Exhibit 10

 

 

 

 

 

 

 

MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT

 

 

BETWEEN

 

RET HOLDINGS, LLC,

 

as Buyer

 

and

 

ORMAT NEVADA INC.,

 

as Seller

 

for the purchase of the membership interests in

 

IMPERIAL SOLAR 1, LLC

 

 

DATED AS OF MARCH 26, 2014 

 

 
 

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TABLE OF CONTENTS

 

    Page      

Article I            DEFINITIONS

1

Section 1.1

Certain Definitions

1

Section 1.2

Certain Interpretive Matters

10

Article II           PURCHASE AND SALE OF THE INTERESTS

11

Section 2.1

Purchase and Sale of the Membership Interests

11

Section 2.2

Purchase Price

11

Section 2.3

Closing

12

Section 2.4

Deliveries

12

Section 2.5

Transfer Taxes

14

Section 2.6

Allocation for Tax Purposes

14

Article III          REPRESENTATIONS AND WARRANTIES REGARDING SELLER AND THE
PROJECT COMPANY

15

Section 3.1

Organization-Seller

15

Section 3.2

Authorization

15

Section 3.3

Non-Contravention-Seller

15

Section 3.4

Brokers’ Fees

15

Section 3.5

Litigation - Seller

16

Section 3.6

Title to Membership Interests

16

Section 3.7

Authorizations

16

Section 3.8

Organization of the Project Company

16

Section 3.9

Non-Contravention- Project Company

17

Section 3.10

Capitalization

17

Section 3.11

Subsidiaries

17

Section 3.12

Contracts

17

Section 3.13

Other Assets

18

Section 3.14

No Undisclosed Liabilities

18

Section 3.15

Litigation - Project Company

19

Section 3.16

Legal Compliance

19

Section 3.17

Permits

19

Section 3.18

Tax Matters

19

 

 
 

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TABLE OF CONTENTS

(continued)

 

    Page      

Section 3.19

Books and Records

21

Section 3.20

Affiliate Transactions

21

Section 3.21

Absence of Certain Actions

21

Section 3.22

Financial Statements

22

Section 3.23

Environmental Matters

22

Section 3.24

Real Property Related Documentation

23

Section 3.25

Real Property

23

Section 3.26

Intellectual Property

24

Section 3.27

Labor Matters

24

Section 3.28

Project Development

25

Section 3.29

Project Assets

25

Section 3.30

Solvency

25

Section 3.31

Bank Accounts

25

Section 3.32

Regulatory Matters

26

Section 3.33

Investment Company

26

Article IV          REPRESENTATIONS AND WARRANTIES REGARDING BUYER

26

Section 4.1

Organization

26

Section 4.2

Authorization

26

Section 4.3

Noncontravention

27

Section 4.4

Authorizations

27

Section 4.5

Litigation

27

Section 4.6

Brokers’ Fees

27

Section 4.7

Solvency

27

Section 4.8

Regulatory Matters

27

Section 4.9

Available Funds

28

Section 4.10

Securities Laws

28

Article V           COVENANTS

29

Section 5.1

Project Construction and Funding

29

Section 5.2

Public Announcements

29

Section 5.3

Notification of Certain Matters

30

 

 
 

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TABLE OF CONTENTS

(continued)

 

    Page      

Section 5.4

Post-Closing Access; Preservation of Records

30

Section 5.5

Tax Matters

30

Section 5.6

Confidentiality

31

Section 5.7

Financing Cooperation

31

Section 5.8

Further Assurances

31

Section 5.9

Seller Credit Support

32

Section 5.10

Buyer Credit Support

32

Section 5.11

EPC Schedule

32

Section 5.12

Post-Closing Covenants

32

Article VI         INDEMNIFICATION, SURVIVAL AND REMEDIES

34

Section 6.1

Seller’s Agreement to Indemnify

34

Section 6.2

Buyer Indemnitee Notices

36

Section 6.3

Buyer’s Agreement to Indemnify

36

Section 6.4

Seller Indemnitee Notices

37

Section 6.5

Third Party Indemnification Procedures

37

Section 6.6

Limitations on Remedies

40

Section 6.7

Survival

41

Section 6.8

Investigations and Knowledge

42

Section 6.9

Set-Off

42

Article VII        CLOSING CONDITIONS; TERMINATION

 

Section 7.1

Conditions Precedent to Obligations of Buyer

42

Section 7.2

Conditions Precedent to Obligations of Seller

43

Section 7.3

Termination

43

Article VIII       MISCELLANEOUS

44

Section 8.1

Parties in Interest

44

Section 8.2

No Recourse

44

Section 8.3

Assignment

45

Section 8.4

Notices

45

Section 8.5

Amendments and Waivers

46

Section 8.6

Headings

46

 

 
 

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TABLE OF CONTENTS

(continued)

 

    Page      

Section 8.7

Construction

46

Section 8.8

No Other Representations or Warranties; Specific Performance; Remedies

46

Section 8.9

Entire Agreement

46

Section 8.10

Severability

47

Section 8.11

Expenses

47

Section 8.12

Governing Law

47

Section 8.13

Resolution by Parties

47

Section 8.14

Binding Arbitration

48

Section 8.15

Exceptions to Arbitration Obligation

48

Section 8.16

Consent to Jurisdiction; Waiver of Jury Trial

48

Section 8.17

Remedies Cumulative

49

Section 8.18

Counterparts

49

Section 8.19

Release

49

 

 
 

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Exhibits      

Exhibit A

Form of Assignment and Assumption Agreement

Exhibit B Project Site Exhibit C Form of FIRPTA Certificate Exhibit D IE
Schedule Exhibit E Form of Promissory Note Exhibit F Form of SNDA Exhibit G Form
of Title Policy Exhibit H Form of Blue Mountain Guarantee Exhibit I Form of
Membership Interests Escrow Agreement         Schedules       Schedule 1.1

Knowledge

Schedule 3.7

Authorizations

Schedule 3.10

Capitalization

Schedule 3.12

Contracts

Schedule 3.13

Other Assets

Schedule 3.14

Liabilities

Schedule 3.17

Permits

Schedule 3.18

Tax Matters

Schedule 3.20

Affiliate Transactions

Schedule 3.23

Environmental Matters

Schedule 3.25

Real Property Agreements

Schedule 3.28

Project Development

Schedule 3.31

Bank Accounts

Schedule 5.11

EPC Schedule

Schedule 8.19

Surviving Arrangements

 

 
 

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MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT

 

This Membership Interest Purchase and Sale Agreement (this “Agreement”) is made
as of March 26, 2014 (the “Execution Date”) by and between RET Holdings, LLC, a
Delaware limited liability company (“Buyer”) and Ormat Nevada Inc., a Delaware
corporation (“Seller”). Buyer and Seller are referred to collectively herein as
the “Parties.” Capitalized terms used but not otherwise defined herein shall
have the meaning ascribed such terms in Article I.

 

W I T N E S S E T H:

 

WHEREAS, Seller owns ninety nine percent (99%) of the membership interests in,
and ORNI Holding LLC, a Delaware limited liability company and wholly-owned
Subsidiary of Seller (“Holding”), owns one percent (1%) of the membership
interests in, Imperial Solar 1, LLC, a Delaware limited liability company (the
“Project Company”), a single purpose entity that owns all the assets related to
the Project, comprising the approximately 13.1 megawatt (DC) solar power
generating facility currently in development in Heber, California (the
“Project”);

 

WHEREAS, Seller has undertaken certain development and construction activities
on behalf of the Project Company with respect to the Project and shall, prior to
the sale of the Membership Interests related to the Project Company, transfer
all right, title and interest to assets held with respect to the Project to the
Project Company; and

 

WHEREAS, Seller desires to sell, or caused to be sold, to Buyer, and Buyer
desires to purchase from Seller, all of the membership interests of the Project
Company (collectively, the “Membership Interests”), on the terms and subject to
the conditions set forth in this Agreement;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
promises herein made, and in consideration of the representations and warranties
herein contained, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Parties hereto, intending to
become legally bound, hereby agree as follows:

 

Article I

DEFINITIONS

 

Section 1.1     Certain Definitions. As used in this Agreement, the following
terms shall have the following meanings:

 

“AAA” has the meaning set forth in .

 

“Action” means any action, suit, litigation, arbitration, mediation or
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding) before any court or other Governmental Authority or any
mediator, arbitrator or mediation or arbitration panel.

 

 
 

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“Affiliate” of any particular Person means any other Person Controlling,
Controlled by or under common Control with such particular Person.

 

“Agreement” has the meaning set forth in the preamble hereof.

 

“ARRA” means the American Recovery and Reinvestment Tax Act of 2009, as amended,
and applicable regulations, guidelines, required applications and certifications
promulgated or required in connection therewith.

 

“Assignment and Assumption Agreement” means the assignment and assumption
agreement, dated as of the Closing Date, by and between the Buyer and Seller
transferring the Membership Interests to Buyer and substantially in the form of
Exhibit A hereto.

 

“Balance Sheet” has the meaning set forth in Section 3.22.

 

“Blue Mountain Guarantee” means a guaranty, substantially in the form set forth
on Exhibit H, executed by each of the guarantor parties thereto in favor of
Seller.

 

“Business Day” means any day other than Saturday, Sunday or any other day on
which banking institutions in California or New York are not open for the
transaction of normal banking business.

 

“Buyer” has the meaning set forth in the preamble to this Agreement.

 

“Buyer Credit Support” means Owner Security as defined in the EPC Schedule.

 

“Buyer Damages” has the meaning set forth in Section 6.1.

 

“Buyer Fundamental Representations” has the meaning set forth in Section 6.7(c).

 

“Buyer Indemnitee Notice” has the meaning set forth in Section 6.2.

 

“Buyer Indemnitee Third Party Claim” has the meaning set forth in Section
6.5(a).

 

“Buyer Indemnitees” has the meaning set forth in Section 6.1.

 

“Closing” has the meaning set forth in Section 2.3.

 

“Closing Date” has the meaning set forth in Section 2.3.

 

“Closing Deadline” means March 31, 2014.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Commercial Operation Date” has the meaning set forth in the PPA.

 

“Confidential Information” has the meaning set forth in Section 5.6.

 

 
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“Confidentiality Agreements” means that certain Non-Disclosure Agreement dated
as of October 31, 2013 between Renewable Energy Trust Capital, Inc. and the
Project Company and that certain Non-Disclosure Agreement dated as of September
3, 2013 between ESU Services SAS and the Project Company.

 

“Consents” means consents, approvals, exemptions, waivers, authorizations,
filings, registrations and notifications.

 

“Contract(s)” has the meaning set forth in Section 3.12(a).

 

“Control,” “Controlled” and “Controlling” mean, with respect to any Person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, membership interests or partnership interests,
by contract or otherwise.

 

“Dispute” has the meaning set forth in Section 8.13.

 

“Election Period” has the meaning set forth in Section 6.5(a)(i).

 

“Environmental Laws” means any and all Laws and any amendments thereto as of the
Closing Date, relating to the environment, human health, preservation or
reclamation of natural resources, or to the management, handling, use,
generation, treatment, storage, transportation, Release or threatened Release of
Hazardous Substances, including but not limited to: CERCLA; the Federal Water
Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Clean Air Act, 42 U.S.C. §
7401 et seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; the
Emergency Planning and Community Right to Know Act of 1986, 42 U.S.C. § 11001 et
seq.; the Safe Drinking Water Act, 42 U.S.C. § 300(f) et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. § 1801 et seq.; the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. § 136 et seq.; the Resource Conservation
and Recovery Act of 1976, 42 U.S.C. § 6901 et seq.; the Oil Pollution Act of
1990, 33 U.S.C. § 2701 et seq.; and any similar or implementing state or local
Law, all amendments or regulations promulgated thereunder.

 

“EPC Schedule” has the meaning set forth in Section 5.11.

 

“ERISA” has the meaning set forth in Section 3.27(a).

 

“ERISA Affiliate” has the meaning set forth in Section 3.27(a).

 

“Escrow Agreement” shall mean, if applicable, that certain Escrow Agreement
dated as of the date hereof by and among Seller, Buyer and Wells Fargo Bank,
National Association, a national banking association, as escrow agent.

 

“Execution Date” has the meaning set forth in the preamble to this Agreement.

 

“Existing Permits” has the meaning set forth in Section 3.17.

 

“FERC” has the meaning set forth in Section 3.32(a).

 

 
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“FIRPTA Certificate” has the meaning set forth in Section 2.4(a)(ii).

 

“GAAP” means United States generally accepted accounting principles consistently
applied.

 

“Governmental Authority” means any (a) nation, state, commonwealth, county,
municipality, district or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign or other government; (c) governmental or quasi
governmental authority of any nature (including any governmental division,
subdivision, department, agency, bureau, branch, office, commission, council,
board, instrumentality, officer, official, representative, organization, unit,
body or entity and any court or other tribunal); or (d) body exercising, or
entitled to exercise, any executive, legislative, judicial, administrative,
regulatory, police, military or taxing authority or power of any nature.

 

“Geothermal Lease” means that certain Lease Agreement dated February 17, 1977,
executed by Joseph L. Holtz, as lessor, and Chevron U.S.A., Inc., a corporation,
as lessee, a Short Form of which was recorded on May 18, 1977 as Instrument
No. 17 in Book 1401, Page 925 of the Official Records of Imperial County,
California, as such Lease Agreement has previously been amended and from time to
time.

 

“Hazardous Substances” means any hazardous substances, pollutants, contaminants,
wastes, or materials (including petroleum (including crude oil or any fraction
thereof), petroleum wastes, radioactive material, hazardous wastes, toxic
substances, or asbestos or any materials containing asbestos) designated,
regulated, or defined under or with respect to which any requirement or
liability may be imposed pursuant to any Environmental Law.

 

“Holding” has the meaning set forth in the recitals to this Agreement.

 

“IE Schedule” shall mean the schedule attached to this Agreement as Exhibit D
that sets forth the IE Report open items and identifies such items necessary for
Closing and Substantial Completion as mutually agreed to by Buyer and Seller.

 

“IID” means Imperial Irrigation District, an irrigation district duly organized
and existing under the Water Code of the State of California.

 

“Intellectual Property” means the following intellectual property rights, both
statutory and common law rights, if applicable: (a) copyrights, registrations
and applications for registration thereof, (b) trademarks, service marks, trade
names, slogans, domain names, logos, trade dress, and registrations and
applications for registrations thereof, or (c) patents, inventions, know-how and
trade secrets as well as any reissued and reexamined patents and extensions
corresponding to the patents, and any patent applications, as well as any
related continuation, continuation in part and divisional applications and
patents issuing.

 

“Interconnection Agreement” means that certain Standard Generator
Interconnection Agreement, dated as of June 11, 2013, by and between IID and
Ormat Nevada Inc.

 

 
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“ITC” means the investment tax credits for qualified solar systems under
Sections 38(b)(1), 46 and 48 of the Code.

 

“Knowledge” when used (i) with respect to Seller or the Project Company, means
the actual knowledge of the individuals listed on Schedule 1.1(a); provided that
no such Person listed on Schedule 1.1(a) shall have any individual liability to
Buyer under or in connection with this Agreement and (ii) with respect to Buyer,
means the actual knowledge of the individuals listed on Schedule 1.1(b);
provided that no such Person listed on Schedule 1.1(b) shall have any individual
liability to Seller under or in connection with this Agreement.

 

“Law(s)” means any federal, state, local, municipal, foreign or other law,
statute, legislation, constitution, ordinance, code, Order or regulation by or
under the authority of any Governmental Authority.

 

“Liability” means any debt, obligation, duty or liability (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, whether direct or
indirect, whether matured or unmatured, whether disputed or undisputed, whether
secured or unsecured and whether due or to become due), regardless of whether
such debt, obligation, duty or liability would be required to be disclosed on a
balance sheet prepared in accordance with GAAP, including any liability for
Taxes.

 

“Lien” means any mortgage, pledge, lien, encumbrance, hypothecation, assessment,
levy, imposition, claim, assignment, purchase right, option, warrant, transfer
restriction, charge or other security interest or claim, restriction or
limitation of any kind or nature whatsoever.

 

“Losses” means all actions, suits, proceedings, hearings, investigations,
charges, complaints, claims, demands, injunctions, judgments, Orders, decrees,
rulings, damages, dues, penalties, fines, Taxes, costs, liabilities,
obligations, losses, expenses and fees, including interest, penalties,
accounting and other advisory fees, investigation costs, court costs and
reasonable attorneys’ fees and expenses.

