Exhibit 10.1

INDEMNIFICATION AND RELEASE AGREEMENT

BY AND BETWEEN

CONOCOPHILLIPS

AND

PHILLIPS 66

DATED AS OF APRIL 26, 2012

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TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS

     1   

ARTICLE II MUTUAL RELEASES; INDEMNIFICATION

     10   

2.1.

  Release of Pre-Distribution Claims      10   

2.2.

  Indemnification by Phillips 66      12   

2.3.

  Indemnification by ConocoPhillips      13   

2.4.

  Indemnification Obligations Net of Insurance Proceeds and Other Amounts     
14   

2.5.

  Procedures for Indemnification of Third-Party Claims      15   

2.6.

  Additional Matters      17   

2.7.

  Remedies Cumulative      19   

2.8.

  Survival of Indemnities      19   

2.9.

  Guarantees, Letters of Credit and other Obligations      19   

2.10.

  No Impact on Third Parties      20   

2.11.

  No Cross-Claims or Third-Party Claims      20   

2.12.

  Severability      20   

2.13.

  Change of Control      20   

ARTICLE III INSURANCE MATTERS

     21   

3.1.

  Insurance Matters      21   

ARTICLE IV DISPUTE RESOLUTION

     23   

4.1.

  General Provisions      23   

4.2.

  Consideration by Senior Executives      24   

4.3.

  Mediation      24   

4.4.

  Arbitration      25   

ARTICLE V EXCHANGE OF INFORMATION; CONFIDENTIALITY

     27   

5.1.

  Agreement for Exchange of Information      27   

5.2.

  Ownership of Information      27   

5.3.

  Compensation for Providing Information      27   

5.4.

  Record Retention      27   

5.5.

  Limitations of Liability      28   

 

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5.6.

  Other Agreements Providing for Exchange of Information      28   

5.7.

  Production of Witnesses; Records; Cooperation      28   

5.8.

  Confidentiality      29   

5.9.

  Protective Arrangements      30   

ARTICLE VI FURTHER ASSURANCES

     30   

6.1.

  Attorney-Client Privilege      30   

6.2.

  Interpretation      30   

6.3.

  No Attorney Testimony      30   

ARTICLE VII MISCELLANEOUS

     30   

7.1.

  Entire Agreement      30   

7.2.

  Assignability      31   

7.3.

  Third-Party Beneficiaries      31   

7.4.

  Notices      31   

7.5.

  Severability      32   

7.6.

  Force Majeure      32   

7.7.

  Headings      32   

7.8.

  Survival of Covenants      32   

7.9.

  Waivers of Default      32   

7.10.

  Amendments      32   

7.11.

  Limitations of Liability      32   

7.12.

  Further Assurances      33   

 

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INDEMNIFICATION AND RELEASE AGREEMENT

This INDEMNIFICATION AND RELEASE AGREEMENT, made and entered into effective as
of April 26, 2012 (this “Agreement”), is by and between ConocoPhillips, a
Delaware corporation (“ConocoPhillips”), and Phillips 66, a Delaware corporation
and wholly owned subsidiary of ConocoPhillips (“Phillips 66”). Capitalized terms
used herein and not otherwise defined shall have the respective meanings
assigned to them in Article I or in the Separation and Distribution Agreement
dated as of 26, 2012 (as amended, modified or supplemented from time to time in
accordance with its terms, the “Separation and Distribution Agreement”).

R E C I T A L S

WHEREAS, the board of directors of ConocoPhillips (the “ConocoPhillips Board”)
has determined that it is in the best interests of ConocoPhillips and its
stockholders to create a new publicly traded company that shall operate the
Phillips 66 Business;

WHEREAS, ConocoPhillips and Phillips 66 have entered into the Separation and
Distribution Agreement in connection with the separation of the Phillips 66
Business from ConocoPhillips (the “Separation”) and the distribution of Phillips
66 Common Stock to stockholders of ConocoPhillips (the “Distribution”); and

WHEREAS, the Separation and Distribution Agreement also provides for the
execution and delivery of certain other agreements, including this Agreement, in
order to facilitate and provide for the separation of Phillips 66 and its
Subsidiaries from ConocoPhillips.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties, intending to be legally
bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

The following capitalized terms used in this Agreement shall have the meanings
set forth below:

“AAA” shall have the meaning set forth in Section 4.3.

“AAA Commercial Arbitration Rules” shall have the meaning set forth in
Section 4.4(a).

“Accounts Receivable Securitization” means a financing arrangement entered into
prior to the Distribution by Phillips 66 Company, and approved by
ConocoPhillips, involving the transfer or sale of accounts receivable of
Phillips 66 Company or any member of the Phillips 66 Group.

“Action” means any demand, action, claim, dispute, suit, countersuit,
arbitration, settlement, inquiry, subpoena, proceeding or investigation of any
nature (whether criminal, civil, legislative, administrative, regulatory,
prosecutorial or otherwise) by or before any federal, state, local, foreign or
international Governmental Authority or any arbitration or mediation tribunal.

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“Affiliate” means, when used with respect to a specified Person, a Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such specified Person. For the
purpose of this definition, “control” (including with correlative meanings,
“controlled by” and “under common control with”), when used with respect to any
specified Person means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or other interests, by
contract, agreement, obligation, indenture, instrument, lease, promise,
arrangement, release, warranty, commitment, undertaking or otherwise. For the
avoidance of doubt, after the Distribution, the members of the ConocoPhillips
Group and the members of the Phillips 66 Group shall not be deemed to be under
common control for purposes hereof due solely to the fact that ConocoPhillips
and Phillips 66 have common shareholders.

“Agreement” shall have the meaning set forth in the Preamble.

“Ancillary Agreements” means the Employee Matters Agreement, this Agreement, the
Intellectual Property Assignment and License Agreement, the Transition Services
Agreement, the Tax Sharing Agreement and the Transfer Documents.

“Applicable Toxic Tort Claim” shall mean an Action alleging pollution,
contamination, an illness, injury, death or medical condition resulting from or
arising out of the presence of or exposure to asbestos, benzene, vinyl chloride,
butadiene, or ethylene dichloride, except such Actions (a) alleging exposure to
Flosal (which shall continue to be tendered by ConocoPhillips to Chevron
Phillips Chemical Company LLC, a Delaware limited liability company),
(b) alleging exposure to Benzene in Norway, or (c) relating to or associated
with Polar Tankers, Inc. and its predecessors.

“Assets” means, with respect to any Person, the assets, properties, claims and
rights (including goodwill) of such Person, wherever located (including in the
possession of vendors or other third Persons or elsewhere), of every kind,
character and description, whether real, personal or mixed, tangible, intangible
or contingent, in each case, whether or not recorded or reflected or required to
be recorded or reflected on the books and records or financial statements of
such Person, including the following:

(a) all accounting and other books, records and files whether in paper,
microfilm, microfiche, computer tape or disc, magnetic tape, electronic or any
other form;

(b) all apparatus, computers and other electronic data processing and
communications equipment, fixtures, machinery, equipment, furniture, office
equipment, automobiles, trucks, vessels, motor vehicles and other transportation
equipment and other tangible personal property;

(c) all inventories of materials, parts, raw materials, components, supplies,
works-in-process and finished goods and products;

 

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(d) all interests in real property of whatever nature, including easements,
whether as owner, mortgagee or holder of a Security Interest in real property,
lessor, sublessor, lessee, sublessee or otherwise;

(e) (i) all interests in any capital stock or other equity interests of any
Subsidiary, Affiliate or any other Person, (ii) all bonds, notes, debentures or
other securities issued by any Subsidiary, Affiliate or any other Person,
(iii) all loans, advances or other extensions of credit or capital contributions
to any Subsidiary, Affiliate or any other Person, and (iv) all other investments
in securities of any Person;

(f) all license agreements, leases of personal property, open purchase orders
for raw materials, supplies, parts or services and other contracts, agreements
or commitments;

(g) all letters of credit;

(h) all written (including in electronic form) or oral technical information,
data, specifications, research and development information, engineering drawings
and specifications, operating and maintenance manuals, and materials and
analyses prepared by consultants and other third Persons;

(i) all Intellectual Property and Technology;

(j) all Software;

(k) all cost information, sales and pricing data, customer prospect lists,
supplier records, customer and supplier lists, customer and vendor data,
correspondence and lists, product data and literature, artwork, design,
formulations and specifications, quality records and reports and other books,
records, studies, surveys, reports, plans and documents;

(l) all prepaid expenses, trade accounts and other accounts and notes
receivable;

(m) all rights under contracts or agreements, all claims or rights against any
Person arising from the ownership of any Asset, all rights in connection with
any bids or offers and all claims, choses in action or similar rights, whether
accrued or contingent;

(n) all licenses, permits, approvals and authorizations which have been issued
by any Governmental Authority;

(o) all cash or cash equivalents, bank accounts, lock boxes and other deposit
arrangements; and

(p) all interest rate, currency, commodity or other swap, collar, cap or other
hedging or similar agreements or arrangements.

 

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“Assumed Actions” means (a) those Actions which are listed in Schedule 1; and
(b) those Actions that are primarily related to the Phillips 66 Business.

“Bridge Loan Facility” means the bridge loan facility pursuant to the bridge
loan facility agreement entered into prior to the Distribution by Phillips 66,
as borrower, the bank named therein as administrative agent, and the lending
banks named therein, on such terms and conditions as agreed to by Phillips 66
and the other parties to the bridge loan facility agreement and approved by
ConocoPhillips.

“ConocoPhillips” shall have the meaning set forth in the Preamble.

“ConocoPhillips Board” shall have the meaning set forth in the Recitals.

“ConocoPhillips Company” means ConocoPhillips Company, a Delaware corporation
and a wholly owned subsidiary of ConocoPhillips.

“ConocoPhillips Group” means ConocoPhillips, each Subsidiary of ConocoPhillips
immediately after the Distribution Date and each Affiliate of ConocoPhillips
immediately after the Distribution Date (in each case other than any member of
the Phillips 66 Group).

“ConocoPhillips Indemnitees” shall have the meaning set forth in Section 2.2.

“ConocoPhillips Intellectual Property” means (a) the ConocoPhillips Name and
ConocoPhillips Marks and (b) all other Intellectual Property that, as of the
Distribution Date, is owned or licensed by any member of either Group, other
than the Phillips 66 Intellectual Property.

“ConocoPhillips Name and ConocoPhillips Marks” means the names, marks, trade
dress, logos, monograms, domain names and other source or business identifiers
of ConocoPhillips or any of its Affiliates using or containing “ConocoPhillips”
(in block letters or otherwise), “ConocoPhillips” either alone or in combination
with other words or elements, and all names, marks, trade dress, logos,
monograms, domain names and other source or business identifiers confusingly
similar to or embodying any of the foregoing either alone or in combination with
other words or elements, together with the goodwill associated with any of the
foregoing.

“Contribution” means the contribution by ConocoPhillips to Phillips 66 of all
the outstanding stock of Phillips 66 Company and any Phillips 66 Assets held
directly by ConocoPhillips in exchange for (a) the assumption by Phillips 66 of
any Phillips 66 Liabilities from ConocoPhillips, and (b) a number of shares of
Phillips 66 Common Stock equal to the Required Share Number.

