ENERGY RATES AND GENERATING CHARGES

12. The rates and charges to be paid by the State for electrical energy under this contract shall be in accordance with those specified in Exhibit 2.

BILLING AND PAYMENTS

13. (a) The State shall pay monthly for electrical energy and for the generation thereof in accordance with the energy rates and generating charges specified in Exhibit 2. The energy bill for each month shall be computed at the rate for firm energy in effect when such energy was taken on the basis of the actual amount of energy used during such month; provided, however, that the bill for energy for the month of May of each year shall not be less than the difference between the minimum annual energy payment, as provided in Article 14 hereof, and the sum of the amounts charged for firm energy during the preceding eleven months. The United States will submit bills to the State by the tenth of each month immediately, following the month during which the energy was generated, and payments shall be due on the first day of the month immediately succeeding. If such charges (less proper and applicable credits) are not paid when due an interest charge of one per centum (1%) of the amount unpaid shall be added thereto, and thereafter an additional interest charge of one per centum (1%) of the principal sum unpaid shall be added on the first day of each succeeding calendar month until the amount due, including such interest, is paid in full, but nothing contained in this article shall be construed as in any manner abridging, limiting, or depriving the United States of any means of enforcing any remedy either at law or in equity for the breach of any of the provisions hereof which it would otherwise have.

(b) In accordance with the provisions of Section 4 (b) of the Adjustment Act, in the event payments to the States of Arizona and Nevada, or either of them, under Section 2 (c) of the Adjustment Act, shall be reduced by reason of the collection of taxes mentioned in said section, adjustments shall be made, from time to time, with each allottee which shall have paid any such taxes, by credits or otherwise, for that proportion of the amount of such reductions which the amount of the payments of such taxes by such allottee bears to the total amount of such taxes collected.

MINIMUM ANNUAL PAYMENTS

14. The minimum quantity of firm energy which the State shall take and/or pay for at firm energy rates in each year of operation under the terms of this contract shall be the total kilowatt hours

stated in notices of withdrawal which are in effect as of June 1 of
such year of operation as properly adjusted to account for the number
of kilowatt hours for the remainder of such year of operation added
or subtracted by notices of withdrawal or relinquishment becoming
effective during such year of operation. No period of less than one
day will be considered in making such adjustments. The total
amount of energy for which notices of withdrawal are in effect as of
June 1, 1941, shall be thirty-five million eight hundred thousand
(35,800,000) kilowatt-hours. The minimum annual energy payment
shall be reduced in case of interruptions or curtailment of delivery
of water as provided in Article 10 hereof.

CONTINGENT ON FINAL EFFECTIVENESS OF ADJUSTMENT ACT

15. This contract shall not become effective unless and until the
Adjustment Act shall have taken effect for all purposes pursuant to
the provisions of Section 10 thereof, but thereupon this contract
shall be fully effective and binding upon the parties hereto as of
midnight, Pacific Standard Time, on the last day of the calendar
month in which the Adjustment Act shall have become fully effective.
The original contract between the parties hereto shall terminate as
of such effective date.

If the Adjustment Act shall not have taken effect for all purposes
prior to June 1, 1941, this contract shall be null, void, and of no force
or effect.

DURATION OF CONTRACT

16. This contract shall remain in effect to and including May 31,
1987, unless sooner terminated as elsewhere herein provided The
State, if this contract has not been terminated prior to said date,
shall be entitled to a renewal hereof upon such terms and conditions
as may be authorized or required under the then existing laws and
regulations, unless the property of the State dependent for its use-
fulness on a continuation of this contract be purchased or acquired,
and the State be compensated for damages to its property, used and
useful in the transmission and distribution of such electrical energy
and not taken, resulting from the termination of the supply.

NO ENERGY TO BE DELIVERED WITHOUT PAYMENT

17. Unless an extension of time for payment has been first obtained
from the Secretary, in writing, no energy shall be generated for, or
delivered to, the State if it shall be in arrears for more than twelve
(12) months in the payment of any charge due to the United States
hereunder.

CONTRACT MAY BE TERMINATED IN CASE OF DEFAULT IN PAYMENT

18. If the State shall be in arrears for more than twelve (12) months
in the payment of any charge, including interest, due to the United
States hereunder, and shall not have obtained an extension of time
from the Secretary for the payment thereof, or, if such extension be
obtained, has not made such payment within the time as extended,
then the Secretary shall have the right forthwith upon written notice
to the State to terminate this contract; provided, that the State shall
have the right at any time within four (4) years from date of the first
of the defaults for which the contract is terminated, to become rein-
stated hereunder by payment to the United States of all arrearages
including interest, if any, together with any and all loss incurred by
the United States by reason of such termination and compensation to
the allottees affected for property rendered idle by such reinstatement.
If the State and the allottees affected fail to agree on such compensa-
tion, the disagreement shall be determined by arbitration as provided
in Article 25 of Exhibit 2. Nothing contained in this contract shall
relieve the State from the obligation to make the United States whole,
for the period of this contract, for all loss and/or damage occasioned
by the failure of the State to take and/or pay for energy as provided
in this contract.

