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remaining in fact and not merely in form within the requirements of national defense as directed by law. Indeed, the statute under which Federal Facilities Corporation is empowered to lease this plant specifically authorizes the extension of the present lease, clearly recognizing this solution as consistent with the Government's commercial interest yet, also, consistent with the national industrial policy required in the interest of national defense.
PUBLICKER INDUSTRIES, INC.,
By A. E. LANG. OCTOBER 30, 1956
UNION CARBIDE & CARBON CORP.,
New York, N. Y., October 25, 1956. Re proposal of Union Carbide & Carbon Corp., to lease Plancor 1207. FEDERAL FACILITIES CORPORATION,
Washington, D. O. GENTLEMEN: Union Carbide & Carbon Corp., submits the following proposal to lease the Government-owned butadiene facility at Louisville, Ky., knows as Plancor 1207.
This proposal is submitted pursuant to and in accordance with the Rubber Producing Facilities Disposal Act of 1953, as last amended by Public Law 433, 84th Congress, 2d session, and the instructions and information, dated September 25, 1956, issued by the Federal Facilities Corporation in connection with the leasing of this facility.
1. Identification of prospective lessee.-Union Carbide & Carbon Corp. (hereinafter referred to as “Carbide") is a New York corporation, formed on November 1, 1917, and having its general corporate offices at 30 East 42d Street, New York, N. Y. Carbide has outstanding only one type of securities, namely, common stock, the shares of which are listed on the New York Stock Exchange. As of October 15, 1956, there were issued and outstanding 29,634,008 shares of stock held by 118,263 stockholders. No affiliations or asociations with reference to the ownership of the facility, arising out of stockownership or otherwise, exist or are contemplated in connection with the acquisition or operation of the facility covered by this proposal.
2. Identification of facility.-The facility covered by this proposal is the Government-owned butadiene facility located at Louisville, Ky., known as Plancor 1207, and described in the brochure distributed by the Federal Facilities Corporation in connection with the aforesaid instructions and information,
3. Products intended to be produced at the facility.-Carbide intends to produce butadiene and/or miscellaneous other chemical products at the facility. Carbide will determine which products it will produce after consideration of conditions prevailing when Carbide obtains possession of the facility.
4. Feedstock supply.—Ethyl alcohol and other basic raw material required to operate the facility for the production of butadiene and/or miscellaneous other chemical products, will be available from several sources, including facilities operated by Carbide. Appropriate arrangements for a supply of ethyl alcohol and other basic raw materials are being made.
5. Disposal of end products.-It is expected that substantially all of the products produced at the facility will be available for sale and will be sold on Carbide's standard terms and conditions of sale for similar products which it produces at other facilities. When butadiene is produced by Carbide at the facility, it is expected that the production will be offered for sale on the open market at prices, to all consumers, competitive with prices for other butadiene produced from alcohol. Carbide is willing to specify, if the Federal Facilities Corporation so requires, that the butadiene produced at the facility will be available for sale, at such prices, to producers of GR-S synthetic rubber on reasonable terms and conditions substantially similar to Carbide's standard terms and conditions of sale of similar products.
6. Term of proposed lease.-Carbide proposes to lease this facility for an initial term of 5 years from the termination of the lease now held by Publicker Industries, Inc., with the option in Carbide to extend the initial term for an additional period or periods of not less than 1 year nor more, in the aggregate, than 10 years. The proposed lease shall be subject to the lease now held by Publicker Industries, Inc.
7. Patents and technical information.-With but two exceptions, Carbide does not claim or intend to claim, directly or indirectly, any "right," as that term is defined in paragraph 5 (e) of section II of the Federal Facilities Corporation's Instructions and Information in connection with the lease of this facility, dated September 25, 1956, with respect to any process, device, or product presently in use in the facility, or which is necessary to permit the use of the facility for the purpose for which it was designed and constructed. Carbide does have a patent "right" with respect to the process for making butadiene from alcohol lised at Plancor 1207. Carbide also is the owner of certain unpatented processes lised in the production of butadiene from ethyl alcohol, and Carbide has an agreement with the Government providing, among other things, that the Government may grant licenses to others to practice these processes but solely in the production of butadiene from alcohol.
8. Agreement to negotiate.-Carbide agrees to negotiate with the Federal Facilities Corporation for the lease of the facility covered by this proposal at the time and places to be established by the Federal Facilities Corporation.
