Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
Staff Report 2602-6016
CITY OF PALO ALTO CITY COUNCIL Special Meeting Monday, August 10, 2026 Council Chambers & Hybrid 5:30 PM Agenda Item 7.Adoption of a Resolution Approving a NAESB Base Contract for Sale and Purchase of Natural Gas with JPMorgan Chase Bank, N.A. and Authorizing the City Manager or Their Designee to Transact Under the Contract for a Portion of the City’s Natural Gas Requirements; CEQA Status: Not a Project, CEQA Guidelines 15378(b)(5) 9 4 5 0 City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Utilities Meeting Date: August 10, 2026 Report #:2602-6016 TITLE Adoption of a Resolution Approving a NAESB Base Contract for Sale and Purchase of Natural Gas with JPMorgan Chase Bank, N.A. and Authorizing the City Manager or Their Designee to Transact Under the Contract for a Portion of the City’s Natural Gas Requirements; CEQA Status: Not a Project, CEQA Guidelines 15378(b)(5) RECOMMENDATION Staff recommends that the City Council adopt a resolution (Attachment A): 1. Approving the NAESB Base Contract for Sale and Purchase of Natural Gas combined with the Special Provisions and Credit Support Addendum (“Master Agreement”) (Attachment B) with JPMorgan Chase Bank, N.A. (“JPMorgan”); and 2. Authorizing the City Manager, or their designee, to transact under the Master Agreement for a portion of the City’s natural gas requirements under specified terms and conditions during calendar years 2026 through 2035, inclusive, subject to the following limitations: a. The date for natural gas delivery for each transaction shall not exceed 36 months from the date the transaction is executed; b. The delivery date for any transaction shall not extend beyond December 2035; c. The maximum aggregate of all transactions executed under this Master Agreement shall be $150 million; d. All transactions shall be subject to the Palo Alto Municipal Code; and e. All transactions shall be subject to the City’s Energy Risk Management Policy, Guidelines, and Procedures. EXECUTIVE SUMMARY Approval of the recommended Master Agreement with JPMorgan provides the City with an additional natural gas supplier with which to transact in a timely and competitive manner ensuring that the City’s objectives are met efficiently. An active set of creditworthy 9 4 5 0 counterparties is essential to ensure that the City of Palo Alto (“City”) meets its obligations to meet customers’ natural gas demands. Executing the Master Agreement does not commit the City to any transactions with JPMorgan, but it allows for transactions to be executed efficiently in the future. The recommended Master Agreement was negotiated under terms and conditions acceptable to the City and has been reviewed and approved by the City Attorney’s Office. BACKGROUND 1 modifying the Municipal Code to streamline the purchase and sale of wholesale utility commodities and services and to allow for a Council-approved standard form master agreement. The ordinance modified Municipal Code Section 2.30.140 clarifying the process to enable suppliers by specifically allowing the use of a standard form master agreement that contains the City’s minimum contract terms and conditions. Execution of standard form master agreements and delegation of authority to transact under the standard form master agreements with specific suppliers is subject to Council approval. This process is used when contracting for the City’s natural gas requirements. 2 approving the natural gas standard form master agreement that is now available to all financially strong natural gas suppliers for execution with non-substantive changes. The Master Agreement with JPMorgan (Attachment B) is the standard form master agreement with non-substantive negotiated changes. The attached proposed resolution (Attachment A) authorizes the City Manager, or their designee, to transact natural gas under the Master Agreement with JPMorgan within maximum expenditure and transaction term limits. The Master Agreement will enable potential future natural gas transactions between the City and JPMorgan. ANALYSIS 1 Ordinance 5387: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=47269&dbid=0&repo=PaloAlto 2 Resolution 9628: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=54434&dbid=0&repo=PaloAlto 9 4 5 0 With the approval of Resolution 100745 in October 2022, Council delegated authority to the City Manager or their designee to transact under the Master Agreements subject to certain conditions and restrictions including a $150 million expenditure limit applied to all transactions in aggregate under each Master Agreement. The cost of natural gas purchased under the Master Agreements is a function of market prices and the City’s actual natural gas use. Most of the city’s natural gas needs are purchased based on a monthly index price; retail natural gas commodity rates are based on that same monthly market price index. The City’s expected natural gas commodity cost is $11 million to $12 million annually; however, natural gas prices are volatile and unpredictable and actual costs incurred and passed through to ratepayers could be different. 6 and has been approved as to form by the City Attorney’s Office. JPMorgan recently had its investment-grade issuer credit ratings affirmed by both Standard & Poor’s (AA-) and Moody’s Investors Services (Aa2), which meet the City’s minimum credit rating requirements. suppliers, staff is requesting, via this Council action, that JPMorgan be approved as one of the prequalified suppliers the City can transact with for natural gas supplies. In addition, because the transaction term authorized by Resolution 10074 only extends through the end of 2028, staff plans to return next year with another resolution replacing Resolution 10074 that will update the aggregate transaction volume limits and duration of transactions for all approved counterparties. 5 Resolution 10074: https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=887680&dbid=0&repo=PaloAlto 6 PAMC Section 2.30.340(c) requires that utilities contracts incorporate the following contract terms and conditions: (1) governing law shall be the laws of the State of California; (2) choice of venue shall be the County of Santa Clara; and (3) a counterparty shall obtain and maintain during the term of the contract the minimum credit rating established as of the date of award of contract of not less than a BBB- credit rating established by Standard & Poor’s and a Baa3 credit rating established by Moody’s Investors Services. 9 4 5 0 FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: NOT YET APPROVED Attachment A 6059776 Resolution No. Resolution of the Council of the City of Palo Alto Approving a NAESB Base Contract for Sale and Purchase of Natural Gas with JPMorgan Chase Bank, N.A. and Authorizing the City Manager or Their Designee to Transact Under the Contract for a Portion of the City’s Natural Gas Requirements RECITALS A. On April 23, 2012, the Council adopted Resolution 9244 amending the Gas Utility Long-Term Plan (GULP) Objectives, Strategies, and Implementation Plan to discontinue the laddering purchase strategy and implement gas supply rates that change monthly according to market prices. B. In accordance with GULP, the City must purchase and, incidental to purchases, sell gas to meet the needs of its gas customers by contracting for terms varying from less than one month to one month. The City's Energy Risk Management Policy provides that the City will transact in accordance with that Policy and the City’s Municipal Code, and in a manner consistent with authority granted by Council to the City Manager. C. By Ordinance No. 5387, adopted August 15, 2016, Council approved changes to the Municipal Code specifically streamlining the purchase and sale of wholesale utility commodities and services and explicitly allowing for standard form master agreements. D. The natural gas standard form master agreement is based on the North American Energy Standards Board, Inc. (NAESB) Base Contract for Sale and Purchase of Natural Gas 2006 version and includes Special Provisions and a Credit Support Addendum (Master Agreement). E. By Resolution 10074 adopted October 3, 2022, Council Authorized the City Manager to purchase a portion of the City’s natural gas requirements from certain prequalified natural gas suppliers under specified terms and conditions during calendar years 2023 through 2028, inclusive. F. JPMorgan Chase Bank, N.A. (JPMorgan) desires to execute a Master Agreement with the City in order to be a supplier for delivery during calendar years, 2026 through 2035, inclusive, so long as JPMorgan continues to be qualified and otherwise eligible to transact with the City. The Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. The Council hereby approves the NAESB Base Contract for Sale and NOT YET APPROVED Attachment A 6059776 Purchase of Natural Gas combined with the Special Provisions and Credit Support Addendum (“Master Agreement”) with JPMorgan Chase Bank, N.A. (“JPMorgan”), attached as Exhibit A. SECTION 2. The Council hereby authorizes the City Manager or their designee to transact under the Master Agreement for a portion of the City’s natural gas requirements from JPMorgan by negotiating one or more individual transactions under the Master Agreement, including, but not limited to, contracts, addenda, confirmations, and transactions, subject to Section 3. SECTION 3 . The transactions negotiated under the Master Agreement shall conform to the following requirements: a. The date for natural gas delivery for each transaction shall not exceed 36 months from the date the transaction is executed; b. The delivery date for any transaction shall not extend beyond December 2035; c. The maximum aggregate of all transactions executed under this Master Agreement = shall be $150 million; d. All transactions shall be subject to the Palo Alto Municipal Code; and e. All transactions shall be subject to the City’s Energy Risk Management Policy, Guidelines, and Procedures. SECTION 4. The Council delegates to the City Manager, or their designee, the authority to execute on behalf of the City the Master Agreement with JPMorgan, as well as any related documents or agreements necessary to administer the Master Agreement that are consistent with the requirements in Section 3 and approved by the City Attorney. // // // // NOT YET APPROVED Attachment A 6059776 SECTION 5. Adoption of this resolution is not subject to California Environmental Quality Act (CEQA) review as it is an administrative governmental activity that will not result in any direct or indirect physical change to the environment (CEQA Guidelines 15378(b)(5)). INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED: Assistant City Attorney City Manager Director of Administrative Services Director of Utilities Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved September 5, 2006 (Revised by R15003/R15007, April 4, 2016) Base Contract for Sale and Purchase of Natural Gas This Base Contract is entered into as of the following date: ____________________________________________, 2026 The parties to this Base Contract are the following: PARTY A PARTY NAME PARTY B Attention: Markets Legal Group 270 Park Avenue ADDRESS 250 Hamilton Avenue www.jpmorgan.com BUSINESS WEBSITE www. CONTRACT NUMBER __________ D-U-N-S® NUMBER 17-892-8479 US FEDERAL: 13-4994650 OTHER: TAX ID NUMBERS √ US FEDERAL: OTHER: United States of America JURISDICTION OF ORGANIZATION California Corporation LLC Limited Partnership Partnership LLP Other: National Association COMPANY TYPE Corporation LLC Limited Partnership Partnership LLP √ Other: N/A GUARANTOR (IF APPLICABLE) N/A Party is a producer, processor, fabricator, refiner, commercial user, or merchandiser of the Gas under this contract: PARTY CFTC CLASSIFICATION Party is a producer, processor, fabricator, refiner, commercial user, or merchandiser of the Gas under this contract: √ CONTACT INFORMATION 383 Madison Avenue, Floor 10, New York, New York 10017 ATTN: Lauren Pombar TEL#: (212)834-4532 FAX#: EMAIL: lauren.a.pombar@jpmorgan.com COMMERCIAL City of Palo Alto ATTN: Jason Huang TEL#: 650-329-2592 FAX#: EMAIL: jason.huang@paloalto.gov 383 Madison Avenue, Floor 10, New York, New York 10017 ATTN: Physical Gas Team TEL#: (713)750-2033 FAX#: EMAIL: Physical_Gas_Trading@jpmorgan.com SCHEDULING City of Palo Alto ATTN: Jason Huang TEL#: 650-329-2592 FAX#: EMAIL: jason.huang@paloalto.gov 270 Park Avenue, New York, New York 10017 ATTN: Markets Legal Group______________________________ TEL#: FAX#: 1-(866)-338-8347 EMAIL: physical.oil.group@jpmorgan.com CONTRACT AND LEGAL NOTICES City of Palo Alto ATTN: Assistant City Attorney TEL#: 650-329-2171 FAX#: EMAIL: amy.bartell@paloalto.gov 383 Madison Avenue, Floor 24, New York, New York 10017 ATTN: Credit Department TEL#: FAX#: EMAIL: Commodities_Credit_-_Americas@jpmchase.com CREDIT City of Palo Alto ATTN: Kelly-Louis Poggetti TEL#: 650-329-2677 FAX#: EMAIL: kelly.poggetti@paloalto.gov 383 Madison Avenue, Floor 10, New York, New York 10017 ATTN: Physical Natural Gas Confirms Team TEL#: (212)834-7442 FAX#: 1-(866)338-8347 EMAIL: physical.naturalgas.group@jpmorgan.com TRANSACTION CONFIRMATIONS City of Palo Alto ATTN: Jason Huang TEL#: 650-329-2592 FAX#: EMAIL: jason.huang@paloalto.gov 383 Madison Avenue, Floor 10, New York, New York 10017 ATTN: Physical Natural Gas Settlements Team TEL#: (212)834-7442 FAX#: 1-(866)338-8347 EMAIL: physical.naturalgas.group@jpmorgan.com INVOICES PAYMENTS SETTLEMENTS City of Palo Alto ATTN: Timothy Denterlein TEL#: 650-617-3105 FAX#: EMAIL: timothy.denterlein@paloalto.gov BANK: JPMorgan Chase Bank, N.A.________________________ ABA: ACCT: OTHER DETAILS: WIRE TRANSFER NUMBERS (IF APPLICABLE) BANK: US Bank, NA ABA: ACCT: OTHER DETAILS: BANK: ABA: ACCT: OTHER DETAILS: ACH NUMBERS (IF APPLICABLE) BANK: ABA: ACCT: OTHER DETAILS: ATTN: ADDRESS: CHECKS (IF APPLICABLE) ATTN: ADDRESS: Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 2 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) Base Contract for Sale and Purchase of Natural Gas (Continued) This Base Contract incorporates by reference for all purposes the General Terms and Conditions for Sale and Purchase of Natural Gas published by the North American Energy Standards Board. The parties hereby agree to the following provisions offered in said General Terms and Conditions. In the event the parties fail to check a box, the specified default provision shall apply. Select the appropriate box(es) from each section: Section 1.2 Transaction √ Oral (default) OR Section 10.2 Additional Events of Default No Additional Events of Default (default) √ Indebtedness Cross Default √ Party A: 3% of Party A’s shareholders’ equity √ Party B: $50,000,000 Transactional Cross Default Specified Transactions: Section 2.7 Confirm Deadline √ 2 Business Days after receipt (default) OR Business Days after receipt Section 2.8 Confirming Party Seller (default) OR Buyer √ Either Party Section 3.2 Performance Obligation √ Cover Standard (default) OR Spot Price Standard Section 10.3.1 Early Termination Damages √ Early Termination Damages Apply (default) OR Early Termination Damages Do Not Apply Note: The following Spot Price Publication applies to both of the immediately preceding. Section 10.3.2 Other Agreement Setoffs √ Other Agreement Setoffs Apply (default) √ Bilateral (default) Triangular OR Other Agreement Setoffs Do Not Apply Section 2.31 Spot Price Publication √ Gas Daily Midpoint (default) OR Section 6 Taxes √ Buyer Pays At and After Delivery Point (default) OR Seller Pays Before and At Delivery Point Section 7.2 Payment Date √ 25th Day of Month following Month of delivery (default) OR Day of Month following Month of delivery Section 15.5 Choice Of Law California Section 7.2 Method of Payment √ Wire transfer (default) Automated Clearinghouse Credit (ACH) Section 15.10 Confidentiality Confidentiality applies (default) OR √ Confidentiality does not apply Section 7.7 Netting √ Netting applies (default) OR √ Special Provisions √Addendum(s): Credit Support Addendum [SIGNATURES ON NEXT PAGE] Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 3 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) IN WITNESS WHEREOF, the parties hereto have executed this Base Contract in duplicate. JPMORGAN CHASE BANK, N.A. PARTY NAME CITY OF PALO ALTO SIGNATURE PRINTED NAME Ed Shikada Title: TITLE City Manager, for Mayor ______________________, 2026 DATE ______________________, 2026 CITY OF PALO ALTO Amy Bartell Assistant City Attorney ______________________, 2026 CITY OF PALO ALTO Ed Shikada City Manager ______________________, 2026 CITY OF PALO ALTO Lauren Lai Administrative Services Director ______________________, 2026 Copyright © 2006North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 4 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) General Terms and Conditions Base Contract for Sale and Purchase of Natural Gas SECTION 1. PURPOSE AND PROCEDURES 1.1. These General Terms and Conditions are intended to facilitate purchase and sale transactions of Gas on a Firm or Interruptible basis. "Buyer" refers to the party receiving Gas and "Seller" refers to the party delivering Gas. The entire agreement between the parties shall be the Contract as defined in Section 2.9. The parties have selected either the “Oral Transaction Procedure” or the “Written Transaction Procedure” as indicated 1.2. The parties will use the following Transaction Confirmation procedure. Any Gas purchase and sale transaction may be effectuated in an EDI transmission or telephone conversation with the offer and acceptance constituting the agreement of the parties. The parties shall be legally bound from the time they so agree to transaction terms and may each rely thereon. Any such transaction shall be considered a “writing” and to have been “signed”. Notwithstanding the foregoing sentence, the parties agree that Confirming Party shall, and the other party may, confirm a telephonic transaction by sending the other party a Transaction Confirmation by facsimile, EDI or mutually agreeable electronic means within three Business Days of a transaction covered by this Section 1.2 (Oral Transaction Procedure) provided that the failure to send a Transaction Confirmation shall not invalidate the oral agreement of the parties. Confirming Party adopts its confirming letterhead, or the like, as its signature on any Transaction Confirmation as the identification and authentication of Confirming Party. If the Transaction Confirmation contains any provisions other than those relating to the commercial terms of the transaction (i.e., price, quantity, performance obligation, delivery point, period of delivery and/or transportation conditions), which modify or supplement the Base Contract or General Terms and Conditions of this Contract (e.g., arbitration or additional representations and warranties), such provisions shall not be deemed to be accepted pursuant to Section 1.3 but must be expressly agreed to by both parties; provided that the foregoing shall not Written Transaction Procedure: 1.2. The parties will use the following Transaction Confirmation procedure. Should the parties come to an agreement regarding a Gas purchase and sale transaction for a particular Delivery Period, the Confirming Party shall, and the other party may, record that agreement on a Transaction Confirmation and communicate such Transaction Confirmation by facsimile, EDI or mutually agreeable electronic means, to the other party by the close of the Business Day following the date of agreement. The parties acknowledge that their agreement will not be binding until the exchange of nonconflicting Transaction Confirmations or the 1.3. If a sending party's Transaction Confirmation is materially different from the receiving party's understanding of the agreement referred to in Section 1.2, such receiving party shall notify the sending party via facsimile, EDI or mutually agreeable electronic means by the Confirm Deadline, unless such receiving party has previously sent a Transaction Confirmation to the sending party. The failure of the receiving party to so notify the sending party in writing by the Confirm Deadline constitutes the receiving party's agreement to the terms of the transaction described in the sending party's Transaction Confirmation. If there are any material differences between timely sent Transaction Confirmations governing the same transaction, then neither Transaction Confirmation shall be binding until or unless such differences are resolved including the use of any evidence that clearly resolves the differences in the Transaction Confirmations. In the event of a conflict among the terms of (i) a binding Transaction Confirmation pursuant to Section 1.2, (ii) the oral agreement of the parties which may be evidenced by a recorded conversation, where the parties have selected the Oral Transaction Procedure of the Base Contract, (iii) the Base Contract, and (iv) these General Terms and Conditions, the terms of the documents shall govern in the priority listed in this sentence. 1.4. The parties agree that each party may electronically record all telephone conversations with respect to this Contract between their respective employees, without any special or further notice to the other party. Each party shall obtain any necessary consent of its agents and employees to such recording. Where the parties have selected the Oral Transaction Procedure in Section 1.2 of the Base Contract, the parties agree not to contest the validity or enforceability of telephonic recordings entered into in accordance with the requirements of this Base Contract. SECTION 2. DEFINITIONS The terms set forth below shall have the meaning ascribed to them below. Other terms are also defined elsewhere in the Contract and shall have the meanings ascribed to them herein. 2.1. “Additional Event of Default” shall mean Transactional Cross Default or Indebtedness Cross Default, each as and if selected by the parties pursuant to the Base Contract. 2.2. “Affiliate” shall mean, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, “control” of any entity or person means ownership of at least 50 percent of the voting power of the entity or person. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 5 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) 2.3. “Alternative Damages” shall mean such damages, expressed in dollars or dollars per MMBtu, as the parties shall agree upon in the Transaction Confirmation, in the event either Seller or Buyer fails to perform a Firm obligation to deliver Gas in the case of Seller or to receive Gas in the case of Buyer. 2.4. "Base Contract" shall mean a contract executed by the parties that incorporates these General Terms and Conditions by reference; that specifies the agreed selections of provisions contained herein; and that sets forth other information required herein and any Special Provisions and addendum(s) as identified on page one. 2.5. "British thermal unit" or "Btu" shall mean the International BTU, which is also called the Btu (IT). 2.6. "Business Day(s)" shall mean Monday through Friday, excluding Federal Banking Holidays for transactions in the U.S. 2.7. "Confirm Deadline" shall mean 5:00 p.m. in the receiving party's time zone on the second Business Day following the Day a Transaction Confirmation is received or, if applicable, on the Business Day agreed to by the parties in the Base Contract; provided, if the Transaction Confirmation is time stamped after 5:00 p.m. in the receiving party's time zone, it shall be deemed received at the opening of the next Business Day. 2.8. "Confirming Party" shall mean the party designated in the Base Contract to prepare and forward Transaction Confirmations to the other party. 