“Corporate Action” means any Action, whether filed before, on or after the
Distribution Date, to the extent it asserts violations of any federal, state,
local, foreign or international securities Law, securities class action or
shareholder derivative claim.

 

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“Credit Rating” means on any date, the rating that has been most recently
announced by any Rating Agency for any class of senior, unsecured,
non-convertible publicly held long-term debt of a Person.

“Dispute” shall have the meaning set forth in Section 4.1(a).

“Distribution” shall have the meaning set forth in the Recitals.

“Distribution Date” means the date and time determined in accordance with
Section 3.3(a) of the Separation and Distribution Agreement at which the
Distribution occurs.

“Employee Matters Agreement” means the Employee Matters Agreement, dated as of
the date hereof, between ConocoPhillips and Phillips 66.

“Environmental Law” means any Law relating to pollution, protection or
restoration of or prevention of harm to the environment or natural resources,
including the use, handling, transportation, treatment, storage, disposal,
Release or discharge of Hazardous Materials or the protection of or prevention
of harm to human health and safety.

“Environmental Liabilities” means all Liabilities relating to, arising out of or
resulting from any Hazardous Materials, Environmental Law or contract or
agreement relating to environmental, health or safety matters (including all
removal, remediation or cleanup costs, investigatory costs, response costs,
natural resources damages, property damages, personal injury damages, costs of
compliance, including with any product take back requirements, or with any
settlement, judgment or other determination of Liability and indemnity,
contribution or similar obligations) and all costs and expenses, interest,
fines, penalties or other monetary sanctions in connection therewith.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.

“Form 10” shall have the meaning set forth in the Separation and Distribution
Agreement.

“Governmental Authority” means any nation or government, any state, municipality
or other political subdivision thereof, and any entity, body, agency,
commission, department, board, bureau, court, tribunal or other instrumentality,
whether federal, state, local, domestic, foreign or multinational, exercising
executive, legislative, judicial, regulatory, administrative or other similar
functions of, or pertaining to, government and any executive official thereof.

“Group” means either the Phillips 66 Group or the ConocoPhillips Group, as the
context requires.

“Hazardous Materials” means any chemical, material, substance, waste, pollutant,
emission, discharge, release or contaminant that could result in liability
under, or that is prohibited, limited or regulated by or pursuant to, any
Environmental Law, and any natural or artificial substance (whether solid,
liquid or gas, noise, ion, vapor or electromagnetic) that could

 

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cause harm to human health or the environment, including petroleum, petroleum
products and byproducts, asbestos and asbestos-containing materials, urea
formaldehyde foam insulation, electronic, medical or infectious wastes,
polychlorinated biphenyls, radon gas, radioactive substances,
chlorofluorocarbons and all other ozone-depleting substances.

“Indemnifying Party” shall have the meaning set forth in Section 2.4(a).

“Indemnitee” shall have the meaning set forth in Section 2.4(a).

“Indemnity Payment” shall have the meaning set forth in Section 2.4(a).

“Information” means information, whether or not patentable or copyrightable, in
written, oral, electronic or other tangible or intangible forms, stored in any
medium, including studies, reports, records, books, contracts, instruments,
surveys, discoveries, ideas, concepts, know-how, techniques, designs,
specifications, drawings, blueprints, diagrams, models, prototypes, samples,
flow charts, data, computer data, disks, diskettes, tapes, computer programs or
other software, marketing plans, customer names, memos, and other technical,
financial, employee or business information or data.

“Information Statement” shall have the meaning set forth in the Separation and
Distribution Agreement.

“Initial Notice” shall have the meaning set forth in Section 4.2.

“Insurance Proceeds” means those monies:

(a) received by an insured from an insurance carrier; or

(b) paid by an insurance carrier on behalf of the insured;

in any such case net of any applicable premium adjustments (including reserves
and retrospectively rated premium adjustments) and net of any costs or expenses
incurred in the collection thereof; provided, however, with respect to a captive
insurance arrangement, Insurance Proceeds shall only include net amounts
received by the captive insurer in respect of any captive reinsurance
arrangement.

“Intellectual Property” means all of the following whether arising under the
Laws of the United States or of any other foreign or multinational jurisdiction:
(a) patents, patent applications (including patents issued thereon) and
statutory invention registrations, including reissues, divisions, continuations,
continuations in part, substitutions, renewals, extensions and reexaminations of
any of the foregoing, and all rights in any of the foregoing provided by
international treaties or conventions, (b) trademarks, service marks, trade
names, service names, trade dress, logos and other source or business
identifiers, including all goodwill associated with any of the foregoing and any
and all common law rights in and to any of the foregoing, registrations and
applications for registration of any of the foregoing, all rights in and to any
of the foregoing provided by international treaties or conventions, and all
reissues, extensions and renewals of any of the foregoing, (c) Internet domain
names, (d) copyrightable works, copyrights, moral rights, mask work rights,
database rights and design rights, in each case, other

 

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than Software, whether or not registered, and all registrations and applications
for registration of any of the foregoing, and all rights in and to any of the
foregoing provided by international treaties or conventions, (e) confidential
and proprietary information, including trade secrets, invention disclosures,
processes and know-how, in each case, other than Software, and (f) intellectual
property rights arising from or in respect of any Technology.

“Intellectual Property Assignment and License Agreement” means the Intellectual
Property Assignment and License Agreement, dated as of the date hereof, between
ConocoPhillips and Phillips 66.

“Investment Grade” shall mean a rating of at least (a) BBB- by Standard & Poor’s
Financial Services LLC, (b) Baa3 by Moody’s Investors Service, Inc., or (c) BBB-
by Fitch, Inc.

“Law” means any national, supranational, federal, state, provincial, local or
similar law (including common law), statute, code, order, ordinance, rule,
regulation, treaty (including any income tax treaty), license, permit,
authorization, approval, consent, decree, injunction, binding judicial or
administrative interpretation or other requirement, in each case, enacted,
promulgated, issued or entered by a Governmental Authority.

“LHO” shall have the meaning set forth in Section 2.5(i).

“Liabilities” means any and all debts, guarantees, assurances, commitments,
liabilities, responsibilities, Losses, remediation, deficiencies, reimbursement
obligations in respect of letters of credit, damages, fines, penalties,
settlements, sanctions, costs, expenses, interest and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured, accrued or not
accrued, asserted or unasserted, liquidated or unliquidated, foreseen or
unforeseen, known or unknown, reserved or unreserved, or determined or
determinable, including those arising under any Law, claim (including any
Third-Party Claim), demand, Action, or order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority or arbitration tribunal, and those arising under any contract,
agreement, obligation, indenture, instrument, lease, promise, arrangement,
release, warranty, commitment or undertaking, or any fines, damages or equitable
relief that is imposed, in each case, including all costs and expenses relating
thereto.

“Losses” means actual losses (including any diminution in value), costs,
damages, penalties and expenses (including legal and accounting fees and
expenses and costs of investigation and litigation), whether or not involving a
Third-Party Claim.

“Medicare Reporting Obligations” shall have the meaning set forth in
Section 2.6(g).

“Person” means an individual, a general or limited partnership, a corporation, a
trust, a joint venture, an unincorporated organization, a limited liability
entity, any other entity and any Governmental Authority.

“Phillips 66” shall have the meaning set forth in the Preamble.

 

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“Phillips 66 Common Stock” means the common stock, par value $0.01 per share, of
Phillips 66.

“Phillips 66 Company” means Phillips 66 Company, a Delaware corporation and a
wholly owned subsidiary of ConocoPhillips Company.

“Phillips 66 Financing Arrangements” means the Rule 144A / Capital Markets
Securities, the Term Loan Facility, the Bridge Loan Facility, the Accounts
Receivable Securitization, and the Revolving Credit Facility.

“Phillips 66 Group” means Phillips 66, each Subsidiary of Phillips 66
immediately after the Distribution Date, and each Affiliate of Phillips 66
immediately after the Distribution Date.

“Phillips 66 Indemnitees” shall have the meaning set forth in Section 2.3.

“Rating Agency” means Moody’s Investors Service, Inc., Standard & Poor’s, a
division of The McGraw-Hill Companies, Inc., Fitch, Inc. or any nationally
recognized statistical rating organizations registered with the Securities and
Exchange Commission.

“Release” means any release, spill, emission, discharge, leaking, pumping,
pouring, dumping, injection, deposit, disposal, dispersal, leaching or migration
of Hazardous Materials into the environment (including, ambient air, surface
water, groundwater and surface or subsurface strata).

“Representatives” means, with respect to any Person, any of such Person’s
directors, officers, employees, agents, consultants, advisors, accountants,
attorneys or other representatives.

“Required Share Number” means the number of shares of Phillips 66 Common Stock
necessary to effect the Distribution less the number of shares of Phillips 66
Common Stock outstanding immediately prior to the Contribution.

“Response” shall have the meaning set forth in Section 4.2.

“Revolving Credit Facility” means a revolving credit facility pursuant to a
revolving credit facility agreement entered into prior to the Distribution by
Phillips 66, as borrower, the bank named therein as administrative agent, and
the lending banks named therein, on such terms and conditions as agreed to by
Phillips 66 and the other parties to the revolving credit facility agreement and
approved by ConocoPhillips.

“Rule 144A / Capital Markets Securities” means securities sold prior to the
Distribution by Phillips 66, and approved by ConocoPhillips, in reliance on Rule
144A promulgated under the Securities Act.

“Securities Act” means the U.S. Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.

 

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“Security Interest” means any mortgage, security interest, pledge, lien, charge,
claim, option, right to acquire, voting or other restriction, right-of-way,
covenant, condition, easement, encroachment, restriction on transfer, or other
encumbrance of any nature whatsoever.

“Separation” shall have the meaning set forth in the Recitals.

“Separation and Distribution Agreement” has the meaning set forth in the
Preamble.

“Software” means any and all (a) computer programs, including any and all
software implementation of algorithms, models and methodologies, whether in
source code, object code, human readable form or other form, (b) databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise, (c) descriptions, flow charts and other work
products used to design, plan, organize and develop any of the foregoing,
screens, user interfaces, report formats, firmware, development tools,
templates, menus, buttons and icons, and (d) documentation, including user
manuals and other training documentation, relating to any of the foregoing.

“Subsidiary” or “subsidiary” means, with respect to any Person, any corporation,
limited liability company, joint venture or partnership of which such Person
(a) beneficially owns, either directly or indirectly, more than fifty percent
(50%) of (i) the total combined voting power of all classes of voting securities
of such Person, (ii) the total combined equity interests or (iii) the capital or
profit interests, in the case of a partnership, or (b) otherwise has the power
to vote, either directly or indirectly, sufficient securities to elect a
majority of the board of directors or similar governing body.

“Tax Benefit” shall have the meaning set forth in the Tax Sharing Agreement.

“Tax Sharing Agreement” means the Tax Sharing Agreement, dated as of the date
hereof, between ConocoPhillips, ConocoPhillips Company, Phillips 66 and Phillips
66 Company.

“Taxes” shall have the meaning set forth in the Tax Sharing Agreement.

