Agenda — California City City Council, September 8, 2026

CITY OF CALIFORNIA CITY
September 8, 2026
Dr. Marquette Hawkins
MAYOR
Jim Creighton

MAYOR PRO TEM
Shawn Bradley
Della Clark
Ronald Smith

COUNCIL MEMBERS
John Paul Maier

ACTING CITY

MANAGER

AMENDED AGENDA
(Updates are highlighted in red text: Item CB 2 Added)

CITY COUNCIL/ HOUSING AUTHORITY/ SUCCESSOR AGENCY
SPECIAL MEETING TUESDAY, SEPTEMBER 8, 2026 @ 5:00 PM

COUNCIL CHAMBERS
21000 HACIENDA BLVD., CALIFORNIA CITY, CA 93505 &

VIA ZOOM
If you need special assistance to participate in this meeting, contact the City Clerk at (760) 373-7140 or via email at [email protected]. We request a 24-hour notification prior to the meeting in order for the City to make reasonable arrangements to ensure accessibility. (28 CFR 35.102-35.104 American Disabilities Act Title II) Zoom instructions and notes:

Web Link: https://us06web.zoom.us/j/82424125440
Meeting ID:824 2412 5440
Passcode: 288834

1. Public can dial into the Zoom line:
a. One tap mobile: +16694449171,87254527178# US
b. Dial the following number: +1 564 217 2000 US

CITY OF CALIFORNIA CITY
September 8, 2026
The public is urged to listen to the meeting in a quiet place to avoid background noise. We also request public to MUTE your audio device when not commenting to avoid disruption during meeting.
**Please take this time to turn off your cell phones ** CLOSED SESSION 4:00 PM

CALL TO ORDER

ROLL CALL
Councilmembers: Bradley Clark, Smith, Mayor Pro Tem Creighton, Mayor Hawkins

ADOPT THE AGENDA

PUBLIC COMMENT
Members of the public are welcome to address the City Council ONLY on those items listed on the Closed Session agenda. Each member of the public will be given (3) three minutes to speak

CLOSED SESSION
CS 1. Public Employee dismissal/discipline/release pursuant to Government Code 54957 CS 2. Conference with Legal Counsel – Pending Litigation pursuant to Government Code 54956.9(d)(1):

Serina Rodarte v. City of California City, et al. (Case No.: BCV-25-101491) CS 3. CONFERENCE WITH LEGAL COUNSEL—ANTICIPATED LITIGATION Significant exposure to litigation pursuant to Section 54956.9(d)(2): One Case

REPORT OUT OF CLOSED SESSION

CITY COUNCIL CONVENES TO REGULAR MEETING
SPECIAL MEETING 5:00 PM

CALL TO ORDER

PLEDGE OF ALLEGIANCE / INVOCATION
ROLL CALL –
Councilmembers: Bradley Clark, Smith, Mayor Pro Tem Creighton, Mayor Hawkins

CITY OF CALIFORNIA CITY
September 8, 2026

DEPARTMENT REPORTS
Cannabis City Manager
Housing OHV
Parks and Recreation

CITY CLERK REPORTS/RECEIVED COMMUNICATIONS
J.M. Powers – September 1, 2026

CIVIC/COMMUNITY/ORGANIZATION ANNOUNCEMENTS

PUBLIC BUSINESS FROM THE FLOOR / PUBLIC COMMENT
This portion of the meeting is reserved for the public to address the City Council on any matter NOT on this agenda and over which the City Council has jurisdiction. Please state your name for the record and limit your comments to (3) three minutes.The City Council will receive the comments but cannot engage in back-and- forth discussion with the public or make any decision. The City Council can direct staff to bring the item back to a future agenda for discussion.

CONSENT CALENDAR

WAIVER OF FULL READING OF RESOLUTIONS AND ORDINANCES
Consideration to waive full-text reading of all Resolutions and Ordinances by single motion made at the start of each meeting, subject to the ability of the City Council / Agency to read the full text of selected resolutions and ordinances when the item is addressed by subsequent motion. All items on the consent calendar are considered routine, and non-controversial and will be approved by (1) one motion if no member of the council, staff, or public wishesto comment or ask questions. Public comments are to be limited to (3) three minutes. Roll call vote required.

CC 1. Approve City Check Register dated 08/21/2026-09/03/2026 CC 2. Approve Minutes for 08/18/2026 Special Meeting
CC 3. Staff Report: John Paul Maier, Acting City Manager ` Subject: 2026 Regular Meeting Schedule and Cancellation of Certain Regular Scheduled Meetings Recommendation: It is recommended that the City Council Adopt a Resolution of the City Council of the City of California City, California, Approving the Calendar Year 2026 Regular Meeting Schedule and Cancellation of Certain Regular Scheduled Meetings.

CONTINUED BUSINESS
CB 1. Staff Report: Sean Grayson, Assistant to the City Manager, Carina Robinson, Cannabis Program Manager & Tax Administrator
Subject: Review of Cannabis Ordinance Revision Content for Future Adoption Recommendation: It is recommended that the City Council receive the report and provide any needed direction.

CB 2. Staff Report: John Paul Maier, Acting City Manager, Victor Ponto, City Attorney Subject: Consideration and Potential Approval of an Energy Savings Agreement Between City of California City And 12 Holdings, LLC (A Staff Report will be forthcoming) Recommendation: It is recommended that the City Council provide any needed direction.

CITY OF CALIFORNIA CITY
September 8, 2026
COUNCILMEMBER COMMENTS, AGENDA REQUESTS, AND AB1234 REPORTS This portion of the meeting is reserved for council members to present information, announcements, and items that have come to their attention. The Brown Act precludes Council, staff, or public discussion. Short staff responses are appropriate. The Council will take no formal action. A Council member may request the City Clerk to calendar an item for consideration at a future meeting or refer an item to staff.

ADJOURNMENT
AFFIDAVIT OF POSTING- September 7, 2026
I, John Paul Maier, Acting City Manager / City Clerk for the City of California City, California, DO HEREBY CERTIFY that the foregoing notice was posted on all official City bulletin boards and the City’s website at least 24 hours prior to the meeting in compliance with the provisions of the Brown Act.

DR - CANNABIS
1 COUNCIL AGENDA ITEM
September 8, 2026
TO: Honorable Mayor and City Council
FROM: Carina Robinson, Cannabis Program Manager
SUBJECT: CANNABIS MONTHLY DEPARTMENT REPORT

MONTHLY ACTIVITY

1. Community Education Townhall presentation in final draft and ready for final review with Acting City Manager. Plan to set meeting in City Hall Chambers at the end of September.

The meeting will be open to the public, operators, and residents of all ages. Recording will be posted on City Hall website for records.

2. Completed permitting audit, edits, and updates in Cassell.

3. Met with six operators for follow up inspections and in office meetings.

4. Grant monitor resigned. Meeting with new Monitor to discuss retaining services 9/3/2026.

5. BSCC Grant Invoice #13 submitted.

6. Reviewed Grant per line item regarding purchased equipment and actual approvals for requirements. Grant needs to be updated correctly with achievable tasks and the correct staff positions. Still no response from the middle or high school administrator yet regarding education classes on premises per grant.

7. Continuing to work with RCS Consultants for Time Allocation Study. There are multiple positions in the department that must be recorded accurately for allocation of time required to complete all tasks.

8. New Business License and Cannabis Permit issued to a manufacturer on Curtis Place.

Completed onsite visit and file review.

9. One new operator pending background check with Live Scan for Moss Ave.

10. Received California Department of Tax and Fee Administration letter dated 8/6/2026 of revocation for a Seller’s Permit with one operator that owes back taxes from January 2026.

Notified Cannabis Taskforce and Code Enforcement. On 8/14/2026, the Notice of Suspension was issued. On 8/24/2026, the Notice of Plan of Correction issued. Operator has not responded to the Plan of Correction and continues to operate without a State Seller’s Permit or proof of compliance.

11. Recalculating taxes owed from a NOV for a cultivation on Neuralia per the City Attorney’s guidance. Planning Department audited business licensing files for operator to apply for a new permit upon completion of building requirements and corrected tax settlement. 5 DR - CANNABIS
2 12. Met with Code Enforcement to allow operator on premises of a “red tagged” property to remove personal items. There are no new building applications on file for permitting.

Current Business License and Cannabis Permit suspended due to no Certificate of Occupancy and several violations of non-compliance.

13. See Code Enforcement report for citations.

14. Received court decision regarding operator on Baron Boulevard. Assisted City Attorney with a “path of compliance” requested by the defendant’s attorneys. Waiting for the information and resolution regarding owed back taxes and decision from the court.

15. Organizing all notes for Cannabis Ordinance revisions to meet standardization of operations and municipal codes in the industry.

16. Week of 9/7/2026 will be meeting with Kern County Fire Department Plans Examiner to review the partnership agreement and execution of inspections for cannabis department.

ONGOING ACTIVITY

1. Creating Townhall PowerPoint for Operator Training by BSCC Grant.

2. Follow-ups with complaints from identified and anonymous reporters.

3. Updating electronic files for each operator with all correspondences. Documents are date and timed stamped upon receipt, then scanned/uploaded to the ‘P’ Drive.

4. Cannabis spreadsheet updated continuously with accurate information for accounting department.

5. Reviewing facility files for accurate cannabis tax assessment reporting.

6. Attending Cannabis Advisory Committee meetings (virtual attendance). Public comments are submitted via email and verbally as required.

7. Attending Department of Cannabis Control meetings (virtual attendance). Public comments are submitted via email and verbally as required. 6 DR-PARK

COUNCIL AGENDA ITEM
September 8, 2026
TO: Honorable Mayor and City Council
FROM: Leanndrea Weible, Park Coordinator
SUBJECT: Park and Recreation Monthly Department Report
OPERATIONS AND UPDATES:

1. Community Pool Season
Last month, Park staff explored options to extend the pool season beyond the originally scheduled closure date of August 21, 2026. As a result of these efforts, Voices of Our Youth, a nonprofit organization, hosted a community event on September 5, 2026. The event provided free pool admission, complimentary hot dogs, and two lifeguards, with all event-related costs covered by Voices of Our Youth. The event provided an opportunity for residents and families to gather and enjoy the pool together and marked the conclusion of the 2026 pool season. The pool is now closed until the 2027 season.

2. Extreme Tour Community Event
On August 28, 2026, Extreme Tour, a traveling music group, provided live music and entertainment at California City’s Skate Park. The event was well attended by community members and provided an opportunity for residents to enjoy live entertainment in a local recreational setting.

3. Strata Center Basketball Hoops Dedication
On September 3, 2026, Mayor Hawkins dedicated the basketball hoops recently donated by CoreCivic to the California City Strata Center. He was joined by Mayor Pro Tem Creighton, Councilmember Smith, Park Commission Chair Royten, Commissioner Boochee, Acting City Manager John Paul Maier, and local residents for the dedication.

The Park and Recreation Department extends its sincere appreciation to Voices of Our Youth, CoreCivic, Extreme Tour, City officials, staff, volunteers, and all others who contributed their time, resources, and support to these activities. Their efforts helped provide enjoyable recreational opportunities and memorable experiences for California City residents 7 DR-PARK
Current hours of operation for the Strata are as follows:

MONDAY- CLOSED

TUESDAY-FRIDAY
10AM – 12PM FOR INDOOR WALKING (Open to everyone interested in utilizing the gym for walking ONLY DURING THESE HOURS)

TUESDAY-THURSDAY
12PM-5PM- OPEN GYM

SATURDAY - VARIES

SUNDAY - CLOSED
CURRENTLY:
• Wednesdays the Art Center is used for Zumba Classes from 5-6pm. For more information, you are invited to stop in during a session and speak to Cheryl- This activity is not available for the month of September
UPCOMING:
• Park and Recreation Commission Meeting is scheduled for SEPTEMBER 21, 2026, at 7:00 p.m. The meeting will be held in the Council Chambers at City Hall. Community Participation is necessary to shape the future of our parks and as such, participation is strongly encouraged. 8 DR - CITY MANAGER

COUNCIL AGENDA ITEM
September 8, 2026
TO: Mayor and City Council
FROM: John Paul Maier, MBA, MMC, Acting City Manager
SUBJECT: City Manager’s Report
Staffing Updates
On August 19, 2026, City Employees and Council Member Smith gathered at the Art Center and expressed gratitude to outgoing City Manager Sean Grayson and congratulated him on his dedicated public service. Mr. Grayson will continue working in a temporary part-time capacity, ensuring transfer of institutional knowledge and other assignments. On August 25, 2026, the City Council appointed John Paul Maier as Acting City Manager.

The City Manager’s Office is also working closely with Human Resources to secure temporary part-time assistance for the City Clerk’s Office during the current transition and update will be provided in the coming weeks.

General/Community Updates
The City Manager’s Office is developing a comprehensive guideline and framework for key community initiatives designed to provide greater structure and direction for future economic development efforts. This report will be presented at a near future City Council Meeting.

A second priority is the development of additional media and communication platforms to improve how the City communicates with residents, businesses, and the broader community.

The Scout Lodge has received other site visits from Arson investigator, Alliant Insurance, and has received a clear Asbestos Report.

Response Statement
Will provide oral report in response to Mojave Desert News publication on September 2, 2026. 9 DR-HOUSING

COUNCIL AGENDA ITEM
September 8, 2026
TO: Honorable Mayor and City Council
FROM: Nicole Jarmon- Housing Manager
SUBJECT: HOUSING MONTHLY DEPARTMENT REPORT

BACKGROUND/ DISCUSSION
Desert Jade
Currently we have 91 apartments that are filled.

The waitlist has been updated, and we currently have 74 applicants.

Two units are undergoing rehab,
Big thanks to Safe Haven Kids League, for the food donation on 08/10-08/11 & 08/12/26.

On September 23, 2026, we will be having our BBQ from 12pm-4pm for all Desert Jade/Legends tenants it will be held in the clubhouse.

Fire Units
Desert Jade has three units red tag due to fire, plans have been submitted to the city, waiting on start date.

Legends
Currently has 5 apartments and 6 houses filled.
one vacant unit will undergo rehab soon.

Waitlist is combined with Desert Jade
10 DR-OHV

COUNCIL AGENDA ITEM
September 8, 2026
TO: Honorable Mayor and City Council
FROM: Inge Elmes, OHV Manager
SUBJECT: OHV MONTHLY DEPARTMENT REPORT
Events
With the weather beginning to cool down, the city should expect a small turnout for Labor Day weekend. Next potential influx is typically Columbus Day Holiday weekend.

Operations
Staff is closing out the current OHV G25 Grant cycle and is preparing for the next G26 Grant cycle to begin. OHV staff is focused on preparing for the holidays by maintaining amenities and upkeeping riding area.

Manager Updates
Reimbursement process for the G25 grant cycle will begin next week and will be submitted by due date. Existing Conditions report is currently being reviewed, and public outreach meetings will follow within the next few months.

Finance Report
For the month of August, OHV sales totaled $1,417.00. These numbers are actuals and reflect only amounts received within each month. Please refer to Monthly Permit Sales report for FY totals. *OHV sales are deposited to specific OHV Permit Program GL revenue codes #29-3992 through #29-3998. Please refer to the financial statement for details. Not all proceeds are deposited in the same month.
**Some merchandise was purchased by staff at a discounted rate. All sales for merchandise are allocated to GL revenue code 29-3691.