 

“Material Adverse Effect” means, (a) with respect to Seller, the Project or the
Project Company any event, change or effect that, when taken individually or
together with all other adverse events, changes and effects, is or is reasonably
likely (i) to be materially adverse to the financial condition, properties,
assets (including Project Assets), liabilities, business, operations or results
of operations of the Project Company or the Project, or (ii) the ability of such
Person to perform its obligations under, or to consummate the transactions
contemplated by, this Agreement, and (b) with respect to Buyer, a material
adverse effect on the ability of Buyer to perform its obligations under, or to
consummate the transactions contemplated by, this Agreement; provided, however,
that a “Material Adverse Effect” shall not include any adverse change, effect or
circumstance directly or indirectly resulting from or arising out of (i) actions
taken or omissions made by a Party at the request or with the consent of the
other Party, the failure to take any action prohibited by this Agreement or the
taking of any action pursuant to or in accordance with the Agreement;
(ii) changes in the renewable power development industry or in renewable energy
markets generally and not specifically relating to the Project, (iii) changes in
economic conditions or financial markets in any country or region or globally,
(iv) legal, accounting or regulatory changes, (v) the announcement of this
Agreement and the transactions contemplated hereby or (vi) changes in general
political conditions, including any acts of war or terrorist activities. For the
avoidance of doubt, the Parties agree that the terms “material,” “materially” or
“materiality” as used in this Agreement with an initial lower case “m” shall
have their respective customary and ordinary meanings, without regard to the
meaning ascribed to Material Adverse Effect.

 

 
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“Membership Interests” has the meaning set forth in the recitals to this
Agreement.

 

“Membership Interests Escrow Agreement” shall mean that certain Escrow Agreement
dated as of the Closing Date hereof by and among Seller, Buyer and Chadbourne &
Parke LLP, as escrow agent, substantially in the form attached hereto as Exhibit
I.

 

“Order” means any temporary, preliminary or permanent order, judgment,
injunction, edict, decree, ruling, pronouncement, determination, decision,
opinion, verdict, sentence, stipulation, subpoena, writ or award that is or has
been issued, made, entered, rendered or otherwise put into effect by or under
the authority of any court, administrative agency or other Governmental
Authority.

 

“Organizational Documents” means any charter, certificate of incorporation,
certificate of formation, articles of association, bylaws, operating agreement,
partnership agreement or similar formation or governing documents and
instruments.

 

“Parties” has the meaning set forth in the preamble to this Agreement.

 

“Permit” means any permit, consent, approval, authorization, notification,
variance, waiver, order, filing, license, franchise, registration of, from, to
or with any Governmental Authority.

 

“Permit Application” means all Permits that have been applied for with a
Governmental Authority but which have not yet been obtained (and are not
necessary to have been obtained as of the Closing Date).

 

“Permitted Liens” means:

 

(a)     Liens for Taxes incurred in the ordinary course of business that are not
yet due and payable, or are being contested in good faith by appropriate and
lawful proceedings;

 

(b)     mechanics’, materialmen’s, warehousemen’s, carriers’, or other like
Liens, securing obligations incurred in the ordinary course of business that are
not yet due and payable or are being contested in good faith by appropriate and
lawful proceedings;

 

(c)     good faith pledges or deposits made in the ordinary course of business
to secure performance of bids, tenders, contracts (other than for the repayment
of borrowed money) or leases, or to secure statutory obligations, or surety,
stay, appeal, indemnity, performance or other similar bonds required in the
ordinary course of business;

 

 
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(d)     Liens consisting of zoning restrictions, public rights-of-way, and
similar encumbrances, or other restrictions on real property imposed by Law or
arising in the ordinary course of business that do not secure any monetary
obligation and do not individually or in the aggregate materially detract from
the value of use of the affected property or interfere with the Project Assets;

 

(e)     non-monetary Liens incurred in the ordinary course of business which do
not currently present any risk of sale of the property subject to the Liens,
which do not reduce the value of the Project Assets in any material respect;

 

(f)     those Liens set forth on Schedule 3.25(b), on any other Schedule or on
the Title Commitment; and

 

(g)     that certain letter dated March 20, 2008 from Toni F. Holtz and Walter
J. Holtz to ORNI 24, LLC and that certain letter dated March 7, 2014 from the
Project Company to Walter and Toni Holtz, in each case relating to that certain
Judgment Pursuant to Stipulation dated July 28, 1993.

 

“Person” means an individual, partnership, limited liability partnership,
corporation, limited liability company, association, joint stock company, trust,
estate, joint venture, unincorporated organization, or governmental entity (or
any department, agency, or political subdivision thereof).

 

“Post-Closing Period” means the portion of a Straddle Taxable Period that is not
a Pre-Closing Period.

 

“Post-Closing Taxable Period” means any taxable period that begins and ends
after the Closing Date.

 

“PPA” means that certain Power Purchase Agreement, dated as of November 18, 2011
(as amended October 31, 2013) by and between IID and Project Company.

 

“Pre-Closing Period” means the portion of a Straddle Taxable Period that ends on
the Closing Date.

 

“Pre-Closing Taxable Period” means any taxable period that ends on or before the
Closing Date.

 

“Project” has the meaning set forth in the recitals to this Agreement.

 

“Project Assets” means (i) all of the assets owned by the Project Company,
including the Contracts, Project Site, Permits, equipment, supplies and all
rights necessary for the development, construction, ownership, operation and
maintenance of, or otherwise relating to, the Project, and (ii) the
Interconnection Agreement.

 

“Project Company” has the meaning set forth in the recitals to this Agreement.

 

 
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“Project Contracts” means the PPA, the Real Property Agreements, and the
Interconnection Agreement.

 

“Project Site” means the real property described in Exhibit B.

 

“Promissory Note” means a promissory note in the form attached as Exhibit E.

 

“Purchase Price” has the meaning set forth in Section 2.2.

 

“Qualifying Facility” has the meaning set forth in Section 3.32(a).

 

“Real Property Agreements” means the easements and agreements set forth in
Schedule 3.25.

 

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, or disposing of any
Hazardous Substances.

 

“Renewable Energy Incentives” shall mean U.S. federal tax credits or other tax
benefits (such as accelerated depreciation) associated with the construction,
ownership, production, or sale of electricity from the Project, including any
governmental payments made in lieu of such tax credits or other benefits (such
as the Section 1603 Cash Grant).

 

“SNDA" means that certain Subordination and Non-Disturbance Agreement, by and
among Second Imperial Geothermal Company, a California limited partnership,
Heber Field Company, a California limited partnership, the Project Company,
OrCal Geothermal LLC, a Delaware limited liability company, and Union Bank,
N.A., as trustee, substantially in the form attached hereto as Exhibit F, with
such modifications as Union Bank, N.A. shall reasonably request that are
reasonably acceptable to Buyer.

 

“Section 1603 Begun Construction Application” means the on-line preliminary
application filed by the Project Company before October 1, 2012, claiming that
the Project Company began construction on the Project during 2009 – 2011 but did
not place it in service by the end of 2011.

 

“Section 1603 Cash Grant” means cash grant proceeds with respect to the Project
under Section 1603 of the ARRA administered by the Treasury.

 

“Section 1603 Grant Guidance” means the program guidance issued in July, 2009,
and revised in March 2010 and April 2011, by the Treasury with respect to the
Section 1603 Cash Grant, the “Begun Construction Applicant Checklist,” the
“Frequently Asked Questions and Answers,” and any clarification, addition or
supplement thereto, or replacement thereof, issued by the Treasury or any other
Governmental Authority.

 

“Securities Act” means the Securities Act of 1933, as amended, including the
rules and regulations thereunder.

 

“Seller” has the meaning set forth in the preamble to this Agreement.

 

 
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“Seller Credit Support” means, if applicable, the $9,000,000 paid by Buyer to
Seller pursuant to the terms of the Escrow Agreement.

 

“Seller Damages” has the meaning set forth in Section 6.3.

 

“Seller Fundamental Representations” has the meaning set forth in Section
6.7(b).

 

“Seller Indemnitee(s)” has the meaning set forth in Section 6.3.

 

“Seller Indemnitee Notice” has the meaning set forth in Section 6.4.

 

“Seller Indemnitee Third Party Claim” has the meaning set forth in Section
6.5(b).

 

“Straddle Taxable Period” means a taxable period that begins on or before the
Closing Date and ends after the Closing Date. In the case of Taxes arising in a
Straddle Taxable Period, except as provided in the next sentence, the allocation
of such Taxes between the Pre-Closing Period and the Post-Closing Period shall
be made on the basis of an interim closing of the books as of the end of the
Closing Date. In the case of any Taxes based on capitalization, debt or shares
of stock authorized, issued or outstanding, or any real property, personal
property or similar ad valorem Taxes that are payable for a Straddle Taxable
Period, the portion of such Tax that relates to the Pre-Closing Period shall be
deemed to be the amount of such Tax for the entire Straddle Taxable Period
multiplied by a fraction, the numerator of which is the number of days in the
Pre-Closing Period and the denominator of which is the number of days in the
entire Straddle Taxable Period. In the event the Taxes described in the
preceding sentence are attributable to any property that is revalued or
re-assessed (or for which any exemption is forfeited) on or after the Closing
Date on account of Buyer’s purchase of 100% of the Membership Interests as
contemplated herein, the portion of such Tax allocated to the Pre-Closing Period
pursuant to the preceding sentence shall be made without taking into account
such revaluation or reassessment. Furthermore, if any Taxes described in the
second sentence preceding this sentence are attributable to property that was
owned by the Project Company solely in the Pre-Closing Period, such Taxes shall
be allocated entirely to the Pre-Closing Period, and if any Taxes described in
the second sentence preceding this sentence are attributable to property that
was owned by the Project Company solely in the Post-Closing Period, such Taxes
shall be allocated entirely to the Post-Closing Period.

 

“Subsidiary” when used with respect to any Person, means any other Person or
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person.

 

“Tax Proceeding” has the meaning set forth in Section 5.5(b).

 

“Tax Return” means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof, required to be filed
with any Governmental Authority, including any schedule or attachment thereto
and including any amendment thereof and any documents with respect to, or
accompanying requests for the extension of time in which to file any such
report, return, document, declaration or other information.

 

 
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“Taxes” means (i) all taxes, however denominated, including any interest,
penalties or other additions to tax that may become payable in respect thereof,
imposed by any Governmental Authority, which taxes shall include all income or
profits taxes (including, but not limited to, federal, state and local income
taxes), payroll and employee withholding taxes, unemployment insurance, social
security taxes, sales and use taxes, ad valorem taxes, excise taxes, franchise
taxes, gross receipts taxes, business license taxes, occupation taxes, real and
personal property taxes, stamp taxes, environmental taxes, escheat, unclaimed
property, energy, transfer taxes, workers’ compensation, Pension Benefit
Guaranty Corporation premiums and other governmental charges, fees, abatements,
assessments, duties or charges of any kind whatever which are required to be
paid, withheld or collected; (ii) any liability for payment of any amounts of
the type described in clause (i) as a result of being a member of an affiliated,
consolidated, combined, unitary or other group for any taxable period; and
(iii) any liability for the payment of any amounts of the type described in
clause (i) or (ii) as a result of any express or implied obligation to indemnify
or otherwise assume or succeed to the Tax liability of any other person by
reason of the application of Treasury Regulation Section 1.1502-6.

 

“Third Party Claim” has the meaning set forth in Section 6.5(b).

 

“Title Commitment” has the meaning set forth in Section 2.4(a)(v).

 

“Title Insurer” has the meaning set forth in Section 2.4(a)(v).

 

“Transaction Documents” means this Agreement, the Assignment and Assumption
Agreement and all other agreements, certificates, instruments, documents and
writings delivered by Buyer and/or Seller in connection with the Transactions.

 

“Transactions” means the transactions contemplated in this Agreement and the
Transaction Documents, including the purchase and sale of the Membership
Interests.

 

“Transfer Taxes” means all transfer Taxes if any resulting from the transfer of
the Project Company under this Agreement (excluding Taxes measured by net
income), including sales, real estate transfer, use, excise, stock, stamp,
documentary, filing, recording, permit, license, authorization and similar
Taxes, filing fees and similar charges.

 

“Treasury” means the United States Department of the Treasury.

 

Section 1.2     Certain Interpretive Matters. In this Agreement, unless the
context otherwise requires:

 

(a)     the singular number includes the plural number and vice versa;

 

(b)     reference to any Person includes such Person’s successors and assigns
but, if applicable, only if such successors and assigns are permitted by this
Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity;

 

(c)     reference to any gender includes each other gender;

 

 
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(d)     reference to any Article, Section, Exhibit, Annex or Schedule means such
Article, Section, Exhibit, Annex or Schedule of or to this Agreement, and
references in any Article, Section, Exhibit or Schedule or definition to any
clause means such clause of such Article, Section, Exhibit, Annex or Schedule;

 

(e)     “hereunder,” “hereof,” “hereto” and words of similar import are
references to this Agreement as a whole and not to any particular Section or
other provision hereof;

 

(f)     “including” (and with correlative meaning “include”) means including
without limiting the generality of any description preceding such term;

 

(g)     relative to the determination of any period of time, “from” means “from
and including,” “to” means “to but excluding” and “through” means “through and
including;”

 

(h)     the expression “and/or” shall connote “any or all of”;

 

(i)     reference to any law (including statutes and ordinances) means such law
as amended, modified, codified or reenacted, in whole or in part, and in effect
as of the date of this Agreement, including rules and regulations promulgated
thereunder;

 

(j)     whenever a person is permitted or required under this Agreement to make
a decision in its “sole discretion” or “discretion,” such Person (i) will be
entitled to make such decision on the basis of any reason or for no reason at
all, (ii) will be entitled to consider such interests (including its own
interests) and factors as such Person desires, and (iii) will have no duty or
obligation to give any consideration to any interest of, or factors affecting,
any other Person, in each case (i), (ii) and (iii) to the fullest extent
permitted by Law; and

 

(k)     any agreement (including this Agreement), instrument, insurance policy,
statute, regulation, rule or order defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument, insurance policy, statute, regulation, rule or order as from time to
time amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes, regulations,
rules or orders) by succession of comparable successor statutes, regulations,
rules or orders and references to all attachments thereto and instruments
incorporated therein; provided, however, that this provision shall not apply to
any agreement or instrument the amendment or modification of which requires the
consent or approval of a Party hereto and where such consent or approval has not
been received.

 

Article II     

PURCHASE AND SALE OF THE INTERESTS

 

Section 2.1     Purchase and Sale of the Membership Interests. At the Closing,
and upon the terms and subject to the conditions of this Agreement, Buyer agrees
to purchase from Seller and Holding, and Seller agrees to sell to Buyer and to
cause Holding to sell to Buyer, all of the Membership Interests, free and clear
of all Liens, for and as full consideration for the sale, transfer, conveyance,
assignment and delivery of the Membership Interests, the amounts and in the
manner specified in Section 2.2.

 

 
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Section 2.2     Purchase Price. The purchase price for the Membership Interests
shall be $35,250,000, the “Purchase Price”) and shall be paid by Buyer as
follows:

 

(a)     If the Closing occurs on a date that is after the Execution Date:

 

 (i)     On the Execution Date, Buyer shall place the Seller Credit Support in
escrow pursuant to the terms of the Escrow Agreement; and

 

 (ii)     On the Closing Date:

 

  (A)     Buyer shall pay Seller or cause to be paid to Seller $6,000,000 by
wire transfer of immediately available funds;

 

  (B)     Buyer shall cause the Promissory Note in the amount of $20,250,000 to
be executed by Renewable Energy Trust Capital, Inc. and delivered to Seller; and

 

  (C)     Upon joint instruction from Seller and Buyer, the Seller Credit
Support in the amount of $9,000,000 shall be disbursed to Seller in accordance
with the terms of Section 1.3 of the Escrow Agreement.

 

(b)     If the Closing Date occurs on the Execution Date, on the Execution Date:

 

 (i)     Buyer shall pay Seller or cause to be paid to Seller $15,000,000 by
wire transfer of immediately available funds; and

 

 (ii)     Buyer shall cause the Promissory Note in the amount of $20,250,000 to
be executed by Renewable Energy Trust Capital, Inc. and delivered to Seller.

 

Section 2.3     Closing. The purchase and sale of the Membership Interests (the
“Closing”) shall take place via email exchanges of signatures and execution
documents, on the Execution Date or on such mutually agreeable date as soon as
practicable and no later than one (1) Business Day after the conditions to the
Closing set forth in Sections 7.1 and 7.2 have been satisfied or waived (the
date upon which the Closing occurs, “Closing Date”); provided, that the Closing
shall not occur until all the deliverables set forth in Sections 2.4(a) and
2.4(b) have been received (or waived by the applicable receiving Party).
Effective as of the Closing Date, Seller shall cease to be a member of the
Project Company, and shall have no further rights with respect to the Project
Company, including pursuant to the Organizational Documents of the Project
Company.