9. Conditions or contingencies.—This proposal is submitted upon the following conditions or contingencies :
(a) That the lease of the facility to Carbide shall be upon substantially the terms and conditions set forth in the form of lease attached hereto as exhibit A, or such other terms and conditions as the Federal Facilities Corporation and Carbide may mutually agree, it being understood that the lease shall, upon execution, contain a "national security clause," provisions for the recapture of the facility and the termination of the lease if the President determines that the national interest so requires, and standard Government clauses, all in appropriate form.
() That the Federal Facilities Corporation or other appropriate governmental agency extend to Carbide immunity from suit, or, upon request of Carbide, obtain for Carbide a license, upon reasonable terms and conditions no less favorable than those then being offered, on any patents relative to the operation by Carbide of Plancor 1207 as to which the Federal Facilities Corporation or other appropriate governmental agency has the power to extend such immunity or to obtain such a license. Carbide intends to request such reasonable licenses and immunity from suit to the extent the Federal Facilities Corporation or other appropriate agency shall be able to grant or extend the same after Carbide has determined that such licenses or immunity from suit may be necessary to enable it to operate the facility competitively and to manufacture, use, and sell the product therefrom.
(c) That the Federal Facilities Corporation, without warranty of title, shall have marketable title to the facility, including, without limitation, the lands, buildings, structure, utilities, fixtures, machinery, equipment, pipelines, easements, and other property comprising or appurtenant to the facility, free and clear from all liens, claims, or encumbrances (other than the lease, dated March 25, 1955, between the Federal Facilities Corporation and Publicker Industries, Inc.), and unburdened with any fixed or contingent liabilities which must be assumed by Carbide.
(a) That all risks of damage to and destruction of the facility in whole or in part shall be borne by the Government until the time of actual transfer of possession, and at the time of such transfer the facility shall be in at least as good condition as at the date hereof, normal wear and tear excepted.
10. Amount proposed to be paid as rental.—Carbide offers to pay rental for the lease of the facility at the rate of $100,000 per year, payable in quarterly installments. In addition, as indicated in the form of lease attached hereto as exhibit A, Carbide will assume all costs of maintaining the facility in standby condition in accordance with the national security clause.
Enclosed with this proposal is a certified check for $2,500, being the requisite deposit provided for in paragraph 6 of section II of the Instructions and Information in connection with the leasing of this facility, dated September 25, 1956.
11. Business activities of prospective lessee.-Carbide is engaged in the general chemical business. It is among the leading companies in the chemical industry. The principal business activities of the Corporation are divided into five major groups: alloys and metals; synthetic organic chemicals; electrode, carbons, and batteries ; industrial gases and carbide; and plastics.
The products of the alloys and metals group are used largely in the metalproducing, metal-fabricating, and metal-consuming industry. The operations of the chemicals group have grown out of fundamental organic-chemical research in investigating the possibilities of the manufacture of synthetic organic chemicals. The operations of the electrodes, carbons, and batteries group include
the manufacture and sale of products made partly or entirely from carbon. The products and processes of the industrial gases and carbide group include acetylene, calcium carbide and oxygen, and certain welding apparatus and processes. The plastics group produces synthetic resins that are sold to fabricators for further processing, and also semiprocessed plastics sold to companies that employ these materials in their finished products.
Carbide is not engaged in the production or sale of rubber and participates to a very minor extent in the production and sale of petroleum. Carbide manufactures butadiene in only limited quantities, estimated to be approximately 4 percent of the total butadiene produced in the United States. This butadiene is presently being sold under contract to several users. Carbide also produces styrene, another component of GR-S rubber. Styrene is also used in the production of polystyrene and related plastic materials. Carbide's production of styrene is estimated to be approximately 8 percent of the total production of styrene in the United States. Respectfully submitted.
UNION CARBIDE & CARBON CORP., By H. B. MOCURE, Vice President.