Attachment
OHV Permit Program Sales Spreadsheet
11 12
13 14
15 CC 1

COUNCIL AGENDA ITEM
September 8, 2026
TO: Honorable Mayor and City Council
FROM: Kenny Cooper, Finance Manager
Karina Chong, Accounts Payable
SUBJECT: Approve City Check Register dated 08/21/2026-09/03/2026 BACKGROUND/ DISCUSSION:

The following checks have been prepared by the Finance Department. The items are provided to the Mayor and City Council for review and approval.

RECOMMENDATION:

Staff recommends the City Council discuss and approve the attached check register. 16 17
18 19
20 21
22 23
24 25
26 27
28 29

CITY OF CALIFORNIA CITY
August 18, 2026
Marquette Hawkins
MAYOR
Jim Creighton

MAYOR PRO TEM
Shawn Bradley
Della Clark
Ronald Smith

COUNCIL MEMBERS
Sean Grayson

CITY MANAGER

DRAFT MINUTES

CITY COUNCIL/ HOUSING AUTHORITY/ SUCCESSOR AGENCY
SPECIAL MEETING TUESDAY, AUGUST 18, 2026 @ 5:00 PM

COUNCIL CHAMBERS
21000 HACIENDA BLVD., CALIFORNIA CITY, CA 93505 &

Web Link: https://us06web.zoom.us/j/82424125440
Meeting ID:824 2412 5440
Passcode: 288834

1. Public can dial into the Zoom line:
a. One tap mobile: +16694449171,87254527178# US
b. Dial the following number: +1 564 217 2000 US

2. Comments
a. Public must join Zoom Webinar to comment
b. Keep your mic on Mute until you are requested to speak c. Use the “Raise your Hand” button to request to speak or, d. Send a chat request to the City Clerk for a request to speak, and the City Clerk will unmute you.
e. When requested to speak, state your name for the record f. Re-mute when your time to speak has ende
30 CITY OF CALIFORNIA CITY
August 18, 2026
The public is urged to listen to the meeting in a quiet place to avoid background noise. We also request public to MUTE your audio device when not commenting to avoid disruption during meeting.
**Please take this time to turn off your cell phones ** CLOSED SESSION 4:00 PM

CALL TO ORDER

DEPUTY CITY MANAGER / CITY CLERK MAIER ANNOUNCED THAT THE CLOSED SESSION WAS CANCELLED AND THAT THE SPECIAL MEETING WOULD COMMENCE AT 5:00 P.M.

ROLL CALL
Councilmembers: Bradley Clark, Smith, Mayor Pro Tem Creighton, Mayor Hawkins

ADOPT THE AGENDA

CLOSED SESSION
CS 1. CONFERENCE WITH LEGAL COUNSEL—ANTICIPATED LITIGATION Significant exposure to litigation pursuant to Government Code Section 54956.9(d)(2):

One case.

REPORT OUT OF CLOSED SESSION
NONE

CITY COUNCIL CONVENES TO REGULAR MEETING
REGULAR MEETING 5:00 PM

CALL TO ORDER
MAYOR HAWKINS CALLED THE MEETING TO ORDER AT 5:01 P.M.

PLEDGE OF ALLEGIANCE / INVOCATION
MAYOR HAWKINS LED THE PLEDGE OF ALLEGIANCE.

ROLL CALL –
Councilmembers: Bradley Clark, Smith, Mayor Pro Tem Creighton, Mayor Hawkins MAYOR PRO TEM CREIGHTON WAS ABSENT, ALL OTHERS WERE PRESENT. 31 CITY OF CALIFORNIA CITY
August 18, 2026

CONTINUED BUSINESS
CB 1. Subject: Official Statement of the City of California City in Regard to the Outcome of Recently Completed Administrative Investigations
Recommendation: It is recommended that the City Council provide the official statement and take any other necessary action.

MAYOR HAWKINS CALLED FOR PUBLIC COMMENT: JEANIE O’LAUGHLIN AND PATTI ORR SPOKE.

CITY MANAGER GRAYSON STATED THAT AN INDEPENDENT INVESTIGATOR WAS HIRED TO

INVESTIGATE ALLEGATIONS OF MISCONDUCT ARISING FROM A RECORDED

CONVERSATION BETWEEN MAYOR HAWKINS AND COUNCILMEMBER SMITH THAT OCCURRED IN DECEMBER OF 2024, AS WELL AS OTHER ALLEGED MISCONDUCT. THE INVESTIGATION HAS CONCLUDED, AND THE INVESTIGATOR’S REPORT DID NOT MAKE ANY FINDINGS OF MISCONDUCT AGAINST MAYOR HAWKINS OR COUNCILMEMBER SMITH.

CITY MANAGER GRAYSON FURTHER NOTED THAT THE CITY CANNOT COMMENT ON THE

DETAILS OF PERSONNEL MATTERS OR OTHER CONFIDENTIAL PROCESSES AND WILL HAVE NO FURTHER COMMENT ON THE TOPIC AT THIS TIME.

ADJOURNMENT
MAYOR HAWKINS ADJOURNED THE MEETING AT 5:23 P.M.

AFFIDAVIT OF POSTING- August 17, 2026
I, John Paul Maier, Deputy City Manager / City Clerk for the City of California City, California, DO HEREBY CERTIFY that the foregoing notice was posted on all official City bulletin boards and the City’s website at least 24 hours prior to the meeting in compliance with the provisions of the Brown Act. 32 CC 3

COUNCIL AGENDA ITEM
September 8, 2026
TO: Honorable Mayor and City Council
FROM: John Paul Maier, MBA, MMC, Acting City Manager
SUBJECT: Adopt a Resolution 26-3276 of the City Council of the City of California City, California, Approving the Calendar Year 2026 Regular Meeting Schedule and Cancellation of Certain Regular Scheduled Meetings
BACKGROUND:

In effort to improve transparency and efficiency, staff has reviewed the California Municipal Code and other local agencies best practices to bring forth a schedule of City Council Regular Meetings for the remainder of the 2026 Calendar Year.

Sec. 2-1.402. -Regular and Special Meetings. The Council shall hold regular meetings on the second and fourth Tuesday of each month at City Hall located at 21000 Hacienda Boulevard, California City. A closed session shall be held, when necessary, between the hours of four p.m. and six p.m., and the regular session shall commence at six p.m. on said days. If the date of any regular meeting falls on a holiday, the closed session and regular session shall instead be held on the next succeeding day, which is not a holiday during the same hours as stated in this section.

Meetings may also be held from time to time at other locations authorized by the Ralph M. Brown Act.

The cancellation of certain dates during the fall and winter is in observance of holidays that fall near those City Council meeting dates.

FISCAL IMPACT:

There is no fiscal impact from this action. Any future action may result in costs detailed in the future action staff report.

RECOMMENDATION:

It is respectfully recommended that the City Council: Adopt a Resolution of the City Council of the City of California City, California, Approving the 2026 Calendar Year Regular Meeting Schedule and Cancellation of Certain Regular Scheduled Meetings.

ATTACHMENTS:

1. Resolution No. 2026-3276- Approving 2026 Calendar Year of Regular Meetings

2. Exhibit A: 2026 Regular Meeting Schedule
33 4934-6822-1096 v1
RESOLUTION NO. 26-3276

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CALIFORNIA CITY, APPROVING THE 2026 REGULAR MEETING SCHEDULE AND CANCELLATION OF

CERTAIN REGULAR SCHEDULED MEETINGS
The City Council of the City of California City, California does resolve as follows:

WHEREAS, the City of California City is a local agency that promotes transparency and additional efforts of notifying the public of future City Council Regular Meetings; and WHEREAS, Sec. 2-1.402. -Regular and Special Meetings. The Council shall hold regular meetings on the second and fourth Tuesday of each month at City Hall located at 21000 Hacienda Boulevard, California City. A closed session shall be held, when necessary, between the hours of four p.m. and six p.m., and the regular session shall commence at six p.m. on said days. If the date of any regular meeting falls on a holiday, the closed session and regular session shall instead be held on the next succeeding day, which is not a holiday during the same hours as stated in this section. Meetings may also be held from time to time at other locations authorized by the Ralph M. Brown Act.

NOW, THEREFORE, BE IT RESOLVED, DETERMINED, AND ORDERED BY THE CITY COUNCIL OF THE CITY OF CALIFORNIA CITY, CALIFORNIA, AS FOLLOWS:

Section 1: The above recitals are true and correct.

Section 2: The City Council of the City of California City approves the City Council Regular Meeting Schedule (Exhibit A) and observe cancellations of November 24, 2026, and December 22, 2026, City Council Meetings in observance of fall and winter holidays.

Section 3: The City Council of the City of California City hereby authorizes the City Clerk to post cancellation notices.
34 4934-6822-1096 v1
PASSED AND ADOPTED at a regular meeting of the City Council of the City of California City held on September 8, 2026:

AYES:

NOES :

ABSENT:

ABSTAIN:

______________________________
Marquette E. Hawkins
Mayor
ATTEST: APPROVED AS TO FORM:
________________________ _________________________
John Paul Maier, MBA, MMC Victor M. Ponto
Acting City Manager / City Clerk City Attorney
STATE OF CALIFORNIA }
COUNTY OF KERN } SS
CITY OF CALIFORNIA CITY }
I, John Paul Maier, City Clerk of the City of California City, do hereby certify that the foregoing Resolution was duly and regularly adopted by the City Council of the City of California City on the _________ day of ________________ 2026, by the following vote:

John Paul Maier
Acting City Manager / City Clerk
35 City of California City 2026 City Council Regular Meeting Calendar Meetings Recommendation
Tuesday, January 13, 2026
Tuesday, January 27, 2026
Tuesday, February 10, 2026
Tuesday, February 24, 2026
Tuesday, March 10, 2026
Tuesday, March 24, 2026
Tuesday, April 14, 2026
Tuesday, April 28, 2026
Tuesday, May 12, 2026
Tuesday, May 26, 2026
Tuesday, June 9, 2026
Tuesday, June 23, 2026
Tuesday, July 14, 2026
Tuesday, July 28, 2026
Tuesday, August 11, 2026
Tuesday, August 25, 2026
Tuesday, September 8, 2026
Tuesday, September 22, 2026
Tuesday, October 13, 2026
Tuesday, October 27, 2026
Tuesday, November 10, 2026
Tuesday, November 24, 2026 Cancelled
Tuesday, December 8, 2026
Tuesday, December 22, 2026 Cancelled
Tuesday, January 12, 2027
Tuesday, January 26, 2027
36 CB 1

COUNCIL AGENDA ITEM
September 8, 2026
TO: Mayor and City Council
FROM: Sean Grayson, Assistant to the City Manager
Carina Robinson, Cannabis Program Manager & Tax Administrator

SUBJECT: Review of Cannabis Ordinance Revision Content for Future Adoption BACKGROUND/ DISCUSSION:

On May 26, 2026, the City Council adopted Interim Urgency Ordinance 26-833 imposing a temporary moratorium on the approval of new cannabis businesses and the expansion of existing cannabis businesses. On June 9, 2026, the City Council adopted Interim Urgency Ordinance 26- 834 which amended the urgency ordinance to allow those projects and/or applications that were submitted prior to the effective date of Interim Urgency Ordinance 26-834 to be able to proceed forward, and if appropriate under the Municipal Code, be approved during the moratorium.

The Interim Urgency Ordinance was not extended by the City Council and ended after the 45-day moratorium. In the City Council’s actions on the subject, direction was provided to pursue a comprehensive ordinance update to address all issues established within the moratorium. This ordinance update is anticipated to be completed in 2027. Direction was also provided to present a “slim” ordinance amendment as soon as possible to avoid approvals occurring during the full ordinance development process that would permit a business that would be incompatible with the full ordinance once adopted. The four amendments recommended by staff include:
• Requiring new cannabis business to provide a bond for closure and deconstruction. • Prohibiting temporary wells.
• Prohibiting generators for permanent power.
• Prohibiting new 2 Tier Light buildings.

Separate from the direction provided during the urgency ordinance consideration, there was a request from the Mayor to include conditions limiting ownership of more than one dispensary in the “slim” ordinance amendment. Additionally, staff is recommending that a provision be added that requires submittal of plans from a professional engineer be submitted at the time of planning review for the ventilation / odor control system to be installed to comply with the existing odor control provisions of the municipal code.

Staff is requesting direction from the City Council as to the four original and two added items to confirm that each should be included in the amended ordinance. Staff will work with City Attorney’s Office to prepare an ordinance amendment to be considered at a public hearing at a future City Council meeting.
37 CB 1
FISCAL IMPACT:

None with this action.

RECOMMENDATION:

It is recommended that the City Council receive the report and provide any needed direction.

ATTACHMENTS:

None.
38 CB 2

COUNCIL AGENDA ITEM
September 8, 2026
TO: Mayor and City Council
FROM: John Paul Maier, Acting City Manager and Marc Tran, Deputy City Attorney
SUBJECT: Consideration and Potential Approval of Proposed Energy Services and Municipality Utility Agreement Between the City of California City and 12 Holdings, LLC
PROCEDURAL BACKGROUND:

During the June 9, 2026, City Council meeting, Mayor Hawkins requested that the Energy Services and Municipality Utility Agreement from 12 Holdings LLC (“ESA”) be brought to the City Council for consideration of direction to the City Attorney and City Manager for review. This item was agendized for the June 23, 2026, City Council meeting. The City Council deferred the item to a future City Council agenda for both a closed session and open session item. On July 14, 2026, the Council directed the City Attorney’s Office and the City Manager to review the draft ESA and provide the City Council with comments. Those comments were provided and a negotiation process between the parties commenced for several weeks.

As a result of those negations, attached is the proposed Energy Services and Municipality Utility Agreement from 12 Holdings LLC which has been updated since the publicly shared draft during the July 14, 2026, meeting.

ADDITIONAL BACKGROUND/DISCUSSION:

On November 12, 2019, the City Council for the City, serving as the governing body of the City (“City Council”), adopted Resolution No. 11-19-2811, which established a municipally-owned electric utility in the City (as further described and specifically applied herein, “Municipal Utility”) and authorized the city manager for the City (“City Manager”) to take various actions associated with the creation, establishment, and operation of the Municipal Utility.

Certain areas in the City have been designated for the proposed development of a Municipal Utility to supply power to various off-takers, defined as companies throughout different industries who will consume power (as further described below, “Municipal Utility Service Areas”). Due to the high usage of electrical energy associated with these off-takers, the Municipal Utility Service Areas are constrained with respect to the uncertain availability and quality of electric service.

These issues adversely affect economic development opportunities within the Municipal Utility Service Areas.

CB 2
In furtherance of the City Manager’s delegated authority under Resolution No. 11-19-2811, the City Manager executed (i) that certain Memorandum of Understanding, dated September 27, 2020, between the City and 12 Holdings (“MOU”) and (ii) that certain Term Sheet, dated May 12, 2021, between the City and 12 Holdings (“Term Sheet”). Collectively, the MOU and Term Sheet describe key terms and conditions by which 12 Holdings and its affiliates will support the Municipal Utility by developing, owning, and operating Municipal Utility generation facilities for the purpose of providing electric service within the Municipal Utility Service Areas.

