Exhibit 10.25.1

 

 

 

CREDIT AGREEMENT

dated as of

December 19, 2011

between

THERMO NO. 1 BE-01, LLC,

and

ORMAT NEVADA INC.,

 

 

 

 

 

THERMO 1 CREDIT AGREEMENT

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TABLE OF CONTENTS

 

          Page  

ARTICLE I DEFINITIONS

     1   

Section 1.01

  

Certain Defined Terms

     1   

Section 1.02

  

Terms Generally

     19   

Section 1.03

  

Accounting Terms

     20   

ARTICLE II THE ADVANCE AMOUNT

     21   

Section 2.01

  

Advance Amount

     21   

Section 2.02

  

Evidence of Indebtedness

     21   

Section 2.03

  

Repayment of the Advance Amount

     21   

Section 2.04

  

Prepayment of the Advance Amount

     21   

Section 2.05

  

Interest

     24   

Section 2.06

  

Taxes

     24   

Section 2.07

  

Payments by the Company

     26   

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     26   

Section 3.01

  

Due Organization, Power, Etc.

     26   

Section 3.02

  

Due Authorization, Etc.

     27   

Section 3.03

  

No Conflict

     27   

Section 3.04

  

Approvals, Etc.

     27   

Section 3.05

  

Financial Statements; No Material Adverse Effect

     28   

Section 3.06

  

Litigation, Etc.

     29   

Section 3.07

  

Compliance with Laws and Obligations

     29   

Section 3.08

  

Environmental Laws

     29   

Section 3.09

  

Material Project Documents

     30   

Section 3.10

  

Properties

     30   

Section 3.11

  

Taxes

     30   

Section 3.12

  

Full Disclosure

     31   

Section 3.13

  

Solvency and Bankruptcy

     31   

Section 3.14

  

Regulatory Restrictions on Borrowing

     31   

Section 3.15

  

Security Documents

     32   

Section 3.16

  

ERISA

     32   

Section 3.17

  

Insurance

     32   

Section 3.18

  

Conduct of Business

     32   

Section 3.19

  

Margin Stock

     32   

Section 3.20

  

Members; Membership Interests and Related Matters

     33   

Section 3.21

  

No Ownership by Disqualified Persons

     33   

Section 3.22

  

Sufficiency of Material Project Documents

     33   

Section 3.23

  

No Force Majeure Event

     33   

Section 3.24

  

No Employees

     33   

Section 3.25

  

No Lienable Work

     33   

ARTICLE IV CONDITIONS

     34   

 

THERMO 1 CREDIT AGREEMENT   -i-   

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Section 4.01

  

Conditions Precedent to Effectiveness

     34   

Section 4.02

  

Conditions Precedent to Phase Two Date

     37   

Section 4.03

  

Conditions Precedent to Phase Three Date

     39   

ARTICLE V AFFIRMATIVE COVENANTS

     40   

Section 5.01

  

Limited Liability Company Existence; Etc.

     40   

Section 5.02

  

Conduct of Business

     40   

Section 5.03

  

Compliance with Laws and Obligations

     40   

Section 5.04

  

Governmental Authorizations

     40   

Section 5.05

  

Maintenance of Title

     40   

Section 5.06

  

Maintenance of Property; Insurance

     41   

Section 5.07

  

Keeping of Books

     42   

Section 5.08

  

Access to Records

     42   

Section 5.09

  

Payment of Utilities, Taxes, Etc.

     42   

Section 5.10

  

Reporting Requirements

     43   

Section 5.11

  

Notices

     44   

Section 5.12

  

Cash Grant

     45   

Section 5.13

  

Further Assurances

     46   

Section 5.14

  

Maintenance of Regulatory Status

     46   

Section 5.15

  

Accounts

     46   

Section 5.16

  

Budgets

     46   

Section 5.17

  

Operating Statements and Reports

     47   

Section 5.18

  

Material Project Documents

     48   

Section 5.19

  

Maintenance of Corporate Separateness

     48   

Section 5.20

  

Environmental Laws

     48   

Section 5.21

  

Maintenance of Site

     49   

Section 5.22

  

Lien Waivers

     49   

ARTICLE VI NEGATIVE COVENANTS

     49   

Section 6.01

  

Organizational Documents

     49   

Section 6.02

  

Subsidiaries; Equity Issuances

     50   

Section 6.03

  

Indebtedness

     50   

Section 6.04

  

Liens, Etc.

     50   

Section 6.05

  

Investments, Advances, Loan

     50   

Section 6.06

  

Business Activities; Employees

     51   

Section 6.07

  

Restricted Payments

     51   

Section 6.08

  

Fundamental Changes; Asset Dispositions and Acquisitions

     51   

Section 6.09

  

Accounting Changes

     52   

Section 6.10

  

Amendment or Termination of Project Documents

     52   

Section 6.11

  

Transactions with Affiliates

     53   

Section 6.12

  

Accounts

     53   

Section 6.13

  

Derivative Transactions

     53   

Section 6.14

  

Cash Grant

     53   

Section 6.15

  

Substantial Consummation

     53   

ARTICLE VII EVENTS OF DEFAULT

     54   

Section 7.01

  

Events of Default

     54   

 

THERMO 1 CREDIT AGREEMENT   -ii-   

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Section 7.02

  

Limitation on Exercise of Remedies

     57   

Section 7.03

  

Certain Step In Rights

     57   

ARTICLE VIII MISCELLANEOUS

     58   

Section 8.01

  

Notices

     58   

Section 8.02

  

Waivers; Amendments

     58   

Section 8.03

  

Expenses; Indemnity; Etc.

     59   

Section 8.04

  

Successors and Assigns

     60   

Section 8.05

  

Survival

     61   

Section 8.06

  

Counterparts; Integration; Effectiveness

     61   

Section 8.07

  

Severability

     61   

Section 8.08

  

Right of Setoff

     61   

Section 8.09

  

Governing Law; Jurisdiction; Etc.

     62   

Section 8.10

  

Headings

     63   

Section 8.11

  

Confidentiality

     63   

Section 8.12

  

Third Party Beneficiaries

     64   

Section 8.13

  

Usury

     64   

Section 8.14

  

Reinstatement

     65   

Section 8.15

  

Limited Recourse

     65   

Section 8.16

  

Reasonable Cooperation of Ormat; Following Payment of Advance Amount

     66   

ARTICLE IX REPRESENTATIONS AND WARRANTIES OF ORMAT

     66   

Section 9.01

  

Due Organization, Power, Etc.

     66   

Section 9.02

  

Due Authorization, Etc.

     66   

Section 9.03

  

No Conflict

     67   

 

APPENDIX A   -    Insurance APPENDIX B   -    Real Estate Documents EXHIBIT A  
-    Form of Financial Statement Certificate EXHIBIT B-1   -    Form of Consent
to Assignment (Additional Material Project Document) EXHIBIT B-2   -    Opinion
Coverage (Additional Material Project Document) EXHIBIT B-3   -    Form of
Consent to Assignment (BLM ROW) EXHIBIT B-4   -    Form of Consent to Assignment
(City of Anaheim) EXHIBIT B-5   -    Form of Consent to Assignment (the State of
Utah, acting by and through the School and Institutional Trust Lands
Administration) EXHIBIT C   -    Operating Statements and Report Requirements
EXHIBIT D   -    Form of Subordination Agreement EXHIBIT E   -    Form of
Accounts Agreement

 

SCHEDULE 3.04   -    Authorizations

 

THERMO 1 CREDIT AGREEMENT   -iii-   

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SCHEDULE 3.06   -    Litigation SCHEDULE 3.10   -    Real Property SCHEDULE 3.11
  -    Taxes SCHEDULE 4.01(f)   -    Form of Legal Opinions SCHEDULE 4.02(d)   -
   Project Documents Requiring Consent to Assignment from the Applicable
Counterparty SCHEDULE 4.03(e)   -    Project Documents Requiring Consent to
Assignment from the Applicable Counterparty SCHEDULE 5.05(b)      Specified
Collateral

 

THERMO 1 CREDIT AGREEMENT   -iv-   

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This Credit Agreement (this “Agreement”), dated as of December 19, 2011 (the
“Effective Date”), is entered into by and between (i) THERMO NO. 1 BE-01, LLC, a
Delaware limited liability company (the “Company”), and (ii) ORMAT NEVADA INC.,
a Delaware corporation (“Ormat”).

RECITALS

WHEREAS, the Company is repowering its geothermal power plant in Beaver County,
Utah with a planned additional generation capacity of approximately twelve and
thirty-four hundredths (12.34) MW (gross);

WHEREAS, the Company and Ormat have entered into that certain Engineering,
Procurement and Construction Contract, dated as of the date hereof (the “EPC
Contract”), pursuant to which Ormat and the Company have agreed, inter alia,
that Ormat will provide engineering, design, procurement, construction and
related services and will supply all equipment for the new power generation unit
being added to the existing Thermo 1 geothermal power plant on a lump-sum, fixed
price, turnkey basis, all subject to and in accordance with the terms and
conditions set forth in the EPC Contract;

WHEREAS, Ormat has agreed to defer the payment of amounts due to Ormat under the
EPC Contract as set forth therein; and

WHEREAS, Ormat and the Company desire to enter into this Agreement and the other
Financing Documents (as hereinafter defined) to provide for payments under this
Agreement and to secure the payment obligations of the Company under this
Agreement.

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged the
parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Certain Defined Terms

As used in this Agreement, the following terms shall have the following
meanings:

“Accounts” means, the “Collateral Accounts” (including sub-accounts thereof) and
any other account opened pursuant to the Accounts Agreement.

“Accounts Agreement” means the Accounts Agreement substantially in the form of
Exhibit E to be entered into by the Company, Ormat and the Depositary.

“Additional Project Document” means any contract or agreement relating to the
Project entered into by the Company subsequent to the Effective Date (including
any Replacement Project Document), providing for monetary obligations in excess
of One Hundred Fifty Thousand Dollars ($150,000) in any fiscal year or which
provides for non-monetary obligations, the non-performance of which could
reasonably be expected to have a Material Adverse Effect.

 

THERMO 1 CREDIT AGREEMENT   -1-   

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For purposes of this definition, indemnity, guaranty or similar obligations of
the Company subject to a maximum dollar amount shall be computed in such amount,
and all other indemnity, guaranty or similar obligations of the Company shall be
computed in the amount thereof which could, at the time such agreement is
entered into, reasonably be expected to become due and payable under normal
circumstances.

“Advance Amount” means, as of any date, the sum, without duplication, of (a) the
total amount of payment obligations of the Company to Ormat under (i) the EPC
Contract (determined in accordance with the EPC Contract and including all
amounts set forth in invoices by Ormat and payable by the Company (but not yet
paid to Ormat) under the EPC Contract) and (ii) this Agreement, minus (b) the
total amount of payment obligations of Ormat to the Company, including any
liquidated damages, under, and as determined in accordance with, the EPC
Contract. The Advance Amount shall be reduced by any optional prepayments,
mandatory prepayments or deemed prepayments made by or on behalf of the Company
pursuant to Section 2.04, but only to the extent such amounts were not taken
into account in making the calculation in the first sentence of this definition.
For the avoidance of doubt, any amounts that have been disputed and are subject
to the dispute resolution proceedings under the EPC Contract shall not be
included in the Advance Amount until such proceedings are resolved.

“Affected Property” means any Property of the Company that suffers an Event of
Loss.

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls, or is
Controlled by, or is under common Control with, the Person specified.

“Agreed Model” means the Excel-based model dated November 21, 2011, having the
title “Thermo Repower_Ormat EPCM_November 22 2011_V3.xlsx” as confirmed via
email exchange (attaching the Agreed Model) between John Perry (on behalf of the
Company) and Eron Kareev (on behalf of Ormat).

“Agreement” has the meaning assigned to such term in the preamble hereto.

“Applicable Law” means with respect to any Person, property or matter, any of
the following applicable thereto: any statute, law, regulation, ordinance, rule,
judgment, rule of common law, order, decree, authorization, approval,
concession, grant, franchise, license, agreement, directive, guideline, policy,
requirement, or other governmental restriction or any similar form of decision
of, or determination by, or any interpretation or administration of any of the
foregoing, by any Governmental Authority, whether in effect as of the date
hereof or thereafter and in each case as the same may be amended (including any
of the foregoing pertaining to land use or zoning restrictions).

“Authorization” means any consent, waiver, registration, filing, agreement,
notarization, certificate, license, tariff, approval, permit (including permits
relating to Water Rights), authorization, exception or exemption from, by or
with any Governmental Authority, whether provided by express action or deemed
provided by failure to act within any specified period and all corporate,
creditors’, shareholders’ and partners’ approvals or consents.

 

THERMO 1 CREDIT AGREEMENT   -2-   

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“Authorized Representative” means, with respect to any Person, the person or
persons authorized to act on behalf of such Person with respect to such matter
by the governing body of such Person.

“Bankruptcy Code” means Title 11 of the United States Code and any other
federal, state or foreign bankruptcy, insolvency, rehabilitation, liquidation or
similar laws, now or hereafter in effect.

“BLM ROW” means the agreements with the Bureau of Land Management identified on
Appendix B.

“Board” means the Board of Governors of the Federal Reserve System of the United
States of America.

“Business Day” means any day, other than (a) a Saturday or Sunday or a public
holiday or (b) a day on which commercial banks in the States of Nevada, Utah or
New York are authorized or required to be closed.

“Capital Expenditures” means expenditures to acquire or construct fixed assets,
plant and equipment (including renewals, improvements and replacements) computed
in accordance with GAAP.

“Capital Stock” means, with respect to any Person, any and all shares,
interests, participations and/or rights in or other equivalents (however
designated, whether voting or nonvoting, ordinary or preferred) in the equity or
capital of such Person, now or hereafter outstanding, and any and all rights,
warrants or options exchangeable for, or convertible into, any of the foregoing.

“Cash Grant” means the cash grant from the U.S. Department of the Treasury under
Section 1603 of the American Recovery and Reinvestment Tax Act of 2009 (or any
successor or replacement to such cash grant) with respect to Company’s
investment in the construction of the Project.

“Cash Grant Guidance” means the guidance issued on July 9, 2009 (as revised
March 2010) by the U.S. Department of the Treasury, the Frequently Asked
Questions and Answers issued by the U.S. Treasury Department on January 8, 2010
and June 25, 2010 and any clarification, amendment, addition or supplement
issued by the U.S. Department of the Treasury or any other Governmental
Authority with jurisdiction over the program, each with respect to the Cash
Grant program or any successor or replacement program.

“Cash Grant Proceeds” means the cash proceeds of the Cash Grant received by the
Company.

“Cash Grant Terms and Conditions” means the terms and conditions to which the
Company must agree in order to qualify for and receive a Cash Grant with respect
to the Project.

 

THERMO 1 CREDIT AGREEMENT   -3-   

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“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement or (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement.

“Change of Control” means a “Change of Control” as defined in the EPC Contract.

“Change Order” means any “Change in Work” (as defined in the EPC Contract) which
has the effect of increasing the price or extending the time for performance
thereunder or which results in additional payment by the Company to Ormat.

“Code” means the Internal Revenue Code of 1986, and the regulations thereunder,
in each case as amended, reformed or otherwise modified from time to time.

“Collateral” means, collectively, all collateral described in the Security
Documents (including the “Account Collateral” under the Accounts Agreement).

“Collection Expenses” means all reasonable out-of-pocket costs or expenses (if
any) and, if applicable, reasonable transaction costs, incurred by the Company
in connection with the collection, enforcement, negotiation, consummation,
settlement, proceedings, administration or other activity related to the receipt
and/or collection of the relevant proceeds, as applicable.

“Company” has the meaning assigned to such term in the preamble hereto.

“Condemnation” means any taking, seizure, confiscation, requisition, exercise of
rights of eminent domain, public improvement, inverse condemnation, condemnation
or similar action of or proceeding by any Governmental Authority relating to the
Project unless such taking, seizure, confiscation, requisition, exercise of
rights of eminent domain, public improvement, inverse condemnation, condemnation
or similar action or proceeding is diligently contested in good faith by the
Company and during the period of such contest, the enforcement of any contested
item is effectively stayed.

“Consents to Assignment” means (a) each Consent to Assignment executed by a
Project Party listed on Schedule 4.02(d) or Schedule 4.03(e) substantially in
the form of Exhibit B-1 (except, in the case of (i) the BLM ROW, substantially
in the form of Exhibit B-3, (ii) the City of Anaheim, substantially in the form
of Exhibit B-4, and (iii) the State of Utah, acting by and through the School
and Institutional Trust Lands Administration, substantially in the form of
Exhibit B-5) or, in each case, otherwise in form and substance reasonably
satisfactory to Ormat and (b) each Consent to Assignment (substantially in the
form of Exhibit B-1 or otherwise satisfactory to Ormat, unless, solely in the
case of a Consent to Assignment in respect of a Replacement Project Document,
such Consent to Assignment is substantially in the form of the Consent to
Assignment initially received in respect of the replaced Material Project
Document) entered into with a Project Party pursuant to Section 6.10(d) in
connection with any Additional Project Document that is a Material Project
Document.

“Contractor Acquired Permits” has the meaning assigned to such term in the EPC
Contract.

 

THERMO 1 CREDIT AGREEMENT   -4-   

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“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

“Credits” means any credits, credit certificates or similar items such as those
for greenhouse gas reduction, or the generation of green power or renewable
energy, as well as any capacity credits, renewable energy credits, tradable
generation rights, pollution/emission credits or other associated benefits, in
each case created and defined by a Governmental Authority, and/or its specified
replacement for such purposes, but specifically excluding any and all state tax
credits and production tax credits, investment tax credits and any other tax
credits or tax benefits which are or will be generated by the Project.

“Default” means any event or condition that, with notice or lapse of time or
both, would (unless cured or waived) become an Event of Default.

“Depositary” means Wells Fargo, National Association, in its capacity as
depositary and securities intermediary pursuant to the Accounts Agreement.

“Development” means the ownership, development, construction, testing,
operation, maintenance and use of the Project and the Site by the Company,
compliance with the Material Project Documents by the Company and the financing
of the Project by the Company.

“Disposition” has the meaning assigned to such term in Section 2.04(b)(iv).

“Disposition Proceeds Sub-Account” has the meaning assigned to such term in the
Accounts Agreement.

“Disqualified Person” means (a) a federal state or local government (or
political subdivision, agency or instrumentality thereof), (b) an organization
described in Section 501(c) of the Code and exempt from tax under Section 501(a)
of the Code, (c) an entity described in paragraph (4) of Section 54(j) of the
Code, (d) a real estate investment trust, as defined in Section 856(a) of the
Code, (e) a regulated investment company, as defined in Section 851(a) of the
Code, or (f) a partnership or other “pass-thru entity” (within the meaning of
paragraph (g)(4) of Section 1603 of the American Recovery and Reinvestment Tax
Act of 2009) any direct or indirect partner (or other holder of an equity or
profits interest) of which is an organization described in (a) through (e) above
unless such person owns an indirect interest in the Company through a “taxable C
corporation” (other than a regulated investment company), as that term is used
in the Cash Grant Guidance; provided, that if and to the extent the definition
of “Disqualified Person” under Section 1603(g) of the American Recovery and
Reinvestment Tax Act of 2009 is amended and such amendment is applicable to the
Cash Grant, the definition of “Disqualified Person” under this Agreement shall
be interpreted to conform to such amendment and any Cash Grant Guidance with
respect thereto.

“Dollars” or “$” refers to the lawful currency of the United States of America.

“Economic Interest” means the direct or indirect ownership by one Person of the
Capital Stock of another Person.

 

THERMO 1 CREDIT AGREEMENT   -5-   

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“Effective Date” has the meaning assigned to such term in the preamble hereto.

“Environmental Claim” means any administrative, regulatory or judicial action,
suit, demand, claim, notice of non-compliance or violation, investigation,
proceeding, consent order or consent agreement relating in any way to any
Environmental Law, environmental permit or Hazardous Materials or arising from
alleged injury or threat of injury to natural resources, human health or safety
or the environment.

“Environmental Consultant” means a qualified environmental consultant reasonably
satisfactory to Ormat.

“Environmental Law” means any national, state, municipal, departmental or local
statute, law, ordinance, rule, regulation, code, order, judgment, decree or
Authorization by any Governmental Authority regulating, relating to or imposing
liability or standards of conduct concerning pollution, natural resources, the
environment, health, safety or Hazardous Materials, each as the same may be
amended and now or hereafter in effect.

“EPC Contract” has the meaning assigned to such term in the recitals hereto.

“Equity Contribution” means any equity contribution provided to the Company by
the Sponsor or an Affiliate of the Sponsor or any other holder of Capital Stock
in the Company.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Company, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

“ERISA Event” means the occurrence of any one or more of the following (i) any
“reportable event,” as defined in Section 4043 of ERISA or the regulations
issued thereunder, with respect to any Plan (other than an event for which the
30-day notice period is waived by regulation); (ii) any failure by any Plan to
satisfy the minimum funding standards of ERISA or the Code for any plan year or
part thereof or a waiver of such standards or extension of any amortization
period is sought or granted under Section 412 of the Code, (iii) the receipt by
the Company or any ERISA Affiliate from the PBGC or a plan administer of any
notice relating to the intention to terminate any Plan or to appoint a trustee
to administer any Plan or the occurrence of any event or condition which could
reasonably be expected in the judgment of Ormat to constitute grounds under
ERISA for the termination of, or the appointment of a trustee or administrator
for, any Plan, (iv) the aggregate “amount of unfunded benefit liabilities”
(within the meaning of Section 4001(a)(18) of ERISA) under all Plans, determined
in accordance with Title IV of ERISA, exceeds Five Million Dollars ($5,000,000),
(v) the incurrence by Company or any ERISA Affiliate of any liability pursuant
to Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (within the meaning of Section 3(3) of
ERISA), (vi) the partial or complete withdrawal by the Company or any ERISA
Affiliate from any Multiemployer Plan, (vii) the establishment or amendment by
Company of any employee welfare benefit plan (within the meaning of Section 3(1)
of ERISA) that provides

 

THERMO 1 CREDIT AGREEMENT   -6-   

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post-employment welfare benefits in a manner that would increase the liability
of the Company thereunder, or (viii) the imposition of any Lien on any of the
rights, properties or assets of the Company or any ERISA Affiliate pursuant to
Title I or IV of ERISA or such penalty or excise tax provisions.

“Event of Abandonment” means, at any time after Final Acceptance, (a) the
written announcement by the Company of a decision to abandon or indefinitely
defer, or the abandonment of, the construction or completion or operation of all
or any material part of the Project for any reason or (b) the suspension for a
continuous period of more than sixty (60) consecutive days of the construction
or completion or operation of all or any material part of the Project (excluding
any period of suspension resulting from events of force majeure (under and as
defined in any of the Project Documents), any Event of Loss, scheduled
maintenance of the Project, repairs to the Project (whether or not scheduled),
forced outages or scheduled outages of the Project or any other involuntary
suspension of work contemplated under the Project Documents).

“Event of Default” has the meaning assigned to such term in Section 7.01.

“Event of Loss” means any loss of, destruction of or damage to, or any
Condemnation or other taking of, any Property of the Company.

“Excluded Taxes” means, with respect to any payment to be made by or on account
of any obligation of the Company hereunder, (a) income, franchise, capital, or
similar taxes imposed on (or measured by) the net income of the recipient or
beneficial owner of such payment by the United States of America (or any
subdivision thereof or therein), or by the jurisdiction under the laws of which
such recipient or beneficial owner is organized, in which its principal office
is located, or in which it is engaged in a trade or business, or any subdivision
of any thereof or therein (b) any branch profits taxes imposed by the
jurisdictions listed in clause (a) of this definition, (c) any Taxes imposed as
a result of the failure of the recipient or beneficial owner of such payment to
furnish any form, documentation or information required by Section 2.06(e),
(d) any U.S. Federal withholding Taxes or deductions imposed or collected by
Sections 1471 – 1474 of the Code or as a result of the Foreign Account Tax
Compliance Act (“FATCA”) or any regulation that may be promulgated from time to
time in connection with FATCA, and (e) any withholding Taxes or deductions
imposed by the laws of the United States of America that are in effect (i) as of
the date of this Agreement, (ii) as of the date the recipient of such a payment
becomes a party to this Agreement, or (iii) as of the date that the beneficial
owner of such a payment becomes the beneficial owner of any portion of any
Advance Amount hereunder.

“Excusable Event” has the meaning assigned to such term in the EPC Contract.

“FERC” means the Federal Energy Regulatory Commission, and any successor entity
performing similar functions.

“Final Acceptance” means “Final Acceptance” as defined in the EPC Contract.

“Financing Documents” means this Agreement and the Security Documents.

 

THERMO 1 CREDIT AGREEMENT   -7-   

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“Force Majeure Event” means a “Force Majeure Event” as defined in the EPC
Contract.

“FPA” has the meaning assigned to such term in Section 3.14(b).

“Funding Date” has the meaning assigned to such term in the Accounts Agreement.

“GAAP” means generally accepted accounting principles in effect from time to
time in the United States of America, applied on a consistent basis.

“Generating Unit” has the meaning assigned to such term in the EPC Contract.

“Governmental Authority” means any applicable, federal, state, and local
governments and all agencies, authorities, departments, instrumentalities, or
courts of the foregoing, lawfully exercising or entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power, or other subdivisions of any of the foregoing having
jurisdiction over the Site, the Project or the Company.