 

Section 2.4     Deliveries.

 

(a)     At the Closing, Seller will deliver or cause to be delivered to Buyer
the following:

 

 (i)     the Assignment and Assumption Agreement;

 

 
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 (ii)     a certificate of non-foreign status dated as of the Closing Date, in
the form attached hereto as Exhibit C, signed under penalty of perjury
(i) stating that Seller and Holding own one hundred percent (100%) of the
Membership Interests of the Project Company, (ii) stating that each of Seller
and Holding is not a foreign corporation, foreign partnership, foreign trust,
foreign estate or disregarded entity for federal income tax purposes,
(iii) providing Seller’s and Holding’s U.S. employer identification numbers and
(iv) providing Seller’s and Holding’s addresses, all in accordance with Section
1445 of the Code and Treasury Regulation Section 1.1445-2(b)(2) (the “FIRPTA
Certificate”);

 

 (iii)     an officer’s certificate of an authorized officer or representative
of Seller: (i) certifying that each of the conditions set forth in Sections
7.1(d) and 7.1(e) has been fulfilled; and (ii) attaching true, accurate and
complete copies of the Organizational Documents of Seller and the Project
Company, and resolutions of Seller authorizing the execution, delivery and
performance by Seller of the Transaction Documents to which it is a party, and a
certificate of good standing or similar certificates from the Delaware Secretary
of State for each of the Seller and the Project Company and from the California
Secretary of State for the Project Company;

 

 (iv)     a certificate of incumbency from the secretary, assistant secretary,
managing director or authorized officer of Seller as to the officers or
authorized representatives of Seller authorized to execute and deliver the
Transaction Documents on behalf of Seller;

 

 (v)     at Seller’s cost, an unconditional and irrevocable commitment or binder
from a national title insurance company (the “Title Insurer”) committing to
insure that Project Company has fee title to the Project Site and good and
valid, recorded and insurable easement interests including easements for access,
ingress, egress and its transmission line, in each case, free and clear of all
Liens or other exceptions to title except for Permitted Liens and extended
coverage equivalent to an extended ALTA owner’s policy based on an ALTA survey,
which Title Commitment shall be substantially in the form of Exhibit G and shall
commit to issuing endorsements reasonably acceptable to Buyer, including the
following endorsements: nonimputation in favor of Buyer, indirect access and
entry, single tax parcel, contiguity, same as survey, and energy facility (ALTA
Series 36) (collectively, the “Title Commitment”)

 

 (vi)     the books and records of the Project Company, including originals
where available, or copies of all Real Property Agreements, Contracts, Consents,
Permits and Permit Applications;

 

 (vii)     executed copies of the Real Property Agreements set forth on Schedule
3.25(d); and

 

 (viii)     the Buyer Credit Support.

 

 
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(b)     At the Closing, Buyer will deliver or cause to be delivered to Seller
the following:

 

 (i)     the Purchase Price to Seller as provided in Section 2.2 and an amount
equal to the premium costs of the title policy with respect to the Project Site
(including the premium costs of any binder or endorsements) (which shall be paid
to Seller if Seller has already paid the title company for such title policy or
paid directly to the title company if such title policy is issued at or after
Closing);

 

 (ii)     the Assignment and Assumption Agreement;

 

 (iii)     an officer’s certificate of an authorized officer or representative
of Buyer: (i) certifying that each of the conditions set forth in Sections
7.2(b) and 7.2(c) has been fulfilled; and (ii) attaching true, accurate and
complete copies of the Organizational Documents of Buyer and resolutions of
Buyer authorizing the execution, delivery and performance of the Transaction
Documents to which it is a party and a certificate of good standing or similar
certificates from the Delaware Secretary of State for Buyer;

 

 (iv)     a certificate of incumbency from the secretary, assistant secretary,
or other authorized representative of Buyer as to the officers or authorized
representatives of Buyer authorized to execute and deliver the Transaction
Documents on behalf of Buyer;

 

 (v)     the Promissory Note, executed by Renewable Energy Trust Capital, Inc.;

 

 (vi)     the Membership Interests Escrow Agreement, executed by Buyer and the
escrow agent thereunder, and in connection with the execution therewith, Buyer
shall deliver to the escrow agent thereunder the limited liability company
membership interests in the Project Company (and the related signed but undated
transfer instrument executed by Buyer); and

 

 (vii)     the Blue Mountain Guaranty, duly executed by the guarantor parties
thereto.

 

Section 2.5     Transfer Taxes. All applicable Transfer Taxes (including any
membership interest transfer Taxes due as a result of the sale of the Membership
Interests and Taxes, if any, imposed upon the transfer of personal property) and
filing, recording, registration, stamp, documentary and other similar Taxes and
similar fees payable in connection with this Agreement, the transactions
contemplated by this Agreement or the documents giving effect to such
transactions will be the responsibility of and be paid equally by Seller and
Buyer.

 

Section 2.6     Allocation for Tax Purposes. Seller and Buyer recognize that the
purchase and sale of the Membership Interests pursuant to this Agreement shall
be treated as a purchase and sale of the Project Assets for federal income tax
purposes. Buyer shall prepare a proposed allocation of the Purchase Price and
any Liability treated as assumed for Tax purposes (and all other capitalized
costs) among the Project Assets (with the aid of such appraisal reports and cost
segregation studies that it deems necessary). Buyer shall deliver such proposed
allocation to Seller within ninety (90) days after the Closing Date. If Seller
objects to such proposed allocation by means of written notice delivered to
Buyer within thirty (30) days following receipt of Buyer’s proposed allocation
(which notice will state the nature of such objection), Seller and Buyer shall
negotiate in good faith and reasonably cooperate with each other in order to
determine the allocation to the various assets of the Project Company for the
thirty (30) days thereafter. Seller and Buyer agree (a) to report the federal,
state and local income and other Tax consequences of the transactions
contemplated herein in a manner consistent with such allocation and (b) not to
take any position inconsistent therewith upon examination of any Tax return, in
any refund claim, in any litigation, investigation or otherwise, unless required
by applicable Law or by any Governmental Authority or with the consent of the
other Party.

 

 
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Article III     

REPRESENTATIONS AND WARRANTIES
REGARDING SELLER AND THE PROJECT COMPANY

 

Seller represents and warrants to Buyer as of the Execution Date as follows:

 

Section 3.1     Organization-Seller. Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
organization. Holding is a limited liability company duly formed, validly
existing and in good standing under the laws of its jurisdiction of
organization.

 

Section 3.2     Authorization. Seller has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution,
delivery and performance by Seller of this Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement has been duly
executed and delivered by Seller and constitutes the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights and remedies of creditors
generally and the exercise of judicial or administrative discretion in
accordance general equitable principles.

 

Section 3.3     Non-Contravention-Seller. Neither the execution and delivery of
this Agreement by Seller, nor the consummation by Seller of the transactions
contemplated hereby will (a) conflict with any provision of the Organizational
Documents of Seller or Holding, (b) result in the imposition or creation of a
Lien upon or with respect to the Membership Interests, (c) violate or result in
a breach of any agreement, Contract, lease, license or instrument to which
Seller or Holding is a party or by which any of its respective properties are
bound, or (d) violate any Law to which Seller or Holding is subject, except, in
the case of clauses (c) and (d) for such violations or breaches which would not,
individually or in the aggregate, have a Material Adverse Effect on Seller, the
Project or the Project Company.

 

Section 3.4     Brokers’ Fees. None of Seller, its Affiliates or the Project
Company has entered into any contract or other arrangement or understanding
(written or oral, express or implied) with any Person which may result in the
obligation of Buyer, any of its Affiliates or the Project Company to pay any
fees or commissions to any broker or finder as a result of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
by this Agreement.

 

 
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Section 3.5     Litigation - Seller. There are no Actions pending or, to
Seller’s Knowledge, threatened, in law or in equity before any Governmental
Authority against Seller or any of its Affiliates which would have, individually
or in the aggregate, a Material Adverse Effect on Seller, and there are no
outstanding injunctions, judgments, orders, decrees, rulings, or charges to
which Seller or any of its Affiliates is a party or by which it is bound by or
with any Governmental Authority which would have, individually or in the
aggregate, a Material Adverse Effect on Seller, the Project or the Project
Company.

 

Section 3.6     Title to Membership Interests. Seller and Holding are the direct
record and beneficial owners of the Membership Interests and such Membership
Interests represent the entirety of Seller’s and Holding’s interests in the
Project Company. Seller and Holding have good and marketable title to the
Membership Interests, free and clear of any and all Liens. On the Closing Date,
the Membership Interests shall be free and clear of all Liens. Seller and
Holding have not granted any option, right, agreement, contract or made any
other obligation or commitment pursuant to which any other Person has a right to
acquire in any way any ownership or other interest in any Membership Interests.
The Membership Interests constitute one hundred percent (100%) of the ownership
interests in the Project Company. There is no voting agreement, proxy or similar
agreement that could require Seller or Holding to sell, transfer or otherwise
dispose of such Membership Interests (other than this Agreement).

 

Section 3.7     Authorizations. Except as set forth on Schedule 3.7 and for
(i) compliance with any applicable requirements of the Securities Act, and
(ii) compliance with any other applicable securities Laws, no Consent of, with
or to any Governmental Authority or other Person is required to be obtained or
made by or with respect to Seller, the Project Company or any of their
respective Affiliates in connection with the execution and delivery of this
Agreement by Seller or the consummation of the transactions contemplated hereby.

 

Section 3.8     Organization of the Project Company. The Project Company is a
limited liability company duly formed, validly existing and in good standing
under the laws of Delaware, and has all requisite limited liability company
power and authority to carry on its business as it is currently, and
contemplated by Seller to be, conducted and to own, lease and operate its
properties where such properties are now owned, leased or operated. The Project
Company is duly qualified or licensed to do business and in good standing in
each jurisdiction, in which the property owned, leased or operated by it or the
nature of the business conducted and contemplated by Seller to be conducted by
it makes such qualification or license necessary. The Organizational Documents
of the Project Company are in full force and effect, and no other documents,
instruments, agreements or certificates are in effect that govern the relative
rights and obligations of the members of the Project Company. The Project
Company is not in breach of, or default under, any of its Organizational
Documents. No event has occurred that, with the giving of notice or the passage
of time, or both, would constitute a default by the Project Company under any of
its Organizational Documents. The Project Company has not given written notice
to, or received any written notice that, any member is in breach of, or default
under, any of its obligations under the Project Company’s Organizational
Documents. True, correct and complete copies of the Organizational Documents of
the Project Company have been delivered to Buyer.

 

 
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Section 3.9     Non-Contravention- Project Company. Neither the execution nor
delivery of this Agreement by Seller, nor the consummation by Seller or the
Project Company of the transactions contemplated hereby will (a) conflict with
or result in a violation or breach of any provision of the Organizational
Documents of the Project Company, (b) result in the imposition or creation of
any Lien, other than any Permitted Lien, upon or with respect to the Project
Assets, the Project Company or the Membership Interests, (c) violate any Law to
which the Project Company or the Project is subject, (d) conflict with, result
in any violation or breach of or default under (or constitute an event that,
with notice or lapse of time or both, would result in a violation or breach or
constitute a default under), or give rise to a right of termination,
cancellation, modification or acceleration of any obligation, trigger or
increase in any payment, or result in loss of a benefit under, any provision of
any Contract to which Seller or the Project Company is a party or by which any
Project Assets are bound or (e) conflict with or result in any violation of any
of the terms or requirements of, or give any Governmental Authority any right
that it would not otherwise have to revoke, withdraw, suspend, cancel,
terminate, or modify any Permit or Permit Application relating to the Project,
the Project Site or the Project Company, provided that in the case of clauses
(b), (c), (d) and (e), for such conflict, violation, breach, default or
otherwise, which would not, individually or in the aggregate, have, or are
reasonably likely to have, a Material Adverse Effect on the Project or the
Project Company.

 

Section 3.10     Capitalization. Schedule 3.10 sets forth all authorized, issued
and outstanding Membership Interests as of the date hereof. Except as set forth
in Schedule 3.10, there are no other issued and outstanding Membership
Interests, or convertible securities, calls, preemptive rights, options,
warrants, rights, contracts, commitments (other than this Agreement),
understandings or arrangements by which the Project Company is bound to issue,
repurchase or otherwise acquire or retire any additional Membership Interests or
other securities of the Project Company. Seller and Holding are the only members
of the Project Company. The Membership Interests have been, and at the Closing
will be, duly authorized, validly issued, fully paid and nonassessable. The
Membership Interests were not issued in violation of the preemptive or other
rights of any Person. There are no liabilities for, or obligation with respect
to, any dividends, distributions or similar participation interests declared or
accumulated but unpaid with respect to any of the Membership Interests. The
Membership Interests were issued in compliance with applicable securities Laws.

 

Section 3.11     Subsidiaries. The Project Company has no Subsidiaries and the
Project Company has never owned any equity interests in any Person.

 

Section 3.12     Contracts.

 

(a)     Schedules 3.12 and 3.25 sets forth all agreements with contract values
greater than $10,000 (oral and written), the Project Contracts and the Real
Property Agreements, including all instruments, commitments, leases, subleases,
licenses, evidences of indebtedness, mortgages, indentures, purchase orders,
release binding bids, letters of credit, security agreements and other legally
binding arrangements, in each case with contract values greater than $10,000,
together with any amendments, restatements, supplements and other modifications
thereto, to which the Project Company is a party and which otherwise relate to
the Project Site, the Project Assets or the Project and which are in effect on
the date hereof (each individually a “Contract” and collectively, the
“Contracts”). Each Contract is in full force and effect and is the legal, valid,
binding and enforceable obligation of the Project Company and, to Seller’s
Knowledge, the other parties thereto, subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights and remedies of creditors generally and the exercise of judicial or
administrative discretion in accordance with general equitable principles.
Neither the Project Company, nor to Seller’s Knowledge, any of the other parties
to any Contract, is in breach, violation or default, and, no event has occurred
which with notice or lapse of time or both would constitute a breach, violation
or default by any such party, or permit termination, modification, or
acceleration by the other parties under such Contract. The Project Company is
not a party to, or bound by, nor are its assets subject to, any Contract with
contract values greater than $10,000 other than the Contracts listed on
Schedules 3.12 and 3.25.

 

 
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(b)     To Seller’s Knowledge, the Project Company does not have any outstanding
claims or causes of action (including relating to availability), whether for
liquidated damages or other monetary damages or otherwise, under any Contract
(including a warranty agreement). Neither the Project Company nor any Affiliate
of the Project Company has received written notice of any claim or cause of
action (including relating to availability) against it, whether for liquidated
damages or other monetary damages, under any Contract.

 

(c)     Other than as set forth on Schedule 3.12 or 3.25, in the Title
Commitment or in those certain letters described in clause (g) of the definition
of Permitted Liens, there are no outstanding Contracts for the sale of, or
purchase options, rights of first refusal, subleases, licenses, concessions or
any other Contract affecting Seller or Project Company’s interest in the Project
Assets, or granting any other party the right to the possession, use, occupancy
or enjoyment of any of the Project Company’s interest in the Project Site or any
portion thereof.

 

Section 3.13     Other Assets. Except for the Contracts listed on Schedules 3.12
and 3.25, the Permits listed on Schedule 3.17, the Environmental Matters listed
on Schedule 3.23(a), the Project Site, the assets to be conveyed to the Project
Company under the EPC Schedule and other assets listed on Schedule 3.13, the
Project Company does not own, and as of the date of Closing, the Project Company
will not own directly or indirectly any other material assets. The assets set
forth on Schedule 3.12, Schedule 3.13, Schedule 3.17, Schedule 3.23(a), Schedule
3.25, the Project Site and the assets to be conveyed to the Project Company
under the EPC Schedule constitute all the assets and documents evidencing rights
with respect to the development, construction, ownership and operation of the
Project and the Project Assets, owned, leased or licensed or otherwise held by
Seller and its Affiliates necessary to perform its obligations under the PPA and
Interconnection Agreement. The Project Company was formed solely for the purpose
of engaging in the development, construction, ownership and operation of the
Project, and the Project Company has not engaged in any material trade, business
or similar activity other than as described in this sentence.

