buildings, housing, easements, rights of way, and riparian rights appurtenant thereto and/or owned, controlled or hereafter acquired by the lessor for or in connection with said.dam and power plant, but excluding and excepting from the property hereby demised and leased the locks and navigation facilities and such housing as the Secretary of War shall designate by notice in writing to the lessee given within sixty days from the date hereof, as being required for the housing of lock operators;

(2) Subject to the provisions of Article D hereof, Dam Numbered 3 with its lands, water rights, power house, structures, and facilities, which shall include installed electrical generating equipment sufficient to generate there two hundred and fifty thousand horsepower, all its hydroelectric and operating apparatus, appurtenances, accessories and facilities, trackage, transmission lines, telephone and telegraph lines, an electrical tie connecting the switch house at Dam Numbered 2 with said power house, of a capacity equal to the generating .capacity installed in said power house, the necessary transformers and switching apparatus, and all lands, buildings, housing, easements, rights of way, and riparian rights appurtenant thereto and/or owned, controlled or hereafter acquired by the lessor for or in connection with said dam and power plant, but excluding and excepting from the property hereby demised and leased the locks and navigation facilities and such housing as said Secretary of War shall designate by notice in writing to the lessee given at the time of the delivery of possession of said Dam Numbered 3, completed, as being required for the housing of lock operators;

(3) United States nitrate plant numbered 2 (as officially known and designated on the records of the War Department of the United States) including its sixty thousand kilowatt steam power plant, the Waco limestone quarry with equipment therefor, and all lands, buildings, housing, easements, rights of way, materials, trackage, transmission lines, telephone and telegraph lines, fixtures, apparatus, tools, supplies, appurtenances, accessories and facilities, such existing service equipment as the Secreatry of War shall certify by notice in writing to the lessee given within sixty days from the date hereof as belonging thereto, and the sulphuric acid units now in storage on the premises, but not including the platinum catalyzers for use in the manufacture of nitric acid, which shall be retained by the lessor and the lessee shall in no way be responsible therefor; and (4) United States nitrate plant numbered 1 (as officially known and designated on the records of the War Department of the United States) including its power house and transmission line to United States nitrate plant numbered 2 and all lands, buildings, housing, easements, rights of way, materials, trackage, transmission lines, telephone and telegraph lines, fixtures, apparatus, tools, supplies, appurtenances, accessories and facilities, as respects the properties described in paragraphs (1), (3) and (4) above for and during the term of fifty years beginning on the date of delivery to the lessee of possession of said properties and thence ensuing and fully to be completed, and as respects the properties described in paragraph (2) above for and during the term beginning on the day of delivery to the lessee of possession of the said properties completed and thence ensuing and until the end of the aforesaid term of fifty years, upon the terms and conditions contained in this lease and to that end the parties hereto respectively covenant and agree as follows, namely:

A. The lessee will pay to the lessor as rental therefor within fifteen days after the end of each fiscal year (which is hereby defined to begin July 1) of the lease term except as herein otherwise stated:

(1) From the aforesaid delivery of possession of the properties described in paragraphs (1), (3), and (4) of the granting clauses hereof (a) a sum equal to interest at the rate of 4 per centum per annum upon the total of all sums expended by the lessor upon the acquisition and construction of Dam Numbered 2, with its lands, water rights, power house, structures, and facilities, as hereinabove described, and its locks and navigation facilities, exclusive of expenditures and obligations paid or incurred by the lessor prior to May 31, 1922, and (b) annual amounts sufficient, if continued for one hundred years, to amortize, on a basis of 4 per centum interest compounded annually, the entire amount (without deduction of expenditures and obligations paid or incurred prior to May 31, 1922) so expended, except that such payments of said sum as aforesaid and amortization combined for the first six years from the aforesaid delivery of possession shall be at the rate of $200,000 per year, and that the difference between such $200,000 per year and the full amount of said sum aforesaid and amortization (with simple interest on such difference at the rate of 4 per centum per annum) shall be paid in annual installments commencing not later than the end of the thirty-fifth year

of the lease term, each such installment to be equal to at least one-fifteenth of the principal sum of such difference and interest thereon to the date of payment;