“Guarantee” means a guarantee, an endorsement, a contingent agreement to
purchase or to furnish funds for the payment or maintenance of, or otherwise to
be or become contingently liable under or with respect to, any Indebtedness,
other obligations, net worth, working capital or earnings of any Person, or a
guarantee of the payment of dividends or other distributions upon the Capital
Stock of any Person, or an agreement to purchase, sell or lease (as lessee or
lessor) Property of any Person, products, materials, supplies or services
primarily for the purpose of enabling a debtor to make payment of his, her or
its obligations or an agreement to insure a creditor against loss, and including
the issuance by a bank or other financial institution of a letter of credit or
other similar instrument for the benefit of another Person, but excluding
endorsements for collection or deposit in the ordinary course of business, or
customary and reasonable indemnity obligations in effect on the Effective Date
or entered into in connection with any acquisition or disposition of assets or
the execution of any contracts or agreements permitted under this Agreement. The
terms “Guarantee” and “Guaranteed” used as verbs shall have correlative
meanings.

“Hazardous Materials” means any hazardous or toxic substances, chemicals,
materials or wastes defined, listed, classified or regulated as such in or under
any Environmental Laws, including: (a) any petroleum or petroleum products
(including gasoline, crude oil or any fraction thereof), flammable explosives,
radioactive materials, asbestos in any form or condition, urea formaldehyde foam
insulation and polychlorinated biphenyls, (b) any chemicals, materials or
substances defined as or included in the definition of “hazardous substances”,
“hazardous wastes”, “hazardous materials”, “extremely hazardous wastes”,
“regulated substance”, “hazardous constituent”, “hazardous substance”,
“radioactive substance”, “pesticide”, “restricted hazardous wastes”, “toxic
substances”, “toxic pollutants”, “contaminants” or “pollutants”, or words of
similar import, including by reason of deleterious properties, ignitability,
corrosiveness, reactivity, carcinogenicity or reproductive toxicity, under any
applicable Environmental Law and (c) any other chemical, material or substance,
import, storage, transport, use or disposal of, or exposure to or Release of
which is prohibited, limited or otherwise regulated under any Environmental Law
or with respect to which liability or standards of conduct are imposed under any
Environmental Law.

 

THERMO 1 CREDIT AGREEMENT   -8-   

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“Impairment” means, with respect to any Transaction Document or any
Authorization by any Governmental Authority, the rescission, termination,
cancellation, repeal, invalidity or unenforceability thereof. The verb “Impair”
shall have a correlative meaning.

“Indebtedness” of any Person means, without duplication, all (a) indebtedness
for borrowed money and every reimbursement obligation with respect to letters of
credit, bankers’ acceptances or similar facilities, (b) obligations evidenced by
bonds, debentures, notes or other similar instruments, (c) obligations to pay
the deferred purchase price of property or services, except accounts payable and
accrued expenses arising in the ordinary course of business and payable within
90 days, (d) liabilities under interest rate or currency swap agreements,
interest rate or currency collar agreements and all other agreements or
arrangements designed to protect against fluctuations in interest rates and
currency exchange rates, (e) the capitalized amount (determined in accordance
with GAAP) of all payments due or to become due under all leases and agreements
to enter into leases required to be classified and accounted for as a capital
lease in accordance with GAAP, (f) reimbursement obligations (contingent or
otherwise) pursuant to any performance bonds or collateral security,
(g) Indebtedness of others described in clauses (a) through (f) above secured by
(or for which the holder thereof has an existing right, contingent or otherwise,
to be secured by) a Lien on the Property of such Person, whether or not the
respective Indebtedness so secured has been assumed by such Person and
(h) Indebtedness of others described in clauses (a) through (g) above Guaranteed
by such Person. The Indebtedness of any Person shall include the Indebtedness of
any other Person (including any partnership in which such person is a general
partner) to the extent such Person is liable therefor as a result of such
Person’s ownership interest in or other relationship with such other Person,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor. For purposes of this definition, the amount of the
liability of such Person with respect to any swap agreement (or similar
agreement or arrangement) at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that such Person would be required to
pay if such swap agreement were terminated at such time.

“Indemnified Party” has the meaning assigned to such term in Section 8.03(b).

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Interconnection Agreement” means the Distribution Generator Interconnection
Agreement, dated June 17, 2008, between the Company and PacifiCorp dba Rocky
Mountain Power.

“Interest Payment Period” means the period beginning on the date immediately
following the Final Acceptance Date and ending on the date that is one hundred
and eighty (180) days thereafter.

“Lien” means any mortgage, charge, pledge, lien (statutory or other), privilege,
security interest, hypothecation, collateral assignment or preference, priority
or other security agreement, preferential arrangement or other encumbrance upon
or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired (including any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing and the filing of any financing
statement under the UCC or comparable law of the relevant jurisdiction).

 

THERMO 1 CREDIT AGREEMENT   -9-   

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“Loss Proceeds” means insurance proceeds, Condemnation awards or other
compensation, awards, damages and other payments or relief (exclusive, in each
case, of the proceeds of liability insurance, delay in start-up insurance and
business interruption insurance and other payments for interruption of
operations) with respect to any Event of Loss.

“Material Adverse Effect” means a material adverse effect on (i) the validity or
priority of the Liens granted under the Security Documents, (ii) the Company’s
ability to observe and perform any of its material obligations under the
Financing Documents or (iii) the ability of Ormat to enforce its material rights
and remedies under the Financing Documents.

“Material Project Documents” means the Power Purchase Agreement, the MES
Agreement, the EPC Contract, the Interconnection Agreement, the Real Estate
Documents, the O&M Agreement, the Transmission Agreement and any Replacement
Project Document in replacement of any of the foregoing.

A “Material Project Document” shall also include any Additional Project Document
providing for monetary obligations in excess of One Hundred Fifty Thousand
Dollars ($150,000) in any fiscal year or which provides for non-monetary
obligations of the Company, the non-performance of which could reasonably be
expected to have a Material Adverse Effect. For purposes of this definition,
indemnity, guaranty or similar obligations of the Company subject to a maximum
dollar amount shall be computed at such amount, and all other indemnity,
guaranty or similar obligations of the Company shall be computed at the amount
thereof which could, at the time such agreement is entered into, reasonably be
expected to become due and payable under normal circumstances.

“Maturity Date” means the last day of the Interest Payment Period.

“Member” means Intermountain Renewable Power, LLC, a Delaware limited liability
company.

“MES Agreement” means the Master Electric Service and Facilities Improvements
Agreement, having Service ID#:376809795 and Contract #: CC:11391, between Rocky
Mountain Renewable Power, LLC and the Company as assignee of the Member.

“Moody’s” means Moody’s Investors Service, Inc., or any successor to the rating
agency business thereof.

“Mortgage” means the Leasehold Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing, dated as of the date hereof, by the Company to the
Title Company as trustee for the benefit of Ormat as beneficiary.

“Multiemployer Plan” means a multi-employer plan as defined in
Section 4001(a)(3) of ERISA.

 

THERMO 1 CREDIT AGREEMENT   -10-   

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“Net Available Amount” means:

(i) in case of any Event of Loss, the aggregate amount of Loss Proceeds received
by the Company in respect of such Event of Loss, net of Collection Expenses in
connection with the collection of such Loss Proceeds;

(ii) in the case of any Project Document Claim, the aggregate amount received by
the Company in respect of such Project Document Claim, net of Collection
Expenses in connection with the collection of such amount; and

(iii) in the case of any Disposition, the aggregate amount received by the
Company in respect of such Disposition, net of Collection Expenses in connection
with such Disposition.

“Non-Recourse Parties” has the meaning assigned to such term in Section 8.15(a).

“O&M Agreement” means the Operations and Maintenance Agreement, to be entered
into by the Company and the Operator.

“Officer’s Certificate” means a certificate signed by an Authorized
Representative of the Company.

“Operating Account” has the meaning assigned to such term in the Accounts
Agreement.

“Operating and Maintenance Expenses” means expenses of administering and
operating the Project and the Company’s Properties and of maintaining such
Properties and the Project in good repair and operating condition, including
insurance costs, fuel, power, transmission and capacity expenses, costs and fees
attendant to the acquisition and maintenance of any Authorizations, fees, costs
and expenses under the relevant Material Project Documents, salaries and wages,
legal, accounting and other professional fees attendant to any of the foregoing
items, Capital Expenditures and overhead expenses included in any Operating
Budget approved in accordance with Section 5.16. Operating and Maintenance
Expenses shall exclude: (i) payments to be made into any of the Accounts during
such period, (ii) payments of any kind with respect to Restricted Payments
during such period and (iii) payments of interest on the Advance Amount.

“Operating Budget” means a budget covering a fiscal year of the Company detailed
by month, prepared by the Company and submitted in accordance with Section 5.16,
covering (a) Operating and Maintenance Expenses (including a reasonable
allowance for contingencies) and interest on the Advance Amount expected to be
incurred by the Company, and (b) Project Revenues expected to be received by the
Company, in each case during the relevant fiscal year of the Company to which
such budget applies.

“Operator” means Raser Technologies Operating Company, Inc.

“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from the
execution, delivery or enforcement of, or otherwise with respect to, any
Financing Document. For the avoidance of doubt, “Other Taxes” shall not include
any Excluded Taxes.

 

THERMO 1 CREDIT AGREEMENT   -11-   

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“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

“Permitted Capital Expenditures” means Capital Expenditures that are set forth
in the applicable Construction Budget or Operating Budget approved in accordance
with the terms hereof.

“Permitted Investments” means an investment denominated in Dollars in any of the
following: (i) direct obligations of, or obligations the principal of, and
interest on, which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within 180 days from the date of acquisition thereof; (ii) investment
in commercial paper maturing within 180 days from the date of acquisition
thereof and having, at such date of acquisition, the highest short-term credit
rating obtainable from S&P and from Moody’s; (iii) investments in certificates
of deposit, bankers’ acceptances and time deposits maturing within 180 days from
the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any United States office of
any commercial bank organized under the laws of any member nation of the
Organization of Economic Cooperation and Development, and having, at the date of
acquisition thereof, a combined capital and surplus and undivided profits of not
less than the U.S. $/Foreign Currency equivalent of Two Hundred Fifty Million
Dollars ($250,000,000); (iv) either (x) direct and general obligations of any
State of the United States of America or any municipality or other political
subdivision thereof or debt obligations of corporations organized within the
United States of America, in each case if at the time of acquisition such
obligation bears the highest credit rating of either S&P or Moody’s or (y) other
obligations issued by or on behalf of any State of the United States of America
or any municipality or other political subdivision thereof if at the time of
acquisition such obligations have been refunded by investments irrevocably
deposited in investments bearing the highest credit rating of either S&P or
Moody’s, and in the case of either (x) or (y), maturing within 180 days of the
acquisition thereof; (v) mutual or money market funds, managed by reputable
sponsors, comprised and which are required by their constituent documents to be
comprised, at least ninety-five percent (95%) of investments of the type
described in paragraph (i), (ii), (iii), or (iv) above; (vi) obligations to
resell under repurchase agreements with a maturity not in excess of 180 days
pursuant to a written agreement with respect to any security of the type
described in clauses (i), (ii), (iii) or (iv) above; and (vii) other investments
similar to those listed in clauses (i) – (vi) above and approved in writing by
Ormat.

“Permitted Lien” means any of the following:

(a) Liens arising by reason of:

(i) taxes, assessments or governmental charges that are not yet due and payable
or are being contested in good faith by appropriate proceedings properly
instituted and diligently conducted and, in either case, in respect of which
appropriate reserves are being maintained in accordance with GAAP;

(ii) security in the ordinary course of business for payment of workmen’s
compensation or other types of social security benefits; or

 

THERMO 1 CREDIT AGREEMENT   -12-   

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(iii) minor defects, easements, rights of way, grazing leases, restrictions,
irregularities, encumbrances and clouds on title and statutory liens reflected
in the Title Policy or that do not materially impair the property affected
thereby, do not materially detract from the value of the affected property, do
not individually or in the aggregate materially impair the value of the security
interests granted under the Security Documents and do not materially interfere
with the ordinary conduct of business of the Company or the Development of the
Project;

(b) Liens of mechanics, carriers, landlords, warehousemen, materialmen,
laborers, employees or suppliers or any similar Liens arising by operation of
law incurred in the ordinary course of business of the Company (including the
initial construction of the Project by Ormat) with respect to obligations which
are not due or, if due, are (i) being contested in good faith and (ii) are
adequately bonded or in respect of which adequate reserves are in place in
accordance with GAAP;

(c) Liens arising out of judgments or orders that have been adequately bonded or
with respect to which a stay of execution has been obtained pending an appeal or
proceeding for review and in respect of which adequate reserves are in place in
accordance with GAAP;

(d) Liens arising with respect to zoning restrictions, easements, licenses,
reservations, covenants, rights-of-way, utility easements, building restrictions
and other similar charges or encumbrances on the use of real property set forth
in the Title Policy or which do not materially detract from the value of the
affected property and do not materially interfere with the ordinary conduct of
the business of the Company or the Development of the Project;

(e) Liens or the interests of lessors to secure purchase money or lease
obligations permitted under Section 6.03(b);

(f) customary rights of setoff or bankers’ or similar liens upon deposits of
cash or investments in favor of banks or other financial institutions;

(g) Liens created under the Security Documents; or

(h) Liens created by or through Ormat under the EPC Contract, including Liens
placed on the Project by vendors or subcontractors to Ormat.

“Permitted Local Operating Account” means a demand deposit account (other than
the Collateral Accounts under the Accounts Agreement) established by the Company
with an FDIC-insured bank or financial institution with prior notice to Ormat;
provided that from and after the Phase Two Date each such demand deposit account
is subject to a control agreement in form and substance satisfactory to Ormat or
other arrangements have been made with respect to such demand deposit account
that are reasonably acceptable to Ormat.

“Permitted Subordinated Debt” has the meaning assigned to such term in
Section 6.03(d).

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

THERMO 1 CREDIT AGREEMENT   -13-   

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“Phase 1 Report” has the meaning assigned to such term in Section 4.03(f).

“Phase Two Date” means January 19, 2012, subject to extension consistent with
the corresponding “Phase of Work” under the EPC Contract.

“Phase Three Date” means February 19, 2012, subject to extension consistent with
the corresponding “Phase of Work” under the EPC Contract.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Company or any ERISA Affiliate
is (or, if such plan were terminated, would under Section 4069 of ERISA be
deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Plan of Reorganization” means the Third Amended Plan of Reorganization of Raser
Technologies, Inc. and its Affiliated Debtors, dated August 1, 2011, as
supplemented, amended or modified.

“Pledge Agreement” means the Pledge Agreement dated as of the date hereof,
between the Member and Ormat.

“Power Purchase Agreement” means the Renewable Power Purchase and Sale
Agreement, dated as of March 10, 2008, between the Company and the City of
Anaheim.

“Prepayment Account” has the meaning assigned to such term in the Accounts
Agreement.

“Proceeds Account” has the meaning assigned to such term in the Accounts
Agreement.

“Project” has the meaning assigned to such term in the EPC Contract.

“Project Document Claim” means any payment under any Project Document in respect
of termination payments, liquidated damages for performance or performance
guarantees, warranty claims or, to the extent similar to the foregoing,
indemnity claims (but excluding liquidated damages payable in respect of delay).

“Project Documents” means, collectively, (i) the Material Project Documents,
(ii) any Additional Project Document and (iii) any contract or agreement
relating to the Project (other than the Material Project Documents) entered into
by the Company as of the Effective Date providing for monetary obligations of
less than One Hundred Fifty Thousand Dollars ($150,000) in any fiscal year. For
purposes of this definition, indemnity, guaranty or similar obligations of the
Company subject to a maximum dollar amount shall be computed at such amount, and
all other indemnity, guaranty or similar obligations of the Company shall be
computed at the amount thereof which could, at the time such agreement is
entered into, reasonably be expected to become due and payable under normal
circumstances.

“Project Party” means each Person (other than Ormat or any Related Party of
Ormat) from time to time party to any Material Project Document.

 

THERMO 1 CREDIT AGREEMENT   -14-   

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“Project Revenues” means, for any period, all income and revenues (without
duplication) received by the Company during such period from (a) any payments
due to the Company under the Power Purchase Agreement and all other income
derived from the sale or use of electric energy, capacity and ancillary services
and Credits generated by the Project during such period, (b) all income from the
investment of monies in any Account, (c) payments or refunds received in cash by
the Company under any Material Project Document (including any proceeds from
renewable resource credit sales and delay liquidated damages), (d) insurance
proceeds, condemnation awards or other proceeds from any delayed opening or
business interruption insurance maintained by or on behalf of the Company,
(e) any net proceeds derived from the sale of any Property of the Project and
(f) all other income, revenue or other amounts, however earned or received, by
any the Company during such period including, any tax refunds; provided that,
Project Revenues shall not include (i) any Equity Contribution or other
contributions to capital; (ii) the proceeds of the Indebtedness under this
Agreement; (iii) the Net Available Amount of Loss Proceeds, any Project Document
Claim, including claims against Ormat under the EPC Contract, or any
Disposition; or (iv) warranty payments due to the Company under any Project
Document.

“Property” means any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible, including
the Real Property and the Water Rights.

“Prudent Generator Practices” means any of the practices, methods and acts
engaged in by a preponderance of the competent operators within the geothermal
electric generating industry in the United States at the time in question, or
any of the practices, methods and acts which, in the exercise of reasonable
judgment in light of the facts known at the time the decision was made, could
have been expected to accomplish the desired results at a reasonable cost
consistent with good business practices, reliability, safety and expedition. For
the avoidance of doubt, Prudent Generator Practices is not limited to the
optimum practice, method or act to the exclusion of all others, but rather
delineates typical practices, methods or acts that would be expected from
competent operators within the electric generating industry to accomplish the
desired results, having due regard for, among other things, the preservation of
manufacturers’ warranties and operating instructions, the requirements and
Authorizations of Governmental Authorities of competent jurisdiction and the
requirements of the Project Documents.

“QF” has the meaning assigned to such term in Section 3.14(b).

“Real Estate Documents” means, collectively, each easement, right of way,
license, lease, permit, revocable consent and other document, agreement or
instrument pursuant to which the Company has rights in Real Property or Water
Rights, including those items specified on Appendix B or delivered pursuant to
Sections 5.05 or 5.13 in connection with Real Property.

“Real Property” means all real property held by the Company that the Company
owns in fee or in which it holds a leasehold interest as a tenant, an easement
or right of way right as an easement holder or a license right as a licensee or
otherwise uses or occupies, including the real property more particularly
identified in the Title Policy.

 

THERMO 1 CREDIT AGREEMENT   -15-   

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“Recapture Liability” means any payment required to be made to the United States
of America (or any agency or instrumentality thereof) resulting from all or any
portion of the Cash Grant being “recaptured” or disallowed.

“Recapture Period” means, with respect to the Generating Unit, the period
commencing on the placed in service date (within the meaning of the Cash Grant
Guidance) of the Generating Unit and ending on the fifth anniversary thereof.

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person’s Affiliates.

“Release” means to dispose, discharge, inject, spill, leak, leach, dump, pump,
pour, emit, escape, empty, seep, place and the like, into or upon any land or
water or air, or otherwise enter into the environment.

“Replacement Project Document” means any Additional Project Document in
replacement of a Material Project Document which is entered into with a
Replacement Project Party and either (i) has economic terms which are no less
favorable to the Company than those in the Material Project Document being
replaced and has other terms and conditions which, in the case of such other
terms and conditions, taken as a whole, are not materially less favorable to the
Company than those in the Material Project Document being replaced or (ii) is in
form and substance satisfactory to Ormat, acting reasonably.

“Replacement Project Party” means a Person (or any guarantor of such Person’s
obligations) (a) having, on the date of such replacement, credit, or acceptable
credit support, and experience equal to or greater than that of the party to the
Material Project Document (including any guaranty thereof) being replaced as
certified in writing by the Company to Ormat or (b) acceptable to Ormat (acting
reasonably); provided that, in each case, on the date the applicable Replacement
Project Document is entered into (i) to the extent that the Project Party for
the Material Project Document that is being replaced had previously provided a
Consent to Assignment, such Person shall have delivered a Consent of Assignment,
and (ii) in respect of each Material Project Document that is being replaced for
which the applicable Project Party did not provide a Consent to Assignment, the
Company shall have used commercially reasonable efforts to cause such Person to
deliver, a Consent to Assignment and, if reasonably requested by Ormat and if
with the exercise of commercially reasonable efforts the Company is able to
obtain the same, an opinion of counsel in accordance with Section 6.10(d).

“Restoration Sub-Account” has the meaning assigned to such term in the Accounts
Agreement.

“Restore” means, with respect to any Affected Property, to rebuild, repair,
restore or replace such Affected Property. The term “Restoration” shall have a
correlative meaning.

 

THERMO 1 CREDIT AGREEMENT   -16-   

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“Restricted Payment” means:

(a) all dividends paid by the Company (in cash, Property thereof or obligations)
on, or other payments or distributions on account of, or the setting apart of
money for a sinking or other analogous fund for, or the purchase, redemption,
retirement or other acquisition by the Company of, any portion of any shares in
the Company or any warrants, rights or options to acquire any such shares; and

(b) any payment of development, management or other fees, or of any other
amounts, by the Company to any Affiliate thereof (other than to Operator under
the O&M Agreement).

“Revenue Account” has the meaning assigned to such term in the Accounts
Agreement.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., or any successor to the rating agency business thereof.

“Security Agreement” means the Security Agreement, dated as of the date hereof,
between the Company and Ormat.

“Security Documents” means the Accounts Agreement, the Security Agreement, the
Mortgage, the Pledge Agreement, the Consents to Assignment, all UCC financing
statements required by any Security Document and any other security agreement or
instrument to be executed or filed pursuant hereto or any Security Document.

“Secured Obligations” has the meaning given to that term in the Security
Agreement.

“Secured Obligation Documents” has the meaning given to that term in the
Security Agreement.

“Site” means the site upon which the Project is located, together with any
fixtures or civil works constructed thereon and any other Real Property of the
Company required for the installation and operation of the Generating Unit,
including the Real Property referred to in the Real Estate Documents to the
extent applicable.

“Solvent” means, with respect to any Person on a particular date, the ability of
such Person to pay its debts as they become due. “Solvency” has the meaning
correlative thereto.

“Specified Collateral” has the meaning assigned to such term in Section 5.05(b).

“Sponsor” means Cyrq Energy, Inc., a Delaware corporation.

“Step In Event” means, either a Step In Event (Resource) or a Step In Event
(Grant) as the context requires.

“Step In Event (Grant)” means the occurrence of an Excusable Event under either
item (ii) or item (iv) of clause (b) of the definition of Excusable Event.

 

THERMO 1 CREDIT AGREEMENT   -17-   

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“Step In Event (Resource)” means (a) at any time after the Completion Date plus
ninety (90) days, the operating cash flows of the Company have been less than
sixty-five percent (65%) of the projected operating cash flows set forth in the
Agreed Model for the preceding two (2) calendar months, or (b) in Ormat’s
reasonable business judgment, the geothermal reservoir is materially and
adversely different than the reservoir contemplated in the Agreed Model.

“Step In Period” means either (x) a Step In Period (Grant) in respect of a Step
In Event (Grant) or (y) a Step In Period (Resource) in respect of a Step In
Event (Resource).

“Step In Period (Grant)” means operating cash flows of the Company have been
used to repay thirty percent (30%) of the Advance Amount during the continuance
of a Step In Event (Grant).

“Step In Period (Resource)” means, in the case of clause (a) of the definition
of “Step In Event (Resource)”, the operating cash flows of the Company equal or
exceed the operating cash flows of the Company set forth in the Agreed Model,
for a period of six (6) calendar months; and in the case of clause (b) of the
definition of “Step In Event (Resource)”, Ormat determines that in its
reasonable business judgment the geothermal reservoir is adequate to operate the
Generating Unit as anticipated as of the Effective Date.

“Subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than
fifty percent (50%) of the Capital Stock or more than fifty percent (50%) of the
ordinary Voting Stock or, in the case of a partnership, more than fifty percent
(50%) of the general partnership interests are, as of such date, owned,
controlled or held, or (b) that is, as of such date, otherwise Controlled, by
the parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent.

“Substitute Owner Payment Security” has the meaning given to that term in the
EPC Contract.

“Supplemental Owner Payment Security” has the meaning given to that term in the
EPC Contract.

“Survey” means the survey in respect of the Site, showing such matters as may be
reasonably required by the Title Company, which survey shall be in form and
content acceptable to the Title Company and prepared by a registered surveyor
reasonably acceptable to the Title Company.

“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings with respect to the Advance Amount now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority and all interest, penalties or similar liabilities with respect
thereto.

 

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“Tax Savings” means any net reduction in liability for Taxes not otherwise
indemnifiable hereunder.

“Termination Date” means the last to occur of the date on which (a) all amounts
due under (as determined in accordance with) the EPC Contract and the Financing
Documents are indefeasibly paid in full and (b) the Secured Obligations and all
other obligations of Assignor under the Secured Obligation Documents are fully
satisfied or Substitute Owner Payment Security has been provided to Ormat in
accordance with the terms and conditions of the EPC Contract, covering any
remaining, disputed obligations owed to Ormat under the EPC Contract.