“Technology” means all technology, designs, formulae, algorithms, procedures,
methods, discoveries, processes, techniques, ideas, know-how, research and
development, technical data, tools, materials, specifications, processes,
inventions (whether patentable or unpatentable and whether or not reduced to
practice), apparatus, creations, improvements, works of authorship in any media,
confidential, proprietary or non-public information and other similar materials,
and all recordings, graphs, drawings, reports, analyses and other writings, and
other tangible embodiments of the foregoing in any form whether or not listed
herein, in each case, other than Software.

“Term Loan Facility” means the term loan facility pursuant to the term loan
agreement entered into prior to the Distribution by Phillips 66, as borrower,
the bank named therein as administrative agent, and the lending banks named
therein, on such terms and conditions as agreed to by Phillips 66 and the other
parties to the term loan agreement and approved by ConocoPhillips.

 

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“Third Party” shall have the meaning set forth in Section 2.5(a).

“Third-Party Claim” shall have the meaning set forth in Section 2.5(a).

“Transfer Documents” shall have the meaning set forth in the Separation and
Distribution Agreement.

“Transition Services Agreement” means the Transition Services Agreement, dated
as of the date hereof, between ConocoPhillips and Phillips 66.

ARTICLE II

MUTUAL RELEASES; INDEMNIFICATION

2.1. Release of Pre-Distribution Claims.

(a) Except as provided in Section 2.1(c), effective as of the Distribution Date,
Phillips 66 does hereby, for itself and each other member of the Phillips 66
Group, their respective Affiliates (other than any member of the ConocoPhillips
Group), successors and assigns, and all Persons who at any time prior to the
Distribution Date have been directors, officers, agents or employees of any
member of the Phillips 66 Group (in each case, in their respective capacities as
such), remise, release and forever discharge ConocoPhillips and the members of
the ConocoPhillips Group, their respective Affiliates (other than any member of
the Phillips 66 Group), successors and assigns, and all Persons who at any time
prior to the Distribution Date have been stockholders, directors, officers,
agents or employees of any member of the ConocoPhillips Group (in each case, in
their respective capacities as such), and their respective heirs, executors,
administrators, successors and assigns, from any and all Liabilities whatsoever,
whether at law or in equity (including any right of contribution), whether
arising under any contract or agreement, by operation of law or otherwise,
existing or arising from any acts or events occurring or failing to occur or
alleged to have occurred or to have failed to occur or any conditions existing
or alleged to have existed on or before the Distribution Date, including in
connection with the transactions and all other activities to implement the
Separation and the Distribution.

(b) Except as provided in Section 2.1(c), effective as of the Distribution Date,
ConocoPhillips does hereby, for itself and each other member of the
ConocoPhillips Group, their respective Affiliates (other than any member of the
Phillips 66 Group), successors and assigns, and all Persons who at any time
prior to the Distribution Date have been directors, officers, agents or
employees of any member of the ConocoPhillips Group (in each case, in their
respective capacities as such), remise, release and forever discharge Phillips
66, the respective members of the Phillips 66 Group, their respective Affiliates
(other than any member of the ConocoPhillips Group), successors and assigns, and
all Persons who at any time prior to the Distribution Date have been
stockholders, directors, officers, agents or employees of any member of the
Phillips 66 Group (in each case, in their respective capacities as such), and
their respective heirs, executors, administrators, successors and assigns, from
any and all Liabilities whatsoever, whether at law or in equity (including any
right of contribution), whether arising under any contract or agreement, by
operation of law or otherwise, existing or arising from any acts or events
occurring or failing to occur or alleged to have occurred or to have failed to
occur

 

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or any conditions existing or alleged to have existed on or before the
Distribution Date, including in connection with the transactions and all other
activities to implement the Separation and the Distribution.

(c) Nothing contained in Section 2.1(a) or (b) shall impair any right of any
Person to enforce this Agreement, the Separation and Distribution Agreement, any
other Ancillary Agreement or any agreements, arrangements, commitments or
understandings that are specified in Section 2.8(b) of the Separation and
Distribution Agreement or the applicable Schedules thereto as not to terminate
as of the Distribution Date, in each case in accordance with its terms. Nothing
contained in Section 2.1(a) or (b) shall release any Person from:

(i) any Liability provided in or resulting from any agreement among any members
of the ConocoPhillips Group or the Phillips 66 Group that is specified in
Section 2.8(b) of the Separation and Distribution Agreement or the applicable
Schedules thereto as not to terminate as of the Distribution Date, or any other
Liability specified in such Section 2.8(b) as not to terminate as of the
Distribution Date;

(ii) any Liability, contingent or otherwise, assumed, transferred, assigned or
allocated to the Group of which such Person is a member in accordance with, or
any other Liability of any member of any Group under, this Agreement, the
Separation and Distribution Agreement or any other Ancillary Agreement;

(iii) any Liability for the sale, lease, construction or receipt of goods,
property or services purchased, obtained or used in the ordinary course of
business by a member of one Group from a member of the other Group prior to the
Distribution Date;

(iv) any Liability for unpaid amounts for products or services or refunds owing
on products or services due on a value-received basis for work done by a member
of one Group at the request or on behalf of a member of the other Group;

(v) any Liability that the parties may have with respect to indemnification or
contribution pursuant to this Agreement for claims brought against the parties
by third Persons, which Liability shall be governed by the provisions of this
Article II and Article III and, if applicable, the appropriate provisions of the
Separation and Distribution Agreement and the other Ancillary Agreements; or

(vi) any Liability the release of which would result in the release of any third
Person other than a Person released pursuant to this Section 2.1.

In addition, nothing contained in Section 2.1(a) shall release ConocoPhillips
from honoring its existing obligations to indemnify any director, officer or
employee of a member of the Phillips 66 Group who was a director, officer or
employee of a member of the ConocoPhillips Group on or prior to the Distribution
Date, to the extent such director, officer or employee becomes a named defendant
in any Action with respect to which such director, officer or employee was
entitled to such indemnification pursuant to then existing obligations; it being
understood that, if the underlying obligation giving rise to such Action is a
Phillips 66 Liability, Phillips 66 shall indemnify ConocoPhillips for such
Liability (including ConocoPhillips’ costs to indemnify the director, officer or
employee) in accordance with the provisions set forth in this Article II.

 

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(d) Phillips 66 covenants that it will not make, and will not permit any member
of the Phillips 66 Group to make, any claim or demand, or commence any Action
asserting any claim or demand, including any claim of contribution or any
indemnification, against ConocoPhillips or any member of the ConocoPhillips
Group, or any other Person released pursuant to Section 2.1(a), with respect to
any Liabilities released pursuant to Section 2.1(a). ConocoPhillips covenants
that it will not make, and will not permit any member of the ConocoPhillips
Group to make, any claim or demand, or commence any Action asserting any claim
or demand, including any claim of contribution or any indemnification, against
Phillips 66 or any member of the Phillips 66 Group, or any other Person released
pursuant to Section 2.1(b), with respect to any Liabilities released pursuant to
Section 2.1(b).

(e) It is the intent of each of ConocoPhillips and Phillips 66, by virtue of the
provisions of this Section 2.1, to provide for a full and complete release and
discharge of all Liabilities existing or arising from all acts and events
occurring or failing to occur or alleged to have occurred or to have failed to
occur and all conditions existing or alleged to have existed on or before the
Distribution Date, between or among Phillips 66 or any member of the Phillips 66
Group, on the one hand, and ConocoPhillips or any member of the ConocoPhillips
Group, on the other hand (including any contractual agreements or arrangements
existing or alleged to exist between or among any such members on or before the
Distribution Date), except as expressly set forth in Section 2.1(c). At any
time, at the request of any other party to this Agreement, each party shall
cause each member of its respective Group to execute and deliver releases
reflecting the provisions hereof.

(f) Any breach of the provisions of this Section 2.1 by either ConocoPhillips or
Phillips 66 shall entitle the other party to recover reasonable fees and
expenses of counsel in connection with such breach or any action resulting from
such breach.

2.2. Indemnification by Phillips 66. Subject to Section 2.4, Phillips 66 shall,
and shall cause the other members of the Phillips 66 Group to, indemnify, defend
and hold harmless ConocoPhillips, each member of the ConocoPhillips Group and
each of their respective directors, officers and employees, and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively,
the “ConocoPhillips Indemnitees”), from and against any and all Liabilities of
the ConocoPhillips Indemnitees relating to, arising out of or resulting from any
of the following items (without duplication):

(a) the failure of Phillips 66 or any other member of the Phillips 66 Group or
any other Person to pay, perform or otherwise promptly discharge any Phillips 66
Liabilities or Phillips 66 Contracts in accordance with its respective terms,
whether prior to or after the Distribution Date or the date hereof;

(b) the Phillips 66 Business, any Phillips 66 Liabilities or any Phillips 66
Contracts;

(c) the Assumed Actions;

 

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(d) any Corporate Action or Action relating primarily to the Phillips 66
Business from which Phillips 66 is unable to cause a ConocoPhillips Group party
to be removed pursuant to Section 2.6(d);

(e) any use by any member of the ConocoPhillips Group allowed by the
Intellectual Property Assignment and License Agreement, the Separation and
Distribution Agreement or any other Ancillary Agreement after the Distribution
Date of the Phillips 66 Intellectual Property owned by, or licensed by a Third
Party to, a member of the Phillips 66 Group;

(f) any failure by Phillips 66 or a member of the Phillips 66 Group to use
commercially reasonable efforts to obtain the waivers of subrogation
contemplated by Section 2.4(d);

(g) any breach by Phillips 66 or any member of the Phillips 66 Group of this
Agreement, the Separation and Distribution Agreement or any of the other
Ancillary Agreements;

(h) any guarantee, indemnification obligation, letter of credit reimbursement
obligations, surety, bond or other credit support agreement, arrangement,
commitment or understanding for the benefit of Phillips 66 or its Subsidiaries
by ConocoPhillips or any of its Subsidiaries (other than Phillips 66 or its
Subsidiaries) that survives following the Distribution Date; and

(i) any untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, with respect
to all information contained in any of the Form 10 (including in any amendments
or supplements thereto), the Information Statement (as amended or supplemented
if Phillips 66 will have furnished any amendments or supplements thereto) or any
offering memorandum or other marketing materials prepared in connection with the
Phillips 66 Financing Arrangements, other than any such statement or omission in
the Form 10, Information Statement or offering memorandum or other marketing
materials based on information furnished by ConocoPhillips solely in respect of
the ConocoPhillips Group.

