 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 Day.

If the Parties have not so agreed on or before the second Business Day following the affected

Day, then the replacement price for the original contract 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 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 average of all quotes obtained shall determine the replacement

price. A “Market Disruption Event” means, with respect to an index specified for a Transaction,

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; or (e) both Parties agree

that a material change in the formula for or the method of determining the contract price has

occurred.

19. REPRESENTATIONS AND WARRANTIES



Page 16 of 18

19.1 Each Party represents and warrants to the other Party that: (a) it is duly organized, validly

existing and in good standing under the laws of the jurisdiction of its formation; (b) the

execution, delivery and performance under each Transaction is within its powers, have

been duly authorized by all necessary action and do not violate any of the terms and

conditions in its governing documents, any contract to which it is a party or any law, rule,

regulation, order or the like applicable to it; (c) these General Terms and Conditions and

each Transactions constitute its legally valid and binding obligation enforceable against it

in accordance with its terms, subject, as to enforceability only, to applicable bankruptcy,

moratorium, insolvency or similar laws affecting the rights of creditors generally and to

general principles of equity; and (d) it is not bankrupt and there are no proceedings

pending or being contemplated by it or, to its knowledge, threatened against it which

would result in it being or becoming bankrupt.

19.2 UNLESS OTHERWISE EXPRESSLY STATED IN THE CONFIRMATION OF A

TRANSACTION, SELLER MAKES NO OTHER WARRANTIES, EXPRESS OR

IMPLIED, INCLUDING WITHOUT LIMITATION, THE WARRANTIES OF

MERCHANTABILITY OR FITNESS OF THE PRODUCTS FOR ANY PARTICULAR

PURPOSE, EVEN IF SUCH PURPOSE IS KNOWN TO SELLER.

20. MISCELLANEOUS

20.1 No Transaction shall be assigned by either Party without the prior written consent of the

other Party, which consent shall not be unreasonably withheld. Each assigned

Transaction shall be binding upon and shall inure to the benefit of the Parties and their

permitted successors and assigns. Notwithstanding the foregoing, Phillips 66 shall have

the right to assign any Transactions to a creditworthy Affiliate without the necessity of

obtaining the Counterparty’s consent thereto. Such assigned Transactions shall be

subject to General Terms and Conditions that are identical to those set forth herein,

except that references to Phillips 66 shall be to the assignee.

20.2 No waiver by either Party of any breach by the other Party of any of the covenants or

conditions of these General Terms and Conditions or any Transaction shall be construed

as a waiver of any succeeding breach of the same or of any other covenant or condition

hereof.

20.3 No statement or agreement, oral or written, made prior to or at the time of entering into a

Transaction, shall vary or modify the written terms hereof, and neither Party shall claim

any amendment to, modification of, or release from any provisions by mutual agreement

unless such agreement is in writing, signed by the other Party.

20.4 Except as provided in the next sentence, all notices, invoices and other communications

by one Party to the other under these General Terms and Conditions and any Transaction

shall be in writing and shall be delivered personally, by overnight courier, by certified

mail, return receipt requested, by facsimile, or e-mail to the Party’s address set forth in



Page 17 of 18

the Confirmation or otherwise in the sending Party’s records. Notwithstanding the

foregoing, a notice of an Event of Default may not be sent e-mail. Notices will be

deemed given when received, or in the case of notice sent by facsimile, at the time of

transmission if sent during normal business hours, or the following Business Day if sent

after normal business hours.

20.5 The section headings are for convenience only and shall not be interpreted in any way to

limit or change the subject matter of these General Terms and Conditions.

20.6 If any court of competent jurisdiction holds any terms or condition herein invalid or

unenforceable, the remaining terms and conditions shall remain in full force and effect

The invalidity of any one or more covenants or provisions of these General Terms and

Conditions shall not affect the validity of any other provisions hereof or these General

Terms and Conditions, and the Transactions thereunder as a whole, and in case of any

such invalidity, these General Terms and Conditions shall be construed to the maximum

extent possible as if such invalid provision had not been included herein.

20.7 Each Party (i) consents to the recording of telephone conversations between the trading,

marketing and other relevant personnel of the Parties in connection with any potential

Transaction, (ii) agrees to obtain any necessary consent of, and give any necessary notice

of such recording to, its relevant personnel and (iii) agrees, to the extent permitted by

applicable law, that recordings may be submitted in evidence in any Proceedings.

20.8 Any Confirmation and any other related document, including any recordings, may be

scanned and stored electronically, or stored on computer tapes and disks, as may be

practicable (the “Imaged Agreement”). The Imaged Agreement, if introduced as

evidence on paper, any recording, if introduced as evidence in its original form and as

transcribed onto paper, and all computer records of the foregoing, if introduced as

evidence in printed format, in any judicial, arbitration, mediation or administrative

proceedings, will be admissible as between the Parties to the same extent and under the

same conditions as other business records originated and maintained in documentary

form. Neither Party shall object to the admissibility of any Imaged Agreement (or

photocopies of the transcription of such Imaged Agreement) on the basis that such were

not originated or maintained in documentary form under the hearsay rule, the best

evidence rule or any other rule of evidence. However, nothing herein shall be construed

as a waiver of any other objection to the admissibility of such evidence.

20.9 Neither Party shall disclose the terms or conditions of any Transaction to any third party

(other than the Party’s employees, lenders, counsel, accountants or advisors that have a

need to know such information and have agreed to keep it confidential), except in order

to comply with any applicable law, regulation, any exchange or in connection with any

court or regulatory proceeding; provided, however each Party shall, to the extent

practicable, use reasonable efforts to prevent or limit the disclosure. Notwithstanding the

foregoing, a Party may elect to report a Transaction to a price index publication in which

case the Product description, volume, price, delivery point and delivery date may be



Page 18 of 18

disclosed but the identity of the counterparty shall remain confidential. The Parties shall

be entitled to all remedies available at law or in equity to enforce, or seek relief in

connection with this confidentiality obligation.

21. ATTACHMENTS/ADDENDA

Attached hereto and incorporated by reference herein, are certain addenda providing further

terms and conditions as applicable:

(a) Dispute Resolution

(b) Marine Provisions for Natural Gas Liquids

Page A-1

EXHIBIT A DISPUTE RESOLUTION PROCEDURES

Arbitration

1. Arbitration. Any dispute arising out of or relating to any Transaction, including its

existence, validity, interpretation, performance, breach, or termination, will be determined by

binding arbitration in accordance with the Commercial Arbitration Rules of the American

Arbitration Association (the "AAA") before a panel of three arbitrators, or before a sole

arbitrator if (a) the amount in dispute, inclusive of all claims and counterclaims, totals less than

five million dollars ($5,000,000); or (b) the amount in dispute is five million dollars

($5,000,000) or greater and the Parties agree in writing to arbitration before a sole arbitrator. The

panel of three arbitrators will be chosen as follows: (y) upon the written demand of either Party

and within fifteen (15) Days from the date of such demand, each Party will name an arbitrator;

and (z) the two Party-appointed arbitrators will thereafter, within thirty (30) Days from the date

on which the second of the two arbitrators was named, name a third arbitrator who will act as

chairperson of the arbitral tribunal. In the event that either Party fails to name an arbitrator

within fifteen (15) Days from the date of a written demand to do so, then upon written

application by either Party, that arbitrator will be appointed by the AAA in accordance with its

Commercial Arbitration Rules. In the event that the two Party-appointed arbitrators fail to

appoint the third arbitrator within thirty (30) Days from the date on which the second of the two

arbitrators was named, then upon written application by either Party, the third arbitrator will be

appointed by the AAA in accordance with its Commercial Arbitration Rules. If the arbitration

will be before a sole arbitrator, then the sole arbitrator will be appointed by agreement of the

Parties within fifteen (15) Days upon written demand of either Party. If the Parties cannot agree

to a sole arbitrator, then upon written application by either Party, the sole arbitrator will be

appointed by the AAA in accordance with its Commercial Arbitration Rules.