“Title Company” means Security Title Company of Garfield County.

“Title Policy” means with respect to the Mortgage, the American Land Title
Association 2006 Form extended coverage policy of title insurance or such other
form as is acceptable to Ormat or a binding marked commitment to issue such
policy, dated as of a date and in an amount reasonably acceptable to Ormat,
insuring the Lien in favor of Ormat created by the Mortgage in the Real Property
identified in the Title Policy, subject only to Permitted Liens and those other
exceptions reasonably approved by Ormat and containing such endorsements and
affirmative assurances, including full coverage against mechanics’ liens
(filed), as Ormat shall reasonably require and which are reasonably obtainable
from title companies in the State of Utah.

“Transaction Document” means each of the Financing Documents and the Material
Project Documents.

“Transmission Agreement” means the Service Agreement for Long-Term
Point-to-Point Transmission Agreement, dated June 12, 2008, between the Company
and PacifiCorp.

“UCC” means the Uniform Commercial Code as in effect from time to time in New
York.

“Voting Stock” means, with respect to any Person, Capital Stock the holders of
which are ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such Person,
even if the right so to vote has been suspended by the happening of a
contingency.

“Water Rights” means all rights, titles, interests, claims, permits,
certificates, priorities, sources, wells, diversions, withdrawals, returns,
quantities and uses of water for the Project, including all rights, titles and
interests approved and authorized by State of Utah State Engineer Orders in
connection with Water Number 71-5107 (A77441), Water Number 71-5146 (A78253),
and Water Number 71-533 (A34489).

Section 1.02 Terms Generally

Except as otherwise expressly provided, the following rules of interpretation
shall apply to this Agreement and the other Financing Documents:

(a) the definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined;

 

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(b) whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms;

(c) the words “include”, “includes” and “including” shall be deemed to be
followed by the phrase “without limitation”;

(d) the word “will” shall be construed to have the same meaning and effect as
the word “shall”;

(e) unless the context requires otherwise, (a) any definition of or reference to
any agreement, instrument or other document herein shall be construed as
referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or therein) and shall
include any appendices, schedules, exhibits, clarification letters, side letters
and disclosure letters executed in connection therewith;

(f) any reference herein to any Person shall be construed to include such
Person’s successors and assigns to the extent permitted under the Financing
Documents and, in the case of any Governmental Authority, any Person succeeding
to its functions and capacities;

(g) the words “herein”, “hereof” and “hereunder”, and words of similar import,
shall be construed to refer to this Agreement in its entirety and not to any
particular provision hereof;

(h) all references herein to Articles, Sections, Appendices, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and
Appendices, Exhibits and Schedules to, this Agreement; and

(i) the words “asset” and “property” shall be construed to have the same meaning
and effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.

Section 1.03 Accounting Terms

Except as otherwise expressly provided herein, all terms of an accounting or
financial nature shall be construed in accordance with GAAP; provided that, if
the Company notifies Ormat that the Company requests an amendment to any
provision hereof to eliminate the effect of any change in GAAP occurring after
the date hereof or in the application thereof on the operation of such provision
(or if Ormat notifies the Company that Ormat requests an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith.

 

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ARTICLE II

THE ADVANCE AMOUNT

Section 2.01 Advance Amount

(a) Based on the amount of payment obligations due under the EPC Contract and
this Agreement, Ormat shall calculate the Advance Amount from time to time from
and after the Effective Date, and, upon request by the Company, shall notify the
Company in writing of such amount, such notice to be accompanied by reasonable
supporting detail. On or before the Final Acceptance Date, Ormat shall provide
written notice (with reasonable supporting detail) to the Company of the Advance
Amount as of the first date of the Interest Payment Period. The Company may from
time to time dispute the amount of the Advance Amount calculated by Ormat by
providing written notice to Ormat within five Business Days of receipt of
Ormat’s calculation of the Advance Amount. Any such dispute shall be resolved
pursuant to the dispute resolution provisions of the EPC Contract as if such
dispute resolutions provisions were set forth in full in this Agreement (with
appropriate conforming of defined terms). Ormat will have no obligation to
advance any other amounts hereunder.

Section 2.02 Evidence of Indebtedness

(a) The Advance Amount as of any date shall be evidenced by one or more accounts
or records maintained by Ormat in the ordinary course of business. The accounts
or records maintained by Ormat shall be presumptive evidence, absent contrary
evidence provided by the Company, of the Advance Amount and the interest and
payments thereon. Any failure to so record or any error in doing so shall not,
however, limit or otherwise affect the obligation of the Company hereunder to
pay any amount owing with respect to the Advance Amount.

(b) In the event that any amount due hereunder is not paid by the Company when
due (whether at the stated maturity, by acceleration or otherwise), Ormat may,
subject to the terms and conditions thereof, avail itself of the rights and
remedies afforded it under the Financing Documents and the Project Documents as
applicable.

Section 2.03 Repayment of the Advance Amount

The Company unconditionally and irrevocably promises to pay the Advance Amount
in full to Ormat on the Maturity Date.

Section 2.04 Prepayment of the Advance Amount

(a) Optional Prepayments.

(i) The Company shall have the right at any time, and from time to time, to
prepay, the Advance Amount in whole or in part, without premium, penalty or
break funding costs, upon not fewer than three (3) Business Day’s prior written
notice to Ormat.

 

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(b) Mandatory Prepayments. In accordance with and subject to the terms of the
Accounts Agreement the following mandatory prepayments, in whole or in part, may
occur without premium, penalty or break funding costs:

(i) within five (5) Business Days of receipt of any Cash Grant Proceeds, such
Cash Grant Proceeds shall be deposited in the Prepayment Account for application
in accordance with the Accounts Agreement as a mandatory prepayment (to the
extent of such proceeds) of the Advance Amount, together with accrued interest
thereon. Nothing in this Section 2.04(b) shall be deemed to limit the obligation
of the Company to deposit (or cause to be deposited) in the Prepayment Account
the Cash Grant Proceeds;

(ii) on each Funding Date, with respect to any Project Document Claim (other
than in respect of such a claim against Ormat or any Related Party thereof), the
Net Available Amount of such Project Document Claim shall be applied by in
accordance with the Accounts Agreement as a mandatory prepayment (to the extent
of such proceeds) of the Advance Amount, together with accrued interest thereon;

(iii) on each Funding Date, with respect to any Event of Loss, the amount of
Loss Proceeds from such Event of Loss that are required to be deposited on such
Funding Date in the Prepayment Account pursuant to Section 3.7(a) and (b) of the
Accounts Agreement shall be applied as a mandatory prepayment (to the extent of
such proceeds) of the Advance Amount, together with accrued interest thereon.
Nothing in this Section 2.04(b) shall be deemed to limit the obligation of the
Company to deposit (or cause to be deposited) in the Proceeds Account the Loss
Proceeds in respect of any Event of Loss;

(iv) on each Funding Date occurring after Final Acceptance, with respect to any
sale, transfer or other disposition of any assets or property (other than in
respect of any sale of capacity, energy, ancillary services or other services in
the ordinary course of business (herein, the “Disposition”), the amount of the
proceeds of such Disposition that are required to be deposited on such Funding
Date in the Prepayment Account pursuant to Section 3.5(c) of the Accounts
Agreement shall be applied by the Company to the mandatory prepayment (to the
extent of such proceeds) of the Advance Amount, together with accrued interest
thereon (without limiting the obligation of the Company to obtain the consent of
Ormat to any Disposition not otherwise permitted hereunder);

(v) upon any Change of Control after Final Acceptance, an amount equal to the
Advance Amount as of the date of such Change of Control; and

(vi) as soon as may be accomplished by the Depositary under the Accounts
Agreement after each Funding Date, an amount equal to the amount of funds
deposited in the Prepayment Account pursuant to Section 3.01 of the Accounts
Agreement on such Funding Date shall be applied to the mandatory prepayment (to
the extent of such proceeds) of the Advance Amount, together with accrued
interest thereon.

 

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(c) Deemed Prepayments. The following prepayments will be deemed to occur
without premium, penalty or break funding costs:

(i) if the “Minimum Capacity Requirement” is not satisfied within the
“Performance Testing Period” under and in accordance with Section 17.2.3 of the
EPC Contract, then the Advance Amount, together with accrued interest thereon
and all other amounts under this Agreement and the other Financing Documents,
shall immediately be deemed to be repaid in full without the requirement of any
further action by the Company and Ormat shall comply with its obligations set
forth in Section 8.16 of this Agreement and the corresponding provisions of the
other Financing Documents to release the Liens of the Security Documents, the
EPC Contract and otherwise terminate the obligations of the Company under the
Financing Documents and the other Transaction Documents to which Ormat (or any
Related Party thereof) is a party;

(ii) if the Company posts Substitute Owner Payment Security as contemplated by
Section 8.4(c) of the EPC Contract, then without affecting Ormat’s rights with
regard to the amounts owed to Ormat under the EPC Contract (as opposed to this
Agreement) and its rights with regard to Substitute Owner Payment Security as
provided in the EPC Contract, the Advance Amount, together with accrued interest
thereon and all other amounts under this Agreement and the other Financing
Documents, shall immediately be deemed to be repaid in full without the
requirement of any further action by the Company and Ormat shall comply with its
obligations set forth in Section 8.16 of this Agreement and the corresponding
provisions of the other Financing Documents to release the Liens of the Security
Documents, the EPC Contract and otherwise terminate the obligations of the
Company under the Financing Documents and the other Transaction Documents to
which Ormat (or any Related Party thereof) is a party;

(iii) if (a) Ormat draws on the Supplemental Owner Payment Security as
contemplated by Section 3.14 or Section 9.1.2 of the EPC Contract, the Advance
Amount immediately shall be deemed to be prepaid by the amount of such draw
without the requirement of any further action by the Company or (b) the Company
makes (or causes to be made) the payment described in Section 3.12(b) of the EPC
Contract, the Advance Amount immediately shall be deemed to be prepaid by the
amount of such payment without the requirement of any further action by the
Company;

(iv) if Ormat is obligated to set off or sets off any amounts it is required to
pay against the Contract Price under the EPC Contract (including any Delay
Liquidated Damages, Special Delay Liquidated Damages and Buy Down Amounts, each
as defined in the EPC Contract), the Advance Amount immediately shall be deemed
to be prepaid by the amount of such set off without the requirement of any
further action by the Company; or

(v) if any Project Document Claim by the Company against Ormat (or any of its
Related Parties) is determined in the favor of the Company by a final,
non-appealable judgment of an arbitrator or a court of competent jurisdiction,
the Advance Amount immediately shall be deemed to be prepaid by the amount of
such Project Document Claim without the requirement of any further action by the
Company.

 

THERMO 1 CREDIT AGREEMENT   -23-   

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(d) Notices, Etc. The Company shall notify Ormat by telephone (confirmed by
facsimile or other electronic transmission) of any voluntary or mandatory
prepayment hereunder, not later than 2:00 p.m., Pacific Time, three (3) Business
Days before the date of prepayment. Each such notice shall be irrevocable and
shall specify the prepayment date, the principal amount of the Advance Amount or
portion thereof to be prepaid and, in the case of a mandatory prepayment, a
reasonably detailed calculation of the amount of such prepayment. All voluntary
or mandatory prepayments under this Section 2.04 shall be made by the Company
(or the Depositary) to Ormat and shall be accompanied by accrued interest on the
principal amount being prepaid to but excluding the date of payment. Upon the
receipt or deemed receipt of any prepayment (whether voluntary, mandatory or
deemed), Ormat shall reflect the same in its accounts and records as
contemplated by Section 2.02 and deliver to the Company a revised calculation of
the Advance Amount for the review of the Company in accordance with
Section 2.01.

Section 2.05 Interest

(a) Advance Amount. The Advance Amount shall bear interest from the first date
of the Interest Payment Period until such amount is paid in its entirety at a
rate per annum equal to nine percent (9.0%).

(b) Default Interest. Notwithstanding the foregoing, if any principal of or
interest on the Advance Amount or any fee or other amount payable by the Company
hereunder is not paid when due, whether at stated maturity, upon acceleration,
by mandatory prepayment or otherwise, such overdue amount shall bear interest,
after as well as before judgment, at a rate per annum equal to nine and one half
percent (9.5%).

(c) Payment of Interest. Accrued interest on the Advance Amount shall be payable
in arrears on each Funding Date following the Interest Payment Date and the
Maturity Date; provided that (i) interest accrued pursuant to paragraph (b) of
this Section shall be payable on demand, and (ii) in the event of any repayment
or prepayment of the Advance Amount, accrued interest on the principal amount
repaid or prepaid shall be payable on the date of such repayment or prepayment.

(d) Computation. All interest hereunder shall be computed on the basis of a year
of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The computation of
interest shall be determined by Ormat. The Company may dispute such computation
by providing written notice to Ormat within five Business Days of receipt
thereof. Any such dispute shall be resolved pursuant to the dispute resolution
provisions of the EPC Contract as if such dispute resolutions provisions were
set forth in full in this Agreement (with appropriate conforming of defined
terms)

Section 2.06 Taxes

(a) Payments Free of Taxes. Any and all payments by or on account of any
obligation of the Company hereunder or under any other Financing Document shall
be made free and clear of and without deduction for any Taxes other than
deductions required by Applicable Law; provided that if the Company shall be
required by law to deduct any Taxes from such

 

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payments, then (i) the sum payable shall be increased by the additional amount,
if any, so that, after making all required deductions (including deductions
applicable to any additional amount payable under this Section) for any
Indemnified Taxes, Ormat receives an amount equal to the sum it would have
received had no such required deductions for Indemnified Taxes been made,
(ii) the Company shall make or shall cause to be made such deductions and
(iii) the Company shall pay or shall cause to be paid the full amount deducted
to the relevant Governmental Authority in accordance with Applicable Law.

(b) Payment of Other Taxes by the Company. In addition, the Company shall pay or
cause to be paid any Other Taxes to the relevant Governmental Authority in
accordance with Applicable Law.

(c) Indemnification by the Company. The Company shall indemnify or cause to be
indemnified Ormat, within thirty (30) days after written demand therefor, for
the full amount of any Indemnified Taxes (plus any Taxes imposed or asserted on
or attributable to amounts payable under this Section) paid by Ormat and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto (other than any penalties, interest and expenses resulting solely from
the gross negligence or willful misconduct of Ormat), whether or not such
Indemnified Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. The amount of such payment or liability and the
denomination thereof as set forth in reasonable detail in a certificate
delivered to the Company by Ormat shall be conclusive absent manifest error. In
the event that the Company disputes the amount of any claim by Ormat for
Indemnified Taxes, it shall have the right to place such amount in escrow
pending the resolution of the dispute, subject to the Company’s agreement to pay
any interest or penalties associated with a delay in payment of any such
Indemnified Taxes.

(d) Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Company to a Governmental Authority, the
Company shall deliver or cause to be delivered to Ormat the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment satisfactory to Ormat, acting reasonably.

(e) Forms. To the extent that Ormat or the beneficial owner of any Advance
Amount is entitled to an exemption from or a reduction of United States federal
withholding tax with respect to payments under this Agreement, Ormat shall
deliver to the Company, at the time or times reasonably requested by the
Company, such properly completed and executed documentation prescribed by
Applicable Law as will permit such payments to be made without withholding or at
a reduced rate (including IRS Form W-8BEN, W-8ECI or W-9) (or, in each case, any
successor form and, in each case, attached to an IRS Form W-8IMY if required)
and, in the case of a claim for an exemption under the “portfolio interest
exemption,” a statement certifying (i) that it is not a 10-percent shareholder
(within the meaning of Section 871(h)(3)(B) of the Code) of the Company,
(ii) that it is not a controlled foreign corporation related to the Company
(within the meaning of Section 864(d)(4) of the Code), and (iii) that it is not
a “bank” as such term is used in Section 881(c)(3)(A) of the Code).

(f) If the Company determines that a reasonable basis exists for contesting a
Tax, Ormat shall cooperate with the Company in challenging such Tax at the
Company’s expense;

 

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provided, however, that Ormat shall not be required to take any action hereunder
which, in the reasonable discretion of Ormat would cause Ormat to suffer a
material economic, legal, regulatory or other disadvantage.

(g) If Ormat receives a refund of any Indemnified Taxes as to which it has been
indemnified by the Company or of any Taxes or Other Taxes that the Company has
paid or paid additional amounts on account of under this Section 2.06, it shall
pay over such refund to the Company within five Business Days of receipt, net of
all of its reasonable out-of-pocket expenses (including Taxes with respect to
such refund) and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided, that the Company,
upon the request of Ormat, agrees to repay as soon as reasonably practicable the
amount paid over to the Company (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to Ormat in the event Ormat is
required to repay such refund to such Governmental Authority.

(h) Nothing herein contained (other than the restrictions on transfer and
assignment set forth in Section 8.04) shall (x) interfere with the right of
Ormat to arrange its affairs (tax or otherwise) in whatever manner it thinks fit
and, in particular, Ormat shall not be obligated (other than as set forth in
clauses (f) and (g) above) to investigate or claim any relief, credit, remission
or repayment available to it or the extent, order and manner of any claim or
(y) other than as set forth in clause (e) and (g) above, oblige Ormat to
disclose any information relating to its affairs (tax or otherwise) or any
computations in respect of Taxes.

Section 2.07 Payments by the Company

Unless otherwise specified, the Company shall make each payment required to be
made by it hereunder (whether of principal or interest or under Section 2.06, or
otherwise) or under any other Financing Document (except to the extent otherwise
provided therein) prior to 2:00 p.m., Pacific Time, on the date when due, by
wire transfer of immediately available funds, without set-off or counterclaim.
Any amounts received after such time on any date may, in the discretion of
Ormat, be deemed to have been received on the next succeeding Business Day for
purposes of calculating interest thereon. All such payments shall be made to the
account of Ormat most recently designated by Ormat for such purpose by written
notice to the Company. If any payment hereunder shall be due on a day that is
not a Business Day, the date for payment shall be extended to the next
succeeding Business Day and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All amounts
owing under this Agreement or under any other Financing Document are payable in
Dollars.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Ormat that:

Section 3.01 Due Organization, Power, Etc.

The Company (a) is a limited liability company, duly organized, validly existing
and in good standing under the laws of Delaware; (b) has all requisite limited
liability company power and authority to own or lease and operate its Properties
and to carry on its business as now

 

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conducted and as proposed to be conducted and to enter into and perform its
obligations under the Transaction Documents to which it is a party; and (c) is
duly qualified to do business and is in good standing in each jurisdiction where
necessary in light of its business as now conducted and as proposed to be
conducted (including performance of the Material Project Documents to which it
is party); except, in the case of clause (c), where the failure to be so
qualified could not reasonably be expected to result in a Material Adverse
Effect.

Section 3.02 Due Authorization, Etc.

The Company has taken all necessary limited liability company action to
authorize the execution, delivery and performance by it of each of the Financing
Documents to which it is a party. Each Financing Document to which the Company
is a party has been duly executed and delivered by the Company and is in full
force and effect and constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its respective
terms, except as enforcement may be limited (i) by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting creditors’ rights generally and (ii) by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

Section 3.03 No Conflict

The execution, delivery and performance by the Company of this Agreement and
each of the other Financing Documents to which it is a party and all other
documents and instruments to be executed and delivered hereunder and thereunder,
as well as the consummation of the transactions contemplated herein and therein,
do not and will not (i) conflict with the limited liability company agreement or
other organizational documents of the Company, (ii) conflict with or result in a
breach of, or constitute a default under, any material indenture, loan
agreement, mortgage, deed of trust or other material instrument or agreement to
which the Company is a party or by which either it or the Property or assets of
the Company are subject, (iii) conflict with or result in a breach of, or
constitute a default in any material respect under, any Applicable Law, or
(iv) result in the creation or imposition of any Lien (other than a Permitted
Lien) upon any of the Property or assets of the Company or the Sponsor.

Section 3.04 Approvals, Etc.

(a) All Authorizations (other than Contractor Acquired Permits) required to be
obtained by the Company and necessary for (i) the Development of the Generating
Unit in accordance with the Construction Schedule (as defined in the EPC
Contract), (ii) the execution, delivery and performance of the Transaction
Documents to which it is a party and (iii) the carrying on of the business of
the Company as it is presently carried on and is contemplated to be carried on,
(A) are set forth on Schedule 3.04 and (B) as of the Effective Date, except as
set forth in Part II of Schedule 3.04, have been duly obtained. As of the
Effective Date, the Company is not aware of any Authorization (other than
Contractor Acquired Permits) required to be obtained by the Company and
necessary as contemplated by clauses (i), (ii) and (iii) of the preceding
sentence that is not set forth on Schedule 3.04.

 

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(b) (i) As of the Effective Date, and other than in respect of Contractor
Acquired Permits, those Authorizations listed on Part II of Schedule 3.04 are
not obtainable or required to be obtained given the current state of Development
of the Generating Unit or are not customarily obtained until a later stage of
Development of the Project has commenced and (ii) on any other date, those
Authorizations listed on Part II of Schedule 3.04 that have not then been
obtained by such date are not obtainable or required to be obtained given the
current state of the Project and the Development of the Generating Unit and are
not customarily obtained until a later stage. The Company reasonably believes
that those Authorizations listed on Part II of Schedule 3.04 will be obtained in
due course at, or prior to, the time when such Authorization becomes required
for the Development of the Generating Unit under Applicable Law.

(c) Except as set forth in Schedule 3.04, each of the Authorizations obtained as
of the date of the representation set forth in this Section 3.04 is given has
been duly obtained, was validly issued, is in full force and effect, is not
subject to appeal, is held by the Company, is not subject to any current legal
proceeding to which the Company or the Member is a party or which seeks any
material adverse modification or revocation and is free from any unsatisfied
condition (required to be satisfied as of such date) the failure of which to
satisfy could reasonably be expected to have a Material Adverse Effect and has
not been modified, amended or supplemented in a manner that could reasonably be
expected to have a Material Adverse Effect.

Section 3.05 Financial Statements; No Material Adverse Effect

(a) The financial statements of the Company furnished to Ormat pursuant to
Section 4.01(e) are true, complete and correct and fairly present in all
material respects the financial condition and the results of operations of the
Company as of the date thereof, all in accordance with GAAP (subject to the
absence of footnotes, normal year-end adjustments and the effect of accounting
adjustments resulting from the transactions contemplated by the Plan of
Reorganization).

(b) Other than as set forth in Part I of Schedule 3.05, as of the date of the
relevant balance sheet included in such financial statements, the Company had no
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
or any other liabilities or obligations of a nature required to be reflected in
a balance sheet for the period to which such financial statements relate that
were not disclosed in such balance sheet and, either individually or in the
aggregate would be material to the Company; provided that no representation is
made as to the effect of accounting changes resulting from the transactions
contemplated by the Plan of Reorganization. Notwithstanding the foregoing, as of
the Effective Date the liabilities of the Company set forth on the line items
“Note payable”, and “Due to affiliates” on the financial statements of the
Company dated August 31, 2011 have been discharged and no longer constitute
liabilities of the Company.

(c) Set forth in Part II of Schedule 3.05 are all of the contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments or any other liabilities or
obligations of a nature that would be required to be reflected in a balance
sheet of the Company as described above if such balance sheet were dated as of
the Effective Date.

 

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(d) No event or circumstance has occurred and is continuing since
September 30, 2011 that has had or could reasonably be expected to have a
Material Adverse Effect.

Section 3.06 Litigation, Etc.

Except as set forth in Part I of Schedule 3.06, there is no pending or, to the
knowledge of the Company, threatened (in writing) litigation, investigation,
action or proceeding, including any Environmental Claim, of or before any court,
arbitrator or Governmental Authority which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect. Except as set forth in
Part II of Schedule 3.06, there are no pending administrative claims against the
Company arising out of or pertaining to the bankruptcy that is the subject of
the Plan of Reorganization.

Section 3.07 Compliance with Laws and Obligations

The Company is in compliance with, and the Project is owned and the Generating
Unit is being Developed in compliance with, all laws, regulations and orders of
any Governmental Authority applicable to its Property and all Authorizations,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

Section 3.08 Environmental Laws

(a) All Property (including underlying groundwater) owned, leased or used by the
Company has been, and continues to be in compliance with all Environmental Laws,
except to the extent that any failure to be in compliance with Environmental
Laws has not had and could not reasonably be expected to have a Material Adverse
Effect; (b) the Company and its Properties are and have at all times been in
compliance with Environmental Laws, except to the extent that any failure to be
in compliance with Environmental Laws has not had and could not reasonably be
expected to have a Material Adverse Effect; (c) there have been no Releases of
Hazardous Materials by the Company, its Affiliates, or their respective
employees or agents at, on or under the Property owned, leased or used by the
Company or at any other location, the costs to the Company of addressing which,
individually or in aggregate, have had or could reasonably be expected to have a
Material Adverse Effect; (d) the Company has been issued (except for any such
Authorizations set forth in Part II of Schedule 3.04 which are not required to
be issued as of the date this representation is made) and is in material
compliance with all Authorizations by any Governmental Authority relating to
environmental matters and required under Environmental Laws for its business and
operations, except to the extent that any failure so to be in compliance with
such Authorizations or Environmental Laws has not had and could not reasonably
be expected to have a Material Adverse Effect; (e) the Company has not received
notice of any pending, or to the knowledge of the Company, threatened
Environmental Claim regarding any Property owned, leased or used by the Company
or any of the Company’s businesses or operations, except to the extent that any
such Environmental Claim has not had and could not reasonably be expected to
have a Material Adverse Effect; and (f) no conditions exist at, on or under any
Property currently or formerly owned, leased or used by the Company which have
given or could reasonably be expected to give rise to liability of the Company
under

 

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Environmental Laws, which liability has had or could reasonably be expected to
have a Material Adverse Effect. As of the Effective Date, there have been no
environmental investigations conducted, or studies, audits, reviews or other
analyses conducted within the last two years which are in the possession of the
Company in relation to the Project which have not been provided to Ormat.