2.3. Indemnification by ConocoPhillips. Subject to Section 2.4, ConocoPhillips
shall, and shall cause the other members of the ConocoPhillips Group to,
indemnify, defend and hold harmless Phillips 66, each member of the Phillips 66
Group and each of their respective directors, officers and employees, and each
of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the “Phillips 66 Indemnitees”), from and against any and all
Liabilities of the Phillips 66 Indemnitees relating to, arising out of or
resulting from any of the following items (without duplication):

(a) the failure of ConocoPhillips or any other member of the ConocoPhillips
Group or any other Person to pay, perform or otherwise promptly discharge any
Excluded Liabilities, whether prior to or after the Distribution Date or the
date hereof;

(b) the ConocoPhillips Business or any Excluded Contracts;

 

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(c) the Excluded Liabilities;

(d) any Corporate Action or Action relating primarily to the ConocoPhillips
Business from which ConocoPhillips is unable to cause a Phillips 66 Group party
to be removed pursuant to Section 2.6(d);

(e) any use by any member of the Phillips 66 Group allowed by the Intellectual
Property Assignment and License Agreement, the Separation and Distribution
Agreement or any other Ancillary Agreement after the Distribution Date of the
ConocoPhillips Intellectual Property owned by, or licensed by a Third Party to,
a member of the ConocoPhillips Group;

(f) any failure by ConocoPhillips or a member of the ConocoPhillips Group to use
commercially reasonable efforts to obtain the waivers of subrogation
contemplated by Section 2.4(d);

(g) any untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, with respect
to all information contained in any of the Form 10 (including in any amendments
or supplements thereto), the Information Statement (as amended or supplemented
if Phillips 66 will have furnished any amendments or supplements thereto) or any
offering memorandum or other marketing materials prepared in connection with the
Phillips 66 Financing Arrangements, only to the extent based on information
furnished by ConocoPhillips solely in respect of the ConocoPhillips Group; and

(h) any breach by ConocoPhillips or any member of the ConocoPhillips Group of
this Agreement, the Separation and Distribution Agreement or any of the other
Ancillary Agreements.

2.4. Indemnification Obligations Net of Insurance Proceeds and Other Amounts.

(a) The parties intend that any Liability subject to indemnification or
reimbursement pursuant to this Article II or Article III will be net of
Insurance Proceeds that actually reduce the amount of the Liability.
Accordingly, the amount which any party (an “Indemnifying Party”) is required to
pay to any Person entitled to indemnification hereunder (an “Indemnitee”) will
be reduced by any Insurance Proceeds theretofore actually recovered by or on
behalf of the Indemnitee in respect of the related Liability. If an Indemnitee
receives a payment (an “Indemnity Payment”) required by this Agreement from an
Indemnifying Party in respect of any Liability and subsequently receives
Insurance Proceeds, then the Indemnitee will pay to the Indemnifying Party an
amount equal to the excess of the Indemnity Payment received over the amount of
the Indemnity Payment that would have been due if the Insurance Proceeds had
been received, realized or recovered before the Indemnity Payment was made.

(b) An insurer who would otherwise be obligated to pay any claim shall not be
relieved of the responsibility with respect thereto or, solely by virtue of the
indemnification provisions hereof, have any subrogation rights with respect
thereto, it being expressly understood and agreed that no insurer or any other
Third Party shall be entitled to a “windfall” (i.e., a benefit they would not be
entitled to receive in the absence of the indemnification provisions) by virtue
of the indemnification provisions hereof.

 

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(c) The parties intend that any indemnification or reimbursement payment in
respect of a Liability pursuant to this Article II or Article III shall be
(i) reduced to take into account the amount of any Tax Benefit to the
indemnified or reimbursed Person resulting from the Liability so indemnified or
reimbursed and (ii) increased so that the amount of such payment, reduced by the
amount of all Income Taxes (as defined in the Tax Sharing Agreement) payable
with respect to the receipt thereof (but taking into account all correlative Tax
Benefits resulting from the payment of such Income Taxes), shall equal the
amount of the payment which the Person receiving such payment would otherwise be
entitled to receive pursuant to this Agreement. For purposes of this
Section 2.4(c), the amount of any Tax Benefit and any Income Taxes shall be
calculated on the basis that the indemnified or reimbursed Person is subject to
the highest marginal regular statutory income Tax rate, has sufficient taxable
income to permit the realization or receipt of any relevant Tax Benefit at the
earliest possible time and is not subject to the alternative minimum tax.

(d) Each of ConocoPhillips and Phillips 66 shall, and shall cause the members of
its Group to, when appropriate, use commercially reasonable efforts to obtain
waivers of subrogation for each of the insurance policies identified on Schedule
3.1(c). Each of ConocoPhillips and Phillips 66 hereby waives, for itself and
each member of its Group, its rights to recover against the other party in
subrogation or as subrogee for a third Person.

(e) For all claims as to which indemnification is provided under Section 2.2 or
Section 2.3 other than Third-Party Claims (as to which Section 2.5 shall apply),
the reasonable fees and expenses of counsel to the Indemnitee for the
enforcement of the indemnity obligations shall be borne by the Indemnifying
Party.

2.5. Procedures for Indemnification of Third-Party Claims.

(a) If an Indemnitee shall receive written notice from a Person (including any
Governmental Authority) who is not a member of the ConocoPhillips Group or the
Phillips 66 Group (a “Third Party”) of any claim or of the commencement by any
such Person of any Action (collectively, a “Third-Party Claim”) with respect to
which an Indemnifying Party may be obligated to provide indemnification to such
Indemnitee pursuant to Section 2.2 or 2.3, or any other Section of this
Agreement or any other Ancillary Agreement, such Indemnitee shall give such
Indemnifying Party written notice thereof within fourteen (14) days of such
written notice. Any such notice shall describe the Third-Party Claim in
reasonable detail and include copies of all notices and documents (including
court papers) received by the Indemnitee relating to the Third-Party Claim.
Notwithstanding the foregoing, the failure of an Indemnitee to provide notice in
accordance with this Section 2.5(a) shall not relieve an Indemnifying Party of
its indemnification obligations under this Agreement, except to the extent to
which the Indemnifying Party shall demonstrate that it was materially prejudiced
by the Indemnitee’s failure to provide notice in accordance with this
Section 2.5(a).

(b) An Indemnifying Party may elect to defend (and, unless the Indemnifying
Party has specified any reservations or exceptions, to seek to settle or
compromise), at such

 

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Indemnifying Party’s own expense and by such Indemnifying Party’s own counsel,
any Third-Party Claim. Within thirty (30) days after the receipt of notice from
an Indemnitee in accordance with Section 2.5(a) (or sooner, if the nature of
such Third-Party Claim so requires), the Indemnifying Party shall notify the
Indemnitee of its election whether the Indemnifying Party will assume
responsibility for defending such Third-Party Claim, which election shall
specify any reservations or exceptions. After notice from an Indemnifying Party
to an Indemnitee of its election to assume the defense of a Third-Party Claim,
such Indemnitee shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof,
but the fees and expenses of such counsel shall be the expense of such
Indemnitee except as set forth in the next sentence.

(c) In the event that the Indemnifying Party has elected to assume the defense
of the Third-Party Claim but has specified, and continues to assert, any
reservations or exceptions in such notice, then, in any such case, the
reasonable fees and expenses of one separate counsel for all Indemnitees shall
be the expense of such Indemnitees, but shall be reimbursed by the Indemnifying
Party.

In the event that the Indemnifying Party has elected to assume the defense of
the Third Party Claim but has specified, and continues to assert, any
reservations or exceptions in such notice, then the Indemnitee must consent to
any settlement or compromise.

(d) Notwithstanding an election by an Indemnifying Party to defend a Third-Party
Claim pursuant to Section 2.5(b), the Indemnitee may, upon notice to the
Indemnifying Party, elect to take over the defense of such Third-Party Claim if
(i) in its exercise of reasonable business judgment, the Indemnitee determines
that the Indemnifying Party is not defending such Third-Party Claim competently
or in good faith, (ii) the Credit Rating of the Indemnifying Party is or falls
below Investment Grade as determined by at least two Rating Agencies, (iii) the
Indemnitee determines in its exercise of reasonable business judgment that there
exists a compelling business reason for such Indemnitee to defend such
Third-Party Claim (other than as contemplated by the foregoing clause (i)),
(iv) the Indemnifying Party makes a general assignment for the benefit of
creditors, has filed against it or files a petition in bankruptcy or insolvency
or is declared bankrupt or insolvent or declares that it is bankrupt or
insolvent, or (v) there occurs a change of control of the Indemnifying Party.

(e) If an Indemnifying Party elects not to assume responsibility for defending a
Third-Party Claim, or fails to notify an Indemnitee of its election as provided
in Section 2.5(b), or if an Indemnitee takes over the defense of a Third-Party
Claim as provided in Section 2.5(d)(i), the Indemnifying Party shall bear the
costs and expenses of the Indemnitee incurred in defending such Third-Party
Claim. If the Indemnitee takes over the defense of a Third-Party Claim as
provided in Section 2.5(d)(ii)-(v), the Indemnifying Party shall bear all of the
Indemnitee’s reasonable costs and expenses incurred in defending such
Third-Party Claim.

(f) If, pursuant to Section 2.5(d) or for any other reason, the Indemnifying
Party is not defending a Third-Party Claim for which indemnification is provided
under this Agreement, the Indemnifying Party shall have the right, at its own
expense, to monitor reasonably the defense of such Third-Party Claim; provided,
that such monitoring activity shall not interfere in any material respect with
the conduct of such defense.

 

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(g) If an Indemnifying Party has failed to assume the defense of the Third-Party
Claim in accordance with the terms of this Agreement or an Indemnitee takes over
the defense of a Third-Party Claim as provided in Section 2.5(d)(i), an
Indemnitee may settle or compromise the Third-Party Claim without the consent of
the Indemnifying Party. If an Indemnitee takes over the defense of a Third-Party
Claim as provided in Section 2.5(d)(ii)-(v), such Indemnitee may not settle or
compromise any Third-Party Claim without the consent of the Indemnifying Party,
such consent not to be unreasonably withheld or delayed.

(h) In the case of a Third-Party Claim, no Indemnifying Party shall consent to
entry of any judgment or enter into any settlement of the Third-Party Claim
without the consent of the Indemnitee if the effect thereof is to permit any
injunction, declaratory judgment or other non-monetary relief to be entered,
directly or indirectly against any Indemnitee. For the avoidance of doubt, the
consent of any Indemnitee pursuant to this Section 2.5(h) shall be required only
with respect to non-monetary relief.

(i) Phillips 66 shall prepare and circulate a legal hold order (“LHO”) covering
relevant categories of documents as promptly as practical following receipt of
any notice pursuant to Section 2.5(a) and shall promptly notify ConocoPhillips
after such LHO has been circulated. ConocoPhillips shall prepare and circulate a
LHO covering documents in the possession, custody or control of the
ConocoPhillips Group with respect to any Action so notified to Phillips 66.

(j) The provisions of this Section 2.5 (other than this Section 2.5(j)) and the
provisions of Section 2.6 shall not apply to Taxes (Taxes being governed by the
Tax Sharing Agreement).

(k) All Assumed Actions have been tendered by ConocoPhillips to Phillips 66 and
are deemed to be formally accepted by Phillips 66 upon the execution of this
Agreement.

(l) An Indemnifying Party shall provide the Indemnitee with a monthly written
report identifying any Third Party Claims which such Indemnifying Party has
elected to defend pursuant to Section 2.5(b) or, in the case of Phillips 66,
which are identified on Schedule 1.1. In addition, the Indemnifying Party shall
establish a procedure reasonably acceptable to the Indemnitee to automatically
send electronic notice from the Indemnifying Party to the Indemnitee through the
litigation management system or any successor system when any such Third Party
Claim is closed, regardless of whether such Third Party Claim was decided by
settlement, verdict, dismissal or was otherwise disposed of.

