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Coker Complex Ground Lease

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Sectors: Financial Services, Insurance
Governing Law: Texas, View Texas State Laws
Effective Date: August 19, 1999
Related Agreement Types:
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Exhibit 10.11


EXECUTION COPY


================================================================================


COKER COMPLEX GROUND LEASE
AND BLANKET EASEMENT AGREEMENT


dated as of August 19, 1999


between


CLARK REFINING & MARKETING, INC.


and


PORT ARTHUR COKER COMPANY L.P.


================================================================================


TABLE OF CONTENTS


Page


ARTICLE I
DEFINITIONS........................................................1
SECTION 1.1 Definitions...........................................1
SECTION 1.2 Other Definitional Provisions.........................1


ARTICLE II
LEASE AND GRANT OF EASEMENTS.......................................1
SECTION 2.1 Lease.................................................1
SECTION 2.2 Grant of Easements....................................2
SECTION 2.3 Easements Appurtenant.................................3
SECTION 2.4 No Interference ......................................3


ARTICLE III
POSSESSION AND QUIET ENJOYMENT.....................................3


ARTICLE IV
TITLE..............................................................3


ARTICLE V
FIXTURES...........................................................4


ARTICLE VI
AUXILIARY FACILITIES...............................................4


ARTICLE VII
UNDERTAKINGS OF LESSOR; FURTHER ASSURANCES.........................5


ARTICLE VIII
RESERVATIONS AND RESTRICTIONS......................................6
SECTION 8.1 Reservations..........................................6


ARTICLE IX
MAINTENANCE; INSPECTION; COMPLIANCE WITH LAWS......................6
SECTION 9.1 Maintenance...........................................6
SECTION 9.2 Inspection............................................6
SECTION 9.3 Compliance with Laws..................................6


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Page
----


ARTICLE X
LIENS..............................................................7
SECTION 10.1 Lessee Liens.........................................7
SECTION 10.2 Lessor Liens ........................................8


ARTICLE XI
TAXES AND CHARGES..................................................8
SECTION 11.1 Taxes................................................8
SECTION 11.2 Apportionment .......................................8


ARTICLE XII
INSURANCE..........................................................9
SECTION 12.1 Lessee Insurance.....................................9
SECTION 12.2 Lessor Insurance ....................................9


ARTICLE XIII
RENT...............................................................9
SECTION 13.1 Initial Term.........................................9
SECTION 13.2 Renewal Term ........................................9


ARTICLE XIV
NONTERMINATION....................................................10


ARTICLE XV
CONDEMNATION......................................................11


ARTICLE XVI
BINDING EFFECT; SUCCESSORS AND ASSIGNS............................11


ARTICLE XVII
LESSEE'S OPTION TO REMOVE THE FACILITY............................11


ARTICLE XVIII
POSSESSION UPON TERMINATION.......................................12


ARTICLE XIX
INDEMNITY.........................................................12
SECTION 19.1 Lessee Indemnity....................................12
SECTION 19.2 Lessor Indemnity ...................................13


ARTICLE XX
TERM..............................................................13
SECTION 20.1 Coker Complex Ground Lease Term.....................13
SECTION 20.2 Renewal Term .......................................14


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Page
---- ARTICLE XXI
MINERAL RIGHTS....................................................14


ARTICLE XXII
MISCELLANEOUS.....................................................14
SECTION 22.1 Assignment as Security for Lessee's Obligations....14
SECTION 22.2 Memorandum of Lease................................15
SECTION 22.3 Relationship of the Parties........................15
SECTION 22.4 Time is of the Essence.............................15
SECTION 22.5 Notices ...........................................15
SECTION 22.6 Severability ......................................16
SECTION 22.7 Amendment .........................................16
SECTION 22.8 Headings, etc. ....................................16
SECTION 22.9 Counterparts ......................................17
SECTION 22.10 GOVERNING LAW......................................17
SECTION 22.11 WAIVER OF JURY TRIAL...............................17


ARTICLE XXIII
NO MERGER.........................................................17
SECTION 23.1 No Merger...........................................17


APPENDIX A -- DEFINITIONS


EXHIBITS


A Coker Site Description
B Blanket Easement Description
C Dock Easement Description
D Air Products Utilities
E Form of Assignment and Consent Agreement
F Auxiliary Facilities
G Form of Memorandum of Lease