 

Section 3.14     No Undisclosed Liabilities. Except for Liabilities and
obligations arising under the Transaction Documents, Contracts and Permits, and
as disclosed on the financial statement delivered pursuant to Section 3.22 and
except as otherwise set forth in Schedule 3.14 (none of which is a liability for
breach of Contract or default thereunder), the Project Company does not have any
material Liabilities, absolute or contingent, accrued or unaccrued, matured or
unmatured, of the type that would be required to be disclosed in a balance sheet
prepared in accordance with GAAP.

 

 
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Section 3.15     Litigation - Project Company. There are no Actions pending or,
to Seller’s Knowledge, threatened in law or in equity or before any Governmental
Authority against the Project Company or the Project Assets. Seller has not
received written notice of any claim that could be reasonably expected to have a
Material Adverse Effect on the Project or the Project Company.

 

Section 3.16     Legal Compliance. The Project Company is not in material
violation of any Law (including Environmental Laws) or Permit applicable to it
or its operations.

 

Section 3.17     Permits. Each Permit listed in Schedule 3.17(a) (“Existing
Permits”) is in full force and effect and the Project Company is in material
compliance with all its material obligations with respect thereto. There are no
Actions pending or, to Seller’s Knowledge, threatened which would reasonably be
expected to result in the revocation, termination or suspension of any Existing
Permit of the Project Company. To Seller’s Knowledge, no event has occurred or
circumstance exists that (with or without notice or lapse of time) would
reasonably be expected to constitute or result in a violation by the Project
Company of, or a material failure on the part of the Project Company to comply
with, any Existing Permit. The Permits listed on Schedule 3.17(b) are the only
additional Permits required to be obtained for the construction or operation of
the Project and Seller has no reason to believe that such additional Permits
cannot be timely obtained in the ordinary course. All of the conditions required
for the Project under the Final Agreement for Conditional Use Permit
#11-0014/Variance #11-0005 Heber Solar Energy Facility/ORNI 24 LLC (Approved by
Planning Commission on October 12, 2011) have been satisfied, fulfilled or
waived.

 

Section 3.18     Tax Matters. Except as set forth in Schedule 3.18:

 

(a)     All Tax Returns required to have been filed by or with respect to the
Project Company on or before the Closing Date have been duly and timely filed,
and each such Tax Return was true, correct and complete in all material
respects. There are no Liens (other than Permitted Liens) for Taxes on any of
the assets of the Project Company.

 

(b)     The Project Company is not the beneficiary of any extension of time
within which to file any Tax Return, nor have Seller, Holding, or the Project
Company made any requests for such extensions.

 

(c)     The Project Company is, and has been at all times since its
organization, treated as either a disregarded entity or a partnership for
federal tax purposes pursuant to Treasury Regulations Section
301.7701-3(b)(l)(i), and neither Seller, Holding, nor the Project Company has
filed an election to have the Project Company classified as an association
taxable as a corporation pursuant to Treasury Regulations Section 301.7701-3(c).

 

(d)     No written claim has ever been received by Seller or the Project Company
from a Governmental Authority in a jurisdiction where the Project Company does
not file Tax Returns that the Project Company is or may be subject to taxation
by such Governmental Authority.

 

 
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(e)     The Project Company is not a party to any Tax allocation, Tax indemnity
or Tax sharing agreement or similar arrangements with any Person.

 

(f)     Neither Seller, Holding, nor the Project Company has issued to any
Person a power of attorney, with regard to any tax matter relating to the
Project Company, that is currently in effect, and no Tax ruling from a
Governmental Authority has been requested or obtained by Seller, Holding, or the
Project Company, with respect to any Tax matter relating to the Project Company
or the Project Assets.

 

(g)     None of the Project Assets currently is subject to the Alternative
Depreciation System within the meaning of Section 168(g) of the Code.

 

(h)     No more than a de minimis amount (if any) of the Project Assets in the
possession of the Project Company as of the Closing Date is comprised of any
property that is used property.

 

(i)     No federal, state or local tax credit (including the ITC) has been
claimed by the Project Company with respect to any Project Assets. The Project
Company has not submitted an application claiming a Section 1603 Cash Grant with
respect to any Project Assets, other than a Section 1603 Begun Construction
Application.

 

(j)     Neither Seller nor the Project Company has received written notice that
any interests in the Project Assets or the Project are, on or prior to the
Closing Date, subject to rollback taxes, tax penalties, or tax assessment
increases under any local, state or federal law, statute, code, ordinance or
regulation pursuant to which any such interests, or any portion or parcel
thereof, may have been or would be entitled to a preferential or special real
estate tax assessment or tax treatment.

 

(k)     Neither Seller nor Holding is a foreign person within the meaning of
Section 1445 of the Code and is a United States person within the meaning of
Section 1446 of the Code.

 

(l)     Other than with respect to the BDO Independent Accountant’s Report to
which representation Section 3.18(o) applies, the Section 1603 Begun
Construction Application (including all attachments thereto), a copy of which is
set forth in Schedule 3.18(l), was filed with Treasury on September 10, 2012,
and the factual information contained therein is true, correct and accurate in
all respects. For the avoidance of doubt, Seller is not making any
representations regarding the conclusions reached by any third party in any such
documents.

 

(m)     Seller has not received any inquiries or correspondence from Treasury
regarding its Section 1603 Begun Construction Application other than those set
forth in Schedule 3.18(m).

 

(n)     All factual information contained in the documents prepared by Seller,
Holding or the Project Company and set forth in Schedule 3.18(n) is true,
correct and accurate in all respects. To Seller’s Knowledge, all information
provided by and documents prepared by third parties and set forth in Schedule
3.18(n) are true, correct and complete in all respects. For the avoidance of
doubt, Seller is not making any representations regarding the conclusions
reached by any third party in any such documents.

 

 
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(o)     The factual information provided by Seller, Holding and the Project
Company to BDO in connection with the preparation of the BDO Independent
Accountants Report, dated September 10, 2012, is true, correct and accurate in
all respects. No costs were incurred, no work was done and no binding written
contracts were entered into with respect to “specified energy property” (within
the meaning of Section 1603 of the ARRA) that is part of the Project prior to
January 1, 2009.

 

(p)     All solar modules installed in the Project were supplied pursuant to (i)
that certain Solar Module Supply Agreement, dated as of December 15, 2011, as
amended on December 28, 2011, between LDK Solar, International Company Limited
and Seller, and (ii) that certain Solar Module Supply Agreement, dated as of
April 9, 2013, between ET Solar Energy Limited and Seller.

 

(q)     Both Seller and Holding are accrual basis taxpayers. Under both Holding
and Sellers method of accounting, property is treated as provided when title to
the property passes.

 

(r)     As of the Closing Date all sales, use and any similar taxes related to
purchase and installation of the Project Assets shall have been paid in full and
no such taxes shall be due and owing by Project Company or any Affiliate of
Buyer on or after the Closing Date.

 

(s)     Neither Seller nor any of its Affiliate has filed for a “first buyer”
property tax exclusion with respect to the Project pursuant to Section 73 of the
California Revenue and Taxation Code.

 

Section 3.19     Books and Records. True, correct and complete copies of the
organizational books and records of the Project Company have been provided to
Buyer.

 

Section 3.20     Affiliate Transactions. Except as set forth on Schedule 3.20,
neither Seller nor any Affiliate of the Project Company or Seller has any
interest in or is a party to: (a) any contract, agreement, arrangement, letter
of intent, memorandum of understanding, promise, obligation, right, purchase
order, lease, license or similar understanding, whether written or oral, with,
or relating to, the Project Company or the Project; (b) any loan or other
instrument to or from the Project Company; or (c) any right or property (real,
personal or mixed, tangible or intangible) used, or expected to be used, by the
Project Company or otherwise related to the Project.

 

Section 3.21     Absence of Certain Actions. Neither the Project Company nor any
officer, employee or agent of the Project Company has directly or indirectly
given or agreed to give any payment, gift or similar benefit to any Person which
constitutes an illegal bribe or kickback (or is unlawful under the Foreign
Corrupt Practices Act of 1977) or which constitutes an illegal bribe, illegal
kickback or other illegal payment under any applicable Laws of the United States
or under the Laws of any state that subjects the payor to a criminal penalty or
the loss of a license or privilege to engage in a trade or business.

 

 
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Section 3.22     Financial Statements. Seller has provided to Buyer a true and
correct copy of the unaudited balance sheet of the Project Company as of January
31, 2014 (the “Balance Sheet”). The Balance Sheet presents fairly in all
material respects the financial condition of the Project Company.

 

Section 3.23     Environmental Matters.

 

(a)     Schedule 3.23(a) sets forth all material environmental, health and
safety reports, assessments, analyses related to the Project in the possession
of Seller and the Project Company that relate to environmental matters
concerning the development, construction or operation of the Project and the
Project Site. To Seller’s Knowledge, there are no other material environmental
site assessments or environmental reports relating to the Project or the Project
Site.

 

(b)     The Project Company is not subject to any outstanding decree, judgment,
Order, consent decree, compliance order, or administrative order under any
Environmental Laws.

 

(c)     Seller with respect to the Project and the Project Company are in
compliance in all material respects with all Environmental Laws and Permits
under Environmental Law.

 

(d)     Neither the Seller nor the Project Company has been served with notice
of any Actions, and to Seller’s Knowledge, no Actions are threatened, against
the Seller or the Project Company by any Person under any Environmental Laws.

 

(e)     Except as set forth in Section 3.23(e), the Seller, the Project Company
and to the Knowledge of Seller, their Affiliates or any Person has not stored,
disposed of, generated, manufactured, refined, produced, or treated any
Hazardous Substance at, upon, or from the Project Site in violation of any Law.

 

(g)     None of the Project Company, Seller or, to the Knowledge of Seller, any
of their respective Affiliates has received any written notice or, to Seller’s
Knowledge, oral notice or request for information regarding any unresolved
actual, alleged or threatened Actions arising under any Environmental Law from
any Person or Governmental Authority regarding the Project, the Project Company
or any of the Project Assets.

 

 
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Section 3.24     Real Property Related Documentation. Seller has delivered to
Buyer, to the extent in Seller’s possession or control: (i) all Permits, other
than electrical and building permits with respect to the Project; (ii) all
material documents certifying the payment of any applicable real estate Tax;
(iii) all material architectural, mechanical, electrical, plumbing, drainage,
construction and similar plans, specifications and blueprints relating to the
Project Site; (iv) all policies of title insurance, commitments or preliminary
reports on the Project Site; (v) all existing Phase I or other environmental
reports or studies in draft or final form relating to the Project Site; (vi) all
leases, easements, purchase options or other land rights agreements with respect
to the Project Site; (vii) any surveys or plats relating to the Project Site;
and (viii) any other material studies, reports, documents, or items evaluating
all or any part of the Project Site or the feasibility of the Project.

 

Section 3.25     Real Property.

 

(a)     The Project Company owns the Project Site in fee simple.

 

(b)     The Project Company has never leased or licensed or been granted any
written easements or any written options on any real property other than
pursuant to the Real Property Agreements. Except as set forth on Schedule
3.25(a) or in the Title Commitment, the Project Company has not leased or
licensed, as applicable, or subleased or licensed or otherwise granted any
Person the right to use or occupy the real property that is the subject of to
the Real Property Agreements.

 

(c)     (i) Neither Seller nor the Project Company has received written notice
of any condemnation, eminent domain or similar governmental proceeding with
respect to the Project Site, and (ii) to Seller’s Knowledge, no owner of the
real property in which the Project Company has a leasehold, license, option,
easement or other real property interest has received any notice of any
condemnation, eminent domain or similar governmental proceeding.

 

(d)     A true, correct and complete copy of the Real Property Agreements in
effect as of the Closing Date relating to the Project Site has been provided to
Buyer by Seller. Each such Real Property Agreement is in full force and effect,
and has not been amended, supplemented, replaced, restated or modified except as
noted on Schedule 3.25(d) hereto, and all rent payments and other payments due
under each Real Property Agreement prior to the date hereof have been paid as
and when due. Neither Seller nor the Project Company is in default (and, to
Seller’s Knowledge, no other party thereto is in default) of any obligation in
the Real Property Agreements. Upon execution and recording of the Real Property
Agreements on Schedule 3.25(d), the Project Company possesses (i) all access,
leasehold and other rights necessary for full and complete access to and from
the Project Site required to develop, build, construct, install, own, use,
operate, electrically interconnect and maintain the Project on the Project Site,
(ii) recorded, insurable, metes and bounds access easements to the Project Site
and (iii) good and marketable fee and easement interests, as applicable, in the
real property. Other than as may be described on the Schedule 3.25(d) or on the
Title Commitment, there are no encroachments, easements, liens, encumbrances,
covenants, conditions, restrictions, reservations, rights of way, exceptions or
other title defects affecting the Project Site. Neither the Project Company nor
the Seller has collaterally assigned or granted any security interest in the
Real Property Agreements or the Project Site, except as shown on the Title
Commitment. As of the Execution Date and Closing, as applicable, there are no
Liens, other than Permitted Liens, on the real property and easement interests
of the Project Company. The Real Property Agreements comprise all of the real
property and easement interests and rights sufficient to enable the Project to
be located, constructed, operated and maintained in accordance with the Law, the
PPA and the Interconnection Agreement. All utility services necessary for the
construction of the Project and the operation thereof for its intended purpose
including electricity will be available at the boundaries of the Project Site
and either will reach the Project Site through adjoining public streets or, if
they pass through adjoining private land, will do so in accordance with valid
easements or wirelessly.

 

 
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(e)     Neither Seller nor the Project Company has received any written notice
of any of the following, and, to Seller’s Knowledge, none of the following
events or conditions has occurred or currently exists:

 

  (i)     claims from any Governmental Authority having jurisdiction over the
Project or the Project Site or from any Person who will provide utility service
to the Project or the Project Site, that there are not sufficient easements and
rights-of-way required for the operation of the Project in the ordinary course
or to provide ingress and egress to and from the Project Site;

 

  (ii)     notice from any Governmental Authority that has or will have
jurisdiction over the Project or the Project Site that any applicable Law has
or, except as may be shown in the Title Commitment or in the ALTA Survey, will
change the permitted use of all or any portion of the Project Site; or

 

  (iii)     claims from any landowners that there exist unrecorded easements
burdening or that will burden all or any portion of the Project or Project Site,
or that the Project may encroach upon the real property of any such adjacent
landowners.

 

Section 3.26     Intellectual Property.

 

(a)     The Project Company owns, or has the licenses or rights to use all
material Intellectual Property currently used by the Project Company.

 

(b)     Neither Seller nor the Project Company has received from any Person a
claim in writing that the Project Company is infringing in any material respect
the Intellectual Property of such Person and to Seller’s Knowledge, there is no
threatened claim by or against the Project Company for infringement or
misappropriation of any material Intellectual Property with respect to the
Project.

 

Section 3.27     Labor Matters.

 

(a)     The Project Company has no and has never had any employees and no
employment offers were ever made or offered to any Person. The Project Company
is not a party to or bound by any collective bargaining or labor agreements
concerning the Project Company, and to Seller’s Knowledge, no present union
organizing efforts are underway with respect to the Project Company or the
Project. The Project Company does not maintain or sponsor, and has never
maintained or sponsored, any “employee benefit plan” within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”),
or any other welfare benefit plan. The consummation of the transactions
contemplated by this Agreement will not result in Buyer, the Project Company or
any ERISA Affiliate thereof incurring any Liability with respect to any defined
benefit plan or any other benefit plan. For purposes of this Agreement, “ERISA
Affiliate” means any person, entity, trade or business that, together with the
Project Company, is or was treated as a single employer within the meaning of
Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(3) of ERISA.

 

 
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(b)     None of Seller or its Affiliates has been notified by any trade or labor
union, employees’ association or similar organization regarding the use of union
labor on the Project and is not aware of any current labor disputes with respect
to the work undertaken at the Project Site.

 

Section 3.28     Project Development. Other than as disclosed in Schedule 3.28,
none of Seller, the Project Company nor any of their Affiliates has received
written notice (or, to the Knowledge of Seller, any oral notice) from the
applicable interconnection provider, specific to the Project, that such
interconnection provider has taken or has determined to take any action with
respect to termination of the Project’s queue positions or the rights under any
interconnection agreements or similar agreements of the Project. The Project
Company or any Affiliates, as applicable, have timely made all material deposits
and other payments, and filed all reports and other information, required in
order to maintain their interconnection queue positions and interconnection and
transmission rights.

 

Section 3.29     Project Assets. The Project Company has good and marketable
title to the Project Assets it purports to own, free and clear of any Liens,
other than Permitted Liens.