(2) From delivery of possession of said Dam Numbered 3 completed (a) a sum equal to interest at the rate of 4 per centum per annum upon the total of all sums expended by the lessor upon the acquisition and construction of Dam Numbered 3, with its lands, water rights, power house, structures, and facilities, as hereinabove described, and its locks and navigation facilities, less the sum of $6,000,000, and (b) annual amounts sufficient if continued for one hundred years, to amortize on a basis of 4 per centum interest compounded annually, the entire amount (without deduction of such $6,000,000) so expended, except that such payments of said sum aforesaid and amortization combined for the first three years from such delivery of possession of said Dam Numbered 3 shall be at the rate of $160,000 per year, and that the difference between such $160,000 per year and the full amount of such interest and amortization (with simple interest on such difference at the rate of 4 per centum per annum) shall be paid in annual installments commencing not later than the thirty-fifth year of the lease term, each such installment to be equal to at least one-fifteenth of the principal sum of such difference and interest thereon to the date of payment;

(3) During the term of the lease of said Dam Numbered 2, $35,000 annually, in installments quarterly in advance, for repairs and maintenance of such dam and its locks and for operation of said locks irrespective of the actual cost thereof;

(4) From such delivery of such possession of said Dam Numbered 3, $20,000 annually, in installments quarterly in advance, for repairs and maintenance of such dam and its locks, and for operation of said locks irrespective of the actual cost thereof; and

(5) The lessee will supply to the lessor, free of all charge during the period of the lease of Dam Numbered 2, to be delivered at any point on its lock grounds designated by said Secretary of War by notice in writing to the lessee, such electric power as in his judgment shall be necessary for the operation and lighting of its said locks, and will supply to the lessor from such delivery of such possession of said Dam Numbered 3, to be delivered at any point on its lock grounds designated by said Secretary of War by notice in writing to the lessee, such electric power as in his judgment shall be necessary for the operation and lighting of its said locks.

If the lessee be deprived of possession of any portion of the demised properties for any part of a fiscal year, the total payments to be made by way of rental by the lessee for such fiscal year for the demised properties shall be reduced so that the rental to be paid, with respect to that portion of the properties of which the lessee is deprived of possession, shall be the same proportion of the total yearly rental of such portion of the demised properties, as the time, during which the lessee enjoyed possession during such fiscal year of that portion of the properties of which it was deprived, is of one year.

In case the lessee shall be deprived of the possession of any part of the demised properties pursuant to the provisions of subdivision (3) of Article E hereof, the payments to be made by the lessee by way of rental hereunder shall thereupon be reduced proportionately as may, subject to the provisions of Article N hereof, be agreed upon between said Secretary of War and the lessee.

B. In addition to the payments above covenanted to be made the lessee covenants and agrees that it will—

(1) At its own cost and expense complete the steam power plant connected with said United States nitrate plant numbered 2 by installing such additional electrical generating and other equipment as will increase the generating capacity of said plant up to at least ninety thousand kilowatts according to plans and specifications therefor to be approved by said Secretary of War;

(2) In accordance with plans and specifications which have been or may be prepared or approved by said Secretary of War and out of funds which the lessor hereby covenants and agrees promptly to make available for that purpose, install in the power house of said Dam Numbered 2, with reasonable promptness after such funds are so made available, such additional electrical-generating units, together with necessary hydroelectric and operating appurtenances, accessories and facilities as will increase the generating capacity of the equipment of said Dam Numbered 2 up to approximately six hundred thousand horsepower, at the cost and expense of the lessor and without profit to the lessee, each such additional generating unit to be the property of the lessor and included in the leased property upon which rental by way of interest and amortization shall be paid to the lessor from the time of its completed installation, such additional

rental to be paid in the manner and at the rates provided in subdivision (1) of Article A hereof; and

(3) Pay to the lessor a royalty of 5 cents per long ton upon all limestone removed by the lessee or its agents from the said Waco limestone quarry, such payments to be made on or before the 10th day of each month for the quantity of such limestone so removed during the preceding month.