2. Discovery. The Parties adopt the initial disclosure requirements embodied in Rule

26(a) of the Rules of Federal Civil Procedure, without regard to any local rule or order

suspending the effect of such initial disclosure requirements. The nature and extent of any

further discovery to be conducted by the Parties will be determined by the arbitral tribunal or

sole arbitrator based on a showing by the Party seeking additional discovery that such additional

discovery is required to present the dispute properly for final resolution. In determining the

scope of discovery, the arbitral tribunal or sole arbitrator will consider that in adopting this

Section was the intent to limit discovery appropriately.

3. Procedure and Place of Arbitration. Notwithstanding the selection of choice of

law, the procedure of the arbitration proceedings will be conducted in accordance with the

Commercial Arbitration Rules of the AAA. The place of arbitration will be Harris County,

Houston, Texas.

4. Award. The arbitral tribunal or sole arbitrator will submit a written, reasoned

award within a reasonable period of time after the naming of the third arbitrator, or in the case of

a sole arbitrator, within a reasonable period of time after the naming of that sole arbitrator. In no

event will the award be submitted more than twelve (12) Months after the naming of the third

Page A-2

arbitrator or sole arbitrator, except in extraordinary circumstances as reasonably determined by

the arbitral tribunal or sole arbitrator. The award will be final and binding on all Parties. Special,

punitive and exemplary damages are not recoverable, notwithstanding any other provision in

these General Terms and Conditions.

5. Costs & Expenses. All fees and expenses in connection with such arbitration

proceedings (except the fees and expenses of counsel, witnesses, and employees of each Party,

which will be borne solely by the Party incurring them) will be divided equally between the

Parties, provided that the arbitral tribunal or sole arbitrator may award the prevailing Party all or

a portion of its reasonable fees and expenses (including the fees and expenses of counsel,

witnesses, and employees).

6. Confidentiality. The arbitration proceedings, including any (a) discovery; (b)

award; (c) evidence, statement, conduct, or action; (d) hearing, and (e) offers to settle in

connection with the arbitration, are confidential and will not be disclosed to third parties except

(x) in connection with a suit for enforcement of the award, (y) as required by law or as part of

good-faith compliance with disclosure obligations under applicable law, or (z) when reasonably

necessary to explain the terms and conditions of the award to outside attorneys, auditors, and

insurers. Any offer, promise, conduct, statement, or evidence made in the course of the

arbitration by any of the Parties, their agents, employees, experts, or attorneys are confidential

and shall be considered inadmissible under Rule 408 of the Federal Rules of Evidence, and any

similar state provisions, for any purpose, including impeachment. Evidence that is otherwise

admissible shall not be rendered inadmissible as a result of its use in the arbitration proceedings.

7. Consent to Judgment. Judgment on the award may be entered by any court of

competent jurisdiction. The prevailing Party shall be entitled to recover all reasonable fees and

expenses, including attorneys’ fees, in connection with any enforcement of the award.

Page B-1

EXHIBIT B

MARINE PROVISIONS

FOR NATURAL GAS

LIQUIDS

I) General - Except where specifically provided otherwise in the Confirmation, these Marine Provisions shall govern as to the matters covered herein.

II) Definitions - Capitalized terms used, but not defined herein, shall have the meaning

set forth in the General Terms and Conditions. As used in these Marine Provisions:

1) “All Fast” means at such time as the Vessel is completely moored at the Cargo Custody Transfer Point with the gangway, if it is to be utilized, down and secured.

2) “Cargo” means any Product(s) described in the Contract.

3) “Cargo Custody” Transfer Point means the Delivery Location designated in the

Confirmation where custody of the Cargo is transferred from Terminal Party to Vessel

Party or Vessel Party to Terminal Party.

4) “COC” means Certificate of Compliance.

5) “COI” means United States Coast Guard Certificate of Inspection or similar

documentation for other flag or port states.

6) “Confirmation” means the specific transaction terms and conditions of the Contract

including but not limited to provisions relating to quantity, quality, term, delivery and

price and which manifests a contract for sale of a Cargo.

7) “Contract” means and includes the following documents in connection with each

Transaction involving waterborne delivery of Cargo entered into by and between

Buyer and Seller to which these Marine Provisions are attached: (A) the Confirmation

(including amendments thereto); (B) these Marine Provisions; and (C) the General

Terms and Conditions (then latest edition).

8) “Controlled Tonnage” means Vessels that are owned/operated or bareboat or time

chartered by a Party.

9) “Customary Anchorage” means a recognized anchorage within the designated port

for a Cargo Custody Transfer Point.

Page B-2

10) “Delivery Window” means the Delivery Period set out in the Confirmation or the

scheduler’s nomination which designates the time period during which the Vessel is

to endeavor to tender NOR at the Cargo Custody Transfer Point, or as near thereto

as she may safely get, as established by the Contract.

11) “ETA” means estimated time of arrival.

12) “General Terms and Conditions” means the General Terms and Conditions of

Phillips 66 Company for the applicable Product as in effect or modified from time to

time. 13) “IGS” means an inert gas system.

14) “IIC” means an independent inspection company.

15) “Inland Vessel” means a United States Coast Guard-approved or American Bureau of

Shipping inspected tow and/or tank barge and/or a tug that is restricted to operations in the inland waterways of the United States.

16) “Lightering” or “Ship to Ship operations” means the process of transferring cargo

between vessels.

17) “LPG” means liquefied petroleum gas

18) “Marine Claims” means any dispute or claim arising under these Marine Provisions,

including but not limited to demurrage claims disputes.

19) “NGL” means natural gas liquids

20) “Non-Controlled Tonnage” means any Vessel that is not Controlled Tonnage of a Party, such as spot or voyage chartered Vessels.

21) “NOR” means Notice of Readiness.

22) “Ocean-Going Barge” means a United States Coast Guard approved or American

Bureau of Shipping inspected tank barge that has an ABS Load Line Certification and

is certified to operate in offshore waters.

23) “Ocean-Going Vessel” means an Ocean Tanker or Ocean-Going Barge.

24) “Ocean Tanker” means any ship, tanker or combination carrier that is certified to

operate in offshore waters.

25) “OCIMF” means the Oil Companies International Marine Forum.

26) “Open Period for Berthing” means a window for berthing, which either has not

already been assigned by the Terminal to some other vessel, or for which some other

vessel cannot claim priority on the basis that her NOR was given earlier than the NOR

of the Vessel performing under the Contract.

Page B-3

27) “Security Regulations” means, collectively, the International Ships and Port Facility Security Code and the U.S. Maritime Transportation Security Act of 2002.

28) “Service Vessel” means the maneuvering or Lightering vessel, which will receive the

cargo from the Ship to be Lightered, and transport its cargo to its discharge berth.

29) “TVE” means Tank Vessel Examination.

30) “Terminal” means any refinery or terminal facility delivering Cargo to or receiving

Cargo from a Vessel.

31) “Terminal Party” means the Party taking delivery from, or making delivery to, a Vessel

at a Terminal.

32) “Tow” means an Inland Vessel or an Ocean-Going Barge.

33) “Vessel” includes any Ocean-Going Vessel or Inland Vessel.

34) “Vessel Owner” means the Vessel Party if the Vessel Party is the owner/operator of

the Vessel. If the Vessel Party is not the owner/operator of the Vessel, then “Vessel

Owner” means the then current owner/operator of the Vessel.

35) “Vessel Party” means the Party nominating a Vessel to perform under the Contract.