Section 3.09 Material Project Documents

Copies of each of the Material Project Documents in effect on the date this
representation is made, and any amendments or modifications thereto, have been
provided to Ormat and such Material Project Documents provided to Ormat are, or
when delivered will be, true and complete copies of such documents. No
termination event has occurred under any Material Project Document and each
Material Project Document is in full force and effect, and the Company has not
given or received any notice of any default, expiration (except scheduled
expiration in accordance with the terms of the relevant Material Project
Documents), breach or termination pursuant to any Material Project Document that
could reasonably be expected to result in a Material Adverse Effect. The Company
is in compliance in all material respects with all of the terms of the Material
Project Documents to which it is a party. The Company is not, and to the
Company’s knowledge each counterparty to any Material Project Document is not,
in default in any material respect of any of its obligations under any Material
Project Document that has been executed and delivered as of the date this
representation is given or restated.

Section 3.10 Properties

(a) The Real Property and Water Rights listed on Appendix B is a complete and
correct list of all material Real Property interests and all material Water
Rights interests held by the Company as of the Effective Date. The Company has a
legal, valid and subsisting leasehold estate, easement estate, right of way,
permit, revocable consent or license in the Site, in each case free and clear of
all Liens other than any Permitted Liens, and enjoys peaceful and undisturbed
possession of all Properties and Water Rights that are necessary for the
Development of the Generating Unit and the operation of the Project.

(b) (i) The Company owns, or is licensed to use, all trademarks, tradenames,
copyrights, patents and other intellectual property necessary for its business,
in each case, as to which the failure of the Company to so own or be licensed
could reasonably be expected to have a Material Adverse Effect, and (ii) the use
thereof by the Company does not infringe upon the rights of any other Person,
except for any such infringements that, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect.

(c) Except as set forth on Schedule 3.10, the Company has obtained all necessary
licenses, easements, rights of way and access rights that are required for the
Development of the Project and the Company enjoys peaceful and undisturbed
possession of the Project.

Section 3.11 Taxes

Except as set forth on Schedule 3.11, the Company has filed, or caused to be
filed, all material federal, state, local and other tax returns required to be
filed, and has paid, or caused to be paid, all material taxes, fees, charges and
assessments due thereon, other than such taxes the payment of which are subject
to a good faith contest and for which adequate reserves have been established in
accordance with GAAP.

 

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Section 3.12 Full Disclosure

As of the Effective Date, neither any Financing Document nor any other
information delivered in connection with the Financing Documents provided by the
Sponsor, the Member or the Company to Ormat, taken as a whole, contains any
misstatement of material fact or omitted or omits to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, taken as a whole, not misleading in any material respects
as of the date such information is dated or made.

Section 3.13 Solvency and Bankruptcy

The Company is, and, upon the incurrence of the obligations under the Financing
Documents and immediately after giving effect to the transactions contemplated
herein, will be, Solvent. As of the Effective Date, the Sponsor, the Member and
the Company are not subject to any insolvency proceedings and the Plan of
Reorganization was approved by the applicable Governmental Authority. Under the
Plan of Reorganization, the Company has assumed only those Project Documents
described in the Plan of Reorganization and there are no other contracts or
obligations of the Company applicable to the Project that are in effect as of
the Effective Date.

Section 3.14 Regulatory Restrictions on Borrowing

(a) The Company is not an “investment company” or a company “controlled by” an
“investment company” within the meaning of the Investment Company Act of 1940 of
the United States, as amended.

(b) The Project is a “qualifying small power production facility” (a “QF”)
within the meaning of Section 3(17)(C) of the Federal Power Act (“FPA”), as
amended by the Public Utility Regulatory Policies Act of 1978, as amended, and
the rules and regulations promulgated thereunder by FERC, and the Company is
eligible for the regulatory exemptions set forth in 18 C.F.R. §§ 292.601(c)
(including eligibility for the exemption from regulation under Sections 205 and
206 of the FPA set forth in 292.601(c)(1)) and 292.602(b) and (c).

(c) The Company is not, nor will Ormat be (solely as a result of its execution,
delivery or performance of this Agreement or the other Financing Documents or
the transactions contemplated thereby, other than the exercise of remedies under
the Security Documents except to the extent that, following such exercise of
remedies, the Company will remain as the owner and operator of the Project),
subject to regulation: (i) respecting the rates of electric utilities or
material financial and organizational regulation of electric utilities under the
FPA or the Applicable Laws of the State of Utah other than, solely with respect
to Ormat’s exercise of remedies under the Security Documents, Section 203 of the
FPA; or (ii) otherwise as a gas or other regulated utility, however denominated,
under Applicable Laws of the United States of America or the State of Utah.

 

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Section 3.15 Security Documents

The provisions of the Security Documents that have been delivered on or prior to
the date this representation is made are (and each other Security Document to
which the Company will be a party when delivered thereafter will be), effective
to create, in favor of Ormat, a legal, valid and enforceable first priority Lien
(subject to Permitted Liens) on and security interest in all of the Collateral
purported to be covered thereby, and all necessary recordings and filings have
been (or, in the case of such other Security Documents, will be) made in all
necessary public offices (except in the case of the Mortgage, for which adequate
arrangements for recording satisfactory to Ormat shall have been made), and all
other necessary and appropriate action has been (or, in the case of such other
Security Documents, will be) taken, so that the security interest created by
each Security Document is a perfected Lien on and security interest in all
right, title and interest of the Company in the Collateral purported to be
covered thereby, prior and superior to all other Liens other than Permitted
Liens and all necessary and appropriate consents to the creation, perfection and
enforcement of such Liens have been (or, in the case of such other Security
Documents, will be) obtained from each of the parties to the Material Project
Documents.

Section 3.16 ERISA

Neither the Company nor any ERISA Affiliate has (or, within the five year period
immediately preceding the date hereof had) sponsored, maintained, participated
in or incurred any liability in respect of any Plan or Multiemployer Plan.
Neither the Company nor any ERISA Affiliate has any contingent liability with
respect to any post retirement benefit under any “welfare plan” (as defined in
Section 3(1) of ERISA), other than liability for continuation coverage under
Part 6 of Title I of ERISA or similar state laws.

Section 3.17 Insurance

All insurance policies required to be obtained by the Company as of the
Effective Date pursuant to Appendix A and pursuant to the Material Project
Documents have been obtained and are in full force and effect and all premiums
then due and payable thereon have been paid in full.

Section 3.18 Conduct of Business

The Company is not engaged in any business other than the development,
construction, ownership, operation, maintenance and financing of the Project and
the activities related or incident thereto, and the Company has no material
obligations or material liabilities other than those arising out of or relating
to the conduct of such business or activities related or incidental thereto (to
the extent existing on the Effective Date).

Section 3.19 Margin Stock

The Company is not engaged principally, or as one of its principal activities,
in the business of extending credit for the purpose of purchasing or carrying
margin stock (as defined or used in Regulations T, U or X of the Board), and no
part of the proceeds of the Advance Amount or the Project Revenues will be used
by the Company to purchase or carry any such margin stock or to extend credit to
others for the purpose of purchasing or carrying any such margin stock or
otherwise in violation of Regulations T, U or X of the Board.

 

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Section 3.20 Members; Membership Interests and Related Matters

(a) As of the Effective Date, the Sponsor Controls the Company and owns directly
or indirectly 100% of the Capital Stock of the Company free and clear of all
Liens.

(b) The Company has no Subsidiaries.

Section 3.21 No Ownership by Disqualified Persons

As of the Effective Date, neither the Company nor any direct or indirect owner
of the Company or any holder of an equity or profits interest in the Company
(other than any such direct or indirect owner that is a direct or indirect owner
solely as a result of owning equity interests in an entity that is treated as a
C corporation for federal income tax purposes) is a Disqualified Person.

Section 3.22 Sufficiency of Material Project Documents

Assuming Ormat is performing all of its obligations under the EPC Contract, the
rights granted to the Company pursuant to the Material Project Documents,
together with the rights that the Company reasonably expects to be commercially
available when and as required, are sufficient to enable the Project to be
located, constructed, operated and routinely maintained as contemplated by the
Transaction Documents (subject at all times to the limitations set forth therein
or contemplated thereby) and provide adequate ingress and egress for any
reasonable purpose in connection with the construction, operation and routine
maintenance of the Project, except as could reasonably be expected not to have a
Material Adverse Effect.

Section 3.23 No Force Majeure Event

No event, condition or circumstance has occurred and is continuing for which the
Company has given a notice of “force majeure,” and the Company has not received
such notice from any other Person that could reasonably be expected to entitle
the Company or such notifying Person to excuse, defer or suspend the performance
of any of the material obligations of the Company or such notifying Person under
any Transaction Document to which it is a party on the basis of “force majeure.”

Section 3.24 No Employees

The Company does not have, and never has had, any employees.

Section 3.25 No Lienable Work

In the 90 day period prior to the Effective Date, the Company has not, and no
other Person has, performed Preconstruction Services or Construction Services
(as defined in Utah Code Ann. § 38-1-1 et seq.) on or for the Real Property.

 

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ARTICLE IV

CONDITIONS

Section 4.01 Conditions Precedent to Effectiveness.

The effectiveness of the obligations of Ormat under this Agreement is
conditioned upon and subject to the receipt by Ormat (except as set forth
otherwise below) of each of the following documents, and the satisfaction of the
conditions precedent set forth below, each of which shall be, except as
expressly set forth below, in form and substance satisfactory to Ormat (unless
waived in accordance with Section 8.02):

(a) Execution of Financing Documents. This Agreement and all other Financing
Documents (other than the Consents to Assignment and the Accounts Agreement)
shall have been duly executed and delivered by the Persons intended to be
parties thereto and shall be in full force and effect.

(b) Security Documents. Ormat shall have received evidence satisfactory to Ormat
that the security interests in and to the Collateral intended to be created
under the Security Documents (other than the Consents to Assignment and the
Accounts Agreement) shall have been created in favor of Ormat and are fully
registered (if applicable), perfected and in full force and effect (except in
the case of the Mortgage, for which adequate arrangements, satisfactory to
Ormat, for recording in the appropriate real estate recording office shall have
been made).

(c) Charter Documents. The following documents, in form and substance
satisfactory to Ormat, in each case certified as indicated below:

(i) a copy of the certificate of incorporation, certificate of formation,
charter or other organizational documents, together with any amendments thereto,
of the Company and the Member, certified by the Secretary of State of its
jurisdiction of organization and a certificate as to the good standing of and
payment of franchise taxes by the Company and the Member from such Secretary of
State, in each case dated no more than 10 Business Days prior to the Effective
Date; and

(ii) a certificate of the Secretary, an Assistant Secretary, member or partner
(as applicable) of the Company and the Member dated as of the Effective Date,
certifying:

(A) that attached to such certificate is a true and complete copy of its
by-laws, limited liability company operating agreement or other governing
document of such Person, as applicable;

(B) that attached to such certificate is a true and complete copy of resolutions
duly adopted by the board of directors, manager(s), member(s), partner(s) or
other authorized governing body of such Person, authorizing the execution,
delivery and performance of each of the Financing Documents and the Project
Documents to which such Person is or is intended to be a party, and that such
resolutions have not been modified, rescinded or amended and are in full force
and effect;

 

THERMO 1 CREDIT AGREEMENT   -34-   

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(C) that the certificate of incorporation, certificate of formation, charter or
other organizational documents (as the case may be) of such Person has not been
amended since the date of the certification furnished pursuant to clause (i)
above;

(D) as to the incumbency and specimen signature of each officer, member or
partner (as applicable) of such Person executing the Financing Documents to
which such Person is or is intended to be a party (and Ormat may conclusively
rely on such certificate until it receives notice in writing from such Person);
and

(E) as to the qualification of such Person to do business in each jurisdiction
where its operations require qualification to do business and as to the absence
of any pending proceeding for the dissolution or liquidation of such Person.

(d) Company Certificate. An Officer’s Certificate (the statements made in which
certificate shall be true on and as of the Effective Date) from the Company
certifying as to: (i) the representations and warranties made by the Company in
this Agreement and the other Financing Documents being true and correct when
made and as of the Effective Date (except to the extent such representations and
warranties expressly relating to an earlier date, in which case such
representations and warranties being true and correct as of such earlier date);
(ii) the absence of any event occurring and continuing that constitutes a
Default or an Event of Default; and (iii) the satisfaction (or waiver by Ormat)
of all conditions precedent to the Effective Date in accordance with the terms
and conditions hereof.

(e) Financial Statements. The respective balance sheets of the Company and
Sponsor for the fiscal quarter ending August 31, 2011, and the related
statements of earnings for such quarter and for the year to date, in reasonable
detail and prepared in accordance with GAAP, subject to the absence of
footnotes, year-end adjustments and the effect of accounting adjustments
resulting from the transactions contemplated by the Plan of Reorganization, it
being understood that such financial statements do not reflect the transactions
contemplated by the Plan of Reorganization.

(f) Opinion of Counsel. The following opinions addressed to Ormat, in
substantially the form attached as Schedule 4.01(f):

(i) Hunton & Williams, LLP, special New York counsel to the Company;

(ii) Cohne, Rappaport & Segal, P.C., special Utah counsel to the Company; and

(iii) Hunton & Williams, LLP, special bankruptcy counsel to the Company and the
Sponsor.

(g) Insurance. The Company shall have obtained the insurance described on
Appendix A to the extent then required and such insurance shall be in full force
and effect, and the Company shall have furnished Ormat with certificates signed
by the insurer or an agent

 

THERMO 1 CREDIT AGREEMENT   -35-   

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authorized to bind the insurer, together with loss payee endorsements in favor
of Ormat evidencing such insurance required pursuant to Appendix A, identifying
underwriters, the type of insurance, the insurance limits and the policy terms,
and stating that such insurance (x) is, in each case, in full force and effect
and (y) complies with Section 5.06 and that all premiums then due and payable on
such insurance have been paid.

(h) Title. All documents necessary to establish that the Company (i) holds a fee
simple interests or a legal, valid and subsisting leasehold estate, easement
estate, right of way, permit, revocable consent or license in the Site free and
clear of all Liens other than any Permitted Liens, and (ii) has obtained all
necessary Water Rights, geothermal leases, real estate licenses, easements,
rights of way, access rights, utility and other services then required for the
Development of the Generating Unit, including any instruments or memoranda of
the Real Estate Documents, including all amendments thereto, evidencing such
interests in the Site to be duly recorded with all required Governmental
Authorities in accordance with applicable law.

(i) Project Documents.

(i) True, correct and complete copies of each Project Document in existence as
of the Effective Date, and each such Project Document shall be in full force and
effect and enforceable against each party thereto as of the Effective Date; and

(ii) A certificate of an Authorized Representative of the Company certifying
that (i) no material default or event of default exists under any Material
Project Document and (ii) all conditions precedent to the performance of the
Company under each Material Project Document have been satisfied (other than
conditions precedent that are not required to be satisfied until a later date).

(j) Lien Searches. Results of a recent search of all effective UCC financing
statements and fixture filings and all judgment and tax lien filings which have
been made with respect to any personal or mixed property of the Company and the
Member, together with copies of all such filings disclosed by such search, and
UCC termination statements for filing in all applicable jurisdictions as may be
necessary to terminate any effective UCC financing statements or fixture filings
disclosed in such search (other than any such financing statements or fixture
filings in respect of Permitted Liens).

(k) Authorizations.

(i) True, complete and correct copies (or other evidence satisfactory to Ormat)
of each Authorization required to be obtained by the Company as of such date and
listed on Part I of Schedule 3.04.

(ii) The Company shall have duly obtained or been assigned and there shall be in
full force and effect in the name of the Company, and not subject to any current
legal proceeding or to any unsatisfied condition that could reasonably be
expected to allow material adverse modification or revocation of, and all
applicable appeal periods shall have expired with respect to, the Authorizations
listed on Part I of Schedule 3.04.

 

THERMO 1 CREDIT AGREEMENT   -36-   

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(l) Filings. All filings, registrations, recordings and other actions required
to be taken (including filing UCC-1 financing statements) as of the Effective
Date, and all filing, recordation, notarization and other similar fees and all
recording, stamp and other taxes and expenses related to such filings,
registrations and recordings required to be paid, for the consummation of the
transactions contemplated by the Transaction Documents shall have been taken and
paid, respectively (to the extent that the obligation to make payment then
exists), by the Company (except in the case of the Mortgage, for which adequate
arrangements for recording satisfactory to Ormat shall have been made).

(m) Agreed Model. Ormat shall have received the Agreed Model.

(n) Appointment of Process Agent. Delivery of evidence that the Company and the
Member have appointed an agent in the State of New York to receive service of
process, to the extent required, under the Financing Documents.

(o) Fees and Expenses. The Company shall have paid (and provided evidence
satisfactory to Ormat of payment of) all fees and expenses, if any, then due and
payable by the Company pursuant to the Financing Documents.

(p) Representations and Warranties. Each of the representations and warranties
of the Company and the Member contained in each of the Financing Documents shall
be true and correct when made and as of the Effective Date (except to the extent
such representations and warranties expressly relating to an earlier date, in
which case such representations and warranties shall be true and correct as of
such earlier date).

(q) No Litigation Regarding Financing Documents. No action, suit, investigation
or proceeding shall have been instituted nor shall governmental action be
threatened before any Governmental Authority, nor shall any order, judgment or
decree have been issued or proposed to be issued by any Governmental Authority
at the time of the Effective Date, to set aside, restrain, enjoin or prevent the
execution and delivery of the Financing Documents.

(r) Plan of Reorganization. Ormat shall have received a copy of the Plan of
Reorganization, as approved by the applicable bankruptcy court and then in
effect, certified as true, complete and correct by an Authorized Representative
of the Company.

Section 4.02 Conditions Precedent to Phase Two Date.

The effectiveness of the obligations of Ormat under this Agreement arising on or
after the Phase Two Date is conditioned upon and subject to the receipt by Ormat
(except as set forth otherwise below) of each of the following documents, and
the satisfaction of the conditions precedent set forth below, each of which
shall be, except as expressly set forth below, in form and substance
satisfactory to Ormat (unless waived in accordance with Section 8.02):

(a) No Default. No Default or Event of Default has occurred and is continuing.

(b) No Litigation. No action, suit, investigation or proceeding shall have been
instituted nor shall governmental action be threatened before any Governmental
Authority, nor shall any order, judgment or decree have been issued or proposed
to be issued by any

 

THERMO 1 CREDIT AGREEMENT   -37-   

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Governmental Authority at the time of the Phase Two Date, to set aside,
restrain, enjoin or prevent the consummation of the Transaction Documents or any
of the transactions contemplated by the Transaction Documents.

(c) Representations and Warranties. Each of the representations and warranties
of the Company and the Member contained in each of the Financing Documents shall
be true and correct when made and as of the Phase Two Date (except to the extent
such representations and warranties expressly relating to an earlier date, in
which case such representations and warranties shall be true and correct as of
such earlier date).

(d) Consents to Assignment. Fully executed copies of Consents to Assignment from
the Project Parties (other than the Company) to the Project Documents listed on
Schedule 4.02(d) or, with respect to the Project Documents so specified on such
schedule, the Company shall have used commercially reasonable efforts to obtain
such copies.

(e) Survey. If required by the Title Company, a Survey of the Site acceptable to
the Title Company shall have been received by the Title Company.

(f) Title Insurance. A Title Policy with respect to the Mortgage, and copies of
all recorded documents listed as exceptions to title or otherwise referred to
therein, together with evidence that all title insurance premiums and expenses,
filing, recordation, subscription and inscription fees and all recording and
other similar fees, and all recording, stamp and other taxes and other expenses
related to the issuance of the Title Policy and such filings, registrations and
recordings necessary for the consummation of the transactions contemplated by
this Agreement and the other Financing Documents have been paid in full by or on
behalf of the Company.

(g) Permitted Local Operating Account. A control agreement in form and substance
reasonably satisfactory to Ormat or other arrangements reasonably satisfactory
to Ormat shall be in effect for the Permitted Local Operating Account.

(h) Accounts Agreement and Establishment of Accounts. The Accounts Agreement
shall have been duly executed and delivered by the Persons intended to be
parties thereto and shall be in full force and effect and each of the Accounts
shall have been established pursuant to the Accounts Agreement.

(i) Opinion of Counsel. An opinion from New York counsel to the Company,
addressed to Ormat and covering the then-effective Accounts Agreement, in form
and substance reasonably satisfactory to Ormat.

(j) O&M Agreement. The Company and the Operator shall have entered into the O&M
Agreement, in form and substance reasonably acceptable to Ormat.

(k) Telecommunications Agreement. The Company shall have provided Ormat with
executed copies of the contracts and agreements between the Company and the
Project Parties thereto providing the Company with the right to use the fiber
optic or telecommunication lines or facilities currently used in connection with
the operation of the Project.

 

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Section 4.03 Conditions Precedent to Phase Three Date.

The effectiveness of the obligations of Ormat under this Agreement arising on or
after the Phase Three Date is conditioned upon and subject to the receipt by
Ormat (except as set forth otherwise below) of each of the following documents,
and the satisfaction of the conditions precedent set forth below, each of which
shall be, except as expressly set forth below, in form and substance
satisfactory to Ormat (unless waived in accordance with Section 8.02):

(a) No Default. No Default or Event of Default has occurred and is continuing.

(b) No Litigation. No action, suit, investigation or proceeding shall have been
instituted nor shall governmental action be threatened before any Governmental
Authority, nor shall any order, judgment or decree have been issued or proposed
to be issued by any Governmental Authority at the time of the Phase Three Date,
to set aside, restrain, enjoin or prevent the consummation of the Transaction
Documents or any of the transactions contemplated by the Transaction Documents.

(c) Representations and Warranties. Each of the representations and warranties
of the Company and the Member contained in each of the Financing Documents shall
be true and correct when made and as of the Phase Three Date (except to the
extent such representations and warranties expressly relating to an earlier
date, in which case such representations and warranties shall be true and
correct as of such earlier date).

(d) Company Certificate. An Officer’s Certificate (the statements made in which
certificate shall be true on and as of the Phase Three Date) from the Company
certifying as to: (i) the representations and warranties made by the Company in
this Agreement and the other Financing Documents being true and correct when
made and as of the Phase Three Date (except to the extent such representations
and warranties expressly relating to an earlier date, in which case such
representations and warranties being true and correct as of such earlier date);
(ii) the absence of any event occurring and continuing that constitutes a
Default or an Event of Default; and (iii) the satisfaction (or waiver by Ormat)
of all conditions precedent to the Phase Three Date in accordance with the terms
and conditions hereof.

(e) Consents to Assignment. Fully executed copies of Consents to Assignment from
the Project Parties (other than the Company) to the Project Documents listed on
Schedule 4.03(e).

(f) Environmental Site Assessment. Ormat shall have received a copy of a Phase 1
environmental site assessment (the “Phase 1 Report”) prepared by the
Environmental Consultant, covering the Site, which shall be in form and
substance reasonably satisfactory to Ormat, and either (i) reference Ormat as an
addressee or (ii) be accompanied by a letter addressed to Ormat permitting
reliance on such Phase 1 Report. If the Phase 1 Report identifies the presence
or likely presence of Hazardous Materials contamination on the Site, the Company
shall have identified a remediation plan and posted adequate security from a
Qualified Bank (as defined in the EPC Contract) or in an escrow account to cover
the costs of such remediation plan, each subject to the reasonable approval of
Ormat.

 

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ARTICLE V

AFFIRMATIVE COVENANTS

Until the Termination Date, the Company shall be subject to the following
covenants:

Section 5.01 Limited Liability Company Existence; Etc.

The Company shall at all times preserve and maintain in full force and effect
(a) its existence as a limited liability company, in good standing under the
laws of its jurisdiction of organization, and (b) its qualification to do
business and its good standing in the State of Utah and each other jurisdiction
where necessary in light of its business as now conducted and as proposed to be
conducted (including performance of the Material Project Documents to which it
is party); except, in the case of clause (b) where the failure to be so
qualified could not reasonably be expected to result in a Material Adverse
Effect.

Section 5.02 Conduct of Business

The Company shall, or shall enforce its rights under the EPC Contract to cause
Ormat to, construct and complete the Project in all material respects in
accordance with (i) the scope of work and other specifications set forth in the
Material Project Documents, (ii) Prudent Generator Practices and (iii) all
Applicable Laws.

Section 5.03 Compliance with Laws and Obligations

The Company shall comply with all Environmental Laws and occupational health and
safety regulations and all other Applicable Laws and Authorizations, except, in
each case, where the failure to do so, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect.