2.9. "Contract" shall mean the legally-binding relationship established by (i) the Base Contract, (ii) any and all binding Transaction Confirmations and (iii) where the parties have selected the Oral Transaction Procedure in Section 1.2 of the Base Contract, any and all transactions that the parties have entered into through an EDI transmission or by telephone, but that have not been confirmed in a binding Transaction Confirmation, all of which shall form a single integrated agreement between the parties. 2.10. "Contract Price" shall mean the amount expressed in U.S. Dollars per MMBtu to be paid by Buyer to Seller for the purchase of Gas as agreed to by the parties in a transaction. 2.11. "Contract Quantity" shall mean the quantity of Gas to be delivered and taken as agreed to by the parties in a transaction. 2.12. "Cover Standard", as referred to in Section 3.2, shall mean that if there is an unexcused failure to take or deliver any quantity of Gas pursuant to this Contract, then the performing party shall use commercially reasonable efforts to (i) if Buyer is the performing party, obtain Gas, (or an alternate fuel if elected by Buyer and replacement Gas is not available), or (ii) if Seller is the performing party, sell Gas, in either case, at a price reasonable for the delivery or production area, as applicable, consistent with: the amount of notice provided by the nonperforming party; the immediacy of the Buyer's Gas consumption needs or Seller's Gas sales requirements, as applicable; the quantities involved; and the anticipated length of failure by the nonperforming party. 2.13. "Credit Support Obligation(s)” shall mean any obligation(s) to provide or establish credit support for, or on behalf of, a party to this Contract such as cash, an irrevocable standby letter of credit, a margin agreement, a prepayment, a security interest in an asset, guaranty, or other good and sufficient security of a continuing nature. 2.14. "Day" shall mean a period of 24 consecutive hours, coextensive with a "day" as defined by the Receiving Transporter in a particular transaction. 2.15. "Delivery Period" shall be the period during which deliveries are to be made as agreed to by the parties in a transaction. 2.16. "Delivery Point(s)" shall mean such point(s) as are agreed to by the parties in a transaction. 2.17. "EDI" shall mean an electronic data interchange pursuant to an agreement entered into by the parties, specifically relating to the communication of Transaction Confirmations under this Contract. 2.18. "EFP" shall mean the purchase, sale or exchange of natural Gas as the "physical" side of an exchange for physical transaction involving gas futures contracts. EFP shall incorporate the meaning and remedies of "Firm", provided that a party’s excuse for nonperformance of its obligations to deliver or receive Gas will be governed by the rules of the relevant futures exchange regulated under the Commodity Exchange Act. 2.19. "Firm" shall mean that either party may interrupt its performance without liability only to the extent that such performance is prevented for reasons of Force Majeure; provided, however, that during Force Majeure interruptions, the party invoking Force Majeure may be responsible for any Imbalance Charges as set forth in Section 4.3 related to its interruption after the nomination is made to the Transporter and until the change in deliveries and/or receipts is confirmed by the Transporter. 2.20. "Gas" shall mean any mixture of hydrocarbons and noncombustible gases in a gaseous state consisting primarily of methane. 2.21. “Guarantor” shall mean any entity that has provided a guaranty of the obligations of a party hereunder. 2.22. "Imbalance Charges" shall mean any fees, penalties, costs or charges (in cash or in kind) assessed by a Transporter for failure to satisfy the Transporter's balance and/or nomination requirements. 2.23. “Indebtedness Cross Default” shall mean if selected on the Base Contract by the parties with respect to a party, that it or its Guarantor, if any, experiences a default, or similar condition or event however therein defined, under one or more agreements or instruments, individually or collectively, relating to indebtedness (such indebtedness to include any obligation whether present or future, contingent or otherwise, as principal or surety or otherwise) for the payment or repayment of borrowed money in an aggregate amount greater than the threshold specified in the Base Contract with respect to such party or its Guarantor, if any, which results in such indebtedness becoming immediately due and payable. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 6 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) 2.24. "Interruptible" shall mean that either party may interrupt its performance at any time for any reason, whether or not caused by an event of Force Majeure, with no liability, except such interrupting party may be responsible for any Imbalance Charges as set forth in Section 4.3 related to its interruption after the nomination is made to the Transporter and until the change in deliveries and/or receipts is confirmed by Transporter. 2.25. "MMBtu" shall mean one million British thermal units, which is equivalent to one dekatherm. 2.26. "Month" shall mean the period beginning on the first Day of the calendar month and ending immediately prior to the commencement of the first Day of the next calendar month. 2.27. "Payment Date" shall mean a date, as indicated on the Base Contract, on or before which payment is due Seller for Gas received by Buyer in the previous Month. 2.28. "Receiving Transporter" shall mean the Transporter receiving Gas at a Delivery Point, or absent such receiving Transporter, the Transporter delivering Gas at a Delivery Point. 2.29. "Scheduled Gas" shall mean the quantity of Gas confirmed by Transporter(s) for movement, transportation or management. 2.30. “Specified Transaction(s)” shall mean any other transaction or agreement between the parties for the purchase, sale or exchange of physical Gas, and any other transaction or agreement identified as a Specified Transaction under the Base Contract. 2.31. "Spot Price " as referred to in Section 3.2 shall mean the price listed in the publication indicated on the Base Contract, under the listing applicable to the geographic location closest in proximity to the Delivery Point(s) for the relevant Day; provided, if there is no single price published for such location for such Day, but there is published a range of prices, then the Spot Price shall be the average of such high and low prices. If no price or range of prices is published for such Day, then the Spot Price shall be the average of the following: (i) the price (determined as stated above) for the first Day for which a price or range of prices is published that next precedes the relevant Day; and (ii) the price (determined as stated above) for the first Day for which a price or range of prices is published that next follows the relevant Day. 2.32. "Transaction Confirmation" shall mean a document, similar to the form of Exhibit A, setting forth the terms of a transaction formed pursuant to Section 1 for a particular Delivery Period. 2.33. “Transactional Cross Default” shall mean if selected on the Base Contract by the parties with respect to a party, that it shall be in default, however therein defined, under any Specified Transaction. 2.34. “Termination Option” shall mean the option of either party to terminate a transaction in the event that the other party fails to perform a Firm obligation to deliver Gas in the case of Seller or to receive Gas in the case of Buyer for a designated number of days during a period as specified on the applicable Transaction Confirmation. 2.35. "Transporter(s)" shall mean all Gas gathering or pipeline companies, or local distribution companies, acting in the capacity of a transporter, transporting Gas for Seller or Buyer upstream or downstream, respectively, of the Delivery Point pursuant to a particular transaction. SECTION 3. PERFORMANCE OBLIGATION 3.1. Seller agrees to sell and deliver, and Buyer agrees to receive and purchase, the Contract Quantity for a particular transaction in accordance with the terms of the Contract. Sales and purchases will be on a Firm or Interruptible basis, as agreed to by the parties in a transaction. The parties have selected either the “Cover Standard” or the “Spot Price Standard” as indicated on the Base Contract. Cover Standard: 3.2. The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by Seller to Buyer in an amount equal to the positive difference, if any, between the purchase price paid by Buyer utilizing the Cover Standard and the Contract Price, adjusted for commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity and the quantity actually delivered by Seller for such Day(s) excluding any quantity for which no replacement is available; or (ii) in the event of a breach by Buyer on any Day(s), payment by Buyer to Seller in the amount equal to the positive difference, if any, between the Contract Price and the price received by Seller utilizing the Cover Standard for the resale of such Gas, adjusted for commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity and the quantity actually taken by Buyer for such Day(s) excluding any quantity for which no sale is available; and (iii) in the event that Buyer has used commercially reasonable efforts to replace the Gas or Seller has used commercially reasonable efforts to sell the Gas to a third party, and no such replacement or sale is available for all or any portion of the Contract Quantity of Gas, then in addition to (i) or (ii) above, as applicable, the sole and exclusive remedy of the performing party with respect to the Gas not replaced or sold shall be an amount equal to any unfavorable difference between the Contract Price and the Spot Price, adjusted for such transportation to the applicable Delivery Point, multiplied by the quantity of such Gas not replaced or sold. Imbalance Charges shall not be recovered under this Section 3.2, but Seller and/or Buyer shall be responsible for Imbalance Charges, if any, as provided in Section 4.3. The amount of such unfavorable difference shall be payable five Business Days after presentation of the performing party’s invoice, Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 7 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) Spot Price Standard: 3.2. The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by Seller to Buyer in an amount equal to the difference between the Contract Quantity and the actual quantity delivered by Seller and received by Buyer for such Day(s), multiplied by the positive difference, if any, obtained by subtracting the Contract Price from the Spot Price; or (ii) in the event of a breach by Buyer on any Day(s), payment by Buyer to Seller in an amount equal to the difference between the Contract Quantity and the actual quantity delivered by Seller and received by Buyer for such Day(s), multiplied by the positive difference, if any, obtained by subtracting the applicable Spot Price from the Contract Price. Imbalance Charges shall not be recovered under this Section 3.2, but Seller and/or Buyer shall be responsible for Imbalance Charges, if any, as provided in Section 4.3. The amount of such unfavorable difference shall be payable five Business Days after presentation of the performing party’s invoice, which 3.3. Notwithstanding Section 3.2, the parties may agree to Alternative Damages in a Transaction Confirmation executed in writing by both parties. 3.4. In addition to Sections 3.2 and 3.3, the parties may provide for a Termination Option in a Transaction Confirmation executed in writing by both parties. The Transaction Confirmation containing the Termination Option will designate the length of nonperformance triggering the Termination Option and the procedures for exercise thereof, how damages for nonperformance will be compensated, and how liquidation costs will be calculated. SECTION 4. TRANSPORTATION, NOMINATIONS, AND IMBALANCES 4.1. Seller shall have the sole responsibility for transporting the Gas to the Delivery Point(s). Buyer shall have the sole responsibility for transporting the Gas from the Delivery Point(s). 4.2. The parties shall coordinate their nomination activities, giving sufficient time to meet the deadlines of the affected Transporter(s). Each party shall give the other party timely prior Notice, sufficient to meet the requirements of all Transporter(s) involved in the transaction, of the quantities of Gas to be delivered and purchased each Day. Should either party become aware that actual deliveries at the Delivery Point(s) are greater or lesser than the Scheduled Gas, such party shall promptly notify the other party. 4.3. The parties shall use commercially reasonable efforts to avoid imposition of any Imbalance Charges. If Buyer or Seller receives an invoice from a Transporter that includes Imbalance Charges, the parties shall determine the validity as well as the cause of such Imbalance Charges. If the Imbalance Charges were incurred as a result of Buyer’s receipt of quantities of Gas greater than or less than the Scheduled Gas, then Buyer shall pay for such Imbalance Charges or reimburse Seller for such Imbalance Charges paid by Seller. If the Imbalance Charges were incurred as a result of Seller’s delivery of quantities of Gas greater than or less than the Scheduled Gas, then Seller shall pay for such Imbalance Charges or reimburse Buyer for such Imbalance Charges paid by Buyer. SECTION 5. QUALITY AND MEASUREMENT All Gas delivered by Seller shall meet the pressure, quality and heat content requirements of the Receiving Transporter. The unit of quantity measurement for purposes of this Contract shall be one MMBtu dry. Measurement of Gas quantities hereunder shall be in accordance with the established procedures of the Receiving Transporter. SECTION 6. TAXES The parties have selected either “Buyer Pays At and After Delivery Point” or “Seller Pays Before and At Delivery Point” as Seller shall pay or cause to be paid all taxes, fees, levies, penalties, licenses or charges imposed by any government authority (“Taxes”) on or with respect to the Gas prior to the Delivery Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to the Gas at the Delivery Point(s) and all Taxes after the Delivery Point(s). If a party is required to remit or pay Taxes that are the other party’s responsibility hereunder, the party responsible for such Taxes shall promptly reimburse the other party for such Taxes. Any party entitled Seller Pays Before and At Delivery Point: Seller shall pay or cause to be paid all taxes, fees, levies, penalties, licenses or charges imposed by any government authority (“Taxes”) on or with respect to the Gas prior to the Delivery Point(s) and all Taxes at the Delivery Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to the Gas after the Delivery Point(s). If a party is required to remit or pay Taxes that are the other party’s responsibility hereunder, the party responsible for such Taxes shall promptly reimburse the other party for such Taxes. Any party entitled SECTION 7. BILLING, PAYMENT, AND AUDIT 7.1. Seller shall invoice Buyer for Gas delivered and received in the preceding Month and for any other applicable charges, providing supporting documentation acceptable in industry practice to support the amount charged. If the actual quantity delivered is not known by the billing date, billing will be prepared based on the quantity of Scheduled Gas. The invoiced quantity will then be adjusted to the actual quantity on the following Month's billing or as soon thereafter as actual delivery information is available. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 8 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) 7.2. Buyer shall remit the amount due under Section 7.1 in the manner specified in the Base Contract, in immediately available funds, on or before the later of the Payment Date or 10 Days after receipt of the invoice by Buyer; provided that if the Payment Date is not a Business Day, payment is due on the next Business Day following that date. In the event any payments are due Buyer hereunder, payment to Buyer shall be made in accordance with this Section 7.2. 7.3. In the event payments become due pursuant to Sections 3.2 or 3.3, the performing party may submit an invoice to the nonperforming party for an accelerated payment setting forth the basis upon which the invoiced amount was calculated. Payment from the nonperforming party will be due five Business Days after receipt of invoice. 7.4. If the invoiced party, in good faith, disputes the amount of any such invoice or any part thereof, such invoiced party will pay such amount as it concedes to be correct; provided, however, if the invoiced party disputes the amount due, it must provide supporting documentation acceptable in industry practice to support the amount paid or disputed without undue delay. In the event the parties are unable to resolve such dispute, either party may pursue any remedy available at law or in equity to enforce its rights pursuant to this Section. 7.5. If the invoiced party fails to remit the full amount payable when due, interest on the unpaid portion shall accrue from the date due until the date of payment at a rate equal to the lower of (i) the then-effective prime rate of interest published under "Money Rates" by The Wall Street Journal, plus two percent per annum; or (ii) the maximum applicable lawful interest rate. 7.6. A party shall have the right, at its own expense, upon reasonable Notice and at reasonable times, to examine and audit and to obtain copies of the relevant portion of the books, records, and telephone recordings of the other party only to the extent reasonably necessary to verify the accuracy of any statement, charge, payment, or computation made under the Contract. This right to examine, audit, and to obtain copies shall not be available with respect to proprietary information not directly relevant to transactions under this Contract. All invoices and billings shall be conclusively presumed final and accurate and all associated claims for under- or overpayments shall be deemed waived unless such invoices or billings are objected to in writing, with adequate explanation and/or documentation, within two years after the Month of Gas delivery. All retroactive adjustments under Section 7 shall be paid in full by the party owing payment within 30 Days of Notice and substantiation of such inaccuracy. 7.7. Unless the parties have elected on the Base Contract not to make this Section 7.7 applicable to this Contract, the parties shall net all undisputed amounts due and owing, and/or past due, arising under the Contract such that the party owing the greater amount shall make a single payment of the net amount to the other party in accordance with Section 7; provided that no payment required to be made pursuant to the terms of any Credit Support Obligation or pursuant to Section 7.3 shall be subject to netting under this Section. If the parties have executed a separate netting agreement, the terms and conditions therein shall prevail to the extent inconsistent herewith. SECTION 8. TITLE, WARRANTY, AND INDEMNITY 8.1. Unless otherwise specifically agreed, title to the Gas shall pass from Seller to Buyer at the Delivery Point(s). Seller shall have responsibility for and assume any liability with respect to the Gas prior to its delivery to Buyer at the specified Delivery Point(s). Buyer shall have responsibility for and assume any liability with respect to said Gas after its delivery to Buyer at the Delivery Point(s). 8.2. Seller warrants that it will have the right to convey and will transfer good and merchantable title to all Gas sold hereunder and delivered by it to Buyer, free and clear of all liens, encumbrances, and claims. EXCEPT AS PROVIDED IN THIS SECTION 8.2 AND IN SECTION 15.8, ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE, ARE DISCLAIMED. 8.3. Seller agrees to indemnify Buyer and save it harmless from all losses, liabilities or claims including reasonable attorneys' fees and costs of court ("Claims"), from any and all persons, arising from or out of claims of title, personal injury (including death) or property damage from said Gas or other charges thereon which attach before title passes to Buyer. Buyer agrees to indemnify Seller and save it harmless from all Claims, from any and all persons, arising from or out of claims regarding payment, personal injury (including death) or property damage from said Gas or other charges thereon which attach after title passes to Buyer. 8.4. The parties agree that the delivery of and the transfer of title to all Gas under this Contract shall take place within the Customs Territory of the United States (as defined in general note 2 of the Harmonized Tariff Schedule of the United States 19 U.S.C. §1202, General Notes, page 3); provided, however, that in the event Seller took title to the Gas outside the Customs Territory of the United States, Seller represents and warrants that it is the importer of record for all Gas entered and delivered into the United States, and shall be responsible for entry and entry summary filings as well as the payment of duties, taxes and fees, if any, and all applicable record keeping requirements. 8.5. Notwithstanding the other provisions of this Section 8, as between Seller and Buyer, Seller will be liable for all Claims to the extent that such arise from the failure of Gas delivered by Seller to meet the quality requirements of Section 5. SECTION 9. NOTICES 9.1. All Transaction Confirmations, invoices, payment instructions, and other communications made pursuant to the Base Contract ("Notices") shall be made to the addresses specified in writing by the respective parties from time to time. 9.2. All Notices required hereunder shall be in writing and may be sent by facsimile or mutually acceptable electronic means, a nationally recognized overnight courier service, first class mail or hand delivered. 9.3. Notice shall be given when received on a Business Day by the addressee. In the absence of proof of the actual receipt date, the following presumptions will apply. Notices sent by facsimile shall be deemed to have been received upon the sending party's receipt of its facsimile machine's confirmation of successful transmission. If the day on which such facsimile is received is not a Business Day or is after five p.m. on a Business Day, then such facsimile shall be deemed to have been received on the next Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 9 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) following Business Day. Notice by overnight mail or courier shall be deemed to have been received on the next Business Day after it was sent or such earlier time as is confirmed by the receiving party. Notice via first class mail shall be considered delivered five Business Days after mailing. 9.4. The party receiving a commercially acceptable Notice of change in payment instructions or other payment information shall not be obligated to implement such change until ten Business Days after receipt of such Notice. SECTION 10. FINANCIAL RESPONSIBILITY 10.1. If either party (“X”) has reasonable grounds for insecurity regarding the performance of any obligation under this Contract (whether or not then due) by the other party (“Y”) (including, without limitation, the occurrence of a material change in the creditworthiness of Y or its Guarantor, if applicable), X may demand Adequate Assurance of Performance. “Adequate Assurance of Performance” shall mean sufficient security in the form, amount, for a term, and from an issuer, all as reasonably acceptable to X, including, but not limited to cash, a standby irrevocable letter of credit, a prepayment, a security interest in an asset or guaranty. Y hereby grants to X a continuing first priority security interest in, lien on, and right of setoff against all Adequate Assurance of Performance in the form of cash transferred by Y to X pursuant to this Section 10.1. Upon the return by X to Y of such Adequate Assurance of Performance, the security interest and lien granted hereunder on that Adequate Assurance of Performance shall be released automatically and, to the extent possible, without any further action by either party. 