36) “Vessel Vetting” is the technical risk assessment and evaluation process prior to

Vessel acceptance/rejection by the Vessel Party and/or the Terminal.

37) “Ship to be Lightered” means the Vessel which will deliver the cargo to the Service

Vessel.

III) Vessel Requirements

A) Phillips 66 Vessel Vetting: Each Vessel to be nominated under these

provisions shall always be of an acceptable condition that complies with the P66

Marine Vetting and Audit Criteria Summary for Vessel Operators, and each

Party involved in the Transaction, including the Terminal(s), reserves the right

to inspect (or not to inspect) and accept the Vessel(s) nominated for use, including

vessels used in Lightering operations and the company utilized for lighterage

support, except in the case of Transactions where both of the following conditions

exist: a) FOB Transactions where P66 is Seller or DES Transactions where P66 is

Buyer AND b) where the Delivery Location is a third party terminal where P66

leases tankage (unless specifically otherwise required by contractual agreement).

The Vessel(s) so nominated must be accepted in all respects and by P66 Marine

Vetting before officially tendering its valid NOR. The acceptance or rejection of

the Vessel will not be unreasonably withheld and shall be communicated to the

other Party within twenty-four (24) hours (1 business day) after receipt of

nomination and all required vetting data or in the case tugs/towboats and/or barges

shall be done within a timely manner. An acceptance of a Vessel will not

constitute a continuing acceptance of the Vessel for any subsequent loading

Page B-4

or discharging operations. Further, P66 reserves the right to rescind a Vessel

acceptance on any reasonable ground if such Vessel is involved in any incident

or if more recent information regarding the Vessel s status or similar becomes

available at any time after a Vessel is accepted but prior to tender. The

Seller/Terminal Party reserves the right, but not the duty, to have a

representative(s) attend onboard the Vessel at any loading and/or discharging

location at their expense and the Master, Vessel Owner, operators, managers

and/or agents shall cooperate to facilitate the attendance.

Note: The P66 Marine Vetting and Audit Criteria Summary for Vessel Operators

document is accessible through the P66 link at www.SIS3.com. Vessels not

meeting the requirements in this Article III may be rejected by Terminal Party at

Terminal Party’s sole, but reasonably applied, discretion and neither review nor

failure to review these requirements shall be deemed to waive or diminish

Terminal Party s rights or Vessel Party s obligations herein.

B) Vessel Regulatory Compliance. The Vessel Party shall exercise due diligence to

ensure that, throughout the Cargo transfer operation, the Vessel shall fully comply,

or hold authorized waivers for non-compliance, with all applicable flag or port

state or other regulations (ex. United States Coast Guard regulations) in effect as

of the date Vessel berths. All expenses and time lost during any period when this

warranty has been breached shall be for Vessel Party’s account.

C) Environmental Compliance.

i. The Vessel Party shall exercise due diligence to ensure that the Vessel shall

comply with all applicable local, state and federal environmental laws and

regulations covering water, air and land pollution while at the place(s) of the

Cargo Custody Transfer Point. If the Vessel fails to comply with such laws

and regulations, the Vessel may be required to vacate her berth and proceed to

the Customary Anchorage or waiting place. All expenses and time lost during

any period when this warranty has been breached and until the Vessel

reberths and is found to be in compliance with the aforementioned laws and

regulations shall be for Vessel Party’s account. ii. The Vessel Party must have current hydrogen sulfide (H2S) and benzene

policies and procedures for handling excessive levels of H2S and benzene. It must be recognized that petroleum products have the potential to contain H2S and/or benzene.

D) Oil Pollution Responsibility Certificate. The Vessel Party shall exercise due

diligence to ensure that the Vessel complies with the U.S. Federal Water

Pollution Control Act, as amended, the U.S. Federal Oil Pollution Control Act

of 1990 (OPA 1990), and regulations issued pursuant thereto effective during

the term of the Contract, and has secured and carried onboard the Vessel a

current U.S. Coast Guard Certificate of Financial Responsibility (COFR) (Water

Pollution). The Vessel Party shall exercise due diligence to ensure that a Vessel

also have onboard any other applicable local, state or federal Proof of Financial

Responsibility Certificate that may be required at the Cargo Custody Transfer

Point.

http://www.sis3.com/

Page B-5

E) Insurance. This provision shall be applicable only between Parties and shall not

affect any liability of the Vessel to third parties, including but not limited to governments. i. For Ocean-Going Vessels, the Vessel Party shall exercise due diligence to

ensure that throughout the Vessel's service under the Contract, the Vessel shall: 1. be entered in a P&I club, being a member of the International Group of

P&I Clubs and have in place insurance cover for oil pollution for the greater of the maximum on offer through the International Group of P&I Clubs or 1 billion U.S. dollars; and

2. carry hull & machinery insurance at least equal to the “agreed” value of the Vessel.

ii. For Inland Vessels, the Vessel Party shall exercise due diligence to ensure

that throughout the Vessel's service under the Contract, the Vessel shall:

1. have protection & indemnity insurance, including pollution liability

insurance, procured from a P&I Club in the International Group of P&I

clubs, WQIS, or another insurer(s) with a minimum rating by A.M. Best

Company of A minus to be reasonably approved by Terminal Party with

a minimum of 100 million U.S. dollars per incident; and 2. carry hull & machinery insurance at least equal to the “agreed” value of the

Vessel. iii. All such insurance shall be at no cost to the Terminal Party. Upon request of

the Terminal Party, the Vessel Party shall promptly furnish to the Terminal

Party reasonable evidence of required insurance.

iv. To the extent applicable, all Ocean-Going Vessels shall carry on board a valid

certificate of insurance as described in the 1969 Civil Liability Convention

for Oil Pollution Damage or the International Convention of Civil Liability

for Oil Pollution Damage 1992.

v. The Vessel Owner representations and warranties set forth above are an

essential part of the Contract, and the obligations of the Terminal Party under

the Contract are conditional on the truth and performance of such

representations warranties. Any breach of the above representations and

warranties shall entitle the Terminal Party to terminate the Contract and/or to

recover any damages allowable in law, admiralty or equity.

F) Vessel Connection Construction. Vessel Party shall exercise due diligence to

ensure that all piping, valves, spools, reducers and other fittings comprising that portion of the Vessel’s manifold system outboard of the last fixed rigid support to

the Vessel’s deck and used in the transfer of Cargo, bunkers or

ballast, will be made of steel or nodular iron. The fixed rigid support for the

manifold system must be designed to prevent both lateral and vertical

movement of the manifold. Further, Vessel Party shall exercise due diligence to

ensure that no more than one reducer or spool piece (each in compliance with the

American National Standards Institute ANSI standard) will be used between the

Vessel s manifold valve and the Terminal hose or loading arm connection and this

cantilever length should not exceed the standard for the size of the manifold

piping.

G) Carrier Alpha Code. Where bills of lading are issued, the Vessel Party shall

Page B-6

exercise due diligence to ensure that the Bill of Lading issuer shall have and use a

standard carrier alpha code (SCAC) required by the U.S. Customs regulations.

H) U.S. Customs and Border Protection Compliance. The Vessel Party shall exercise

due diligence to ensure that the Vessel shall fully comply or hold waivers for

non-compliance with all applicable U.S. Customs regulations in effect as of the

date Vessel berths. The Vessel Party shall provide all required Customs

information to the U.S. Customs and/or the Terminal Party prior to Vessel

arrival. Without limitation, Vessel Party shall exercise due diligence to ensure

that the Vessel shall comply with all obligations imposed upon her or the Vessel

Owner under the Security Regulations. Terminal Party shall exercise due diligence

to ensure that the discharge Terminal shall comply with any obligations imposed

upon it or the Vessel Owner under the Security Regulations.