Section 5.04 Governmental Authorizations

The Company shall: (a) obtain and maintain in full force and effect (or where
appropriate, promptly renew in a timely manner), or cause to be obtained and
maintained in full force and effect all material Authorizations (including all
Authorizations required by Environmental Law and all Authorizations set forth in
Schedule 3.04 of this Agreement) required of the Company or the Operator by any
Governmental Authority under any Applicable Law for the Development of the
Generating Unit, in each case, at or before the time the relevant Authorization
becomes necessary for such purposes and (b) preserve and maintain all other
Authorizations required of the Company or the Operator by any Governmental
Authority for the operation of the Project.

Section 5.05 Maintenance of Title

(a) Except as set forth in Section 5.05(b), the Company shall maintain (i) good
title to the Property owned by the Company free and clear of Liens, other than
Permitted Liens; (ii) legal and valid and subsisting leasehold interests to the
Properties leased by the Company (including the Site), free and clear of Liens,
other than Permitted Liens; and (iii) legal and valid possessory rights to the
Properties possessed and not otherwise held in fee or leased by the

 

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Company. Without limiting the foregoing, the Company shall take all actions
required under the Water Rights grants and applicable law to timely preserve,
prove and perfect such Water Rights that are material to the Development of the
Generating Unit and the operation of the Project.

(b) Ormat and the Company recognize and agree that the Company has requested
that the portion of the Collateral indicated in Schedule 5.05(b) (such Property,
collectively, the “Specified Collateral”) be distributed to the Member and
released from the Lien of the Security Documents. The Company represents and
warrants to Ormat that the Specified Collateral is not required for or material
to the Development of the Generating Unit or the operation of the Project. Ormat
shall have the right, within 60 days after the Effective Date, to provide
written notice to the Company that it has determined, acting reasonably, that
all or a portion of the Specified Collateral is required for or material to the
Development of the Generating Unit or the operation of the Project; for the
avoidance of doubt, Ormat reaching a different conclusion than the
representation and warranty set forth in the preceding sentence shall not
constitute a Default or Event of Default under this Agreement. If Ormat does not
provide such notice within such 60 day period, the Company may distribute such
Specified Collateral to the Member on an “as is, where is” basis with no
recourse to the Company, and the Liens of Ormat on the Specified Collateral
shall be automatically released. If Ormat delivers such notice within such
period, Ormat shall not be required to release its Lien on the portion of the
Specified Collateral that it has specified in such notice as being required for
or material to the Development of the Generating Unit or the operation of the
Project; provided that, with respect to any portion of the Specified Collateral
that is not so specified, the Company may distribute such portion of the
Specified Collateral to the Member on an “as is, where is” basis with no
recourse to the Company, and the Liens of Ormat on such portion of the Specified
Collateral shall be automatically released. At the expense of the Company, Ormat
shall take such steps as are reasonably necessary to release all Liens of, by or
through Ormat on the Specified Collateral released in accordance with this
Section 5.05(b). When any Specified Collateral has been released from the Liens
of Ormat pursuant to this Section 5.05(b), such released Specified Collateral
shall not be considered Property of the Company or subject to the terms of this
Agreement or the Security Documents.

Section 5.06 Maintenance of Property; Insurance

(a) Subject to Section 5.05(b), the Company shall preserve and maintain the
Project and all of its material Properties, owned, leased or otherwise
possessed, that are necessary for the conduct of its business in good working
order and condition (ordinary wear and tear excepted).

(b) The Company shall maintain (or cause to be maintained) the insurance
required to be maintained pursuant to Appendix A and any additional insurance
(if any) required to be maintained by it under the Material Project Documents.
If at any time any of the required insurance (including the limits or
deductibles thereof) shall no longer be available on commercially reasonable
terms, the Company shall procure substitute insurance coverage reasonably
satisfactory to Ormat that is comparable to the required coverage and that is
available on commercially reasonable terms. All such insurance shall (i) provide
that no cancellation, material reduction in amount or material change in
coverage thereof shall be effective until at least thirty (30) days after
receipt by Ormat of written notice thereof, (ii) name Ormat as mortgagee (in the
case of property insurance) or additional insured on behalf of Ormat (in the
case of liability insurance) or loss payee (in the case of property insurance),
as applicable and (iii) be reasonably satisfactory in all other respects to
Ormat.

 

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(c) The Company shall promptly notify Ormat of any Event of Loss which is
believed will exceed One Hundred Fifty Thousand Dollars ($150,000) individually,
or Three Hundred Thousand Dollars ($300,000) in the aggregate. The Company shall
promptly notify Ormat of each written notice received by it with respect to the
cancellation of, adverse change in, or default under, any insurance policy
required to be maintained in accordance with this Section 5.06.

(d) No provision of this Section 5.06 or any provision of this Agreement or any
other Financing Document or Project Document shall impose on Ormat any duty or
obligation to verify the existence or adequacy of the insurance coverage
maintained by the Company, nor shall Ormat be responsible for any
representations or warranties made by or on behalf of the Company to any
insurance company or underwriter.

Section 5.07 Keeping of Books

The Company shall maintain an accounting and control system, management
information system and books of account and other records, which together
adequately reflect truly and fairly the financial condition of the Company and
the results of its operations in accordance with GAAP (subject, in the case of
unaudited financial statements to changes resulting from audit and usual
year-end adjustments and the absence of footnotes) and all Applicable Laws.

Section 5.08 Access to Records

(a) The Company shall permit (i) officers and designated representatives of
Ormat to visit and inspect the Properties of the Company and (ii) officers and
designated representatives of Ormat to examine and make copies of the books of
record and accounts of the Company and discuss the affairs, finances and
accounts of the Company with the Company’s officers, employees or agents
(subject to reasonable requirements of safety and confidentiality, including
requirements imposed by Applicable Law or by contract), in each case, with
reasonable advance notice to the Company and during normal business hours of the
Company and as often as reasonably requested.

(b) The reasonable costs and expenses of each such visit by Ormat shall be borne
by Ormat.

Section 5.09 Payment of Utilities, Taxes, Etc.

The Company shall pay and discharge, before the same shall become delinquent all
material obligations as they become due including: (a) all utility charges,
(b) all taxes, assessments and governmental charges or levies imposed upon it or
upon its Property to the extent required under the Transaction Documents to
which the Company is a party or under Applicable Law and (c) all lawful claims
that, if unpaid, could reasonably be expected to become a Lien upon its
Property; provided, however, that in each case the Company shall not be required
to pay or discharge any tax, assessment, charge or claim that is being contested
in good faith and as to which (i) adequate bonds or reserves are maintained with
respect to the contested items in

 

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accordance with GAAP, (ii) during the period of such contest the enforcement of
any contested item is effectively stayed and (iii) such contest would not
reasonably be expected to result in the sale, forfeiture or loss of any material
part of the Collateral.

Section 5.10 Reporting Requirements

The Company shall furnish to Ormat copies of the following financial statements,
reports, notices and other information (one copy in electronic format being
sufficient):

(a) as soon as available and in any event within forty five (45) days after the
end of each quarterly fiscal period of each fiscal year of the Company (except
for the fourth fiscal quarter of such fiscal year), the balance sheet as at the
end of such period, and the related statements of earnings and cash flows for
such quarter and the year to date, in reasonable detail and prepared in
accordance with GAAP, subject to the absence of footnotes and normal recurring
adjustments;

(b) as soon as available and in any event within ninety (90) days after the end
of each fiscal year of the Company beginning with the end of fiscal year 2011,
annual financial statements, which annual financial statements shall include a
balance sheet as at the end of such fiscal year and the related statements of
income, shareholders’ equity and cash flows for the fiscal year then ended, all
presented in reasonable detail and all prepared in accordance with GAAP, subject
to the absence of footnotes and normal recurring year-end adjustments; provided
that, at the written request of Ormat, the Company shall, at the expense of
Ormat, (i) engage a reputable firm of independent public accountants reasonably
acceptable to Ormat (the “Approved Accountant”) to perform an audit of such
annual financial statements and to provide an opinion on such financial
statements, which opinion shall state that the examination by the Approved
Accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances and
(ii) request, but with no obligation to obtain, that the Approved Accountants
provide a certificate stating that they have reviewed this Agreement and stating
further whether, in making their audit, they have become aware of any condition
or event that then constitutes a Default or an Event of Default, and, if they
are aware that any such condition or event then exists, specifying the nature
and period of the existence thereof (it being understood that the Approved
Accountants shall not be liable, directly or indirectly, for any failure to
obtain knowledge of any Default or Event of Default unless the Approved
Accountants should have obtained knowledge thereof in making an audit in
accordance with generally accepted auditing standards or did not make such an
audit);

(c) a certificate of an Authorized Representative of the Company in
substantially the form of Exhibit A as of the last day of each fiscal quarter
and delivered simultaneous with the provision of financial statements pursuant
to clauses (a) and (b) above, (i) certifying that such financial statements
fairly present the financial condition and results of operations of the Company
on the dates and for the periods indicated in accordance with GAAP, subject, in
the case of interim financial statements, to the absence of footnotes and
normally recurring year-end adjustments, (ii) certifying that no Default or
Event of Default has occurred and is continuing, or if a Default or Event of
Default has occurred and is continuing, a statement as to the nature thereof,
and (iii) certifying, if applicable, as to compliance with the Cash Grant Terms
and Conditions and Cash Grant Guidance, until the end of the Recapture Period;

 

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(d) promptly, but in no event later than thirty (30) days after the receipt
thereof by the Company, copies of (i) all Authorizations obtained by the Company
after the Effective Date and (ii) any material amendment, supplement or other
modification to any Authorization received by the Company after the Effective
Date; and

(e) such other information with respect to the condition (financial or
otherwise), business, operations, performance, prospects of the Company or the
Project as Ormat may from time to time reasonably request.

Section 5.11 Notices

The Company shall, promptly (and in any event within five (5) Business Days)
upon an Authorized Representative of the Company obtaining knowledge thereof,
give notice to Ormat of:

(a) the filing or commencement of any litigation, investigation, action or
proceeding of or before any court, arbitrator or Governmental Authority against
or affecting the Company or the Project that, if adversely determined, could
reasonably be expected to result in liability in an aggregate amount exceeding
One Hundred Fifty Thousand Dollars ($150,000) ;

(b) the occurrence of a Default or an Event of Default or any material breach or
default under any Material Project Document;

(c) promptly upon obtaining knowledge of (i) any fact, circumstance, condition
or occurrence that could form the basis of an Environmental Claim by any Person
against, or with respect to the activities of, the Company or the Project,
(ii) any pending or threatened material Environmental Claim arising with respect
to the Project or the Company or (iii) any alleged violation of, non-compliance
with or liability or obligation under any Environmental Laws or any
environmental Authorization applicable to the Company or the Project or the
receipt of any material notice from any applicable Governmental Authority,
describing the same in reasonable detail and, together with such notice or as
soon thereafter as practicable, a description of the action that the Company has
taken or proposes to take with respect thereto and, thereafter, from time to
time provide such detailed reports with respect thereto as Ormat may reasonably
request the assertion of any Environmental Claim by any Person against, or with
respect to the activities of, the Company or the Project;

(d) the occurrence of any ERISA Event, together with a written notice setting
forth the nature thereof and the action, if any, that the Company or ERISA
Affiliate proposes to take with respect thereto;

(e) the occurrence of any force majeure event under any Material Project
Document or with respect to the Project, each such notice being in the form of
an Officer’s Certificate specifying the nature and expected duration of any such
event and what action the Company has taken, is taking or proposes to take with
respect thereto;

 

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(f) copies of (i) material notices received by the Company under the Material
Project Documents; (ii) notification of any amendment to any Material Project
Document and of any actual, proposed or written threat of, termination or
cancellation of any Material Project Document; and (iii) notification of the
entry into an Additional Project Document;

(g) any casualty, damage or loss, whether or not insured, through fire, theft,
other hazard or casualty, if such casualty, damage or loss affects the Project,
in excess of $150,000 for any one casualty or loss, or an aggregate of $300,000;

(h) the initiation of any Condemnation proceedings involving any of the
Properties;

(i) any other fact, event, circumstance, condition or development specific to
the Company or the Project which has, or could reasonably be expected to have, a
Material Adverse Effect;

(j) copies of any notice or demand and confirmation of the receipt of any Cash
Grant proceeds delivered to the Company or any Affiliate thereof by the U.S.
Department of the Treasury or such other Governmental Authority with respect to
a Cash Grant application, the Cash Grant Terms and Conditions and/or any
Recapture Liabilities;

(k) notice of any communications from FERC raising issues or requesting
information with respect to the continued eligibility of the Project’s QF status
and regulatory exemptions; and

(l) such other information with respect to the condition (financial or
otherwise), business, operations, performance, prospects of the Company or the
Project as Ormat may from time to time reasonably request.

Section 5.12 Cash Grant

The Company shall properly complete and file the Cash Grant application as soon
as reasonably possible after the Placed in Service Date (as defined in the Cash
Grant Guidance) and shall take all commercially reasonable actions necessary or
useful (including, if applicable, enforcement of the applicable provisions of
the EPC Contract against Ormat) to ensure receipt of Cash Grant Proceeds in the
full amount requested in such Cash Grant application. The Company shall promptly
provide to Ormat a copy of the filed Cash Grant application. The Company shall
request that the U.S. Department of the Treasury (or other applicable
Governmental Authority that actually pays the Cash Grant Proceeds) deliver the
Cash Grant Proceeds to the Depositary for deposit into the Prepayment Account.
The Company hereby appoints Ormat as the Company’s attorney-in-fact with full
power of substitution, which appointment is coupled with an interest and is
irrevocable prior to the full, final and indefeasible payment and performance of
the Secured Obligations, in the Company’s name or in Ormat’s name to file, but
only in the event that (i) as a result of the exercise of its remedies under and
in compliance with the terms of the Security Documents, Ormat is then the owner
of the Project (directly or through ownership of the Capital Stock of the
Company) or (ii) the Company has failed to file the Cash Grant application
within thirty (30) days after the Placed in Service Date, to file any and all
applications in connection with the Cash Grant.

 

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Section 5.13 Further Assurances

The Company shall execute, acknowledge where appropriate, and deliver, and cause
to be executed, acknowledged where appropriate, and delivered, from time to time
promptly at the reasonable request of Ormat all such instruments and documents
as are necessary or appropriate to carry out the intent and purposes of the
Financing Documents, including any instruments and documents (including filings,
recordings or registrations required to be filed in respect of any Security
Document or assignment thereto) necessary to maintain, to the extent permitted
by Applicable Law, Ormat’s perfected security interest in the Collateral
(subject to Permitted Liens) to the extent and in the priority required pursuant
to the Security Documents. Without limitation of the foregoing, the Company
agrees to promptly cause to be filed and recorded in the appropriate real estate
recording office any amendment to the Mortgage or any new mortgage or deed of
trust (if such mortgage or deed of trust is in form and substance satisfactory
to Ormat) and cause the Title Company to issue an endorsement to the Title
Policy or a new Title Policy covering such amendment to the Mortgage or new
mortgage or deed of trust (if such mortgage or deed of trust is in form and
substance satisfactory to Ormat) upon receipt and execution of documentation
required to be delivered pursuant to the previous sentence, and pay all title
insurance premiums and expenses, all filing, recording and similar fees with
respect to such amendments and title endorsements.

Section 5.14 Maintenance of Regulatory Status

The Company shall take or cause to be taken all actions necessary to obtain and
maintain the QF status of and related regulatory exemptions for the Project.

Section 5.15 Accounts

The Company shall instruct each person remitting cash (including insurance
proceeds, liquidated damages, warranty payments, revenues and reimbursement of
expenses and other amounts pursuant to the Material Project Documents) to or for
the account of the Company to deposit such cash in the Accounts in accordance
with the Accounts Agreement; provided that Project Revenues shall not be
required to be deposited in the Accounts until the earlier to occur of
(x) Completion (under and as defined in the EPC Contract) and (y) an Event of
Default under this Agreement (it being understood and agreed that the Cash Grant
Proceeds shall be deposited into the Prepayment Account in accordance with
Section 2.04(b) and the Accounts Agreement).

Section 5.16 Budgets

(a) The Company shall, prior to Final Acceptance, adopt an Operating Budget for
the period to the conclusion of the then current fiscal year of the Company and,
no less than sixty (60) days in advance of the beginning of each fiscal year of
the Company thereafter, the Company shall adopt an Operating Budget for the
succeeding fiscal year. Each Operating Budget shall be prepared in good faith on
the basis of written assumptions stated therein which the Company believes to be
reasonable as to all factual and legal matters material to such estimates. Each
such Operating Budget shall be subject to the prior approval of Ormat, such
approval not to be unreasonably withheld or delayed. In the event that the costs
contained in a proposed Operating Budget vary from the Agreed Model for the
applicable fiscal year by more

 

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than 10%, then copies of such proposed Operating Budget together with a
comparison of the costs in the proposed Operating Budget with the costs set
forth in the Operating Budget for the current fiscal year and an explanation of
the reasons for any significant increase or decrease in any category shall be
furnished to Ormat in sufficient time to provide Ormat not less than thirty
(30) days to review and approve such Operating Budget. In the event that,
pursuant to the immediately preceding sentence, the Operating Budget is not
approved by Ormat (which approval shall not be unreasonably withheld or
delayed), 110% of the relevant costs set forth in the Agreed Model for such year
shall apply until the Operating Budget for the then current fiscal year is
approved. Copies of each final Operating Budget adopted shall be furnished to
Ormat promptly upon its adoption.

(b) Subject to Section 5.16(c), the Company shall comply with the applicable
Operating Budget. If during any fiscal year the Company reasonably projects that
the aggregate Operating and Maintenance Expenses for the Project for such fiscal
year will exceed 110% of the amount budgeted for Operating and Maintenance
Expenses in the then applicable Operating Budget, or if the aggregate Operating
and Maintenance Expenses for the Project incurred to date during such fiscal
year plus the Operating and Maintenance Expenses budgeted for the remainder of
such fiscal year in the then applicable Operating Budget exceed 110% of the
amount budgeted for Operating and Maintenance Expenses in the then applicable
Operating Budget or if any line item of Operating and Maintenance Expenses for
the Project in respect of payments to Affiliates of the Company incurred to date
during such fiscal year and budgeted for the remainder of such fiscal year
exceeds 110% of the budgeted amount thereof, then the Company shall prepare and
submit for the approval of Ormat, an amended Operating Budget for the remainder
of the then current annual period (and Ormat shall consider each such amendment
in good faith and shall not unreasonably withhold or delay its consent to the
approval of any such amendment); provided, that if such amended Operating Budget
is not approved by Ormat, then the existing Operating Budget prior to such
proposed amended Operating Budget shall apply. Notwithstanding the foregoing,
the Company may pay Operating and Maintenance Expenses in an amount not to
exceed 120% of Operating and Maintenance Expenses then set forth in the
applicable Operating Budget at any time at which a Force Majeure Event has
occurred and is continuing.

(c) In the event an expenditure in excess of amount permitted by clause
(b) above is necessary to comply with the Company’s obligations under the
Transaction Documents or to prevent material injury to a Person, damage to the
Property or criminal liability, the Company may make such expenditure without
the consent of Ormat; provided that the Company will notify Ormat thereof as
promptly thereafter as possible, with a reasonably detailed description of the
circumstances and amount of such expenditure, and the Company and Ormat shall
thereupon make such adjustments to the Operating Budget as shall be necessary,
in Ormat’s reasonable judgment, for the ongoing financial well-being of the
Company and the operation of the Project.

Section 5.17 Operating Statements and Reports

The Company shall furnish to Ormat, no later than thirty (30) days after the end
of each fiscal quarter of the Company, commencing with the close of the first
full fiscal quarter after the Final Acceptance, an operating statement of the
Project for such quarterly period and for the portion of the Company’s fiscal
year then ended, and, not more than forty five (45) days after the end of each
fiscal year of the Company, an operating statement of the Project for such
fiscal

 

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year, in each case, inclusive of the information set forth in Exhibit C. Such
operating statements shall correspond to the classifications and quarterly
periods of the current annual Operating Budget and shall show all Project
Revenues and all expenditures for Operating and Maintenance Expenses. The
quarterly operating statement shall include updated estimates of Operating and
Maintenance Expenses for the balance of the fiscal year to which the operating
statement relates. Both the quarterly and annual operating statements shall be
certified as complete and correct in all material respects by an Authorized
Representative of the Company. Each operating statement will be accompanied by a
statement of sources and uses of funds for the periods covered by it and a
discussion of the reason for any material variance from the amount budgeted
therefor in the relevant Operating Budget.

Section 5.18 Material Project Documents

The Company shall maintain in full force and effect, preserve, protect and
defend material rights under, and take all commercially reasonable actions
necessary to prevent termination or cancellation of and enforce against other
parties the material terms of each Material Project Document. The Company shall
comply with and perform and observe in all material respects all of its
covenants and obligations contained in the Material Project Documents. To the
extent not previously obtained, the Company shall use commercially reasonable
efforts to obtain (i) a Consent to Assignment from, and (ii) an opinion of
counsel to, each Project Party to a Material Project Agreement, in form and
substance satisfactory to Ormat, acting reasonably.

Section 5.19 Maintenance of Corporate Separateness

The Company shall:

(a) act solely in its name and through its duly authorized officers, managers or
agents in the conduct of its businesses;

(b) conduct its business solely in its own name, in a manner not misleading to
other Persons as to its identity;

(c) except for fees payable pursuant to the Financing Documents or to the extent
provided otherwise in the Accounts Agreement, provide for the payment of its own
operating expenses and liabilities from its own funds;

(d) not hire or employ any employees without the prior written consent of Ormat;
and

(e) comply in all material respects with Section 16 and the other provisions of
the Company’s limited liability company agreement.

Section 5.20 Environmental Laws

The Company shall (a) comply, and use commercially reasonable efforts to cause
all other Persons operating or occupying the Company’s Properties to comply,
with all applicable Environmental Laws and Applicable Permits required pursuant
thereto, except where failure to comply could not reasonably be expected to
result in a Material Adverse Effect; (b) obtain,

 

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maintain and renew all such Applicable Permits required under applicable
Environmental Laws and reasonably necessary for its operations and occupancy of
the Company’s Properties, except where failure to obtain, maintain or renew
could not reasonably be expected to have a Material Adverse Effect; (c) conduct
any investigation, study, sampling and testing, and undertake any corrective,
cleanup, removal, response, remedial or other action necessary to identify,
report, remove, remediate and clean up all Releases of Hazardous Materials from
the Project or any of the Company’s other properties, to the extent required
under and in compliance in all material respects with the requirements of all
applicable Environmental Laws; provided, however, that the Company shall not be
required to undertake any such cleanup, removal, remedial or other action to the
extent that its obligation to do so is being contested in good faith and by
proper proceedings; (d) promptly notify Ormat and provide copies upon receipt of
any written claims, complaints, written notices of material violation or written
information requests related to any actual, alleged or potential material
non-compliance with or material liability by the Company under applicable
Environmental Laws and provide Ormat with periodic updates (at least monthly) on
the status of such matters until such matters have been resolved; and
(e) promptly notify Ormat of any Release or discovery of Hazardous Materials at
any of its properties that is reasonably likely to require material expenditures
to investigate and/or remediate said Hazardous Materials and provide Ormat with
periodic updates (at least monthly) on the status of such matters.

Section 5.21 Maintenance of Site

The Company shall not use, or permit to be used, the Site for any purpose other
than for the Development of the Generating Unit and the conduct of its business
in respect of the Project as contemplated by the Project Documents.

Section 5.22 Lien Waivers

The Company shall not permit any Person to perform Preconstruction Services or
Construction Services on or for the Project from the Effective Date until after
the recording of the Mortgage.

ARTICLE VI

NEGATIVE COVENANTS

Until the Termination Date, the Company shall be subject to the following
covenants:

Section 6.01 Organizational Documents

The Company shall not, amend, waive, modify or supplement its articles of
organization or other organizational documents in any respect without the prior
written consent of Ormat (such consent not to be unreasonably withheld,
conditioned or delayed), except (i) to change the directors and officers of the
Company from time to time, (ii) as required to comply with any Applicable Law,
or (iii) to effect changes that are ministerial or administrative in nature. The
Company shall promptly notify Ormat of any such changes and provide complete and
correct copies of such amended documents.

 

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Section 6.02 Subsidiaries; Equity Issuances

The Company shall not (a) form or have any Subsidiary, (b) subject to
Section 6.05 hereof, own any Capital Stock in, or otherwise control any Voting
Stock of or have any ownership interest in, any other Person or (c) issue any
Capital Stock that does not constitute part of the Collateral.

Section 6.03 Indebtedness

The Company shall not create, incur, assume or suffer to exist any Indebtedness,
other than:

(a) Indebtedness incurred under the Financing Documents;

(b) purchase money or lease obligations to the extent incurred in the ordinary
course of business to finance the acquisition or licensing of intellectual
property or items of equipment (and Indebtedness incurred to finance any such
obligations), provided that (i) if such obligations are secured, they are
secured only by Liens upon the equipment or intellectual property being financed
and (ii) the aggregate principal amount and the capitalized portion of such
obligations do not at any one time exceed One Fifty Hundred Thousand Dollars
($150,000) in the aggregate for the Company;

(c) Indebtedness incurred in the ordinary course of business to vendors or
suppliers to the Company in an amount not to exceed $150,000, which shall have
payment terms of no longer than thirty (30) days;

(d) Indebtedness (i) that is incurred in favor of a Related Party of the Company
and (ii) is subordinated pursuant to an agreement substantially in the form set
forth on Exhibit D (“Permitted Subordinated Debt”); or

(e) the posting of Substitute Owner Payment Security or Supplemental Owner
Payment Security in accordance with the EPC Contract, and any related repayment
obligations.