In the current draft of the 12 Holdings agrees to pay the City five percent (5%) of the net revenue, up to fifteen million dollars ($15,000,000) per year. This Agreement ensures that the City will receive a financial benefit from the Municipal Utility operations, enhancing the economic viability and support for the City's involvement in the project.

The City desires to implement a master contract arrangement by which 12 Holdings and the City will work cooperatively and exclusively to identify specified Municipal Utility Service Areas— defined as encompassing the entire municipal boundaries of California City—within which 12 Holdings will install Municipal Utility generation facilities and carry out other responsibilities to serve the City’s customers within those areas. All customers shall retain the unrestricted right to purchase electricity from any other energy provider of their choosing. 12 Holdings will be responsible for providing for the delivery of electricity to customers within the Municipal Utility Service Areas, including billing and collection activities, and will remit standard connection fees and applicable taxes to the City accordingly. Given the iterative nature of serving multiple Municipal Utility Service Areas over time, the Parties desire to establish terms and conditions for the initial Municipal Utility Service Area and a streamlined process by which additional areas may be incorporated under this Agreement as needed.
12 Holdings desires to, among other things, install and operate electrical generation facilities (as further described in Section 4.1 of the ESA, “Generation System”) to serve the Municipal Utility Service Areas (as further described in Section 3.2 of the ESA), and to provide additional Generation Systems under similar arrangements to serve other areas as needed. 12 Holdings shall assume full responsibility and liability for the development, operation, maintenance, and regulatory compliance of all Municipal Utility generation facilities. All customers shall have the option and right to obtain electric service from other providers, and nothing in this Agreement shall restrict a customer’s choice of energy provider. 12 Holdings will provide electricity service under the terms of this Agreement to customers who elect to receive it.

In reliance on 12 Holdings’ support, the City desires to receive payment through standard connection fees and taxes on utility bills, as well as to benefit from the economic development opportunities arising from the establishment and operation of the Municipal Utility systems. The City shall have no operational responsibilities under this Agreement but will benefit financially from the established fee and tax structure and five percent (5%) net revenue, up to fifteen million dollars ($15,000,000) annually.

The Parties desire to memorialize the terms and conditions for service to the Municipal Utility Service Area and to establish a contractual structure that allows for the provision of similar services to the entire municipal area over time. For clarity, the “Municipal Utility Service Area” shall be defined as the entirety of the incorporated boundaries of California City. This Agreement shall CB 2
serve as the master framework for all energy generation and distribution services provided by 12 Holdings within the City.

Given the significant upfront and ongoing capital required to install, maintain, and upgrade utilityscale energy infrastructure—potentially exceeding ten billion dollars ($10,000,000,000)—the Parties recognize the necessity of long-term planning certainty. Therefore, the City supports a thirty-five (35) year exclusive arrangement, with 12 Holdings granted the first right of renewal, in order to secure private capital investment and deliver comprehensive utility services in alignment with the City’s economic development objectives. .

FISCAL IMPACT:

As noted above, the draft ESA provides that the City is entitled to five percent (5%) net revenue, up to fifteen million dollars ($15,000,000) annually.

With respect to costs, given the early status of the subject project, true financial impacts on the City are difficult to forecast. Potential financial impacts could come with project approvals, use of eminent domain, site inspections, decommissioning plans, legal challenges and other internal and external impacts on the project.

RECOMMENDATION:

Staff recommends that the City Council receive the staff report, public comment and deliberate on whether to approve the ESA in its current form based on the information and testimony presented.

ATTACHMENTS:

Energy Services and Municipality Utility Agreement
4912-1725-2554 v3

ENERGY SERVICES AND MUNICIPALITY UTILITY AGREEMENT

BETWEEN

CITY OF CALIFORNIA CITY
AND
12 HOLDINGS, LLC
4912-1725-2554 v3 1

ENERGY SERVICES AND UTILITY MUNICIPALITY UTILITY

AGREEMENT BETWEEN CITY OF CALIFORNIA CITY
AND 12 HOLDINGS, LLC
THIS ENERGY SERVICES AND UTILITY MUNICIPALITY UTILITY AGREEMENT ("Agreement"), dated as of _____________, 2026 is entered into between the CITY OF CALIFORNIA CITY, a California Municipal Corporation and General Law City organized and operating under the laws of the State of California ("City"), and 12 Holdings, a California limited liability company (“12 Holdings”). The City and 12 Holdings shall be individually referred to as a “Party” and collectively referred to as the "Parties."

RECITALS
This Agreement is made with reference to the following:

A. On November 12, 2019, the City Council for the City, serving as the governing body of the City (“City Council”), adopted Resolution No. 11-19-2811, which established a municipally-owned electric utility in the City (as further described and specifically applied herein, “Municipal Utility”) and authorized the city manager for the City (“City Manager”) to take various actions associated with the creation, establishment, and operation of the Municipal Utility.

B. Certain areas in the City have been designated for the proposed development of a Municipal Utility to supply power to various off-takers, defined as companies throughout different industries who will consume power (as further described below, “Municipal Utility Service Areas”). Due to the high usage of electrical energy associated with these off-takers, the Municipal Utility Service Areas are constrained with respect to the uncertain availability and quality of electric service. These issues adversely affect economic development opportunities within the Municipal Utility Service Areas.

C. In furtherance of the City Manager’s delegated authority under Resolution No. 11-19-2811, the City Manager executed (i) that certain Memorandum of Understanding, dated September 27, 2020, between the City and 12 Holdings (“MOU”) and (ii) that certain Term Sheet, dated May 12, 2021, between the City and 12 Holdings (“Term Sheet”). Collectively, the MOU and Term Sheet describe key terms and conditions by which 12 Holdings and its affiliates will support the Municipal Utility by developing, owning, and operating Municipal Utility generation facilities for the purpose of providing electric service within the Municipal Utility Service Areas.

D. 12 Holdings agrees to pay the City five percent (5%) of the net revenue, up to fifteen million dollars ($15,000,000) per year. This Agreement ensures that the City will receive a financial benefit from the Municipal Utility operations, enhancing the economic viability and support for the City's involvement in the project.

E. The City desires to implement a master contract arrangement by which 12 Holdings and the City will work cooperatively and exclusively to identify specified Municipal Utility Service Areas—defined as encompassing the entire municipal boundaries of California City—within which 12 Holdings will install Municipal Utility generation facilities and carry out other responsibilities to serve the City’s customers within those areas. All customers shall retain the unrestricted right to purchase electricity from any other energy provider of their choosing. 12 Holdings will be responsible for providing for the delivery of electricity to customers within the Municipal Utility Service Areas, including billing and collection activities, and will remit standard connection fees and applicable taxes to the City accordingly. Given the iterative nature of serving multiple Municipal Utility Service Areas over time, the Parties desire to establish terms and conditions for the initial Municipal Utility 4912-1725-2554 v3 2
Service Area and a streamlined process by which additional areas may be incorporated under this Agreement as needed.

F. 12 Holdings desires to, among other things, install and operate electrical generation facilities (as further described in Section 4.1, “Generation System”) to serve the Municipal Utility Service Areas (as further described in Section 3.2), and to provide additional Generation Systems under similar arrangements to serve other areas as needed. 12 Holdings shall assume full responsibility and liability for the development, operation, maintenance, and regulatory compliance of all Municipal Utility generation facilities. All customers shall have the option and right to obtain electric service from other providers, and nothing in this Agreement shall restrict a customer’s choice of energy provider. 12 Holdings will provide electricity service under the terms of this Agreement to customers who elect to receive it.

G. In reliance on 12 Holdings’ support, the City desires to receive payment through standard connection fees and taxes on utility bills, as well as to benefit from the economic development opportunities arising from the establishment and operation of the Municipal Utility systems. The City shall have no operational responsibilities under this Agreement but will benefit financially from the established fee and tax structure.

H. The Parties desire to memorialize the terms and conditions for service to the Municipal Utility Service Area and to establish a contractual structure that allows for the provision of similar services to the entire municipal area over time. For clarity, the “Municipal Utility Service Area” shall be defined as the entirety of the incorporated boundaries of California City. This Agreement shall serve as the master framework for all energy generation and distribution services provided by 12 Holdings within the City.

I. Given the significant upfront and ongoing capital required to install, maintain, and upgrade utility-scale energy infrastructure—potentially exceeding ten billion dollars ($10,000,000,000)—the Parties recognize the necessity of long-term planning certainty.

Therefore, the City supports a thirty-five (35) year exclusive arrangement, with 12 Holdings granted the first right of renewal, in order to secure private capital investment and deliver comprehensive utility services in alignment with the City’s economic development objectives.

AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the City and 12 Holdings agree as follows:

ARTICLE 1 INCORPORATED DOCUMENTS

1.1. General.

The Parties desire to work cooperatively and exclusively to install a Generation System and assume responsibility for its operation and maintenance at no capital expense for the City and no liability. The City’s role will be limited to benefiting financially through taxes on utility bills and five percent (5%) net revenue, up to fifteen millions dollars ($15,000,000) annually, without operational responsibilities. Given the iterative nature of serving multiple Municipal Utility Service Areas over time, the Parties anticipate that additional documents will be needed to describe material terms and conditions associated with providing electric service within the Municipal Utility Service Areas. The Parties are using exhibits to this Agreement for the purpose of addressing specific topics or incorporating additional or modified terms and conditions. 4912-1725-2554 v3 3

1.2. Documents Included.

This Agreement consists of this document and the exhibits listed below and any exhibit added pursuant to the process described in Section 1.3, all of which are specifically incorporated herein and made a part of this Agreement by this reference:
• Exhibit A: Definitions
• Exhibit B: Description of Municipal Utility Service Areas • Exhibit C: Additional Service Confirmations
• Exhibit D: Service Notices
• Exhibit E: Reserved
• Exhibit F: Reserved
• Exhibit G: Reserved
• Exhibit H: Form of Controlled Account Agreement
• Exhibit I: Form of Retail Service Agreement

1.3. Additional Exhibits.

Additional documents may be made a part of this Agreement and incorporated herein as exhibits if (a) the document is specifically identified as an “Exhibit” to this Agreement and (b) the document has been duly executed by the Parties.

1.4. Entire Agreement.

This Agreement sets forth the full and complete understanding of the Parties relating to the subject matter hereof as of the Effective Date, and supersedes any negotiations, agreements, and representations made or dated prior thereto with respect to the subject matter of this Agreement.

1.5. Conflicting Provisions.

Unless otherwise expressly stated, in the event of a conflict between this document and any Exhibit, the terms and provisions of this document, as amended from time to time, shall control. In the event of any conflict between the Exhibits, the Exhibit with the latest effective date mutually agreed upon by the Parties shall control.

1.6. Amendments.

No change, amendment, or modification of this Agreement shall be valid or binding upon the Parties hereto unless such change, amendment, or modification shall be in writing and duly executed by the Parties.

1.7. Defined Terms.

Capitalized terms used in this Agreement shall have the meanings specified in Exhibit A.

ARTICLE 2 EFFECTIVE DATE AND TERM

2.1. Effective Date and Binding Nature.

This Agreement shall be effective and binding upon the occurrence of the following: (a) execution of this Agreement by 12 Holdings’ duly authorized representative, (b) approval by the City Council, as evidenced by a formally adopted resolution specifying, among other things, the findings required under California Government Code Section 4217.12, and (c) execution by the City Manager, or designee, in accordance with such resolution (“Effective Date”). As of the Effective Date, this Agreement shall be binding to give full effect to, and enforce, the rights and obligations of the Parties under all Articles. The rights and obligations of the Parties related to 12 Holdings’ development of the Generation System and the City’s financial receipts 4912-1725-2554 v3 4
from the utility services shall be effective and binding only upon satisfaction or waiver of the conditions precedent set forth in Section 2.4.

2.2. Term.

This Agreement shall continue for a period of thirty-five (35) years after the date set forth in the first Commencement Notice, as described in Section 4.4.2 (“Initial Term”), unless and until terminated earlier pursuant to the provisions of this Agreement.

2.3. Renewal.

The Parties have the option to renew this Agreement by two (2) additional periods of twenty-five (25) years (each, a “Renewal Term”) following the expiration of the Initial Term at 12 Holdings’ sole discretion if (a) 12 Holdings gives notice in writing at least one hundred eighty (180) days before expiration of the Initial Term or Renewal Term, as applicable, and (b) the Parties reach agreement in writing regarding the pricing hereunder with respect to such Renewal Term. The Initial Term and each Renewal Term, if exercised, shall be referred to herein collectively as the “Term.”

2.4. Conditions Precedent.

2.4.1 Specified Conditions Precedent.

Each Party’s obligations under this Agreement shall be conditioned upon the following conditions precedent, which are waivable only upon mutual agreement of the Parties A. 12 Holdings shall obtain, or cause to be obtained, all necessary land rights (including leases, easements, and rights-of-way), permits, and governmental authorizations required for the construction, installation, operation, and maintenance of the Generation System, including rights and approvals necessary to access and use water supply and natural gas service from authorized third-party providers, under terms and conditions reasonably acceptable to 12 Holdings. For the avoidance of doubt, this does not include any rights to drill for, extract, or produce water, natural gas, minerals, or other subsurface resources.

B. The City shall not be responsible for the construction, installation, operation, or maintenance of the Distribution System. 12 Holdings will assume full responsibility for these activities under terms and conditions reasonably acceptable to the City.

C. The City enters into a Retail Service Agreement with customers within the first Municipal Utility Service Area in a form reasonably acceptable to 12 Holdings to support financing associated with the Generation System, as further described in Section 5.2.1.

D. As required in accordance with Section 4.5, the Parties modify this Agreement or enter into additional agreement(s) as reasonably required to support financing associated with the Generation System.

E. 12 Holdings delivers, and the City accepts in writing, the Service Notice for the first Municipal Utility Service Area, as further described in Section 3.5.

2.4.2 Effect of Outstanding Conditions Precedent.

If the conditions precedent in Section 2.4.1 are not satisfied or waived within two hundred seventy (270) days following the Effective Date ("Precedent Date"), either Party may terminate this Agreement without any recourse or payment due to the other Party; provided, however, (a) the Parties may, by mutual written agreement, extend the Precedent Date, (b) the Precedent Date will 4912-1725-2554 v3 5
be extended on a day-for-day basis, not more than a cumulative twelve (12) month-period, for a Permitted Extension, as described in Section 2.4.3, and (c) each Party shall use commercially reasonable efforts to satisfy the conditions precedent that are within its control. Upon termination, 12 Holdings shall cease all development activities, and both Parties shall negotiate in good faith the settlement of any outstanding obligations.

2.4.3 Permitted Extensions to the Precedent Date.

A. The Precedent Date may be extended on a day-for-day basis for not more than twelve (12) months if 12 Holdings has used commercially reasonable efforts to obtain Permits necessary for the construction, installation, operation, and maintenance of the Generation System but is unable to obtain such permits and 12 Holdings has worked diligently to resolve the delay (“Permitting Delay”).

B. The Precedent Date may be extended on a day-for-day basis in the event of Force Majeure, provided that (i) 12 Holdings works diligently to resolve the effect of the Force Majeure and 12 Holdings provides evidence of its efforts promptly to the City upon the City’s written request and (ii) 12 Holdings may not claim Force Majeure for any reason that was the basis for or would qualify as a Permitting Delay.

