COMMONWEALTH OF DEPARTMENT OF COMMUNITY ECONOMIC DEVELOPMENT November 25, 2013 Alan Greenberger, FAIA Deputy of Mayor for Economic Development City of Philadelphia Department of Commerce 1515 Arch Street 12th Floor Philadelphia, 1 9 02 Dear Mr. Greenberger: Congratulations. The parcels listed on Attachment 1 to this letter that was submitted to the Department of Community and Economic Development (DCED) through the application process has been approved and designated 3 Keystone Opportunity Expansion Zone The designated parcels will be eligible for bene?ts from the KOEZ program for a period of ten (10) years beginning January 1, 2014 through December 31, 2023. The designated parcels are approved as Designation '7 of the 2013 Designations. In order to' qualify each year for the exemptions, deductions, abatements and credits provided under Chapters 5 and 7 of the Act, Philadelphia Energy Solutions LLC (together with its wholly?owned, indirect subsidiary, Philadelphia Energy Solutions Re?ning and other of its current and future subsidiaries and affiliates, collectively, must be in compliance with the reporting, ?ling and compliance requirements of the Act, the Guidelines, and letter dated July 1, 2013 (the Letter?), which is Attachment 2 to this letter. These obligations include, but are not limited to, the requirement to submit by December 31 (in the absence of an extension or waiver granted by the Department) an annual application to the Department for which benefits are applied in order to maintain eligibility for the grant of exemptions, deductions, abatements and credits under the Act. in addition to reporting, filing and compliance requirements of the Act and the Guidelines, the KOEZ Letter provides for the following requirements (with capitalized terms as de?ned in the KOEZ Letter): During the 6 Year Compliance Period, PBS must include with their annual application to the Department: i. the KOEZ Investment Report (prepared at least annually and substantially in the same form as Attachment 2 to the KOEZ Letter and acceptable to the Department), until such time that PBS has invested $500,000,000.00; and OFFICE OF THE SECRETARY 400 North Street, 4th Floor Commonwealth Keystone Harrisburg. PA17120-O225 717.787.3003 Fax 717.787.6866 newPA.com Mr. Greenberger Page 2 ii. the Permanent Full?Time Jobs and Full?Time Equivalent Jobs Report, prepared at least annually and in substantially the same form as Attachment 3 to the KOEZ Letter and acceptable to the Department. Your application was carefully reviewed by DCED to assure it meets the spirit and intent of the KOEZ legislation, as amended February 14, 2012. approval of this application is conditional to you being in conformity with all provisions of the KOEZ legislation. Should it be later determined that you are not in full conformity with the KOEZ legislation, any nonconfonnity shall be immediately corrected. Please review this correSpondence and the attached documents. The appropriate person(s) must sign and return this letter to the DCED within 30 business days to acknowledge that the City of Philadelphia accepts the offer to designate the parcels listed on Attachment 1 to this letter as part of the KOEZ Program. Once approved, all parcels listed on Attachment 1 will be subject to all of the provisions of the KOEZ legislation, as amended February 14, 2012, any requirements set forth by the DCED in its administration of the KOEZ program, and the KOEZ Letter. Please understand that if the City of Philadelphia accepts the designation from the CommonWealth, it also agrees to make no public announcement of the project without the prior approval of DCED. Again, congratulations on your designation. Keystone Opportunity Expansion Zones embody the spirit by establishing a strong partnership between state and lecal government jurisdictions. Any inquiries concerning this letter should be directed to Tara L. Santore, KOZ Manager at 717? 