 

Section 3.30     Solvency. No petition or notice has been presented, no order
has been presented, no order has been made and no resolution has been passed for
the bankruptcy, liquidation, winding-up or dissolution of Seller or the Project
Company. No receiver, trustee, custodian or similar fiduciary has been appointed
over the whole or any part of the Project Assets or the income of Seller or the
Project Company. None of Seller or the Project Company has any plans or
intentions of, and has not received any notice that any other Person has any
plan or intention of, filing, making or obtaining any such petition, notice,
order or resolution or of seeking the appointment of a receiver, trustee,
custodian or similar fiduciary. Seller is solvent and has or will have
sufficient assets and capital to carry on its business as now conducted or to be
conducted and to perform its obligations hereunder.

 

Section 3.31     Bank Accounts. Schedule 3.31 sets forth (a) an accurate and
complete list of the names and locations of banks, trust companies and other
financial institutions at which the Project Company maintain accounts of any
nature and (b) the managers and, if applicable, officers and directors of the
Project Company.

 

 
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Section 3.32     Regulatory Matters.

 

(a)     None of Seller, Holding or the Project Company has filed or is currently
required to file any tariff, contract or other instrument for the approval of
the Federal Energy Regulatory Commission (the “FERC”) in order to provide its
services; provided, however, that the Project Company is required to
self-certify the Project at FERC as a qualifying small power production facility
under the Public Utility Regulatory Policies Act, as amended, and its
implementing regulations (“Qualifying Facility”) effective prior to its
commencement of wholesale sales of capacity, energy or ancillary services under
the PPA. The transactions contemplated by this Agreement do not require the
prior approval of the FERC, or any other agency within the United States
Department of Energy, or of any state regulatory commission with authority over
the provision or pricing of energy services; and the Project Company is
currently exempt from regulation under the federal Public Utility Holding
Company Act of 2005 and the Federal Power Act.

 

(b)     The Project Company is not subject to any laws and regulations of any
states in which it currently operates as such laws and regulations relate to the
rates of electric utilities and the financial and organizational regulation of
electric utilities, and the Project Company has filed, where the Project Company
is required to file, any material tariff, contract or instrument for the
approval or acceptance of any state energy regulatory agency.

 

Section 3.33     Investment Company. The Project Company is not an “investment
company,” or an “affiliated person” of an “investment company,” or a company
“controlled” by an “investment company” as such terms are defined in the
Investment Company Act of 1940, as amended.

 

Article IV     

REPRESENTATIONS AND WARRANTIES REGARDING BUYER

 

Buyer represents and warrants to Seller as of the Execution Date as follows:

 

Section 4.1     Organization. Buyer is a limited liability company duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of organization and Buyer has all requisite limited liability
company power and authority to carry on its business as it is currently
conducted and to own, lease and operate its properties where such properties are
now owned, leased or operated. Buyer is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or license necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed or in good standing would
not, individually or in the aggregate, have a Material Adverse Effect on Buyer.

 

Section 4.2     Authorization. Buyer has all requisite company power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution,
delivery and performance by Buyer of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
limited liability company action on the part of Buyer. This Agreement has been
duly executed and delivered by Buyer and assuming the due authorization,
execution and delivery by each other party hereto, constitutes the legal, valid
and binding obligations of Buyer, enforceable against Buyer in accordance with
its terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights and remedies of
creditors generally and the exercise of judicial or administrative discretion in
accordance with general equitable principles.

 

 
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Section 4.3     Noncontravention. Neither the execution and delivery of this
Agreement nor the consummation by Buyer of the transactions contemplated hereby
will (a) conflict with any provision of the Organizational Documents of Buyer,
(b) violate or result in a breach of any agreement, contract, lease, license or
instrument to which Buyer or any of its Affiliates is a party or by which its
respective properties are bound, or (c) violate any Law to which Buyer is
subject, except, in the case of clauses (b) and (c), for such violations or
breaches which would not, individually or in the aggregate, have a Material
Adverse Effect on Buyer.

 

Section 4.4     Authorizations. Except for (i) compliance with any applicable
requirements of the Securities Act, and (ii) compliance with any other
applicable securities Laws, no Consent of, with or to any Governmental Authority
or other Person is required to be obtained or made by or with respect to Buyer
in connection with the execution and delivery of this Agreement by Buyer or the
consummation by Buyer of the transactions contemplated hereby.

 

Section 4.5     Litigation. There are no Actions pending or threatened in
writing, in law or in equity or before any Governmental Authority against Buyer
or any of its Affiliates which would have, individually or in the aggregate, a
Material Adverse Effect on Buyer, and there are no outstanding injunctions,
judgments, orders, decrees, rulings, or charges to which Buyer or any of its
Affiliates is a party or by which it is bound by or with any Governmental
Authority which would have, individually or in the aggregate, a Material Adverse
Effect on Buyer.

 

Section 4.6     Brokers’ Fees. None of Buyer or its Affiliates has entered into
any contract or other arrangement or understanding (written or oral, express or
implied) with any Person which may result in the obligation of Seller or any of
its Affiliates to pay any fees or commissions to any broker or finder as a
result of the execution and delivery of this Agreement or the consummation of
the transactions contemplated by this Agreement.

 

Section 4.7     Solvency. No petition or notice has been presented, no Order has
been presented, no Order has been made and no resolution has been passed for the
bankruptcy, liquidation, winding-up or dissolution of Buyer. No receiver,
trustee, custodian or similar fiduciary has been appointed over the whole or any
part of the assets or the income of Buyer. Buyer has no plans or intentions of,
and has not received any notice that any other Person has any plan or intention
of, filing, making or obtaining any such petition, notice, order or resolution
or of seeking the appointment of a receiver, trustee, custodian or similar
fiduciary. Buyer is solvent and has or will have sufficient assets and capital
to carry on its business as now conducted or to be conducted and to perform its
obligations hereunder.

 

Section 4.8     Regulatory Matters.

 

(a)     The transactions contemplated by this Agreement do not require the Buyer
to obtain prior approval of the FERC, or any other agency within the United
States Department of Energy, or of any state regulatory commission with
authority over the provision or pricing of energy services; and Buyer is not
subject to regulation under the federal Public Utility Holding Company Act of
2005 or the Federal Power Act.

 

 
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(b)     Buyer is not subject to any laws and regulations of any states in which
it currently operates as such laws and regulations relate to the rates of
electric utilities and the financial and organizational regulation of electric
utilities, and Buyer has filed, where Buyer is required to file, any material
tariff, contract or instrument for the approval or acceptance of any state
energy regulatory agency. No state has requested and received from the FERC any
permission to apply any state energy regulation to Buyer.

 

Section 4.9     Available Funds. Buyer has or has access to sufficient funds to
make the payments due on or after the Closing Date pursuant to this Agreement.

 

Section 4.10     Securities Laws.

 

(a)     Buyer is an “accredited investor” within the meaning of Regulation D
promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

 

(b)     Buyer has had adequate opportunity to obtain from Seller such
information about the Project Company as is necessary for Buyer to evaluate the
merits and risks of its acquisition of the Membership Interests. Buyer
acknowledges that its investment in and acquisition of the Membership Interests
are subject to a number of risks, and represents to Seller that Buyer is able to
bear a complete loss of its investment in the Membership Interests.

 

(c)     Buyer has sufficient expertise in business and financial matters to be
able to evaluate the risks involved in the acquisition of the Membership
Interests and to make an informed investment decision with respect to such
acquisition.

 

(d)     Buyer acknowledges that the Membership Interests are an illiquid
investment and that Buyer may have to hold the Membership Interests for an
indefinite period of time.

 

(e)     Buyer is purchasing the Membership Interests for its own account for
investment only, and not with a view toward, or for sale in connection with, any
resale or distribution of any part thereof, and has no present intention of
distributing or reselling the Membership Interests except in compliance with the
applicable Laws.

 

(f)     Buyer understands that the Membership Interests are not registered under
the Securities Act, or qualified under applicable state securities or “blue sky”
laws on the grounds that the sale provided for in this Agreement is exempt from
registration under the Securities Act and qualification under applicable state
securities or “blue sky” laws, and that Seller’s reliance on such exemptions is
predicated on Buyer’s representations set forth in this Agreement. Buyer
understands that the Membership Interests may not be sold, transferred or
otherwise disposed of without registration under the Securities Act and/or
qualification under applicable state securities or “blue sky” laws, or an
exemption therefrom.

 

 
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ARTICLE V     

COVENANTS

 

Section 5.1     Operation of Business.

 

(a)     After the Execution Date and prior to the Closing Date, the Seller shall
cause the Project Company to conduct its business in the ordinary course
consistent with past practice. Without limiting the generality of the foregoing,
except as otherwise provided in this Agreement, the Seller shall cause the
Project Company to:

 

i.     maintain the material properties, assets and equipment owned and leased
by the Project Company;

 

ii.     maintain all existing material Permits;

 

iii.     maintain the books and records and accounts of the Project Company in
the manner in which such books and records and accounts are currently
maintained;

 

iv.     comply in all material respects with all applicable Laws;

 

v.     not take or cause another Person to take any action that could reasonably
be expected to jeopardize the eligibility of the Project for any Renewable
Energy Incentives.

 

vi.     maintain and preserve intact the existing Contracts of the Project
Company (and its relationships with the counterparties thereto) and satisfy all
obligations thereunder; and

 

vii.     cooperate with Buyer’s engineer and provide such engineer access to the
Project and related documentation as reasonably necessary for Buyer’s engineer
to prepare an engineer’s report.

 

(b)     Seller covenants that it shall provide all information and documentation
reasonably requested by Buyer and otherwise cooperate with Buyer, as necessary
to allow Buyer to prepare and file the Section 1603 Cash Grant application in
accordance with the Section 1603 Grant Guidance and as necessary to allow Buyer
to respond to any follow-up inquiries from any Governmental Authority with
respect to the Section 1603 Cash Grant application.

 

(c)     Seller covenants that it shall reasonably cooperate with Buyer as may be
necessary for Buyer’s accountants to prepare an audited balance sheet of the
Project Company by March 20, 2014.

 

Section 5.2     Public Announcements. Except to the extent otherwise required by
applicable Law, none of the Parties will issue any press release or make any
other public announcements concerning the transactions contemplated hereby or
the contents of this Agreement without the prior written consent of the other
Party. Upon Closing, each Party, in its sole discretion, will have full
authority to issue press releases or make any other public announcements
concerning the transaction subject to Section 5.6 pertaining to Confidential
Information.

 

 
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Section 5.3     Notification of Certain Matters. Between the date hereof and the
Closing Date, each Party will give prompt written or electronic notice to the
other Party of: (a) any notice or other communication from any third party
alleging that the Consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement or that such
transactions otherwise may violate the rights of, or confer remedies upon, such
third party, and (b) any notice or other communication from or to any
Governmental Authority in connection with the transactions contemplated hereby.

 

Section 5.4     Post-Closing Access; Preservation of Records. From and after the
Closing, upon reasonable request of Seller, Buyer will make or cause to be made
available (including for the purpose of copying) to Seller during regular
business hours such books, records, Tax Returns and documents of the Project
Company pertaining to the period prior to Closing as may be reasonably necessary
for Seller to obtain. Buyer will cause the Project Company to maintain and
preserve all such pre-Closing Tax Returns, books, records and other documents
for the greater of (i) six (6) years after the date of Closing or (ii) any
applicable statutory or regulatory retention period, as the same may be extended
and, in each case, if Buyer does not intend to retain such records, shall offer
to transfer such records to Seller at the end of any such period at Seller’s
cost.

 

Section 5.5     Tax Matters.

 

(a)     Tax Returns for Pre-Closing Taxable Periods and Straddle Taxable
Periods. In the case of any Tax Return with respect to the Project Company
(other than a Tax Return relating to Transfer Taxes) for a Pre-Closing Taxable
Period that is required to be filed after the Closing Date or for a Straddle
Taxable Period, Buyer shall prepare or cause to be prepared and filed such Tax
Return and shall timely pay all Taxes due for such period. Seller shall be given
a reasonable opportunity, not in excess of thirty (30) days, to review any such
Tax Return of the Project Company prior to filing, and Buyer shall accept any
reasonable comments to such Tax Return made by Seller. In the event of a
disagreement between Buyer and Seller with respect to any such Tax Return, the
Parties shall engage a mutually acceptable accounting or other dispute
resolution firm to determine whether Seller’s comments are reasonable. The costs
of such firm shall be paid equally by Seller and Buyer. The Parties shall
cooperate with respect to preparing and filing such Tax Returns, and each Party
shall provide all information reasonably requested by the other Party necessary
to prepare and file such Tax Returns.

 

(b)     Tax Proceedings. After the Closing, in the case of any audit,
examination, or other proceeding with respect to Taxes of the Project Company
(“Tax Proceeding”) for which Seller is or may be liable or which may affect
Seller’s allocable share of any Tax items of the Project Company, Buyer shall
give written notice to Seller within ten (10) days of Buyer’s receipt of any
notice of such Tax Proceeding, and Seller shall have the right, with counsel of
its choice and at its sole expense, to control (in the case of a Pre-Closing
Taxable Period) or to participate in (in the case of a Straddle Taxable Period),
the conduct of such Tax Proceeding, including any litigation resulting therefrom
or initiated by the Project Company in response thereto; provided that the
failure to provide such written notice shall not affect Buyer’s right to
indemnification hereunder except to the extent Seller has been actually
prejudiced as a result of such failure.

 

 
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(c)     Tax Refunds. Any Tax refund (including interest thereon) with respect to
the Project Company attributable to a Pre-Closing Taxable Period or a
Pre-Closing Period, including Taxes for which Buyer received indemnification
from Seller pursuant to Section 6.1, shall be the property of the Seller. If,
after the Closing, Buyer or the Project Company receives a Tax refund for such a
period, Buyer or the Project Company shall pay to Seller within ten (10) days
after such receipt an amount equal to the refunded amount (including any
interest thereon).

 

Section 5.6     Confidentiality. All nonpublic information provided to, or
obtained by, Buyer in connection with the transactions contemplated hereby shall
be subject to the Confidentiality Agreements, the terms of which shall continue
in force until the Closing. Seller acknowledges that information concerning the
Project Company has competitive value to Buyer, and Seller agrees that from and
after the Closing, all information relating specifically to the Project Company
that prior to the Closing would have been “Confidential Information” under the
terms of the Confidentiality Agreements shall become confidential information of
Buyer and the Project Company (“Confidential Information”), and Seller and each
of Seller’s Affiliates shall maintain the confidentiality of such Confidential
Information in accordance with the terms of the Confidentiality Agreements as if
they were the parties to whom the Confidential Information was disclosed under
the Confidentiality Agreements, and as if Buyer were the disclosing party and as
if neither Seller nor any of Seller’s Affiliates had previously known or
independently developed such Confidential Information; provided, however, that
the Confidentiality Agreements are hereby amended to provide (i) that the
provisions of the Confidentiality Agreements shall apply with respect to any
Confidential Information until the date that is two (2) years following the
Closing; (ii) that each Party may use its own Confidential Information in any
way that said Party, in its sole discretion, deems appropriate following the
Closing; and (iii) that each Party shall otherwise maintain the Confidential
Information of the other Party in accordance with the obligations set forth in
the Confidentiality Agreements.

 

Section 5.7     Financing Cooperation. At Buyer’s request, Seller shall from
time to time following the Closing, cooperate with Buyer and Buyer’s lenders and
other sources providing financing for the Buyer or the Project Company,
including to the extent practicable providing such additional instruments,
agreements, consents to assignment, certificates and other documents as Buyer
may reasonably request; provided, however, that “cooperation” shall not oblige
Seller to retain any liability, or pay any fees, including third party legal,
counsel or accountant fees, expenses or other consideration or offer or grant
any financial accommodation to any other Person. Without limiting the foregoing,
Seller agrees that it shall, at Buyer’s request following any assignment of
Buyer’s rights under the EPC Schedule to the Project Company, cooperate with
Buyer, at Buyer’s expense, to cause the letter of credit comprising the Owner
Security to have the Project Company be the beneficiary thereunder.

 

Section 5.8     Further Assurances. Seller and Buyer each agree that from time
to time after the Closing, they will execute and deliver or cause their
respective Affiliates (including, with respect to Buyer, the Project Company) to
execute and deliver such further instruments, as may be reasonably necessary to
carry out the purpose and intent of this Agreement, including cooperating to
change the registration of the Project with Western Renewable Energy Generation
Information System.

