How does Terms Upgrade offer work? What should be the setup done againts the profile OZF : Default

Was trying to create a terms Upgrade offer for Freight Term Upgrade. The event phase that is entered in the profile OZF : Default phase for Line level discounts doesn't seem to be honored.

When the profile was set with a custom event phase ,it didn't get honored. When the Event phase "List Line Adjustment" was selected for the  OZF : Default phase for Line level discounts at user level, was getting the error

"The pricing phase for this modifier is attached to a PRICE event and cannot be used for this modifier type. Please choose a different pricing phase or remove the incompatible PRICE event for this pricing phase from the Event Phases form".