SCHEDULES


I Coker Complex Site Permitted Liens


-3-


GROUND LEASE AND BLANKET EASEMENT AGREEMENT (the "Coker Complex Ground
-------------------- Lease"), dated as of August 19, 1999, between Clark Refining & Marketing, Inc., - ----- a Delaware corporation ("Lessor") and Port Arthur Coker Company L.P., a Delaware
------ Limited Partnership ("Lessee").
------


WHEREAS, the Lessor is the owner of the Coker Complex Site;


WHEREAS, Lessee wishes to lease the Coker Complex Site from Lessor in order to construct and operate the Coker Complex at the Coker Complex Site; and


WHEREAS, Lessor wishes to lease the Coker Complex Site to Lessee;


NOW THEREFORE, for and in consideration of the mutual covenants, premises and agreements set forth herein, and good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:


ARTICLE I
DEFINITIONS


SECTION 1.1 Definitions. Except as otherwise defined herein, the
----------- capitalized terms used herein shall have the respective meanings assigned thereto in Appendix A.


SECTION 1.2 Other Definitional Provisions.
-----------------------------


(a) The words "hereof", "herein", "hereto" and "hereunder" and words of similar import when used in this Coker Complex Ground Lease shall refer to this Coker Complex Ground Lease as a whole and not to any particular provision of this Coker Complex Ground Lease, and Article, Section and Schedule references are to this Coker Complex Ground Lease unless otherwise specified.


(b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.


ARTICLE II
LEASE AND GRANT OF EASEMENTS


SECTION 2.1 Lease. The Lessor hereby demises, leases and delivers to the
----- Lessee and Lessee hereby leases and accepts from Lessor the following described properties for a term of years equal to the Coker Complex Ground Lease Term, subject to all Permitted Liens now or hereafter in existence, (such estates being referred to herein as the "Coker Complex Leasehold"):


2


(a) the property (the "Coker Complex Site") described in
Exhibit A; provided, however, that as to the portions of Avenue H and
-------- -------
14th Street included in the description of the Coker Complex Site,
Lessee's use shall be non-exclusive and in common with Lessor and other
occupants of the Adjacent Refinery Property; and


(b) all equipment, buildings, structures, fixtures and
improvements located on the Coker Complex Site.


SECTION 2.2 Grant of Easements. Lessor does hereby grant and
------------------ convey to Lessee, for the Coker Complex Ground Lease Term, the following easements (which, together with all other easements granted or to be granted by or pursuant to this Coker Complex Ground Lease are referred to as "Easements") appurtenant to the Coker Complex Leasehold:


(a) a nonexclusive easement on, over and under the Adjacent
Refinery Property, as more particularly described in Exhibit B, for the
purpose of ingress and egress, for the construction and maintenance of
interconnection pipes, wiring, other pipelines and communication and
utility lines and for any other purpose as may be necessary or
desirable in connection with the construction, ownership and operation
of the Coker Complex or the operation of the Heavy Oil Processing
Facility or any of the Auxiliary Facilities, including, without
limitation, the provision by Lessee to Air Products of any of the
utilities described on Exhibit D hereto pursuant to Section 17.4 of the
Hydrogen Supply Agreement;


(b) a nonexclusive easement on that portion of the dock
described in Exhibit C for the purpose of unloading cargoes of crude
oil and other feedstocks and loading products of the Coker Complex and
for the construction and maintenance of pipes, pumps, valves, gauges
and other equipment in connection with such loading and unloading; and


(c) a nonexclusive easement on, over and under all pipelines,
oil handling facilities and terminaling facilities (including, in each
case, any and all easements relating thereto) owned or otherwise
controlled by Lessor (i) for the purpose of transporting oil (A) from
the facilities of Sun Pipe Line Company in Nederland, Texas to and
through the facility commonly known as "Lucas Terminal" and (B) from
Lucas Terminal to the Adjacent Refinery Property, (ii) for the purpose
of transporting crude oil and the access to and maintenance of oil
pipelines, interconnection pipes, tanks, wiring, other pipelines and
communication and utility lines and (iii) for any other purpose as may
be necessary or desirable in connection with the transportation of
crude oil from the docking facilities of Sun Pipe Line Company in
Nederland, Texas to the Refinery. Lessor shall, at its sole cost and
expense and promptly upon notice from Lessee, take all such actions as
Lessee may reasonably request to further specify, document or reflect
in the public records the foregoing easement described in this clause
(c) or to obtain title insurance with respect to such easement.