Examples of Force Majeure include, but are not limited to, natural disasters, war, terrorism, and other events beyond the reasonable control of the affected Party.

2.5. Notifications.

All notifications related to conditions precedent, extensions, and renewals must be in writing and delivered as specified in Article 9.

ARTICLE 3 MUNICIPALITY UTILITY SERVICE AREAS

3.1. General.

The City and 12 Holdings shall work cooperatively to implement energy infrastructure across the entirety of California City, as further described in Section 3.7. The Parties agree that the Municipal Utility Service Area shall encompass the fully incorporated municipal boundary of California City (the “Territory”), and no further identification or subdivision of additional service areas is necessary. 12 Holdings shall install and maintain the Generation System within the Territory and shall assume full responsibility for its development, operation, maintenance, and compliance. The City’s role will be strictly limited to benefiting financially through standard connection fees and taxes on utility bills, with no operational responsibilities or financial liabilities.

All customers within the Territory shall retain the right to purchase electricity from other providers.

Subject to the terms of this Agreement and applicable law, the City grants 12 Holdings, LLC, or its assigns, the authority to develop, construct, own, operate, and maintain energy generation, distribution, and related infrastructure within the Territory, without obligation for exclusivity. The City shall not enter into any conflicting agreements for energy services within the Territory without the prior written consent of 12 Holdings, except where required by law or existing SCE arrangements.

3.2. First Municipal Utility Service Area.

The City and 12 Holdings have consulted, and have identified the first Municipal Utility Service Area (“Municipal Utility Service Area”), with the following general description:

A. Location: California City, CA
B. Description of Commercial Activity: Various off-takers as described in the Recitals 4912-1725-2554 v3 6
C. Assessor Parcel Numbers Within Municipal Utility Service Area: All parcels located within the incorporated municipal boundaries of California City, CA, as recorded with the Kern County Assessor’s Office.

D. Excluded Properties: None
E. Estimated Initial Electric Load: 250 MW
F. Estimated Full Electric Load: Up to 5 GW
12 Holdings shall have the right to distribute energy within the First Municipal Utility Service Area and any additional areas where transmission lines are run, subject to the terms of this Agreement.

3.3. Additional Municipal Utility Service Areas.

The City and 12 Holdings acknowledge that the entire incorporated boundary of California City is already designated as the Municipal Utility Service Area. As such, there is no need to identify or designate additional service areas within the City.

Should 12 Holdings seek to expand service into surrounding areas outside the City's boundaries, such expansion shall be subject to approval by the State of California and any other applicable regulatory authorities. The Parties may meet as reasonably required to coordinate such expansion efforts.

3.4. Description of Municipal Utility Service Area.

The entire incorporated boundary of California City is established as the sole Municipal Utility Service Area under this Agreement. No additional service area descriptions are required within City limits.

3.5. Service Notices.

After consultation with the City concerning the expected electric load within a Municipal Utility Service Area, 12 Holdings shall deliver to the City a written notice specifying the scope and characteristics of electric service to be provided by the Generation System, including any limitations on and exceptions to service (“Service Notice”). Without limiting the generality of the foregoing, the Service Notice shall include the maximum capacity associated with the Generation System (“Contract Capacity”). The Service Notice for the First Municipal Utility Service Area includes and incorporates by reference the information set forth in Section 4.1.2, and any other information the Parties wish to include. Once delivered by 12 Holdings, the Service Notice for each Municipal Utility Service Area will be included as an element of Exhibit D.

3.6. Transmission Infrastructure and Limited Exclusivity. 12 Holdings shall have the exclusive right to develop, own, and operate electricity transmission infrastructure that connects its Generation System to customers within the Municipal Utility Service Area. This right applies only to infrastructure developed by 12 Holdings and shall not prevent customers from electing to purchase electricity from other providers.
12 Holdings may, at its discretion, export excess energy to other utility companies or wholesale markets, and shall retain all associated revenues from such exports. With respect to the transmission services described herein, the City shall not solicit, entertain bids or proposals, or enter into agreements with third parties for competing transmission infrastructure within the Municipal Utility Service Area without first obtaining written consent from 12 Holdings.

In recognition of the City’s reliance on 12 Holdings to develop energy infrastructure, 12 Holdings agrees to act in good faith and respond promptly to any waiver or consent request from the City, and to reasonably negotiate any amendments or supplemental exhibits required to support public interest objectives or external partnerships.
4912-1725-2554 v3 7

3.7. Financial Terms.
12 Holdings shall be solely responsible for financing all aspects of the development, installation, operation, and maintenance of the Generation and Distribution Systems. The City shall not bear any financial responsibility—direct or indirect—for these systems, and shall never be required to contribute capital, reimburse expenses, or assume liabilities related to their implementation or operation for the duration of this Agreement.
12 Holdings shall retain all financial benefits and revenues derived from the operation of the Generation and Distribution Systems, with the exception of applicable taxes and standard connection fees, which shall be remitted to the City as provided in this Agreement.

3.8. Performance Metrics.
12 Holdings shall ensure that all installed systems meet industry standards for reliability and efficiency.

Specific performance metrics and standards shall be mutually agreed upon and documented in the Service Notices and Additional Service Confirmations.

3.9. Regulatory Compliance.
12 Holdings shall comply with all applicable federal, state, and local regulations in the development, installation, and operation of the Generation and Distribution Systems.

3.10. Reporting Requirements.
12 Holdings shall provide regular reports to the City detailing the operation, maintenance, and financial performance of the Generation and Distribution Systems. The frequency and content of these reports shall be mutually agreed upon and documented in the Service Notices and Additional Service Confirmations.

3.11. Insurance and Liability.
12 Holdings shall maintain adequate insurance coverage for the development, installation, and operation of the Generation and Distribution Systems. The specific insurance requirements and liability terms shall be detailed in the Service Notices and Additional Service Confirmations.

3.12. Termination Clauses.

This Agreement may be terminated by either Party under the conditions specified in Article 2. Upon termination, 12 Holdings shall cease all development and operational activities, and both Parties shall negotiate in good faith the settlement of any outstanding obligations.

3.13. Force Majeure.

Force Majeure events, including natural disasters, war, terrorism, and other events beyond the reasonable control of the affected Party, shall be handled as specified in Section 2.4.3. The process for declaring and managing Force Majeure events shall be detailed in the Service Notices and Additional Service Confirmations.

ARTICLE 4 ENERGY SERVICES

4.1. Description of the Generation System.

4.1.1 General.
12 Holdings and the City shall consult to determine the characteristics, technology, and capability of the Generation System serving the Municipal Utility Service Areas. The goals are: (a) providing 4912-1725-2554 v3 8
reasonably priced Electricity compared to alternatives within California City, (b) promoting the use of renewable and clean energy technologies, and (c) ensuring redundancy and reliability of electric service within the Municipal Utility Service Areas.

4.1.2 First Municipal Utility Service Area.
12 Holdings shall serve the entire incorporated municipal boundary of California City as the designated Municipal Utility Service Area. The Generation System shall be developed, installed, and operated to meet the electrical needs of customers throughout the full Territory, as defined in this Agreement.

A. Technology: (i) The Generation System may include, but is not limited to, natural gas-fired microturbine generators, solar photovoltaic systems, battery storage, combined-cycle power plants, hydrogen plants, ammonia plants, supercritical CO₂ turbines, or other suitable technologies. The specific technology mix shall be determined solely by 12 Holdings based on considerations including system reliability, redundancy, cost-effectiveness, and environmental impact. (ii) 12 Holdings reserves the right to modify or update the technology over time in response to market conditions, technological advancements, or environmental performance—subject to the City’s reasonable consent, which shall not be unreasonably withheld, delayed, or conditioned.

B. Size: (i) The Generation System shall be designed to serve expected retail demand across the City, up to a maximum aggregate capacity of 5 GW, unless otherwise agreed in writing.

C. Location: (i) The Generation System shall be installed at one or more locations within the City, to be mutually agreed upon in writing by the Parties.

D. Contract Capacity: (i) Seventy-five percent (75%) of the installed nameplate capacity shall constitute the Contract Capacity, subject to standard industry derating factors, as noted below.

E. Limitations on Service: (i) The Generation System is subject to all operating conditions imposed by applicable Permits. (ii) Contract Capacity may be temporarily reduced due to Force Majeure events, with reasonable advance notice from 12 Holdings to the City. (iii) Contract Capacity may also be adjusted by 12 Holdings for necessary operations and maintenance, upon reasonable notice to the City.

4.2. Installation and Operations of the Generation System.

4.2.1 General.

Subject to the terms of this Agreement, 12 Holdings shall:

A. Construct and install the Generation System in accordance with Prudent Industry Practice, Applicable Law, and this Agreement;
B. Procure all necessary fuel for the generation of Electricity and the proper operation of the Generation System;
C. Operate, maintain, and replace the various components of the Generation System in accordance with Prudent Industry Practice, and as required to ensure that the Generation System meets the Contracted Capacity;
D. Ensure compliance with all relevant environmental regulations and standards; 4912-1725-2554 v3 9
E. Implement a regular maintenance schedule and procedures to ensure ongoing reliability and efficiency.

4.2.2 Permits.
12 Holdings shall be solely responsible for obtaining and maintaining all Permits necessary to construct, install, operate, maintain, and replace the Generation System, subject to the terms of this Agreement.

The City may, upon request, provide reasonable assistance in support of 12 Holdings' permitting efforts, particularly in coordination with other governmental agencies. This assistance may include, as appropriate, issuing letters of municipal support, facilitating access to required information, and participating in joint meetings with permitting authorities.

Nothing in this Agreement shall require the City to waive or alter state-mandated timelines for land development, utility interconnection, or environmental review processes. In any instance where a Permit must be formally entered into by, or issued to, the City, but requires participation or action by 12 Holdings, the City shall obtain such Permit prior to the first Commencement Notice, with 12 Holdings providing all necessary documentation and reimbursing the City for any related costs.

4.2.3 Assistance, Cooperation, and Further Assurances.

While 12 Holdings shall be solely responsible for the development, construction, installation, operation, maintenance, and replacement of the Generation System, the City agrees to provide reasonable cooperation to facilitate timely execution of the project. Such cooperation may include issuing letters of support, participating in joint coordination efforts, and taking other non-financial actions that do not impose liability or expense upon the City.

The City also agrees to support 12 Holdings in identifying and applying for state, federal, and other third-party funding opportunities—including grants, bonds, and incentive programs—that may benefit the project. Upon request, the City may provide reasonable assistance such as signing letters of municipal support, sharing necessary documentation, and engaging with public agencies, provided such assistance imposes no financial or legal burden on the City. Any funds secured through such programs shall be directed toward furthering the objectives of this Agreement.

Additionally, the City will assist 12 Holdings in securing access to essential resources such as natural gas, water, and land necessary for the Generation System. This includes cooperating with 12 Holdings to obtain easements, rights-of-way, access rights, utility corridors, other property interests, and local authorizations for such resources, as long as such cooperation does not obligate the City to incur financial costs or liabilities. 12 Holdings anticipates the necessary property interests will be obtained through existing City-controlled property and rights-of-way, negotiated easements, licenses, or other voluntary agreements. The City’s eminent domain authority shall not be compelled; the City’s use of eminent domain shall remain subject to the City’s independent determination, applicable law, including required public process, hearings on public necessity, and City Council approval. The Parties agree to make all reasonable efforts to avoid project delays arising from the municipality.

4.3. Additional Provisions Related to Operations.

4.3.1 Dispatch.
12 Holdings shall operate the Generation System in a manner consistent with Prudent Industry Practice, with reasonable consideration given to various factors, including but not necessarily limited to operating the Generation System in a manner that: (a) Provides reasonable electric service reliability as compared to alternatives for electric service within California City; (b) Maximizes the Generation System’s value to 12 Holdings.
4912-1725-2554 v3 10

4.3.2 Outages.
12 Holdings shall use commercially reasonable efforts to ensure outages of the Generation System are minimized. Without limiting the generality of the foregoing, 12 Holdings shall implement a design for the Municipal Utility Service Area that, among other things, ensures redundancy of generation resources.

4.3.3 Operating Procedures.

In order to further implement the operating provisions of this Agreement, 12 Holdings shall, by no later than 12 Holdings’ issuance of the Commencement Notice, develop and deliver written operating procedures concerning the coordination of matters related to the Generation System.

Topics to be covered in the operating procedures shall include communications, designated representatives, equipment documentation, operations logs, emergency procedures, and cybersecurity measures. The operating procedures shall be subject to revision and updating by the Parties by mutual agreement from time to time.

4.4. Deliverability and Commencement Notices.

4.4.1 Deliverability Notice.

With respect to the First Municipal Utility Service Area and to each additional Municipal Utility Service Area, 12 Holdings shall develop and deliver a notice (“Deliverability Notice”) providing reasonable advance notice of the expected date on which 12 Holdings anticipates that the Generation System will be operational and ready to provide Electricity to the Distribution System for delivery to the Municipal Utility Customers. The Deliverability Notice for the First Municipal Utility Service Area shall be delivered to the City within sixty (60) days of the Effective Date, and such notice shall be updated at least every ninety (90) days.

4.4.2 Commencement Notice.

The Parties shall cooperate in mutually developing a written notice (“Commencement Notice”) mutually acknowledging that (a) the Municipal Utility System for the First Municipal Utility Service Area has been completed, (b) 12 Holdings is ready to commence delivery of Electricity from the Generation System, and (c) the City is ready to receive Electricity from 12 Holdings and to commence delivery of Electricity to the Municipal Utility Customers.

4.4.3 Full Requirements.

Subject to the terms of this Agreement, 12 Holdings shall provide, deliver, and sell to the City all Electricity required by the City to meet the aggregate Electricity requirements of the Municipal Utility Customers within the range of Contract Capacity then in effect pursuant to the Service Notice, and subject to the limitations and exceptions specified in the Service Notice.

4.5. Financing Cooperation.

The City acknowledges and agrees that 12 Holdings may, without further consent of the City, take actions necessary to finance or refinance its investment in the development, installation, operation, and replacement of the Generation System. These actions may include, but are not limited to: (a) pledging or assigning its interests in the Generation System or this Agreement; and (b) creating security interests in favor of lenders or financial institutions.

The City further acknowledges that as a condition of such financing, lenders may require the City to enter into direct agreements allowing the lender certain rights, including the right to assume or perform 12 Holdings’ obligations under this Agreement and/or the right to receive notice and opportunity to cure any 4912-1725-2554 v3 11
defaults. The City agrees to work in good faith with 12 Holdings and its lenders to review and, if reasonable, enter into such agreements, provided that:

A. no such agreement shall create or imply any financial liability for the City; B. 12 Holdings shall not create, pledge, or assign any debt or obligation in the name of the City or on its behalf; and
C. any amendments to this Agreement requested by a lender shall be subject to the City’s reasonable review and shall not conflict with the City’s fundamental obligations, immunities, or fiscal policies.
12 Holdings shall be solely responsible for securing all financing on a non-recourse basis, and the City shall have no obligation—financial, legal, or otherwise—to guarantee, co-sign, or underwrite any debt related to the project. The City agrees to provide such technical assistance and documentation as may be reasonably required to facilitate 12 Holdings’ financing, provided such assistance imposes no cost or liability on the City.