2.6. Additional Matters.

(a) Indemnification payments in respect of any Liabilities for which an
Indemnitee is entitled to indemnification under this Article II shall be paid by
the Indemnifying Party to the Indemnitee as such Liabilities are incurred upon
demand by the Indemnitee, including reasonably satisfactory documentation
setting forth the basis for the amount of such indemnification payment,
including documentation with respect to calculations made and consideration of
any Insurance Proceeds that actually reduce the amount of such Liabilities. THE
INDEMNITY AGREEMENTS CONTAINED IN THIS ARTICLE II SHALL REMAIN

 

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OPERATIVE AND IN FULL FORCE AND EFFECT, REGARDLESS OF (I) ANY INVESTIGATION MADE
BY OR ON BEHALF OF ANY INDEMNITEE, (II) THE KNOWLEDGE BY THE INDEMNITEE OF
LIABILITIES FOR WHICH IT MIGHT BE ENTITLED TO INDEMNIFICATION HEREUNDER AND
(III) ANY TERMINATION OF THIS AGREEMENT.

(b) Any claim on account of a Liability that does not result from a Third-Party
Claim shall be asserted by written notice given by the Indemnitee to the related
Indemnifying Party. Such Indemnifying Party shall have a period of thirty
(30) days after the receipt of such notice within which to respond thereto. If
such Indemnifying Party does not respond within such thirty (30)-day period,
such Indemnifying Party shall be deemed to have refused to accept responsibility
to make payment. If such Indemnifying Party does not respond within such thirty
(30)-day period or rejects such claim in whole or in part, such Indemnitee shall
be free to pursue such remedies as may be available to such party as
contemplated by this Agreement and the other Ancillary Agreements.

(c) In the event of payment by or on behalf of any Indemnifying Party to any
Indemnitee in connection with any Third-Party Claim, such Indemnifying Party
shall be subrogated to and shall stand in the place of such Indemnitee as to any
events or circumstances in respect of which such Indemnitee may have any right,
defense or claim relating to such Third-Party Claim against any claimant or
plaintiff asserting such Third-Party Claim or against any other Person. Such
Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner,
and at the cost and expense of such Indemnifying Party, in prosecuting any
subrogated right, defense or claim.

(d) In the event of an Action for which indemnification is sought pursuant to
Section 2.2 or 2.3 and in which the Indemnifying Party is not a named defendant,
if either the Indemnitee or Indemnifying Party shall so request, the parties
shall use commercially reasonable efforts to substitute the Indemnifying Party
for the named defendant.

(e) In the event that Phillips 66 or ConocoPhillips shall establish a risk
accrual in an amount of at least $25 million with respect to any Third-Party
Claim for which such party has indemnified the other party pursuant to
Section 2.2 or 2.3, as applicable, it shall notify the other party of the
existence and amount of such risk accrual (i.e., when the accrual is recorded in
the financial statements as an accrual for a potential liability), subject to
the parties entering into an appropriate agreement with respect to the
confidentiality and/or privilege thereof.

(f) Any Applicable Toxic Tort Claim for which, at the time notice is required
under Section 2.5(a), ConocoPhillips cannot reasonably determine whether such
Applicable Toxic Tort Claim primarily relates to the Phillips 66 Business shall
be presumed to fall within Phillips 66’s indemnification obligation in
Section 2.2(d). If pursuant to Section 2.5(a) an Applicable Toxic Tort Claim is
notified to Phillips 66, and thereafter it is determined that Section 2.2 does
not provide any indemnification therefor, ConocoPhillips shall pay to Phillips
66 $5,000 to cover Phillips 66’s direct and indirect expenses promptly following
the re-tender of such Applicable Toxic Tort Claim to ConocoPhillips and its
acceptance thereof.

 

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(g) Phillips 66 shall provide ConocoPhillips or a Third Party designated by
ConocoPhillips with all information necessary for the members of the
ConocoPhillips Group to comply with their obligations under Section 111 of the
Medicare, Medicaid and SCHIP Extension Act (or any successor thereto) (“Medicare
Reporting Obligations”) with respect to the settlement or other disposition of
any Action by or on behalf of any member of the Phillips 66 Group. If Phillips
66 fails to do so promptly and/or provides materially incorrect information,
then Phillips 66 shall indemnify ConocoPhillips pursuant to Section 2.2 for any
fines, penalties and/or costs arising from any such Phillips 66 failure or
action. Phillips 66 shall bear all costs associated with satisfying such
Medicare Reporting Obligations (including but not limited to settlements or
releases of personal injury claims from a Medicare beneficiary on behalf of
ConocoPhillips), including ConocoPhillips’ costs if ConocoPhillips elects to
effect reporting, or reasonable third-party costs if ConocoPhillips outsources
such reporting. ConocoPhillips agrees that it shall not use a Third Party for
such purpose unless such Third Party indemnifies both ConocoPhillips and
Phillips 66 on commercially reasonable terms for any wrongful reporting.
Phillips 66 shall provide ConocoPhillips with a monthly written report
identifying all Actions that are subject to Medicare Reporting Obligations on
the part of any member of the ConocoPhillips Group and that have been settled or
otherwise disposed of by or on behalf of any member of the Phillips 66 Group. In
addition, Phillips 66 shall establish a procedure reasonably acceptable to
ConocoPhillips to automatically send electronic notice from Phillips 66 to
ConocoPhillips through the litigation management system or any successor system
when any such Action is closed, regardless of whether such Action was decided by
settlement, verdict, dismissal or was otherwise disposed of.

2.7. Remedies Cumulative. The remedies provided in this Article II shall be
cumulative and shall not preclude assertion by any Indemnitee of any other
rights or the seeking of any and all other remedies against any Indemnifying
Party.

2.8. Survival of Indemnities. The rights and obligations of each of
ConocoPhillips and Phillips 66 and their respective Indemnitees under this
Article II shall survive the sale or other transfer by any party of any Assets
or businesses or the assignment by it of any Liabilities.

2.9. Guarantees, Letters of Credit and other Obligations. In furtherance of, and
not in limitation of, the obligations set forth in Section 2.6 hereof and
Section 5.3 of the Separation and Distribution Agreement:

(a) On or prior to the Distribution Date or as soon as practicable thereafter,
Phillips 66 shall (with the reasonable cooperation of the applicable member(s)
of the ConocoPhillips Group) use its commercially reasonable efforts to have any
member(s) of the ConocoPhillips Group removed as guarantor of or obligor for any
Phillips 66 Liability to the extent that they relate to Phillips 66 Liabilities,
including in respect of those guarantees, letters of credit and other
obligations set forth on Schedule 2.9(a).

(b) On or prior to the Distribution Date, to the extent required to obtain a
release from a guarantee, letter of credit or other obligation of any member of
the ConocoPhillips Group, Phillips 66 shall execute a substitute document in the
form of any such existing guarantee or letter of credit, as applicable, or such
other form as is agreed to by the relevant parties to such guarantee agreement,
letter of credit or other obligation, except to the extent that such existing

 

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guarantee contains representations, covenants or other terms or provisions
either (i) with which Phillips 66 would be reasonably unable to comply or
(ii) which would be reasonably expected to be breached.

(c) If the parties are unable to obtain, or to cause to be obtained, any such
required removal as set forth in clauses (a) and (b) of this Section 2.9,
(i) Phillips 66 shall, and shall cause the other members of the Phillips 66
Group to, indemnify, defend and hold harmless each of the ConocoPhillips
Indemnitees for any Liability arising from or relating to such guarantee, letter
of credit or other obligation, as applicable, and shall, as agent or
subcontractor for the applicable ConocoPhillips Group guarantor or obligor, pay,
perform and discharge fully all of the obligations or other Liabilities of such
guarantor or obligor thereunder, and (ii) Phillips 66 shall not, and shall cause
the other members of the Phillips 66 Group not to, agree to renew or extend the
term of, increase any obligations under, or transfer to a third Person, any
loan, guarantee, , letter of credit, lease, contract or other obligation for
which a member of the ConocoPhillips Group is or may be liable unless all
obligations of the members of the ConocoPhillips Group with respect thereto are
thereupon terminated by documentation satisfactory in form and substance to
ConocoPhillips in its sole and absolute discretion.

2.10. No Impact on Third Parties. For the avoidance of doubt, except as
expressly set forth in this Agreement, the indemnifications provided for in this
Article II are made only for purposes of allocating responsibility for
Liabilities between the ConocoPhillips Group, on the one hand, and the Phillips
66 Group, on the other hand, and are not intended to, and shall not, affect any
obligations to, or give rise to any rights of, any third parties.

2.11. No Cross-Claims or Third-Party Claims. Each of Phillips 66 and
ConocoPhillips agrees that it shall not, and shall not permit the members of its
respective Group to, in connection with any Third-Party Claim, assert as a
counterclaim or third-party claim against any member of the ConocoPhillips Group
or Phillips 66 Group, respectively, any claim (whether sounding in contract,
tort or otherwise) that arises out of or relates to this Agreement, any breach
or alleged breach hereof, the transactions contemplated hereby (including all
actions taken in furtherance of the transactions contemplated hereby on or prior
to the date hereof), or the construction, interpretation, enforceability or
validity hereof, which in each such case shall be asserted only as contemplated
by Article IV.

2.12. Severability. If any indemnification provided for in this Article II is
determined by a Delaware federal or state court to be invalid, void or
unenforceable, the liability shall be apportioned between the Indemnitee and the
Indemnifying Party as determined in a separate proceeding in accordance with
Article IV.

2.13. Change of Control. In the event that any third Person or “group” (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act) acquires,
including by way of merger, consolidation or other business combination, fifty
percent (50%) or more of the assets or voting equity of either ConocoPhillips or
Phillips 66, ConocoPhillips or Phillips 66, as applicable, shall take all
necessary action so that such third Person or group shall become a guarantor of
the obligations of ConocoPhillips or Phillips 66, as applicable, under this
Agreement, the Separation and Distribution Agreement and the other Ancillary
Agreements.

 

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ARTICLE III

INSURANCE MATTERS

3.1. Insurance Matters.

(a) ConocoPhillips and Phillips 66 agree to cooperate in good faith to arrange
insurance coverage for Phillips 66 to be effective no later than the
Distribution Date. In no event shall ConocoPhillips, any other member of the
ConocoPhillips Group or any ConocoPhillips Indemnitee have liability or
obligation whatsoever to any member of the Phillips 66 Group in the event that
any insurance policy or other contract or policy of insurance shall be
terminated or otherwise cease to be in effect for any reason, shall be
unavailable or inadequate to cover any Liability of any member of the Phillips
66 Group for any reason whatsoever or shall not be renewed or extended beyond
the current expiration date.

(b) From and after the Distribution Date, other than as provided in
Section 3.1(c), neither Phillips 66 nor any member of the Phillips 66 Group
shall have any rights to or under any of ConocoPhillips’ or its Affiliates’
insurance policies. At the Distribution Date, Phillips 66 shall have in effect
all insurance programs required to comply with Phillips 66’s contractual
obligations and such other insurance policies as reasonably necessary, and,
following the Distribution Date, Phillips 66 shall maintain such insurance
programs and policies with insurers which comply with the minimum financial
credit rating standards set by the major global insurance brokers.