346?0327, e~mail tsantore@pa.gov- Sincerely, C. Alan Walker Secretary M. Greenberger Page 3 Name CC: Carolyn Newhouse, DCED Scott Dunkelberger, DCED Christopher Houston, DCED Barry Wickes, DCED Brian Eekert, DCED Tara L. Santore, DCED Matthew Forti, DOR Vincent Dougherty, KOZ Coordinator lbw} Date L7 a Title KOZ Designation City of Philadelphia PES #1 Attachment 1 - PES #1 Name of Property Owner LocationIComplete Address of Property for Designation City State County Municipality School District Tax lD Parcel Number Total Acreage Expiration Philadelphia Energy Solutions 3144 W. Passyunk Ave (Lot 1) Philadelphia PA Philadelphia Philadelphia Philadelphia 88-4-097045 337.03 2023 Philadelphia Energy Solutions 2700 W. Passyunk Ave Philadelphia PA Philadelphia Philadelphia Philadelphia 88-4-097024 12.26 2023 Total Acreage 349.29 Attachment 2 COMMONWEALTH OF DEPARTMENT OF COMMUNITY 8: ECONOMIC DEVELOPMENT July 1, 2013 Mr. Gregory G. Gatta Philadelphia Energy Solutions 173 5 Market Street, 10th Floor Philadelphia, PA 19103 Re: Keystone Opportunity Expansion Zones Dear Mr. Gotta: The Department of Community and Economic Development (the ?Department?? and Philadelphia Energy Solutions LLC (together with its wholly?owned, indirect subsidiary, Philadelphia Energy Solutions Re?ning and Marketing LLC and other of its current and future subsidiaries and af?liates, collectively, have discussed the designation of two new KOEZs (the ?New KOEZs) and the extension of one unused KOBZ (the ?Existing within the City of Philadelphia (the ?City?) pursuant to the Keystone Opportunity Zone, Keystone Opportunity Expansion Zone and Keystone Opportunity Improvement Zone Act (the Af?liates are those quali?ed businesses, as de?ned in the Act, located within the New ..a__c_0rporation, proprietorship,..limited. .. .. . partnership or other entity that directly or indirectly controls or is controlled by or is under common control with Philadelphia Energy Solutions LLC. Control means ownership, directly or through one or more af?liates, of ?fty percent or more of the shares of stock entitled to vote for the election of directors, in the case of a corporation, or ?fty percent or more of the equity interests in the case of any other type of legal entity, or status as a general partner in any partnership, or any other arrangement whereby a party controls or has the right to control the Board of Directors or equivalent gOVerning body of a corporation or other entity. On September 8, 2012 (the ?Acquisition Date?), PES acquired from Sunoco, inc. approximately 1,400 acres of land which included the Girard Point oil re?nery (the ?Girard Point Re?nery?) and Point Breeze oil re?nery (the ?Point Breeze Re?nery?) (together, the ?Philadelphia Re?nery Complex?) located in the City and commenced operations through PESRM. The Philadelphia Refinery Complex includes areas known as the Sunoco West and Sunoco North Yards, which are included in the Existing KOEZ. The designation of the Existing KOEZ will expire on December 31, 2013. Other portions of the Philadelphia Re?nery Complex - are included in the New KOEZS. Of?ce of Secretary 4oo North Street, 4th Floor Commonwealth Keystone Building Harrisburg, PA 17120-0225 1 717.737.3003 1 Fax 717787.68 66 newPAnom In a report prepared by the Philadelphia Industrial Development Corporation in collaboration with the Philadelphia City Flaming Commission and Philadelphia Department of Commerce entitled An Industrial Market and Land Use Strategy for the City of Philadelphia, September 2010 (the ?Land Use Report?), it was found that a top priority for industrial development in the City was the development of the Sunoco North Yard located in the Existing KOEZ, which was identi?ed in the Land Use Report as an underutilized part of the Philadelphia Re?nery Complex. The Sunoco West Yard, which is also located in the Existing KOEZ, is included in the Eastwick Redevelopment Area, which was recerti?ed in March, 2006 by the Philadelphia City Planning Commission as a blighted area pursuant to the Urban Redevelopment Law, Act of May 24, 1945 (PL. 991), as amended. The Land Use Report also provided that the Philadelphia Re?nery Complex is located in an area which is undervalued with some of the lowest land values in the City of Philadelphia. On February 14, 2012, the effective date of the amendment to the Act (PL. 183, No. 16) (the ?Effective Date?) the New KOEZS consisted of deteriorated property, as de?ned in the Act. The Department anticipates receiving two (2) designation applications (the ?Designation Applications?) for designation of the New KOEZS under Section 301 of the Act (73 PS. The Department anticipates also receiving an extension application for the Existing KOBE pursuant to Section of the Act (73 PS. (the ?Extension Application?) for an additional period and the Department has made a determination that the extension period shall be limited to 7 years (the ?Extension Period?). The Existing KOEZ and the New KOBZs will be located approximately as shown on Attachment 1. PBS will submit the ?nal delineations after they are ?nalized with the City in September, 2013. The Department believes