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SECTION 2.3 Easements Appurtenant. The Easements shall be deemed to be
--------------------- appurtenant to the Coker Complex Leasehold and shall be for the benefit of the Lessee and its permitted successors and assigns. Lessor agrees that it will not make any use or permit any use of the land described in Exhibit B or Exhibit C that would interfere with the use and enjoyment of the Easements or the operation of the Coker Complex by the Lessee or its successors, assigns or subtenants at any time during the Coker Complex Ground Lease Term, except to the extent that such use would not impair (i) the ability of the Lessee or its successors, assigns or subtenants to operate the Coker Complex in accordance with the Base Case Financial Model or (ii) any of the security interests granted or to be granted by the Coker Company to the Financing Parties pursuant to the Financing Documents.


SECTION 2.4 No Interference. With respect to any nonexclusive easement
--------------- granted pursuant to this Coker Complex Ground Lease, the Lessor shall not grant or convey any easement or other interest (other than a Permitted Lien) that, if used or enjoyed in accordance with its terms, would interfere with the use and enjoyment of the Coker Complex, Coker Complex Leasehold and Easements or the operation of the Coker Complex by the Lessee or its permitted successors, assigns or subtenants at any time during the Coker Complex Ground Lease Term, except to the extent that such easement or interest would not impair (i) the ability of the Lessee or its successors, assigns or subtenants to operate the Coker Complex in accordance with the Base Case Financial Model or (ii) any of the security interests granted or to be granted by the Coker Company to the Financing Parties pursuant to the Financing Documents.


ARTICLE III
POSSESSION AND QUIET ENJOYMENT


The Lessor covenants with the Lessee that the Lessee will enjoy quiet possession of the Coker Complex Leasehold and the right to utilize the Easements, free from claims of persons in possession and third parties claiming rights thereto.


ARTICLE IV
TITLE


The Lessor warrants and represents that it has (a) good and indefeasible title to the Coker Complex Site and to all property covered by any Easement (other than the Easement granted pursuant to clause (c) of Section 2.2, with respect to which it has a valid and enforceable easement interest with the right to grant such Easement), in fee simple absolute and (b) the right to convey the Easements, in each case free and clear of all liens and encumbrances, except for Permitted Liens. The Lessor further warrants and represents that Permitted Liens in existence on the date hereof do not and will not adversely affect the use of the Coker Complex Site, the Easements and the Auxiliary Facilities as contemplated by the other Project Documents.


4


ARTICLE V
FIXTURES


As a material part of this Coker Complex Ground Lease, the Lessor and the Lessee agree and intend that each item representing part of the Coker Complex (a) is attached, affixed and annexed to the Coker Complex Site or the Easements, as the case may be, (b) shall remain attached, affixed and annexed to the Coker Complex Site or the Easements, as the case may be, (c) shall be considered with respect to the interests of the parties hereto as the real property of the Lessee for the Coker Complex Ground Lease Term (subject to Lessor's reversionary interest therein), (d) shall be considered to become fixtures to and a part of the Coker Complex Site or the Easements, as the case may be, immediately upon being installed or constructed on, or otherwise affixed or annexed to, the Coker Complex Site, (e) is adaptable to the uses and purposes for which the Coker Complex Site is being leased by Lessor to Lessee, and (f) cannot be removed from the Coker Complex Site without doing substantial injury and/or material damage to the Coker Complex Site.


ARTICLE VI
AUXILIARY FACILITIES


For purposes hereof, "Auxiliary Facilities" shall mean: the nonexclusive use of any equipment or facilities owned by the Lessor and located on the Easements and necessary to the operation of the Coker Complex, including, without limitation, the facilities necessary for Lessee to provide Air Products with any of the utilities described on Exhibit D hereto pursuant to Section 17.4 of the Hydrogen Supply Agreement. The Auxiliary Facilities include, without limitation, the equipment and facilities described on Exhibit F.