AGREEMENT OF LEASE
THIS AGREEMENT, made and entered into this ---- day of 1956, by and between FEDERAL FACILITIES CORPORATION (hereinafter called the "FFC”), an instrumentality of the United States,'having an office for the transaction of business in Washington, D. C., party of the first part, and UNION CARBIDE AND CARBON CORPORATION (hereinafter called "Carbide"), a corporation of the State of New York, having a general office at New York, New York, party of the second part:
Whereas by Executive Order No. 10678, effective September 24, 1956, the President designated the FFC to administer all matters involving the Rubber Producing Facilities Disposal Commission, the existence of which terminated on September 23, 1956; and
Whereas pursuant to said Executive Order and Section 9 (f) of the Rubber Producing Facilities Disposal Act, Public Law 205, 83d Congress (herein called the “Disposal Act”) as amended by Section 4 (a) of Public Law 433, 84th Congress Second Session, the FFC is authorized to lease alcohol-butadiene facilities owned by the Government, subject to certain conditions as provided in said Section 9 (f) as so amended; and
Whereas Carbide has offered to lease, for the term and under certains terms and conditions hereinafter stated, the Government-owned alcohol-butadiene facility located at Louisville, Kentucky, known as Plancor 1207, subject to the lease (hereinafter called the “Publicker lease”) dated March 25, 1956, by and between the FFC and Publicker Industries Inc.; and
Whereas Carbide has represented that, if this lease shall become effective in accordance with the Disposal Act, as amended, Carbide intends to produce butadiene and/or miscellaneous other chemical products at Plancor 1207 and is prepared to take possession of Plancor 1207 as lessee as soon as the Publicker lease is terminated and maintain Plancor 1207 in accordance with the terms hereof so that the facility will be readily available for use in a national emergency; and
Whereas FFC has agreed to take all action essential to enable Carbide to take possession as lessee hereunder; and
Whereas the FFC has determined that such a lease to Carbide is desirable;
Now, THEREFORE, in consideration of the mutual covenants herein contained, it is agreed by and between the parties as follows:
Section 1. Definitions.
(a) The term “FFC" as used herein shall mean the Federal Facilities Corporation or, if it shall have ceased to exist, such other agency of the United States of America as the President shall have designated to administer the contracts and leases and other matters involving the Commission.
(6) The term "Government” as used herein shall mean the United States of America or any department, agency, officer or instrumentality thereof.
(c) The term "Leased Property" as used herein shall mean the property described in Section 2 hereof and all replacements thereof and shall not include any changes, alterations or improvements thereto made by Carbide or any machinery, equipment, structures or other facilities or property installed or erected by Carbide at the site described in Section 2.
Section 2. Leasing.–Subject to the terms hereof, the FFC hereby leases to Carbide and Carbide hereby leases from the FFC all real, personal or mixed property owned by the United States and now administered by FFC and constituting, located at, or connected with tthe Louisville, Kentucky, Governmentowned alcohol-butadiene plant (Plancor 1207) located on Hughes Camp Ground Road in Jefferson County, Kentucky, as same now exists, together with any and all additional property of any nature charged to said Plancor after the date hereof by FFC; being part of the same property conveyed to the Defense Plant Corporation by deeds dated April 29, 1944, September 19, 1942, and September 23, 1942, and recorded in Deed Book 1937 page 413, Deed Book 1837 page 199, and Deed Book 1838, page 283, respectively, in the office of the Clerk of the County Court of Jefferson County, Kentucky
Provided, however, that this lease is made expressly subject to all existing leases, easements, rights of way, licenses, restrictive covenants, reservations and grants now of record pertaining to said Plancor 1207 property, including, without limiting the generality of the foregoing, the Publicker lease.
Section 3. Term.—This lease shall become operative and Carbide shall be entitled to possession of the Leased Property upon the termination of the Publicker lease, and this lease shall continue in force for an initial term of five (5) years after Carbide obtains possession of the Leased Property. This lease may be extended from time to time at Carbide's option for such additional term or terms of not less than one (1) year as Carbide may elect; provided, that the total of such additional term or terms shall not exceed ten (10) years. This lease shall be subject to termination as hereinafter provided.
At Carbide's election, this lease shall not become operative if the Publicker lease shall be terminated pursuant to the "recapture” provisions set forth in clause (a) of Section 19 thereof.
If Carbide shall exercise the option hereinabove provided in this Section 3 to extend the term of this lease, it shall do so by written notice to the FFC not less than ninety (90) days prior to the end of the initial term or of any additional term then in effect, as the case may be. Section 4. Rent.-Carbide shall pay rent for the Leased Property at the rate of
Dollars ($--------) per year. Such rent shall be paid quarterly not later than the last day of each calendar quarter-year period, commencing with the calendar quarter-year period in which Carbide shall obtain possession of the Leased Property. Rent shall be paid to such representative of the FFC as the FFC shall prescribe by notice in writing to Carbide.
Section 5. Records.-So long as this lease remains in force, Carbide shall maintain separate property accounts for the Leased Property and such other necessary data and records as may bear upon the respective rights and obligations of the FFC and Carbide under this lease, all to the extent required by the FFC and in form satisfactory to the FFC Carbide agrees to make such accounts, data and records available during the term of this lease and for a period of three (3) years thereafter to the FFC for audit and inspection and to furnish the FFC with such excerpts therefrom or copies thereof as the FFC may request.