4.6. Energy Services Meter.
“Delivery Point(s)” means each point of interconnection or service delivery at which Electricity is delivered by 12 Holdings to the City, including, without limitation, residences, businesses, and other facilities served by the City.
12 Holdings shall provide a system of standard revenue grade meters to measure Electricity that is delivered to the City at the Delivery Point(s). Such metering systems may be referred to collectively or individually as a “Meter” or the “Meters,” as applicable. The Meters shall be installed and maintained at 12 Holdings’ sole cost and expense. 12 Holdings shall test each Meter not less than once every two (2) years, or more frequently in accordance with the manufacturers’ specification and any applicable standards, or upon the City’s reasonable request, and will, upon request, provide copies of all reports regarding the results of such testing to the City. If the testing indicates that a Meter is in error by more than plus or minus one percent (+ or –1%), then 12 Holdings shall promptly repair or replace such equipment at its sole cost and expense. 12 Holdings shall bear the cost of all testing performed; provided, however, if any independent testing performed pursuant to the City’s reasonable request indicates that a Meter is not in error or in error by less than plus or minus one percent (+ or –1%), the City shall bear the cost of such testing.

4.7. Decommissioning Plan.

Based on the project’s current conceptual design and anticipated scope, 12 Holdings anticipates the estimated cost of decommissioning would be approximately five million dollars ($5,000,000). The actual cost of decommissioning will likely differ based on the final system size, technology, equipment, site configuration, infrastructure, and construction scope. 12 Holdings shall provide the City with a more developed, good-faith estimate based on then-available information within ninety (90) days to one hundred twenty (120) days after the execution of this Agreement. 12 Holdings shall develop and submit a decommissioning plan for the Generation System within three (3) years following the commencement of the commercial operation of the first phase of the Generation System.

The plan shall include steps for safely decommissioning the system, removing, disposing, or recycling components, restoring the site to its original condition or another condition agreed upon by the Parties, and responsibility for decommissioning costs (whether by 12 Holdings directly or the applicable project entity), and then-current estimated costs.
12 Holdings shall obtain and provide the City with a performance bond related to decommissioning efforts prior to the commencement of commercial operation of the first phase of the Generation System. 12 Holdings shall review and reaffirm the decommissioning plan no less frequently than every five (5) years to account for subsequent phases, expansion, repowering, equipment replacement, regulatory 4912-1725-2554 v3 12
requirements, and updated then-current decommissioning costs. 12 Holdings shall replace the performance bond as necessary to reflect increased costs of decommissioning as necessary.

ARTICLE 5 UTILITY SERVICES

5.1. General.

Pursuant to Resolution No. 11-19-2811 and actions taken in accordance therewith, the City established a Municipal Utility for the purpose of meeting the current and future needs of the community and providing alternatives to existing providers of utility services. To carry out the arrangements contemplated in this Agreement, the City shall assume and carry out the role of a local publicly owned electric utility (as defined in Public Utilities Code section 224.3, “POU'') with respect to the distribution, delivery, billing, and collection for Electricity from the Generation System within the Municipal Utility Service Areas. Without limiting the generality of the foregoing, 12 Holdings shall establish rules, conditions, and requirements for customers located within the Municipal Utility Service Areas (“Municipal Utility Customers'') by which 12 Holdings shall exclusively provide electric utility service, as further described in Section 5.2.2. To promote services provided in the Municipal Utility Service Areas and in light of 12 Holdings’ role under this Agreement, 12 Holdings shall cooperate and provide assistance to the City as reasonably required to carry out the City’s responsibilities as a POU operating the Municipal Utility.

5.2. Retail Customer Relationship.

5.2.1 Retail Service Agreement.
12 Holdings shall draft and adopt a Retail Service Agreement for Municipal Utility Customers. The City shall consult and cooperate with 12 Holdings in developing the Retail Service Agreement. The Retail Service Agreement shall include the rates, rules, conditions, and requirements for electric service to Municipal Utility Customers and shall incorporate customary POU service rules appropriate for the City’s operation of a Municipal Utility System instead of a traditional, interconnected POU electric system.

5.2.2 Exclusive Service Within the Municipal Utility Service Area.

All customers within the Municipal Utility Service Area shall retain the unrestricted right to obtain electric service from any qualified energy provider of their choosing.

While 12 Holdings shall serve as the primary developer and operator of energy infrastructure within the Territory under this Agreement, no customer shall be required to take electric service from 12 Holdings or the Municipal Utility. The City shall not establish permit, use, or occupancy conditions that mandate exclusive electric service from 12 Holdings or the Municipal Utility, and no provision of this Agreement shall be interpreted to limit or restrict customer choice in energy procurement.

5.3. Distribution System.

5.3.1 12 Holdings Services.
12 Holdings shall be responsible for all services related to the construction, installation, operation, maintenance, and repair of the Distribution System. 12 Holdings shall assume all responsibilities for these services, subject to any limitations or conditions that the Parties may agree to in writing. 12 Holdings shall bear all costs associated with these services.

5.3.2 Construction and Installation.

In accordance with Section 3.6, 12 Holdings shall have the exclusive right to finance, install, own, operate, and maintain the Distribution System within the Municipal Utility Service Areas in accordance with Prudent Industry Practice, Applicable Law, and this Agreement. Subject to the 4912-1725-2554 v3 13
provisions of this Section, 12 Holdings shall be responsible for all costs associated with the construction and installation of the Distribution System.

To the maximum extent reasonably practicable, and in connection with the development of the Distribution System, 12 Holdings may (i) require or permit Municipal Utility Customers to pay advances, contributions, or other amounts to fund all or a portion of the upfront costs of constructing and installing facilities needed to serve such customers, or (ii) subject to 12 Holdings’ reasonable determination, permit Municipal Utility Customers to construct and install identified portions of the Distribution System serving their premises. Any facilities constructed by Municipal Utility Customers pursuant to this Section shall, upon completion and acceptance, be conveyed to 12 Holdings or the Municipal Utility, as determined by 12 Holdings, free and clear of all liens and encumbrances.

5.3.3 Ownership, Operation, Maintenance, and Replacement. 12 Holdings shall own, operate, maintain, and replace the Distribution System in accordance with Prudent Industry Practice, Applicable Law, and this Agreement. 12 Holdings shall be entitled to collect through rates the cost of owning, operating, maintaining, and replacing the Distribution System.

5.3.4 Wholesale Interconnections.

As of the Effective Date, the Parties anticipate that the Distribution System will operate on a standalone power basis, without interconnection to the electric system of neighboring electric utilities or to the bulk transmission system. If the Parties mutually determine that an interconnection is necessary or advisable, the Parties shall consult and work cooperatively to pursue such interconnection.

5.3.5 Distribution System Responsibilities and Liabilities. 12 Holdings shall be solely responsible for the operation, maintenance, and regulatory compliance of the Distribution System in accordance with Prudent Industry Practice and all Applicable Laws. 12 Holdings shall bear all costs associated with these responsibilities and shall indemnify and hold harmless the City from any claims, damages, or liabilities arising from 12 Holdings’ operation, maintenance, or regulatory compliance of the Distribution System, except to the extent caused by the City's negligence or willful misconduct.

The City shall cooperate with 12 Holdings in obtaining any necessary permits, approvals, or licenses required for the operation, maintenance, or regulatory compliance of the Distribution System. The City shall also grant 12 Holdings reasonable access to the Distribution System assets for the purpose of carrying out its responsibilities under this Agreement.

5.4. Billing and Collection.

5.4.1 General.
12 Holdings shall bill and collect charges for electricity delivered to Municipal Utility Customers under rates, terms, and conditions specified in the Municipal Utilities published rates, rules, and regulations ("Utility Rates and Rules"). 12 Holdings shall identify additional billing and collection terms and conditions in the Utility Rates and Rules, including deposits and disconnection of service. 12 Holdings will submit the documentation for rate schedules for review. All collected funds shall be deposited into the Controlled Account, as described in Section 6.5. From the Controlled Account, 12 Holdings shall remit to the City the applicable taxes from each bill and five percent (5%) of the net revenue up to fifteen million dollars ($15,000,000) from 12 Holdings. This remittance shall be made within thirty (30) days of collection.
4912-1725-2554 v3 14

5.4.2 12 Holdings Services.
12 Holdings agrees to provide services on behalf of the City related to metering, billing, and collection. The City anticipates that it will retain 12 Holdings to provide all services related to metering, billing, and collection. Upon mutual agreement, 12 Holdings shall assume the City's responsibilities for all identified services, subject to limitations or conditions that the Parties may agree to in writing. 12 Holdings shall remit to the City the greater of either (a) 5% of the total net revenue, up to fifteen (15) million per year which will be paid six (6) months after the system is commissioned, to which will set the bi-annual date for the annual payment or (b) the standard connection fees plus all applicable taxes, as compensation for the right to operate the Municipal Utility. This remittance shall be made within thirty (30) days of collection. 12 Holdings will retain the remaining funds for actual costs incurred and other expenses related to billing and collection. If the system size becomes larger than 5 GW, additional compensation will be due the city, which will be determined at that time between 12 Holdings and the city.

5.4.3 Advancement to the City.
12 Holdings shall advance to the City an aggregate of ten million dollars ($10,000,000) in three tranches, contingent upon the execution of this Agreement, which must occur no later than September 8, 2026. This offer shall automatically expire and be of no further force or effect if this Agreement is not executed on or before September 8, 2026. The first tranche of three million dollars ($3,000,000) shall be advanced within ninety (90) days of ESA execution; the second tranche of three million five hundred thousand dollars ($3,500,000) shall be advanced within ninety (90) days after the funding of the first tranche; and the third tranche of three million five hundred thousand dollars ($3,500,000) shall be advanced within ninety (90) days after the funding of the second tranche, with all advances to be completed within nine (9) months of ESA execution.

5.5. Rules and Regulations.

As a POU, the Municipal Utility is subject to various rules and regulations. The City agrees to comply with all rules and regulations pertaining to the Municipal Utility. 12 Holdings agrees to cooperate with and provide assistance to the City in identifying and complying with such rules and regulations.

5.6. Transfer of Energy; Title and Risk of Loss.
12 Holdings will be responsible for the delivery of Electricity to the Delivery Point(s). 12 Holdings shall own all Electricity prior to delivery to the Delivery Point(s). As between the Parties, 12 Holdings shall maintain the risk of loss with respect to (and shall be responsible for any property damage or injuries caused by) the Electricity produced by and delivered from the Generation System up to the Delivery Point(s). Title to Electricity shall pass from 12 Holdings to the City at the Delivery Point(s).

ARTICLE 6 PRICING AND PAYMENTS

6.1. General.
12 Holdings will establish rates for Electricity provided to the Municipal Utility Customers. Incorporated into the rates for Electricity shall be the cost of Electricity supplied by 12 Holdings, as further described in Section 6.2. In addition to the cost of Electricity supplied by 12 Holdings, the City’s rates shall include the City’s cost associated with the Distribution System and other costs and charges associated with the City operating the Municipal Utility and providing Electricity to the Municipal Utility Customers.

6.2. Pricing for Energy Services.

6.2.1 Basic Energy Charge. 12 Holdings shall have the sole discretion to determine the rate charged per kWh for Electricity provided to the City for electric service to the Municipal Utility Customers within the First Municipal Utility Service Area ("Basic Energy Charge"). The rate for additional Municipal Utility Service Areas will be determined by 12 Holdings based 4912-1725-2554 v3 15
on the Generation Facilities used to serve those areas and shall be identified in the Service Notice for those additional Municipal Utility Service Areas.

6.2.2 Rate Adjustments. 12 Holdings reserves the right to adjust the Basic Energy Charge at its discretion to account for changes in the cost of generation, market conditions, or other factors that impact the cost of providing Electricity to the Municipal Utility Customers. 12 Holdings shall provide the City with written notice of any rate adjustments at least thirty (30) days prior to the effective date of such adjustments.

6.2.3 Minimum Payment. In recognition of serving the Municipal Utility Service Area, 12 Holdings may, at its discretion, establish a minimum monthly charge following the Commencement Notice. The amount of the minimum monthly charge, if any, shall be determined by 12 Holdings and communicated to the City in writing.

6.3. Invoice for Energy Services.

Payment to the City shall be accomplished via transactions associated with the Controlled Account, as described in Section 6.5. Payment from the City through the Controlled Account is due within forty-five (45) days of the date of the Invoice (“Due Date”).

If any portion of an Invoice is in dispute, the City shall not be responsible for paying the disputed amount until the dispute is resolved. The City shall promptly notify 12 Holdings of the basis for the dispute. Disputes shall be subject to resolution pursuant to Article 14. Upon resolution of any dispute, any refund, if applicable, shall be paid within twenty (20) days.

Late payments and refunds shall accrue interest at a per annum rate equal to the lesser of: (i) ten percent (10%) or (ii) the maximum rate permissible under Applicable Law.

6.4. Records and Audits.
12 Holdings shall maintain all records pertaining to its performance of services under this Agreement (including but not limited to all billings, costs, and metering) sufficient to verify all costs claimed to have been performed (including Electricity delivered) pursuant to this Agreement for a period of not less than two (2) years following payment made by the City for such billing period, and such records shall be subject to examination upon the City’s reasonable request.

6.5. Escrow Arrangement.

Payments under this Agreement to the City from 12 Holdings shall be made from a controlled account that is (a) established prior to any sale of Electricity from 12 Holdings to the City for the purpose of collecting payments from Municipal Utility Customers to the City, as the Municipal Utility, and remitting payments from the City to 12 Holdings, and (b) established pursuant to an account control agreement and any other necessary agreement(s) required to establish the controlled account (“Escrow Account”).

6.5.1 Operation of the Escrow Account.

A. Except as otherwise provided in this Agreement or the Controlled Account agreements, 12 Holdings shall retain ownership of the Controlled Account Balance, subject to the remittance of the City's portion as described in Section 5.4.1; B. All payments by the Municipal Utility Customers for electric service in the Municipal Utility Service Area pursuant to the Retail Service Agreements with 12 Holdings shall be remitted directly into the Controlled Account; C. The Controlled Account must maintain the Minimum Controlled Account Balance for the duration of the existence of the Controlled Account, and 12 Holdings shall 4912-1725-2554 v3 16
replenish the Controlled Account as necessary to maintain the Minimum Controlled Account Balance pursuant to the Controlled Account agreements. If all Controlled Account obligations are met and the Minimum Controlled Account Balance is maintained, funds in the Controlled Account in excess of the Minimum Controlled Account Balance may be distributed to 12 Holdings, provided that 12 Holdings remits to the City the greater of either:
(a) five percent (5%) of the total net revenue, or
(b) up to fifteen million dollars ($15,000,000) per year, whichever is greater.

D. The Controlled Account agreements will provide for a process of receiving and allocating any termination fees associated with termination of the Retail Service Agreements, which shall also be remitted directly into the Controlled Account and then paid to 12 Holdings, subject to the remittance of the City's portion as described in Section 5.4.1.

6.6. Duty to Implement Collection and Disconnection Activities. 12 Holdings shall establish a rule as part of the Utility Rates and Rules, consistent with similar rules adopted by POUs, by which 12 Holdings may disconnect electric service to any Municipal Utility Customer that is delinquent on its payment beyond prescribed times set forth in the Utility Rates and Rules, subject to proper notices. 12 Holdings shall enforce the rule and disconnect electric service as allowed under the rule.