 

 
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Section 5.9     Seller Credit Support. As set forth in Section 2.2 (a) hereof,
in the event the Closing Date occurs after the Execution Date, simultaneous with
the execution and delivery of this Agreement, Buyer shall deliver to Seller the
Seller Credit Support. In the event that all of the conditions set forth in
Section 7.1 have been satisfied or waived, Seller indicates that it is ready to
proceed with the Closing and Buyer fails to consummate the Closing at the time
contemplated by Section 2.3, then Seller shall be entitled to instruct the
Escrow Agent to disburse the Seller Credit Support as provided in Section 1.3 of
the Escrow Agreement.

 

Section 5.10     Buyer Credit Support. At Closing, Seller shall deliver to Buyer
the Buyer Credit Support. The Buyer shall be entitled to draw upon such Buyer
Credit Support pursuant to the terms of the EPC Schedule.

 

Section 5.11     EPC Schedule. Set forth on Schedule 5.11 is an EPC Schedule
containing certain terms agreed upon by Buyer and Seller relating to EPC matters
(the “EPC Schedule”), the terms of which EPC Schedule are hereby incorporated in
and made a part of this Agreement as if set forth in full herein.

 

Section 5.12     Post-Closing Covenants.

 

(a)     Seller shall use commercially reasonable efforts to cause the SNDA to be
executed and recorded within thirty (30) days after the Closing Date.

 

(b)     Promptly following the Closing Date, Buyer shall cause Seller’s Pre-COD
Security (as defined in the PPA) to be released.

 

(c)     Promptly following the Closing Date, Buyer shall cause Seller’s letter
of credit in favor in Imperial County, California in respect of the reclamation
bond to be released.

 

(d)     For so long as any amounts remain outstanding and payable to Seller
pursuant to the Promissory Note, Buyer shall cause the Project Company to retain
and not distribute, dividend or otherwise transfer any amounts received in
respect of the Section 1603 Cash Grant.

 

(e)     Seller shall have obtained, at Seller’s cost, and delivered to Buyer an
ALTA/ACSM land title survey of the Project Site and access easement over the
adjacent property owned by Second Imperial Geothermal Company certified to
Buyer, the Project Company, Heber Field Company, Second Imperial Geothermal
Company and the Title Insurer, in form and substance reasonably satisfactory to
Buyer, and sufficient for Title Insurer to provide an extended ALTA owner’s
policy to the Project Company, without any general survey exception to the Title
Commitments (“ALTA Survey”);

 

(f)     In the event the amounts payable to Toni and Walter Holtz pursuant to
the Holtz Side Letter Agreement RE: Payments for Quitclaim Deed have not been
paid as of the Closing Date, Seller shall promptly cause such amounts to be
paid.

 

 
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(g)     In the event that IID and the Parties agree that IID will own part or
all of the Project’s transmission line and/or part or all of the Project’s
substation (such part or parts to be owned by IID, collectively, the “IID
Transmission Facilities”), then:

 

 i.     Buyer shall cause the Project Company to (A) execute a bill of sale or
similar instrument conveying the IID Transmission Facilities to IID, which bill
of sale or other instrument shall be in a form acceptable to IID and Buyer and
(B) deliver such bill of sale to IID.

 

 ii.     Seller shall cause Second Imperial Geothermal Company, a California
limited partnership (“SIGC”), to (A) execute an easement agreement conveying a
non-exclusive easement in gross to IID over a portion of the northern part of
the property owned by SIGC adjacent to and directly to the east of the Project
Site, which portion shall (unless IID shall request otherwise) be coextensive
with the “Access and Transmission Easement Area” described in Exhibit “C” and
depicted on Exhibit “C-1” of that certain Easement Agreement (SIGC To Imperial)
between SIGC and the Project Company dated as of March 21, 2014 (the “SIGC
Easement Property”), which agreement shall (1) be in a form and provide for a
term acceptable to IID and the Parties and (2) entitle IID to locate, maintain
and use the IID Transmission Facilities on the SIGC Easement Property and (B)
deliver such easement agreement to IID. Notwithstanding anything to the contrary
herein, Seller and Buyer acknowledge that pursuant to the Easement Agreement
(SIGC to Imperial), if SIGC does not grant IID a transmission easement over the
Access and Transmission Easement Area, the Project Company has the right to
grant a subeasement to IID of all or any part of its rights and interest under
the Access and Transmission Easement, as set forth in Section 3.7.1 therein.

 

 iii.     Buyer shall (A) cause the Project Company to enter into an appropriate
amendment to that certain Easement Agreement (Imperial To IID), recorded in
Imperial County on February 20, 2014 as Instrument No. 2014003235, which
amendment shall be in a form acceptable to IID and Buyer, but shall in no event
enlarge the boundaries of the easement area originally provided therein and (B)
deliver such amendment to IID.

 

(h)     In the event that the Post-COD Security (as defined in the PPA) required
by IID pursuant to the PPA is reduced from $4,800,000 to $2,500,000, Buyer will
promptly pay to Seller an amount equal to (i) $430,000, if such reduction occurs
on or prior to April 1, 2015, (ii) $380,000, if such reduction occurs after
April 1, 2015 and on or prior to April 1, 2016, and (iii) $345,000, if such
reduction occurs prior to April 1, 2016 and on or April 1, 2017; provided,
however, that if the Post-COD Security is reduced to an amount other than
$2,500,000, then the amount payable pursuant to this Section 5.12(h) shall be
adjusted by multiplying the amounts described in clauses (i), (ii) and (iii), as
applicable, by a fraction, the numerator of which is the amount of the reduction
in the Post-COD Security and the denominator of which is $2,300,000.

 

(i)     In the event Buyer desires to certificate the Membership Interests prior
to the payment in full of the Promissory Note, Seller shall have the right to
approve any amendments to the Project Company’s organizational documents related
to such certification of the Membership Interests, which approval shall not be
unreasonably withheld, and immediately upon the Membership Interests becoming
certificated, Buyer shall deliver all certificates in respect of the Membership
Interests to the escrow agent under the Membership Interests Escrow Agreement to
be held in escrow pursuant to the terms thereof.

 

 
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(j)     In the event that (i) the Membership Interests are transferred to Seller
by the escrow agent under the Membership Interests Escrow Agreement in
accordance with the terms thereof and (ii) either (x) the Section 1603 Cash
Grant has not been paid to the Project Company as of the time of such transfer
or (y) the Section 1603 Cash Grant has been paid to the Project Company and the
full amount thereof is held by the Project Company as of the time of such
transfer, then within five (5) Business Days of such transfer, Seller shall pay
to Buyer $6,000,000 by wire transfer of immediately available funds.

 

(k)     At such time as all amounts owing to Seller pursuant to the Promissory
Note have been paid in full, Seller shall execute such documents as are
necessary to cause the Membership Interests to be released by the escrow agent
under the Membership Interests Escrow Agreement in accordance with the terms
thereof

 

(l)     In the event that the Project Company receives any transmission rate
credits in accordance with Section 11.5 of the Interconnection Agreement, then
Buyer shall cause the Project Company to assign (to the extent assignable, and
at no cost to Buyer or the Project Company), for no consideration, such
transmission rate credits to Seller or an Affiliate of Seller designated by
Seller to whom the Project Company is permitted to assign such transmission rate
credits pursuant to such Section 11.5.

 

Article VI     

INDEMNIFICATION, SURVIVAL AND REMEDIES

 

Section 6.1     Seller’s Agreement to Indemnify. Subject to the terms and
conditions set forth herein, from and after the Closing, Seller shall indemnify,
defend, reimburse, and hold harmless Buyer, the Project Company and their
respective directors, officers, employees, affiliates, controlling persons,
agents and representatives and their respective successors and assigns (each, a
“Buyer Indemnitee” and, collectively, the “Buyer Indemnitees”) from and against
all Liabilities, assessments, fines, penalties, Taxes, Losses, amounts paid in
settlement, defense costs, Liens, damages, costs and expenses (including
reasonable out-of-pocket attorneys’, accountants and other experts fees and
expenses and or other expenses of Third Party Claims) (collectively, “Buyer
Damages”) incurred by, and all demands, claims, Actions or causes of action
asserted against, any Buyer Indemnitee as a result of or arising out of:

 

(a)     the breach or inaccuracy of any representation or warranty made by
Seller in this Agreement or any Transaction Document;

 

(b)     the breach or violation of, or default under, any covenant, agreement or
undertaking of Seller contained in this Agreement or any Transaction Document;

 

(c)     except as provided in Section 2.5, any Taxes of the Project Company for
a Pre-Closing Taxable Period or a Pre-Closing Period; and

 

 
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(d)     that certain letter dated March 20, 2008 from Toni F. Holtz and Walter
J. Holtz to ORNI 24, LLC and that certain letter dated March 7, 2014 from the
Project Company to Walter and Toni Holtz, in each case relating to that certain
Judgment Pursuant to Stipulation dated July 28, 1993.

 

With respect to any claim for indemnification under this Agreement not resulting
from a Third Party Claim, within ten (10) days after notification from a Buyer
Indemnitee setting forth the nature of the circumstances entitling the Buyer
Indemnitee to indemnity hereunder, Seller shall diligently commence resolution
of such matters in a manner reasonably acceptable to the Buyer Indemnitee and
shall diligently and timely prosecute such resolution to completion. With
respect to those claims that may be satisfied by payment of a liquidated sum of
money, including claims for reimbursement of expenses incurred in connection
with any circumstances entitling any Buyer Indemnitee to indemnity hereunder,
Seller shall pay the full amount so claimed to the extent supported by
reasonable documentation within fifteen (15) days of such resolution. If Seller
by written notice to Buyer disputes the right to indemnity of all Buyer
Indemnitees in connection with such claim, Seller shall pay any undisputed part
of such claim, and Buyer and Seller shall timely resolve any remaining dispute,
provided that if any such remaining dispute is not resolved within thirty (30)
days of Buyer’s receipt of Seller’s dispute notice, Buyer may commence an Action
pursuant to Section 8.14.

 

The maximum aggregate amount of Buyer Damages for which Seller shall be liable
with respect to claims made pursuant to Section 6.1(a) (other than with respect
to Buyer Damages to the extent arising from or attributable to (i) fraud or
willful misconduct by Seller or the Project Company, for which no monetary limit
shall apply or (ii) the breach of any Seller Fundamental Representation, which
is addressed below), shall be equal to seventy-five percent (75%) of the amount
equal to (x) the Purchase Price, minus (y) any amounts paid by Seller to Buyer
pursuant to Sections 6.5.1 of the EPC Schedule, plus (z) any amounts paid by
Buyer to Seller pursuant to Section 6.5.2 of the EPC Schedule.

 

The maximum aggregate amount of Buyer Damages for which Seller shall be liable
with respect to claims made pursuant to Section 6.1 (including with respect to
the breach of any Seller Fundamental Representation, but other than (A) with
respect to Buyer Damages to the extent arising from or attributable to fraud or
willful misconduct by Seller or the Project Company and (B) pursuant to Section
6.1(d), for which no monetary limit shall apply) shall be equal to seventy-five
percent (75%) of the amount equal to (x) the Purchase Price, minus (y) any
amounts paid by Seller to Buyer pursuant to Sections 6.5.1 of the EPC Schedule,
plus (z) any amounts paid by Buyer to Seller pursuant to Section 6.5.2 of the
EPC Schedule.  

 

Except with respect to Buyer Damages arising from or attributable to fraud or
willful misconduct by Seller or the Project Company or arising out of any
failure by Seller to complete item 56 on the IE Schedule, for which no minimum
amount shall be required, Seller shall have no Liability in the case of a claim
by any Buyer Indemnitee, unless and until, Buyer Indemnitees have suffered or
incurred Losses with respect to the Project consisting of actual damages
aggregating in excess of $50,000, whereupon such Buyer Indemnitees shall be
entitled to claim indemnification for only the amount of all Losses related to
the Project in excess of such amount.  

 

 
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Section 6.2     Buyer Indemnitee Notices. Seller shall be obligated to indemnify
Buyer Indemnitees for those claims giving rise to Buyer Damages as to which
Buyer Indemnitees have given Seller written notice thereof (the “Buyer
Indemnitee Notice”) prior to the end of the applicable survival period set forth
in Section 6.7 below in the event that such survival period applies to such
Buyer Damages. Any Buyer Indemnitee Notice delivered by a Buyer Indemnitee to
Seller with respect to Buyer Damages shall set forth the basis of the claim for
Buyer Damages and, to the extent reasonably practicable, a reasonable estimate
of the amount thereof.

 

Section 6.3     Buyer’s Agreement to Indemnify. Subject to the terms and
conditions set forth herein, from and after the Closing, Buyer shall indemnify,
defend, reimburse, and hold harmless Seller and its directors, officers,
employees, affiliates, controlling persons, agents and representatives and their
successors and assigns (each, a “Seller Indemnitee” and, collectively, the
“Seller Indemnitees”) from and against all Liabilities, assessments, fines,
Taxes, Losses, damages, amounts paid in settlement, defense costs, Liens, costs
and expenses (including reasonable out-of-pocket attorneys’, accountants and
other experts fees and expenses and or other expenses of Third Party Claims)
(collectively, “Seller Damages”) incurred by, and all demands, claims, Actions
or causes of action asserted against, any Seller Indemnitee as a result of or
arising out of:

 

(a)     the breach or inaccuracy of any representation or warranty made by Buyer
in this Agreement or any Transaction Document;

 

(b)     the breach or violation of, or default under, any covenant, agreement or
undertaking of Buyer contained in this Agreement or any Transaction Document;
and

 

(c)     except as provided in Section 2.5, any Taxes of the Project Company for
a Post-Closing Period or a Post-Closing Taxable Period.

 

With respect to any claim for indemnification under this Agreement not resulting
from a Third Party Claim, within ten (10) days after notification from a Seller
Indemnitee setting forth the nature of the circumstances entitling the Seller
Indemnitee to indemnity hereunder, Buyer shall diligently commence resolution of
such matters in a manner reasonably acceptable to the Seller Indemnitee and
shall diligently and timely prosecute such resolution to completion. With
respect to those claims that may be satisfied by payment of a liquidated sum of
money, including claims for reimbursement of expenses incurred in connection
with any circumstances entitling any Seller Indemnitee to indemnity hereunder,
Buyer shall pay the full amount so claimed to the extent supported by reasonable
documentation within fifteen (15) days of such resolution. If Buyer by written
notice to Seller disputes the right to indemnity of all Seller Indemnitees in
connection with such claim, Buyer shall pay any undisputed part of such claim,
and Buyer and Seller shall timely resolve any remaining dispute; provided that
if any such remaining dispute is not resolved within thirty (30) days of
Seller’s receipt of Buyer’s dispute notice, Seller may commence an Action
pursuant to Section 8.14.

 

 
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The maximum aggregate amount of Seller Damages for which Buyer shall be liable
with respect to claims made pursuant to Section 6.3(a) (other than with respect
to Seller Damages to the extent arising from or attributable to (i) fraud or
willful misconduct by Buyer or the Project Company, for which no monetary limit
shall apply or (ii) the breach of any Buyer Fundamental Representation, which is
addressed below) shall be equal to seventy-five percent (75%) of the amount
equal to (x) the Purchase Price, minus (y) any amounts paid by Seller to Buyer
pursuant to Sections 6.5.1 of the EPC Schedule, plus (z) any amounts paid by
Buyer to Seller pursuant to Section 6.5.2 of the EPC Schedule.

 

The maximum aggregate amount of Seller Damages for which Buyer shall be liable
with respect to claims made pursuant to Section 6.3 (including with respect to
the breach of any Buyer Fundamental Representation, but other than with respect
to Seller Damages to the extent arising from or attributable to fraud or willful
misconduct by Buyer or the Project Company, for which no monetary limit shall
apply) shall be equal to seventy-five percent (75%) of the amount equal to (x)
the Purchase Price, minus (y) any amounts paid by Seller to Buyer pursuant to
Sections 6.5.1 of the EPC Schedule, plus (z) any amounts paid by Buyer to Seller
pursuant to Section 6.5.2 of the EPC Schedule.

 

In addition, Buyer shall have no Liability in the case of a claim by any Seller
Indemnitee, unless and until, the Seller Indemnitees have suffered or incurred
Losses with respect to the Project consisting of actual damages aggregating in
excess of $50,000, whereupon such Seller Indemnitees shall be entitled to claim
indemnification for only the amount of all Losses in excess of such amount.