I) Drug and Alcohol.

i. Vessel Party shall exercise due diligence to ensure that the Vessel Owner of a

US flag Vessels has in force a drug and alcohol policy that meets or exceeds

the standards set forth by the U.S. Coast Guard Regulations, and any other

applicable federal, state or local laws, and that such a policy includes: pre-hire,

random/unannounced, and post-incident testing adequate to act as an effective

abuse deterrent. Vessel Party shall exercise due diligence to ensure that this

policy will remain in effect during the term of the Contract with regard to the

applicable Vessel(s), and the Vessel Party shall require the Vessel Owner to

exercise due diligence to ensure that such a policy is complied with.

ii. Vessel Party shall exercise due diligence to ensure that Vessel Owner of a non

US flag Vessel has in force a drug and alcohol policy that meets or exceeds

the standards set forth by their flag state and also meets or exceeds the

Standards set in the most recent edition of the “Guidelines for the Control of

Drugs and Alcohol on Board Ship” as published by the OCIMF. Vessel Party

shall exercise due diligence to ensure that this policy will remain in effect

during the term of the Contract with regard to the applicable Vessel(s), and the

Vessel Party shall require the Vessel Owner to exercise due diligence to ensure

that such a policy is complied with, unless not permitted by the Flag state. IV) Nominations and Pre-Arrival Conditions

A) Delivery Window Nomination. Unless otherwise agreed in writing by the Contract

parties, the Vessel Party shall nominate, in writing, a three (3) day Delivery

Window not less than forty five (45) days before the first day of the delivery

month. The Terminal Party will notify the Vessel Party not later than the close of

business on the third business day after receipt of such nomination as to actual

Delivery Window and will make best efforts to accommodate Vessel Party’s

nomination.

B) Vessel Nomination. Unless otherwise agreed in writing, not less than six (6) days

before a Tow’s arrival at the Cargo Custody Transfer Point, nor less than

Page B-7

t w e l v e (12) days before arrival of any other t a n k v e ssel at the Cargo

Custody Transfer Point, the Vessel Party shall nominate for acceptance by the

Terminal Party a suitable Vessel which is proposed to perform under the Contract.

Provided however, that if upon execution of the Contract there is less than s i x

(6) days before a Tow’s arrival at the Cargo Custody Transfer Point or less than

twelve (12) days before arrival of any other LPG Vessel at the Cargo Custody

Transfer Point, then the Vessel Party shall, as soon as reasonably practicable,

nominate for acceptance by the Terminal Party a suitable Vessel which is proposed

to perform under the Contract. The Vessel Party shall furnish, as required by the

Terminal Party, data about the Vessel’s dimensions, equipment, winches and lines,

and such other data or documents as the Terminal Party may reasonably require.

C) LPG Tank Readiness. Unless otherwise agreed, Vessels proceeding to the

Terminal for the purposes of loading refrigerated gas liquid Cargo are to arrive with

their tanks, pumps, lines compressors and condensers liquid free under the vapors

of last cargo which shall be propane and/or butane with butadiene content not

exceeding 0.5 percent by weight. Vessel’s designated tanks to be under a slight

overpressure and fully cooled down ready to receive the nominated Cargo to IIC’s

inspector satisfaction. If Vessel fails to arrive with tanks ready for loading, any

NOR acceptance will be rescinded and all time and expenses required for Vessel to

have its tanks in a load ready condition will be for Vessel Party’s account.

D) Vessel Substitution. If a Vessel nomination is rejected by the Terminal Party,

the Vessel Party must promptly nominate another, suitable Vessel for acceptance

by the Terminal Party. If a Vessel nomination is accepted by the Terminal Party,

the Vessel Party may substitute another suitable Vessel by nominating it for

acceptance by the Terminal Party. Unless otherwise agreed in writing,

nomination of a substitute Vessel shall be made not later than four (4) days before

the Vessel s arrival at the Cargo Custody Transfer Point or four (4) days before

the first day of the Delivery Window, whichever is earlier. A Vessel

nomination that has been accepted by the Terminal Party is not superseded until

the Terminal Party has accepted a substitute Vessel nomination. Tug substitution

must be done within twenty-four (24) hours’ notice and only after Vessel

clearance as above. However, a twelve (12) hour notice period will be

considered by the Terminal Party for inland and cross harbor movements. Tugs

must be of the similar size, capacity, capability and costs. Terminal Party will have

the option to approve or reject any substitute.

i. ETAs.

1. At no time shall the ETA constitute an agreement to alter the Delivery

Window in the Contract or in the scheduler’s nomination, if different.

2. Unless otherwise agreed in writing, the Vessel Party shall give notice in

writing to the Terminal Party of the Vessel’s ETA at the Cargo Custody

Transfer Point. When applicable, such notice must be received by the

Terminal Party at least four (4) days in advance of such arrival by a

Tow, and at least seven (7) days in advance of such arrival by any

other Vessel. When applicable, such notice shall be actually received by

the Terminal Party 72, 48, 24 and 6 hours before Vessel’s expected

Page B-8

arrival at the Cargo Custody Transfer Point.

3. The Vessel Party shall promptly notify the Terminal Party in writing

about a new ETA if the ETA advances or recedes by two (2) hours or

more after the twenty-four (24) hour ETA notice has been given.

ii. Pre-Arrival Information. The Vessel Party shall furnish, as reasonably

requested by the Terminal Party, additional data in writing, about the Vessel’s

dimensions, loading temperature of the Vessel’s cargo tanks, the Vessel’s last

three previous cargoes carried in all tanks, seaworthiness, equipment, and

certificates, as well as the nature and estimated duration of the Vessel s

anticipated Cargo handling and other operations at the Cargo Custody Transfer

Point, such information to be actually received by the Terminal Party not later

than forty-eight (48) hours, if reasonably possible, before the Vessel’s arrival

at the Cargo Custody Transfer Point.

iii. Terminal Regulations. If the Cargo Custody Transfer Point is a marine

Terminal, a Vessel must comply at all times with the applicable Terminal

regulations. Copies of such regulations should be requested of the Terminal. V) Delivery Window/Berthing

A) Priority in Berthing.

i. Subject to subparagraph B. of this Paragraph V.1., priority in berthing shall be

given to a Vessel that tenders NOR within her agreed Delivery Window over

a Vessel that tenders NOR outside her agreed Delivery Window.

ii. Vessels will be accorded priority in berthing in the order in which each

Vessel’s valid NOR is received by the Terminal, provided NOR is tendered

within the agreed Cargo Window. The Terminal Party reserves the right to

berth Vessels consistent with its operating and Terminal requirements.

B) Notice of Arrival of Vessel After Delivery Window. As soon as it becomes apparent

that the nominated Vessel will arrive after its Contractual Delivery Window, the

Vessel Party will immediately notify the Terminal Party in writing of this delay

along with the expected new ETA. The Terminal Party will evaluate and advise

within two (2) business days if the new ETA can be accommodated in the Terminal

schedule. If the Vessel can be accommodated, such accommodation does not and

will not constitute a new Delivery Window under the original Contract and Vessels

arriving after their original Delivery Window will be scheduled for loading at the

earliest practicable time. Laytime for Vessels arriving after their original Delivery

Window will not commence until the vessel is All Fast at the terminal. Vessels

arriving after their original Delivery Window without the required notification to the

Terminal Party or if the, Terminal cannot accommodate the new ETA of the Vessel

in its schedule, the Terminal Party can refuse to deliver or receive the Cargo, as

applicable, without prejudice to any other rights which the Terminal Party may have

pursuant to the Contract. VI) Vessel at the Berth/Cargo Transfer Operations

Page B-9

A) Non-Compliance with Terminal Regulations or Breakdown of Vessel Safety or

Environmental Systems.