ARTICLE 7 DEFAULT AND REMEDIES

7.1. Events of Default.

In the event of a Party’s breach of any payment obligation hereunder or any material breach of any representation, warranty, covenant, obligation, or other term of this Agreement, the non-defaulting Party shall provide the defaulting Party with written notice of the default, which notice shall describe the default in reasonable detail. From receipt of written notice of default, the defaulting Party shall have ten (10) days to cure any payment default and sixty (60) days to cure any other material breach or default; provided, however, with respect to non-payment defaults, the cure period shall be extended, so long as the defaulting Party has begun curative action and is continuing to proceed diligently, using commercially reasonable efforts, to complete such curative action. It shall be an event of default by a Party if such Party fails to cure any such breach within the applicable cure period provided for in this section.

7.2. Other Events of Default.

In addition to the foregoing, with respect to a Party, it shall be an event of default (“Event of Default”) if:

A. such Party admits in writing to its inability to pay its debts as they become due; B. such Party files a petition seeking reorganization or arrangement under the federal bankruptcy laws or any other Applicable Law or statute of the United States of America or any state, district or territory thereof;
C. such Party makes an assignment for the benefit of creditors; D. such Party consents to the appointment of a receiver, or has a receiver appointed by a court of competent jurisdiction, of the whole or any substantial part of its assets; or E. such Party has a petition in bankruptcy filed against it, and such petition is not dismissed within ninety (90) days of such filing.
4912-1725-2554 v3 17

7.3. 12 Holdings Remedies.

As further described in Section 8.2.3, following the issuance of the first Commencement Notice, if an Event of Default by the City has occurred and is continuing, then following the expiration of any applicable cure period, 12 Holdings may, in its discretion: (a) suspend its performance under this Agreement without liability to the City, including providing Electricity from the Generation System, (b) collect on any amounts due and/or (c) terminate this Agreement. Upon any such 12 Holdings election to terminate this Agreement, the City shall pay the City Early Termination Fee to 12 Holdings within thirty (30) calendar days, upon which full payment this Agreement will be terminated. 12 Holdings’ remedies set forth in this section shall be cumulative and not exclusive; provided, however, 12 Holdings’ sole and exclusive remedy under this Agreement if it chooses to terminate this Agreement pursuant to this Section 7.3 shall be payment by the City to 12 Holdings as liquidated damages, and not a penalty, of the sum of the City Early Termination Fee, and any and all other amounts then owed by the City to 12 Holdings under this Agreement as of the date of termination as set forth above. Prior to the first Commencement Notice, if an Event of Default by the City has occurred and is continuing, 12 Holdings may pursue all remedies or damages at law or in equity against the City, subject to the terms of this Agreement.

7.4. City Remedies.

As further described in Section 8.2.2, if an Event of Default by 12 Holdings has occurred and is continuing, then following the expiration of any applicable cure period, the City may, in its discretion: (a) suspend its performance under this Agreement and/or (b) terminate this Agreement. The City may pursue all other remedies or damages at law or in equity against 12 Holdings, subject to the terms of this Agreement.

ARTICLE 8 TERMINATION

8.1. Termination Upon Expiration of the Term.

The Electricity supply period under this Agreement commences on the date set forth in the first Commencement Notice and continues for the duration of the Initial Term and any Renewal Terms, unless earlier terminated as expressly provided.

8.2. Early Termination Rights.

8.2.1 Termination Due to Inability to Raise Funds.
12 Holdings may terminate this Agreement without penalty or any fees if they are unable to raise the necessary funds for the project. To exercise this right, the following conditions must be met:

A. 12 Holdings shall deliver written notice to the City indicating their intention to terminate the Agreement due to their inability to secure funding for the project.

B. The termination shall be effective immediately upon the City’s receipt of such notice.

C. 12 Holdings shall not be obligated to pay any fees, surcharges, or liquidated damages as a result of this termination.

D. Upon termination under this section, 12 Holdings shall have the right, at its sole discretion, to either (a) remove and retain all Generation System and Distribution System assets, or (b) transfer ownership of the Generation System and Distribution System assets to the SCE at a price mutually agreed upon by the Parties. If 12 Holdings elects to remove and retain the assets, it shall do so within a commercially reasonable time frame and shall bear all costs associated with such removal. If 12 Holdings elects to transfer ownership of the assets to the City, the Parties shall 4912-1725-2554 v3 18
negotiate in good faith to determine a fair market value for the assets and execute all necessary agreements to effectuate such transfer.

8.2.2 Termination for 12 Holdings’ Default.

The City may terminate this Agreement if 12 Holdings is in material default under Article 7 and fails to cure such default within the applicable cure period. To terminate this Agreement as provided in this section, all the following conditions shall be satisfied:

A. The City shall have provided the default notices required under Article 7; B. 12 Holdings shall have not cured its Default within the cure period pursuant to Article 7;
C. The City shall have delivered written notice to 12 Holdings indicating the City’s intention to terminate this Agreement because of 12 Holdings Default; D. Within fifteen (15) business days after receipt by 12 Holdings of the City’s written notice indicating the City’s intention to terminate this Agreement because of 12 Holdings Default, 12 Holdings shall have an additional thirty (30) business days to cure its Default;
E. If 12 Holdings fails to cure its Default within the period indicated above, the City shall have the right to deliver to 12 Holdings termination notice for 12 Holdings’ default, designating a day, no earlier than the day such notice is deemed to be received and no later than twenty (20) days after such notice is received by 12 Holdings, as the termination date of this Agreement.

F. Upon termination for 12 Holdings’ default, the City shall have the right, at its sole discretion, to either (a) require 12 Holdings to remove all Generation System and Distribution System assets at 12 Holdings’ sole cost, or (b) take ownership of the Generation System and Distribution System assets at no cost to the City. If the City elects to take ownership of the assets, the Parties shall execute all necessary agreements to effectuate such transfer.

G. Notwithstanding the foregoing, the City shall have the right to terminate this Agreement immediately upon written notice if the City determines, based upon substantial and credible evidence, that Baker Energy, 12 Holdings, Good 3nergy, or any of their respective owners, officers, directors, employees, agents, representatives, consultants, affiliates, or associates has directly or indirectly offered, promised, authorized, paid, or provided any money, compensation, gift, gratuity, kickback, thing of value, or other benefit to any past, present, or future elected official, appointed official, employee, representative, or agent of the City of California City for the purpose of influencing the negotiation, approval, execution, administration, or performance of this Agreement or any transaction contemplated hereby.

This provision shall not apply to compensation expressly authorized by law, lawful campaign contributions made in compliance with applicable law, or payments made pursuant to written agreements approved by the City. The rights granted under this subsection are cumulative and shall not limit any other rights or remedies available to the City under this Agreement or applicable law.
4912-1725-2554 v3 19

8.2.3 Termination for the City’s Default.
12 Holdings may terminate this Agreement if the City is in material default under Article 7 and fails to cure such default within the applicable cure period. To terminate this Agreement as provided in this section, all the following conditions shall be satisfied:

A. 12 Holdings shall have provided the default notices required under Article 7; B. The City shall have not cured its Default within the cure period pursuant to Article 7;
C. 12 Holdings shall have delivered written notice to the City indicating 12 Holdings’ intention to terminate this Agreement because of the City’s Default; D. Within fifteen (15) business days after receipt by the City of 12 Holdings’ written notice indicating 12 Holdings’ intention to terminate this Agreement because of the City’s Default, the City shall have an additional thirty (30) business days to cure its Default;
E. If the City fails to cure its Default within the period indicated above, 12 Holdings shall have the right to deliver to the City termination notice for the City’s default, designating a day, no earlier than the day such notice is deemed to be received and no later than twenty (20) days after such notice is received by the City, as the termination date of this Agreement.

F. Upon termination for the City's default, 12 Holdings shall have the right, at its sole discretion, to either (a) remove and retain all Generation System and Distribution System assets, or (b) transfer ownership of the Generation System and Distribution System assets to the City at a price mutually agreed upon by the Parties. If 12 Holdings elects to remove and retain the assets, it shall do so within a commercially reasonable time frame and shall bear all costs associated with such removal. If 12 Holdings elects to transfer ownership of the assets to the City, the Parties shall negotiate in good faith to determine a fair market value for the assets and execute all necessary agreements to effectuate such transfer.

ARTICLE 9 NOTICES

9.1. Notices.

Unless the Agreement specifically requires otherwise, any notice, demand, or request provided for in this Agreement, or served, given, or made in connection with it, must be in writing and will be deemed properly served, given, or made if delivered (a) in person, (b) sent by registered or certified mail, postage prepaid, or by an internationally recognized overnight courier service that provides a receipt of delivery, or (c) sent by electronic mail, in each case, to the Parties at the address specified below:

If to the City:

City of California City
21000 Hacienda Blvd
California City, California 93505
Attention: Sean Grayson
Phone: 760.373.7170
Email: [email protected]
If to 12 Holdings:
12 Holdings Commercial, LLC
36 E Jackson Street
Orlando, FL 32801
4912-1725-2554 v3 20
Attention: Christopher M. Whitt
Phone: 407-413-1144
Email: [email protected]
ARTICLE 10 REPRESENTATIONS AND WARRANTIES

10.1. Authorization; Enforceability.

Each Party represents and warrants to the other Party as of the Effective Date that: (a) such Party is duly organized, validly existing, and in good standing under the laws of the state of its formation; (b) the execution and delivery by such Party of, and the performance of its obligations under, this Agreement has been duly authorized by all necessary councils, governing boards, corporate, municipal, or similar action, does not and will not require any further consent or approval of any other Person, and does not contravene any provision of, or constitute a default under, such Party’s organizational documents (including any organic statutes or ordinances), any indenture, mortgage, or other material agreement binding on such Party, or any valid order of any court, regulatory agency, or other body having authority to which such Party is subject; (c) this Agreement constitutes the legal and valid obligation of such Party, enforceable against such Party in accordance with its terms, except as may be limited by bankruptcy, reorganization, insolvency, bank moratorium, or similar laws relating to or affecting creditors’ rights generally and general principles of equity, whether such enforceability is considered in a proceeding in equity or at law; and (d) there is no litigation, action, proceeding, or investigation pending, or to the best of its knowledge, threatened before any court or other Governmental Authority by, against, affecting, or involving any of its business or assets that would affect its ability to carry out the transactions contemplated herein.

10.2. Sovereign Immunity.

The City represents, warrants, and covenants that, with respect to its contractual obligations under this Agreement, it will not claim immunity on the grounds of sovereignty or similar grounds with respect to itself or its revenues or assets from suit, jurisdiction of court, relief by way of injunction, order for specific performance or recovery of property, attachment of assets, or execution or enforcement of any judgment.

10.3. Compliance.

Each Party covenants to comply with all Applicable Laws. 12 Holdings further covenants that, during the Term, 12 Holdings shall operate and maintain the Generation System consistent with Prudent Industry Practice.

10.4. Change in Law.

In the event of a Change in Law following the Effective Date that (a) materially and adversely affects 12 Holdings’ costs of installing or operating the Generation System, or (b) otherwise materially impacts the ability of 12 Holdings to perform its obligations or receive the economic benefits contemplated under this Agreement, then 12 Holdings may so notify the City in writing of such Change in Law. Within thirty (30) days following receipt by the City of such notice, 12 Holdings and the City will meet and attempt in good faith to negotiate such amendments to this Agreement as are reasonably necessary to preserve the allocation of economic benefits and burden originally intended by the Parties under this Agreement. If the Parties are unable, despite good faith efforts, to agree upon such amendments within sixty (60) days thereafter, 12 Holdings may terminate this Agreement without either Party having further liability under this Agreement, except with respect to liabilities accrued prior to the date of termination. 4912-1725-2554 v3 21
ARTICLE 11 INDEMNIFICATION

11.1. Indemnity by 12 Holdings.

To the fullest extent permitted by Applicable Law, 12 Holdings shall indemnify, defend, and hold harmless the City and its elected officials, officers, agents, and employees from and against any and all claims, actions, losses, liabilities, damages, and expenses (including reasonable attorneys’ fees, expert fees, and litigation costs) arising out of or relating to the development, installation, operation, maintenance, or replacement of the Generation and Distribution Systems under this Agreement, to the extent caused by the willful misconduct or gross negligence of 12 Holdings, its Affiliates, or its respective directors, officers, agents, or employees. This indemnity shall not apply to claims arising solely from the willful misconduct or gross negligence of the City or its agents. 12 Holdings shall bear all costs incurred by the City in enforcing this indemnification, including reasonable attorneys’ fees.

ARTICLE 12 ASSIGNMENT

12.1. Assignment.

Except as provided in Section 12.2, neither Party may assign its rights and obligations under this Agreement ("Assigning Party") without the prior written consent of the other Party ("Non-Assigning Party"), which consent may not be unreasonably withheld, conditioned, or delayed, provided that the proposed assignee:
(a) is, at the time of such assignment, of equal or greater creditworthiness than was the Assigning Party as of the Effective Date, such creditworthiness to be established at the reasonable discretion of Non-Assigning Party; (b) assumes in writing all obligations of the Assigning Party hereunder, to the extent the same continues to survive; and (c) the Assigning Party delivers such information as may be reasonably requested by the other Party to confirm that the proposed assignment will not adversely affect the enforceability or tax treatment of this Agreement. This provision applies to both residential and commercial assignments.

12.2. Assignment by 12 Holdings without Consent.

Notwithstanding Section 12.1, the City agrees that 12 Holdings may, with prior written notice to the City, assign, transfer, charge, or otherwise encumber its rights, interests, benefits, and obligations under this Agreement in whole or in part and without the City’s consent to: (a) any Affiliate or subsidiary of 12 Holdings; (b) any Person succeeding to all or substantially all of the assets of 12 Holdings; and (c) a lender, directly or collaterally in connection with any financing transaction entered into by 12 Holdings, as provided further in Section 4.6. Any direct assignment of rights or obligations under this Agreement pursuant to this section shall release 12 Holdings from the assigned right or obligation so long as such assigned right or obligation is assumed in writing by the assignee. Any collateral assignment of this Agreement pursuant to this section shall not release 12 Holdings from its obligations or liabilities under this Agreement. The City agrees to promptly (but in any event no later than seven (7) calendar days after requested by 12 Holdings) execute (or cause the appropriate third party to execute, as applicable) any consents, estoppels, subordination, and non-disturbance agreements, or other documents related to such financing transaction assignment as may be reasonably required by Purchaser or lender.

12.3. Subcontractors – No Assignment.
12 Holdings may engage contractors or subcontractors to provide services or supplies under this Agreement, provided that no such contract or subcontract shall relieve 12 Holdings of any of its duties or obligations under this Agreement.

ARTICLE 13 FORCE MAJEURE

13.1. Force Majeure.

A Party claiming relief due to Force Majeure ("Claiming Party") shall: (a) notify the other Party in writing within five (5) business days of a Force Majeure condition preventing such Party's performance, (b) exercise 4912-1725-2554 v3 22
all reasonable efforts to minimize delay or damage caused by such Force Majeure event, (c) notify the other Party in writing of the cessation or termination of the Force Majeure event, and (d) resume performance of its obligations hereunder as soon as practicable thereafter. Failure to provide timely Notice constitutes a waiver of a Force Majeure claim. The suspension of performance due to a claim of Force Majeure must be of no greater scope and of no longer duration than is required by the Force Majeure event.