Section 6.04 Liens, Etc.

The Company shall not create, incur, assume or suffer to exist any Lien upon or
with respect to any of its properties of any character (including accounts
receivables) whether now owned or hereafter acquired, or assign any accounts or
other right to receive income, other than Permitted Liens.

Section 6.05 Investments, Advances, Loan

The Company shall not make any advance, loan or extension of credit to, or make
any acquisitions or investments (whether by way of transfers of Property,
contributions to capital, acquisitions of stock, securities, evidences of
indebtedness or otherwise) in, or purchase any stock, bonds, notes, debentures
or other securities of, any other Person, except Permitted Investments.

 

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Section 6.06 Business Activities; Employees

(a) The Company shall not at any time conduct any activities other than those
related to the Project as contemplated by the Project Documents and any
activities incidental to the foregoing.

(b) The Company shall not directly hire any employees, it being understood that
the foregoing shall not restrict the Company from engaging third party service
providers otherwise in accordance with this Agreement.

Section 6.07 Restricted Payments

The Company may not declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, other than any distribution of funds
transferred to the Company pursuant to Section 3.01 of the Accounts Agreement.

Section 6.08 Fundamental Changes; Asset Dispositions and Acquisitions

(a) The Company shall not (in one transaction or a series of transactions) merge
into or consolidate with, or acquire all or any substantial part of the assets
or any class of stock or other ownership interests of, any other Person or sell,
transfer or otherwise dispose of all or substantially all of its assets to any
other Person. The Company shall not change its legal form, liquidate or
dissolve.

(b) The Company shall not purchase, acquire or lease any assets other than:
(i) the purchase or lease of assets reasonably required for the Project;
(ii) the purchase or lease of assets reasonably required in connection with the
Restoration of the Project in accordance with Section 3.04 of the Accounts
Agreement; (iii) the purchase of assets in the ordinary course of business as
reasonably required in connection with the operation and maintenance of the
Project in accordance with the Operating Budget; (iv) any Permitted Capital
Expenditures, (v) Permitted Investments, and (vi) the purchase of assets using
proceeds of Equity Contributions or Permitted Subordinated Debt.

(c) Subject to Section 5.05(b), the Company shall not convey, sell, lease,
transfer or otherwise dispose of, in one transaction or a series of
transactions, any material part of its Property.

(d) Notwithstanding the foregoing and any provisions of Sections 5.02 or 5.05 to
the contrary, the Company shall subject to the mandatory prepayment provisions
of this Agreement and the Accounts Agreement, be entitled to convey, sell,
lease, transfer or otherwise dispose of (i) sales of Credits, capacity, energy,
ancillary services and other services in accordance with the Project Documents;
(ii) obsolete or worn out assets or assets no longer used or useful in its
business; (iii) Permitted Investments; (iv) assets replaced with other assets
that are of equal or greater value once in place and have a similar function to
the assets being replaced; and (v) the Specified Collateral in accordance with
Section 5.05(b).

 

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Section 6.09 Accounting Changes

The Company shall not change its fiscal year without Ormat’s consent, such
consent not to be unreasonably withheld, conditioned or delayed.

Section 6.10 Amendment or Termination of Project Documents

The Company shall not:

(a) enter into any agreement (other than the Financing Documents) restricting
its ability to amend any of the Transaction Documents;

(b) except for the EPC Contract, without the prior written consent of Ormat, not
to be unreasonably withheld, conditioned or delayed, directly or indirectly
amend, modify, supplement or grant a consent, approval or waiver under, or
permit or consent to the amendment, modification or supplement of any provision
of: (i) any Material Project Document, except (A) Change Orders, (B) any
extension of the term of a Material Project Document on substantially the same
terms and conditions then in effect (or on more favorable terms and conditions
to the Company) and (C) any ministerial or administrative amendments,
modifications, waivers, consents and approvals; or (ii) any Project Document
other than a Material Project Document, except any such amendment, modification,
supplement, consent, approval or waiver which could not reasonably be expected
to have a Material Adverse Effect;

(c) directly or indirectly transfer (except pursuant to the Security Documents),
terminate, cancel or permit or consent to the transfer (except pursuant to the
Security Documents), termination or cancellation of any Project Document
(including by exercising any contractual option to terminate, or failing to
exercise any contractual option to extend), except (i) where such termination
occurs following performance in full by each Person party thereto of all of its
obligations thereunder or (ii) in the case of any Project Document other than a
Material Project Document, where such transfer, termination or cancellation
could not reasonably be expected to result in a Material Adverse Effect, without
the written consent of Ormat, not to be unreasonably withheld, conditioned or
delayed; or

(d) without the written consent of Ormat, not to be unreasonably withheld,
conditioned or delayed, enter into any Additional Project Document which is a
Material Project Document (other than a Replacement Project Document permitted
to be entered into pursuant to this Agreement) without the prior approval of
Ormat (acting reasonably), and (in the case of a Replacement Project Document
for which the Project Party to the Material Project Document to be replaced has
executed a Consent to Assignment) unless the Project Party thereto shall execute
and deliver a Consent to Assignment to Ormat in substantially the form of
Exhibit B-1 and, if reasonably requested by Ormat and if with the exercise of
commercially reasonable efforts the Company is able to obtain the same, an
opinion from counsel to such Project Party covering the matters listed in
Exhibit B-2.

Promptly after the execution and delivery of any of the following, the Company
shall furnish Ormat with certified copies of (i) all material amendments,
modifications or supplements of any Project Document and (ii) all Additional
Project Documents. If applicable, Ormat shall use good faith efforts to respond
to each request pursuant to this Section 6.10 as soon as practicable.

 

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Section 6.11 Transactions with Affiliates

The Company shall not directly or indirectly enter into any transaction or
series of related transactions with any Affiliate of the Company, except for
(a) such transaction (i) in the ordinary course of the Company’s (and such
Affiliate’s) business and (ii) upon fair and reasonable terms no less favorable
to the Company than it could obtain in comparable arm’s-length transactions with
a Person which is not an Affiliate, (b) Project Documents in effect as of the
date hereof and the transactions expressly contemplated thereby and the O&M
Agreement, and (c) Permitted Subordinated Debt.

Section 6.12 Accounts

The Company shall not open, or instruct the Depositary or any other Person to
open, any bank accounts other than the Accounts and the Permitted Local
Operating Account.

Section 6.13 Derivative Transactions

The Company shall not enter into any derivative transactions (including any
swap, cap, or collar agreement or any similar arrangement), it being understood
that any transaction for the purchase and sale of energy, capacity, ancillary
services or Credits that is on a “unit contingent basis” and that relates to the
Project shall not be considered to be a derivative transaction, irrespective of
the form of agreement used to document such purchase and sale.

Section 6.14 Cash Grant

As of the Effective Date and thereafter until the expiration of the Recapture
Period, (i) neither the Company nor any direct or indirect owner of the Company
or any holder of an equity or profits interest in the Company (other than any
such direct or indirect owner that is a direct or indirect owner solely as a
result of owning equity interests in an entity that is treated as a
C corporation for federal income tax purposes) will become a Disqualified Person
and (ii) the Company shall not cause or permit any other action or omission that
would cause a Cash Grant to be recaptured.

Section 6.15 Substantial Consummation

Reasonably promptly (but in any event within thirty (30) days) following the
occurrence of “substantial consummation” of the Plan of Reorganization, the
Company shall deliver to Ormat an opinion of counsel to the Company regarding
the occurrence “substantial consummation” of the Plan of Reorganization, such
opinion to be in form and substance reasonably acceptable to Ormat.

 

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ARTICLE VII

EVENTS OF DEFAULT

Section 7.01 Events of Default.

Subject to Section 7.02, if any of the following events (“Events of Default”)
shall occur:

(a) the Company shall fail to pay the Advance Amount on the Maturity Date (or if
such day is not a Business Day, the next succeeding Business Day) in the manner
set forth in Section 2.03; or

(b) the Company shall fail to pay (i) on any Funding Date occurring subsequent
to the Interest Payment Date, interest on the Advance Amount payable under this
Agreement when and as the same shall become due and payable, and such failure
shall continue unremedied for a period of five (5) Business Days or (ii) any
other amount (other than an amount referred to in Section 7.01(a) or (b)(i))
payable under this Agreement or under any other Financing Document when and as
the same shall become due and payable, and such failure shall continue
unremedied for a period of five (5) Business Days; or

(c) any representation or warranty made by the Company in this Agreement or any
other Financing Document, or in any certificate or other document furnished to
any Ormat by or on behalf of the Company in accordance with the terms hereof or
thereof, or any representation or warranty made by the Member in the Pledge
Agreement, shall prove to have been false or misleading in any material respect
as of the time made, confirmed or furnished and the same could reasonably be
expected to result in a Material Adverse Effect; provided, that no Event of
Default shall occur pursuant hereto if within thirty (30) days of the date on
which the Company receives notice (from any source) that such false or
misleading representation or warranty has occurred, the Company shall eliminate
or otherwise address to the reasonable satisfaction of Ormat any Material
Adverse Effect relating to such false or misleading representation or warranty;
or

(d) (i) the Company shall fail to observe or perform any covenant or agreement
contained in Sections 5.01, or 5.06(b) or Article VI, or (ii) the Member shall
fail to observe or perform any covenant or agreement contained in Sections 5.05
or 5.06 of the Pledge Agreement, and in each case such failure shall continue
unremedied for a period of five (5) Business Days after the earlier of
(i) written notice thereof from Ormat and (ii) the Company having knowledge
thereof; or

(e) the Company or the Member shall fail to observe or perform any covenant,
condition or agreement contained in any Financing Document (other than those
specified in Section 7.01(a), (b) or (d)), and in each case such failure shall
continue unremedied for a period of thirty (30) days after the earlier of
(i) written notice thereof from Ormat and (ii) the Company having knowledge
thereof; provided, that if such failure cannot be remedied within such thirty
(30) day period but is susceptible of remedy within a longer period, such thirty
(30) day period shall be extended for up to an additional sixty (60) days so
long as (A) the Company or the Member has promptly notified Ormat of such
failure and (B) the Company or the Member has commenced action reasonably
planned to remedy such failure and continues diligently to pursue such action;
or

 

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(f) (i) the Company shall fail to make any payment (whether of principal or
interest and regardless of amount) in respect of any Indebtedness (other than
Indebtedness under the Financing Documents) that is outstanding in an aggregate
principal amount (or notional principal amount) of at least One Hundred Fifty
Thousand Dollars ($150,000) beyond any period of grace with respect thereto, or
(ii) the Company is in default in the performance of or compliance with any term
of any evidence of Indebtedness in an aggregate outstanding principal amount (or
notional principal amount) of at least One Hundred Fifty Thousand Dollars
($150,000), and as a consequence of such default or condition such Indebtedness
has become, or has been declared due and payable in full (whether by redemption,
purchase, offer to purchase or otherwise), before its stated maturity or before
its regularly scheduled dates of payment; or

(g) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking (i) liquidation,
reorganization or other similar relief in respect of the Company or the Member,
or their respective debts, or of a substantial part of their respective assets,
under any Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect or (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Company or the Member, or for a substantial part of their respective assets,
and, in any such case, such proceeding or petition shall continue undismissed or
un-stayed for a period of sixty (60) or more days or an order or decree
approving or ordering any of the foregoing shall be entered; or

(h) the Company or the Member, shall (i) voluntarily commence any proceeding or
file any petition seeking liquidation, reorganization or other relief under any
federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition described
in Section 7.01(g), (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Company or the Member, or for a substantial part of their respective assets,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the benefit
of creditors or (vi) take any action for the purpose of effecting any of the
foregoing; or

(i) any final non-appealable judgment or order for the payment of money in
excess of One Hundred Fifty Thousand Dollars ($150,000) shall be rendered
against the Company (exclusive of judgment amounts covered by insurance where
the insurer has admitted liability in respect of such judgment) and the same
remains unpaid or unstayed for a period of ninety (90) or more consecutive days;
or

(j) (i) any Financing Document is revoked, terminated or otherwise ceases to be
in full force and effect (except in connection with its expiration in accordance
with its terms in the ordinary course (and not related to any default by the
Company or the Member thereunder)), or the enforceability thereof shall be
challenged by the Company or the Member, as the case may be; or (ii) any
Financing Document that creates a security interest in Collateral ceases to
provide (to the extent permitted by law and to the extent required by the
Financing Documents) a first priority perfected Lien on the assets purported to
be covered thereby in favor of Ormat; or

 

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(k) any ERISA Event shall occur and be continuing that, either individually or
in the aggregate with each other continuing ERISA Event, has had a Material
Adverse Effect; or

(l) without limiting any other provision of this Article VII, (i) any Material
Project Document shall at any time for any reason cease to be valid and binding
or in full force and effect or shall be Impaired (in each case, except in
connection with its expiration in accordance with its terms in the ordinary
course (and not related to any default thereunder)), or (ii) any Project Party
(other than Ormat or any Related Party thereof) shall terminate or cease to
perform under any Material Project Document, or shall repudiate any Material
Project Document and the repudiation, termination or cessation of performance
could reasonably be expected to have a Material Adverse Effect; provided that no
such event shall be an Event of Default if the Company has entered into a
Replacement Project Document within thirty (30) days after the occurrence
thereof; provided, that if such Replacement Project Document is not entered into
within such thirty (30) day period, such thirty (30) day period shall be
extended for up to an additional ninety (90) days so long as (A) the Company or
the Member has promptly notified Ormat of the underlying issue with the Material
Project Document and (B) the Company or the Member has commenced action
reasonably planned to enter into such Replacement Project Document and continues
diligently to pursue such action;

(m) all or substantially all of the assets constituting the Project shall suffer
a substantial casualty, or be destroyed, irreparably damaged, or requisitioned
or taken by condemnation, and such casualty, destruction, damage, requisition or
taking could reasonably be expected to have a Material Adverse Effect, taking
into account application of all Loss Proceeds relating thereto and the
provisions of the Accounts Agreement; or

(n) any Event of Abandonment shall occur and be continuing;

then, and in every such event (other than an event with respect to the Company
or the Member described in Section 7.01(g) or (h)), and at any time thereafter
during the continuance of such event, Ormat may, by written notice to the
Company, declare the Advance Amount then outstanding to be due and payable in
whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Advance Amount so declared to be due and payable, together with
accrued interest thereon and other amounts payable by the Company hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Company; and
in case of any event with respect to the Company described in Section 7.01(g) or
(h), the principal of the Advance Amount then outstanding, together with accrued
interest thereon and all fees and other payment obligations of the Company
accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company. Upon the occurrence and during the continuance of
any Event of Default, in addition to the exercise of remedies set forth above,
Ormat shall be, subject to the terms of the Accounts Agreement and Section 8.17
(Limited Recourse), entitled to exercise the rights and remedies available to
Ormat under and in accordance with the provisions of the other Financing
Documents to which it is a

 

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party or any Applicable Law. The Company and Ormat acknowledge and agree that
the proceeds resulting from any exercise of remedies under this Agreement or any
other Financing Document shall be applied in accordance with the provisions of
Section 5.09 of the Security Agreement.

Section 7.02 Limitation on Exercise of Remedies

Notwithstanding Section 7.01, in the event that Ormat or any of its Related
Parties fails to perform any of its obligations under any Transaction Document
to which it is a party and such failure causes or could reasonably be expected
to cause a Default or Event of Default under this Agreement, the Company shall
give written notice to Ormat of such failure, such notice to be given promptly
and in any event no later than thirty (30) days after a responsible officer of
the Company obtains actual knowledge of such failure. Provided the Company has
complied with its notice obligations pursuant to this Section, any Default or
Event of Default under this Agreement which is caused by a failure by Ormat or
any of its Related Parties to perform any of its obligations under any
Transaction Document to which it is a party shall not be considered a Default or
Event of Default under this Agreement and Ormat shall not be entitled to any
remedy under this Agreement or any other Financing Document in respect of any
such Default or Event of Default.

Section 7.03 Certain Step In Rights

Notwithstanding anything to the contrary in this Agreement or the other
Financing Documents, upon not less than ten (10) Business Days’ written notice
from Ormat to the Company that a Step In Event has occurred and is continuing,
Ormat shall have the right to operate the Project in the place of the Operator
until the expiry of the applicable Step In Period, after which the Operator
shall resume operating the Project in consultation with Ormat. Without limiting
Ormat’s rights hereunder, prior to exercising such rights, Ormat will consult
with the Company regarding its exercise of such rights.

During the Step In Period:

(i) the Company shall have no obligations to the Operator under the Operating
Agreement, except with respect to obligations incurred prior to the Step In
Period;

(ii) following written request therefor by Ormat, the Company shall direct the
Depositary to reimburse Ormat for all of its reasonably documented, actual costs
incurred to operate the Project (but not for any profit or markup), from time to
time in accordance with the Accounts Agreement;

(iii) Ormat will consult with the Company from time to time regarding the
operation of the Project. and Ormat shall operate and maintain the Project in
accordance with Prudent Generator Practices;

(iv) Section 7.02 shall, for the avoidance of doubt, continue to apply; and

(v) Ormat shall keep the Company reasonably informed as to its operation of the
Project.

 

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ARTICLE VIII

MISCELLANEOUS

Section 8.01 Notices

Except as otherwise expressly provided herein or in any Financing Document, all
notices and other communications provided for hereunder or thereunder shall be
(i) in writing (including facsimile) and (ii) sent by facsimile or overnight
courier (if for inland delivery) or international courier (if for overseas
delivery) to a party hereto at its address and contact number specified in
below, or at such other address and contact number as is designated by such
party in a written notice to the other parties hereto:

 

If to the Company:   

Thermo No. 1 BE-01, LLC

136 South Main Street, Suite 600

Salt Lake City, Utah 84101

Attention: Nicholas Goodman

Fax: (801) 374-3314

If to Ormat:   

Ormat Nevada Inc.

6225 Neil Road

Reno, Nevada 89511-1136

Attn: President

Telephone: (775) 356-9029

Facsimile: (775) 356-9039

All notices and communications shall be effective when received by the addressee
thereof during business hours on a Business Day in such Person’s location as
indicated by such Person’s address above, or at such other address as is
designated by such Person in a written notice to the other parties hereto.

Section 8.02 Waivers; Amendments

(a) No Deemed Waivers; Remedies Cumulative. No failure or delay on the part of
either Party in exercising any right, power or privilege hereunder or under any
other Financing Document and no course of dealing between either Party, or any
of its Affiliates, on the one hand, and the other Party, on the other hand,
shall impair any such right, power or privilege or operate as a waiver thereof;
nor, except as contemplated by Section 8.4(c) of the EPC Contract in connection
with “Substitute Owner Payment Security” and a deemed repayment in full of the
Advance Amount hereunder, shall any single or partial exercise of any right,
power or privilege hereunder or under any other Financing Document preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights, powers and remedies herein or in
any other Financing Document expressly provided are

 

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cumulative and not exclusive of any rights, powers or remedies which either
Party thereto would otherwise have. No notice to or demand on either Party in
any case shall entitle the other Party to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of such
Party to any other or further action in any circumstances without notice or
demand.

(b) Amendments. Neither this Agreement nor any other Financing Document nor any
provision hereof or thereof (including any Appendix, Exhibit or Schedule hereto
or thereto) may be waived, amended or modified except pursuant to an agreement
or agreements in writing entered into by the Company and Ormat.

Section 8.03 Expenses; Indemnity; Etc.

(a) Costs and Expenses. The Company agrees to pay or reimburse Ormat for:
(i) all reasonable costs and expenses (other than Taxes except as expressly
contemplated hereby) of Ormat (including payment of counsels’ fees and expenses)
in connection with (x) any Default or Event of Default and any enforcement or
collection proceedings resulting from such Default or Event of Default or in
connection with the negotiation of any restructuring or “work-out” (whether or
not consummated) of the obligations of the Company under this Agreement or the
obligations of the Member or Project Party (other than Ormat) under any other
Financing Document or Project Document in connection with such Default or Event
of Default and (y) the enforcement of this Section 8.03 or the preservation of
its rights, (ii) all reasonable costs, expenses, taxes, assessments and other
charges (including reasonable legal fees) incurred in connection with any
filing, registration, recording or perfection of any security interest
contemplated by any Security Document or any other document referred to therein
and (iii) all costs, expenses and other charges of the Title Company in respect
of the Title Policy.

(b) Indemnification by the Company. The Company agrees to indemnify and hold
harmless Ormat and its Affiliates and each of their respective shareholders,
partners, members, directors, officers, employees and agents (each, an
“Indemnified Party”) from and against any and all losses, claims, damages and
liabilities (other than Taxes except as expressly contemplated hereby),
including all Environmental Claims or liabilities arising under Environmental
Laws or relating to Hazardous Materials, and any Recapture Liability, to which
such Indemnified Party may become subject related to or arising out of any
transaction contemplated by the Financing Documents or the execution, delivery
and performance of the Financing Documents or any other document required
hereunder (other than any Project Document, the terms of which shall govern the
indemnity obligations between the Persons party thereto) and the financing
transactions contemplated by the Financing Documents and will reimburse any
Indemnified Party for all expenses (including reasonable and documented counsel
fees and expenses) as they are incurred in connection therewith. The Company
will not be liable under the foregoing indemnification provision to an
Indemnified Party to the extent that any loss, claim, damage, liability or
expense that has resulted from such Indemnified Party’s (or any Related Party’s)
bad faith, gross negligence or willful misconduct. In the case of an
investigation, litigation or proceeding to which the indemnity in this paragraph
applies, such indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by the Company or an Indemnified Party,
whether or not an Indemnified Party is otherwise a party thereto and whether or
not any aspect of the transactions contemplated hereby is consummated. The
Company also agrees that no

 

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Indemnified Party shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to the Company, or any security holders or
creditors thereof related to or arising out of the execution, delivery and
performance of any Financing Document or the financing transactions contemplated
by the Financing Documents, except to the extent that any loss, claim, damage or
liability has resulted from such Indemnified Party’s material breach of this
Agreement, bad faith, gross negligence or willful misconduct. To the extent
permitted by Applicable Law, the Company shall not assert, and the Company
hereby waives, any claim against any Indemnified Party, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any other Financing Document, the Advance Amount or the
use of the proceeds thereof. Each of the Company and Ormat recognize and agree
that the relevant Project Document, and not this Agreement or any other
Financing Document, sets forth the indemnity obligations of each of the parties
to such Project Document.

(c) Settlements; Appearances in Actions. The Company agrees that, without the
Indemnified Party’s prior written consent, it will not settle, compromise or
consent to the entry of any judgment in any pending or threatened claim, action
or proceeding in respect of which indemnification could be sought by or on
behalf of such Indemnified Party under this Agreement (whether or not any
Indemnified Party is an actual or potential party to such claim, action or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of such Indemnified Party from all liability arising out
of such claim, action or proceeding. In the event that an Indemnified Party is
requested or required to appear as a witness in any action brought by or on
behalf of or against the Company or any Affiliate thereof in which such
Indemnified Party or any of its Related Parties is not named as a defendant, the
Company agrees to reimburse such Indemnified Party for all reasonable expenses
incurred by it in connection with such Indemnified Party’s appearing and
preparing to appear as such a witness, including the reasonable and documented
fees and disbursements of its legal counsel. In the case of any claim brought
against an Indemnified Party for which the Company may be responsible under this
Section 8.03, Ormat agrees (at the expense of the Company) to execute such
instruments and documents and cooperate as reasonably requested by the Company
in connection with the Company’s defense, settlement or compromise of such
claim, action or proceeding.

Section 8.04 Successors and Assigns

The provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns permitted
hereby, except that neither party may assign or otherwise transfer or
participate any of its rights or obligations hereunder without the prior written
consent of the other party (and any attempted assignment, transfer or
participation without such consent shall be null and void). Notwithstanding the
foregoing, Ormat shall be permitted to transfer its rights or obligations
hereunder to (i) a wholly-owned Affiliate of Ormat that is organized under the
laws of a State in the United States of America without the prior written
consent of the Company, and (ii) to any Person that is organized under the laws
of a State in the United States of America with the written consent of the
Company, such consent not to be unreasonably withheld, conditioned or delayed.
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto and their respective successors
and assigns permitted hereby) any legal or equitable right, remedy or claim
under or by reason of this Agreement.

 

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Section 8.05 Survival

All covenants, agreements, representations and warranties made by the Parties
herein and in the certificates or other instruments delivered in connection with
or pursuant to this Agreement shall be considered to have been relied upon by
the other Party and shall survive the execution and delivery of this Agreement
and the making of the Advance Amount, regardless of any investigation made by
either Party or any other Person on its behalf, and shall continue in full force
and effect as long as the principal of or any accrued interest on the Advance
Amount or any other amount payable under this Agreement is outstanding and
unpaid and so long as Ormat’s obligation to provide the Advance Amount to the
Company hereunder has not expired or terminated. The provisions of Sections
8.03, 8.14 and 8.15 shall survive and remain in full force and effect regardless
of the consummation of the transactions contemplated hereby, the repayment of
the Advance Amount, the expiration or termination of Ormat’s obligation to
provide the Advance Amount to the Company hereunder, or the termination of this
Agreement or any provision hereof. The obligations of the Company under
Section 2.06 shall survive the termination of this Agreement and the repayment
of the Advance Amount for a period that is coterminous with the statute of
limitations to actions by applicable Government Authorities for the payment of
Taxes.