ACCESS TO BOOKS AND RECORDS

19. The Secretary or his duly authorized representatives shall have
free access at all reasonable times to the books and records of the
State relating to the transmission and disposal of electrical energy
hereunder, with the right at any time during office hours to make
copies of or from the same.

USE OF PUBLIC AND RESERVED LANDS OF THE UNITED STATES

20. The use is authorized of such public and reserved lands of the
United States as may be necessary or convenient for the construction,
operation, and maintenance of main transmission lines, to transmit
electrical energy generated at Boulder Dam, together with the use of
such public and reserved lands of the United States as may be desig-
nated by the Secretary, from time to time, for camp sites, residences
for employees, warehouses, and other uses incident to the operation
and maintenance of such main transmission lines.

MODIFICATIONS

21. Any modifications, extension, or waiver by the Secretary, subse-
quent to May 31, 1941, of any of the terms, provisions, or requirements
of any regulation or contract, promulgated or executed subsequent to

May 19, 1941, for the benefit of any one or more of the allottees shall not be denied to the State.

DISPUTES AND DISAGREEMENTS

22. Disputes or disagreements between the United States and the State as to the interpretation or performance of the provisions of this contract shall be determined either by arbitration or court proceedings. If in any such arbitration or court proceedings or otherwise any sum or amount paid by the State on the demand or bill of the United States under this contract shall be held not to have been due or owing, payment shall not be deemed to have been voluntary, and such sum or amount shall be refunded. Whenever a controversy arises out of this contract, and the disputants agree to submit the matter to arbitration the Secretary shall name one arbitrator and the State shall name one arbitrator, and the two arbitrators thus chosen shall select a third arbitrator, but in the event of their failure to name such third arbitrator within five days after their first meeting, such third arbitrator shall be named by the Chief Justice of the Supreme Court of the United States. The decision of any two of such arbitrators shall be a valid award of the arbitrators, and shall be final and binding as to the parties hereto.

PRIORITY OF CLAIMS OF THE UNITED STATES

23. Claims of the United States arising out of this contract shall have priority over all others, secured or unsecured.

TITLE TO REMAIN IN UNITED STATES

24. The title to Boulder Dam and reservoir, Boulder Power Plant, and incidental works, including generating machinery and equipment, shall forever remain in the United States.

EFFECT OF WAIVER OF BREACH OF CONTRACT

25. The waiver of a breach of any of the provisions of this contract shall not be deemed to be a waiver of any provision hereof, or of any other subsequent breach of any provision hereof.

TRANSFER OF INTEREST IN CONTRACT

26. No voluntary transfer of this contract, or of the rights of the State hereunder, shall be made without the written approval of the Secretary; and any successor or assign of the rights of the State, whether by voluntary transfer, judicial sale, trustee's sale, or otherwise, shall be subject to all the conditions of the Project Act as modified by the Adjustment Act, and of the Adjustment Act, and also subject to all the provisions and conditions of this contract to

77831-48- -35

the same extent as though such successor or assign were the original contractor hereunder; provided, that the execution of a mortgage or trust deed, or judicial or trustee's sale made thereunder, shall not be deemed a voluntary transfer within the meaning of this Article.

NOTICES

27. (a) Any notice, demand or request required or authorized by this contract to be given or made to or upon the United States shall be delivered, or mailed postage prepaid, to the Director of Power, United States Bureau of Reclamation, Boulder City, Nevada, except where, by the terms hereof, the same is to be given or made to or upon the Secretary, in which event it shall be delivered, or mailed postage prepaid, to the Secretary, at Washington, D. C.

(b) Any notice, demand or request required or authorized by this contract to be given or made to or upon the State shall be delivered, or mailed postage prepaid, to the Secretary of the Colorado River Commission of Nevada, Carson City, Nevada.

(c) The designation of any person specified in this article or in any such request for notice, or the address of any such person, may be changed at any time by notice given in the same manner as provided in this article for other notices.

CONTRACT CONTINGENT UPON APPROPRIATIONS

28. This contract is subject to appropriations being made by Congress from time to time of money sufficient to make all payments and to provide for the doing and performance of all things on the part of the United States to be done and performed under the terms hereof, and to there being sufficient money available in the Colorado River Dam fund for such purposes. No liability shall accrue against the United States, its officers, agents or employees, by reason of sufficient money not being so appropriated, or on account of there not being sufficient money in the Colorado River Dam fund for such purposes.