that it is in the best interests of the Commonwealth of the'NeW'KOEZs'and grant the 'eXtenSiohIOf I the Existing KOEZ in order to alleviate economic distress, restore prosperity and make signi?cant contributions to the economic and social life of the Commonwealth. When the New KOEZS have been designated by the Department, PES will be deemed to have relocated into the New KOEZS under Section 307 of the Act. The Department, in consultation with the Department of Revenue, may waive or modify the requirements of Section 307 of the Act. The Department has made a determination to modify the requirements to provide for the following job retention/creation and capital investment requirements based on certain representations made by PES on which the Department has relied in making its detennination to modify the job retention/creation and capital investment requirements: 1. PES will employ persons in re?nery operations who will be located in the New KOEZS and Existing KOEZ and who will provide services at the Philadelphia Re?nery Complex to PBS that are ordinary and necessary to the re?nery?s ongoing operations. PBS represents that they will be creating or retaining 970 full-time jobs, including full?time jobs from the fonner Sunoco operations, which 2 are those jobs in the Speci?c industry sector within which PES operates computed on a basis of at least 2,080 annual hours worked perjob (including paid leave)(the ?Full?Time Jobs?). In addition, PBS utilizes contractors (the ?Contractors?) in re?nery operations and will retain and maintain no less than 30 full-time equivalent Contractor jobs that were maintained at the Philadelphia Re?nery Complex prior to the Acquisition Date (the Jobs?). The number of FTE obs will be computed by dividing the number of Contractors hours worked by 2,080 annual hours (including paid leave). The Full~Tirne Jobs are those jobs which PES did not transfer from another location, but retained or are newly created in The Full-Time Jobs and FTE Jobs are to be located within the New KOEZs and Existing KOEZ and are to be created or retained and thereafter maintained through the end of the 6 year period commencing on the Acquisition Date (the ?6 Year Compliance Period?). 2. PES has also represented that they will also be making a capital investment of at least $500 million in the Philadelphia Re?nery Complex during the 6 Year Compliance Period. Upon the Department?s: receipt of the Designation Applications on or before October 1, 2013, as required under the Act, seeking designation of the New KOEZS pursuant to Section of the Act (73 PS. 820.301 determination that the Designation Applications are in compliance with the K02 Guidelines issued by the Department, as amended (the ?Guidelines?); and determination, after consultation with the Department of Revenue, that the requirements of the Act are otherwise satis?ed, the Department shall designate the New KOBZS pursuant to Section 301being comprised of parcels that are as of the Effective Date deteriorated in the judgment of the Department. Separate designations shall be granted to the New however, they shall run concurrently, and be effective upon the date of the Department?s designation. KOEZ bene?ts will commence January 1, 2014. If the foregoing conditions precedent are not satisfied to the Department?s reasonable satisfaction, the Department shall be under no obligation to issue a certi?cation of the tax exemptions, deductions, abatements and credits under the Act for the New KOEZS. Notwithstanding the foregoing, the effective date for the commencement of the 6 Year Compliance Period shall be September 8, 2012. Upon the Department?s: receipt of the Extension Application requesting the Extension Period; determination that the Extension Application is in compliance with the Guidelines; and determination, after consultation with the Department of Revenue, that the requirements of the Act are otherwise satis?ed, the Department shall grant an extension for the Extension Period. Ifthe foregoing conditions precedent are not satis?ed to the Department?s reasonable satisfaction, the Department shall be under no legal obligation to issue a certi?cation of the tax exemptions, deductions, abatements and credits under the Act for the Existing KOEZ for the Extension Period. In order to qualify each year for the exemptions, deductions, abatements and credits provided under Chapters 5 and 7 of the Act, the Company must be in compliance with the reporting, ?ling and compliance requirements of the Act, the Guidelines, and this