enforcing such provisions, including sanctions for noncompliance; provided, however, that in the event the Supply System becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the Commission, the Supply System may request the United States to enter into such litigation to protect the interests of the United States.

13. Officials Not to Benefit

No member of or delegate to Congress, or resident commissioner, shall be admitted to any share or part of this contract, or to any benefit that may arise therefrom; but this provision shall not be construed to extend to this contract if made with a corporation for its general benefit.

14. Covenant Against Contingent Fees

The Supply System warrants that no person or selling agency has been employed or retained to solicit or secure this contract upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees or bona fide established commercial or selling agencies maintained by the Supply System for the purpose of securing business.

15. Convict Labor

In connection with the performance of work under this contract, the Supply System agrees not to employ any person undergoing sentence of imprisonment at hard labor.

16. Examination of Records

(a) The Supply System agrees that the Commission and the Comptroller General of the United States or any of their duly authorized representatives shall have access to and the right to examine any directly pertinent books, documents, papers, and records of the Supply System involving transactions related to this contract until the expiration of three years after final payment under this contract unless the Commission authorizes their prior disposition.

(b) The Supply System further agrees to include in all its subcontracts hereunder a provision to the effect that the subcontractor agrees that the Comptroller General of the United States or any of its duly authorized representatives shall, until the expiration of three years after final payment under the subcontract, have access to and the right to examine any directly pertinent books, documents, papers, and records of such subcontractor, involving transactions related to the subcontract. The term "subcontract" as used in this clause excludes (i) purchase orders not exceeding $2,500 and (ii) subcontracts or purchase orders for public utility services at rates established for uniform applicability to the general public.

(c) Nothing in this contract shall be deemed to preclude an audit by the General Accounting Office of any transaction under this

contract.

17. Inspection

The Commission, or any person authorized by it, shall at all reasonable times have access to the premises for the purpose of inspecting the premises and of determining if the Supply System is complying with the obligations imposed by this Lease. The rights hereunder shall be in addition to any rights the Commission may have under any licensing arrangement required by law.

18. Taxes and Assessments; Payments in Lieu Thereof

The Supply System shall have the duty to pay and shall save and hold harmless the Commission from the payment of all legally imposed taxes, assessments for local improvements and similar charges which may be levied by any duly constituted authority of the State, County, or other political subdivision of the State upon the leasehold estate herein created, the leased land and all buildings or other improvements now or hereafter upon the leased land. In the event that, under any statute now or hereafter enacted, the Commission shall make payments in lieu of taxes or assessments to any such authority on account of such property, Supply System shall pay to the Commission the amount of such payments, and such amount shall become due and payable as additional rent hereunder.

19. Commission's Rights and Remedies: No Waiver Implied

All rights and remedies of the Commission under this Lease shall be cumulative and none shall exclude any other allowed the Commission by law, and the use of or resort to any one or more shall not exclude or be deemed a waiver of any other or others; nor shall any express or implied waiver of a breach of any term, covenant or condition of this Lease constitute or be construed as a waiver of any other breach of the same or any other term, convenant or condition. 20. Protection Against Claims and Losses

The Commission, contractors of the Commission, and the officers, employees or representatives of any of them shall not be liable for and the Supply System shall indemnify and save them and each of them free and harmless from any and all liability, loss, damage, or costs (including attorney's fees incurred in the defense of any suit, action or other legal proceedings brought against any of them by third parties) for injury to or death of persons or injury to or destruction of property occurring on or about the premises and caused by or arising out of: (a) the conduct of the business or use of the premises, or any operations which are necessary or incidental thereto, (b) the erection or removal of any equipment, building or part thereof or the making of any repairs, replacements, alterations, additions and/or improvements to the premises, or (c) any default or negligence in the performance of any covenant or obligation of the Supply System hereunder; Provided, that the foregoing shall not apply to any injury, destruction or death as may be caused by the negligence or default of the Commission, contractors of the Commission, and the officers, employees or representatives of any of them.

IN WITNESS WHEREOF, the parties hereto have executed this day of

Lease as of the

By:

1962.

THE UNITED STATES OF AMERICA,

UNITED STATES ATOMIC ENERGY COMMISSION,

WASHINGTON PUBLIC POWER SUPPLY SYSTEM,

By:

WITNESSES:

(Address)

(Address)

day of

County of Benton, ss:

On this 1962, before me personally appeared to me known to be an authorized representative of the United States Atomic Energy Commission, an instrumentality of the United States, that executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said Commission, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument.

In Witness Whereof, I have hereunto set my hand and affixed my official seal the day and year first above written.

Notary Public in and for the State of Washington, residing at

day of

1962, before me personally to me known to be of Wash

On this appeared ington Public Power Supply System, a municipal corporation of the State of Washington, that executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said municipal corporation, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument and that the seal affixed is the corporate seal of said municipal corporation.

In Witness Whereof, I have hereunto set my hand and affixed my official seal the day and year first above written.

Notary Public in and for the State of Washington, residing at (SEAL)

SUMMARY OF PRINCIPAL PROVISIONS OF EXCHANGE AGREEMENT WITH THE BPA, WPPSS, AND THE SUPPLY SYSTEM PARTICI

PANTS

This agreement provides a method by which the Supply System, through its Participants, proposes to construct and operate the Hanford generating plant and the transmission and switching facilities associated therewith. In return for the entire electric energy output from such plant, Bonneville will, in accordance with its authority under the Bonneville Project Act, exchange electric energy with each Participant in the amount of its share of the Project Annual Costs.