Section 8.06 Counterparts; Integration; Effectiveness

This Agreement may be executed in counterparts (and by different parties hereto
on different counterparts), each of which shall constitute an original, but all
of which when taken together shall constitute a single contract. This Agreement
and the other Financing Documents to which the Company is a party constitute the
entire contract between and among the parties relating to the subject matter
hereof and thereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by each of the Company and Ormat, and thereafter shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Delivery of an executed counterpart of a
signature page to this Agreement by telecopy or email shall be effective as
delivery of a manually executed counterpart of this Agreement.

Section 8.07 Severability

Any provision of this Agreement held to be invalid, illegal or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof; and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.

Section 8.08 Right of Setoff

If an Event of Default shall have occurred and be continuing, Ormat and any of
its Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held, and
any other indebtedness at any time owing, by Ormat or any such

 

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Affiliate to or for the credit or the account of the Company against any of and
all the obligations of the Company now or hereafter existing under this
Agreement held by Ormat, irrespective of whether or not Ormat shall have made
any demand under this Agreement and although such obligations may be unmatured
or denominated in a currency other than Dollars. The rights of Ormat or any of
its Affiliates under this Section are in addition to other rights and remedies
(including other rights of setoff) which Ormat may have.

Section 8.09 Governing Law; Jurisdiction; Etc.

(a) Governing Law. This Agreement shall be construed in accordance with and
governed by the law of the State of New York, without regard to principles of
conflicts of law thereof that would result in the application of the laws of any
other jurisdiction. It is the intent and purpose of the parties hereto that the
provisions of Section 5-1401 of the General Obligations Law of the State of New
York shall apply to this Agreement.

(b) Submission to Jurisdiction. Any legal action or proceeding with respect to
this Agreement or any other Financing Document to which the Company is a party
shall be brought in (i) the State of New York courts in the County of New York,
(ii) the United States District Court for the Southern District of New York,
(iii) the State of Utah Third Judicial District, Salt Lake City District Court,
or (iv) the United States District Court for the District of Utah and, by
execution and delivery of this Agreement, each party hereto hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each party hereto
agrees that a judgment, after exhaustion of all available appeals, in any such
action or proceeding shall be conclusive and binding upon it, and may be
enforced in any other jurisdiction, including by a suit upon such judgment, a
certified copy of which shall be conclusive evidence of the judgment.

(c) Waiver of Venue. Each party hereto hereby irrevocably waives any objection
that it may now have or hereafter have to the laying of the venue of any suit,
action or proceeding arising out of or relating to this Agreement or any other
Financing Document to which it is a party brought in the Supreme Court of the
State of New York, County of New York, in the United States District Court for
the Southern District of New York, the State of Utah Third Judicial District,
Salt Lake City District Court, or the United States for the District of Utah,
and hereby further irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.

(d) WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
ARISING UNDER ANY FINANCING DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO
ANY FINANCING DOCUMENT, OR THE FINANCING TRANSACTIONS RELATED THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT
OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL

 

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COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

(e) Service of Process. The Company irrevocably appoints CT Corporation System
(the “Company Process Agent”), with an office on the date hereof at 111 Eighth
Avenue, New York, N.Y. 10011 and at 136 East South Temple, Suite 2100, Salt Lake
City, UT 84111 and Ormat irrevocably appoints HIQ Corporate Services, Inc. (the
“Ormat Process Agent”), with an office on the date hereof at One Commerce Plaza,
99 Washington Ave., Suite 805A, Albany, NY 12210-2822 and at 1108 E South Union
Ave., Midvale, UT 84047, as its agent and true and lawful attorney-in-fact in
its name, place and stead to accept on behalf of such party and its property and
revenues service of copies of the summons and complaint and any other process
which may be served in any suit, action or proceeding brought in the State of
New York or the State of Utah, respectively, in connection with this Agreement,
and each party agrees that the failure of the Company Process Agent or Ormat
Process Agent, as applicable, to give any notice of any such service of process
to a party shall not impair or affect the validity of such service or, to the
extent permitted by applicable law, the enforcement of any judgment based
thereon. Each party hereto irrevocably consents to the service of process in the
manner provided for notices in Section 8.01. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.

Section 8.10 Headings

Article and Section headings and the Table of Contents used herein are for
convenience of reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in interpreting, this
Agreement.

Section 8.11 Confidentiality

Except to the extent necessary for the exercise and enforcement of its rights
and remedies and the performance of its obligations under this Agreement or as
otherwise mutually agreed by the Company and Ormat, each of the Company and
Ormat and any of its respective Affiliates and its or their respective
shareholders, members, partners, directors, officers, employees and agents
(collectively, “representatives”) and its respective advisors, counsel and
public accountants (collectively, “advisors”) will not itself intentionally
disclose, directly or indirectly, any of this Agreement or information furnished
hereunder or the Transaction Documents or information furnished thereunder, and
will use all reasonable efforts to have all such information kept confidential
(consistent with its own practices); provided that (i) each of the Company and
Ormat and its Affiliates and its representatives and advisors may use, retain
and disclose any such information (A) to its special counsel and public
accountants, (B) to any Governmental Authority or regulatory authority, or
(C) to the extent required by law, including securities laws, or the rules and
regulations of any stock exchange on which securities of the Company or Ormat or
any of its respective Affiliates are listed, (ii) each of the Company and Ormat
and its Affiliates and its representatives and advisors may use, retain and
disclose any such information that has been publicly disclosed (other than by
such party or any Affiliate thereof or any of its representatives or advisors in
breach of this Section 8.11) or has rightfully come into the possession of such
party or any Affiliate thereof or any of its representatives or advisors other

 

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than from the other party or a Person acting on such other party’s behalf,
(iii) to the extent that the Company or Ormat or any Affiliate thereof or its
representatives or advisors may have received a subpoena or other written demand
under color of legal right for such information, such party or such Affiliate or
representative or advisor may disclose such information, but such party shall
first, as soon as practicable upon receipt of such demand, unless otherwise
prohibited by Applicable Laws, furnish a copy thereof to the other parties and,
if practicable so long as such party shall not be in violation of such subpoena
or demand or likely to become liable to any penalty or sanctions thereunder,
afford the other party reasonable opportunity, at the other party’s cost and
expense, to obtain a protective order or other reasonably satisfactory assurance
of confidential treatment for the information required to be disclosed,
(iv) each of the Company and Ormat and its Affiliates and its representatives
and advisors may disclose any such information, and make such filings, as may be
required by this Agreement or the Transaction Documents, and (v) nothing in this
Section 8.11 shall prevent the Company or Ormat and its Affiliates from using
such information for its own internal purposes, subject to the restrictions set
forth herein with respect to public disclosure of such information.
Notwithstanding anything herein to the contrary, each of the Company and Ormat
may disclose information to its Affiliates and other representatives and
advisors in accordance with this Agreement if such Persons have agreed to be or
are otherwise bound by confidentiality obligations substantially similar to
those contained in this Section 8.11.

Section 8.12 Third Party Beneficiaries

The agreement of Ormat to make the Advance Amount to the Company, on the terms
and conditions set forth in this Agreement, is solely for the benefit of the
Company and Ormat, and, except in respect of Non-Recourse Parties as
contemplated by Section 8.15, no other Person (including the Sponsor, the
Member, any other Project Party (other than Ormat), contractor, subcontractor,
supplier, workman, carrier, warehouseman or materialman furnishing labor,
supplies, goods or services to or for the benefit of the Project) shall have any
rights under this Agreement or under any other Financing Document or Project
Document as against Ormat or with respect to any extension of credit
contemplated by this Agreement.

Section 8.13 Usury

Regardless of any provision contained in the Transaction Documents, or any other
documents or instruments executed in connection herewith, Ormat shall never be
entitled to receive, collect or apply, as interest hereon, any amount in excess
of the highest lawful rate and if Ormat ever receives, collects or applies, as
interest, any such excess, such amount that would be excessive interest shall be
deemed a partial prepayment of principal and treated hereunder as such (provided
that no premium or penalty shall become due and payable as a result of such
deemed prepayment); and, if the principal hereof is paid in full, any remaining
excess shall be refunded to the Company. In determining whether or not the
interest paid or payable, under any specific contingency, exceeds the highest
lawful rate, the parties hereto shall, to the maximum extent permitted under
applicable law, (i) characterize any non-principal payment as an expense, fee or
premium rather than as interest, (ii) exclude voluntary prepayments and the
effects thereof and (iii) spread the total amount of interest throughout the
entire contemplated term hereof; provided, however, that if the interest
received for the actual period of existence hereof exceeds the highest lawful
rate, Ormat shall either apply or refund to Company the amount of such excess as
herein provided, and in such event Ormat shall not be subject to any penalties
provided by any laws for contracting for, charging or receiving interest in
excess of the highest lawful rate.

 

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Section 8.14 Reinstatement

The obligations of the Company under this Agreement shall be automatically
reinstated if and to the extent that for any reason any payment by or on behalf
of the Company hereunder or under any Financing Document or the EPC Contract is
rescinded or must be otherwise restored, whether as a result of any proceedings
in bankruptcy or reorganization or otherwise, and the Company agrees that it
will indemnify Ormat and/or Ormat on demand for all reasonable costs and
expenses (including fees of counsel) incurred by Ormat and/or Ormat in
connection with such rescission or restoration, including any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.

Section 8.15 Limited Recourse

(a) The obligations of the Company hereunder and under the other Financing
Documents, including with respect to the payment of the principal of or interest
on any Advance Amount, are obligations solely of the Company and shall be
satisfied solely from the Collateral and the assets of the Company and shall not
constitute a debt or obligation of the Member or any other Affiliate of the
Company or any of their respective officers, directors, employees, shareholders,
agents, attorneys or representatives (collectively, the “Non-Recourse Parties”).
None of the Non-Recourse Parties shall be liable for any amount payable by the
Company under this Agreement or the other Financing Documents and Ormat shall
not seek a money judgment or deficiency or personal judgment against any
Non-Recourse Party for payment of any obligations payable by the Company under
this Agreement or the other Financing Documents and no property or assets of the
Non-Recourse Parties shall be sold, levied upon or otherwise used to satisfy any
judgment rendered in connection with any action brought against the Company with
respect to this Agreement or the other Financing Documents. In furtherance of
the foregoing, Ormat shall have no recourse to, and Ormat shall not seek to
enforce any money judgment or deficiency or personal judgment against the Member
or any Affiliate thereof in respect of any amounts transferred from the Revenue
Account pursuant to clause Fourth of Section 3.01(c) of the Accounts Agreement.

(b) Notwithstanding the provisions of Section 8.15(a), nothing in this
Section 8.15 shall limit or affect or be construed to limit or affect the
obligations and liabilities of any Non-Recourse Party (i) in accordance with the
terms of any other Transaction Document to which such Non-Recourse Party is a
party, or (ii) arising from liability pursuant to Applicable Law for such
Non-Recourse Party’s fraudulent actions or willful misconduct.

(c) The foregoing acknowledgments, agreements and waivers shall survive
termination of this Agreement and be enforceable by any Non-Recourse Party and
are a material inducement for the parties’ execution of this Agreement and the
other Financing Documents.

 

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Section 8.16 Reasonable Cooperation of Ormat; Following Payment of Advance
Amount

(a) Ormat agrees to reasonably cooperate with the Company in connection with the
Company’s efforts to procure long term financing for the Project and in
connection therewith agrees to make itself and its representatives available
upon reasonable notice and at reasonable times to meet, in the presence of the
Company, with potential lenders to the Company. In furtherance of the foregoing
and in connection with any long term financing for the Project or the Company,
Ormat agrees to use reasonable efforts to take such actions as may reasonably
facilitate such refinancing, including assigning (or effecting another form of
transfer) of the Security Documents and the other Financing Documents to the
lenders providing such long term financing. The Company agrees to pay any out of
pocket expenses (including reasonable legal fees and costs) that Ormat incurs in
connection with this Section 8.16(a).

(b) Upon the payment (or deemed payment) in full of the Advance Amount and
unless requested otherwise by the Company, Ormat agrees to take such steps as
may be reasonably required in order to evidence the payment (or deemed payment)
of the Advance Amount hereunder and Ormat further agrees to take such steps as
may be reasonably required to release the Collateral from the Liens of the EPC
Contract and the Security Documents, including giving such written instructions
to the Depositary or such other Persons as may be required in connection
therewith under the Financing Documents or the EPC Contract.

ARTICLE IX

REPRESENTATIONS AND WARRANTIES OF ORMAT

Ormat represents and warrants to the Company as of the Effective Date that:

Section 9.01 Due Organization, Power, Etc.

(a) Ormat is a corporation, duly organized, validly existing and in good
standing under the laws of Delaware; (b) has all requisite corporate power and
authority to enter into and perform its obligations under the Transaction
Documents to which it is a party; and (c) is duly qualified to do business and
is in good standing in each jurisdiction where necessary in light of its
business as now conducted and as proposed to be conducted; except, in the case
of clause (c), where the failure to be so qualified could not reasonably be
expected to result in a material adverse effect on Ormat.

Section 9.02 Due Authorization, Etc.

Ormat has taken all necessary corporate action to authorize the execution,
delivery and performance by it of each of the Transaction Documents to which it
is a party. Each Transaction Document to which Ormat is a party has been duly
executed and delivered by Ormat and is in full force and effect and constitutes
a legal, valid and binding obligation of Ormat, enforceable against Ormat in
accordance with its respective terms, except as enforcement may be limited
(i) by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other similar laws affecting creditors’ rights generally and (ii) by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

 

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Section 9.03 No Conflict

The execution, delivery and performance by Ormat of each of the Transaction
Documents to which it is a party and all other documents and instruments to be
executed and delivered hereunder and thereunder, as well as the consummation of
the transactions contemplated herein and therein, do not and will not
(i) conflict with the articles of incorporation or by-laws of Ormat,
(ii) conflict with or result in a breach of, or constitute a default under, any
material indenture, loan agreement, mortgage, deed of trust or other material
instrument or agreement to which Ormat is a party or by which Ormat is bound or
to which the property or assets of Ormat are subject, (iii) conflict with or
result in a breach of, or constitute a default in any material respect under,
any Applicable Law, or (iv) result in the creation or imposition of any Lien
(other than a Permitted Lien) upon any of the Property or assets of Ormat.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

THERMO NO. 1 BE-01, LLC By:  

/s/ Nicholas Goodman

  Name: Nicholas Goodman   Title:   CEO

 

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ORMAT NEVADA INC. By:  

/s/ Connie Stechman

  Name: Connie Stechman   Title:   Assistant Secretary

 

THERMO 1 CREDIT AGREEMENT   -69-   

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APPENDIX A – Insurance

(a) The Company shall maintain or cause to be maintained in effect at all times
the insurance required to be maintained under the Financing Documents and the
Material Project Documents (unless otherwise waived in writing by the
contractual party). The Company shall enforce its rights under the EPC Contract
to cause Ormat (as “contractor” thereunder) to maintain its insurance as
required in the EPC Contract.

(b) Without limiting the foregoing, the Company shall maintain or cause to be
maintained in effect at all times the types of insurance by the following
provisions together with any other types of insurance required hereunder, with
insurance companies rated A-, X or better, by A.M. Best’s Insurance Guide and
Key Ratings (“Best”) (or an equivalent rating by another nationally recognized
insurance rating agency of similar standing if Best shall no longer be
published) or other insurance companies of recognized responsibility
satisfactory to Ormat, until the Termination Date.

(c) Company’s Insurance Requirements

(i) Commercial general liability insurance for the Project on an “occurrence”
policy form, including coverage for premises, operations, explosion, collapse
and underground hazards, products/completed operations, coverage equivalent to
broad form property damage, blanket contractual liability and personal injury,
with primary coverage limits of no less than $1,000,000 for bodily injury or
death to one or more persons or damage to property resulting from any one
occurrence and a $2,000,000 aggregate limit for products/completed operations.
The commercial general liability policy (including any excess) shall also
include a severability of interest clause with no exclusions or limitations for
cross liability. To the extent commercially available and not prohibited by
statute, the commercial general liability shall have no exclusion for punitive
damages.

(ii) If applicable, automobile liability insurance, including coverage for
owned, non-owned and hired automobiles for both bodily injury, including death
and property damage and containing appropriate no-fault insurance provisions or
other endorsements in accordance with state legal requirements, with limits of
not less than $1,000,000 combined single limit for bodily injury and property
damage. To the extent that there are no owned vehicles, hired and non-owned auto
liability either under a separate automobile liability policy or the commercial
general liability described above.

(iii) If applicable, workers compensation and employer’s liability insurance, to
the extent the Company has employees, providing statutory benefits and no less
than $1,000,000 (for employer’s liability) and such other forms of insurance
which the Company is required by law to provide for the Project, All States
endorsement and USL&H Act coverage (if any work is performed near or over
water), covering loss resulting from bodily injury, sickness, disability or
death of the employees of the Company performing work with respect to the
Project.

(iv) The Company shall (X) cause Ormat (in its capacity as “contractor” under
the EPC Contract) to maintain sudden and accidental pollution liability with a
limit of not less

 

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than $10,000,000 per occurrence and policy term aggregate until the Completion
Date as defined in the EPC Contract and such cover shall name Company and Ormat
(in its capacity as “lender” under this Agreement) as additional insured(s), and
either under separate policy or included within the liability insurance that
Ormat provides under the EPC Contract and (Y) maintain sudden and accidental
pollution liability with a limit of not less than $5,000,000 per occurrence and
policy term aggregate during operations. Such cover may be written on
occurrence, claims-made or time element-short term pollution liability forms.

(v) If any aircraft or watercraft is used for Project operations, the Company
shall purchase aircraft and/or watercraft liability, to insure the use of any
owned, non-owned or chartered aircraft or watercraft with limits of not less
than $15,000,000 per occurrence and annual aggregate basis.

(vi) Excess or Umbrella Liability Insurance of not less than $10,000,000 per
occurrence and annual aggregate basis on an “occurrence” policy form and cover
shall follow form in excess of the coverage provided by the policies described
in paragraphs (c)(i), (c)(ii), (c)(iii) and (c)(iv) above, as applicable.

(vii) Operational property insurance on an “all risk” basis covering all of the
Project’s physical assets at the earlier of the Completion Date (as defined in
the EPC Contract) or expiration of the builders risk coverage purchased by Ormat
under the EPC Contract ensuring no gaps in coverage and including without
limitation all buildings, structures, boilers, machinery, equipment, rail cars,
facilities, fixtures, supplies, and other properties constituting a part of the
Project, and any property of others for which the Company has responsibility to
insure, in an amount not less than the full replacement cost value of the
Project and such other property with no coinsurance penalty or deduction for
depreciation or a waiver thereof and providing, without limitation:

(A) coverage against loss or damage caused by, but not limited to, fire,
lightning, windstorm, hail, explosion, riot, civil commotion, aircraft,
vehicles, smoke, earthquake, flood, collapse, sinkhole, subsidence and other
risks included under industry standard “all risk” policies; provided, however,
that earthquake and flood coverage may each be subject to an annual aggregate
limit of not less than $25,000,000 (including coverage required in clause
(G) below), or such other sublimits as Ormat may from time to time reasonably
require to be insured;

(B) coverage for off-site storage with a per occurrence limit sufficient to
cover the full replacement cost of property and equipment stored off-site, as
applicable;

(C) coverage for transit to the extent an exposure exists or arises, with a per
occurrence limit of $1,000,000 or such higher amount as is sufficient to cover
the full replacement cost of any item in transit;

(D) coverage for machinery breakdown for all equipment and machinery that
qualifies for cover under a machinery breakdown policy, on a “comprehensive”
basis with limits of not less than full replacement cost of such objects;

 

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(E) coverage for resultant damage following loss or damage from a covered peril
with design clause wording of at least LEG 2/96 or its equivalent;

(F) coverage for on-site pollution clean-up from land or water with a sub-limit
of not less than $250,000 in the annual aggregate, unless coverage is provided
under a pollution liability policy;

(G) coverage for business interruption, contingent business interruption (for
direct suppliers and customers) and extra expense, with respect to the perils
required to be insured above, in an amount not less than 12 months of gross
revenues less non-continuing expenses and not less than $2,000,000 for
contingent business interruption with respect to the first non owned electrical
interconnection or substation, and not less than $1,000,000 for extra expense.
Such cover shall be on an all risk basis with the exception of the contingent
business interruption which shall be on best available terms that are
commercially reasonable; and

(H) deductibles at no greater than $250,000 for property damage, except for
Earthquake which may be 2% of total insured value, $500,000 for machinery
breakdown, for the steam turbine generator, and for boilers and forty-five
(45) days for business interruption, extra expense and contingent business
interruption.

(vii) Operators extra expense insurance on the geothermal wells constituting the
Wellfield and the development, operation and maintenance of the Wellfield
including (A) control of well insurance, (B) redrilling and extra expense
insurance, and (C) seepage and pollution, clean-up and contamination insurance;
all with a combined single limit in the amount of $3,000,000.

(viii) Such other or additional insurance to cover increases or changes in
risks, including limits, coverages, deductibles or other terms and conditions as
guided by Prudent Generator Practices, as are from time to time insured against
for properties and facilities similar in nature, use and location to the Project
which Ormat may reasonably require.

(d) All policies covering real or personal property issued pursuant hereto
(including all risk property and business interruption) shall be, in such form
and on terms and conditions (including the form of lender loss payable clauses
and the form of non-vitiation or multiple insureds clauses, as applicable)
acceptable to Ormat.

(e) Ormat shall be named as additional insured under policies of general
liability insurance (including excess liability and automobile liability) and
the all risk property insurance. Except as otherwise expressly provided in the
EPC Contract with regard to insurance furnished by Ormat in its capacity as
“contractor” under the EPC Contract, all policies obtained by Owner under this
Agreement shall be primary and non-contributory with any insurance carried by or
on behalf of Ormat.

(f) Ormat (in its capacity as “lender” under this Agreement) shall be the
beneficiary of a mortgagee / lender’s loss payable form acceptable to Ormat,
form 438 BFU or equivalent. Ormat (in its capacity as “lender” under this
Agreement), shall be endorsed as the sole loss payee for all loss proceeds in
excess of $1,000,000, under all business interruption (including delay in

 

  Appendix A   Page 3

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startup) and all risk property, insurance procured and maintained for the
Project. During the continuance of an Event of Default, Ormat shall notify the
insurer that an Event of Default has occurred and is continuing hereunder in
which case all proceeds shall be paid directly to the Depositary for application
in accordance with the Accounts Agreement. Upon payment and satisfaction of all
of the Company’s obligations under, and termination of, the Financing Documents,
the Company may instruct (upon receiving approval from Ormat, not to be
unreasonably withheld, delayed or conditioned) the insurers to name the Company,
or such successor credit provider or other Person as the Company shall specify,
as loss payee.

(g) Each policy shall expressly provide that all provisions thereof, except the
limits of liability (which shall be applicable to all insureds as a group) and
liability for premiums (which shall be solely a liability of the Company) shall
operate in the same manner as if there were a separate policy covering each such
insured. Each policy shall waive subrogation against Ormat in its capacity as a
“lender” under this Agreement and as a “contractor” under the EPC Contract. To
the extent commercially available, each such policy shall be endorsed to provide
that if any premium or instalment is not paid when due, or if such insurance is
to be cancelled, terminated or materially and adversely changed for any reason
whatsoever, the insurers (or their representatives) will promptly notify the
Company and Ormat, and any such cancellation, termination or change shall not be
effective until 30 days, except 7 days with regard to non-payment, after receipt
of such notice by Ormat. To the extent endorsement of the required policies to
provide such written notice of cancellation or material change to Ormat is not
commercially available, the Company shall be obligated to provide written notice
of cancellation or material change to Ormat.

(h) In the event that the Company fails to respond in a timely and reasonable
manner to take any steps necessary or reasonably requested by Ormat to collect
from any insurers for any loss covered by any insurance required to be
maintained by this Appendix A, Ormat shall have the right to direct the Company
to, upon Ormat’s request and at the Company’s own cost and expense, make all
proofs of loss and take all other steps necessary or reasonably requested by
Ormat to collect from insurers for any loss covered by any insurance required
herein.

(i) In the event that at any time the insurance required herein shall be reduced
or cease to be maintained, then Ormat may, at its option, maintain the insurance
required hereby and, in such event, the Company shall reimburse Ormat for the
cost of such insurance.

(j) In the event any insurance (including the limits or deductibles thereof)
hereby required to be maintained, other than insurance required by law to be
maintained described in this Appendix A, shall not be available on commercially
reasonable terms in the commercial insurance market, Ormat shall not
unreasonably withhold its agreement to waive such requirement to the extent the
maintenance thereof is not so available; provided, however, that (i) the Company
shall first request any such waiver in writing, which request shall be
accompanied by written reports prepared by the Company’s insurance
representative, certifying that such insurance is not available on commercially
reasonable terms in the commercial insurance market for electric generating
plants of similar type and capacity (and, in any case where the required amount
is not so available, certifying as to the maximum amount which is so available
on commercially reasonable terms) and explaining in detail the basis for such
conclusions and the form and substance of such reports to be reasonably
acceptable to Ormat;

 

  Appendix A   Page 4

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(ii) at any time after the granting of any such waiver, Ormat may request, and
the Company shall furnish to Ormat within 15 days after such request,
supplemental reports reasonably acceptable to Ormat updating the prior reports
and reaffirming such conclusion; and (iii) any such waiver shall be effective
only so long as such insurance shall not be available on commercially reasonable
terms in the commercial insurance market.