letter. These obligations include, but are not limited to, the requirement to submit by December 31 (in the absence of an extension or waiver granted by the Department) an annual application to the Department for which bene?ts are applied in order to maintain eligibility for the grant of exemptions, deductions, abatements and credits under the Act. In addition to reporting, ?ling and compliance requirements of the Act and the Guidelines: During the 6 Year Compliance Period, PES must include with their annual application to the Department: i. the KOEZ Investment Report (prepared at least annually and substantially in the same form as attachment 2 and acceptable to the Department), until Such time that PES has invested $500,000,000.00; and .. Report, prepared at least annually and in substantially the same form as attachment 3 and acceptable to the Department. If the Department is in receipt of a timely annual application and it determines that PBS has complied with the reporting, ?ling and compliance requirements of the Act, the Guidelines, and this letter, the Department (as provided for in the Guidelines) shall annually provide written notice to PBS verifying their eligibility for that year to receive exemptions, deductions, abatements and credits under the Act. If the Department has not received a timely annual application, or if one has been received and the Department determines that PES has not complied with the reporting, ?ling and compliance requirements of the Act, the Guidelines, and this letter, the Department (in accordance with the Guidelines) shall provide PES written notice of non-compliance and PBS will not receive exemptions, deductions, abatements and credits under the Act. The Department shall not consider PES to be in breach of its obligation to comply with the Full-Time Jobs and FE Jobs requirements of the 6 Year Compliance Period if the Secretary of Community and Economic Development, in his/her sole discretion, determines that any one of the following exists: circumstances outside out of reasonable control of (ii) a work stoppage which has a material adverse impact on the ability of PES to comply with the Full-time Jobs requirement; or unavailability, on commercially reasonable terms, of raw materials or transportation thereof which has a material adverse impact on the ability of PBS to comply with the Full?time Jobs requirement; or (iv) the loss of all or substantially all of a commercial market for PES ?3 products. PBS is to be compliant with the annual reporting, ?ling and compliance requirements of the Act, the Guidelines, and this letter by December 31 of the calendar year that the bene?ts . under the Act are requested. In the event that PES remains non?compliant beyond any deadlines imposed by the Act, the Guidelines or this letter, PES shall not be eligible to receive exemptions, deductions, abatements and credits under the Act for that year. The Commonwealth is grateful for investment in the Philadelphia Re?nery Facility and the retention and creation of jobs in Philadelphia. Very truly yours, Secretary AGREED TO and ACCEPTED this day 013.13%, 2013. -iu'it? I "i Attachment 1 Attachment 2 KEYSTONE EXPANSION ZONE KOEZ INVESTMENT REPORT COUNTY OF The undersigned, being duly sworn, deposes and says(the ?Company?). 2 On the Department of Community and Economic Development (the ?Deparnnent?? issued a letter to the Company (the Letter?), which we have personally reviewed and which describes certain bene?ts that are to be made available to the Company under the Keystone Opportunity Zone, Keystone Opportunity Expansion Zone and Keystone Opportunity Improvement Zone Act (the . 3. We understand that all terms and phrases appearing herein that are not otherwise de?ned herein shall have the meanings ascribed to them in the Act and the Letter. 4. We have personally reviewed the initial/?renewal application ?led with the Department by the Company for bene?ts under the Act for the period of (the ?Applic ation?). 5. In accordance with the KOEZ Letter, the Company will be making a capital investment . .Of at hast$509mini99 lathe Philadelnhia Complex. .6 Year. Compliance. Periodunderstand that, as described in the KOEZ Letter, during the 6 Year Compliance Period, the Company must include with the Applications ?led by the Company to the Department this KOEZ Investment Report until such time that the Company completes its capital investment of $500,000,000 at the Philadelphia Refinery Complex. 