In the event of a prolonged Force Majeure event, such as a pandemic, that significantly delays the project, the Parties shall meet and confer in good faith to discuss potential modifications to the project schedule or other terms of the Agreement as reasonably necessary to address the impact of the Force Majeure event.

The occurrence of a Force Majeure event shall not excuse the City's payment obligations.

ARTICLE 14 DISPUTE RESOLUTION

14.1. Informal Resolution.

The Parties shall make a good faith attempt to resolve any and all controversies, claims, disagreements, or disputes between the Parties arising out of or related to the performance of this Agreement, or the alleged breach, termination, or invalidity hereof (“Dispute”). In the event of any Dispute, either Party may give notice to the other Party invoking the provisions and process set forth in this article. Within seven (7) days of the Dispute notice, each Party shall designate a senior officer who is authorized to resolve the Dispute. The designees shall meet in person, telephonically, or otherwise at a mutually agreed time and place no later than fifteen (15) days after notice of the Dispute was initially delivered. Fifteen (15) days after the meeting of senior officers, either Party may then, by notice to the other, submit the Dispute to binding arbitration pursuant to Section 14.2.

14.2. Arbitration.

Any dispute not otherwise resolved pursuant to the foregoing meeting of the Executive Parties shall be submitted to final and binding arbitration. Such arbitration shall take place before a neutral, mutually-selected arbitrator, pursuant to the procedural rules of the American Arbitration Association. The venue for such arbitration shall be Los Angeles, California, or other mutually agreeable venue. Each party will be responsible for its own attorneys’ fees and associated costs.

14.3. Governing Law.

This Agreement and all questions concerning the performance of this Agreement will be interpreted, construed, and enforced in all respects in accordance with applicable laws of the State of California, without reference to rules relating to choice of law.

ARTICLE 15 MISCELLANEOUS

15.1. Non-Waiver.

The failure, delay, or forbearance by either Party to exercise any of its rights or remedies under this Agreement or to provide written notice of any default to a defaulting Party shall not constitute a waiver of such rights or remedies. No Party shall be deemed to have waived any right or remedy provided hereunder unless it has made such waiver specifically in writing. The waiver by either Party of any default or breach of any term, condition, or provision hereof shall not be deemed to be a waiver of any subsequent breach of the same term, condition, or provision, or any other term, condition, or provision hereof.

15.2. Severability.

Any provision in this Agreement that is or becomes invalid, illegal, or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining provisions of this Agreement or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. 4912-1725-2554 v3 23

15.3. Survival.

Any provision of this Agreement that expressly or by implication comes into or remains in full force following the termination or expiration of this Agreement shall survive the termination or expiration of this Agreement.

15.4. Interpretation.

Unless the context of the Agreement otherwise requires: (a) references to articles, sections, paragraphs, clauses, annexes, appendices, or exhibits are references to articles, sections, paragraphs, clauses, annexes, appendices, or exhibits in this Agreement; (b) the headings, subheadings, and table of contents used in this Agreement are solely for convenience of reference and shall not constitute a part of this Agreement nor shall they affect the meaning, construction, or effect of any provision thereof; (c) references to any Person (including a Party, whether specifically or generically) shall include such Person (or Party), and its successors and permitted assigns and transferees; (d) reference to any agreement means such agreement as amended, supplemented, or otherwise modified from time-to-time in accordance with the applicable provisions thereof; (e) references to any law includes any amendment or modification to such law and any rules or regulations issued thereunder, or any Applicable Law enacted in substitution or replacement thereof; (f) references to “days” shall mean calendar days, unless the term “Business Days” is used; (g) if the time for performing an obligation under this Agreement expires on a day that is not a Business Day, the time shall be extended until that time on the next Business Day; and (h) references to time are references to the time in effect in the Pacific time zone.

15.5. Binding Effect.

This Agreement and its rights, privileges, duties, and obligations shall insure to the benefit of and be binding upon each of the Parties hereto, together with their respective successors and permitted assigns.

15.6. No Partnership.

This Agreement is not intended, and shall not be construed, to create any association, joint venture, agency relationship, or partnership between the Parties or to impose any such obligation or liability upon either Party. Neither Party shall have any right, power, or authority to enter into any agreement or undertaking for, or act as or be an agent or representative of, or otherwise bind, the other Party.

15.7. No Third-Party Beneficiaries.

This Agreement is solely for the benefit of the Parties hereto and no right or cause of action shall accrue by reason hereof for the benefit of any third party not a Party hereto.

15.8. Counterparts.

This Agreement may be executed in counterparts, which shall together constitute one and the same agreement.

15.9. Further Assurances.

Upon the receipt of a written request from a Party, each Party shall execute such additional documents, instruments, estoppels, and assurances, and take such additional actions, as are reasonably necessary and desirable to carry out the terms and intent hereof, including, without limitation, in connection with the design, installation, operation, maintenance, or financing of the Generation System. Neither Party shall unreasonably withhold, condition, or delay its compliance with any reasonable request made pursuant to this section.
[Signatures on the following page]
4912-1725-2554 v3 24
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the date set forth below.

CITY OF CALIFORNIA CITY, a California municipal corporation and general law city organized and operating under the laws of the State of California.

California City
By: ____________________________________________
Title: _________________________________
Date: _________________________________
Signature: ____________________________
12 Holdings, LLC, a California Limited Liability Company By: ____________________________________________
Title: _________________________________
Date: _________________________________
Signature: ____________________________
4912-1725-2554 v3 A-1

EXHIBIT A

DEFINITIONS OF THE AGREEMENT

1. DEFINITIONS.
"Additional Service Confirmation" means the written document executed for each additional Municipal Utility Service Area confirming the inclusion of the additional Municipal Utility Service Area under this Agreement as further provided in Section 3.5.
"Affiliate" means, when used with reference to a specified Person, any other Person that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with the specified Person. As used in this Agreement, "control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management policies or activities of a person, whether through ownership or voting securities, by contract or otherwise. "Agreement" means this Energy Services and Municipal Utility Agreement, including all attachments and appendices, and as provided in the Preamble and further defined in Section 1.4. "Applicable Law" means any applicable law, statute, rule, regulation, decision, writ, order, decree or judgment, permit or any interpretation thereof, promulgated or issued by a Governmental Authority. "Assigning Party" means the Party assigning its rights and obligations under this Agreement with the prior written consent of the other Party as further provided in Section 12.1. "12 Holdings, LLC" means 12 Holdings, LLC, a California limited liability company. "Base Rate" means the charge per kWh for Electricity provided by 12 Holdings to the City as determined by 12 Holdings and as further provided in Section 6.2.1. "Basic Energy Charge" means the rate charged per kWh for Electricity provided to the City for electric service to the Municipal Utility Customers within the First Municipal Utility Service Area, as determined by 12 Holdings and further provided in Section 6.2.1.
"Business Day" means a day other than a Saturday, Sunday, or any day banks in California are required or permitted to be closed.
"Capacity" means (i) with respect to a generating facility, the ability of such facility at any given time to produce energy at a specified rate as measured in MW or kW and any report rights thereto, and (ii) with respect to an energy storage facility, the ability of such facility at any given time to charge and discharge energy at a specified rate as measured in MW or kW and any reporting rights thereto. "Change in Law" means (i) the enactment, adoption, promulgation, modification, or repeal after the Effective Date of any Applicable Law or regulation, (ii) the imposition of any material conditions on the issuance or renewal of any applicable permit after the Effective Date, or (iii) a change in any utility rate schedule or tariff approved by any Governmental Authority, which is binding on a Party, the Municipal Utility System, or any of the products sold from the Municipal Utility System. "City" means City of California City, a California municipal corporation and general law city organized and operating under the laws of the State of California.
"City Council" means the City Council serving as the governing body of the City of California City. "Claiming Party" means a Party claiming relief due to Force Majeure. "Commencement Notice" means the Notice setting forth the date upon which the Electricity supply period pursuant to this Agreement commences.
4912-1725-2554 v3 A-2
"Contract Capacity" means the maximum capacity associated with the Generation System as further provided in Section 3.6.
"Controlled Account" means a controlled account that is (i) established prior to any sale of Electricity from 12 Holdings to the City for the purpose of collecting payments from Municipal Utility Customers to the City, as the Municipal Utility, and remitting payments from the City to 12 Holdings, and (ii) established pursuant to an account control agreement and any other necessary agreement(s) required to establish the controlled account as further provided in Section 6.5.
"Controlled Account Balance" means the funds provided to the Controlled Account net of any payments owed to 12 Holdings, as described further in Section 6.5.1C. "Deliverability Notice" means the notice providing reasonable advance notice of the expected date on which 12 Holdings anticipates that the Generation System will be operational and ready to provide Electricity to the Distribution System for delivery to the Municipal Utility Customers. "Delivery Point(s)" means the physical connection points for delivery of Contracted Energy. "Dispute" means disputes between the Parties arising out of or related to the performance of this Agreement, or the alleged breach, termination, or invalidity of the Agreement. "Distribution Services Costs" means the costs the City pays to 12 Holdings for construction, installation, operation, maintenance, and repair of the Distribution System, as further provided in Section 5.3.1. "Distribution System" means the distribution facilities necessary to transmit and deliver electricity from the Delivery Point(s) to end-use customers in the Municipal Utility Service Area(s) and as further described in Section 5.3.
"Distribution System Notice" means a written request from the City to 12 Holdings to provide services on behalf of the City related to the construction, installation, operation, maintenance, and repair of the Distribution System as further provided in Section 5.3.1. "Due Date" means the date by which payment must be made by the City to 12 Holdings through the Controlled Account as further provided in Section 6.3.
"Early Termination Date" means a day no earlier than the day the Termination Notice is deemed to be received and no later than twenty (20) days after the Termination Notice is received by 12 Holdings, set as an early termination date of the Agreement, as described in Section 8.2.1D. "Effective Date" means the date provided in Section 2.1. "Electricity" means electrical energy produced by the Generation System and provided through the Distribution System to Municipal Utility Service Areas. "Event of Default" means a Party's breach of any payment obligation hereunder or any material breach of any representation, warranty, covenant, obligation, or other term of this Agreement as further provided in Section 7.1 and Section 7.2.
"First Municipal Utility Service Area" means the area as described in Section 3.2. "Force Majeure" means a cause or event that (i) delays or prevents a Party from timely performing any material obligation under this Agreement, (ii) is not within the reasonable control of, and without the fault or negligence of the Party claiming Force Majeure, and (iii) by the exercise of due diligence and acting in accordance with Prudent Industry Practices the affected party is unable to overcome or avoid. Provided the event meets all of the criteria described above, Force Majeure may include, without limitation: acts of God, 4912-1725-2554 v3 A-3
sudden actions of the elements such as floods, earthquakes, hurricanes, blizzards, volcanic activity, or tornadoes; severe weather; high winds of sufficient strength or duration to materially damage the System or significantly impair its operation for a period of time longer than normally encountered in similar businesses under comparable circumstances; lightning; ice storms; sabotage; vandalism; cyber-attack; terrorism; war; riots; fire; explosion; blockades; insurrection; pandemic; any actions or inactions by any Governmental Authority that prohibit or prevent the transactions contemplated hereby or would cause such transactions to be a violation of law or regulation (in the case of Force Majeure claimed by Purchaser, other than any actions or inactions by the Purchaser in its governmental or regulatory capacity); and condemnation of any portion of the Site by any governmental entity other than any condemnation caused by the Purchaser. Without limiting the generality of the definition of Force Majeure set forth above, in no event shall any of the following constitute a Force Majeure event: (i) to the extent not caused by an event of Force Majeure, Purchaser's inability to receive, use, resell, or otherwise make economic use of the Contracted Energy in the agreed upon quantity following its delivery to the Delivery Point, (ii) the failure by 12 Holdings to obtain Permits or approvals of any type to construct, operate or maintain the System or to construct, operate or maintain the System in accordance with this Agreement, except to the extent such failure was itself caused by an event of Force Majeure; (iii) Purchaser's economic inability to pay amounts due to 12 Holdings, delays in or inability of a Party to obtain financing, or other economic hardship of any kind; (iv) 12 Holdings’ ability to sell energy at prices in excess of those provided in this Agreement, or Purchaser's ability to purchase any energy at prices less than those provided in this Agreement. "12 Holdings" means 12 Holdings Commercial, LLC, a Wyoming Limited Liability Company and affiliate of 12 Holdings.
"Generation System" means the energy generation resources, as more fully described with reference to Section 4.1.1 and Section 4.1.2.
"Governmental Authority" means any federal, state, regional, city, or local government, any intergovernmental association or political subdivision thereof, or other governmental, regulatory or administrative agency, court, commission, administration, department, board, or other governmental subdivision, legislature, rulemaking board, tribunal or other governmental authority, or any Person acting as a delegate or agent of any Governmental Authority. The term "Governmental Authority" shall not include Purchaser.
"Initial Term" means a period of one hundred (100) years after the date set forth in the Commencement Notice unless and until terminated earlier pursuant to the provisions of this Agreement and as provided in Section 2.2.
"Invoice" means the documentation of the amount of Electricity delivered to the City and the Basic Energy Charge, together with any Minimum Payment, if applicable, for the billing period including any bill or statement that describes current charges due.
"Memorandum of Understanding" or "MOU" means the Memorandum of Understanding entered between the City and 12 Holdings, dated September 27, 2020. "Meter(s)" means the system of standard revenue grade meters to measure Electricity that is delivered to the City at Delivery Point(s) as further provided in Section 4.6. "Minimum Controlled Account Balance" means the minimum balance that must be maintained in the Controlled Account, as specified in Exhibit H.
"Minimum Payment" means the minimum monthly payment the City will pay to 12 Holdings to ensure that the Generation System has sufficient capacity to serve the First Municipal Utility Service Area, as determined by 12 Holdings and further described in Section 6.2.3. 4912-1725-2554 v3 A-4
"Municipal Utility" means the municipally-owned electric utility in the City, as authorized by the City Manager and established by Resolution 11-19-2811 and provided for in Recital A. "Municipal Utility Customers" means any and all end-users of Electricity provided by the Municipal Utility System.
"Municipal Utility Service Area" means areas in the City that have been designated for the proposed development due to constraint and uncertain availability and quality of electric service and as further provided in Exhibit B.
"Municipal Utility System" means the combination of the Generation System and Distribution System serving a Municipal Utility Service Area.
"Net Revenue" means all gross revenues actually received by 12 Holdings or its Affiliates from the sale of Electricity, Capacity, Renewable Energy Credits, ancillary services, or any other products or services generated by or attributable to the Generation System or Municipal Utility System, less all reasonable and documented operating expenses, fuel costs, purchased power costs, transmission and distribution charges, utility and interconnection fees, taxes (excluding income taxes), insurance, maintenance and repair costs, debt service required to finance the Generation System, reserve requirements, regulatory compliance costs, and any other direct costs reasonably incurred in generating, delivering, and selling such products or services, determined in accordance with generally accepted accounting principles ("GAAP"), consistently applied.
"Non-Assigning Party" means the Party providing its written consent to the Assigning Party to assign its rights and obligations under this Agreement as further provided in Section 12.1. "Off-Taker" means any entity, including but not limited to commercial, industrial, and residential consumers, that purchases Electricity from the Municipal Utility. "Parties" means The City and 12 Holdings collectively. "Party" means the individual reference to The City or 12 Holdings.
"Permit" means all applications, permits, licenses, franchises, certificates, concessions, consents, authorizations, approvals, registrations, orders, filings, entitlements and similar requirements of whatever kind and however described which are required to be obtained or maintained by any Person with respect to the development, siting, design, acquisition, construction, equipping, financing, ownership, possession, start-up, testing, operation or maintenance of the Municipal Utility System, the production and delivery to the Delivery Point(s) of Contracted Capacity and Capacity or any other transactions or matter contemplated by this Agreement and as further provided in Section 4.2.2. "Permitted Extension" means day-for-day extensions to the Precedent Date for reasons specified in Section 2.4.3.
"Permitting Delay" means 12 Holdings’ inability, while using commercially reasonable efforts, to obtain Permits necessary for the construction, installation, operation, and maintenance of the Generation System, as described in Section 2.4.3A.
"Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, trustee, estate, limited liability company, unincorporated organization, real estate investment trust, government or any agency or political subdivision thereof, or any other form of entity. "POU" means a local publicly owned electric utility, as defined in Public Utilities Code section 224.3. "Precedent Date" means the date by which conditions precedent must be satisfied or waived as further provided in Section 2.4.2.
4912-1725-2554 v3 A-5
"Prudent Industry Practice" means the practices, methods, and acts that are commonly engaged in or approved by a significant portion of the applicable power generation industry in the Western United States under prudent engineering and operations to design, construct, operate, and maintain electric equipment lawfully and with safety, reliability, dependability, efficiency, and economy. Prudent Industry Practice is not intended to be limited to the optimum practices, methods, or acts, to the exclusion of all others, but rather is a spectrum of possible practices, methods, or acts, generally accepted in the Western United States and consistently adhered to by 12 Holdings.
"Renewal Term" means an additional period of fifty (50) years following the expiration of the Initial Term as further provided in Section 2.3.
"Retail Service Agreement" means the City-drafted agreement that includes the rates, rules, conditions, and requirements for electric service to Municipal Utility Customers and further provided in Section 5.2.1 and Exhibit I.
"Service Notice" means the written notice delivered by 12 Holdings to the City specifying the scope and characteristics of electric service to be provided by the Generation System and as provided in Section 3.6. "Term" means the Initial Term and each Renewal Term collectively. "Term Sheet" means the document executed by the City and 12 Holdings, dated May 12, 2021. "Termination Fee Receipt Confirmation" means the notice 12 Holdings provides to the City following receipt by 12 Holdings of the City's intention to terminate the Agreement, as provided in Section 8.2.1(c). "Termination Notice" means the written notice to 12 Holdings designating a day as an early termination date of this agreement as further provided in Section 8.2.1A. "Utility Rates and Rules" means the terms and conditions specified by 12 Holdings for billing and collection from Municipal Utility Customers, as provided in Section 5.4.1. 4912-1725-2554 v3 B-1