The Lessor hereby grants to the Lessee the license to use the Auxiliary Facilities during the Coker Complex Ground Lease Term. Such right shall be a nonexclusive license in real property, irrevocable for the Coker Complex Ground Lease Term, and such rights to use the Auxiliary Facilities are herein called the "Auxiliary Rights". The Lessor may not grant a license to any other Person to use any of the Auxiliary Facilities during the Ground Lease Term, except to the extent that the granting of such license and the use of such Auxiliary Facilities by such Person would not impair (i) the ability of the Lessee or its successors, assigns or subtenants to operate the Coker Complex in accordance with the Base Case Financial Model, (ii) the ability of Lessee to provide Air Products with any of the utilities described on Exhibit D hereto pursuant to Section 17.4 of the Hydrogen Supply Agreement or (iii) any of the security interests granted or to be granted by the Lessee to the Financing Parties pursuant to the Financing Documents.


5


ARTICLE VII
UNDERTAKINGS OF LESSOR; FURTHER ASSURANCES


The Lessor covenants, represents and warrants to the Lessee that the Coker Complex Leasehold, the Easements and the Auxiliary Rights are sufficient and will, at all times during the Coker Complex Ground Lease Term, be sufficient or, if the same shall cease to be so sufficient, the Lessor will at its expense take such action, including the conveyance of easements and the grant of additional Auxiliary Rights, as is reasonable or necessary, in order to provide the Lessee with reasonable means of constructing, connecting, operating, maintaining, replacing, renewing and repairing the Coker Complex including, but not limited to (a) reasonable means of transporting materials to be processed to the Coker Complex and shipping processed material from the Coker Complex, (b) reasonable access subject to regulatory restrictions to communications networks and sources of electric power, natural gas and other utilities for operation of the Coker Complex, (c) reasonable access subject to regulatory restrictions to sources of potable water, (d) reasonable access subject to regulatory restrictions to areas for or means of disposing of waste materials generated by the operation of the Coker Complex, (e) reasonable access on the Coker Complex Site to a supply of hydrogen, by pipeline or other commercially reasonable alternative, sufficient for the requirements of the Coker Complex, and (f) existing firewater systems, as they may be modified, necessary to maintain, protect and preserve the Coker Complex Site. At all times during the Coker Complex Ground Lease Term the Lessor, at its expense, shall maintain the Easements and the Auxiliary Facilities in good condition and repair and in accordance with Applicable Laws so that they will be available for the operation of the Coker Complex, including, without limitation, the maintenance of roads, equipment, pumps, and pipelines located on Easements or constituting part of an Auxiliary Facility.


The agreement and obligation of Lessor to provide electric utilities and electric service, natural gas and gas service, potable water and water service and sanitary sewage service to the Coker Complex pursuant to the Services and Supply Agreement is incident to, dependent upon and inseparable from the landlord/tenant relationship established by this Coker Complex Ground Lease, and such obligation shall continue only for the Coker Complex Ground Lease Term and the existence of such landlord/tenant relationship. All charges for potable water and sanitary sewer services to be provided by Lessor to Lessee pursuant to the Services and Supply Agreement are included in the rent payable to Lessor hereunder. The provisions of the Services and Supply Agreement are intended only to provide a mechanism for Lessor to recover from Lessee the cost of providing electricity and electric service, and natural gas and gas service, to the Coker Complex, and it is not intended that Lessor shall make a profit by providing such utilities. Lessee acknowledges, understands and agrees that none of such utilities may be sold or resold by Lessee, and none of such utilities may be used by any other party or for any other purpose other than in connection with its tenancy hereunder.


6


ARTICLE VIII
RESERVATIONS AND RESTRICTIONS


SECTION 8.1 Reservations. The grant and conveyance of the
------------ Easements and the Auxiliary Rights by the Lessor to the Lessee are subject to the following reservations and understandings:


(a) The Lessor reserves the right to relocate all or any
portion of the Coker Complex or other property of the Lessee located on
the Adjacent Refinery Property provided that such relocation (i) does
not subject such property to any Liens, conditions or other
restrictions (other than Permitted Liens), (ii) is at the Lessor's
expense and (iii) does not deprive the Lessee of effective use of such
property or make the use of such property more expensive or burdensome
or adversely affect the operation of the Coker Complex, except to the
extent that such relocation would not impair (x) the ability of the
Lessee or its successors, assigns or subtenants to operate the Coker
Complex in accordance with the Base Case Financial Model or (y) any of
the security interests granted or to be granted by the Lessee to the
Financing Parties pursuant to the Financing Documents.