C. The lessor covenants and agrees to maintain and keep in repair (as determined by said Secretary of War, subject to the provisions of article N hereof) said dams and locks. The operation of said locks shall be exclusively that of the lessor and the lessee shall not be responsible for any loss, damage or injury resulting from faulty design or construction of the dams, their gates and locks, or negligent operation of said locks. In the event the lessor fails to maintain and keep in repair said dams and locks, the lessee may, upon giving notice to the lessor, make any and all necessary repairs to said dams and locks at the cost and expense of the lessor, and the lessee may deduct and retain out of the payments to be made by it by way of rental hereunder all such sums as it shall pay on account of said repairs. The lessee covenants and agrees to maintain and keep in repair the spillway gates and power houses (substructures and superstructures) and the machinery and appliances appurtenant to the power houses, and the operation thereof shall be exclusively that of the lessee and the lessor shall not be responsible for any loss, damage, or injury resulting from negligent operation thereof. The lessee further covenants and agrees to comply with and observe all local sanitary laws and regulations in respect to its operation of said power developments. In the event the lessee at any time during the term of this lease, fails to maintain and keep in repair the spillway gates and power houses (substructures and superstructures) and the machinery and appliances appurtenant to the power houses, the lessor may, upon giving notice to the lessee, make any and all necessary repairs to such spillway gates, power houses, machinery and appliances, at the cost and expense of the lessee, which the lessee covenants and agrees to pay promptly. D. The lessor for the purposes of navigation improvement, National defense, and to secure the maximum production of fertilizers at Muscle Shoals in time of peace, covenants and agrees to acquire and construct with reasonable promptness the dam generally known and designated as Dam Numbered 3 and described in paragraph (2) of the granting clauses hereof, with the lands, water rights, privileges, power house, structures, fixtures, apparatus, and facilities necessary for the construction, operation, and maintenance of the same as hereinafter provided, and to complete the same within eight years from the date hereof. Said dam shall be of such dimensions and specifications, and have a power house and such installations and equipment for the generation of electric power, as will take full reasonable advantage of the flow and fall of the Tennessee River for utilization of the water power of said river to the best advantage thereof in view of the other water-power developments that may be located on said river and/or its tributaries, as determined by said Secretary of War; and the said dam shall not be constructed in such a way as will materially impair or detract from the use and enjoyment by the lessee of the other properties, or any of them, demised to it by this lease. The total of the sums expended by the lessor in the acquisition and construction of the properties described in paragraph (2) of the granting clauses hereof shall be deemed to be, for the purpose of calculating the payments to be made by the lessee under Article A hereof, the sums actually so expended, but not exceeding $32,500,000 (including the locks and navigation facilities), unless such amount be increased by mutual agreement between said Secretary of War and the lessee.

E. In order to secure the purposes of the lessor as respects national defense the lessee covenants and agrees

(1) To maintain during the term of this lease said United States nitrate plant numbered 2 in at least the equivalent of the condition (except that the lessee may remove limestone from said Waco Quarry upon payment of the royalty as hereinabove provided) in which it shall be turned over to the lessee at the commencement of the lease term in respect of effective capacity for manufacture of ammonium nitrate, available in suitable buildings, until such time as the Congress of the United States shall declare that such maintenance is no longer deemed necessary in the interest of national defense;