EXHIBIT B

DESCRIPTION OF MUNICIPAL UTILITY SERVICE AREAS

1. First Municipal Utility Service Area.

A. Location: Approximately 160 acres, west of Neuralia Road and north of Mendiburu Road, California City.

B. Description of Commercial Activity: Various off-takers across different industries, including but not limited to commercial, industrial, and residential consumers.

C. Assessor Parcel Numbers Within Municipal Utility Service Area: 302-310-16 D. Excluded Properties: None
E. Estimated Initial Electric Load: 250 MWs
F. Estimated Full Electric Load: Up to 5 GW

2. Additional Municipal Utility Service Areas.

A. Process for Identification: The City and 12 Holdings shall meet regularly and as reasonably required to identify additional areas within California City that may be served by the Municipal Utility System. The Parties shall consult and cooperate to determine the suitability of potential areas based on electrical demand, economic development opportunities, and other relevant factors.

B. Documentation: For each additional Municipal Utility Service Area, the City and 12 Holdings shall execute a written document describing the area. The document shall include the following information:
a. Location and boundaries
b. Description of commercial or residential activities
c. Assessor parcel numbers within the area
d. Excluded properties, if any
e. Estimated initial and full electric load
C. Incorporation into Agreement: Once executed, the written document describing the additional Municipal Utility Service Area will be included as an element of Exhibit B.

3. General Requirements for Municipal Utility Service Areas.

A. Characteristics:
a. The Municipal Utility Service Areas shall be selected to address constraints and uncertain availability and quality of electric service. b. Areas shall be suitable for the deployment of the Generation System and Distribution System to meet the electrical demands of the designated off-takers.

B. Permits and Approvals: The City shall assist 12 Holdings in obtaining necessary permits and approvals for the construction, installation, operation, and maintenance of the Generation System and Distribution System within the Municipal Utility Service Areas. 4912-1725-2554 v3 B-2
C. Exclusivity: 12 Holdings shall have the exclusive right to install, operate, and maintain the Generation System and Distribution System within the identified Municipal Utility Service Areas, as described in the Agreement.

D. Expansion and Development: The Parties shall work cooperatively to facilitate the expansion and development of the Municipal Utility System to meet the growing needs of the community and to enhance the reliability and sustainability of electric service.

E. Renewable and Clean Energy Technologies: The Generation System within each Municipal Utility Service Area shall promote the use of renewable and clean energy technologies, ensuring redundancy and reliability of electric service.

4. Deliverability and Commencement Notices.

A. Deliverability Notice: With respect to each Municipal Utility Service Area, 12 Holdings shall develop and deliver a Deliverability Notice providing reasonable advance notice of the expected date on which the Generation System will be operational and ready to provide Electricity to the Distribution System for delivery to the Municipal Utility Customers.

B. Commencement Notice:

The Parties shall cooperate in mutually developing a Commencement Notice acknowledging that:
a. The Municipal Utility System for the respective Municipal Utility Service Area has been completed.
b. 12 Holdings is ready to commence delivery of Electricity from the Generation System.
c. The City is ready to receive Electricity from 12 Holdings and commence delivery to the Municipal Utility Customers.
4912-1725-2554 v3 C-1

EXHIBIT C

ADDITIONAL SERVICE CONFIRMATIONS

1. General.

The following Additional Service Confirmations outline the terms and conditions for additional Municipal Utility Service Areas identified and mutually agreed upon by the City and 12 Holdings.

Each Additional Service Confirmation shall confirm the inclusion of the additional Municipal Utility Service Area under this Agreement and provide for any additional or modified terms and conditions pertaining to electric service to the respective Municipal Utility Service Area.

2. Contents of Additional Service Confirmations.

A. Each Additional Service Confirmation shall include the following information:
a. Identification of the Municipal Utility Service Area: Location and boundaries of the additional Municipal Utility Service Area.
b. Assessor parcel numbers within the additional Municipal Utility Service Area.

B. Description of Commercial or Residential Activities: Description of the types of offtakers and the nature of their activities within the additional Municipal Utility Service Area.

3. Estimated Electric Load:

A. Initial estimated electric load.

B. Full estimated electric load upon complete build-out.

4. Generation System Specifications:

A. Description of the Generation System, including the technology, size, and location.

B. Contract Capacity for the additional Municipal Utility Service Area.

C. Any limitations on service and exceptions to service.

5. Distribution System Specifications:

Description of the Distribution System required to deliver electricity from the Generation System to the Municipal Utility Customers within the additional Municipal Utility Service Area.

6. Commencement of Service:

A. Deliverability Notice for the additional Municipal Utility Service Area.

B. Commencement Notice, including the date on which the Generation System will begin delivering electricity to the Distribution System.

7. Permits and Approvals:

A. List of necessary permits and approvals required for the construction, installation, operation, and maintenance of the Generation System and Distribution System within the additional Municipal Utility Service Area.

B. Responsibilities of each Party in obtaining these permits and approvals.

8. Pricing and Payment Terms:

A. Base Rate and any specific adjustments for the additional Municipal Utility Service Area.

B. Minimum Payment, if applicable.
4912-1725-2554 v3 C-2
C. Payment terms, including the use of the Controlled Account.

9. Term and Renewal: The term of the Additional Service Confirmation, including any renewal terms.

10. Miscellaneous Provisions:

Any additional terms and conditions mutually agreed upon by the Parties. 4912-1725-2554 v3 D-1

EXHIBIT D

SERVICE NOTICES

1. General.

This Exhibit D outlines the procedures and contents for Service Notices that 12 Holdings shall deliver to the City specifying the scope and characteristics of electric service to be provided by the Generation System to the Municipal Utility Service Areas. Each Service Notice shall include detailed information about the electric service, including capacity, limitations, and other relevant details.

2. Contents of Service Notices.

Each Service Notice shall include the following information:

A. Identification of the Municipal Utility Service Area:
a. Name and description of the Municipal Utility Service Area. b. Assessor parcel numbers and boundaries within the Municipal Utility Service Area.

B. Generation System Specifications:
a. Description of the Generation System technology to be used. b. Installed nameplate capacity of the Generation System. c. Location of the Generation System within the Municipal Utility Service Area.

C. Contract Capacity:
a. Maximum capacity associated with the Generation System that will be provided to the City.
b. Any derating and limitations on the Contract Capacity.

D. Expected Electric Load:
a. Initial expected electric load for the Municipal Utility Service Area. b. Full expected electric load upon complete build-out.

E. Deliverability and Commencement:
a. Expected operational date when the Generation System will be ready to provide electricity (Deliverability Notice).
b. Date when the City is ready to receive and deliver electricity to Municipal Utility Customers (Commencement Notice).

F. Limitations on Service:
a. Any operating conditions or limitations associated with permits. b. Limitations due to Force Majeure events and maintenance activities.

G. Exceptions to Service:
a. Any specific exceptions to the service provided by the Generation System.

3. Procedures for Delivering Service Notices.

A. Deliverability Notice:
4912-1725-2554 v3 D-2
a. 12 Holdings shall provide a Deliverability Notice to the City within a reasonable timeframe, specifying the expected date when the Generation System will be operational.
b. The Deliverability Notice shall be updated at least every ninety (90) days.

B. Commencement Notice:
a. Upon mutual agreement, 12 Holdings and the City shall develop a Commencement Notice acknowledging that the Municipal Utility System is completed, and 12 Holdings is ready to commence delivery of electricity.
b. The Commencement Notice shall include the start date for electric service to the Municipal Utility Customers.

4. Incorporation into Agreement.

Each Service Notice delivered by 12 Holdings and acknowledged by the City shall be incorporated into this Agreement as an element of Exhibit D. The executed Service Notice shall be deemed to amend this Agreement to the extent necessary to specify the terms and conditions of electric service for the respective Municipal Utility Service Area.
4912-1725-2554 v3 E-1

EXHIBIT E

RESERVED
(This exhibit is currently reserved for future use and does not contain any specific terms or conditions.)
4912-1725-2554 v3 F-1

EXHIBIT F

RESERVED
(This exhibit is currently reserved for future use and does not contain any specific terms or conditions.)
4912-1725-2554 v3 G-1

EXHIBIT G

RESERVED
(This exhibit is currently reserved for future use and does not contain any specific terms or conditions.)
4912-1725-2554 v3 H-1

EXHIBIT H

FORM OF CONTROLLED ACCOUNT AGREEMENT

1. Establishment of a Controlled Account.

1.1 1.1. Purpose: The Controlled Account shall be established to collect payments from Municipal Utility Customers and remit payments from the City to 12 Holdings.

1.2 Account ControlThe Controlled Account shall be established pursuant to an account control agreement and any other necessary agreements required to establish and manage the account.

1.3 Minimum Controlled Account BalanceThe Controlled Account must maintain the Minimum Controlled Account Balance as specified in the Agreement.

2. Operation of the Controlled Account.

2.1 Payments from Municipal Utility CustomersAll payments for electric service from Municipal Utility Customers shall be remitted directly into the Controlled Account.

2.2 Remittances to 12 Holdings12 Holdings shall withdraw from the Controlled Account the greater of either (a) five percent (5%) of the net revenue, up to fifteen million dollars ($15,000,000) or (b) the standard connection fees plus all applicable taxes, as compensation for the right to operate the Municipal Utility. This remittance shall be made within thirty (30) days of collection. 12 Holdings will retain the remaining funds for actual costs incurred and other expenses related to the operation of the Municipal Utility System.

2.3 Termination FeesAny termination fees associated with the termination of Retail Service Agreements shall be remitted directly into the Controlled Account and then paid to 12 Holdings, subject to the remittance of the City's portion as described in Section 5.4.1 of the Agreement.

3. Duties of the Parties.

3.1 Collection and Disconnection12 Holdings shall implement rules for collecting payments and disconnecting service to delinquent Municipal Utility Customers, ensuring compliance with the Utility Rates and Rules.

3.2 Replenishment12 Holdings shall replenish the Controlled Account as necessary to maintain the Minimum Controlled Account Balance.

4. Further Assurances.

4.1 DocumentationBoth Parties agree to provide any necessary documentation and technical assistance to facilitate the operation of the Controlled Account.

4.2 ComplianceBoth Parties shall comply with the terms of the Controlled Account agreement and cooperate to ensure its proper management.
4912-1725-2554 v3 I-1

EXHIBIT I

FORM OF RETAIL SERVICE AGREEMENT

1. General Provisions.

1.1 ScopeThis Retail Service Agreement outlines the terms, conditions, and rates for providing electric service to Municipal Utility Customers.

1.2 PartiesThe agreement is between the City (as the provider of electric service) and the Municipal Utility Customer.

2. Rates and Charges.

2.1 Basic Energy ChargeThe rate for electric service provided to the Municipal Utility Customer, including the Base Rate and any applicable adjustments.

2.2 Additional ChargesAny additional charges, such as connection fees, late payment fees, and disconnection fees, as specified in the Utility Rates and Rules.

3. Service Conditions.

3.1 Service RequirementsConditions and requirements for electric service, including metering, billing, and payment terms.

3.2 Service InterruptionsPolicies regarding planned and unplanned service interruptions, including notice requirements and customer rights.

4. Customer Obligations.

4.1 Payment TermsTerms for timely payment of invoices and consequences for late payments.

4.2 Access to PremisesRequirements for providing access to premises for meter reading, maintenance, and inspections.

5. Disconnection and Reconnection.

5.1 Disconnection PolicyPolicies and procedures for disconnecting service due to nonpayment or other breaches of the Retail Service Agreement.

5.2 Reconnection PolicyTerms and conditions for reconnecting service after disconnection, including any applicable fees.

6. Term and Termination.

6.1 TermThe term of the Retail Service Agreement, including start and end dates.

6.2 TerminationConditions under which the Retail Service Agreement may be terminated by either party.

7. Miscellaneous.

7.1 Governing LawThe Retail Service Agreement shall be governed by and construed in accordance with the laws of the State of California.
4912-1725-2554 v3 I-2

7.2 AmendmentsAny amendments to the Retail Service Agreement must be in writing and signed by both parties.

7.3 NoticesProcedures for providing notices under the Retail Service Agreement. 4912-1725-2554 v3 I-3
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the date set forth below.

CITY OF CALIFORNIA CITY, a California municipal corporation and general law city organized and operating under the laws of the State of California.

California City City CouncilSeptember 8, 2026

California City City Council
September 8, 2026