The Terminal Party may instruct the Vessel to vacate her berth if (i) it appears that

the Vessel will not, because of disability or any other cause on the part of the

Vessel, be able to complete loading or discharge within the “allowed laytime”; (ii)

if the Vessel fails to comply with the Terminal’s regulations or (iii) there is a

deficiency in the Vessel’s safety, mooring, or environmental systems, processes or

management. Allowed laytime is the number of hours that the Terminal is

permitted for all activities associated with loading or discharging a Vessel without

paying demurrage. Used laytime is the number of running hours between the

beginning of laytime and the ending of laytime less certain exclusions. Upon

receipt of instructions from the Terminal Party that the Vessel is to vacate the

berth, laytime or demurrage shall cease. The Vessel, after tendering NOR to

recommence loading or discharging, shall be reberthed in accordance with

Terminal Party’s assignment. Laytime or demurrage will only resume counting

upon the recommencement of Cargo operations. If the Vessel does not vacate the

berth following said instructions, the Vessel Party agrees to reimburse the

Terminal Party for any consequential demurrage claims received from other

parties.

B) Pollution Prevention and Responsibility. In the event an escape or discharge of

Cargo or bunkers, or risk of escape or discharge of Cargo or bunkers occurs from

the Vessel and causes or threatens to cause pollution damage, the Vessel Party

will, or will ensure that the Vessel will, promptly take whatever measures it

determines are necessary to prevent or mitigate such damage. Any of the

aforementioned measures shall be at the Vessel Party’s time and expense,

provided that if the Terminal caused or contributed to such escape or discharge,

the expense of the aforementioned measures shall be borne by the Terminal Party

in proportion to its negligence or willful misconduct in causing or contributing to

the escape or discharge. This provision shall be applicable only between the

Parties hereto and shall not affect any liability of either Party to third parties,

including, but not limited to, governmental agencies.

C) Inert Gas System. Unless the Terminal prohibits Vessels from arriving with

Cargo tanks inerted, all Vessels fitted with an IGS will not be permitted to tender

NOR or berth or discharge of any Cargo unless the IGS is fully operational and

all Cargo tanks are inerted with an oxygen level at or below eight (8) percent.

For a Vessel intending to handle Cargoes that could be adversely affected by

inert gas, the Vessel Party may request from the Terminal Party an exemption

from this clause, this request to be made at least three (3) Business Days prior to

the Vessel’s arrival at the Cargo Custody Transfer Point. Such exemption request

shall not be unreasonably withheld. All measurement equipment, procedures,

calculations, and practices performed while Vessel is inerted shall conform to the

most current API Manual of Petroleum Measurement Standards (MPMS), to the

satisfaction of the IIC. Should the IGS fail after the Vessel has berthed, Cargo

Page B-10

handling shall be terminated immediately and the Terminal notified, and the

Vessel may be ordered to vacate the berth until her IGS is fully operational and

tanks are inerted to the requisite pre-arrival condition. Temporary or substitute

equipment or procedures to correct IGS malfunctions may not be used without the

Terminal Party s approval. All expenses during IGS failure and between berthings

in connection with IGS failure are for Vessel Party s account. Laytime or

demurrage shall cease counting upon the stoppage of Cargo operations as a result

of IGS failure and will only resume counting upon the recommencement of Cargo

operations.

D) Shifting of Vessels. Unless otherwise provided in the Contract including

Paragraph VI(1) hereof, all expenses and time during any shifting of the Vessel

shall be for the Vessel Party’s account unless done at the request of the Terminal

Party. The Terminal Party may otherwise, at its option, shift the Vessel within a

berth or between berths, as well as to and from the anchorage, and any expenses

and time lost during such activities shall be for the Terminal Party’s account.

E) Ballasting and Cargo Slops.

i. If the Cargo Custody Transfer Point has ballast water and/or slops handling

facilities, the Vessel may discharge ballast water and/or Cargo slops up to the

maximum capacity available. Unless concurrent with Cargo handling, all time

used during ballasting, deballasting or offloading slops, any charges for these

services, and any delay due to waiting for service facilities shall be for the

Vessel Party’s account. If the Vessel must shift to and/or from such facilities,

all time used by the Vessel in shifting as well as the shifting expenses shall be

for Vessel Party’s account. Title to Cargo slops shall pass to the Terminal Party

at the first permanent flange on shore. Vessel Party shall exercise due

diligence to ensure that the Cargo slops do not contain any Vessel-generated

waste. The Terminal Party reserves the right to lab test the slop tank contents

prior to acceptance, provided that any resulting costs of delay, including

demurrage, shall be for the Terminal Party’s account.

ii. Vessel Party will or will cause Vessel to minimize the loading of ballast into

Cargo tanks previously containing crude oil (dirty ballasting) at discharge

Terminal . When ballasting is conducted simultaneously with discharge

operations, Vessel will maintain at least double valve segregation. During

dirty ballast operations, vapor balancing must be utilized between dirty ballast

loading compartments and discharging Cargo compartments, thereby

eliminating emission of Cargo vapors to the atmosphere. All delays, losses

and expenses incurred due to Vessel s non-compliance with this provision will

be for Vessel Party s account.

F) Special Provisions for Foreign Cargo Slops. Terminal Party shall be notified at

least three (3) Business Days in advance of discharge when a Vessel desires to

discharge foreign Cargo slops. Such notification shall include identity, description,

or chemical properties of components; country of origin; estimated value; and

estimated quantity. If advance notification is not received by Terminal Party, any

time lost in discharging Cargo slops from the Vessel because of a delay in securing

Page B-11

government clearance shall be for Vessel Party’s account. Additionally, regardless

as to when notification of the Vessel’s desire to discharge foreign Cargo slops

was received, all expenses, including but not limited to customs fees,

chemical analysis, removal and proper disposal of Cargo slops shall be for the

account of the Vessel Party.

G) Vessel-Generated Waste. Fees associated with the testing, removal or reception

of Vessel-generated waste, including fuel and lube oil sludge and oil bilge water,

shall be for the account of the Vessel Party. Any waiting for reception facilities

at a Terminal for Vessel-generated waste shall be for Vessel Party’s account. If

the Vessel must shift to and/or from such facilities, all time consumed by the

Vessel shifting as well as shifting expenses for tugs, mooring line handlers, and

pilots shall be for Vessel Party’s account. The Vessel Party shall retain title to

the waste material until it is tested and commingled with Terminal waste or,

alternatively, delivered to a waste disposal company possessing a valid permit. VII) Terminal-Related Conditions

A) Safe Berth Availability and Charges.

i. The Terminal Party shall exercise due diligence to provide a safe berth to

which the Vessel may proceed to, lie at, and depart always safely afloat.

However, if the Vessel cannot, in the Terminal Party’s sole opinion, maintain

its moor safely at the dock, then the Terminal Party at its sole discretion may

order hold-in tugs, and the cost of such tugs shall be for Vessel Party’s

account. The Terminal Party shall provide a safe berth for the Vessel free of

wharfage fees for normal Cargo transfer. The Terminal Party shall be entitled

to charge a wharfage fee for Vessels that cause or otherwise contribute to

unreasonable delays or expenses while in port. Dockage and service fees,

including mooring, booming, fresh water, steam and oily slops receipts will be

charged to the Vessel Party. In addition, all duties and other charges on the

Vessel, including, without limitation, those incurred for tugs and pilots, and

other port costs shall be for the Vessel Party’s account.

ii. Notwithstanding anything contained in this clause or the Contract, the Terminal

Party does not warrant the safety or draft of public channels, fairways,

approaches thereto, anchorages or other publicly- maintained areas either

inside or outside the port area where the Vessel may be directed. Terminal

Party shall not be liable for (i) any loss, damage, injury or delay to Vessel

resulting from the use of such waterways not caused by the Terminal Party’s

fault or negligence or willful misconduct or which could have been avoided by

the exercise of reasonable care on the part of the Vessel or her Master, or (ii)

any damage to Vessels at the Terminal caused by other vessels passing in the

waterway.