(2) To maintain during the term of this lease the buildings of said United States nitrate plant numbered 1 in the condition (ordinary and reasonable wear and tear and damage by force majeure excepted) in which they shall be turned over to the lessee at the commencement of the lease term, but the lessee shall have the right during the lease term to alter and remodel such buildings and to remove, remodel,

substitute, and alter the machinery and equipment contained therein, and upon removal of any such machinery or equipment the lessee shall give written notice of such removal to the Secretary of War, which notice shall state the place upon the land of nitrate plant numbered 1 at which such machinery or equipment is held for delivery to the Secretary of War. If the Secretary of War fails to take possession of such machinery or equipment and to remove the same from the leased premises within 90 days from receipt by him of such notice then the lessee shall store such machinery or equipment in such manner as, in the option of the lessee, is most practicable; (3) Upon demand of the President of the United States, to surrender, whenever war exists, or whenever in his judgment it is imminent and the needs of national defense require, the leased properties, in whole or in part, to the lessor for its war uses during the period of such emergency, upon such just and reasonable compensation to the lessee by way of suspension of payments or obligations hereunder and/or otherwise, as may be fixed and determined by the District Court of the United States for the Northern District of Alabama in accordance with the provisions of Article N hereof; the leased properties to be returned to the lessee upon the termination of the emergency in at least the equivalent of their condition when so surrendered: Provided, That the lessee shall in no way be responsible for any loss, deterioration, damage, or injury of or to person or property, whether or not resulting in death, occurring by reason of such possession and/or use of the surrendered properties during the period of such surrender; and

(4) At all times after the third year of the lease term, to the end that operation in case of war shall be under the direction of a trained force, to retain in its employ at least one competent superintendent and one or more competent foremen of each manufacturing department of said United States nitrate plant numbered 2 for fixation of atmospheric nitrogen, or employ substitutes therefor, until such time as the Secretary of War shall certify in writing that continued maintenance of such force is not deemed necessary in the interest of national defense.

F. In order to secure the purposes of the lessor in respect of the utilization of the demised properties in times of peace for the fixation of atmospheric nitrogen and the production of a concentrated fertilizer and its sale to farmers in the United States at reasonable prices, the lessee covenants and agrees that it will— (1) Produce or cause to be produced at said United States nitrate plant numbered 2 and/or, at the option of the lessee, at such other plants or plants adjacent at or near thereto as it may construct, using the most economical source of power available (such other plant or plants, if any, to be constructed on property owned by the lessor or on property acquired by the lessee and by it conveyed to the lessor prior to such construction, and any such property to become and be, ipso facto and without any further conveyance or assignment, a part of the properties demised by this lease and, as such, subject to all the applicable terms and provisions of this lease for and during the balance of the unexpired said term of fifty (50) years hereinabove mentioned and described, as fully and completely as though specifically leased and demised by this lease), and/or said United States nitrate plant numbered 1, ammonium phosphate or other nitrogeous concentrated fertilizer suitable for use by the farmers both through direct application to the soil and through home-mixing, and containing at least 40 per centum by weight of plant food in the form of ammonia and/or phosphoric acid and/or potash. The production of such concentrated fertilizer will be commenced at said United States nitrate plant numbered 2 by using the cyanamid process. Before the expiration of the second year of the lease term the lessee will make such alterations as are found necessary by the lessee upon inspection and test of the said nitrate plant and will build, on the lands of the lessor, the necessary phosphoric acid and ammonium phosphate plants to produce annually a quantity of such concentrated fertilizer containing not less than ten thousand net tons of fixed nitrogen and not less than forty thousand net tons of plant food in the form of ammonia and/or phosphoric acid and/or potash. The terms "net tons" as used in this article is hereby defined to mean tons of two thousand pounds each. first unit of the plant for production of such concentrated fertilizer will be operated at full capacity not later than in the third year of the lease term and the product will be offered for sale in the manner hereinafter provided. At any time thereafter when the lessee has for three successive fiscal years succeeded in selling approximately the full product of such first unit at cost plus 8 per centum (as provided in subdivision (2) of this article) the lessee will, upon written request of the farmer board hereinafter described, provide and place in operation a second unit of sufficient size so that there shall be then a total capacity for annual production of such concentrated fertilizer containing at least twenty thousand net tons of fixed nitrogen and at least eighty thousand net tons of plant food in the