7. As of 20_, the amount of capital investment made by the Company at the Philadelphia Re?nery Complex, totaled 33 . The Department reserves the right to request such information deemed necessary by the Department to verify the capital investment made by the Company. . 8. This KOEZ Investment Report has been given by the undersigned and on behalf of the Company to the Department for the purpose of inducing the Department to approve certain bene?ts under the Act to the Company, and the undersigned expressly recognizes and acknowledges that the Department will rely upon this KOEZ Investment Report and any additional information provided by the Company to the Department as may be requested in paragraph 7 above in its decision to approve an Application. 9. Under penalties of perjury, we declare that the information contained in this KOEZ Investment Report and any accompanying documentation, to the best of our knowledge, is true, correct and complete as of the date hereof. Title: Title: SWORN TO AND SUBSCRIBED BEFORE LME THIS DAY OF Notary Public MY COMMISSION EXPIRES: Attachment 3 KEYSTONE OPPORTUNITY EXPANSION ZONE PERMANENT FULL TIME JOBS FULL-TIME EQUIVALENT JOBS REPORT SS COUNTY OF The undersigned, being duly sworn, deposes and says(the ?Company?). 2 On the Department of Community and Economic Development (the ?Department?) issued a letter to the Company (the Letter?), which we have personally reviewed and which describes certain bene?ts that are to be made available to the Company under the Keystone Opportunity Zone, Keystone Opportunity Expansion Zone and Keystone Opportunity Improvement Zone Act (the 1 3. We understand that all terms and phrases appearing herein that are not otherwise de?ned herein shall have the meanings ascribed to them in the Act and the KOEZ Letter. 4. We have personally reviewed the initial/renewal application ?led with the Department by the Company for benefits under the Act for the period of (the c?it?kpplication?). S. In accordance with the KOEZ Letter, the Company represented that they will be creating or retaining 970 Full?Time Jobs, including hill?time jobs from the former Sunoco operations, which are those jobs in the speci?c industry sector within which PES operates computed on a basis of at least 2,080 annual hours worked per job (including paid leave). In addition, PES will retain and maintain noless than 30 FTE Contractor jobs that were maintainedthe Philadelphia Re?nery Complex prior to the Acquisition Date. The number of FTE Jobs will be computed by dividing the number of Contractors hours worked by 2,080 annual hours (including paid leave). The Full?Time I obs are those jobs which PES did not transfer from another location, but retained or are newly created in The Full-Time Jobs and FTE Jobs are to be located within the New KOEZS and Existing KOEZ and are to be created or retained and thereafter maintained through September 8, 2018, being the end of the 6 Year Compliance Period. 6. We understand that, as described in the KOEZ Letter, during the 6 Year Compliance Period the Company must include with the annual applications ?led by the Company to the Department this Permanent Full?Time I obs and Full?Time Equivalent Jobs Report (the ?Report?). 7. As of Full?Time obs of the Company have been retained or created and Full?Time Equivalent obs have been retained and are located in the New KOEZS and Existing KOEZ. The Department reserves the right to request such information deemed necessary by the Department to verify the Full-Time Jobs retained or created and the Full-Time Equivalent I obs that have been retained. - 8. Any Permanent Full-Time Jobs included in this Report that are located in the New KOEZs and Existing KOEZ are for the purposes of providing services at the Philadelphia Re?nery Complex to the Company that are ordinary and necessary to the on?going operation of the re?nery. 9. This Report has been given by the undersigned and on behalf of the Company to the Department for the purpose of inducing the Department to approve certain bene?ts under the Act to the Company, and the undersigned expressly recognizes and acknowledges that the Department will rely. upon this Report and any additional information provided by the Company to the Department as may be requested in paragraph 7 above in its decision to approve an Application. 10. Under penalties of perjury, W6 declare that the information contained in this Report and any accompanying documentation is, to the best of our knowledge, true, correct and complete as of the date hereof. Title: Title: swoaN TO AND SUBSCRIBED BEFORE ME THIS DAY OF Notary Public