B) Representative. Terminal Party and Terminal may, at their option, place a

representative or representatives on board the Vessel to observe loading and/or

discharging of Cargo and related operations during the period after the Vessel has

Page B-12

arrived at the port wherein the Cargo Custody Transfer Point is located. In

addition, Terminal Party and Terminal may, at their option, place a representative

or representatives on any Vessel involved in a Lightering operation. The

representatives will advise the Vessel Master(s) or Mooring Master about

avoidance of pollution, unsafe acts, or violation of Terminal regulations.

Terminal Party's or Terminal’s representative will not however, under any

circumstances order or direct the Vessel, her officers or crew to take any particular

action, or interfere in any way with the Master's exercise of his authority. The

responsibility and liability for any pollution, unsafe acts, or violation of Terminal

requirements remains with the Vessel and her Master.

C) Hoses and Simultaneous Discharge.

i. Hoses between a Vessel and the shore flanges shall be furnished by the

Terminal Party, unless otherwise specified by the Terminal. Flanges for hose

connections should be at or near the Vessel’s dockside rail and should comply

with OCIMF recommendations. Crossover hoses between barges, or hoses at

crossover offshore manifolds of Vessels (i.e.,”jumpers”), shall be furnished and

connected by the Vessel at the risk and expense of the Vessel Party.

ii. Vessel’s Cargo hoses, including marine vapor recovery (“MVR”) and

offshore manifold crossover hoses (or jumpers), must be tested annually and

be in service for less than five years. Documentation of annual hydrostatic

testing and service age must be aboard the Vessel and available to the Terminal

Party on request. Any delay arising from Vessel s failure to provide

aforementioned complete and up to date documentation shall not count as used

laytime or as time on demurrage.

iii. If requested by the Terminal Party, Vessel shall load or discharge Terminal

Party’s grades simultaneously whenever the Cargo Custody Transfer Point

allows. Any delay arising from Vessel’s failure to work Terminal Party’s

grades simultaneously shall not count as laytime or as time on

demurrage.

D) Damage to Terminal Party’s Property. Vessel Party shall be liable for any damage

sustained by wharves, berths, docks, tugs, or vessels owned or maintained by the

Terminal Party, or for which the Terminal Party is responsible, arising out of the

negligent or improper operation of the Vessel or any other waterborne craft

ordered by, or being operated for the account of, the Vessel Party. The Vessel

Party will indemnify the Terminal Party for any such damages. Nothing in

these Marine Provisions or the Contract shall prejudice or deprive the Parties of

their rights or limitation or exclusion of liability under applicable laws or

regulation.

E) Shore Lines. If requested by the Vessel Party at least three (3) Business Days

prior to the Vessel’s arrival, the Terminal Party shall use best efforts to perform

a line press or line displacement prior to load or discharge to determine status

of shorelines and ensure accuracy of Cargo measurement.

Page B-13

F) In-Harbor Lightering. In-harbor Lightering shall not be permitted without prior

approval of the Terminal Party and the P66 Marine Vetting team. In-harbor

Lightering shall be performed at Vessel Party’s sole expense, time and risk.

Terminal Party’s approval shall not relieve Vessel Party of the obligation to

indemnify and hold the Terminal Party harmless for any loss or liability

arising from or attributable to Vessel Party’s fault or negligence or willful

misconduct. VIII) Inland Vessels

A) Notice of Readiness.

i. After the Vessel has arrived at the customary waiting area or other place of

waiting as required by the shore facilities for the designated Cargo Custody

Transfer Point, and is in all respects ready to proceed to the berth to

commence loading or discharging the Cargo in accordance with the terms of

the Contract, the Captain or Barge representative shall promptly give such

shore facilities and the Parties hereto notice, berth or no berth via

electronic mail, fax, letter, telegraph, wireless radio or satellite

communication available, radio telephone or telephone.

ii. If, immediately prior to giving NOR, at hoses off, the Vessel is discharging or

loading another cargo in a berth at the port wherein the Cargo Custody

Transfer Point is located, or waiting at a layberth there, NOR may be tendered

at such berth, but time used in shifting from such berth to the anchorage or to

the loading or discharging berth shall not count as laytime or time on

demurrage.

B) Allowed Laytime

i. If not otherwise specified in the Contract or scheduler’s nomination,

allowed laytime for a pressurized Inland Vessel shall be calculated basis the

Cargo volume as follows: 2500 Bbls / Hour + 3 free hours

ii. In no event shall allowed laytime be less than twelve (12) hours, which

includes three (3) hours of free time.

C) Laytime Counting.

i. If an Inland Vessel tenders NOR prior to the commencement of the

Delivery Window, laytime shall commence at 0001 hours local time on the

first day of the Delivery Window or upon All Fast, whichever occurs

first, except in instances where the Vessel is berthed prior to such date

with the Terminal Party’s consent, laytime shall commence when All Fast.

ii. If an Inland Vessel tenders NOR within the Delivery Window, then laytime

shall commence upon NOR, berth or no berth, or upon All Fast, whichever

occurs first.

iii. If an Inland Vessel tenders NOR after the Delivery Window expires, then

laytime shall commence upon All Fast.

iv. Laytime shall cease when the Inland Vessel is released by the Terminal and/or

the IIC.

Page B-14

v. If more than one barge is utilized, barges will be expected to load or discharge

simultaneously.

1. If the Cargo Custody Transfer Point requires barges to berth

individually, time consumed in shifting the barges shall count as used


2. If the Tow requires barges to berth individually, time consumed in

shifting the barges, from hoses off to All Fast, shall not count as used


D) Pumping Warranties.

i. Inland Vessels, other than pressure barge units, will maintain an average of

100 psi at the Vessels manifold or maintain a pumping rate of 2500 barrels per

hour.

ii. Any time consumed due to the inability of the Vessel to discharge the Cargo

throughout the bulk of the discharge, within the specified warranties listed

above, shall not count as laytime or time on demurrage. IX) Ocean-Going Barges


i. After the Vessel has arrived at the Customary Anchorage or other place of

waiting as required by the shore facilities for the designated Cargo Custody

Transfer Point, and is in all respects ready to proceed to the berth to

commence loading or discharging the Cargo in accordance with the terms of

the Contract, the Captain, or Barge representative shall promptly give such

shore facilities and the Parties hereto notice, berth or no berth, via

electronic mail, fax, letter, telegraph, wireless radio or satellite

communication available, radio telephone or telephone.

ii. NOR may not be tendered until the Ocean-Going Barge has a current and valid

TVE, COC, COI and/or equivalents as required under current regulations.

iii. If, at hoses off, the Vessel is discharging or loading another cargo in a berth at

the port wherein the Cargo Custody Transfer Point is located, or waiting at a

layberth there, NOR may be tendered at such berth, but time used in shifting

from such berth to the anchorage or to the loading or discharging berth shall

not count as laytime or time on demurrage.

B) Allowed Laytime.

i. Unless otherwise provided in the Contract or scheduler’s nomination,

laytime shall be the number of hours as specified in the table below at the

Cargo Custody Transfer Point(s).