10.2. In the event (each an "Event of Default") either party (the "Defaulting Party") or its Guarantor shall: (i) make an assignment or any general arrangement for the benefit of creditors; (ii) file a petition or otherwise commence, authorize, or acquiesce in the commencement of a proceeding or case under any bankruptcy or similar law for the protection of creditors or have such petition filed or proceeding commenced against it; (iii) otherwise become bankrupt or insolvent (however evidenced); (iv) be unable to pay its debts as they fall due; (v) have a receiver, provisional liquidator, conservator, custodian, trustee or other similar official appointed with respect to it or substantially all of its assets; (vi) fail to perform any obligation to the other party with respect to any Credit Support Obligations relating to the Contract; (vii) fail to give Adequate Assurance of Performance under Section 10.1 within 48 hours but at least one Business Day of a written request by the other party; (viii) not have paid any amount due the other party hereunder on or before the second Business Day following written Notice that such payment is due; or ix) be the affected party with respect to any Additional Event of Default; then the other party (the "Non-Defaulting Party") shall have the right, at its sole election, to immediately withhold and/or suspend deliveries or payments upon Notice and/or to terminate and liquidate the transactions under the Contract, in the manner provided in Section 10.3, in addition to any and all other remedies available hereunder. 10.3. If an Event of Default has occurred and is continuing, the Non-Defaulting Party shall have the right, by Notice to the Defaulting Party, to designate a Day, no earlier than the Day such Notice is given and no later than 20 Days after such Notice is given, as an early termination date (the “Early Termination Date”) for the liquidation and termination pursuant to Section 10.3.1 of all transactions under the Contract, each a “Terminated Transaction”. On the Early Termination Date, all transactions will terminate, other than those transactions, if any, that may not be liquidated and terminated under applicable law (“Excluded Transactions”), which Excluded Transactions must be liquidated and terminated as soon thereafter as is legally permissible, and upon termination shall be a Terminated Transaction and be valued consistent with Section 10.3.1 below. With respect to each Excluded Transaction, its actual termination date shall be the Early Termination Date for purposes of Section 10.3.1. The parties have selected either “Early Termination Damages Apply” or “Early Termination Damages Do Not Apply” as 10.3.1. As of the Early Termination Date, the Non-Defaulting Party shall determine, in good faith and in a commercially reasonable manner, (i) the amount owed (whether or not then due) by each party with respect to all Gas delivered and received between the parties under Terminated Transactions and Excluded Transactions on and before the Early Termination Date and all other applicable charges relating to such deliveries and receipts (including without limitation any amounts owed under Section 3.2), for which payment has not yet been made by the party that owes such payment under this Contract and (ii) the Market Value, as defined below, of each Terminated Transaction. The Non-Defaulting Party shall (x) liquidate and accelerate each Terminated Transaction at its Market Value, so that each amount equal to the difference between such Market Value and the Contract Value, as defined below, of such Terminated Transaction(s) shall be due to the Buyer under the Terminated Transaction(s) if such Market Value exceeds the Contract Value and to the Seller if the opposite is the case; and (y) where appropriate, discount each amount then due under clause (x) above to present value in a commercially reasonable manner as of the Early Termination Date (to take account of the period between the date of liquidation and the date on which such amount would have otherwise been due pursuant to the relevant Terminated Transactions). For purposes of this Section 10.3.1, “Contract Value” means the amount of Gas remaining to be delivered or purchased under a transaction multiplied by the Contract Price, and “Market Value” means the amount of Gas remaining to be delivered or purchased under a transaction multiplied by the market price for a similar transaction at the Delivery Point determined by the Non-Defaulting Party in a commercially reasonable manner. To ascertain the Market Value, the Non-Defaulting Party may consider, among other valuations, any or all of the settlement prices of NYMEX Gas futures contracts, quotations from leading dealers in energy swap contracts or physical gas trading markets, similar sales or purchases and any other bona fide third-party offers, all adjusted for the length of the term and differences in transportation costs. A party shall not be required to enter into a replacement transaction(s) in order to determine the Market Value. Any extension(s) of the term of a transaction to which parties are not bound as of the Early Termination Date (including but not limited to “evergreen provisions”) shall not be considered in determining Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 10 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) the term of a transaction shall be considered in determining Contract Values and Market Values. The rate of interest used in calculating net present value shall be determined by the Non-Defaulting Party in a commercially reasonable manner. Early Termination Damages Do Not Apply: 10.3.1. As of the Early Termination Date, the Non-Defaulting Party shall determine, in good faith and in a commercially reasonable manner, the amount owed (whether or not then due) by each party with respect to all Gas delivered and received between the parties under Terminated Transactions and Excluded Transactions on and before the Early Termination Date and all other applicable charges relating to such deliveries and receipts (including without limitation any amounts owed under Section The parties have selected either “Other Agreement Setoffs Apply” or “Other Agreement Setoffs Do Not Apply” as 10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the “Net Settlement Amount”). At its sole option and without prior Notice to the Defaulting Party, the Non-Defaulting Party is hereby authorized to setoff any Net Settlement Amount against (i) any margin or other collateral held by a party in connection with any Credit Support Obligation relating to the Contract; and (ii) any amount(s) (including any excess cash margin or excess cash collateral) owed or held by the party that is entitled to the Net Settlement Amount under any other agreement or arrangement Triangular Setoff Option: 10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the “Net Settlement Amount”). At its sole option, and without prior Notice to the Defaulting Party, the Non-Defaulting Party is hereby authorized to setoff (i) any Net Settlement Amount against any margin or other collateral held by a party in connection with any Credit Support Obligation relating to the Contract; (ii) any Net Settlement Amount against any amount(s) (including any excess cash margin or excess cash collateral) owed by or to a party under any other agreement or arrangement between the parties; (iii) any Net Settlement Amount owed to the Non-Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Non-Defaulting Party or its Affiliates to the Defaulting Party under any other agreement or arrangement; (iv) any Net Settlement Amount owed to the Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Defaulting Party to the Non-Defaulting Party or its Affiliates under any other agreement or arrangement; and/or (v) any Net Settlement Amount owed to the Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Defaulting Party or its Affiliates to the Non-Defaulting Other Agreement Setoffs Do Not Apply: 10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the “Net Settlement Amount”). At its sole option and without prior Notice to the Defaulting Party, the Non-Defaulting Party may setoff any Net Settlement Amount against any margin or other collateral held by a party in connection with any Credit Support 10.3.3. If any obligation that is to be included in any netting, aggregation or setoff pursuant to Section 10.3.2 is unascertained, the Non-Defaulting Party may in good faith estimate that obligation and net, aggregate or setoff, as applicable, in respect of the estimate, subject to the Non-Defaulting Party accounting to the Defaulting Party when the obligation is ascertained. Any amount not then due which is included in any netting, aggregation or setoff pursuant to Section 10.3.2 shall be discounted to net present value in a commercially reasonable manner determined by the Non-Defaulting Party. 10.4. As soon as practicable after a liquidation, Notice shall be given by the Non-Defaulting Party to the Defaulting Party of the Net Settlement Amount, and whether the Net Settlement Amount is due to or due from the Non-Defaulting Party. The Notice shall include a written statement explaining in reasonable detail the calculation of the Net Settlement Amount, provided that failure to give such Notice shall not affect the validity or enforceability of the liquidation or give rise to any claim by the Defaulting Party against the Non-Defaulting Party. The Net Settlement Amount as well as any setoffs applied against such amount pursuant to Section 10.3.2, shall be paid by the close of business on the second Business Day following such Notice, which date shall not be earlier than the Early Termination Date. Interest on any unpaid portion of the Net Settlement Amount as adjusted by setoffs, shall accrue from the date due until the date of payment at a rate equal to the lower of (i) the then-effective prime rate of interest published under "Money Rates" by The Wall Street Journal, plus two percent per annum; or (ii) the maximum applicable lawful interest rate. 10.5. The parties agree that the transactions hereunder constitute a "forward contract" within the meaning of the United States Bankruptcy Code and that Buyer and Seller are each "forward contract merchants" within the meaning of the United States Bankruptcy Code. 10.6. The Non-Defaulting Party's remedies under this Section 10 are the sole and exclusive remedies of the Non-Defaulting Party with respect to the occurrence of any Early Termination Date. Each party reserves to itself all other rights, setoffs, counterclaims and other defenses that it is or may be entitled to arising from the Contract. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 11 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) 10.7. With respect to this Section 10, if the parties have executed a separate netting agreement with close-out netting provisions, the terms and conditions therein shall prevail to the extent inconsistent herewith. SECTION 11. FORCE MAJEURE 11.1. Except with regard to a party's obligation to make payment(s) due under Section 7, Section 10.4, and Imbalance Charges under Section 4, neither party shall be liable to the other for failure to perform a Firm obligation, to the extent such failure was caused by Force Majeure. The term "Force Majeure" as employed herein means any cause not reasonably within the control of the party claiming suspension, as further defined in Section 11.2. 11.2. Force Majeure shall include, but not be limited to, the following: (i) physical events such as acts of God, landslides, lightning, earthquakes, fires, storms or storm warnings, such as hurricanes, which result in evacuation of the affected area, floods, washouts, explosions, breakage or accident or necessity of repairs to machinery or equipment or lines of pipe; (ii) weather related events affecting an entire geographic region, such as low temperatures which cause freezing or failure of wells or lines of pipe; (iii) interruption and/or curtailment of Firm transportation and/or storage by Transporters; (iv) acts of others such as strikes, lockouts or other industrial disturbances, riots, sabotage, insurrections or wars, or acts of terror; and (v) governmental actions such as necessity for compliance with any court order, law, statute, ordinance, regulation, or policy having the effect of law promulgated by a governmental authority having jurisdiction. Seller and Buyer shall make reasonable efforts to avoid the adverse impacts of a Force Majeure and to resolve the event or occurrence once it has occurred in order to resume performance. 11.3. Neither party shall be entitled to the benefit of the provisions of Force Majeure to the extent performance is affected by any or all of the following circumstances: (i) the curtailment of interruptible or secondary Firm transportation unless primary, in-path, Firm transportation is also curtailed; (ii) the party claiming excuse failed to remedy the condition and to resume the performance of such covenants or obligations with reasonable dispatch; or (iii) economic hardship, to include, without limitation, Seller’s ability to sell Gas at a higher or more advantageous price than the Contract Price, Buyer’s ability to purchase Gas at a lower or more advantageous price than the Contract Price, or a regulatory agency disallowing, in whole or in part, the pass through of costs resulting from this Contract; (iv) the loss of Buyer’s market(s) or Buyer’s inability to use or resell Gas purchased hereunder, except, in either case, as provided in Section 11.2; or (v) the loss or failure of Seller’s gas supply or depletion of reserves, except, in either case, as provided in Section 11.2. The party claiming Force Majeure shall not be excused from its responsibility for Imbalance Charges. 11.4. Notwithstanding anything to the contrary herein, the parties agree that the settlement of strikes, lockouts or other industrial disturbances shall be within the sole discretion of the party experiencing such disturbance. 11.5. The party whose performance is prevented by Force Majeure must provide Notice to the other party. Initial Notice may be given orally; however, written Notice with reasonably full particulars of the event or occurrence is required as soon as reasonably possible. Upon providing written Notice of Force Majeure to the other party, the affected party will be relieved of its obligation, from the onset of the Force Majeure event, to make or accept delivery of Gas, as applicable, to the extent and for the duration of Force Majeure, and neither party shall be deemed to have failed in such obligations to the other during such occurrence or event. 11.6. Notwithstanding Sections 11.2 and 11.3, the parties may agree to alternative Force Majeure provisions in a Transaction Confirmation executed in writing by both parties. SECTION 12. TERM This Contract may be terminated on 30 Day’s written Notice, but shall remain in effect until the expiration of the latest Delivery Period of any transaction(s). The rights of either party pursuant to Section 7.6, Section 10, Section 13, the obligations to make payment hereunder, and the obligation of either party to indemnify the other, pursuant hereto shall survive the termination of the Base Contract or any transaction. SECTION 13. LIMITATIONS FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY. A PARTY’S LIABILITY HEREUNDER SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN OR IN A TRANSACTION, A PARTY’S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY. SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 12 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) SECTION 14. MARKET DISRUPTION If a Market Disruption Event has occurred then the parties shall negotiate in good faith to agree on a replacement price for the Floating Price (or on a method for determining a replacement price for the Floating Price) for the affected Day, and if the parties have not so agreed on or before the second Business Day following the affected Day then the replacement price for the Floating Price shall be determined within the next two following Business Days with each party obtaining, in good faith and from non-affiliated market participants in the relevant market, two quotes for prices of Gas for the affected Day of a similar quality and quantity in the geographical location closest in proximity to the Delivery Point and averaging the four quotes. If either party fails to provide two quotes then the average of the other party’s two quotes shall determine the replacement price for the Floating Price. "Floating Price" means the price or a factor of the price agreed to in the transaction as being based upon a specified index. "Market Disruption Event" means, with respect to an index specified for a transaction, any of the following events: (a) the failure of the index to announce or publish information necessary for determining the Floating Price; (b) the failure of trading to commence or the permanent discontinuation or material suspension of trading on the exchange or market acting as the index; (c) the temporary or permanent discontinuance or unavailability of the index; (d) the temporary or permanent closing of any exchange acting as the index; or (e) both parties agree that a material change in the formula for or the method of determining the Floating Price has occurred. For the purposes of the calculation of a replacement price for the Floating Price, all numbers shall be rounded to three decimal places. If the fourth decimal number is five or greater, then the third decimal number shall be increased by one and if the fourth decimal number is less than five, then the third decimal number shall remain unchanged. SECTION 15. MISCELLANEOUS 15.1. This Contract shall be binding upon and inure to the benefit of the successors, assigns, personal representatives, and heirs of the respective parties hereto, and the covenants, conditions, rights and obligations of this Contract shall run for the full term of this Contract. No assignment of this Contract, in whole or in part, will be made without the prior written consent of the non-assigning party (and shall not relieve the assigning party from liability hereunder), which consent will not be unreasonably withheld or delayed; provided, either party may (i) transfer, sell, pledge, encumber, or assign this Contract or the accounts, revenues, or proceeds hereof in connection with any financing or other financial arrangements, or (ii) transfer its interest to any parent or Affiliate by assignment, merger or otherwise without the prior approval of the other party. Upon any such assignment, transfer and assumption, the transferor shall remain principally liable for and shall not be relieved of or discharged from any obligations hereunder. 15.2. If any provision in this Contract is determined to be invalid, void or unenforceable by any court having jurisdiction, such determination shall not invalidate, void, or make unenforceable any other provision, agreement or covenant of this Contract. 15.3. No waiver of any breach of this Contract shall be held to be a waiver of any other or subsequent breach. 15.4. This Contract sets forth all understandings between the parties respecting each transaction subject hereto, and any prior contracts, understandings and representations, whether oral or written, relating to such transactions are merged into and superseded by this Contract and any effective transaction(s). This Contract may be amended only by a writing executed by both parties. 15.5. The interpretation and performance of this Contract shall be governed by the laws of the jurisdiction as indicated on the Base Contract, excluding, however, any conflict of laws rule which would apply the law of another jurisdiction. 15.6. This Contract and all provisions herein will be subject to all applicable and valid statutes, rules, orders and regulations of any governmental authority having jurisdiction over the parties, their facilities, or Gas supply, this Contract or transaction or any provisions thereof. 15.7. There is no third party beneficiary to this Contract. 15.8. Each party to this Contract represents and warrants that it has full and complete authority to enter into and perform this Contract. Each person who executes this Contract on behalf of either party represents and warrants that it has full and complete authority to do so and that such party will be bound thereby. 15.9. The headings and subheadings contained in this Contract are used solely for convenience and do not constitute a part of this Contract between the parties and shall not be used to construe or interpret the provisions of this Contract. 15.10. Unless the parties have elected on the Base Contract not to make this Section 15.10 applicable to this Contract, neither party shall disclose directly or indirectly without the prior written consent of the other party the terms of any transaction to a third party (other than the employees, lenders, royalty owners, counsel, accountants and other agents of the party, or prospective purchasers of all or substantially all of a party’s assets or of any rights under this Contract, provided such persons shall have agreed to keep such terms confidential) except (i) in order to comply with any applicable law, order, regulation, or exchange rule, (ii) to the extent necessary for the enforcement of this Contract , (iii) to the extent necessary to implement any transaction, (iv) to the extent necessary to comply with a regulatory agency’s reporting requirements including but not limited to gas cost recovery proceedings; or (v) to the extent such information is delivered to such third party for the sole purpose of calculating a published index. Each party shall notify the other party of any proceeding of which it is aware which may result in disclosure of the terms of any transaction (other than as permitted hereunder) and use reasonable efforts to prevent or limit the disclosure. The existence of this Contract is not subject to this confidentiality obligation. Subject to Section 13, the parties shall be entitled to all remedies available at law or in equity to enforce, or seek relief in connection with this confidentiality obligation. The terms of any transaction hereunder shall be kept confidential by the parties hereto for one year from the expiration of the transaction. In the event that disclosure is required by a governmental body or applicable law, the party subject to such requirement may disclose the material terms of this Contract to the extent so required, but shall promptly notify the other party, prior to disclosure, and shall cooperate (consistent with the disclosing party’s legal obligations) with the other party’s efforts to obtain protective orders or similar restraints with respect to such disclosure at the expense of the other party. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 13 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) 15.11. The parties may agree to dispute resolution procedures in Special Provisions attached to the Base Contract or in a Transaction Confirmation executed in writing by both parties. 