The

form of ammonia and/or phosphoric acid and/or potash. When at any time thereafter the lessee has for three successive fiscal years succeeded in selling approximately the combined full product of such first two units at cost plus 8 per centum (as provided in subdivision (2) of this article) the lessee will, subject to the provisions of Article T hereof, upon written request of the said farmer board, provide and place in operation a third unit of sufficient size so that there shall be then a total capacity for annual production of such concentrated fertilizer containing at least thirty thousand net tons of fixed nitrogen. At any time thereafter when the lessee has for three successive fiscal years succeeded in selling. approximately the combined full product of such first three units at cost plus 8 per centum (as provided in subdivision (2) of this article) the lessee will, upon request of said farmer board, provide and place in operation a fourth unit of sufficient size so that there shall be then a total capacity for annual production of such concentrated fertilizer containing at least forty thousand net tons of fixed nitrogen. At any time thereafter when the lessee has for three successive fiscal years succeeded in selling approximately the combined full product of such first four units at cost plus 8 per centum (as provided in subdivision (2) of this article) the lessee will, upon request of the farmer board, increase the annual production of fixed nitrogen to fifty thousand net tons, the amount of such annual production in excess of said forty thousand net tons of fixed nitrogen to be produced in the form of such concentrated fertilizer or, at the option of the lessee, in the form of nitrogenous fertilizer containing at least 30 per centum by weight of plant food in the form of ammonia and/or phosphoric acid and/or potash, and to be offered for sale under the provisions of subdivision (2) of this article. The lessee throughout the term of this lease will annually produce a quantity of such concentrated fertilizer equal to the plant capacity for such production as the same shall exist from time to time as above stated, except when the nitrogen is required for national defense or when satisfaction of market demands is insured through the maintenance in storage of an unsold quantity of such concentrated fertilizers equal to at least 25 per centum of the annual capacity of said first unit. Provided, That whenever said stock in storage shall fall below said 25 per centum such production shall be resumed. Such concentrated fertilizer so maintained in storage shall be in the form of ammonium phosphate unless upon written request of the lessee the farmer board hereinafter described shall approve such concentrated fertilizer so maintained in storage being in some other form, such approval to be evidenced by a resolution of said farmer board to be made a part of the record of its proceedings hereinafter provided for. Nothing herein contained shall deprive the lessee of the privilege of anticipating from time to time the production of, and the increases above mentioned in plant capacity for production of, such concentrated fertilizers.

If at any time during the term of this lease the lessee shall suspend the production of such concentrated fertilizer, no profit shall accrue to the lessee from the sale of power made available to it through such suspension, for any period for which the lessee shall not be required to pay an additional sum as hereinafter in this subdivision (1) of this article provided, but for and during such period of suspension for which such additional sum shall not be required to be paid all profits from the sale of such power over and above the cost thereof (as provided in subdivision (2) of this article) shall be credited by the lessee to the cost of such concentrated fertilizer (as provided in subdivision (2) of this article); and in case the lessee, its subsidiary and/or allied corporations, shall utilize any power to made available such power so utilized shall be deemed, for the purposes of this provision, to have been sold to the lessee and/or such companies at the fair market value thereof as the same shall be fixed and determined by said farmer board, subject to the provisions of Article N hereof;

If at any time after the completion of Cove Creek Dam and delivery of possession thereof to the lessee under the provisions of Article T hereof, and after fifteen years from the date of delivery of possession to the lessee of the properties described in paragraphs (1), (3), and (4) of the granting clauses hereof, the production of such concentrated fertilizer shall be suspended by the lessee for as much as eighteen months in the aggregate during any period of thirty-six months, the farmer board may, within sixty days after the expiration of such thirty-six months period, upon vote of at least four of its members (not including any member appointed by the lessee), file with the Secretary of War and the lessee a certificate that, in its opinion, similar suspensions are likely to continue for an extended period of time. Thereupon, in addition to all other payments to be made by the lessee to the lessor under the provisions of this lease, the lessee shall pay to the lessor annually within fifteen days after