1. Term.-Commencing at 12 p.m. on the date of execution and ending when the Revenue Bonds are paid, continuing thereafter until notice of termination is given by the Administrator. The agreement terminates automatically if the Government acquires the Project and the agreement may also be terminated if the Bond Resolution is changed without the written consent of the Administrator.

There is an additional termination provision for the period prior to the commencement of commercial operation of the Project if, during such period, the AEC discontinues construction of NPR, or the continuation of the agreement becomes economically unjustified. In the event of such termination, the Government will reimburse the Supply System for costs incurred up to the date of termination.

2. Financing of the Project. The Supply System will issue the Revenue Bonds pursuant to the Bond Resolution. If the interest rate which the bonds bear are not acceptable to the Administrator, the agreement will be terminated and all costs incurred will be borne by the Supply System and/or the Participants.

3. Construction of the Project.-The Supply System will construct the Project and the transmission facilities required to connect into the Government's system. The two units of the Project will be ready for commercial operation by 10-1-65 and 12-1-65, respectively. All designs, plans, specifications, etc., related to the construction and operation of the Project will be subject to the Administrator's approval.

4. Exchange of Energy and Payment of Project Annual Costs.-The total Project Output will be made available to the Government by the Participants through the Supply System and such Output shall thereupon be under the complete control of the Government.

There will be an exhibit prepared which will specify the names of the Participants, the percentage of the Project Annual Costs allocated to each Participant, and the estimated amounts which they must pay each month to the Supply System. Total amount paid by the Participants each year must equal 100% of the Project Annual Cost.

In exchange for the Project Output, the Administrator will make energy and capacity available to each Participant under the terms of their power sales contracts with BPA. The amounts will be determined by multiplying the total metered amounts by the ratio which the Participant's monthly share of the annual costs bears to the aggregate bill for the exchange energy and the firm power sold under the power sales contract.

After the end of each Contract Year the actual costs will be determined and an appropriate adjustment in energy will be made under the remaining months of the current Contract Year, if such actual costs differ from the estimated costs.

If any Participant should no longer have a power sales contract with BPA, the Government will make available exchange electric energy in an amount which is equal to the quotient obtained by dividing his monthly share of the Project Annual Costs by the average cost per kwh for firm power under the prevailing rates to other Participants of the same class who are customers of the Government. The rate of delivery of such energy will be determined by dividing such energy in average kilowatts by 60%.

5. Scheduling Arrangements. The operation of the Project will be scheduled by the Government dispatcher.

6. Operation and Maintenance of the Project.-The Supply System will operate and maintain the Project in accordance with operating guides furnished by the Administrator. Planned outages will take place, if possible, when the Government's commitments are least affected.

7. Ownership of Facilities and Option to Acquire. Ownership of the Project during the term of agreement will be in the Supply System. The Government may acquire the Project (1) prior to the time when all bonds and other obligations have been paid by assuming such obligations or (2) upon the termination of the agreement.

8. The Supply System-AEC Agreement. The Supply System and the AEC will have entered into an agreement for construction of the Project. The AEC agreement, to which the Supply System obligates itself, is attached to this agreement.

9. Accounts.-The Supply System will keep accurate records and accounts for the Project which will be annually audited by a firm of certified public accountants. A copy of this audit will be furnished the BPA.

[Draft No. 8]

Contract No. 14-03-6-19-62

EXCHANGE AGREEMENT EXECUTED BY THE UNITED STATES OF AMERICA DEPARTMENT OF THE INTERIOR ACTING BY AND THROUGH THE BONNEVILLE POWER ADMINISTRAtor and WASHINGTON PUBLIC POWER SUPPLY SYSTEM AND PUBLIC UTILITY DISTRICT No. 1 OF X COUNTY, WASHINGTON (NEW PRODUCTION REACTOR)

This EXCHANGE AGREEMENT, executed 1962, by the UNITED STATES OF AMERICA (hereinafter called "the Government"), Department of the Interior, acting by and through the BONNEVILLE POWER ADMINISTRATOR (hereinafter called "the Administrator"), and WASHINGTON PUBLIC POWER SUPPLY SYSTEM (hereinafter called "Supply System"), a municipal corporation and joint operating agency organized under the laws of the State of Washington, and Public Utility District No. 1 of X County, Washington (hereinafter called the "Participant"), a municipal corporation of the State of Washington,

WITNESSETH:

WHEREAS the Government, pursuant to its comprehensive plan for improving and developing the Columbia River and its tributaries as a waterway or waterways for the use or benefit of interstate and foreign commerce, for the improvement and utilization of water power development and for other beneficial public uses has constructed, maintains, and operates the Columbia River power system, which consists of major storage reservoirs, hydroelectric power projects, and the basic system of transmission lines which interconnect the federal and nonfederal projects in the Pacific Northwest; and

WHEREAS the Secretary of the Interior is authorized, under the Bonneville Project Act, approved August 20, 1937; the Reclamation Project Act of August 4, 1939; and the Flood Control Act of December 22, 1944, and other enactments of Congress to transmit and dispose of the electric power and energy generated at the projects of the Columbia River power system in such manner as to foster the policies set out therein by Congress; and

WHEREAS the Administrator is authorized by Order No. 2563, dated May 2, 1950, and Order No. 2860, dated January 19, 1962, of the Secretary of the Interior, to dispose of electric energy generated at the various federal hydroelectric projects in the Pacific Northwest; and