15.12. Any original executed Base Contract, Transaction Confirmation or other related document may be digitally copied, photocopied, or stored on computer tapes and disks (the “Imaged Agreement”). The Imaged Agreement, if introduced as evidence on paper, the Transaction Confirmation, if introduced as evidence in automated facsimile form, the recording, if introduced as evidence in its original form, and all computer records of the foregoing, if introduced as evidence in printed format, in any judicial, arbitration, mediation or administrative proceedings will be admissible as between the parties to the same extent and under the same conditions as other business records originated and maintained in documentary form. Neither Party shall object to the admissibility of the recording, the Transaction Confirmation, or the Imaged Agreement on the basis that such were not originated or maintained in documentary form. However, nothing herein shall be construed as a waiver of any other objection to the admissibility of such evidence. DISCLAIMER: The purposes of this Contract are to facilitate trade, avoid misunderstandings and make more definite the terms of contracts of purchase and sale of natural gas. Further, NAESB does not mandate the use of this Contract by any party. NAESB DISCLAIMS AND EXCLUDES, AND ANY USER OF THIS CONTRACT ACKNOWLEDGES AND AGREES TO NAESB'S DISCLAIMER OF, ANY AND ALL WARRANTIES, CONDITIONS OR REPRESENTATIONS, EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THIS CONTRACT OR ANY PART THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY, OR FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE (WHETHER OR NOT NAESB KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE), WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING. EACH USER OF THIS CONTRACT ALSO AGREES THAT UNDER NO CIRCUMSTANCES WILL NAESB BE LIABLE FOR ANY DIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF The copyright in this Contract is owned by NAESB, and market participants are encouraged to review NAESB Copyright Policy and Companies with Access to NAESB Standards under the Copyright Policy posted by NAESB on its website at https://www.naesb.org/pdf2/copyright.pdf. Please review this posting and if your company’s name is not listed as having access, please obtain access by contacting the NAESB Office per the contact information in Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 14 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) TRANSACTION CONFIRMATION EXHIBIT A FOR IMMEDIATE DELIVERY Letterhead/Logo Date: ____________________________, _____ Transaction Confirmation #: _______________ This Transaction Confirmation is subject to the Base Contract between Seller and Buyer dated ______________________. The terms of this Transaction Confirmation are binding unless disputed in writing within 2 Business Days of receipt unless otherwise specified in the Base Contract. SELLER: _______________________________________________ _______________________________________________ _______________________________________________ Attn: ___________________________________________ Phone: _________________________________________ Fax: ___________________________________________ Base Contract No. ________________________________ Transporter: _____________________________________ Transporter Contract Number: _______________________ BUYER: _______________________________________________ _______________________________________________ _______________________________________________ Attn: ___________________________________________ Phone: _________________________________________ Fax: ___________________________________________ Base Contract No. ________________________________ Transporter: _____________________________________ Transporter Contract Number: _______________________ Contract Price: $ /MMBtu or ______________________________________________________________________ Delivery Period: Begin: , ___ End: , ___ Performance Obligation and Contract Quantity: (Select One) Firm (Fixed Quantity): Firm (Variable Quantity): Interruptible: MMBtus/day MMBtus/day Minimum Up to MMBtus/day EFP MMBtus/day Maximum subject to Section 4.2. at election of Buyer or Seller Delivery Point(s): ________________________ (If a pooling point is used, list a specific geographic and pipeline location): Special Conditions: Seller: __________________________________________ By: ____________________________________________ Title: ___________________________________________ Date: __________________________________________ Buyer: __________________________________________ By: ____________________________________________ Title: ___________________________________________ Date: __________________________________________ Execution Version - 1 - EXHIBIT B SPECIAL PROVISIONS TO BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS - GENERAL TERMS AND CONDITIONS (FORM NAESB Standard 6.3.1-9/5/06 (Revised by R15003/R15007, 4/4/16) BY AND BETWEEN CITY OF PALO ALTO AND JPMORGAN CHASE BANK, N.A. DATED: ___________, 2026 SECTION 1.2 [Oral Transaction Procedure], line 13: after “agree to” add “, in writing,”. The second sentence of Section 1.2 Oral Transaction Procedure is amended by deleting the words “effectuated in an EDI transmission or telephone conversation with the offer and acceptance” and replacing them with “effectuated in an EDI transmission, telephone conversation or other electronic means of communication indicating the offer and acceptance” and by adding the following sentence to the end of Section 1.2: “All Transactions are entered into in reliance of the fact that this Base Contract (including any Special Provisions and any Addenda hereto agreed upon by the parties) and all Transactions hereunder form a single integrated agreement between the parties and the parties would not otherwise enter into any Gas transactions.” SECTION 1.3 shall be amended by deleting subsections (iii) and (iv) of the last sentence and replacing them with the following new subsections: “(iii) the Special Provisions, (iv) the Base Contract, and (v) these General Terms and Conditions”. SECTION 1.4 is amended by adding the following after the third sentence: “If there is a dispute, upon reasonable request by a party, the other party shall provide a copy of such recording to the party making the request.” SECTION 1.4 is amended by adding the following sentence between the second and third sentences in that section: “No party may knowingly destroy or erase a recording once the possessing party becomes aware of an actual dispute in which the recording may reasonably be anticipated to be discoverable.” SECTION 1.5 is added to SECTION 1, as follows: “City is a municipal utility governed by the City of Palo Alto, by and through its Council, which has all powers necessary and appropriate to a municipal corporation, including but not limited to the authority granted by the City Charter (https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-59239), Article XI, Section 9(a) of the California Constitution, California Government Code Section 39732 and California Public Utilities Code Section 10002, to establish, purchase, and operate public works to furnish its inhabitants with natural gas. Under this authority, City is engaged in the business of delivering natural gas to its residential and commercial customers in Palo Alto, California.” SECTION 2.4, line 1: after “incorporates” add “the Cover Sheet and”. SECTION 2.6 is amended and restated in its entirety, as follows: “’Business Day’ shall mean any Day except Saturday, Sunday, a Day that is a regular holiday declared by City pursuant to Palo Alto Municipal Code Section 2.08.100 or a Day that is a Federal Reserve Bank holiday.” SECTION 2.13 is amended to (i) replace the words “to provide or establish” with the words, “to provide, maintain, or establish”. SECTION 2.23, at the end of the sentence after the words, “immediately due and payable”, the following: “(after giving effect to any applicable notice requirement or grace period)”. SECTION 3.1, line 3: add a third sentence, as follows: “If a transaction is not designated as Firm or Interruptible, the transaction shall be deemed to be Firm.” SECTION 3.2 [Cover Standard], in the last sentence: after “payable” add “within”, and delete “presentation” and replace with “receipt”. SECTION 3.5 is added to SECTION 3, as follows: “Notwithstanding any other provision of this SECTION 3, if a party fails to deliver or receive Gas for three or more consecutive Business Days and such failure is not excused by the terms of the Transaction Confirmation, by Force Majeure, or by the other party’s failure of performance, then upon one Business Day’s prior written Notice and for so long as the non-performing party fails to deliver or receive Gas, the performing party may suspend its performance under such Transaction Confirmation and shall not be obligated to resume its performance until the non-performing party provides two Business Days’ prior written Notice of its intention to perform such obligation (“Notice to Resume Contractual Performance”); provided, however, if the performing party has entered into a replacement contract for a term of 31 Days or less during the suspension period, such performing party may defer its obligation to resume delivering or receiving Gas until after the expiration of the term of the replacement contract; provided further, that the performing party provides written Notice of its execution of such replacement contract to the non-performing party within two Business Days of the performing party’s receipt of the Notice to Resume Contractual Performance.” SECTION 7.1, line 3: after “actual quantity” add “delivered”. SECTION 7.4, line 2: after “it must provide,” add “within 60 Days”; and line 3: delete “without undue delay”. SECTION 7.5, line 3: delete “, plus two percent per annum”. SECTION 8.3 is hereby amended by adding the following sentence to the end of this paragraph: “Neither party shall be obligated to indemnify, defend, or hold the other party harmless to the extent any liability, suit, action, damage, loss or expense arises out of or in connection with any gross negligence or willful misconduct on the part of the other party, its officers, agents, or employees.” SECTION 10.1 is amended and restated in its entirety, as follows: “During the term of this Contract, the parties shall comply with the requirements of the Credit Support Addendum to Base Contract for Sale and Purchase of Natural Gas and any subsequent amendments thereto.” SECTION 10.2 is amended by: a.) Inserting “repudiate, withdraw or” immediately following “(vi)” in the sixth line; and b.) Deleting the word “or” before (ix) in the ninth line, and adding the following as new Sections 10.2(x) and (xi), respectively, after the word “Default;” in the tenth line: “(x) have made any representation or warranty which is false or misleading in any material respect when made or when deemed made or repeated; or”; “(xi) during any 90 Day period on a rolling basis, fail to perform any material covenant or obligation set forth in this Contract (except to the extent constituting a separate Event of Default, and except for such party’s obligations to deliver or receive Gas, the exclusive remedy for which is provided in Section 3) if such failure is not remedied within thirty (30) Days after written notice;”; SECTION 10.3: Insert the following at the end of Section 10.3: “Failure by the Non-Defaulting Party to promptly exercise its rights to terminate and liquidate all transactions upon the occurrence of an Event of Default shall not be deemed to be a waiver of such right.” SECTION 10.3.1 [Early Termination Damages Apply], add a third paragraph, as follows: “The Non-Defaulting Party shall aggregate the costs that the Non-Defaulting party incurs in liquidating and accelerating each Terminated Transaction, or otherwise settling obligations arising from the cancellation and termination of each Terminated Transaction, including brokerage fees, commissions, and other similar transaction costs and expenses reasonably incurred by the Non-Defaulting Party, including costs associated with hedging its obligations, transaction costs associated with obtaining replacement supplies or markets (e.g., brokerage fees, or other such payments), additional transportation balancing or hub services costs, and similar costs incurred in transporting the replacement Gas to or from the replacement Gas seller or buyer, and reasonable attorneys’ fees (at trial and on appeal) and other reasonable litigation and administrative fees and costs incurred in connection with recovering any such costs owed to it by the Defaulting Party under this Contract (collectively ‘Costs’). Notwithstanding the limitation of liability set forth in Section 13, such Costs shall be due and payable by the Defaulting Party to the Non-Defaulting Party within 10 Business Days after receipt by the Defaulting Party of the Non-Defaulting Party’s statement of Costs.” SECTION 10.3.2 [Other Agreement Setoffs Apply; Bilateral Setoff Option], line 3: after the first sentence, add: “Notwithstanding any provision to the contrary herein, any Net Settlement Amount that the Non-Defaulting Party may owe the Defaulting Party shall be equal to zero dollars.”; at the end of the section add: “The obligations of the Non-Defaulting Party and the Defaulting Party under this Contract or otherwise in respect of such amounts shall be deemed satisfied and discharged to the extent of any such setoff. The Non-Defaulting Party will give the Defaulting Party Notice of any setoff effected under this section provided that failure to give such notice shall not affect the validity of the setoff. Nothing in this paragraph shall be deemed to create a charge or other security interest. The rights provided by this Section are in addition to and not in limitation of any other right or remedy (including any right to setoff, counterclaim, or otherwise withhold payment) to which a party may be entitled (whether by operation of law, contract or otherwise). ‘setoff’ as used herein means setoff, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the Non-Defaulting Party is entitled or subject (whether arising under this Contract, another contract, and applicable law or otherwise) that is exercised by, or imposed on, the Non-Defaulting Party.” SECTION 10.4, line 2: delete “, and whether the Net Settlement Amount is due to or due from the Non- Defaulting Party.”; line 8: delete “, plus two percent per annum;”. SECTION 10.8 is added to SECTION 10, as follows: “Upon request, each Party shall deliver to the other Party documentation reasonably requested to evidence the authority and power of such Party and/or its Guarantor, as the case may be, to enter into this Base Contract or any guaranty, as the case may be, which may include, without limitation, certified resolutions and certification of the signature and authority of the individual(s) executing this Contract or such guaranty, as the case may be and to the extent applicable and requested certificates, documents or other evidence sufficient to confirm the sales exempt status of such Party for each jurisdiction in which the purchase, sale and/or delivery of any physical commodity takes place under this Contract, such that the other party will bear no obligation in relation to such purchase, sale and/or delivery for charging, collecting or remitting sales, uses or other excise taxes to any local, municipal, state or federal taxing authority or agency.” SECTION 11.5, line 1: after “the other party” add “of the dates on which Force Majeure commenced and terminated; line 3: after “Upon providing” add “such timely”; line 6: add a new sentence, as follows: “If the affected party fails to provide written notice of the event or occurrence to the other party as soon as reasonably possible, the affected party will not be relieved of its obligation to make or accept delivery of Gas to the extent and for the duration of Force Majeure.” SECTION 15.1, line 4: after “either party may” add “without the prior approval of the other party”; line 6: delete clause (ii) and replace with the following through the end of that sentence: “transfer or assign its interest to any Affiliate of such party, so long as such Affiliate’s creditworthiness equals or exceeds that of such assigning party or its Credit Support Provider, as applicable, as of the date the Base Contract is entered into by such party; provided, however, that in each of (i) and (ii), before any such assignment, transfer and assumption becomes effective, any such assignee shall agree, in writing, to be bound by the terms and conditions of this Contract and the assigning party shall agree, in writing, to remain liable for the obligations of the assignee hereof and shall deliver such tax and enforceability assurance as the non- assigning party may reasonably request. Notwithstanding any provision to the contrary, any direct or indirect change of control of either party (whether voluntary or by operation of law) shall be deemed an assignment and shall require the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed. Upon request, the party subject to a change of control shall promptly deliver financial statements, information and other evidence satisfactory to the requesting party regarding the proposed change of control and, among other things, creditworthiness of the other party after such change. For purposes of this section, change of control shall mean any change in the ownership of Party A greater than 51% of the then ownership of Party A prior to the transfer or assignment.” SECTION 15.5 is hereby deleted in its entirety and replaced with the following provision in lieu thereof: “This Base Contract, all transactions and Transaction Confirmations and the rights and duties of the parties arising therefrom shall be governed by, interpreted and construed in accordance with the laws of the State of California (without reference to choice of law doctrine). With respect to any suit, action or proceedings relating to the foregoing (“Proceedings”) each party irrevocably submits to the non-exclusive jurisdiction of the federal and state courts located in the County of Santa Clara, State of California, waives any objection which it may have to the laying of venue of any Proceedings brought in any such court, and waives any claim that any such Proceedings have been brought in an inconvenient forum. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS BASE CONTRACT OR ANY TRANSACTION AND ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE OTHER PARTY’S ENTERING INTO THIS BASE CONTRACT. SECTION 15.8 is hereby amended by inserting at the end thereof the following: “Each party will be deemed to represent to the other party on the date on which it enters into a transaction or Transaction Confirmation that (absent a written agreement between the Parties that expressly imposes affirmative obligations to the contrary for that transaction or Transaction Confirmation): (i) Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into that transaction and Transaction Confirmation and as to whether that transaction and Transaction Confirmation is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as recommendation to enter into that transaction or Transaction Confirmation; it being understood that information and explanation related to the terms and conditions of a transaction and Transaction Confirmation shall not be considered investment advice or a recommendation to enter into that transaction or Transaction Confirmation. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of that transaction or Transaction Confirmation. (ii) Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts the terms, conditions and risks of that transaction and Transaction Confirmation. It is also capable of assuming, and assumes, the risks of that transaction and Transaction Confirmation. (iii) Status of Parties. The other party is not acting as a fiduciary for or an adviser to it in respect of that transaction or Transaction Confirmation. Each party understands and acknowledges that the other party may, either in connection with entering into a transaction or from time to time thereafter, engage in open market transactions that are designed to hedge or reduce the risks incurred by it in connection with such transaction and that the effect of such open market transactions may be to affect or reduce the value of such transaction. (iv) Eligible Contract Participant. It is an “eligible contract participant” as such term is defined in Section §1(a)(18) of the Commodities Exchange Act, as amended.” SECTION 15.13 is added to SECTION 15, as follows: “If requested by either party, to the extent not publicly available, the other party shall deliver (i) within 180 days following the end of each fiscal year, a copy of its (or its guarantor’s or, in the case of Party A, JPMorgan Chase & Co.’s) certified financial statements or its (or its guarantor’s or, in the case of Party A, JPMorgan Chase & Co.’s) annual report containing that party’s audited consolidated financial statements for such fiscal year and (ii) within 45 days after the end of each of its first three fiscal quarters of each fiscal year, a copy of that party’s (or its guarantor’s or, in the case of Party A, JPMorgan Chase & Co.’s) quarterly report containing unaudited consolidated financial statements for such fiscal quarter. In all cases the statements shall be for the most recent accounting period and prepared in accordance with generally accepted accounting principles, provided, however, that should any such statements not be available on a timely basis due to delay in preparation or certification, such delay shall not be an Event of Default so long as the party diligently pursues the preparation, certification and delivery of the statements.” SECTION 15.14 is added to SECTION 15, as follows: “Scheduling. For all physical gas transactions, J.P. Morgan Ventures Energy Corporation is the agent/contracted marketer for JPMorgan Chase Bank, N.A.; therefore, all nominations will face J.P. Morgan Ventures Energy Corporation.” SECTION 15.15 is added to SECTION 15, as follows: “With respect to any proceeding in connection with any claim, counterclaim, demand, cause of action, dispute and controversy arising out of or relating to this Contract, the parties hereby consent to the exclusive jurisdiction of the federal courts for the Northern District of the State of California; provided, however, that if such federal courts sitting in the Northern District of the State of California refuse jurisdiction, the parties agree to the exclusive jurisdiction of the state courts sitting in the County of Santa, Clara, State of California, wherever venue may properly be laid.” SECTION 15.16 is added to SECTION 15, as follows: “Mobile-Sierra. To the extent, if any, that a transaction does not qualify as a “first sale” as defined by the Natural Gas Act and § 2(21) of the Natural Gas Policy Act (‘‘NGPA”) and is not exempt from the provisions of the Natural Gas Act (‘‘NGA”) pursuant to § 601 of the NGPA, each party irrevocably waives its rights, including its rights under §§ 4 and 5 of the NGA, unilaterally to seek or support a change in the rate(s), charges, classifications, terms or conditions of this Contract, any transaction hereunder or any other agreements entered into in connection with this Contract (collectively, the “Covered Agreements”). By this provision, each party expressly waives its right to seek or support: (i) an order from the U.S. Federal Energy Regulatory Commission (“FERC”) finding that the market-based rate(s), charges, classifications, terms or conditions agreed to by the parties under the Covered Agreements are