Section 6. Survey and Inventory. On or about the date on which Carbide obtains possession of the Leased Property, a survey and inventory of the Leased Property, including, but not limited to, all supplies, machinery, equipment and tools embraced therein, shall be made by a representative of the FFC and a representative of Carbide. Said survey and inventory shall be approved in writing by Carbide and the FFC, and upon approval, a copy thereof shall be attached hereto and become a part hereof, as fully as if originally incorporated herein. There shall be added to said survey and inventory from time to time such additional property, fixtures, and installations as are furnished by or at the expense of the Government, or which become Government property under the terms of this lease. At the expiration or termination of this lease, a similar survey and inventory shall be prepared and approved, said survey and inventory to constitute the basis for final settlement by Carbide with the FFC for accountability for Leased Property, including property which Carbide shall be required to restore or replace under this lease. Any such property shall be either replaced and/or restored or, at the election of the FFC, reimbursement therefor shall be made in cash by Carbide at the then current market value of property of like kind, quality, and condition.
Supplies, spare parts, and other items included in the survey and inventory which are currently used by Carbide shall be either replaced by supplies, spare parts and items of like kind, quality and condition to those so used by Carbide, or at the election of the FFC, reimbursement therefor in cash shall be made by Carbide at the then current market value quarterly not later than twenty (20) days following the close of each calendar quarter-year period hereunder,
Section 7. Assignability.
(a) Carbide shall neither transfer nor assign this lease, nor sublet the Leased Property or any part thereof, nor grant any interest, privilege or license whatsoever in connection therewith; provided that this paragraph shall not prohibit Carbide from assigning this lease to a wholly-owned subsidiary of Carbide pursuant to an instrument of assignment satisfactory to the FFC, and provided further that this paragraph shall not prohibit Carbide, for its own account or under any such other arrangements as it may deem desirable, from dispensing and selling food, soft drinks, tobacco products, confectionery, and similar articles to the employees of Carbide on the Leased Property.
(6) The FFC may assign this lease to any other agency of the Government.
Section 8. Inspection by FFC.—The FFC reserves the right at any reasonable time to enter the Leased Property for the purpose of inspection and inventory and when otherwise deemed necessary for the protection of the interests of the FFC.
Section 9. Nonliability of FFC for Use of Leased Property.—The FFC shall not be responsible for damages to the property of Carbide nor for damages to the property or injuries to the person of Carbide's officers, agents, servants or employees or other persons on the Leased Property as invitees or licensees of Carbide arising from the use of the Leased Property by Carbide, and Carbide shall indemnify and save the FFC harmless from any and all such claims. The FFC shall not be responsible for damages to any persons or property off the Leased Property arising from Carbide's use of the Leased Property and Carbide shall indemnify and save the FFC harmless from any and all claims for such damages.
Section 10. Condition of Leased Property.-Carbide has inspected and knows the condition of the Leased Property and it is understood that the same is hereby leased without any representation or warranty by the FFC whatsoever. All risks of damage to and destruction of the Leased Property in whole or in part shall be borne by the FFC until the time of actual transfer of possession thereof to Carbide, and at the time of such transfer the Leased Property shall be in at least as good condition as on October 31, 1956, ordinary wear and tear excepted.
Section 11. Alterations and Improvements.-Carbide may, at its sole expense, make changes, alterations and improvements to the Leased Property and erect new structures and install other facilities on the site described in Section 2 hereof, provided that any such changes, alterations, improvements, new structures or other facilities will not prevent Carbide from fulfilling its obligations to return the Leased Property within a period of 180 days to the condition required by Section 17 of this lease. Carbide shall prepare and maintain adequate drawings showing the location and connections and other installation data of each item of Leased Property equipment or part thereof connected or removed from its installed location, and Carbide shall tag for identification purposes each item or part thereof so removed to insure the minimum of time and expense in restoration. Subject to Section 14, all such changes, alterations, improvements new structures or other facilities, including all machinery and equipment installed by Carbide, shall remain Carbide's property and may be removed by Carbide at any time.
Section 12. Destruction of Leased Property.—If, during the term of this lease, the Leased Property or a substantial part thereof, is without negligence on the part of Carbide, destroyed or rendered unfit for occupancy or for the purpose for which it was leased by any cause whatsoever, then this lease may, at the option of Carbide, be terminated and, in the event of the election of this option to terminate, the obligation of Carbide to pay rent and to maintain the Leased Property shall cease as of the date the said property was so destroyed or rendered unfit for occupancy or for the purpose for which it was leased. Nothing in this Section 12 shall relieve Carbide of its obligations expressly provided in this lease to maintain, repair, replace, or restore the Leased Property, or any part thereof. Nothing in this Section 12 shall obligate the FFC to repair or restore the Leased Property, or any part thereof.