 

Section 6.4     Seller Indemnitee Notices. Buyer shall be obligated to indemnify
the Seller Indemnitees only for those claims giving rise to Seller Damages and
to which the Seller Indemnitees have given Buyer written notice thereof (the
“Seller Indemnitee Notice”) prior to the end of the applicable survival periods
set forth in Section 6.7 below in the event that such survival period applies to
such Seller Damages. Any Seller Indemnitee Notice delivered by a Seller
Indemnitee to Buyer with respect to Seller Damages shall set forth the basis of
the claim for Seller Damages and, to the extent reasonably practicable, a
reasonable estimate of the amount thereof.

 

Section 6.5     Third Party Indemnification Procedures.

 

(a)     Buyer Indemnitee Procedures. The obligations of Seller to indemnify
Buyer Indemnitees under this Article VI with respect to Buyer Damages resulting
from the assertion of liability by third parties (a “Buyer Indemnitee Third
Party Claim”), will be subject to the following terms and conditions:

 

i.     Buyer Indemnitee will give Seller written notice as described in Section
6.2 promptly after learning of such Buyer Indemnitee Third Party Claim. Failure
to give prompt notice of a Buyer Indemnitee Third Party Claim hereunder shall
not affect Seller’s obligations under this Article VI, provided that if Seller
is materially prejudiced by such failure to give prompt notice, any Buyer
Indemnitee Third Party Claim shall be reduced by the damages resulting from
Buyer Indemnitees’ delay or failure to provide notice. Within fifteen (15) days
after receipt of any notice pursuant to this Section 6.5(a)(i) (the “Election
Period”), Seller shall notify Buyer Indemnitees (i) whether Seller disputes
their potential liability to Buyer Indemnitees under this Agreement with respect
to such Buyer Indemnitee Third Party Claim and (ii) whether Seller desires, at
the sole cost and expense of Seller, to defend Buyer Indemnitees against such
Buyer Indemnitee Third Party Claim.

 

 
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ii.     If Seller notifies Buyer Indemnitees within the Election Period that
Seller does not dispute its potential liability to Buyer Indemnitees under this
Agreement and that Seller elects to assume the defense of the Buyer Indemnitee
Third Party Claim, then Seller shall have the right to defend, at its sole cost
and expense, such Buyer Indemnitee Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by Seller to a
final conclusion or settled at the discretion of Seller in accordance with this
Section 6.5(a). Seller shall have full control of such defense and proceedings
including any compromise or settlement thereof; provided, however, that any such
compromise or settlement shall (i) contain a full release of Buyer Indemnitees
and (ii) be subject to the consent of Buyer Indemnitees, which consent shall not
be unreasonably withheld, conditioned or delayed. Buyer Indemnitees are hereby
authorized, at the sole cost and expense of Seller (but only if Buyer
Indemnitees are actually entitled to indemnification hereunder or if Seller
assumes the defense with respect to the Buyer Indemnitee Third Party Claim), to
file, during the Election Period, any motion, answer or other pleadings which
Buyer Indemnitees shall deem necessary or appropriate to protect their interests
or those of Seller and which are not prejudicial to Seller. If reasonably
requested by Seller, Buyer Indemnitees shall, at the sole cost and expense of
Seller, reasonably cooperate with Seller and its counsel in contesting any Buyer
Indemnitee Third Party Claim which Seller elects to contest, including the
making of any related counterclaim against the Person asserting the Buyer
Indemnitee Third Party Claim or any cross-complaint against any Person;
provided, however, that Buyer Indemnitees will not have to take any action that
they deem, in their discretion, to be adverse to the interests of Buyer
Indemnitees. Buyer Indemnitees may participate in, but not control, any defense
or settlement of any Buyer Indemnitee Third Party Claim controlled by Seller
pursuant to this Section 6.5(a) and, except as permitted above or pursuant to
this Section 6.5(a), shall bear their own costs and expenses with respect to
such participation other than any fees and expenses of such separate counsel
that are incurred prior to the date Seller effectively assumes control of such
defense which, notwithstanding the foregoing, shall be borne by Seller, and
except that Seller shall pay all of the fees and expenses of such separate
counsel if the Buyer Indemnitee has been advised by counsel that a reasonable
likelihood exists of a conflict of interest between Seller and the Buyer
Indemnitee.

 

iii.     If Seller fails to notify Buyer Indemnitees within the Election Period
that Seller elects to defend Buyer Indemnitees pursuant to this Section 6.5(a),
or if Seller elects to defend Buyer Indemnitees pursuant to this Section 6.5(a)
but fails to diligently and promptly defend or settle the Buyer Indemnitee Third
Party Claim, then Buyer Indemnitees shall have the right to defend, at the sole
cost and expense of Seller, the Buyer Indemnitee Third Party Claim. Buyer
Indemnitees shall have full control of such defense and proceedings; provided,
however, that Buyer Indemnitees may not enter into, without Seller’s consent,
which shall not be unreasonably withheld, conditioned or delayed, any compromise
or settlement of such Buyer Indemnitee Third Party Claim. Seller may participate
in, but not control, any defense or settlement controlled by Buyer Indemnitees
pursuant to this Section 6.5(a), and Seller shall bear its own costs and
expenses with respect to such participation.

 

 
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(b)     Seller Indemnitee Procedures. The obligations of Buyer to indemnify
Seller Indemnitees under this Article VI with respect to Seller Damages
resulting from the assertion of liability by third parties (a “Seller Indemnitee
Third Party Claim” and, together with any Buyer Indemnitee Third Party Claims,
“Third Party Claims”), will be subject to the following terms and conditions:

 

i.     Seller Indemnitee will give Buyer written notice as described in Section
6.4 promptly after learning of such Seller Indemnitee Third Party Claim. Failure
to give prompt notice of a Seller Indemnitee Third Party Claim hereunder shall
not affect Buyer’s obligations under this Article VI, provided that if Buyer is
materially prejudiced by such failure to give prompt notice, any Seller
Indemnitee Third Party Claim shall be reduced by the damages resulting from
Seller Indemnitees’ delay or failure to provide notice. Within fifteen (15) days
after receipt of any notice pursuant to this Section 6.5(b)(i) (the “Election
Period”), Buyer shall notify Seller Indemnitees (i) whether Buyer disputes their
potential liability to Seller Indemnitees under this Agreement with respect to
such Seller Indemnitee Third Party Claim and (ii) whether Buyer desires, at the
sole cost and expense of Buyer, to defend Seller Indemnitees against such Seller
Indemnitee Third Party Claim.

 

ii.     If Buyer notifies Seller Indemnitees within the Election Period that
Buyer does not dispute its potential liability to Seller Indemnitees under this
Agreement and that Buyer elects to assume the defense of the Seller Indemnitee
Third Party Claim, then Buyer shall have the right to defend, at its sole cost
and expense, such Seller Indemnitee Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by Buyer to a
final conclusion or settled at the discretion of Buyer in accordance with this
Section 6.5(b). Buyer shall have full control of such defense and proceedings
including any compromise or settlement thereof; provided, however, that any such
compromise or settlement shall (i) contain a full release of Seller Indemnitees
and (ii) be subject to the consent of Seller Indemnitees, which consent shall
not be unreasonably withheld, conditioned or delayed. Seller Indemnitees are
hereby authorized, at the sole cost and expense of Buyer (but only if Seller
Indemnitees are actually entitled to indemnification hereunder or if Buyer
assumes the defense with respect to the Seller Indemnitee Third Party Claim), to
file, during the Election Period, any motion, answer or other pleadings which
Seller Indemnitees shall deem necessary or appropriate to protect their
interests or those of Buyer and which are not prejudicial to Buyer. If
reasonably requested by Buyer, Seller Indemnitees shall, at the sole cost and
expense of Buyer, reasonably cooperate with Buyer and its counsel in contesting
any Seller Indemnitee Third Party Claim which Buyer elects to contest, including
the making of any related counterclaim against the Person asserting the Seller
Indemnitee Third Party Claim or any cross-complaint against any Person;
provided, however, that Seller Indemnitees will not have to take any action that
they deem, in their discretion, to be adverse to the interests of Seller
Indemnitees. Seller Indemnitees may participate in, but not control, any defense
or settlement of any Seller Indemnitee Third Party Claim controlled by Buyer
pursuant to this Section 6.5(b) and, except as permitted above or pursuant to
this Section 6.5(b), shall bear their own costs and expenses with respect to
such participation other than any fees and expenses of such separate counsel
that are incurred prior to the date Buyer effectively assumes control of such
defense which, notwithstanding the foregoing, shall be borne by Buyer, and
except that Buyer shall pay all of the fees and expenses of such separate
counsel if the Seller Indemnitee has been advised by counsel that a reasonable
likelihood exists of a conflict of interest between Buyer and the Seller
Indemnitee.

 

 
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iii.     If Buyer fails to notify Seller Indemnitees within the Election Period
that Buyer elects to defend Seller Indemnitees pursuant to this Section 6.5(b),
or if Buyer elects to defend Seller Indemnitees pursuant to this Section 6.5(b),
but fails to diligently and promptly defend or settle the Seller Indemnitee
Third Party Claim, then Seller Indemnitees shall have the right to defend, at
the sole cost and expense of Buyer, the Seller Indemnitee Third Party Claim.
Seller Indemnitees shall have full control of such defense and proceedings;
provided, however, that Seller Indemnitees may not enter into, without Buyer’s
consent, which shall not be unreasonably withheld, conditioned or delayed, any
compromise or settlement of such Seller Indemnitee Third Party Claim. Buyer may
participate in, but not control, any defense or settlement controlled by Seller
Indemnitees pursuant to this Section 6.5(b), and Buyer shall bear its own costs
and expenses with respect to such participation.

 

Section 6.6     Limitations on Remedies.

 

(a)     Notwithstanding anything contained herein to the contrary, none of
Buyer, Seller, the Project Company, or any Buyer Indemnitee or Seller Indemnitee
will be entitled to any recovery under this Agreement for special, punitive,
exemplary, incidental, indirect or consequential damages or lost profits except
to the extent payable pursuant to a Third Party Claim.

 

(b)     The amount which Buyer or Seller is or may be required to pay to a
Seller Indemnitee or Buyer Indemnitee in respect of Seller Damages or Buyer for
which indemnification is provided under this Agreement will be reduced by any
amounts actually received (including amounts received under insurance policies)
by or on behalf of the Seller Indemnitee or Buyer Indemnitee from third parties
(net of out-of-pocket costs and expenses (including reasonable legal fees and
expenses) incurred by such Seller Indemnitee or Buyer Indemnitee in connection
with seeking to collect and collecting such amounts and net of any payment or
reimbursement obligations of such Seller Indemnitee or Buyer Indemnitee and its
Affiliates in respect thereof) in respect of such Seller Damages or Buyer
Damages (such net amounts are referred to herein as "Indemnity Reduction
Amounts"). If any Seller Indemnitee or Buyer Indemnitee receives any Indemnity
Reduction Amounts in respect of a claim for which indemnification is provided
under this Agreement after the full amount of such claim has been paid by Buyer
or Seller or after Buyer or Seller has made a partial payment of such Claim and
such Indemnity Reduction Amounts exceed the remaining unpaid balance of such
claim, then the Seller Indemnitee or Buyer Indemnitee, as applicable, will
promptly remit to Buyer or Seller, respectively, an amount equal to the excess
(if any) of (i) the amount theretofore indemnified by Buyer or Seller, as
applicable, in respect of such claim, less (ii) the amount of the indemnity
payment that would have been due if such Indemnity Reduction Amounts in respect
thereof had been received before the indemnity payment was made. An insurer or
other third party who would otherwise be obligated to pay any claim shall not be
relieved of the responsibility with respect thereto or, solely by virtue of the
indemnification provisions hereof, have any subrogation rights with respect
thereto, it being expressly understood and agreed that no insurer or any other
third party shall be entitled to any benefit they would not be entitled to
receive in the absence of the indemnification provisions by virtue of the
indemnification provisions hereof. Seller and Buyer will, will cause its
respective indemnified group to, and will use commercially reasonable efforts to
cause each of its representatives to, pursue promptly any claims or rights it
may have against insurance policies which would reduce the amount of Seller
Damages or Buyer Damagers, respectively, for which indemnification is provided
under this Agreement. This clause shall only have force and effect to the extent
its operation would not otherwise adversely affect a Party’s right to seek or
obtain recovery in accordance with the terms of its insurance policies.

 

 
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Section 6.7     Survival. The representations and warranties set forth in
Articles III and IV shall survive the Closing for the periods specified below:

 

(a)     All representations and warranties shall survive, and written notice of
a claim for indemnification for breaches of representations and warranties may
be given, until the date that is three hundred and sixty five (365) days after
the Closing Date.

 

(b)     Notwithstanding the survival period in Section 6.7(a), the
representations and warranties made by Seller set forth in this Section 6.7(b)
(the “Seller Fundamental Representations”) shall survive for the periods set
forth below:

 

i.     the representations and warranties made by Seller set forth in Section
3.18 (Tax Matters) shall survive, and written notice of a claim for
indemnification may be given, at any time prior to ninety (90) days after the
expiration of the applicable statute of limitations relating to the underlying
matters covered by the representations and warranties set forth in Section 3.18
(Tax Matters); and

 

ii.     the representations and warranties made by Seller contained in Section
3.1 (Organization), Section 3.2 (Authorization), Section 3.4 (Brokers’ Fees),
Section 3.6 (Title to Membership Interests), Section 3.8 (Organization of the
Project Company), and Section 3.10 (Capitalization), shall survive indefinitely.

 

(c)     Notwithstanding the survival period in Section 6.7(a), the Buyer’s
representations and warranties contained in Section 4.1 (Organization), Section
4.2 (Authorization), Section 4.6 (Brokers’ Fees), and Section 4.7 (Solvency)
(the “Buyer Fundamental Representations”), shall survive indefinitely.

 

(d)     For the avoidance of doubt, the covenants and agreements of the Parties
hereunder shall survive until fully performed unless limited by their terms or
purpose. Without limiting the foregoing, Seller’s indemnity obligations pursuant
to Section 6.1(d) shall survive until the expiration or earlier termination of
the Geothermal Lease plus six years.

 

 
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(e)     Notwithstanding the foregoing, if a written claim or written notice is
duly given under this Article VI with respect to any representation, warranty,
covenant or agreement prior to the expiration of the applicable survival period,
the claim with respect to such representation, warranty, covenant or agreement
shall continue indefinitely until such claim is finally resolved pursuant to
this Article VI.

 

Section 6.8     Investigations and Knowledge. The right to indemnification,
payment of damages or other remedy provided by this Agreement based on a
representation, warranty, covenant or obligation will not be affected by any
investigation conducted by the Party to or for whom such representation,
warranty, covenant or obligation is made with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing, with respect to, the
accuracy or inaccuracy of or compliance with any such representation, warranty,
covenant, or obligation; provided, however, that no Party hereto may make a
claim for a breach of a representation or warranty pursuant to this Article VI
if such Party had actual knowledge of the inaccuracy or breach of the
representation, warranty when made for which such Party is seeking indemnity
hereunder.

 

Article VII      

 

CLOSING CONDITIONS; TERMINATION

 

Section 7.1     Conditions Precedent to the Obligations of the Buyer.

 

The obligation of the Buyer to consummate the Closing is subject to the
fulfillment, on or prior to the Closing Date, of each of the following
conditions (any or all of which may be waived by the Buyer):

 

(a)     The Buyer shall have received each of the Seller deliverables described
in Section 2.4(a).

 

(b)     Since the Execution Date, no Material Adverse Effect with respect to the
Seller or the Project Company shall have occurred and be continuing, and no fact
or circumstance shall exist that, with the passage of time, would reasonably be
expected to constitute such a Material Adverse Effect.

 

(c)     As of the Closing Date, no Proceeding shall have been instituted or
threatened in writing by any Governmental Authority that seeks to impair,
restrain, prohibit or invalidate the transactions contemplated by this
Agreement.

 

(d)     The representations and warranties made by the Seller in this Agreement
shall be true and correct in all material respects as of the Closing Date,
except to the extent such representations and warranties are by their express
terms made as of the date of this Agreement or another specific date (in which
case, such representations and warranties shall be true and correct as of such
date).

 

(e)     The Seller shall have performed and complied in all material respects
with all obligations, agreements and covenants required by this Agreement to be
performed and complied with by the Seller as of the Closing Date.

 

 
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(f)     Test power from the Project shall not have been synchronized to the
local power grid, and such testing and synchronization shall be scheduled for a
date that is estimated within five (5) Business Days following the Closing Date.

 

(g)     IID shall have delivered its consent under the PPA to the Transactions
and under the Interconnection Agreement to the assignment of the Interconnection
Agreement by Ormat Nevada to the Project Company, each in form and substance
reasonably satisfactory to Buyer.