unjust and unreasonable; or (ii) any refund with respect thereto. Each party agrees not to make or support such a filing or request, and each party agrees that these covenants and waivers shall be binding notwithstanding any regulatory or market changes that may occur hereafter. Absent the agreement of both parties to the proposed change, the standard of review for changes to any rate, charge, classification, term or condition of the Covered Agreements, whether proposed by a party to a non-party or FERC acting sua sponte, shall be the “public interest” standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) (the “Mobile-Sierra” doctrine).” SECTION 15.17 is added to SECTION 15, as follows: “Qualified Financial Contracts. The parties acknowledge and agree that (i) to the extent that prior to the date hereof both parties have adhered to the 2018 ISDA U.S. Resolution Stay Protocol (the “Protocol”), the terms of the Protocol are incorporated into and form a part of this Contract, and for such purposes this Contract shall be deemed a Protocol Covered Agreement, the J.P. Morgan entity that is a party to this Contract (“J.P. Morgan”) shall be deemed a Regulated Entity and the other entity that is a party to this Contract (“Counterparty”) shall be deemed an Adhering Party; (ii) to the extent that prior to the date hereof the parties have executed a separate agreement the effect of which is to amend the qualified financial contracts between them to conform with the requirements of the QFC Stay Rules (the “Bilateral Agreement”), the terms of the Bilateral Agreement are incorporated into and form a part of this Contract, and for such purposes this Contract shall be deemed a Covered Agreement, J.P. Morgan shall be deemed a Covered Entity and Counterparty shall be deemed a Counterparty Entity; or (iii) if clause (i) and clause (ii) do not apply, the terms of Section 1 and Section 2 and the related defined terms (together, the “Bilateral Terms”) of the form of bilateral template entitled “Full-Length Omnibus (for use between U.S. G-SIBs and Corporate Groups)” published by ISDA on November 2, 2018 (currently available on the 2018 ISDA U.S. Resolution Stay Protocol page at www.isda.org and, a copy of which is available upon request), the effect of which is to amend the qualified financial contracts between the parties thereto to conform with the requirements of the QFC Stay Rules, are hereby incorporated into and form a part of this Contract, and for such purposes this Contract shall be deemed a “Covered Agreement,” J.P. Morgan shall be deemed a “Covered Entity” and Counterparty shall be deemed a “Counterparty Entity.” In the event that, after the date of this Contract, both parties hereto become adhering parties to the Protocol, the terms of the Protocol will replace the terms of this paragraph. In the event of any inconsistencies between this Contract and the terms of the Protocol, the Bilateral Agreement or the Bilateral Terms (each, the “QFC Stay Terms”), as applicable, the QFC Stay Terms will govern. Terms used in this paragraph without definition shall have the meanings assigned to them under the QFC Stay Rules. For purposes of this paragraph, references to “this Contract” include any related credit enhancements entered into between the parties or provided by one to the other. In addition, the parties agree that the terms of this paragraph shall be incorporated into any related covered affiliate credit enhancements, with all references to J.P. Morgan replaced by references to the covered affiliate support provider. “QFC Stay Rules” means the regulations codified at 12 C.F.R. 252.2, 252.81–8, 12 C.F.R. 382.1-7 and 12 C.F.R. 47.1-8, which, subject to limited exceptions, require an express recognition of the stay-and- transfer powers of the FDIC under the Federal Deposit Insurance Act and the Orderly Liquidation Authority under Title II of the Dodd Frank Wall Street Reform and Consumer Protection Act and the override of default rights related directly or indirectly to the entry of an affiliate into certain insolvency proceedings and any restrictions on the transfer of any covered affiliate credit enhancements.” SECTION 15.18 is added to SECTION 15, as follows: “The parties do hereby represent and warrant that the General Terms and Conditions of the Base Contract have not been modified, altered, or amended in any respect except for these Special Provisions which are attached to and made a part of the Base Contract.” [SIGNATURES ON NEXT PAGE] IN WITNESS WHEREOF, the parties hereto have executed this Base Contract in duplicate. CITY OF PALO ALTO Approval by Mayor: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 City of Palo Alto Approved as to form: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 City of Palo Alto Approval by City Manager: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 City of Palo Alto Approval by Administrative Services Director: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 ___________________________________________________________________________________________________________ Copyright 2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 1 Adopted October 9, 2003 Credit Support Addendum to the Base Contract for Sale and Purchase of Natural Gas This Credit Support Addendum (“CSA”) is entered into as of this ______ day of _________, 2026. The parties to this CSA are the following: Party A Party B JPMorgan Chase Bank, N.A. and CITY OF PALO ALTO Base Contract Date: [ ], 2026 Base Contract Date: [ ], 2026 Base Contract Number: Base Contract Number: Address for Demands and Notices under Paragraphs 4,5 and 6 of the CSA: Address: JPM Collateral Services Address: 500 Stanton Christiana Road NCC5/FL1 DE3-4184 Newark, Delaware 19713 Group Telephone No.: (302) 634-4607 Telephone: Facsimile No.: (302) 552-6930 Fax: Email: collateral_services@jpmorgan.com Email: Wire Transfer or ACH Numbers (if applicable): Bank: JPMorgan Chase Bank, N.A. Bank: ABA: ABA: ACCT: ACCT: Other Details: Other Details: This CSA is published by the North American Energy Standards Board, Inc. The parties hereby agree to the following provisions offered in said CSA Elections. Provider Party A : _______________________ Party B : ______________________ as the Secured Overnight Financing Rate (SOFR) that appears on Bloomberg Page SOFRRATE for such day, or as published in another source mutually agreed Collateral Valuation Percentage Party A: Cash 100% Letters of Credit 100%* Other _____________ ___% Party B: Cash 100% Letters of Credit 100%* Other _____________ ___% * - See Definition of Valuation Percentage. Minimum Transfer Amount Event of Default has occurred and is continuing with respect to Party A, the Minimum Transfer Amount with respect to Party A shall be US$0. Party B: US$100,000; provided, however, that if an Event of Default has occurred and is continuing with respect to Party B, the Minimum Transfer Amount with respect to Party B shall be US$0. Credit Issuer Requirements of a major foreign bank which in either case has a Credit Rating of at least “A” by S&P or “A2” by Moody’s and which is satisfactory to Secured Party in Secured Party’s reasonable discretion Method for Other Eligible Collateral Party A: _________________________ Party B: _________________________ Time Close of Business 1 p.m. Eastern Prevailing Time Other: 12:00 noon, Eastern Prevailing Time 5 p.m. Eastern Prevailing Time Other __________________ Prevailing Time Threshold Flat amounts Party A: __________________________ Party B: __________________________ Amount Party B: US$10,000 ___________________________________________________________________________________________________________ Copyright 2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 2 Adopted October 9, 2003 Eligibility Requirements to Hold Cash Party A: An Event of Default has not occurred with respect to Party A. Party B: N/A Requirements The Custodian is a Bank (as defined in the Federal Deposit Insurance Act) whose rating with respect to its long term unsecured, unsubordinated indebtedness is at least A- by S&P or A3 by Moody's. As used herein: “Moody’s” shall mean Moody’s Investors Service, Inc., or its successor. “S&P” shall mean Standard & Poor’s Ratings Group, or OPTION A for CSA Paragraphs 4, 5 and 6 – OR – OPTION B for CSA Paragraphs 4, 5 and 6 (Exhibit A for elections is attached.) Special Provisions IN WITNESS WHEREOF, the parties hereto have executed the first page of this CSA in duplicate. JPMORGAN CHASE BANK, N.A. PARTY NAME CITY OF PALO ALTO SIGNATURE PRINTED NAME TITLE DATE CITY OF PALO ALTO CITY OF PALO ALTO CITY OF PALO ALTO ___________________________________________________________________________________________________________ Copyright 2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 3 Adopted October 9, 2003 GENERAL TERMS AND CONDITIONS of the CREDIT SUPPORT ADDENDUM to the BASE CONTRACT FOR PURCHASE AND SALE OF NATURAL GAS Paragraph 1. Purpose This CSA constitutes an Addendum to that certain Base Contract for Sale and Purchase of Natural Gas, as identified on the front page herein, between the parties (“Base Contract”), and supplements, forms part of, and amends the Base Contract affecting transactions thereunder. Capitalized terms used in this CSA that are not herein defined will have the meanings ascribed to them in the Base Contract. In the event of a conflict between the terms of this CSA and the Base Contract, the terms of this CSA shall apply for the purposes of this CSA. The terms set forth below shall have the meanings ascribed to them below. Other terms are also defined elsewhere in the Base Contract and shall have the meanings ascribed to them therein. Paragraph 2. Definitions. As used in this CSA: “Cash” shall mean United States Dollars. “Close of Business” shall have the meaning set forth in the elections on Page 1 herein. "Collateral Requirement" shall have the meaning set forth in Paragraph 3 herein. "Collateral Threshold" shall mean, with respect to a party, the amount, if any, set forth in the elections on Page 1 herein for such party; provided, however, that the Collateral Threshold for a party that is a Defaulting Party shall be zero (0) upon the occurrence and during the continuance of an Event of Default. "Credit Support Default" shall have the meaning set forth in Paragraph 10 herein. “Credit Support Provider”, if applicable, shall mean the entity set forth in the elections on Page 1 herein. “Custodian” shall mean an entity that meets the Custodian Requirements set forth in the elections on Page 1 herein. "Defaulting Party" shall have the meaning set forth in Paragraph 10 herein. "Demand Date" shall mean, with respect to a party's (i) demand for the Transfer of Eligible Collateral pursuant to Paragraph 4 herein, (ii) demand for Reduction or Substitution of Posted Collateral pursuant to Paragraph 5 herein, and/or (iii) demand for Disputed Calculations pursuant to Paragraph 6 herein: (a) the date on which a demand is made, if such demand is received prior to the Notification Time on a Business Day; or (b) the following Business Day if a demand is made on a non-Business Day or after the Notification Time on a Business Day. "Eligible Collateral" shall have the meaning set forth in the elections on Page 1 herein. "Exposure" shall mean the Net Settlement Amount, as calculated by the Secured Party in good faith and in a commercially reasonable manner, that the Pledging Party would owe to the Secured Party if an Early Termination Date had been designated as of the date of such calculation as provided for in Section 10 of the Base Contract; provided that such calculations shall be at the mid point between the bid price and the offer price. "Interest Amount" shall mean the aggregate sum of the amounts of interest calculated for each day in that Interest Period on the principal amount of Cash held by the Secured Party on that day, determined for each such day as follows: (x) the amount of Cash on that day; multiplied by (y) the Interest Rate for that day: divided by (z) 360. ___________________________________________________________________________________________________________ Copyright 2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 4 Adopted October 9, 2003 "Interest Period" shall mean the period from (and including) the last Business Day on which an Interest Amount was Transferred (or if no Interest Amount has yet been Transferred, the Business Day on which Cash was Transferred to the Secured Party) to (but excluding) the Business Day on which the current Interest Amount is to be Transferred. "Interest Rate" shall have the meaning set forth in the elections on Page 1 herein. "Letter of Credit" shall have the meaning set forth in Paragraph 7 (a) herein. “Letter of Credit Default” shall have the meaning set forth in Paragraph 7(b) herein. “Minimum Transfer Amount” shall mean the amount set forth in the elections on Page 1 herein for a party. “Notification Time” shall have the meaning set forth in the elections on Page 1 herein. “Notice” shall have the meaning set forth in Paragraph 9 herein. “Pledging Party” shall have the meaning set forth in Paragraph 3 herein. "Posted Collateral" shall mean (1) all Eligible Collateral and all proceeds thereof that have been Transferred to or received by the Secured Party hereunder and not Transferred to the Pledging Party pursuant to Paragraph 4 or released by the Secured Party, (2) any Interest Amount or portion thereof held by the Secured Party and not Transferred pursuant to Paragraph 8(c), and (3) any Cash received and held by the Secured Party after drawing on any Letter of Credit. "Reference Market Maker" shall mean a leading dealer in the relevant market that is not an affiliate of either party selected by a party determining any disputed calculations pursuant to Paragraph 6 herein in a commercially reasonable manner from among dealers which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit. “Rounding Amount” shall mean the amount set forth in the elections on Page 1 herein for a party. “Secured Party” shall have the meaning set forth in Paragraph 3(b) herein. "Letter of Credit Issuer Requirements" shall have the meaning set forth in the elections on Page 1 herein. "Transfer” or “Transferred" shall mean, with respect to any Eligible Collateral, Posted Collateral, or Interest Amount, and in accordance with the instructions of the appropriate party: (i) in the case of Cash, payment or delivery by wire transfer in immediately available federal funds into one or more bank accounts set forth on Page 1 herein (or as otherwise specified in a demand Notice); (ii) in the case of Letters of Credit, delivery of the Letter of Credit by the Pledging Party to the Secured Party at the address specified in this CSA (or as otherwise specified in a demand Notice) or delivery of an executed amendment to such Letter of Credit (extending the term or increasing the amount available to the Secured Party thereunder) by the Pledging Party, to the Secured Party; and for purposes of Paragraph 5, return of the Letter of Credit by the Secured Party to the Pledging Party or delivery of an executed amendment (which amendment shall be given by the Pledging Party to the Secured Party) to the Letter of Credit in form and substance satisfactory to the Secured Party, reducing the amount available to the Secured Party thereunder, in each case to the address specified in the applicable demand letter or this CSA; and (iii) in the case of any other Eligible Collateral, the Transfer methodology specified by the parties in the elections on Page 1 herein. (iv) in any case in which Eligible Collateral or Posted Collateral is in the form of a Letter of Credit, the deadlines set forth in Paragraph 7 (h). (v) In connection with each Transfer of any Eligible Collateral to the Secured Party pursuant to this CSA, the Secured Party will, upon request of the Pledging Party, provide a receipt in form and substance reasonably satisfactory to the Pledging Party showing the Eligible Collateral ___________________________________________________________________________________________________________ Copyright 2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 5 Adopted October 9, 2003 Transferred to it. In connection with each Transfer of any Posted Collateral to the Pledging Party pursuant to this CSA, the Pledging Party will, upon request of the Secured Party, provide a receipt in form and substance reasonably satisfactory to the Secured Party showing the Posted Collateral Transferred to it. “Valuation Percentage” shall mean the percentage set forth in the elections on Page 1 herein for each form of Eligible Collateral; provided with respect to Letters of Credit the Valuation Percentage shall be 100% unless either (i) a Letter of Credit Default shall apply with respect to such Letter of Credit or (ii) 20 or fewer Business Days remain prior to the expiration of such Letter of Credit, in which case the Valuation Percentage shall be zero (0). "Value" shall mean the Valuation Percentage multiplied by the amount of Posted Collateral; provided with respect to Letters of Credit, such amount shall be the amount then available to be unconditionally drawn under the Letter of Credit held by the Secured Party. Paragraph 3. Calculation of Collateral Requirement. On any Business Day, the "Collateral Requirement" for a party (the “Pledging Party”) means the Secured Party’s Exposure minus the sum of: (a) the Pledging Party's Collateral Threshold; plus (b) the Value of all Posted Collateral then held by the party other than the Pledging Party (the “Secured Party”), and any accrued Interest Amount that has not yet been Transferred to the Pledging Party; provided, however, that, the Collateral Requirement of the Pledging Party will be deemed to be zero (0) whenever the calculation of such Pledging Party’s Collateral Requirement yields a number less than zero (0). OPTION A: Paragraphs 4, 5, and 6 If the parties select Option A of the elections on Page 1 herein, the following Paragraphs 4, 5 and 6 shall apply. Paragraph 4. Transfer of Eligible Collateral. On any Business Day on which (i) no Credit Support Default with respect to the Secured Party has occurred and is continuing, (ii) no Event of Default with respect to the Secured Party has occurred and is continuing, (iii) no Early Termination Date has occurred or been designated by the Pledging Party for which there exist any unsatisfied payment obligations under the Base Contract, and (iv) the Pledging Party’s Collateral Requirement equals or exceeds its Minimum Transfer Amount, the Secured Party may demand, by Notice to the Pledging Party, that the Pledging Party Transfer to the Secured Party, and the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Party having a Value on the date of Transfer at least equal to the Pledging Party’s Collateral Requirement. The amount of Eligible Collateral required to be Transferred hereunder shall be rounded up to the nearest integral multiple of the Rounding Amount. Unless otherwise agreed to in writing by the parties, the Pledging Party shall Transfer the Eligible Collateral by the Close of Business on the Business Day following the Demand Date. Any Letter of Credit or other type of Eligible Collateral (other than Cash) shall be Transferred to the address specified in this CSA or to such address as the Secured Party shall specify in its demand, pursuant to this Paragraph 4. Any demand made by the Secured Party pursuant to this Paragraph 4 shall specify wire transfer information for the account(s) to which Eligible Collateral in the form of Cash shall be Transferred if different then that set forth in this CSA. Notwithstanding anything to the contrary in this CSA, in the event of a Credit Support Default or an Event of Default, with respect to the Pledging Party which gives rise to an obligation to Transfer Eligible Collateral, the Pledging Party shall have no obligation to Transfer such Eligible Collateral if such event is cured or otherwise no longer exists prior to the time that such Eligible Collateral is required to be provided hereunder. Paragraph 5. Reduction and Substitution of Posted Collateral. (a) On any Business Day a Pledging Party may demand, by Notice to the Secured Party, a reduction in the amount of Posted Collateral previously provided by the Pledging Party for the benefit of the Secured Party, and the Secured Party shall comply with said demand, provided that after giving effect to the demanded reduction in Posted Collateral, (i) the Pledging Party shall have a Collateral Requirement of zero (0) as of the date the Secured Party would be required to return the requested Posted Collateral, (ii) no Credit Support Default with respect to the Pledging Party has occurred and is continuing, (iii) no Event of Default with respect to the Pledging Party has occurred and is continuing, and (iv) no Early Termination Date has occurred or been designated by the Secured Party for which there exist any unsatisfied payment obligations under the Base Contract. The amount of the Posted ___________________________________________________________________________________________________________ Copyright 2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 6 Adopted October 9, 2003 Collateral reduction shall be made by the Secured Party if such amount equals or exceeds the Secured Party’s Minimum Transfer Amount; provided however, such amount actually returned by the Secured Party shall be rounded down to the nearest integral multiple of the Rounding Amount. Unless otherwise agreed in writing by the parties, the Secured Party shall effect a permitted reduction in Posted Collateral by the Close of Business on the Business Day following the Demand Date for such reduction. If a permitted reduction in Posted Collateral is to be effected by a reduction in the amount that may be drawn under an outstanding Letter of Credit previously issued for the benefit of the Secured Party, the Secured Party shall promptly take such action as is reasonably necessary to cooperate with the Pledging Party to effectuate such reduction. (b) Except when (i) a Credit Support Default with respect to the Pledging Party has occurred and is continuing, or (ii) an Event of Default with respect to the Pledging Party has occurred and is continuing, or (iii) an Early Termination Date has occurred or been designated by the Secured Party for which there exist any unsatisfied payment obligation under the Base Contract, the Pledging Party may substitute for existing Posted Collateral new Eligible Collateral of equal or greater Value (provided that, if such substitute Eligible Collateral is of a type not designated as Eligible Collateral in the elections on Page 1 herein, then the substitution may not occur unless the Secured Party consents to such substitution). Upon the Transfer to the Secured Party of the substitute Eligible Collateral, the Secured Party shall Transfer the relevant replaced Posted Collateral (as specified by the Pledging Party) to the Pledging Party by the Close of Business on the second Business Day after such Transfer has been effected. Notwithstanding anything herein to the contrary, no such substitution shall be permitted unless (x) the substitute Eligible Collateral is Transferred to the Secured Party prior to, the release of the Posted Collateral to be returned to the Pledging Party and, if applicable, the security interest in, and lien upon, such substituted Eligible Collateral granted pursuant hereto in favor of the Secured Party shall have been perfected as required by applicable law and shall constitute a first priority perfected security interest therein and general first lien thereon, and (y) after giving effect to such substitution, the Value of such substitute Eligible Collateral, together will all other Posted Collateral held by the Secured Party, shall equal or exceed the Pledging Party’s Collateral Requirement. Each substitution of Eligible Collateral shall constitute a representation, warranty and agreement by the Pledging Party that the substituted Eligible Collateral shall be subject to and governed by the terms and conditions of this CSA, including without limitation and if applicable, the security interest in, general first lien on and right of offset against, such substituted Eligible Collateral granted pursuant to Paragraph 13(a) in favor of the Secured Party. (c) The Transfer of any Posted Collateral by the Secured Party to the Pledging Party in accordance with this Paragraph 5 shall be deemed a release by the Secured Party of its security interest, general first lien and right of offset granted pursuant to Paragraph 13(a) hereof only with respect to such returned Posted Collateral. Paragraph 6. Disputed Calculations. (a) If the Pledging Party disputes the amount of Eligible Collateral requested by the Secured Party and such dispute relates to the amount of the Exposure as determined by the Secured Party, then the Pledging Party shall (i) notify the Secured Party of the existence and nature of the dispute not later than the Close of Business on the Demand Date, and (ii) Transfer Eligible Collateral to or for the benefit of the Secured Party in accordance with Paragraph 4 and in an amount equal to the Pledging Party's own calculation of its Collateral Requirement as determined, in accordance with Paragraph 3. Such calculation shall be made in good faith and a commercially reasonable manner that is consistent with Section 10 of the Base Contract. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the two conflicting calculations. If the parties have not been able to resolve their dispute on or before the Notification Time on the second Business Day following the Demand Date, then the amount of the Exposure shall be recalculated with each party requesting quotations from one (1) Reference Market-Maker by the Notification Time on the third (3rd) Business Day following the Demand Date (taking the arithmetic average of those quotations obtained to obtain the average Exposure, provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Secured Party’s calculation shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof. The Pledging Party shall inform the Secured Party of the quotation it has obtained, if any, by the Notification Time on the third (3rd) Business Day following the Demand Date. The Secured Party shall inform the Pledging Party of the results of such recalculation in reasonable detail by the Notification Time on the fourth (4th) Business Day following the Demand Date. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, by the Close of Business on the fifth (5th) Business Day following the Demand Date. If the Pledging Party fails to dispute the amount of the Collateral requirement within the time period specified above, then the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Party having a Value on the date of Transfer at least equal to the Pledging Party's Collateral Requirement, as originally demanded by the Secured Party. (b) If the Secured Party disputes the amount of Eligible Collateral to be reduced by the Secured Party and such dispute relates to the amount of the Exposure claimed by the Pledging Party, then the Secured Party shall (i) notify the Pledging Party of the existence and nature of the dispute by the Close of Business on the Demand Date for such reduction, and (ii) effect the reduction of Eligible Collateral to or for the benefit of the Pledging Party in accordance ___________________________________________________________________________________________________________ Copyright 2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 7 Adopted October 9, 2003 with Paragraph 5 and in an amount equal to the Secured Party's own estimate, made in a commercially reasonable manner, of the Pledging Party’s Collateral Requirement as determined in accordance with Paragraph 3. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the two conflicting amounts. If the parties have not been able to resolve their dispute on or before the Notification Time on the second (2nd) Business Day following the Demand Date for such reduction, then the Secured Party’s Exposure shall be recalculated by each party requesting quotations from one (1) Reference Market-Maker by the Notification Time on the third (3rd) Business Day following the Demand Date for such reduction (taking the arithmetic average of those quotations obtained to obtain the average Exposure; provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Secured Party’s calculations shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof. The Pledging Party shall inform the Secured Party of the quotation it has obtained, if any, by the Notification Time on the third (3rd) Business Day after the Demand Date. The Secured Party shall inform the Pledging Party of the results of such recalculation in reasonable detail by the Notification Time on the fourth (4th) Business Day after the Demand Date for such reduction. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, by the Close of Business on the fifth (5th) Business Day after the Demand Date for such reduction. If the Secured Party fails to dispute the amount of the demanded reduction within the time period specified above, then the Secured Party shall Transfer or cause to be Transferred to the Pledging Party, Eligible Collateral for the benefit of the Pledging Party having a Value on the date of Transfer at least equal to the Pledging Party's demanded reduction. OPTION B: Paragraphs 4, 5, and 6 If the parties select Option B of the elections on Page 1 herein, the following Paragraphs 4, 5 and 6 and the related timing requirements and party information set forth in the Exhibit A to this CSA shall apply. Paragraph 4. Transfer of Eligible Collateral. On any Business Day on which (i) no Credit Support Default with respect to the Secured Party has occurred and is continuing, (ii) no Event of Default with respect to the Secured Party has occurred and is continuing, (iii) no Early Termination Date has occurred or been designated by the Pledging Party for which there exist any unsatisfied payment obligations under the Base Contract, and (iv) the Pledging Party’s Collateral Requirement equals or exceeds its Minimum Transfer Amount, the Secured Party may demand, by Notice to the Pledging Party, that the Pledging Party Transfer to the Secured Party, and the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Party having a Value on the date of Transfer at least equal to the Pledging Party’s Collateral Requirement. The amount of Eligible Collateral required to be Transferred hereunder shall be rounded up to the nearest integral multiple of the Rounding Amount. Unless otherwise agreed to in writing by the parties, the Pledging Party shall Transfer the Eligible Collateral by the Close of Business on the (‘A’) Business Day following the Demand Date. Any Letter of Credit or other type of Eligible Collateral (other than Cash) shall be Transferred to the address specified in this CSA or to such address as the Secured Party shall specify in its demand, pursuant to this Paragraph 4. Any demand made by the Secured Party pursuant to this Paragraph 4 shall specify wire transfer information for the account(s) to which Eligible Collateral in the form of Cash shall be Transferred if different then that set forth in this CSA. Notwithstanding anything to the contrary in this CSA, in the event of a Credit Support Default or an Event of Default, with respect to the Pledging Party which gives rise to an obligation to Transfer Eligible Collateral, the Pledging Party shall have no obligation to Transfer such Eligible Collateral if such event is cured or otherwise no longer exists prior to the time that such Eligible Collateral is required to be provided hereunder. Paragraph 5. Reduction and Substitution of Posted Collateral. (a) On any Business Day a Pledging Party may demand, by Notice to the Secured Party, a reduction in the amount of Posted Collateral previously provided by the Pledging Party for the benefit of the Secured Party, and the Secured Party shall comply with said demand, provided that after giving effect to the demanded reduction in Posted Collateral, (i) the Pledging Party shall have a Collateral Requirement of zero (0) as of the date the Secured Party would be required to return the requested Posted Collateral; (ii) no Credit Support Default with respect to the Pledging Party has occurred and is continuing; (iii) no Event of Default with respect to the Pledging Party has occurred and is continuing; and (iv) no Early Termination Date has occurred or been designated by the Secured Party for which there exist any unsatisfied payment obligations under the Base Contract. The amount of the Posted Collateral reduction shall be made by the Secured Party if such amount equals or exceeds the Secured Party’s Minimum Transfer Amount; provided however, such amount actually returned by the Secured Party shall be rounded down to the nearest integral multiple of the Rounding Amount. Unless otherwise agreed in writing by the parties, the Secured Party shall effect a permitted reduction in Posted Collateral by the Close of Business on the (‘B’) Business Day following the Demand Date for such reduction. If a permitted reduction in Posted Collateral is to be effected by a reduction in the amount that may be drawn under an outstanding Letter of Credit previously issued for the benefit of ___________________________________________________________________________________________________________ Copyright 2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 8 Adopted October 9, 2003 the Secured Party, the Secured Party shall promptly take such action as is reasonably necessary to cooperate with the Pledging Party to effectuate such reduction. (b) Except when (i) a Credit Support Default with respect to the Pledging Party has occurred and is continuing, or (ii) an Event of Default with respect to the Pledging Party has occurred and is continuing or (iii) an Early Termination Date has occurred or been designated by the Secured Party for which there exist any unsatisfied payment obligation under the Base Contract, the Pledging Party may substitute for existing Posted Collateral new Eligible Collateral of equal or greater Value on the (‘C’) Business Day following the Demand Date thereof (provided that, if such substitute Eligible Collateral is of a type not designated as Eligible Collateral in the elections on Page 1 herein, then the substitution may not occur unless the Secured Party consents to such substitution). Upon the Transfer to the Secured Party and/or its Custodian of the substitute Eligible Collateral, the Secured Party and/or its Custodian shall Transfer the relevant replaced Posted Collateral (as specified by the Pledging Party) to the Pledging Party by the Close of Business on the (‘D’) Business Day after such Transfer has been effected. Notwithstanding anything herein to the contrary, no such substitution shall be permitted unless (x) the substitute Eligible Collateral is Transferred to the Secured Party and/or its Custodian simultaneously with, or has been Transferred to the Secured Party and/or its Custodian prior to, the release of the Eligible Collateral to be returned to the Pledging Party and, if applicable, the security interest in, and lien upon, such substituted Eligible Collateral granted pursuant hereto in favor of the Secured Party shall have been perfected as required by applicable law and shall constitute a first priority perfected security interest therein and general first lien thereon, and (y) after giving effect to such substitution, the Value of such substitute Eligible Collateral, together will all other Posted Collateral held by the Secured Party, shall equal or exceed the Pledging Party’s Collateral Requirement. Each substitution of Eligible Collateral shall constitute a representation, warranty and agreement by the Pledging Party that the substituted Eligible Collateral shall be subject to and governed by the terms and conditions of this CSA, including without limitation and if applicable, the security interest in, general first lien on and right of offset against, such substituted Eligible Collateral granted pursuant to Paragraph 13(a) in favor of the Secured Party. (c) The Transfer of any Eligible Collateral by the Secured Party and/or its Custodian to the Pledging Party in accordance with this Paragraph 5 shall be deemed a release by the Secured Party of its security interest, general first lien and right of offset granted pursuant to Paragraph 13(a) hereof only with respect to such returned Eligible Collateral. Paragraph 6. Disputed Calculations. (a) If the Pledging Party disputes the amount of Eligible Collateral requested by the Secured Party and such dispute relates to the amount of the Exposure as determined by the Secured Party, then the Pledging Party shall (i) notify the Secured Party of the existence and nature of the dispute not later than the Close of Business on the (‘A’) Business Day following the Demand Date that the demand for Eligible Collateral is made by the Secured Party pursuant to Paragraph 4, and (ii) Transfer Eligible Collateral to or for the benefit of the Secured Party in accordance with Paragraph 4 and in an amount equal to the Pledging Party's own calculation of its Collateral Requirement, in accordance with Paragraph 3. Such calculation shall be made in good faith and a commercially reasonable manner that is consistent with Section 10 of the Base Contract. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the two conflicting calculations. If the parties have not been able to resolve their dispute on or before the Notification Time on the (‘E’) Business Day following the Demand Date, then the amount of the Exposure shall be recalculated with each party requesting quotations from one (1) Reference Market-Maker by the Notification Time on the (‘F’) Business Day following the Demand Date (taking the arithmetic average of those quotations obtained to obtain the average Exposure, provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Secured Party’s calculation shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof. The (‘A1’) Party shall inform the (‘A2’) Party of the quotation it has obtained, if any, by the Notification Time on the (‘G’) Business Day following the Demand Date. The (‘A3’) Party shall inform the (‘A4’) Party of the results of such recalculation in reasonable detail by the Notification Time on the (‘H’) Business Day following the Demand Date. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, by the Close of Business on the (‘I’) Business Day following the Demand Date. If the Pledging Party fails to dispute the amount of the Collateral requirement within the time period specified above, then the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Party having a Value on the date of Transfer at least equal to the Pledging Party's Collateral Requirement, as demanded by the Secured Party. (b) If the Secured Party disputes the amount of Eligible Collateral to be reduced by the Secured Party and such dispute relates to the amount of the Exposure claimed by the Pledging Party, then the Secured Party shall (i) notify the Pledging Party of the existence and nature of the dispute by the Close of Business on the (‘J’) Business Day following the Demand Date for such reduction, and (ii) effect the reduction of Eligible Collateral to or for the benefit of the Pledging Party in accordance with Paragraph 5 and in an amount equal to the Secured Party's own estimate, made in a commercially reasonable manner, of the Pledging Party’s Collateral Requirement in accordance with Paragraph 3. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the ___________________________________________________________________________________________________________ Copyright 2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 9 Adopted October 9, 2003 two conflicting amounts. If the parties have not been able to resolve their dispute on or before the Notification Time on the (‘K’) Business Day following the Demand Date for such reduction, then the Secured Party’s Exposure shall be recalculated by each party requesting quotations from one (1) Reference Market-Maker by the Notification Time on the (‘L’) Business Day following the Demand Date for such reduction (taking the arithmetic average of those quotations obtained to obtain the average Exposure; provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Pledging Party’s calculations shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof. The (‘A5’) Party shall inform the (‘A6’) Party of the quotation it has obtained, if any, by the Notification Time on the (‘M’) Business Day after the Demand Date. The (‘A7’) Party shall inform the (‘A8’) Party of the results of such recalculation in reasonable detail by the Notification Time on the (‘N’) Business Day after the Demand Date for such reduction. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, by the Close of Business on the (‘O’) Business Day after the Demand Date for such reduction. If the Secured Party fails to dispute the amount of the demanded reduction within the time period specified above, then the Secured Party shall Transfer or cause to be Transferred to the Pledging Party, Eligible Collateral for the benefit of the Pledging Party having a Value on the date of Transfer at least equal to the Pledging Party's demanded reduction. Paragraph 7. Letters of Credit. Eligible Collateral provided in the form of a Letter of Credit shall be subject to the following provisions. (a) Each “Letter of Credit” shall be an irrevocable, transferable, standby letter of credit, issued by an entity that meets the requirements of a Letter of Credit Issuer Requirements set forth in the elections on Page 1 herein in a form reasonably acceptable to the Secured Party. (b) “Letter of Credit Default” shall mean with respect to an outstanding Letter of Credit that is held by the Secured Party as Posted Collateral the occurrence of any of the following events: (i) the issuer of such Letter of Credit shall fail to meet the Letter of Credit Issuer Requirements set forth in the elections on Page 1 herein, (ii) the issuer of such Letter of Credit goes bankrupt; (iii) the issuer of the Letter of Credit shall fail to comply with or perform its obligations under such Letter of Credit if such failure shall be continuing after the lapse of any applicable grace period; (iv) the issuer of such Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Letter of Credit; or (v) such Letter of Credit shall expire or terminate, or shall fail or cease to be in full force and effect (other than in accordance with its terms) prior to the satisfaction of all obligations of the Pledging Party under each transaction to which such Letter of Credit shall relate without the written consent of the other party; provided, however, that no Letter of Credit Default shall occur in any event with respect to a Letter of Credit after the time such Letter of Credit is required to be canceled or returned to the Pledging Party in accordance with the terms of this CSA. Upon the occurrence of a Letter of Credit Default, the Pledging Party agrees to Transfer to the Secured Party either a substitute Letter of Credit or other Eligible Collateral, in each case on or before the second Business Day after the occurrence thereof (or the fifth (5) Business Day after the occurrence thereof if and only if clause (i) under the definition of Letter of Credit Default applies). (c) Unless otherwise agreed in writing by the parties, each Letter of Credit shall be provided in accordance with this Paragraph 7 and each Letter of Credit shall be maintained for the benefit of the Secured Party. The Pledging Party shall (i) renew or cause the renewal of each outstanding Letter of Credit on a timely basis as provided in the relevant Letter of Credit, (ii) Transfer either a substitute Letter of Credit or other Eligible Collateral, in each case at least twenty (20) Business Days prior to the expiration of the outstanding Letter of Credit, and (iii) Transfer for the benefit of the Secured Party either a substitute Letter of Credit or other Eligible Collateral, in each case within one (1) Business Day, if the bank issuing a Letter of Credit shall fail to honor the Secured Party’s properly documented request to draw on an outstanding Letter of Credit, provided that, as a result of the Pledging Party’s failure to perform in accordance with (i), (ii), or (iii) above, the Pledging Party’s Collateral Requirement would be greater than zero (0). (d) As one method of providing Posted Collateral, the Pledging Party may increase the amount of an outstanding Letter of Credit or establish one or more additional Letters of Credit. (e) Upon or at any time after the occurrence of an Event of Default with respect to the Pledging Party and/or the designation of an Early Termination Date by the Secured Party, the Secured Party may draw on the entire undrawn portion of any outstanding Letter(s) of Credit upon submission to the bank issuing such Letter of Credit in accordance with the specific requirements of the Letter of Credit. Cash proceeds received from drawing upon the Letter of Credit shall be deemed Posted Collateral as security for the Pledging Party’s obligations to the Secured Party and the Secured Party shall have the rights and remedies set forth in this CSA with respect to such Cash proceeds. Notwithstanding the Secured Party’s receipt of Cash under the Letter of Credit, the Pledging Party shall remain liable (i) for any failure to Transfer sufficient Posted ___________________________________________________________________________________________________________ Copyright 2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 10 Adopted October 9, 2003 Collateral, and (ii) for any amounts owing to the Secured Party and remaining unpaid after the application of the amounts so drawn by the Secured Party. (f) A Pledging Party may substitute a Letter of Credit for one or more other outstanding Letter(s) of Credit issued for the benefit of the Secured Party, provided that the Value of such substitute Letter of Credit shall be at least equal to the Value of the Letter(s) of Credit being replaced, and provided further that no Letter of Credit shall be canceled unless and until the Letter of Credit to be substituted therefor shall have been validly executed, issued and Transferred for the benefit of the Secured Party in accordance with applicable law. (g) In all cases, the costs and expenses incurred by the Pledging Party to establish, renew, substitute, cancel, and/or increase the amount of (as the case may be) a Letter of Credit shall be borne by the Pledging Party. (h) In any case in which Eligible Collateral or Posted Collateral is in the form of a Letter of Credit (which permits draws based on a facsimile copy), the deadlines set forth in this CSA for providing such collateral to the other party may be met by providing a facsimile copy of the Letter of Credit with an original transmitted by overnight courier for delivery on the next Business Day. Paragraph 8. Care and Use of Cash. Eligible Collateral provided in the form of Cash shall be subject to the following provisions. (a) Eligibility to Hold Cash. (i) If a party is not eligible to hold Cash as set forth in the elections on Page 1 herein, then such Cash shall be held in a Collateral Account in accordance with the provisions of Paragraph 8(e). (ii) The Secured Party or its Custodian