Cargo Quantity Laytime

UP to 29,999 barrels 15 hours

30,000 to 39,999 barrels 16 hours

40,000 to 49,999 barrels 17 hours

50,000 - 59,999 barrels 18 hours

60,000 - 69,999 barrels 19 hours

70,000 - 79,999 barrels 20 hours

Page B-15

80,000 - 89,999 barrels 21 hours

90,000 - 99,999 barrels 22 hours

100,000 - 109,999 barrels 23 hours

110,000 - 119,999 barrels 24 hours

120,000 - 129,999 barrels 25 hours

130,000 - 139,999 barrels 26 hours

140,000 - 149,999 barrels 27 hours

150,000 179,999 barrels 30 hours

180,000 or more 36 hours


i. If an Ocean-Going Barge tenders NOR prior to the commencement of the

Delivery Window, then laytime shall commence at 0001 on the first day of

the agreed Delivery Window, except in instances where the Vessel is berthed

prior to such date with the Terminal Party’s consent, then laytime shall

commence when All Fast.

ii. If an Ocean-Going Barge tenders NOR within the agreed Delivery Window,

then laytime shall commence, berth or no berth, after tender of NOR, or when

All Fast, whichever occurs first.

iii. If an Ocean-Going Barge tenders NOR after the Delivery Window expires,

then laytime shall commence only when All Fast.

iv. Laytime shall cease when the Vessel is released by the Terminal and/or the IIC.

D) Pumping Warranties

i. Ocean-Going Barges, other than pressurized units, will maintain an average of

100 psi at Vessels manifold or discharge its entire Cargo within twenty-four

(24) hours.



above, shall not count as laytime or time on demurrage. X) Ocean Tanker


i. After the Vessel has arrived at the Customary Anchorage or other place of

waiting as required by the designated Shore Facilities, and is in all respects

ready to proceed to the berth to commence loading or discharging the Cargo in

accordance with the terms of the Contract, the Master, Captain, Master’s

Agent or Tanker representative shall promptly give such Shore Facilities and

the Parties hereto notice, berth or no berth, via electronic mail, fax, letter,

telegraph, wireless radio or satellite communication available, radio telephone

or telephone. Unless otherwise agreed, the Customary Anchorages for the

following Cargo Custody Transfer Points shall be deemed to be as indicated

and all other Customary Anchorages and Cargo Custody Transfer Points shall

be provided upon request:

ii. If NOR is tendered orally by an Ocean Tanker, confirmation in writing shall be

made within twelve (12) hours when required.

iii. NOR may not be tendered until the Ocean Tanker has a current and valid TVE,

COC, and COI.

Page B-16

iv. If, immediately prior to giving NOR, at hoses off, the Vessel is discharging or

loading another cargo in a berth at the port wherein the Cargo Custody

Transfer Point is located, or waiting at a layberth there, NOR may be tendered

at such berth, but time used in shifting from such berth to the anchorage or to

the loading or discharging berth shall not count as laytime or time on

demurrage.

B) Allowed Laytime.

Unless otherwise provided in the Contract or scheduler’s nomination, forty-eight

(48) running hours for cargo quantities equal to or greater than 40,000 cubic

meters and thirty-six (36) running hours for cargo quantities less than 40,000 cubic

meters shall be permitted to the Terminal Party as laytime at the Cargo Custody

Transfer Point(s) for a fully refrigerated, semi-refrigerated or pressurized LPG

cargo or pro rata thereof for part cargo based on the total cubic meters of cargo

carried by the Ocean Tanker on that voyage.


i. If an Ocean Tanker tenders NOR prior to the agreed Delivery Window, then

laytime shall commence at 0600 on the first day of the agreed Delivery

Window, except in instances where the Vessel is berthed prior to such date,

with the Terminal Party’s consent, laytime shall commence when All Fast.

ii. If an Ocean Tanker tenders NOR within the agreed Delivery Window, then

laytime shall commence, berth or no berth, six (6) hours after the tender of

NOR, or when All Fast, whichever occurs first.

iii. If an Ocean Tanker tenders NOR after Delivery Window expires, then laytime

shall commence when All Fast.

iv. Laytime shall run until the cargo hoses have been finally disconnected upon

completion of loading or discharging, provided always that if the Vessel is

detained solely for the purposes of awaiting Cargo documents at load port for

more than three 3 hours beyond the final disconnection of cargo hoses,

laytime shall recommence after such three 3 hours and terminate upon

completion of Cargo documentation. If after completion of loading the Vessel

is required to proceed to an anchorage for the Vessel Party s purposes, then the

time spent moving from the berth to the anchorage shall not count as part of

the three 3 hours referred to above or as laytime.

D) Pumping Warranties.

i. Ocean Tankers, other than LPG tankers carrying pressurized or refrigerated

cargoes, will maintain an average of 100 psi at Vessels manifold or discharge

its entire cargo within twenty-four (24) hours.



above, shall not count as laytime or time on demurrage. XI) Deviation

Page B-17

If Buyer elects to change Delivery Location or adds additional ports, it will be subject

to the governing charter party restrictions, if any, and all cost will be for Buyers

account, including additional steaming time at the demurrage rate plus bunkers,

additional expenses at the port, and port time from end of sea passage until start of sea

passage at the demurrage rate. XII) Interim Ports

Buyer shall pay for any interim load/discharge port(s) at cost. Time for additional

steaming, which exceeds direct route from first load port to furthest discharge port,

shall be paid at the demurrage rate plus bunkers consumed, plus actual port costs.

Time used at each additional port shall be paid at the demurrage rate beginning at

end of sea passage and ending at start of sea passage. XIII) Global Lightering or Ship to Ship Transfer

A) If Lightering is performed at any customary Lightering anchorage designated by

the local port authority, time used in such Lightering to count as used laytime.

Such anchorage shall not be considered as a second discharge port or second

discharge berth and running time from such anchorage to berth shall not count as

laytime, or time on demurrage if the allowed laytime has expired. Laytime at

anchorage (whether or not the Vessel is on demurrage) shall begin after receipt of

NOR by Vessel Owner.

B) Any and all expenses incurred at lighterage anchorage, except Vessel Party’s items

if Buyer is not Vessel Party, are to be for Buyer’s account, including but not

limited to deviation to and from said lighterage area, if any, and all port costs at

lighterage area providing acceptable supporting documentation provided.

C) Laytime and demurrage shall cease when all booms, fenders, hoses, reducers, and

all unmooring operations have been completed and workboat or Service Vessel(s)

have been separated.

D) All Lightering and Ship to Ship operations shall be performed according to OCIMF

guidelines.

E) Communication Information.

i. Notices: Where applicable, Vessel is to advise ETA to Lightering area 5-4-3-

2-1 days prior to arrival via telex, telephone, fax or email as per port state (ex.

United States Coast Guard) requirements and OCIMF STS Transfer Petroleum

latest edition and shall also give notice to the Terminal Party at the same

time.

ii. NOR to be tendered at the Customary Anchorage or designated Lightering

zone as specified by the local port authority. NOR's will be considered invalid

if not met with this requirement. Vessel should be anchored and ready to load

upon arrival to this Lightering zone. XIV) Shared Delays (Excluding Lightering)

Page B-18

A) Laytime shall be reduced to one-half for the following conditions:

i. Delays due to weather and/or sea conditions shall include, but not be limited to

lightning, ice, fog, frost, storm, wind, waves and/or swells;

ii. Daylight restrictions, channel blockage and/or port closures associated with the

shore facilities for the designated Cargo Custody Transfer Point;

iii. Breakdown or failure of equipment or machinery in or about the shore

facilities for the designated Cargo Custody Transfer Point;

iv. any delay for which laytime/demurrage consequences are not specifically

allocated in this or any other clause of these Marine Provisions and are

beyond the reasonable control of the Vessel or Terminal Party. XV) Laytime Exclusions

A) Time shall not count as laytime or time on demurrage if lost or spent due to:

i. Inward passage from a Lightering or waiting area to the Customary

Anchorage or berth, even if Lightering has taken place; or proceeding from

the Customary Anchorage to the berth, such time commencing at the earlier

of pilot on board or anchor aweigh and ending at All Fast.

ii. Awaiting pilots, tugs, or tides.