(c) From and after the Distribution Date, except with respect to the insurance
matters identified on Schedule 3.1(c), whose treatment shall be as set forth on
such Schedule, with respect to any losses, damages and liabilities incurred by
any member of the Phillips 66 Group prior to or in respect of the period prior
to the Distribution Date, ConocoPhillips will provide Phillips 66 with access
to, and Phillips 66 may, upon 10 days’ prior written notice to ConocoPhillips,
make claims under, ConocoPhillips’ third-party insurance policies in place at
the time of the Distribution and ConocoPhillips’ historical policies of
insurance, but solely to the extent that such policies provided coverage for the
Phillips 66 Group prior to the Distribution; provided, that such access to, and
the right to make claims under such insurance policies, shall be subject to the
terms and conditions of such insurance policies, including any limits on
coverage or scope, any deductibles and other fees and expenses, and shall be
subject to the following additional conditions:

(i) Phillips 66 shall provide ConocoPhillips with a written report sixty
(60) days prior to any such third-party insurance policy’s renewal date, as
advised by ConocoPhillips, identifying any claims made by Phillips 66 for which
notice has previously been provided to insurers of ConocoPhillips;

(ii) Phillips 66 and its Affiliates shall indemnify, hold harmless and reimburse
ConocoPhillips and its Affiliates for any deductibles, self-insured retention,
fees and expenses incurred by ConocoPhillips or its Affiliates to the extent
resulting from any such access to, or any claims made by Phillips 66 or any of
its Affiliates under, any insurance provided pursuant to this Section 3.1(c),
including any indemnity payments, settlements, judgments, legal fees and
allocated claims expenses and claim handling fees, whether such claims are made
by Phillips 66, its employees or third Persons; and

 

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(iii) Phillips 66 shall exclusively bear (and neither ConocoPhillips nor its
Affiliates shall have any obligation to repay or reimburse Phillips 66 or its
Affiliates for) and shall be liable for all uninsured, uncovered, unavailable or
uncollectible amounts of all such claims made by Phillips 66 or any of its
Affiliates under the policies as provided for in this Section 3.1(c).

In the event that an insurance policy aggregate is exhausted, or believed likely
to be exhausted, due to noticed claims, the Phillips 66 Group, on the one hand,
and the ConocoPhillips Group, on the other hand, shall be responsible for their
pro rata portion of the reinstatement premium, based upon the losses of such
Group submitted to ConocoPhillips’ insurance carrier(s) (including any
submissions prior to the Distribution Date). To the extent that the
ConocoPhillips Group or the Phillips 66 Group is allocated more than its pro
rata portion of such premium due to the timing of losses submitted to
ConocoPhillips’ insurance carrier(s), the other party shall promptly pay the
first party an amount so that each Group has been properly allocated its pro
rata portion of the reinstatement premium. ConocoPhillips and Phillips 66 can
mutually agree not to reinstate the policy aggregate and each Group then will
bear all of its own future costs.

In the event that any member of the ConocoPhillips Group incurs any losses,
damages or liability incurred prior to the Distribution Date under Phillips 66’s
third-party insurance policies, the same process pursuant to this Section 3.1(c)
shall apply, substituting “ConocoPhillips” for “Phillips 66” and “Phillips 66”
for “ConocoPhillips.”

(d) All payments and reimbursements by Phillips 66 pursuant to this Section 3.1
will be made within fifteen (15) days after Phillips 66’s receipt of an invoice
therefor from ConocoPhillips. If ConocoPhillips incurs costs to enforce Phillips
66’s obligations herein, Phillips 66 agrees to indemnify ConocoPhillips for such
enforcement costs, including attorneys’ fees.

(e) All payments and reimbursements by ConocoPhillips pursuant to this
Section 3.1 will be made within fifteen (15) days after ConocoPhillips’ receipt
of an invoice therefor from Phillips 66. If Phillips 66 incurs costs to enforce
ConocoPhillips’ obligations herein, ConocoPhillips agrees to indemnify Phillips
66 for such enforcement costs, including attorneys’ fees.

(f) ConocoPhillips shall retain the exclusive right to control its insurance
policies and programs, including the right to exhaust, settle, release, commute,
buy-back or otherwise resolve disputes with respect to any of its insurance
policies and programs and to amend, modify or waive any rights under any such
insurance policies and programs, notwithstanding whether any such policies or
programs apply to any Phillips 66 Liabilities and/or claims Phillips 66 has made
or could make in the future, and no member of the Phillips 66 Group shall,
without the prior written consent of ConocoPhillips, erode, exhaust, settle,
release, commute, buy-back or otherwise resolve disputes with ConocoPhillips’
insurers with respect to any of ConocoPhillips’ insurance policies and programs,
or amend, modify or waive any rights under any such insurance policies and
programs. Phillips 66 shall cooperate with ConocoPhillips

 

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and share such information at Phillips 66’s cost as is reasonably necessary in
order to permit ConocoPhillips to manage and conduct its insurance matters as it
deems appropriate. Neither ConocoPhillips nor any of its Affiliates shall have
any obligation to secure extended reporting for any claims under any of
ConocoPhillips’ or its Affiliates’ liability policies for any acts or omissions
by any member of the Phillips 66 Group incurred prior to the Distribution Date.

(g) This Agreement shall not be considered as an attempted assignment of any
policy of insurance or as a contract of insurance and shall not be construed to
waive any right or remedy of any member of the ConocoPhillips Group in respect
of any insurance policy or any other contract or policy of insurance.

(h) Phillips 66 does hereby, for itself and each other member of the Phillips 66
Group, agree that no member of the ConocoPhillips Group shall have any Liability
whatsoever as a result of the insurance policies and practices of ConocoPhillips
and its Affiliates as in effect at any time, including as a result of the level
or scope of any such insurance, the creditworthiness of any insurance carrier,
the terms and conditions of any policy, or the adequacy or timeliness of any
notice to any insurance carrier with respect to any claim or potential claim or
otherwise.

(i) The parties acknowledge that to the extent there are losses or premium
adjustments under the parties’ tripartite insurance agreements, such losses or
adjustments will be governed by such tripartite insurance agreements.

ARTICLE IV

DISPUTE RESOLUTION

4.1. General Provisions.

(a) Any dispute, controversy or claim arising out of or relating to this
Agreement, the Separation and Distribution Agreement or the other Ancillary
Agreements (except as otherwise set forth in any such Ancillary Agreements),
including the validity, interpretation, breach or termination thereof (a
“Dispute”), shall be resolved in accordance with the procedures set forth in
this Article IV, which shall be the sole and exclusive procedures for the
resolution of any such Dispute unless otherwise specified in the applicable
Ancillary Agreement or in this Article IV.

(b) Commencing with a request contemplated by Section 4.2, all communications
between the parties or their representatives in connection with the attempted
resolution of any Dispute shall be deemed to have been delivered in furtherance
of a Dispute settlement and shall be exempt from discovery and production, and
shall not be admissible into evidence for any reason (whether as an admission or
otherwise), in any arbitral or other proceeding for the resolution of any
Dispute.

(c) THE PARTIES EXPRESSLY WAIVE AND FOREGO ANY RIGHT TO TRIAL BY JURY.

(d) Governing Law. This Agreement and, unless expressly provided therein, the
Separation and Distribution Agreement and each Ancillary Agreement (and any
claims or disputes arising out of or related hereto or thereto or to the
transactions contemplated hereby and

 

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thereby or to the inducement of any party to enter herein and therein, whether
for breach of contract, tortious conduct or otherwise, and whether predicated on
common law, statute or otherwise) shall be governed by and construed and
interpreted in accordance with the Laws of the State of Delaware, irrespective
of the choice of laws principles of the State of Delaware, including all matters
of validity, construction, effect, enforceability, performance and remedies.

(e) The specific procedures set forth in this Article IV, including the time
limits referenced herein, may be modified by agreement of both of the parties in
writing.

(f) All applicable statutes of limitations and defenses based upon the passage
of time shall be tolled while the procedures specified in this Article IV are
pending. The parties will take any necessary or appropriate action required to
effectuate such tolling.

4.2. Consideration by Senior Executives. If a Dispute is not resolved in the
normal course of business at the operational level, the parties shall attempt in
good faith to resolve the Dispute by negotiation between executives who hold, at
a minimum, the office of Senior Vice President and/or General Counsel. Either
party may initiate the executive negotiation process by providing a written
notice to the other (the “Initial Notice”). Within fifteen (15) days after
delivery of the Initial Notice, the receiving party shall submit to the other a
written response (the “Response”). The Initial Notice and the Response shall
include (a) a statement of the Dispute and of each party’s position and (b) the
name and title of the executive who will represent that party and of any other
person who will accompany the executive. The parties agree that such executives
shall have full and complete authority to resolve any Disputes submitted
pursuant to this Section 4.2. Such executives will meet in person or by
teleconference or video conference within thirty (30) days of the date of the
Initial Notice to seek a resolution of the Dispute. In the event that the
executives are unable to agree to a format for such meeting, the meeting shall
be convened by teleconference.

4.3. Mediation. If a Dispute is not resolved by negotiation or a meeting between
executives is not held as provided in Section 4.2 within thirty (30) days from
the delivery of the Initial Notice, then either party may submit the Dispute for
resolution by mediation pursuant to the American Arbitration Association (the
“AAA”) Mediation Procedures as then in effect. Unless otherwise agreed to in
writing, the parties shall (a) conduct the mediation in Houston, Texas, and
(b) select a mutually agreeable mediator from the AAA Panel of Mediators in the
selected location. If the parties are unable to agree upon a mediator, the
parties agree that AAA shall select a mediator from its panels consistent with
its mediation rules. The parties shall agree to a mutually convenient date and
time to conduct the mediation; provided that the mediation must occur within
thirty (30) days of the request unless a later date is agreed to by the parties
in writing. Each party shall bear its own fees, costs and expenses and an equal
share of the expenses of the mediation. Each party shall designate a business
executive to have full and complete authority to resolve the Dispute and to
represent its interests in the mediation, and each party may, in its sole and
absolute discretion, include any number of other Representatives in the
mediation process. At the commencement of the mediation, either party may
request to submit a written mediation statement to the mediator.

 

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4.4. Arbitration.

(a) In the event any Dispute is not finally resolved pursuant to Section 4.2
within sixty (60) days from the delivery of the Initial Notice (if mediation is
not requested pursuant to Section 4.3), or mediation pursuant to Section 4.3
within sixty (60) days of selection of a mediator, then such Dispute may be
submitted to be finally resolved by binding arbitration pursuant to the AAA
Commercial Arbitration Rules as then in effect (the “AAA Commercial Arbitration
Rules”).

(b) Without waiving its rights to any remedy under this Agreement and without
first complying with the provisions of Sections 4.2 and 4.3, either party may
seek any interim or provisional relief that is necessary to protect the rights
or property of that party either (i) before any Delaware federal or state court,
(ii) before a special arbitrator, as provided for under the AAA Commercial
Arbitration Rules, or (iii) before the arbitral tribunal established hereunder.