 

(h)     None of the assets or properties of the Project Company shall have been
“placed in service” for U.S. federal income tax purposes.

 

(i)     Those items identified as items to be completed prior to Closing on the
IE Schedule attached hereto shall have been completed to Buyer’s reasonable
satisfaction.

 

Section 7.2     Conditions Precedent to the Obligations of the Seller.

 

The obligation of the Seller to consummate the Closing is subject to the
fulfillment, on or prior to the Closing Date, of each of the following
conditions (any or all of which may be waived by the Buyer):

 

(a)     The Seller shall have received each of the Buyer deliverables described
in Section 2.4(b).

 

(b)     The representations and warranties made by the Buyer in this Agreement
shall be true and correct in all material respects as of the Closing Date,
except to the extent such representations and warranties are by their express
terms made as of the date of this Agreement or another specific date (in which
case, such representations and warranties shall be true and correct as of such
date); and

 

(c)     The Buyer shall have performed and complied in all material respects
with all obligations, agreements and covenants required by this Agreement to be
performed and complied with by the Buyer as of the Closing Date.

 

(d)     IID shall have delivered its consent under the PPA to the Transactions
and under the Interconnection Agreement to the assignment of the Interconnection
Agreement by Ormat Nevada to the Project Company, each in form and substance
reasonably satisfactory to Seller.

 

Section 7.3     Termination.

 

(a)     Notwithstanding anything contained in this Agreement to the contrary,
this Agreement may be terminated at any time prior to the Closing Date as
follows:

 

 

(i)

By the Buyer or the Seller at any time after the Closing Deadline if the Closing
has not occurred; provided, however, that the party seeking termination pursuant
to this subsection (i) is not in breach in any material respects of its
representations, warranties, covenants or agreements contained in this
Agreement;

  

 
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(ii)

By the Seller if there has been a material breach by the Buyer of any
representation, warranty, covenant or agreement contained in this Agreement,
which is not cured within twenty (20) days after notice of such breach is
received;

       

(iii)

By the Buyer if there has been a material breach by the Seller of any
representation, warranty, covenant or agreement contained in this Agreement,
which is not cured within twenty (20) days after notice of such breach is
received; or

       

(iv)

By the mutual written consent of the Parties.

 

(b)     Notice of Termination. Any Party desiring to terminate this Agreement
pursuant to this Section 7.3 shall give written notice of such termination to
the other Party to this Agreement.

 

(c)      Effect of Termination. If this Agreement is terminated pursuant to
Section 7.3, all further obligations of the Parties under this Agreement (other
than the provisions which by their terms are intended to survive the expiration
or termination of this Agreement) shall be terminated without further liability
or obligation on the part of the Buyer or the Seller. provided, however, that
nothing herein shall relieve any Party from liability for any willful material
breach of the terms of this Agreement. For the avoidance of doubt, the
Confidentiality Agreements shall survive the termination of this Agreement.

 

Article VIII     

MISCELLANEOUS

 

Section 8.1     Parties in Interest. Except as provided in Article VI and
Section 8.3, nothing in this Agreement, whether express or implied, shall be
construed to give any Person, other than the Parties or their respective
successors and permitted assigns, any legal or equitable right, remedy, claim or
benefit under or in respect of this Agreement.

 

Section 8.2     No Recourse. It is expressly agreed and understood that any
obligations of a Party arising from (or in connection with any performance
under) this Agreement and/or any certificates or documents delivered in
connection with this Agreement are solely the obligations of such Party, and no
personal liability whatsoever (of any type or nature) will attach to, or be
incurred by, any Buyer Indemnitees, or Seller Indemnitees, as applicable, other
than the applicable Party because of the incurrence by such Party of any
obligations set forth in this Agreement or in any certificate or document
delivered in connection with this Agreement or by reason thereof, and any
personal liability in respect of any such obligations of any type or nature, and
any and all claims for any such liability against any such Buyer Indemnitees or
Seller Indemnitees, as applicable, other than the applicable Party, whether
arising in common law or equity or created by rule of law, statute,
constitution, or otherwise, are expressly released and waived by the other Party
for and on behalf of itself and each member of its respective indemnified group,
in each case, as a condition of, and as part of the consideration for, the
execution and delivery of this Agreement by such Party. Each Buyer Indemnitee or
Seller Indemnitee, as applicable, is expressly intended to be a third party
beneficiary of this Section 8.2.

 

 
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Section 8.3     Assignment. This Agreement shall be binding upon and inure to
the benefit of the Parties and their respective successors and permitted
assigns. No Party may assign (by contract, stock sale, operation of Law or
otherwise) either this Agreement or any of its rights, interests, or obligations
hereunder without the express prior written consent of the other Parties, and
any attempted assignment, without such consent, shall be null and void.
Notwithstanding the foregoing, Buyer may assign, without the consent of Seller,
any or all of its rights and interests under this Agreement (a) to one or more
of Buyer’s Affiliates, (b) to any acquirer of substantially all of the assets of
Buyer, (c) as a matter of law to the surviving entity in any merger,
consolidation, exchange or reorganization involving Buyer, and (d) as collateral
security to any lender or lenders (including any agent for any such lender or
lenders) providing financing in connection with the transactions contemplated by
this Agreement, or to any assignee or assignees of such lender, lenders or
agent; it being understood and agreed that no such transfer pursuant to Section
8.3 shall in any way release Buyer from its obligations and liabilities under
this Agreement. Further, Seller may assign, without the consent of Buyer, any or
all of its rights and interests under this Agreement (x) to any acquirer of
substantially all of the assets of Seller, (y) as a matter of law to the
surviving entity in any merger, consolidation, exchange or reorganization
involving Seller, and (z) as collateral security to any lender or lenders
(including any agent for any such lender or lenders) providing financing in
connection with the transactions contemplated by this Agreement, or to any
assignee or assignees of such lender, lenders or agent; it being understood and
agreed that no such transfer pursuant to Section 8.3 shall in any way release
Seller from its obligations and liabilities under this Agreement.

 

Section 8.4     Notices. All notices and other communications required or
permitted to be given by any provision of this Agreement shall be in writing and
mailed (certified or registered mail, postage prepaid, return receipt requested)
or sent by hand or overnight courier, or by facsimile transmission (with
acknowledgment received), charges prepaid and addressed to the intended
recipient as follows, or to such other addresses or numbers as may be specified
by a Party from time to time by like notice to the other Party:

 

 

If to Seller:

Ormat International, Inc.
6225 Neil Road
Reno NV 89511
U.S.A.

Attn: Connie Stechman
E-mail: CStechman@ormat.com
Copy: President

 

 

If to Buyer:

Jon Norling

c/o Renewable Energy Trust Capital, Inc.

601 Montgomery Street, Suite 2000

San Francisco, CA 94111

  

 
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All notices and other communications given in accordance with the provisions of
this Agreement shall be deemed to have been given and received: (i) when
delivered, if delivered by hand or transmitted by facsimile (with acknowledgment
received); (ii) five (5) Business Days after the same are sent by certified or
registered mail, postage prepaid, return receipt requested; or (iii) one (1)
Business Day after the same are sent by a reliable overnight courier service,
with acknowledgment of receipt.

 

Section 8.5     Amendments and Waivers. This Agreement may not be amended,
supplemented or otherwise modified except in a written instrument executed by
Buyer and Seller. No waiver by any of the Parties of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
occurrence. No waiver by any of the Parties of any of the provisions hereof
shall be effective unless explicitly set forth in writing and executed by the
Party sought to be charged with such waiver.

 

Section 8.6     Headings. The table of contents and section headings contained
in this Agreement are for reference purposes only and shall not be deemed a part
of this Agreement or affect in any way the meaning or interpretation of this
Agreement.

 

Section 8.7     Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement.

 

Section 8.8     No Other Representations or Warranties; Specific Performance;
Remedies.

 

(a)     Except for the representations and warranties expressly set forth in
this Agreement, Buyer acknowledges that neither Seller nor any other Person
makes any representation or warranty, express or implied, at law or in equity,
with respect to Seller, the Membership Interests or the Project Company,
including the assets or Liabilities of the Project Company.

 

(b)     Each Party acknowledges and agrees that the other Party would be damaged
irreparably in the event such Party’s obligations under this Agreement are not
performed in accordance with their specific terms or are otherwise breached.
Accordingly, each Party agrees that the other Party shall be entitled to seek
the remedy of specific performance. No delay or forbearance by a Party in the
exercise or enforcement of any right or remedy hereunder shall be deemed a
waiver by such Party its right hereunder to exercise or enforce such right or
remedy.

 

Section 8.9     Entire Agreement. This Agreement, including the Schedules and
Exhibits hereto, and the documents executed in connection herewith constitute
the entire agreement among the Parties with respect to the subject matter hereof
and thereof and supersede any prior understandings, negotiations, agreements, or
representations among the Parties of any nature, whether written or oral, to the
extent they relate in any way to the subject matter hereof or thereof.

 

 
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Section 8.10     Severability. If any provision of this Agreement or the
application of any such provision to any Person or circumstance shall be
declared by any court of competent jurisdiction to be invalid, illegal, void or
unenforceable in any respect, all other provisions of this Agreement, or the
application of such provision to Persons or circumstances other than those as to
which it has been held invalid, illegal, void or unenforceable, shall
nevertheless remain in full force and effect and will in no way be affected,
impaired or invalidated thereby. Upon such determination that any provision, or
the application of any such provision, is invalid, illegal, void or
unenforceable, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible to the fullest extent permitted by applicable Law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the
greatest extent possible.

 

Section 8.11     Expenses. Unless otherwise provided herein, each of Buyer and
Seller agree to pay, without right of reimbursement from the other, all costs
and expenses incurred by it incident to the performance of its obligations
hereunder, including, the fees and disbursements of counsel, accountants,
financial advisors, experts and consultants employed by the respective Parties
in connection with the transactions contemplated hereby, whether or not the
transactions contemplated by this Agreement are consummated. For the avoidance
of doubt and not in limitation of the foregoing, Seller shall pay the fees,
costs and expenses of the Project Company that are incurred prior to Closing or
that relate to services performed prior to Closing, including the fees, costs
and expenses of attorneys, accountants, engineers, consultants and advisors in
connection with Seller’s negotiation and preparation of this Agreement and any
other related agreements and documents; and Buyer shall pay the fees, costs and
expenses of the Project Company that are incurred after the Closing or that
relate to services to be performed on or after the Closing, including the fees,
costs and expenses of attorneys, accountants, engineers, consultants and
advisors in connection with Buyer’s negotiation and preparation of this
Agreement and any other related agreements and documents and Buyer’s
post-Closing ownership of the Project Company and the operation of the Project.

 

Section 8.12     Governing Law. This Agreement and all claims arising out of or
relating to this Agreement and the transactions contemplated hereby shall be
governed by the Laws of the State of New York, without regard to the conflicts
of law principles that would result in the application of any Law other than the
Law of the State of New York.

 

Section 8.13     Resolution by Parties. The Parties shall negotiate in good
faith and attempt to resolve any dispute, controversy or claim arising out of or
relating to this Agreement or the breach, interpretation, termination or
validity thereof (a “Dispute”) within thirty (30) days after the date that a
Party gives written notice of such Dispute to the other Party.

 

 
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Section 8.14     Binding Arbitration. Any Dispute that is not settled to the
mutual satisfaction of the Parties pursuant to Section 8.13 shall be settled by
binding arbitration between the Parties conducted in New York, NY (or such other
location as may be agreed to by the Parties) and in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (the “AAA”)
in effect on the date that a Party gives notice of its demand for arbitration
under this Section 8.14. The submitting Party shall submit such Dispute to
arbitration by providing a written demand for arbitration to the other Party,
and the Parties shall select a single neutral arbitrator with significant
contract resolution experience. If the Parties cannot agree on a single neutral
arbitrator within fifteen (15) Business Days after the written demand for
arbitration is provided, then the arbitrator shall be selected by the AAA. The
decisions of the arbitrator shall be final and binding upon the Parties in all
respects, and shall be the sole and exclusive remedy between the Parties
regarding any Dispute submitted to arbitration pursuant to this Section 8.14.
Judgment upon any award may be entered and enforced in any court having
jurisdiction over a Party or any of its assets. Buyer and Seller shall each bear
the cost of preparing and presenting its own case. The cost of the arbitration,
including the fees and expenses of the arbitrator, shall be borne equally by the
Parties. The arbitrator shall be instructed to establish procedures such that a
decision can be rendered within sixty (60) calendar days of the appointment of
the arbitrator. All limitations of damages herein shall be binding upon the
arbitrator. This Agreement and the rights and obligations of the Parties shall
remain in full force and effect pending the award in any arbitration proceeding
hereunder. The arbitration conducted pursuant hereto shall be confidential.
Neither Party shall disclose or permit the disclosure of any information about
the evidence adduced or the documents produced by the other Party in the
arbitration proceedings or about the existence, contents or results of the
proceeding except as may be required by (i) law, rule, applicable regulation,
interrogatories, subpoenas, civil investigative demands or other similar legal
process, stock exchange rules or disclosure requirement of a Governmental
Authority, including the Securities and Exchange Commission, or (ii) as required
in an action in aid of arbitration or for enforcement of an arbitral award.

 

Section 8.15     Exceptions to Arbitration Obligation. The obligation to
arbitrate shall not be binding upon any Party with respect to (i) requests for
preliminary injunctions, temporary restraining orders, specific performance or
other procedures in a court of competent jurisdiction to obtain interim relief
when deemed necessary by such court to preserve the status quo or prevent
irreparable injury pending resolution by mediation or arbitration of the actual
Dispute, or (ii) actions to collect payments not subject to a bona fide Dispute.

 

Section 8.16     Consent to Jurisdiction; Waiver of Jury Trial.

 

(a)     Subject to Section 8.14, each of the Parties irrevocably submits to the
jurisdiction of (i) state courts of the State of New York located in New York
County and (ii) the Federal courts located in the City of New York, in the State
of New York for the purposes of any suit, Action or other proceeding arising out
of or relating to this Agreement or any transaction contemplated hereby (and
agrees not to commence any Action, suit or proceeding relating hereto except in
such courts). Each of the Parties further agrees that service of any process,
summons, notice or document hand delivered or sent by U.S. registered mail to
such Party’s respective address set forth in Section 8.4 will be effective
service of process for any Action, suit or proceeding in New York with respect
to any matters to which it has submitted to jurisdiction as set forth in the
immediately preceding sentence. Each of the Parties irrevocably and
unconditionally waives any objection to the laying of venue of any Action, suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby in (i) state courts of the State of New York or (ii) the
Federal courts located in the City of New York, in the State of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such Action, suit or proceeding brought in any
such court has been brought in an inconvenient forum. Notwithstanding the
foregoing, each Party agrees that a final judgment in any Action or proceeding
so brought shall be conclusive and may be enforced by suit on the judgment in
any jurisdiction or in any other manner provided in Law or in equity.

 

 
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(b)     EACH OF THE PARTIES IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

 

Section 8.17     Remedies Cumulative. The remedies provided in this Agreement
shall be cumulative and shall not preclude any Party from asserting any other
right, or seeking any other remedies, against the other Party.

 

Section 8.18     Counterparts. This Agreement may be executed by facsimile or
pdf and in any number of counterparts, each of which shall be deemed an original
but all of which together will constitute one and the same instrument. Each
Party hereto agrees to be bound by its facsimile or pdf signature.

 

Section 8.19     Release. From and after Closing, Seller (on behalf of itself it
Affiliates and each of their successors and assigns) hereby releases and forever
discharges the Project Company from any and all claims, suits, demands, causes
of action, contracts, covenants, obligations, debts, costs, expenses, attorneys’
fees, Liabilities of whatever kind or nature in Law or equity, by statute or
otherwise whether now known or unknown, vested or contingent, suspected or
unsuspected, and whether or not concealed or hidden, which have existed or may
have existed, or which do exist, which Seller or any Affiliate of Seller ever
had, now has or hereafter may have against the Project Company arising on or
prior to the Closing; provided, however, nothing in this Section 8.19 shall
operate to release any obligations under this Agreement, any other Transaction
Document or any arrangement set forth on Schedule 8.19.

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Membership Interest
Purchase and Sale Agreement to be executed as of the date first above written.

 

 

BUYER:

 

RET HOLDINGS, LLC

 

 

By: /s/ Karen Morgan                              

Name: Karen Morgan                              

Title: Preident and C.O.O.                       

 

 

 

 

SELLER:

 

ORMAT NEVADA INC.

 

 

 

By: /s/ Connie Stechman                         

Name: Connie Stechman                         

Title: Assistant Secretary