(b) Subject to Section 2.2 and clause (a) of this Section 8.1,
the Lessor reserves the right to use, permit the use of, or grant
easements or licenses to use, any part of the Adjacent Refinery
Property.


ARTICLE IX
MAINTENANCE; INSPECTION; COMPLIANCE WITH LAWS


SECTION 9.1 Maintenance. During the Coker Complex Ground
----------- Lease Term, the Lessee shall take care of and maintain the Coker Complex Site. So long as the Services and Supply Agreement is in effect, such performance with respect to maintenance of the Coker Complex Site as rendered by Lessor thereunder shall be deemed to fulfill Lessee's obligations under this Section.


SECTION 9.2 Inspection. During the Coker Complex Ground Lease
---------- Term, the Lessor and its authorized representatives may, at their own expense, at reasonable times and by appointment on reasonable notice, inspect the Coker Complex Site and the Coker Complex and any other property located on the Coker Complex Site.


SECTION 9.3 Compliance with Laws. (a) During the Coker Complex
-------------------- Ground Lease Term, the Lessee, at its sole cost and expense, shall conform to, comply with and take any and all action necessary to avoid or eliminate any violation of any Applicable Laws applicable to the Coker Complex Site and the Coker Complex, or the use, ownership or occupancy thereof, unless and to the extent that (x) the Lessee shall be prosecuting in good faith a test, challenge, appeal or proceeding for review of such Applicable Laws by appropriate proceedings that do not involve any substantial risk of (i) foreclosure, sale, forfeiture or loss of, or imposition of any Lien


7


prohibited by Article X on the Coker Complex Site or any part thereof, (ii) extending the ultimate imposition of such requirement beyond the termination of the Coker Complex Ground Lease Term or (iii) any material claim against the Lessor, the Coker Complex Site or any property of the Lessor or (y) such violation relates to the presence of or any failure to remediate environmental contamination existing on or under the Coker Complex Site prior to the date hereof. So long as the Services and Supply Agreement is in effect, such performance with respect to compliance with laws applicable to the Coker Complex Site and the Coker Complex as may be rendered thereunder by the Lessor shall be deemed to fulfill Lessee's obligations under this Section.


(b) During the Coker Complex Ground Lease Term, the Lessor, at its sole cost and expense, shall conform to, comply with and take any and all action necessary to avoid or eliminate any violation of any Applicable Laws applicable to the Clark Refinery Property (other than the Coker Complex Site, except to the extent that such violation relates to any environmental condition on or under the Coker Complex Site prior to the date hereof), or the use or occupancy thereof, unless and to the extent that (x) the Lessor shall be prosecuting in good faith a test, challenge, appeal or proceeding for review of such Applicable Laws by appropriate proceedings that do not involve any substantial risk of (i) foreclosure, sale, forfeiture or loss of, or imposition of any Lien prohibited by Article X on the Clark Refinery Property or any part thereof, (ii) extending the ultimate imposition of such requirement beyond the termination of the Coker Complex Ground Lease Term or (iii) any material claim against the Lessee, the Clark Refinery Property or any property of the Lessee, or (y) such violation could not reasonably be expected to have a material adverse effect on the Coker Complex Site or the right of the Lessee to use and enjoy the Easements.


ARTICLE X
LIENS


SECTION 10.1 Lessee Liens. (a) During the Coker Complex Ground Lease Term,
------------ the Lessee shall not directly or indirectly create, assume or suffer to exist any Lien by any Person claiming by, through or under the Lessee, on or with respect to the Coker Complex Site, except Permitted Liens and any other Liens against any part of the Coker Complex Site or the Easements (i) in favor of any taxing authority by reason of the nonpayment by the Lessor of any Tax (other than Taxes being diligently contested in good faith in appropri
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