(c) Unless otherwise agreed by the parties in writing, any Dispute to be decided
in arbitration hereunder will be decided (i) before a sole arbitrator if the
amount in dispute, inclusive of all claims and counterclaims, totals less than
$3 million; or (ii) by an arbitral tribunal of three (3) arbitrators if (A) the
amount in dispute, inclusive of all claims and counterclaims, is equal to or
greater than $3 million, or (B) either party elects in writing to have such
dispute decided by three (3) arbitrators when one of the parties believes, in
its sole judgment, the issue could have significant precedential value; however,
the party who makes that request shall solely bear the increased costs and
expenses associated with a panel of three (3) arbitrators (i.e., the additional
costs and expenses associated with the two (2) additional arbitrators).

(d) The panel of three (3) arbitrators will be chosen as follows: (i) 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 (ii) the two
(2) party-appointed arbitrators will thereafter, within thirty (30) days from
the date on which the second of the two (2) arbitrators was named, name a third,
independent 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 pursuant to the AAA Commercial
Arbitration Rules. In the event that the two (2) party-appointed arbitrators
fail to appoint the third, independent arbitrator within thirty (30) days from
the date on which the second of the two (2) arbitrators was named, then upon
written application by either party, the third, independent arbitrator will be
appointed pursuant to AAA Commercial Arbitration Rules. If the arbitration will
be before a sole independent arbitrator, then the sole independent 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
independent arbitrator, then upon written application by either party, the sole
independent arbitrator will be appointed pursuant to AAA Commercial Arbitration
Rules.

(e) The place of arbitration shall be Houston, Texas. Along with the
arbitrator(s) appointed, the parties will agree to a mutually convenient
location, date and time to conduct the arbitration, but in no event will the
final hearing(s) be scheduled less than nine (9) months from submission of the
Dispute to arbitration unless the parties agree otherwise in writing.

 

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(f) The arbitral tribunal will have the right to award, on an interim basis, or
include in the final award, any relief which it deems proper in the
circumstances, including money damages (with interest on unpaid amounts from the
due date), injunctive relief (including specific performance) and attorneys’
fees and costs; provided that the arbitral tribunal will not award any relief
not specifically requested by the parties and, in any event, will not award
special damages. Upon constitution of the arbitral tribunal following any grant
of interim relief by a special arbitrator or court pursuant to Section 4.4(b),
the tribunal may affirm or disaffirm that relief, and the parties will seek
modification or rescission of the order entered by the special arbitrator or
court as necessary to accord with the tribunal’s decision.

(g) The parties agree to be bound by the provisions of Rule 13 of the Federal
Rules of Civil Procedure with respect to compulsory counterclaims (as the same
may be amended from time to time); provided that any such compulsory
counterclaim shall be filed within thirty (30) days of the filing of the
original claim.

(h) So long as either party has a timely claim to assert, the agreement to
arbitrate Disputes set forth in this Section 4.4 will continue in full force and
effect subsequent to, and notwithstanding the completion, expiration or
termination of, this Agreement.

(i) A party obtaining an order of interim injunctive relief may enter judgment
upon such award in any Delaware federal or state court. The final award in an
arbitration pursuant to this Article IV shall be conclusive and binding upon the
parties, and a party obtaining a final award may enter judgment upon such award
in any court of competent jurisdiction.

(j) It is the intent of the parties that the agreement to arbitrate Disputes set
forth in this Section 4.4 shall be interpreted and applied broadly such that all
reasonable doubts as to arbitrability of a Dispute shall be decided in favor of
arbitration.

(k) The parties agree that any Dispute submitted to mediation and/or arbitration
shall be governed by, and construed and interpreted in accordance with, Delaware
Law, as provided in Section 4.1(d) and, except as otherwise provided in this
Article IV or mutually agreed to in writing by the parties, the Federal
Arbitration Act, 9 U.S.C. §§ 1 et seq., shall govern any arbitration between the
parties pursuant to this Section 4.4.

(l) Subject to Section 4.4(c)(ii)(B), each party shall bear its own fees, costs
and expenses and shall bear an equal share of the costs and expenses of the
arbitration, including the fees, costs and expenses of the three
(3) arbitrators; provided that the arbitral tribunal may award the prevailing
party its reasonable fees and expenses (including attorneys’ fees), including
with respect to any Disputes relating to the parties’ rights and obligations
with respect to indemnification under this Agreement.

(m) Notwithstanding anything in this Article IV to the contrary, any disputes
relating to the interpretation of Article II or requesting injunctive relief or
specific performance shall be conducted according to the fast-track arbitration
procedures of the AAA then in effect.

 

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ARTICLE V

EXCHANGE OF INFORMATION; CONFIDENTIALITY

5.1. Agreement for Exchange of Information.

(a) Subject to Section 5.8 and any other applicable confidentiality obligations,
each of ConocoPhillips and Phillips 66, on behalf of its respective Group,
agrees to provide, or cause to be provided, to the other Group, at any time
before or after the Distribution Date, as soon as reasonably practicable after
written request therefor, any Information in the possession or under the control
of such respective Group which the requesting party reasonably needs (i) to
comply with reporting, disclosure, filing or other requirements imposed on the
requesting party (including under applicable securities or tax Laws) by a
Governmental Authority having jurisdiction over the requesting party, (ii) for
use in any other judicial, regulatory, administrative, tax or other proceeding
or in order to satisfy audit, accounting, claims, regulatory, litigation, tax or
other similar requirements, in each case other than claims or allegations that
one party to this Agreement has against the other, or (iii) subject to the
foregoing clause (ii), to comply with its obligations under this Agreement or
any other Ancillary Agreement; provided, however, that, in the event that any
party determines that any such provision of Information could be commercially
detrimental, violate any Law or agreement, or waive any privilege otherwise
available under applicable Law, including the attorney-client privilege, the
parties shall take all reasonable measures to permit the compliance with such
obligations in a manner that avoids any such harm or consequence.

5.2. Ownership of Information. Any Information owned by one Group that is
provided to a requesting party pursuant to Section 5.1 or Section 5.7 shall be
deemed to remain the property of the providing party. Unless specifically set
forth herein, nothing contained in this Agreement shall be construed as granting
or conferring rights of license or otherwise in any such Information.

5.3. Compensation for Providing Information. The party requesting Information
agrees to reimburse the other party for the reasonable costs, if any, of
creating, gathering and copying such Information, to the extent that such costs
are incurred for the benefit of the requesting party. Except as may be otherwise
specifically provided elsewhere in this Agreement or in any other agreement
between the parties, such costs shall be computed in accordance with the
providing party’s standard methodology and procedures.

5.4. Record Retention. To facilitate the possible exchange of Information
pursuant to this Article V and other provisions of this Agreement after the
Distribution Date, the parties agree to use their reasonable best efforts to
retain all Information in their respective possession or control on the
Distribution Date in accordance with the policies of ConocoPhillips as in effect
on the Distribution Date or such other policies as may be adopted by
ConocoPhillips after the Distribution Date (provided, in the case of Phillips
66, that ConocoPhillips notifies Phillips 66 of any such change). No party will
destroy, or permit any of its Subsidiaries to destroy, any Information which the
other party may have the right to obtain pursuant to this Agreement prior to the
end of the retention period set forth in such policies without first notifying
the other party of the proposed destruction and giving the other party the
opportunity to take possession of such information prior to such destruction;
provided, however, that in the case of any Information

 

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relating to Taxes, employee benefits or Environmental Liabilities, such
retention period shall be extended to the expiration of the applicable statute
of limitations (giving effect to any extensions thereof). Notwithstanding the
foregoing, Section 9 of the Tax Sharing Agreement shall govern the retention of
Tax Records (as defined in the Tax Sharing Agreement).

5.5. Limitations of Liability. No party shall have any liability to any other
party in the event that any Information exchanged or provided pursuant to this
Agreement which is an estimate or forecast, or which is based on an estimate or
forecast, is found to be inaccurate in the absence of willful misconduct by the
party providing such Information. No party shall have any liability to any other
party if any Information is destroyed after reasonable best efforts by such
party to comply with the provisions of Section 5.4.

5.6. Other Agreements Providing for Exchange of Information. The rights and
obligations granted under this Article V are subject to any specific
limitations, qualifications or additional provisions on the sharing, exchange,
retention or confidential treatment of Information set forth in the Separation
and Distribution Agreement or any Ancillary Agreement.

5.7. Production of Witnesses; Records; Cooperation.

(a) After the Distribution Date, except in the case of an adversarial Action by
one party against another party, each party hereto shall use its commercially
reasonable efforts to make available to the other party, upon written request,
the former, current and future directors, officers, employees, other personnel
and agents of the members of its respective Group as witnesses and any books,
records or other documents within its control or which it otherwise has the
ability to make available, to the extent that any such person (giving
consideration to business demands of such directors, officers, employees, other
personnel and agents) or books, records or other documents may reasonably be
required in connection with any Action in which the requesting party may from
time to time be involved, regardless of whether such Action is a matter with
respect to which indemnification may be sought hereunder. The requesting party
shall bear all costs and expenses in connection therewith.

(b) If an Indemnifying Party chooses to defend or to seek to compromise or
settle any Third-Party Claim, the other party shall make available to such
Indemnifying Party, upon written request, the former, current and future
directors, officers, employees, other personnel and agents of the members of its
respective Group as witnesses and any books, records or other documents within
its control or which it otherwise has the ability to make available, to the
extent that any such person (giving consideration to business demands of such
directors, officers, employees, other personnel and agents) or books, records or
other documents may reasonably be required in connection with such defense,
settlement or compromise, or such prosecution, evaluation or pursuit, as the
case may be, and shall otherwise cooperate in such defense, settlement or
compromise, or such prosecution, evaluation or pursuit, as the case may be.

(c) Without limiting the foregoing, the parties shall cooperate and consult to
the extent reasonably necessary with respect to any Actions.

 

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(d) Without limiting any provision of this Section 5.7, each of the parties
agrees to cooperate, and to cause each member of its respective Group to
cooperate, with each other in the defense of any infringement or similar claim
with respect any Intellectual Property and shall not claim to acknowledge, or
permit any member of its respective Group to claim to acknowledge, the validity
or infringing use of any Intellectual Property of a third Person in a manner
that would hamper or undermine the defense of such infringement or similar
claim.

(e) The obligation of the parties to provide witnesses pursuant to this
Section 5.7 is intended to be interpreted in a manner so as to facilitate
cooperation and shall include the obligation to provide as witnesses inventors
and other officers without regard to whether the witness or the employer of the
witness could assert a possible business conflict (subject to the exception set
forth in the first sentence of Section 5.7(a)).

(f) In connection with any matter contemplated by this Section 5.7, the parties
will enter into a mutually acceptable joint defense agreement so as to maintain
to the extent practicable any applicable attorney-client privilege or work
product immunity of any member of any Group.

5.8. Confidentiality.

(a) Subject to Section 5.9, until the five (5)-year anniversary of the
Distribution Date, each of ConocoPhillips and Phillips 66, on behalf of itself
and each member of its respective Group, agrees to hold, and to cause its
respective Representatives to hold, in strict confidence, with at least the same
degree of care that applies to ConocoPhillips’ confidential and proprietary
information pursuant to policies in effect as of the Distribution Date, all
Information concerning each such other Group that is either in its possession
(including Information in its possession prior to the Distribution Date) or
furnished by any such other Group or its respective Representatives at any time
pursuant to this Agreement, the Separation and Distribution Agreement, any other
Ancillary Agreement or otherwise, and shall not use any such Information other
than for such purposes as shall be expressly permitted hereunder or thereunder,
except, in each case, to the extent that such Information has been (i) in the
public domain through no fault of such party or any member of such Group or any
of their respective Representatives, (ii) later lawfully acquired from other
sources by such party (or any member of such party’s Group) which sources are
not themselves bound by a confidentiality obligation, or (iii) independently
generated without reference to any proprietary or confidential Information of
the other party.