will be entitled to hold Cash provided that the following conditions, as applicable, are satisfied: (1) the Secured Party is not a Defaulting Party, (2) the Secured Party or its Credit Support Provider, if applicable, meets the Eligibility Requirements to Hold Cash requirements set forth in the elections on Page 1 herein, (3) Cash shall be held only in any jurisdiction within the United States, and (4) the Custodian meets the Custodian Requirements set forth in the elections on Page 1 herein. If a party or its Custodian is not eligible, or subsequently becomes ineligible, to hold Posted Collateral pursuant to this Section, then it shall be considered a “Downgraded Party” or a “Downgraded Custodian”, as the case may be, and Posted Collateral shall be maintained in accordance with Paragraph 8(e). (iii) Upon Notice by the Secured Party to the Pledging Party of the appointment of a Custodian, the Pledging Party’s obligations to make any Transfer will be discharged by making the Transfer to that Custodian. The holding of Cash by a Custodian will be deemed to be the holding of Cash by the Secured Party for which the Custodian is acting. The Secured Party will be liable for the acts or omissions of its Custodian to the same extent that the Secured Party would be liable hereunder for its own acts or omissions. (b) Use of Cash. Notwithstanding the provisions of applicable law, if the Secured Party is eligible to hold cash in accordance with Paragraph 8(a), is not a Defaulting Party and no Early Termination Date has occurred or been designated by the Pledging Party as a result of an Event of Default with respect to the Secured Party, then the Secured Party shall have the right to sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise dispose of, or otherwise use in its business any Cash it holds, free from any claim or right of any nature whatsoever of the Pledging Party, including any equity or right of redemption by the Pledging Party. (c) Interest Payments on Cash. So long as no Event of Default with respect to the Pledging Party has occurred and is continuing, and no Early Termination Date (for which any unsatisfied payment obligations of the Pledging Party exist) has occurred or been designated as the result of an Event of Default with respect to the Pledging Party and to the extent that an obligation to Transfer Posted Collateral would not be created or increased by the Transfer, the Secured Party will upon written request Transfer to the Pledging Party, in lieu of any interest or other amounts paid or deemed to have been paid with respect to the Cash (all of which may be retained by the Secured Party), the Interest Amount on the third Business Day of each calendar month. On or after the occurrence of an Event of Default with respect to the Pledging Party or an Early Termination Date as a result of an Event of Default with respect to the Pledging Party, the Secured Party shall retain any such Interest Amount as additional Eligible Collateral hereunder until the obligations of the Pledging Party under the Base Contract have been satisfied. (d) Care of Cash. Without limiting the Secured Party’s rights under Paragraph 8(b), the Secured Party will exercise reasonable care to assure the safe custody of all Cash held by it as Posted Collateral to the extent ___________________________________________________________________________________________________________ Copyright 2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 11 Adopted October 9, 2003 required by applicable law, and in any event the Secured Party will be deemed to have exercised reasonable care if it exercises at least the same degree of care as it would exercise with respect to its own property. Except as specified in the preceding sentence, the Secured Party will have no duty with respect to Cash, including, without limitation, any duty to enforce or preserve any rights pertaining thereto. (e) Holding of Cash by a Custodian. The provisions of Paragraph 8(b) will apply to the parties; provided, however, that if a party or its Custodian is not eligible to hold Cash pursuant to Paragraph 8(a) (the event that caused it or its Custodian, if any, to be ineligible to hold Cash shall be a “Credit Rating Event”; if such Credit Rating Event occurs with respect to a party, such party shall be the “Downgraded Party”; and if such Credit Rating Event occurs with respect to a party’s Custodian, such Custodian shall be the “Downgraded Custodian”), then: (1) the provisions of Paragraph 8(b) will not apply with respect to the Downgraded Party as the Secured Party for so long as either the Secured Party or its Custodian, if any, remain a Downgraded Party or a Downgraded Custodian, respectively, and (2) the Downgraded Party shall be required to deliver (or cause the Downgraded Custodian to deliver, as the case may be) by the Close of Business on the second (2nd) Business Day following such Credit Rating Event all Cash in its possession or held on its behalf (i) to a Custodian that meets the Custodian Requirements, and (ii) to a segregated, safekeeping or custody account (“Collateral Account”) within such Custodian with the title of the Collateral Account indicating that the property contained therein is being held as Posted Collateral for the Downgraded Party; provided, that, if the Credit Rating Event occurs with respect to a party’s Custodian that is holding Posted Collateral on behalf of such party, then such Downgraded Custodian may also deliver such Posted Collateral to such party if such party is not a Downgraded Party, and (iii) the parties agree to enter into a control agreement (“Control Agreement”) with the Custodian maintaining the Collateral Account. The Control Agreement shall be in such form as shall be reasonably acceptable to each of the parties and shall provide for such items as the timing and release of the funds in the Collateral Account and the investment and reinvestment of Cash held in the Collateral Account. The Control Agreement shall further provide that Custodian shall serve as Custodian with respect to the Posted Collateral in the Collateral Account, and shall hold such Posted Collateral in accordance with the terms of this CSA and for the security interest of the Downgraded Party and, subject to such security interest, for the ownership of the non-Downgraded Party. The parties further agree that notwithstanding the fact that Cash is being held by a Custodian in a Collateral Account pursuant to a Control Agreement, the Downgraded Party shall be required to make interest payments to the non-Downgraded Party in an amount equal to the Interest Amount in accordance with the provisions of Paragraph 8(c). Paragraph 9. Notices (a) “Notice” shall mean a notice or other communication in respect of this CSA. Notice may be given in any manner set forth below to the address or number or in accordance with the electronic messaging system details provided on Page 1 of this CSA and will be deemed effective as indicated: (i) if in writing and delivered in person or by courier, on the Business Day it is delivered; (ii) if sent by facsimile transmission, on the date that transmission is received by the recipient in legible form (which may be evidenced by a transmission report generated by the sender's facsimile machine) unless such facsimile transmission is received on a non-Business Day or after the Close of Business then such facsimile shall be deemed to have been received on the next following Business Day. (iii) if sent by certified or registered mail or the equivalent (return receipt requested), on the Business Day that mail is delivered or its delivery is attempted; or (iv) if sent by electronic messaging system, on the date that electronic message is received, unless such electronic message is received on a non-Business Day or after the Close of Business, then such electronic message shall be deemed to have been received on the next following Business Day. (b) Any other Notice, including but not limited to, Notice of an Event of Default, must be given pursuant to Section 9 of the Base Contract. Paragraph 10. Credit Support Default (a) A “Credit Support Default" shall exist with respect to a party (the "Defaulting Party") if: (i) a party fails (or fails to cause its Custodian, as applicable) to make, when due, any Transfer of Eligible Collateral, Posted Collateral or the Interest Amount, as applicable, required to be made by it, and such failure continues for one (1) Business Day after Notice of that failure is provided to that party; or ___________________________________________________________________________________________________________ Copyright 2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 12 Adopted October 9, 2003 (ii) a party fails to comply with or perform any material agreement or obligation provided for in this CSA, and such failure continues for one (1) Business Day after Notice of that failure is provided to that party; or (iii) a party or its Custodian fails to comply with any of the obligations under Paragraph 8 herein and the failure continues for one (1) Business Day after notice of the failure is given to that party. (b) Credit Support Default shall constitute and have the effect of an Event of Default set forth in Section 10.2 (vi) of the Base Contract. Paragraph 11. Representations and Warranties. Each party continuously represents and warrants to the other party that: (a) it has the power and authority under the law of the jurisdiction of its organization or incorporation and under its organizational and constituent documents to grant to the Secured Party a valid, enforceable, first-priority security interest in, and lien on, all Posted Collateral (other than Letters of Credit) that it Transfers as the Pledging Party, and has taken all necessary actions to authorize the granting and perfection of that security interest and lien; (b) as of each date on which it, as the Pledging Party, Transfers Eligible Collateral to the Secured Party or to any agent of the Secured Party for the benefit of the Secured Party (or, in the case of after-acquired Posted Collateral, at the time the Secured Party or its agent acquires rights therein), it has title to, and will be the sole owner of such Eligible Collateral, free and clear of any security interest, lien, pledge, charge, encumbrance, or other interests or restrictions other than the security interest granted to the Secured Party hereby; (c) the Secured Party will have a valid and perfected first-priority security interest in, and lien on, all Posted Collateral (other than Letters of Credit) upon receipt thereof; (d) the performance by it of its obligations under this CSA will not result in the creation of any security interest, lien or other encumbrance on any Posted Collateral other than the security interest and lien granted pursuant to this CSA; and (e) in connection with the delivery, issuance, renewal, substitution, or increase (as the case may be) which constitutes a Transfer of a Letter of Credit, such Letter of Credit is the legal, valid and binding obligation of the Issuer thereof, enforceable in accordance with its terms. Paragraph 12. Certain Rights and Remedies. (a) Secured Party’s Rights and Remedies. If at any time (i) an Event of Default with respect to the Pledging Party has occurred and is continuing, or (ii) an Early Termination Date has occurred or been designated as a result of an Event of Default with respect to the Pledging Party, then the Secured Party may do any one or more of the following: (x) exercise any of the rights and remedies of a secured party with respect to the Posted Collateral, including any such rights and remedies under law then in effect; (y) exercise its rights of setoff against any and all property of the Pledging Party in the possession of the Secured Party or its agent; and (z) draw on any outstanding Letter of Credit issued for its benefit under its terms and this CSA. The Secured Party shall either (y) apply the proceeds of the Posted Collateral realized upon the exercise of any such rights or remedies to reduce the Pledging Party's obligations under the Base Contract or this CSA (the Pledging Party remaining liable for any amounts owing to the Secured Party after such application), subject to the Secured Party’s obligation to return any surplus proceeds remaining after such obligations are satisfied in full and/or (z) hold such proceeds as collateral security for the Pledging Party's obligations under the Base Contract or this CSA, subject to the Secured Party’s obligation to return the proceeds after such obligations are satisfied in full. (b) Pledging Party's Rights and Remedies. If at any time an Early Termination Date has occurred or been designated as the result of an Event of Default with respect to the Secured Party, then: (i) the Secured Party will be obligated immediately to Transfer all Posted Collateral and the Interest Amount, if any, to the Pledging Party; and (ii) the Pledging Party may do any one or more of the following: (x) exercise any of the rights and remedies of a pledgor with respect to the Posted Collateral, including any such rights and remedies under law then in effect; (y) to the extent that the Posted Collateral or the Interest Amount is not Transferred to the Pledging Party as required in (i) above, setoff amounts payable by the Pledging Party to the Secured Party against the Posted Collateral held by the Secured Party or to the extent its rights to setoff are not exercised, withhold payment of any remaining amounts payable by the Pledging Party, up to the value of any remaining Posted Collateral held by the Secured Party, until the Posted Collateral is Transferred to the Pledging Party; and/or (z) exercise rights and remedies available to the Pledging Party under the terms of any Letter of Credit. Paragraph 13. General. ___________________________________________________________________________________________________________ Copyright 2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 13 Adopted October 9, 2003 (a) To secure its obligations under the Base Contract and all outstanding transactions, each party, as the Pledging Party, hereby grants to the other party, as the Secured Party, a present and continuing first-priority security interest in, and lien on (and right of setoff against), all Posted Collateral (other than Letters of Credit) Transferred to the Secured Party hereunder. Each party agrees to take such action as the other party reasonably requires in order to perfect or maintain the other party’s first-priority continuing security interest in, and lien on (and right of setoff against), such Posted Collateral. (b) Each party will pay its own costs and expenses in connection with performing its obligations under this CSA and neither party will be liable for any costs or expenses incurred by the other party in connection herewith. (c) This CSA has been and is made solely for the benefit of the parties and their permitted successors and assigns, and no other entity shall acquire or have any right under or by virtue of this CSA. (d) No failure or delay by either party hereto in exercising any right, power, privilege, or remedy hereunder shall operate as a waiver thereof. (e) The headings in this CSA are for convenience of reference only, and shall not affect the meaning or construction of any provision thereof. DISCLAIMER: The purposes of this CSA are to facilitate trade, avoid misunderstandings and make more definite the terms of margining arrangements related to contracts of purchase and sale of natural gas. Further, NAESB does not mandate the use of this CSA by any party. NAESB DISCLAIMS AND EXCLUDES, AND ANY USER OF THIS CSA ACKNOWLEDGES AND AGREES TO NAESB'S DISCLAIMER OF, ANY AND ALL WARRANTIES, CONDITIONS OR REPRESENTATIONS, EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THIS CSA OR ANY PART THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY, OR FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE (WHETHER OR NOT NAESB KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE), WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING. EACH USER OF THIS CSA ALSO AGREES THAT UNDER NO CIRCUMSTANCES WILL NAESB BE LIABLE FOR ANY DIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY USE OF THIS CSA. Execution Version SPECIAL PROVISIONS TO CREDIT SUPPORT ADDENDUM DATED AS OF [ ], 2026 TO THE BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS BETWEEN JPMORGAN CHASE BANK, N.A. (“Party A”) AND CITY OF PALO ALTO (“Party B”) DATED AS OF [ ], 2026 These Special Provisions amend and form part of the Credit Support Addendum (“CSA”) dated as of [ ], 2026 to that certain Base Contract for Sale and Purchase of Natural Gas (“Base Contract”) published by the North American Energy Standards Board, Inc. (“NAESB”) effective between the parties as of [ ], 2026. In the event of any inconsistency between the CSA and these Special Provisions, these Special Provisions shall govern. Except as amended herein, the Base Contract, the General Terms and Conditions thereto, and any Special Provisions to the Base Contract shall remain in full force and effect. All capitalized terms used in these Special Provisions not otherwise defined herein shall have the meaning set forth in the Base Contract. References to sections not included herein shall be to those sections set forth in the Base Contract. Elections on Page 1 of CSA [X]. The following shall be the “Rating Matrix” for each party or, if applicable, its Credit Support Provider and shall define each party’s Collateral Threshold: “Collateral Threshold” means, with respect to a party, the amounts determined on the basis of the lower of the Credit Ratings set forth in the following table, provided, however, that if (i) a party has no Credit Rating, or (ii) an Event of Default or Potential Event of Default has occurred and is continuing with respect to such party, such party’s Collateral Threshold shall be U.S.$0: (S&P ) RATING (Moody’s) Party A Party B Paragraph 2 – Definitions 1. The definition of “Interest Period” shall be amended and restated in its entirety as follows: “Interest Period” means each calendar month, provided that (i) if this CSA is not entered into on the first day of a calendar month, the first interest period will be the period from (and including) the day on which this CSA is entered into to (and including) the last day of such calendar month and (ii) if an Early Termination Date has been designated or deemed to occur in relation to a party, the Interest Period shall mean the period from (and including) the first day of the calendar month in which such Early Termination Date occurred to (but excluding) such Early Termination Date. 2. The definition of “Posted Collateral” shall be amended by replacing the phrase “Paragraph 8(c)” in the fourth line thereof with the phrase “Paragraph 8(c)(i)”. 3. The definition of “Transfer” shall be amended by replacing the words “or Interest Amount” in the first and second lines thereof with “positive Interest Amount, or AV Negative Interest Amount”. 4. The definition of “Valuation Percentage” shall be amended and restated in its entirety as follows: “Valuation Percentage” shall mean the percentage set forth in the elections on Page 1 herein for each form of Eligible Collateral; provided that with respect to Letters of Credit the Valuation Percentage shall be 100% unless either (i) a Letter of Credit Default shall apply with respect to such Letter of Credit or (ii) twenty (20) or fewer Business Days remain prior to the expiration of such Letter of Credit, in which case the Valuation Percentage shall be zero (0). 5. The definition of “Value” shall be amended and restated in its entirety as follows: “Value” shall mean the Valuation Percentage multiplied by the amount of Posted Collateral; provided that with respect to Letters of Credit, such amount shall be the amount then available to be unconditionally drawn by the Secured Party under the Letter of Credit held by the Secured Party; provided, however, that the Value of a Letter of Credit shall be zero if a Letter of Credit Default exists with respect to such Letter of Credit or twenty (20) or fewer Business Days remain prior to the expiration of such Letter of Credit. 6. The following definitions shall be added to the CSA: “AV Negative Interest Amount” means, in respect of any negative Interest Amount, the absolute value of such negative Interest Amount. “Credit Rating” means, with respect to a party, the rating assigned by either S&P or Moody’s to the long term, unsecured and unsubordinated indebtedness of such party, or, if applicable, the Credit Support Provider of such party. “Moody’s” means Moody’s Investors Service, Inc. or its successor. “Potential Event of Default” means any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default. “S&P” means S&P Global Ratings or its successor. Paragraph 3 – Calculation of Collateral Requirement 1. Paragraph 3 of the CSA shall be amended and restated in its entirety as follows: “On any Business Day, the “Collateral Requirement” for a party (the “Pledging Party”) means the Secured Party’s Exposure minus the sum of: (a) the Pledging Party’s Collateral Threshold; plus (b) the Value of all Posted Collateral (as adjusted for any accrued positive Interest Amount or AV Negative Interest Amount that has not yet been Transferred to the Pledging Party or Secured Party, respectively) then held by the party other than the Pledging Party (the “Secured Party”); provided, however, that, the Collateral Requirement of the Pledging Party will be deemed to be zero (0) whenever the calculation of such Pledging Party’s Collateral Requirement yields a number less than zero (0).” Option A, Paragraph 4 – Transfer of Eligible Collateral 1. The second line of Paragraph 4 is amended by inserting the words “or Potential Event of Default” between “no Event of Default” and “with respect to the Secured Party”. Option A, Paragraph 5 – Reduction and Substitution of Posted Collateral 2. The sixth line of Paragraph 5(a) is amended by inserting the words “or Potential Event of Default” between “no Event of Default” and “with respect to the Pledging Party”. 3. The second line of Paragraph 5(b) is amended by inserting the words “or Potential Event of Default” between “an Event of Default” and “with respect to the Pledging Party”. 4. The word “will” in the fifteenth line of Paragraph 5(b) shall be replaced with the word “with”. Option A, Paragraph 6 – Disputed Calculations 5. Paragraph 6(a) shall be deleted and replaced in its entirety with the following: (a) If the Pledging Party disputes the amount of Eligible Collateral requested by the Secured Party and such dispute relates to the amount of the Exposure as determined by the Secured Party, then the Pledging Party shall (i) notify the Secured Party of the existence and nature of the dispute not later than the Close of Business on the Business Day following the Demand Date, and (ii) Transfer Eligible Collateral to or for the benefit of the Secured Party in accordance with Paragraph 4 and in an amount equal to the Pledging Party’s own calculation of its Collateral Requirement as determined, in accordance with Paragraph 3. Such calculation shall be made in good faith and a commercially reasonable manner that is consistent with Section 10 of the Base Contract. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the two conflicting calculations. If the parties have not been able to resolve their dispute on or before the Notification Time on the Business Day following the date of notification of the dispute (the “Resolution Time”), then the amount of the Exposure shall be recalculated with the Secured Party requesting quotations from four (4) Reference Market-Makers (taking the arithmetic average of those quotations obtained to obtain the average Exposure, provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Secured Party’s original calculation shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof. The Secured Party shall inform the Pledging Party of the results of such recalculation in reasonable detail by the Notification Time on the Business Day following the Resolution Time. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, upon demand. If the Pledging Party fails to dispute the amount of the Collateral Requirement within the time period specified above, then the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Party having a Value on the date of Transfer at least equal to the Pledging Party’s Collateral Requirement, as originally demanded by the Secured Party. 6. Paragraph 6(b) shall be deleted and replaced in its entirety with the following: (b) If the Secured Party disputes the amount of Eligible Collateral to be reduced by the Secured Party and such dispute relates to the amount of the Exposure claimed by the Pledging Party, then the Secured Party shall (i) notify the Pledging Party of the existence and nature of the dispute by the Close of Business on the Business Day following the Demand Date for such reduction, and (ii) effect the reduction of Eligible Collateral to or for the benefit of the Pledging Party in accordance with Paragraph 5 and in an amount equal to the Secured Party’s own estimate, made in a commercially reasonable manner, of the Pledging Party’s Collateral Requirement as determined in accordance with Paragraph 3. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the two conflicting amounts. If the parties have not been able to resolve their dispute on or before the Notification Time on the Business Day following the date of notification of the dispute (the “Resolution Time”), then the Secured Party’s Exposure shall be recalculated by Pledging Party requesting quotations from four (4) Reference Market-Maker (taking the arithmetic average of those quotations obtained to obtain the average Exposure; provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Pledging Party’s original calculations shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof. The Pledging Party shall inform the Secured Party of the results of such recalculation in reasonable detail by the Notification Time on the Business Day following the Resolution Time. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, upon demand. If the Secured Party fails to dispute the amount of the demanded reduction within the time period specified above, then the Secured Party shall Transfer or cause to be Transferred to the Pledging Party, Eligible Collateral for the benefit of the Pledging Party having a Value on the date of Transfer at least equal to the Pledging Party’s demanded reduction. Paragraph 7 – Letters of Credit 1. Paragraph 7(a) shall be amended and restated in its entirety as follows: (a) Each “Letter of Credit” shall be an irrevocable, transferable, standby letter of credit, issued by an entity that meets the Letter of Credit Issuer Requirements set forth in the elections in Page 1 herein utilizing the form set forth in Schedule 1 attached to the Special Provisions hereto, with such changes to the terms in that form as the issuing bank may require and as may be acceptable to the party in whose favor the letter of credit is issued, in its reasonable discretion. 2. Paragraph 7(b) shall be amended and restated in its entirety as follows: (b) “Letter of Credit Default” shall mean with respect to an outstanding Letter of Credit that is held by the Secured Party as Posted Collateral the occurrence of any of the following events: (i) the issuer of such Letter of Credit shall fail to meet the Letter of Credit Issuer Requirements set forth in the elections on Page 1 herein; (ii) any event analogous to an event specified in Paragraph 10.2(i)-(v) of the Base Contract shall occur with respect to the issuer of such Letter of Credit; (iii) the issuer of the Letter of Credit shall fail to comply with or perform its obligations under such Letter of Credit if such failure shall be continuing after the lapse of any applicable grace period; (iv) the issuer of such Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Letter of Credit; or (v) such Letter of Credit shall expire or terminate, or shall fail or cease to be in full force and effect prior to the satisfaction of all obligations of the Pledging Party under each transaction to which such Letter of Credit shall relate without the written consent of the other party; provided, however, that no Letter of Credit Default shall occur in any event with respect to a Letter of Credit after the time such Letter of Credit is required to be canceled or returned to the Pledging Party in accordance with the terms of this CSA. Upon the occurrence of a Letter of Credit Default, the Pledging Party agrees to Transfer to the Secured Party either a substitute Letter of Credit or other Eligible Collateral, in each case on or before the second Business Day after the occurrence thereof. 3. Paragraph 7(c) shall be amended and restated in its entirety as follows: (c) Unless otherwise agreed in writing by the parties, each Letter of Credit shall be provided in accordance with this Paragraph 7 and each Letter of Credit shall be maintained for the benefit of the Secured Party. The Pledging Party shall (i) either (a) at least thirty (30) Business Days prior to the then-current expiration date (the “Rollover Date”), renew or cause the renewal of each outstanding Letter of Credit for a period of at least one year from the Rollover Date or (b) if each such Letter of Credit is not renewed prior to the date that is thirty (30) Business Days prior to the Rollover Date, Transfer either a substitute Letter of Credit or other Eligible Collateral, in each case at least twenty (20) Business Days prior to the Rollover Date, and (ii) Transfer for the benefit of the Secured Party either a substitute Letter of Credit or other Eligible Collateral, in each case within one (1) Business Day, if the bank issuing a Letter of Credit shall fail to honor the Secured Party’s properly documented request to draw on an outstanding Letter of Credit, provided that, as a result of the Pledging Party’s failure to perform in accordance with (i), or (ii) above, the Pledging Party’s Collateral Requirement would be greater than zero (0). Any change to an outstanding Letter of Credit other than an increase in amount or extension thereof will become effective only upon the written consent of the Secured Party. 4. The second line of Paragraph 7(e) shall be amended by adding the words “and/or in the event that an outstanding Letter of Credit is not renewed or substituted at least twenty (20) Business Days prior to the Rollover Date” between “by the Secured Party” and “,”. 5. The fourth line of Paragraph 7(e) shall be amended by adding the words “by the Secured Party” between “received” and “from drawing”. 6. Paragraph 7(g) shall be amended and restated in its entirety as follows: (g) In all cases, all costs and expenses relating to a Letter of Credit shall be borne by the Pledging Party. Paragraph 8 – Care and Use of Cash 1. The second line of Paragraph 8(b) is amended by inserting the words “, no Event of Default or Potential Event of Default has occurred and is continuing with respect to the Secured Party” between “not a Defaulting Party” and “and no Early Termination Date”. 2. Paragraph 8(c) is deleted and replaced in its entirety with the following: (c) Interest Payments on Cash. (i) If the Interest Amount for an Interest Period is a positive number, then so long as no Event of Default or Potential Event of Default with respect to the Pledging Party has occurred and is continuing, and no Early Termination Date (for which any unsatisfied payment obligations of the Pledging Party exist) has occurred or been designated as the result of an Event of Default with respect to the Pledging Party and to the extent that an obligation to Transfer Posted Collateral would not be created or increased by the Transfer, the Secured Party will Transfer to the Pledging Party on or prior to the third Business Day of each calendar month, in lieu of any interest or other amounts paid or deemed to have been paid with respect to the Cash (all of which may be retained by the Secured Party), the Interest Amount as calculated by the Secured Party on the first Business Day of each calendar month with respect to the immediately preceding Interest Period. On or after the occurrence of an Event of Default or Potential Event of Default with respect to the Pledging Party or an Early Termination Date as a result of an Event of Default with respect to the Pledging Party, the Secured Party shall retain any such Interest Amount as additional Eligible Collateral hereunder until the obligations of the Pledging Party under the Base Contract have been satisfied. (ii) If the Interest Amount for an Interest Period is a negative number, then so long as no Event of Default or Potential Event of Default with respect to the Secured Party has occurred and is continuing, and no Early Termination Date (for which any unsatisfied payment obligations of the Secured Party exist) has occurred or been designated as the result of an Event of Default with respect to the Secured Party, the Secured Party will calculate the AV Negative Interest Amount on the first Business Day of each calendar month with respect to the immediately preceding Interest Period and shall provide Notice of such AV Negative Interest Amount to the Pledging Party on the same Business Day. The Pledging Party will Transfer to the Secured Party such AV Negative Interest Amount on or prior to the second Business Day following such Notice. If any Posted Collateral is in the form of Cash in the same currency as the AV Negative Interest Amount, any AV Negative Interest Amount or portion thereof not Transferred pursuant to this subsection (ii) of this Paragraph 8(c) (the “Untransferred Interest Amount”) will constitute a reduction of Posted Collateral in the form of such Cash; provided that if the amount of Posted Collateral which is comprised of such Cash is less than the Untransferred Interest Amount, such reduction shall only be to the extent of the amount of such Cash which is Posted Collateral and the Pledging Party shall remain obligated to Transfer the remainder of the Untransferred Interest Amount to the Secured Party. Any reduction of Posted Collateral in the form of Cash shall be deemed to be a Transfer and shall fulfill the Pledgor’s obligation to Transfer the AV Negative Interest Amount or related portion thereof to the Secured Party. 3. Paragraph 8(e) is deleted and replaced in its entirety with the following: (e) Holding of Cash by a Custodian. The provisions of Paragraph 8(b) will apply to the parties; provided, however, that if a party or its Custodian is not eligible to hold Cash pursuant to Paragraph 8(a) (the event that caused it or its Custodian, if any, to be ineligible to hold Cash shall be a “Credit Rating Event”; if such Credit Rating Event occurs with respect to a party, such party shall be the “Downgraded Party”; and if such Credit Rating Event occurs with respect to a party’s Custodian, such Custodian shall be the “Downgraded Custodian”), then: (1) the provisions of Paragraph 8(b) will not apply with respect to the Downgraded Party as the Secured Party for so long as either the Secured Party or its Custodian, if any, remain a Downgraded Party or a Downgraded Custodian, respectively, and (2) the Downgraded Party shall be required to deliver (or cause the Downgraded Custodian to deliver, as the case may be) by the Close of Business on the fifth (5th) Business Day following such Credit Rating Event all Cash in its possession or held on its behalf (i) to a Custodian that meets the Custodian Requirements, and (ii) to a segregated, safekeeping or custody account (“Collateral Account”) within such Custodian with the title of the Collateral Account indicating that the property contained therein is being held as Posted Collateral for the Downgraded Party; provided, that, if the Credit Rating Event occurs with respect to a party’s Custodian that is holding Posted Collateral on behalf of such party, then such Downgraded Custodian may also deliver such Posted Collateral to such party if such party is not a Downgraded Party. Paragraph 10 – Credit Support Default 1. Paragraph 10(a) is amended and restated in its entirety as follows: (a) A “Credit Support Default” shall exist with respect to a party (the “Defaulting Party”) if: (i) a party fails (or fails to cause its Custodian, as applicable) to make, when due, any Transfer of Eligible Collateral, Posted Collateral, positive Interest Amount or AV Negative Interest Amount, as applicable, required to be made by it, and such failure continues for one (1) Business Day after Notice of that failure is provided to that party; or (ii) a party or its Custodian fails to comply with any of the obligations under Paragraph 8 herein and the failure continues for five (5) Business Day after notice of the failure is given to that party; or (iii) a party fails to comply with or perform any material agreement or obligation provided for in this CSA (other than those specified in Paragraphs 10(a)(i) and (ii)), and such failure continues for thirty (30) days after Notice of that failure is provided to that party; or (iv) a Letter of Credit Default occurs with respect to the Letter of Credit provided by such party as Pledging Party. Paragraph 12 – Certain Rights and Remedies 1. Paragraph 12(a) is amended to insert the words “(including any obligation of the Pledging Party to Transfer any AV Negative Interest Amount to the Secured Party)” in the eleventh line thereof between the words “after such obligations” and “are satisfied in full”. 2. Paragraph 12(b) is amended to replace the words “Interest Amount” in the third and sixth lines thereof with the words “amount of any positive Interest Amount”. IN WITNESS WHEREOF, the parties hereto have executed this Credit Support Addendum in duplicate, as of the effective date written above. CITY OF PALO ALTO Approval by Mayor: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 City of Palo Alto Approved as to form: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 City of Palo Alto Approval by City Manager: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 City of Palo Alto Approval by Administrative Services Director: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 2026 SCHEDULE 1 [THIS TEMPLATE IS FOR ISSUANCES OF LETTERS OF CREDIT IN PAPER FORM. ALTERNATIVELY, THE PARTIES MAY AGREE TO ISSUANCE VIA SWIFT MT760, IN WHICH CASE STANDARD SWIFT FIELDS AND CODES MAY BE USED AND COMMUNICATIONS, DRAWINGS AND TRANSFERS WILL BE VIA AUTHENTICATED SWIFT MESSAGES THROUGH JPMORGAN CHASE BANK, N.A. AS ADVISING BANK WITHOUT ANY REQUIREMENT TO PRESENT THE ORIGINAL LETTER OF CREDIT OR RELATED DOCUMENTS IN PAPER FORM] FORM OF LETTER OF CREDIT [BANK NAME and ADDRESS] Irrevocable Standby Letter of Credit No: [INSERT REFERENCE] Beneficiary: JPMorgan Chase Bank, N.A. DATE] Initial Expiration Date: [ one year after date of issuance] Applicant: City of Palo Alto As the Issuing Bank (“Issuer”), we, [Bank Name], hereby establish this irrevocable Standby Letter of Credit No. [INSERT REFERENCE] (this "Letter of Credit") in favor of the above- named beneficiary (“Beneficiary”) for the account of the above-named applicant (“Applicant”) in the amount of US$__________ (_________________ Million U.S. Dollars). Beneficiary may draw all or any portion of this Letter of Credit at any time and from time to time, and Issuer will make funds immediately available to Beneficiary upon presentation of Beneficiary’s draft(s) at sight in substantially the form attached hereto as Exhibit “A” (“Sight Draft”), drawn on Issuer and accompanied by this Letter of Credit. All Sight Drafts must be purportedly signed on behalf of Beneficiary, and the signator must indicate his or her title or other official capacity. No other documents will be required to be presented. Issuer will effect payment under this Letter of Credit within twenty-four (24) hours after presentment of any Sight Draft. Payment shall be made in U.S. Dollars with Issuer’s own funds in immediately available funds. Issuer will honor any Sight Draft presented in substantial compliance with the terms of this Letter of Credit at the Issuer’s letterhead office, the office located at [Bank Address], or any other full service office of the Issuer on or before the above-stated expiration date, as such expiration date may be extended hereunder. Partial and multiple draws and presentations are permitted on any number of occasions. Following any partial draw, Issuer will endorse this Letter of Credit and return the original to Beneficiary. FUNDS UNDER THIS LETTER OF CREDIT ARE AVAILABLE TO BENEFICIARY BY PRESENTATION IN STRICT COMPLIANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT ON OR BEFORE 5:00 P.M., NEW YORK TIME, ON OR BEFORE A BUSINESS DATE OF THE EXPIRATION DATE. FOR THE PURPOSES OF THIS LETTER OF CREDIT, “BUSINESS DAY” MEANS ANY DAY OTHER THAN A SATURDAY, SUNDAY, OR OTHER DAY ON WHICH COMMERCIAL BANKS ARE AUTHORIZED OR REQUIRED TO CLOSE IN THE STATE OF NEW YORK. This Letter of Credit is issued pursuant to the provisions of that certain NAESB Base Contract for Sale and Purchase of Natural Gas between Beneficiary and Applicant dated as of _______________, 20__ (as the same may have been or may be amended from time to time, the “Agreement”). Notwithstanding any reference in this Letter of Credit to the Agreement or any other documents, instruments or agreements, or references in the Agreement or any other documents, instruments or agreements to this Letter of Credit, this Letter of Credit contains the entire agreement between Beneficiary and Issuer relating to the obligations of Issuer hereunder. This Letter of Credit will be automatically extended each year without amendment for a successive period of one (1) year from the expiration date hereof, as extended, unless at least thirty (30) days prior to the expiration date, Issuer notifies Beneficiary by registered mail that it elects not to extend this Letter of Credit for such additional period. Notice of non-extension will be given by Issuer to Beneficiary at Beneficiary’s address set forth herein or at such other address as Beneficiary may designate to Issuer in writing at Issuer’s letterhead address. This Letter of Credit is freely transferable by Beneficiary in whole or in part, and the number of transfers is unlimited. Issuer shall effect any transfers immediately upon presentation to Issuer of this Letter of Credit and a completed written transfer request substantially in the form attached hereto as Exhibit "B." Such transfer will be effected at no cost to Beneficiary. Any transfer fees assessed by Issuer will be payable solely by Applicant, and the payment of any transfer fees will not be a condition to the validity or effectiveness of the transfer of this Letter of Credit. If the original Letter of Credit shall be lost or destroyed, this Letter of Credit may be transferred, in lieu of the original Letter of Credit, by you or one of your affiliates (reasonably acceptable to us) providing us with a commercially reasonable indemnity. THIS LETTER OF CREDIT MAY NOT BE TRANSFERRED TO ANY PERSON WITH WHICH U.S. PERSONS ARE PROHIBITED FROM DOING BUSINESS UNDER U.S. FOREIGN ASSETS CONTROL REGULATIONS OR OTHER APPLICABLE U.S. LAWS AND REGULATIONS Issuer waives any rights it may have, at law or otherwise, to subrogate to any claims which Beneficiary may have against Applicant or Applicant may have against Beneficiary. All commissions, expenses, and charges incurred with this Letter of Credit are for the account of the Applicant. This Letter of Credit sets forth in full our undertaking, and such undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS LETTER OF CREDIT, BENEFICIARY SHALL HAVE THE OPTION TO PRESENT TO US EACH DOCUMENT REQUIRED UNDER THIS LETTER OF CREDIT AS AN ELECTRONIC OR PORTABLE DOCUMENT FORMAT (".PDF") ATTACHMENT TO AN EMAIL. TRANSMISSION MADE FROM BENEFICIARY'S EMAIL ADDRESS TO US AT OUR EMAIL ADDRESS [INSERT]; PROVIDED THAT SUCH EMAIL TRANSMISSION MUST CONTAIN THE FOLLOWING CERTIFICATION “(I) WE CERTIFY THAT WE ARE THE BENEFICIARY OF THE LETTER OF CREDIT INDICATED IN THE .PDF ATTACHMENT(S) AND (II) EACH DOCUMENT WE HAVE TRANSMITTED TO YOU VIA ELECTRONIC MEANS RATHER THAN IN THE FORM OF A PHYSICAL DOCUMENT REPRODUCES ALL TEST, IMAGES AND OTHER FEATURES OF TH ORIGINAL DOCUMENT (INCLUDING ANY SIGNATURES AND ANY UNIVERSALLY UNIQUE IDENTIFIER OR OTHER UNIQUE STRING OF CHARACTERS, MARKS OR OTHER IDENTIFYING INFORMATION APPEARING ON SUCH DOCUMENT) AND HAS NOT BEEN ALTERED." ANY SUCH EMAIL TRANSMISSION SHALL BE DEEMED A SITE DRAFT. THIS PRESENTATION MAY BE DELIVERED TO US IN ELECTRONIC FORM, AND SUCH ELECTRONIC COPY SHALL BE DEEMED TO BE THE ORIGINAL AND VALID FOR PURPOSES OF PRESENTATION HEREUNDER. IN THE EVENT A REQUEST IS PRESENTED VIA EMAIL TO THE ISSUER, IT IS UNDERSTOOD AND AGREED THAT THE ISSUER MAY ACT ON SUCH REQUEST WITHOUT THE NEED OR THE OBLIGATION TO SECURE THE ORIGINAL. IN ANY EVENT, THE ISSUER SHALL NOT BE LIABLE FOR ANY DISCREPANCY THAT MAY ARISE BETWEEN THE REQUEST TRANSMITTED BY EMAIL AND THE ORIGINAL REQUEST DELIVERED AS PROVIDED HEREIN. THIS LETTER OF CREDIT IS SUBJECT TO AND GOVERNED BY THE INTERNATIONAL STANDBY PRACTICES 1998, INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 590 ("ISP98"). AS TO MATTERS NOT GOVERNED BY ISP98, THIS LETTER OF CREDIT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO THE CONFLICT OF LAW PROVISIONS THEREOF THAT WOULD DIRECT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. VERY TRULY YOURS, [BANK NAME] (CONFIDENTIAL) EXHIBIT “A” TO LETTER OF CREDIT SIGHT DRAFT Draft Number __________________ $____________________________ At sight (or electronic format as authorized in the Letter of Credit), pay to the order of [Name of Beneficiary to be inserted], the amount of USD $____________ (__________________ and 00/100ths U.S. Dollars). Value received and charged to the account of: [BANK NAME and ADRESS]. Drawn under [BANK NAME] Standby Letter of Credit No. [INSERT REFERENCE] Dated: _____________ JPMorgan Chase Bank, N.A. By: ________________________ [name and title] Account: [Applicant to be inserted] EXHIBIT “B” TO LETTER OF CREDIT FORM OF TRANSFER REQUEST Irrevocable Standby Letter of Credit No. ____________________ Current Beneficiary: Applicant: __________________________ ____________________________ __________________________ ____________________________ __________________________ ____________________________ __________________________ ____________________________ To: [Name of Issuer] ("Issuer") The undersigned, as the current "Beneficiary" of the above-referenced Letter of Credit, hereby requests that you reissue the Letter of Credit in favor of the transferee named below [insert transferee name and address below]: _____________________________ _____________________________ _____________________________ _____________________________ From and after the date this transfer request is delivered to Issuer, the transferee shall be the "Beneficiary" under the Letter of Credit for all purposes and shall be entitled to exercise and enjoy all of the rights, privileges and benefits thereof. Dated: ________________ JPMorgan Chase Bank, N.A. By: ______________________ Name: ______________ Title: ______________ [Notary Acknowledgement] To be signed by a person purporting to be an authorized representative of Beneficiary and indicating his or her title or other official capacity, and acknowledged by a notary public.