iii. Inability of the Vessel to discharge or receive Cargo safely or have the

IGS working properly, if applicable.

iv. The Vessel requiring separate and/or additional shore tank gauges for any

reason, or the Vessel’s failure to comply with Terminal regulations.

v. Prohibitions of Cargo transfer at any time by the Vessel, or the Vessel Party or

port authorities, unless such prohibition is caused by the Terminal Party’s

failure to comply with applicable laws or regulations.

vi. Vessel Party’s failure to have required documentation on board.

vii. Awaiting customs or immigration clearance, or free pratique.

viii. Strike, lockout, fire, explosion, torts of third parties, stoppage or restraint of

labor of the Master, officers and crew of the Vessel or towboat or pilots.

ix. Any delay for which the Vessel Party, the Vessel (including breakdown or

inefficiency of the Vessel), her Master or crew is responsible, including

without limitation, any delays occasioned by any failure of the Vessel to meet

the requirements of these Marine Provisions or the Contract.

x. Bunkering, ballasting, deballasting, or discharging slops unless concurrent

with loading or discharging of Cargo.

xi. A result of a labor boycott arising in connection with the business of the

Vessel or Vessel Party, the terms or conditions of employment of the Vessel or

Vessel Party’s servants, or employment, trades, or Cargoes of the Vessel.

xii. Restraint or interference in the Vessel’s operation by any governmental

authority in connection with the ownership, registration, or obligations of the

Vessel Party or the Vessel, or in connection with stowaways or with

smuggling or other prohibited activities of the Vessel’s or Vessel Party’s

servants.

xiii. Cargo contamination or damage caused by unseaworthiness or negligence or

Page B-19

willful misconduct of the Vessel or, servants of the Vessel or Vessel Party.

xiv. The Vessel’s unclean tanks, o r t ank no t coo led down read y to l oad

re f r i ge r a t ed LP G car go es , or inability to maintain heating or pumping

warranties, or the need for Vessel repairs.

xv. Any delay caused by the Vessel Party’s failure to comply with financial and/or

credit responsibilities to the Contract. XVI) Cargo Sampling and Analysis

A) If the quality of the Cargo is called into question (for example, quality as

determined by independent certified laboratory is evaluated as not meeting the

applicable specifications for the Cargo loaded or to be loaded as specified in the

sale/purchase agreement), any delays, including but not limited to, re-sampling

and/or analysis, shall be for the account:

i. of the Seller, should the Cargo in question fail to meet the applicable

specifications as per the Contract;

ii. of the Buyer, should the Cargo in question be in compliance with the

applicable specifications as per the Contract. XVII)Demurrage

A) Rate Determination. Demurrage shall be payable by the Terminal Party for all

laytime that exceeds allowed laytime at the following demurrage rates:

i. For Controlled Tonnage:

1. The demurrage rate will be as stipulated in the Contract or scheduler’s

nomination.

2. Should the demurrage rate not have been stipulated within the

Contract or scheduler’s nomination, then the daily hire rate for the

Vessel applies.

ii. For Non-Controlled Tonnage:

1. The demurrage rate will be the demurrage rate or daily hire rate included

in the charter party for the Vessel.

B) Demurrage Claims on Ocean Tankers shall be accompanied by:

i. A laytime statement,

ii. Vessel Owner’s demurrage calculations if applicable,

iii. Vessel Owner’s invoice if applicable,

iv. Copy of the Vessel s NOR document(s),

v. Vessel’s Statement of Facts (SOF) and agent’s SOF if applicable,

vi. Vessel pumping logs if the claim is for a discharge,

vii. Charter party if applicable,

viii. Bill of Lading if the claim is for a pro rata portion,

ix. Letters of Protest (if applicable) signed by or on behalf of Master and Terminal,

x. Such other supporting documentation as reasonably may be requested by the

Terminal Party.

Page B-20

C) Demurrage Claims on Inland Vessels and Ocean-Going Barges shall be

accompanied by:

i. A laytime statement,

ii. Pumping logs or pumping documentation in the barge logs if the claim is

for a discharge and only if needed to verify compliance with the pumping

warranty,

iii. Vessel Owner’s demurrage calculations if applicable,

iv. Vessel Owner’s invoice if applicable,

v. Barge logs with NOR,

vi. Such other supporting documentation as reasonably may be requested by the

Terminal Party.

D) Demurrage Claims Processing.

Demurrage claims must be submitted electronically by email before 1200 noon on

the last Business Day prior to the ninety (90) day time bar, such time period

commencing upon completion of loading/discharge. The demurrage claim will be

deemed waived and extinguished in its entirety if not submitted electronically via

the manner noted below along with reasonable supporting documentation within

the allowed time bar.

For demurrage claims to P66, demurrage claims

must be submitted to:

[email protected]

In no instance will P66 ever be liable for demurrage in excess of that amount

paid to the Vessel Owner.

E) The agreed demurrage amount shall be paid within 30 days of the settled

demurrage claim.

F) Public Dock Clause. Vessels loading or discharging at a public dock are accepted on a first come, first

served basis. Therefore, laytime at a public dock commences only when the Vessel

is All Fast at the nominated berth.

G) New York Arbitration. Marine Claims shall be resolved pursuant to arbitration as provided herein

notwithstanding anything in the General Terms and Conditions to the contrary.

For Marine Claims where the total amount claimed by either Party does not

exceed U.S. $300,000 (exclusive of interest on the sum claimed, costs of the

arbitration, and legal expenses), the dispute is to be governed by the ''Shortened

Arbitration Procedure'' of the Society of Maritime Arbitrators, Inc. (SMA) of New

York, as defined in the SMA's current Rules for such procedure. For Marine

Claims where the total amount claimed by either Party exceeds U.S.$300,000, such

mailto:[email protected]

Page B-21

arbitration shall be referred to three (3) persons in New York City, New York, one

(1) to be appointed by each of the Parties hereto and the third, who shall be the

Chair, by the two (2) so chosen. Their decision, or that of any two of them, shall be

final and binding, and for the purpose of enforcing any award, the Contract may

be made a rule of the Court. The arbitrators shall be persons conversant in

marine matters and may be attorneys and need not be members of the SMA. All

arbitrations shall be governed by the Rules of the SMA. Judgment upon any

arbitration award may be entered by any court of competent jurisdiction. Any

Party may bring a legal action to compel arbitration of any claim to which this

arbitration clause applies in any court of competent jurisdiction.

The panel or single arbitrator hearing the Marine Claim shall have the authority to

provide in any award for the allocation of the costs of arbitration, including

reasonable attorney’s fees, and arbitrator’s fees.

XVIII) Miscellaneous

A) Compliance with Law. Vessel Party and Terminal Party shall be in full

compliance with all applicable governmental laws, regulations, and orders, and

shall maintain records that demonstrate compliance with the applicable regulations

and standards. Vessel Party and Terminal Party shall have the right to inspect and

copy any and all such records of the other Party at any reasonable time or

times during normal business hours. This provision shall survive termination of

the Contract for a period of two (2) years.

B) Interpretation. Irrespective of anything in the Contract to the contrary, these

Marine Provisions and any other document constituting a part of the Contract shall

not be interpreted or applied so as to require either Party to do, or refrain from

doing, anything that would constitute a violation of or result in a loss of

economic benefit under, any applicable laws or regulations, including without

limitation, United States anti- boycott laws or regulations.

C) In the case of any conflict in the various provisions of the Contract, terms shall

prevail in the following order: the Confirmation and, scheduler’s nomination, and

these Marine Provisions; except for narrowing or revising the Delivery Window for

which the scheduler’s nomination shall prevail.

D) The Section and Paragraph headings are for convenience only and shall not be

interpreted in any way to limit or change the subject matter of the Contract.

Date post:	07-Apr-2018
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