(b) Each party agrees not to release or disclose, or permit to be released or
disclosed, any such Information to any other Person, except its Representatives
who need to know such Information (who shall be advised of their obligations
hereunder with respect to such Information), except in compliance with
Section 5.9. Without limiting the foregoing, when any Information is no longer
needed for the purposes contemplated by this Agreement, the Separation and
Distribution Agreement or any other Ancillary Agreement, each party will
promptly after request of the other party either return to the other party all
Information in a tangible form (including all copies thereof and all notes,
extracts or summaries based thereon) or certify to the other party that it has
destroyed such Information (and such copies thereof and such notes, extracts or
summaries based thereon).

 

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5.9. Protective Arrangements. In the event that any party or any member of its
Group either determines on the advice of its counsel that it is required to
disclose any Information pursuant to applicable Law or receives any demand under
lawful process or from any Governmental Authority to disclose or provide
Information of any other party (or any member of any other party’s Group) that
is subject to the confidentiality provisions hereof, such party shall notify the
other party prior to disclosing or providing such Information and shall
cooperate at the expense of the requesting party in seeking any reasonable
protective arrangements requested by such other party. Subject to the foregoing,
the Person that received such request may thereafter disclose or provide
Information to the extent required by such Law (as so advised by counsel) or by
lawful process or such Governmental Authority.

ARTICLE VI

FURTHER ASSURANCES

6.1. Attorney-Client Privilege. Phillips 66 agrees that, in the event of any
Dispute or other litigation, dispute, controversy or claim between
ConocoPhillips or a member of the ConocoPhillips Group, on the one hand, and
Phillips 66 or a member of the Phillips 66 Group, on the other hand, Phillips 66
will not, and will cause the members of its Group not to, seek any waiver of
attorney-client privilege with respect to any communications relating to advice
given prior to the Distribution Date by counsel to ConocoPhillips or any Person
that was a subsidiary of ConocoPhillips prior to the Distribution Date,
regardless of any argument that such advice may have affected the interests of
both parties. Moreover, Phillips 66 will, and will cause the members of its
Group to, honor any such attorney-client privilege between ConocoPhillips and
the members of its Group and its or their counsel, and will not assert that
ConocoPhillips or a member of its Group has waived, relinquished or otherwise
lost such privilege. For the avoidance of doubt, in the event of any litigation,
dispute, controversy or claim between ConocoPhillips or a member of its Group,
on the one hand, and a Third Party other than a member of the Phillips 66 Group,
on the other hand, ConocoPhillips shall retain the right to assert
attorney-client privilege with respect to any communications relating to advice
given prior to the Distribution Date by counsel to ConocoPhillips or any Person
that was a subsidiary of ConocoPhillips prior to the Distribution Date.

6.2. Interpretation. Nothing contained herein shall be interpreted or construed
against the drafter(s) of these agreements. Both parties had full and fair
opportunity to contribute.

6.3. No Attorney Testimony. No in-house attorney or outside attorney may be
called to testify about or present evidence covering the interpretation or
meaning of this Agreement in any dispute between the parties.

ARTICLE VII

MISCELLANEOUS

7.1. Entire Agreement. This Agreement, together with the documents referenced
herein (including the Separation and Distribution Agreement and any other
Ancillary Agreement), constitutes the entire agreement and understanding between
the Parties with respect to the subject matter hereof and supersedes all prior
written and oral and all contemporaneous oral agreements and understandings with
respect to the subject matter hereof. In the case of any

 

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conflict between this Agreement and the Separation and Distribution Agreement or
any other Ancillary Agreement (other than the Tax Sharing Agreement and the
Employee Matters Agreement) in relation to any matters addressed by this
Agreement, this Agreement shall prevail. Notwithstanding anything to the
contrary in this Agreement, the Separation and Distribution Agreement or any
other Ancillary Agreement, in the case of any conflict between this Agreement
and the Tax Sharing Agreement in relation to matters addressed by the Tax
Sharing Agreement, the Tax Sharing Agreement shall prevail. Notwithstanding
anything to the contrary in this Agreement, the Separation and Distribution
Agreement or any other Ancillary Agreement, in the case of any conflict between
this Agreement and the Employee Matters Agreement in relation to matters
addressed by the Employee Matters Agreement, the Employee Matters Agreement
shall prevail.

7.2. Assignability. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and thereto, respectively, and their respective
successors and permitted assigns; provided, however, that no party hereto or
thereto may assign its respective rights or delegate its respective obligations
under this Agreement without the express prior written consent of the other
parties hereto or thereto.

7.3. Third-Party Beneficiaries. Except for the indemnification rights under this
Agreement of any ConocoPhillips Indemnitee or Phillips 66 Indemnitee in their
respective capacities as such, (a) the provisions of this Agreement are solely
for the benefit of the parties and are not intended to confer upon any Person
except the parties any rights or remedies hereunder, and (b) there are no
third-party beneficiaries of this Agreement and this Agreement shall not provide
any third person with any remedy, claim, liability, reimbursement, claim of
action or other right in excess of those existing without reference to this
Agreement.

7.4. Notices. All notices, requests, claims, demands or other communications
under this Agreement shall be in writing and shall be given or made (and shall
be deemed to have been duly given or made upon receipt) by delivery in person,
by overnight courier service, by facsimile or electronic transmission with
receipt confirmed (followed by delivery of an original via overnight courier
service) or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 7.4):

If to ConocoPhillips, to:

ConocoPhillips

600 North Dairy Ashford Street

Houston, Texas 77079

Attention: General Counsel

If to Phillips 66 to:

Phillips 66

600 North Dairy Ashford Street

Houston, Texas 77079

Attention: General Counsel

 

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Any party may, by notice to the other party, change the address and contact
person to which any such notices are to be given.

7.5. Severability. If any provision of this Agreement or the application thereof
to any Person or circumstance is determined by a Delaware state or federal court
to be invalid, void or unenforceable, the remaining provisions hereof or
thereof, or the application of such provision to Persons or circumstances or in
jurisdictions other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby. Upon such determination, the parties
shall negotiate in good faith in an effort to agree upon such a suitable and
equitable provision to effect the original intent of the parties.

7.6. Force Majeure. No party shall be deemed in default of this Agreement to the
extent that any delay or failure in the performance of its obligations under
this Agreement, other than a delay or failure to make a payment, results from
any cause beyond its reasonable control and without its fault or negligence,
such as acts of God, acts of civil or military authority, embargoes, epidemics,
war, riots, insurrections, fires, explosions, earthquakes, floods, unusually
severe weather conditions, labor problems or unavailability of parts, or, in the
case of computer systems, any failure in electrical or air conditioning
equipment. In the event of any such excused delay, the time for performance
shall be extended for a period equal to the time lost by reason of the delay.

7.7. Headings. The article, section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

7.8. Survival of Covenants. The covenants, representations and warranties
contained in this Agreement, and liability for the breach of any obligations
contained herein, shall survive the Separation and the Distribution and shall
remain in full force and effect.

7.9. Waivers of Default. Waiver by any party of any default by the other party
of any provision of this Agreement shall not be deemed a waiver by the waiving
party of any subsequent or other default, nor shall it prejudice the rights of
the other party. No failure or delay by any party in exercising any right, power
or privilege under this Agreement shall operate as a waiver thereof nor shall a
single or partial exercise thereof prejudice any other or further exercise
thereof or the exercise of any other right, power or privilege.

7.10. Amendments. No provisions of this Agreement shall be deemed waived,
amended, supplemented or modified by any party, unless such waiver, amendment,
supplement or modification is in writing and signed by the authorized
representative of the party against whom it is sought to enforce such waiver,
amendment, supplement or modification.

7.11. Limitations of Liability. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO
THE CONTRARY, NEITHER PHILLIPS 66 OR ITS AFFILIATES, ON THE ONE HAND, NOR
CONOCOPHILLIPS OR ITS AFFILIATES, ON THE OTHER HAND, SHALL BE LIABLE UNDER THIS
AGREEMENT TO THE OTHER FOR ANY SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY, REMOTE,

 

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SPECULATIVE OR SIMILAR DAMAGES IN EXCESS OF COMPENSATORY DAMAGES OF THE OTHER
ARISING IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY (OTHER THAN ANY
SUCH LIABILITY WITH RESPECT TO A THIRD-PARTY CLAIM).

7.12. Further Assurances.

(a) In addition to the actions specifically provided for elsewhere in this
Agreement, each of the parties hereto shall use its commercially reasonable
efforts, prior to, on and after the Distribution Date, to take, or cause to be
taken, all actions, and to do, or cause to be done, all things, reasonably
necessary, proper or advisable under applicable Laws, regulations and
agreements, to consummate and make effective the transactions contemplated by
this Agreement, the Separation and Distribution Agreement and the other
Ancillary Agreements.

(b) Without limiting the foregoing, prior to, on and after the Distribution
Date, each party hereto shall cooperate with the other parties, and without any
further consideration, but at the expense of the requesting party, to execute
and deliver, or use its commercially reasonable efforts to cause to be executed
and delivered, all instruments, including instruments of conveyance, assignment
and transfer, and to make all filings with, and to obtain all consents,
approvals or authorizations of, any Governmental Authority or any other Person
under any permit, license, agreement, indenture or other instrument (including
any third-party consents or Governmental Approvals), and to take all such other
actions as such party may reasonably be requested to take by any other party
hereto from time to time, consistent with the terms of this Agreement, the
Separation and Distribution Agreement and the other Ancillary Agreements, in
order to effectuate the provisions and purposes of this Agreement, the
Separation and Distribution Agreement and the other Ancillary Agreements and the
transfers of the Phillips 66 Assets and the assignment and assumption of the
Phillips 66 Liabilities and the other transactions contemplated hereby and
thereby. Without limiting the foregoing, each party will, at the reasonable
request, cost and expense of any other party, take such other actions as may be
reasonably necessary to vest in such other party good and marketable title, free
and clear of any Security Interest, if and to the extent it is practicable to do
so.

(c) On or prior to the Distribution Date, ConocoPhillips and Phillips 66 in
their respective capacities as direct and indirect stockholders of their
respective Subsidiaries, shall each ratify any actions which are reasonably
necessary or desirable to be taken by ConocoPhillips Company, Phillips 66
Company or any other Subsidiary of ConocoPhillips, as the case may be, to
effectuate the transactions contemplated by this Agreement, the Separation and
Distribution Agreement and the other Ancillary Agreements.

 

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IN WITNESS WHEREOF, the parties have caused this Indemnification and Release
Agreement to be executed by their duly authorized representatives.

 

CONOCOPHILLIPS By:  

/s/ Ryan M. Lance

Name:   Ryan M. Lance Title:   Chairman and Chief Executive Officer PHILLIPS 66
By:  

/s/ Greg C. Garland

Name:   Greg C. Garland Title:   Chairman, President and Chief Executive Officer

 

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