(k) In the event that any policy is written on a “claims-made” basis and such
policy is not renewed or the retroactive date of such policy is to be changed,
the Company shall obtain for each such policy or policies the broadest basic and
supplemental extended reporting period coverage or “tail” cover reasonably
available in the commercial insurance market for each such policy or policies,
but in no event less than two years and shall provide Ormat with proof that such
basic and supplemental extended reporting period coverage or “tail” cover has
been obtained.

 

  Appendix A   Page 5

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APPENDIX B – Real Estate Documents

1. Amended and Restated Utah State Mineral Lease Form, Geothermal Energy Lease,
Mineral Lease No. ML 50921-A, effective as of July 1, 2007 between the State of
Utah School and Institutional Trust Lands Administration (“SITLA”), as landlord,
and Thermo No. 1 BE-01, LLC, as tenant.

2. Geothermal Resources Lease, effective as of September 25, 2007, between
Intermountain Renewable Power, LLC and Minersville Land and Livestock Company,
as landlord, as subsequently assigned to Thermo No.1 BE-01, LLC on August 27,
2008.

3. Geothermal Lease and Agreement, effective as of February 18, 2009, between
Intermountain Renewable Power, LLC and Mobil Exploration And Producing North
America Inc., as landlord, as subsequently assigned to Thermo No. 1 BE-01, LLC
on December 15, 2011.

4. U.S. Bureau of Land Management Right-of-Way Grant, UTU-83018, effective as of
June 5, 2008, granting to Intermountain Renewable Power, LLC the right to
construct, operate and maintain an overhead electrical transmission line on
public lands located in Beaver County, Utah, as subsequently assigned to Thermo
No. 1 BE-01, LLC.

5. Right of Way Easement for the construction of electric power transmission,
distribution and communication lines granted by New Horizons Trust to
Intermountain Renewable Power dated July 17, 2008, as subsequently assigned to
Thermo No.1 BE-01, LLC on August 29, 2008.

6. Right of Way Easement for the construction of electric power transmission,
distribution and communication lines granted by Minersville Land and Livestock
to Intermountain Renewable Power dated April 14, 2008, as subsequently assigned
to Thermo No.1 BE-01, LLC on August 29, 2008.

7. Grant of Easement for the construction of a geothermal power plant and
related facilities, pipelines, utility connections and transmission lines
granted by Minersville Land and Livestock Co. to Intermountain Renewable Power,
LLC, dated May 15, 2008, as subsequently assigned to Thermo No.1 BE-01, LLC on
August 29, 2008.

8. Right of Way Easement for the construction of electric power transmission,
distribution and communication lines granted by Wendy J. Pauluk to Intermountain
Renewable Power dated May 18, 2008, as subsequently assigned to Thermo No.1
BE-01, LLC on August 29, 2008.

9. Easement No.1370 for the construction of an overhead power line on state
trust lands granted by the State of Utah by and through SITLA to Thermo No.1
BE-01, LLC commencing on July 1, 2008.

10. Order of the State Engineer approving the Application to Appropriate Water
Number 71-5107 (A77441) in the name of Intermountain Renewable Power, LLC dated
April 9, 2008, as subsequently assigned to Thermo No.1 BE-01, LLC on August 27,
2008.

 

  Appendix B   Page 1

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11. Order of the State Engineer approving the Application to Appropriate Water
Number 71-5146 (A78253) in the name of Intermountain Renewable Power, LLC dated
October 6, 2008, as subsequently assigned to Thermo No.1 BE-01, LLC on
December 9, 2011.

12. Order of the State Engineer approving the Application to Appropriate Water
Number 71-533 (a34489) in the name of Intermountain Renewable Power LLC as
Optionee, Daniel L. and Breezy Carter, North Springs, LLC and Thermo No.1 BE-01,
LLC, filed on February 4, 2009.

13. Water Deed dated August 29, 2008 from Reed M. Carter and Debra Carter,
husband and wife as joint tenants and grantors, to Thermo No. 1 BE-01, LLC, as
grantee with regard to WUC Nos. 71-2187, 71-2184, 71-533, 71-2057 and 5.25 acres
of irrigation from 71-5135 (as segregated from WUC No. 71-1658) and 0.80
acre-feet from 71-5133 (as segregated from WUC 71-1738).

14. Water Deed dated September 8, 2008 from North Springs LLC, as grantor, to
Thermo No. 1 BE-01, LLC, as grantee with regard to WUC Nos. 71-540, 71-541 and
137.588 acre feet from WR No. 71-5134 (as segregated from WUC 71-4498).

15. Water Deed dated September 8, 2008 from Vern Alan Wood and Tamra Lynn Wood,
as grantors, to Thermo No. 1 BE-01, LLC, as grantee with regard to WUC Nos.
71-4216, 71-4179, 71-4180, 71-4181, 71-4183, 71-4217, 71-4218, 71-4219, 71-4220,
71-4226 and 71-4232.

16. Geothermal Resources Lease, effective as of May 23, 2008, between
Intermountain Renewable Power, LLC and Mark and Cindy Whitney, as landlords, as
subsequently assigned to Thermo No.1 BE-01, LLC on August 27, 2008.*

17. Geothermal Energy Lease, ML-50773, as amended and restated, effective as of
April 1, 2007, between Intermountain Renewable Power, LLC and the Utah School
and Institutional Trust Lands Administration, State of Utah, as subsequently
assigned to Thermo No. 1 BE-01 LLC on August 12, 2008.*

18. Geothermal Energy Lease, ML-51193, effective as of March 1, 2008, between
Raser Technologies, Inc. and the Utah School and Institutional Trust Lands
Administration, State of Utah, as subsequently assigned to Thermo No. 1 BE-01
LLC on August 12, 2008.*

19. Geothermal Energy Lease, ML-50856, effective as of June 1, 2007, between
Raser Technologies, Inc. and the Utah School and Institutional Trust Lands
Administration, State of Utah, as subsequently assigned to Thermo No. 1 BE-01
LLC on August 12, 2008.*

 

* Specified Collateral

 

  Appendix B   Page 2

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EXHIBIT A – Form of Financial Statement Certificate

[Date]

Ormat Nevada Inc.

under the Agreement

referred to below

6225 Neil Road

Reno, Nevada 89511-1136

Attn: President

Telephone: (775) 356-9029

Facsimile: (775) 356-9039

 

Re: CREDIT AGREEMENT (as amended, modified or otherwise supplemented from time
to time, the “Agreement”) dated as of December 19, 2011], between Thermo No. 1
BE-01, LLC, a Delaware limited liability company (the “Company”) and Ormat
Nevada Inc., a Delaware corporation (“Ormat”).

Ladies and Gentlemen:

In connection with the delivery of the attached financial statements pursuant to
Section 5.10(c) of the Agreement, the undersigned, an Authorized Representative
of the Company, hereby certifies that:

1. The Financial Statements fairly present the financial condition and results
of operations of the Company on the dates and for the periods indicated in
accordance with GAAP, subject, in the case of interim financial statements, to
the absence of footnotes, normally recurring year-end adjustments[and the effect
of accounting adjustments resulting from the transactions contemplated by the
Plan of Reorganization] [USE BRACKETED LANGUAGE TO THE EXTENT IT REMAINS
APPLICABLE];

2. No Default or Event of Default has occurred and is continuing, or , if a
Default or Event of Default has occurred and is continuing, attached hereto is a
statement as to the nature thereof; and

3. [If applicable] The Company is in compliance with the Cash Grant Terms and
Conditions and Cash Grant Guidance.

 

  Exhibit A   Page 1

--------------------------------------------------------------------------------

The undersigned hereby certifies as to the foregoing on behalf of the Company as
of this      day of             , 20    .

 

THERMO NO. 1 BE-01, LLC By  

 

Name   Title  

 

  Exhibit A   Page 2

--------------------------------------------------------------------------------

EXHIBIT B-1 – Form of Consent to Assignment (Additional Material Project
Document)

CONSENT AND AGREEMENT

This CONSENT AND AGREEMENT (this “Consent”), dated as of              20    , is
entered into by and among [Insert name of Contracting Party], a
[                    ] (the “Contracting Party”), Ormat Nevada Inc., a Delaware
corporation, as secured party (“Ormat”), and Thermo No. 1 BE-01, LLC, a Delaware
limited liability company (the “Company”).

RECITALS

WHEREAS, the Company is repowering its geothermal power plant in Beaver County,
Utah with a planned additional generation capacity of approximately twelve and
thirty-four hundredths (12.34) MW (gross);

WHEREAS, the Company and Ormat have entered into that certain Credit Agreement,
dated as of December 19, 2011 (as amended, restated, supplemented and/or
otherwise modified from time to time in accordance with the terms thereof, the
“Credit Agreement”), pursuant to which the Company and Ormat have agreed, inter
alia, that the Company will repay the Advance Amount (as defined in the Credit
Agreement) to Ormat in satisfaction of amounts owed by the Company to Ormat,
subject to the terms and conditions set forth in the Credit Agreement;

WHEREAS, the Contracting Party and the Company have entered into that certain
[Insert description of relevant Project Document(s)], dated as of
[                    ] [    ], [        ] (as amended, restated, supplemented
and/or otherwise modified from time to time in accordance with the terms thereof
and hereof, the “Assigned Agreement[s]”);

WHEREAS, pursuant to that certain Security Agreement between the Company and
Ormat, dated as of December 19, 2011 (as amended, restated, supplemented and/or
otherwise modified from time to time in accordance with the terms thereof, the
“Security Agreement”) the Company has agreed, inter alia, to assign all of its
right, title and interest in, to and under the Assigned Agreement[s] to Ormat as
security for the Company’s obligations under the Credit Agreement and the other
Financing Documents, as defined in the Credit Agreement (collectively, the
“Financing Documents”); and

WHEREAS, it is a requirement under the Financing Documents that the Contracting
Party and the Company execute and deliver this Consent.

 

  Exhibit B-1   Page 1

--------------------------------------------------------------------------------

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound, the parties hereto hereby
agree, notwithstanding anything in the Assigned Agreement[s] to the contrary, as
follows:

 

1. ASSIGNMENT AND AGREEMENT

 

  1.1 Consent to Assignment

The Contracting Party (a) is hereby notified that Ormat has incurred (or has
agreed to incur) the obligations owed to Ormat under the Financing Documents
(collectively, the “Secured Obligations”) in reliance upon the execution and
delivery by the Contracting Party of the Assigned Agreement[s] and this Consent,
(b) consents to the assignment as security under the Security Agreement of all
of the Company’s right, title and interest in, to and under the Assigned
Agreement[s], including, without limitation, all of the Company’s rights to
receive payment (if any) and all payments due and to become due to the Company
under or with respect to the Assigned Agreement[s] (collectively, the “Assigned
Interests”) and (c) acknowledges the right of Ormat, during the continuance of
an Event of Default under the Credit Agreement and in the exercise of Ormat’s
rights and remedies pursuant to the Security Agreement, upon written notice to
the Contracting Party, to make all demands, give all notices, take all actions
and exercise all rights of the Company under the Assigned Agreement[s].

 

  1.2 Subsequent Owner

(a) The Contracting Party agrees that, if Ormat notifies the Contracting Party
in writing that, pursuant to and in accordance with the terms and conditions of
the Credit Agreement and the Security Agreement, it has assigned, foreclosed or
sold the Assigned Interests, then (i) Ormat or its successor, assignee and/or
designee, or any purchaser of the Assigned Interests (a “Subsequent Owner”)
shall be substituted for the Company under the Assigned Agreement[s] and
(ii) the Contracting Party shall (A) recognize Ormat or the Subsequent Owner, as
the case may be, as its counterparty under the Assigned Agreement[s] and
(B) continue to perform its obligations under the Assigned Agreement[s] in favor
of Ormat or the Subsequent Owner, as the case may be; provided that Ormat or
such Subsequent Owner, as the case may be, has assumed in writing all of the
Company’s rights and obligations (including, without limitation, the obligation
to cure any then existing payment and performance defaults, but excluding any
obligation to cure any then existing performance defaults which by their nature
are incapable of being cured) under the Assigned Agreement[s].

(b) Without limiting anything herein, any warranties provided by the Contracting
Party under the Assigned Agreement[s] shall continue in full force and effect
(until the expiration of the applicable warranty periods set forth in the
Assigned Agreement[s]) in the event that Ormat or a Subsequent Owner succeeds to
the Company’s right, title and interest in the Assigned Agreement[s].

 

  1.3 Right to Cure

If the Company defaults in the performance of any of its obligations under the
Assigned Agreement[s], or upon the occurrence or non-occurrence of any event or
condition under the Assigned Agreement[s] which would immediately or with the
passage of any applicable grace period or the giving of notice, or both, enable
the Contracting Party to

 

CONSENT AND AGREEMENT   -2-   

--------------------------------------------------------------------------------

terminate or suspend its performance under the Assigned Agreement[s] (each
hereinafter a “default”), the Contracting Party shall not terminate or suspend
its performance under the Assigned Agreement[s] until it first gives written
notice of such default to Ormat and affords Ormat a period of at least 30 days
(or if such default is a nonmonetary default, such longer period (not to exceed
90 days) in addition to any cure period afforded the Company under the Assigned
Agreement[s] as may be required so long as Ormat has commenced and is diligently
pursuing appropriate action to cure such default within such longer period) from
receipt of such notice to cure such default; provided, however, that (a) if
possession of the Project is necessary to cure such nonmonetary default and
Ormat has, in accordance with the Credit Agreement, commenced foreclosure in
accordance with the Credit Agreement and the related security documents or has
sought relief from the automatic stay in the event the Company is in bankruptcy,
Ormat shall be allowed a reasonable time to complete such proceedings within
such longer period, and (b) if Ormat is prohibited from curing any such
nonmonetary default by any process, stay or injunction issued by any
governmental authority or pursuant to any bankruptcy or insolvency proceeding or
other similar proceeding involving the Company, then the time periods specified
herein for curing a nonmonetary default shall be extended for the period of such
prohibition plus a period of ninety (90) days after such prohibition ends. In
the event Ormat does not cure any such default within such applicable extended
cure period, the Contracting Party shall continue to have all rights and
remedies afforded to it under the Assigned Agreement[s].

 

  1.4 No Amendments

(a) The Contracting Party agrees that it shall not, without the prior written
consent of Ormat (such consent not to be unreasonably withheld, conditioned or
delayed), enter into any novation, amendment or other modification of the
Assigned Agreement[s].

(b) The Contracting Party agrees that it shall not, without the prior written
consent of Ormat, (i) sell, assign or otherwise transfer any of its rights under
the Assigned Agreement[s] (other than (A) its right to receive payments under
the Assigned Agreement[s] and (B) its right to subcontract under the Assigned
Agreements[s]), (ii) terminate, cancel or suspend its performance under the
Assigned Agreement[s] (unless it has given Ormat any notice and opportunity to
cure that are required by Section 1.3), (iii) consent to any assignment or other
transfer by the Company of its rights under the Assigned Agreement[s] or
(iv) consent to any voluntary termination, cancellation or suspension of
performance by the Company under the Assigned Agreement[s].

 

  1.5 Replacement Agreements

In the event [any or all of] the Assigned Agreement[s] is rejected or terminated
as a result of any bankruptcy, insolvency, reorganization or similar proceeding
affecting the Company, the Contracting Party shall, at the option of Ormat
exercised within forty-five (45) days after such rejection or termination, enter
into a new agreement with Ormat having identical terms, conditions, agreements,
provisions and limitations as the [applicable] Assigned Agreement[s] (subject to
any conforming changes necessitated by the substitution of parties and other
changes as the parties may mutually agree), provided that (a) the term

 

CONSENT AND AGREEMENT   -3-   

--------------------------------------------------------------------------------

under such new agreement shall be no longer than the remaining balance of the
term specified in the [applicable] Assigned Agreement, and (b) upon execution of
such new agreement, Ormat cures any outstanding payment and performance defaults
under the [applicable] Assigned Agreement, excluding any performance defaults
which by their nature are incapable of being cured.

 

  1.6 Limitations on Liability

The Contracting Party acknowledges and agrees that Ormat shall not have any
liability or obligation under the Assigned Agreement[s] as a result of this
Consent, the Security Agreement or otherwise, nor shall Ormat be obligated or
required to (a) perform any of the Company’s obligations under the Assigned
Agreement[s], except obligations that accrue during any period in which Ormat
has assumed the Company’s rights and obligations under the Assigned Agreement[s]
pursuant to Section 1.2(a), or (b) take any action to collect or enforce any
claim for payment assigned under the Security Agreement. If Ormat has assumed
the Company’s rights and obligations under the Assigned Agreement[s] pursuant to
Section 1.2(a) or has entered into a new agreement pursuant to Section 1.5
above, Ormat’s liability to the Contracting Party under the Assigned
Agreement[s] or such new agreement, and the sole recourse of the Contracting
Party in seeking enforcement of the obligations under such agreements, shall be
limited to the interest of Ormat in the Project.

 

  1.7 Delivery of Notices

The Contracting Party shall deliver to Ormat, concurrently with the delivery
thereof to the Company, a copy of each notice, request or demand given by the
Contracting Party to the Company pursuant to the Assigned Agreement[s] relating
to (a) a default by the Company under the Assigned Agreement[s] and (b) any
matter that would require the consent of Ormat pursuant to Section 1.4 of this
Consent. Failure of the Contracting Party to provide a copy of any such notice,
request or demand or any other notice specified in Section 1.3 hereof to Ormat
shall not constitute a breach of this Consent, and Ormat agrees that the
Contracting Party shall have no liability to Ormat for such failure; provided,
however, that no cancellation, suspension or termination of the Assigned
Agreement[s] by the Contracting Party, or any other actions taken by the
Contracting Party under the Assigned Agreement, shall be binding upon Ormat or
the Company without such notice, request or demand (as applicable), if
applicable under Section 1.3, the opportunity to cure during the applicable
extended cure period specified in Section 1.3 and, if applicable under
Section 1.4, the consent of Ormat.

 

  1.8 Transfer

In the event Ormat or its designee is substituted for the Company under the
Assigned Agreement[s] pursuant to Section 1.2 or a new agreement entered into
pursuant to Section 1.5, then, subsequent to such substitution, Ormat shall have
the right to assign all of its interest in the Assigned Agreement[s] or such new
agreement to any entity; provided that such assignee assumes in writing the
obligations of Ormat under the Assigned Agreement[s] or such new agreement. Upon
such assignment, Ormat shall be released from any further liability under the
Assigned Agreement[s] or such new agreement.

 

CONSENT AND AGREEMENT   -4-   

--------------------------------------------------------------------------------

2. PAYMENTS UNDER THE ASSIGNED AGREEMENT

 

  2.1 Payments

The Contracting Party shall pay all amounts (if any) payable by it under the
Assigned Agreement[s] in the manner and as and when required by the Assigned
Agreement[s] to the following account [INSERT ACCOUNT INFORMATION FROM
DEPOSITARY].

 

  2.2 No Offset, Etc.

All payments required to be made by the Contracting Party under the Assigned
Agreement[s] shall be made without any offset, recoupment, abatement,
withholding, reduction or defense whatsoever, other than those allowed by the
terms of the Assigned Agreement.

 

3. REPRESENTATIONS AND WARRANTIES OF CONTRACTING PARTY

The Contracting Party hereby represents and warrants, in favor of Ormat, as of
the date hereof, that:

(a) The Contracting Party (i) is a [                    ] duly organized and
validly existing under the laws of the State of [                    ], and
(ii) has all requisite power and authority to enter into and to perform its
obligations hereunder and under the Assigned Agreement[s], and to carry out the
terms hereof and thereof and the transactions contemplated hereby and thereby;

(b) the execution, delivery and performance by the Contracting Party of this
Consent and the Assigned Agreement[s] have been duly authorized by all necessary
corporate or other action on the part of the Contracting Party and do not
require any approvals, filings with, or consents of any entity or person which
have not previously been obtained or made;

(c) each of this Consent and the Assigned Agreement[s] is in full force and
effect, has been duly executed and delivered on behalf of the Contracting Party
by the appropriate officers of the Contracting Party, and constitutes the legal,
valid and binding obligation of the Contracting Party, enforceable against the
Contracting Party in accordance with its terms, except as the enforceability
thereof may be limited by (i) bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors’ rights generally and
(ii) general equitable principles (whether considered in a proceeding in equity
or at law);

(d) there is no litigation, action, suit, proceeding or investigation pending or
(to the best of the Contracting Party’s knowledge) threatened against the
Contracting Party before or by any court, administrative agency, arbitrator or
governmental authority, body or agency which, if adversely determined,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the performance by the Contracting Party of its
obligations hereunder or under the Assigned Agreement[s];

 

CONSENT AND AGREEMENT   -5-   

--------------------------------------------------------------------------------

(e) the execution, delivery and performance by the Contracting Party of this
Consent and the Assigned Agreement[s], and the consummation of the transactions
contemplated hereby and thereby, do or will not result in any violation of,
breach of or default under any term of its formation or governance documents, or
of any contract or agreement to which it is a party or by which it or its
property is bound, or of any license, permit, franchise, judgment, injunction,
order, law, rule or regulation applicable to it, other than any such violation,
breach or default which could not reasonably be expected to have a material
adverse effect on the Contracting Party’s ability to perform its obligations
under the Assigned Agreement[s] or this Consent;

(f) neither the Contracting Party nor, to the best of the Contracting Party’s
knowledge, any other party to the Assigned Agreement[s], is in default of any of
its obligations thereunder;

(g) to the best of the Contracting Party’s knowledge, (i) no event of force
majeure exists under, and as defined in, the Assigned Agreement[s] and (ii) no
event or condition exists which would either immediately or with the passage of
any applicable grace period or giving of notice, or both, enable either the
Contracting Party or the Company to terminate or suspend its obligations under
[any of] the Assigned Agreement[s]; and

(h) the Assigned Agreement[s] and this Consent are the only agreements between
the Company and the Contracting Party with respect to the Project, and all of
the conditions precedent to effectiveness under the Assigned Agreement[s] have
been satisfied or waived.

Each of the representations and warranties set forth in this Section 3 shall
survive the execution and delivery of this Consent and the Assigned Agreement[s]
and the consummation of the transactions contemplated hereby and thereby.

 

4. ADDITIONAL PROVISIONS

[Insert specific provisions as may be relevant to the Assigned Agreement. Such
provisions, if any, to be identified after due diligence and review of the
Assigned Agreement. With respect to Affiliate Contracts, such provisions to
include right of Ormat to terminate the Assigned Agreement[s] upon 30 days
notice if any Secured Obligation Event of Default shall have occurred and be
continuing.]

 

5. MISCELLANEOUS

 

  5.1 Addresses

All notices, requests and other communications provided for in this Consent
shall be given or made in writing (including, without limitation, by facsimile)
delivered to the intended recipient at the address specified below or, as to any
party, at such other address as shall be designated by such party in a notice to
each other party. Except as otherwise

 

CONSENT AND AGREEMENT   -6-   

--------------------------------------------------------------------------------

provided in this Consent, all such communications shall be deemed to have been
duly given when transmitted by facsimile with confirmation of receipt received
or personally delivered or, in the case of a mailed or delivered notice, upon
receipt, in each case given or addressed as aforesaid; provided, however, that
if such transmission or delivery does not occur by 4:00 p.m. recipient’s time,
then such transmission or delivery shall be deemed to occur on the next business
day.

 

If to Company:   

Thermo No. 1 BE-01, LLC

136 South Main Street, Suite 600

Salt Lake City, Utah 84101

  

Attention: Nicholas Goodman

Fax: (801) 374-3314

If to Contracting Party:    [                                         ]   
[                                 ]    [                                 ]   
Attn: [                            ]    Telephone:
[                                ]    Facsimile:
[                                ] If to Ormat:   

Ormat Nevada, Inc.

6225 Neil Road

Reno, Nevada 89511-1136

   Attn: President    Telephone: (775) 356-9029    Facsimile: (775) 356-9039

 

  5.2 Governing Law; Jurisdiction; Etc.

(a) Governing Law. This Consent shall be construed in accordance with and
governed by the law of the State of New York, without regard to principles of
conflicts of law thereof that would result in the application of the laws of any
other jurisdiction. It is the intent and purpose of the parties hereto that the
provisions of Section 5-1401 of the General Obligations Law of the State of New
York shall apply to this Agreement.

(b) Submission to Jurisdiction. Any legal action or proceeding with respect to
this Consent shall be brought in the courts of the State of New York in the
County of New York or the United States for the Southern District of New York
and, by execution and delivery of this Agreement, each party hereto hereby
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each party hereto
agrees that a judgment, after exhaustion of all available appeals, in any such
action or proceeding shall be conclusive and binding upon it, and may be
enforced in any other jurisdiction, including by a suit upon such judgment, a
certified copy of which shall be conclusive evidence of the judgment.

 

CONSENT AND AGREEMENT   -7-   

--------------------------------------------------------------------------------

(c) Waiver of Venue. Each party hereto hereby irrevocably waives any objection
that it may now have or hereafter have to the laying of the venue of any suit,
action or proceeding arising out of or relating to this Agreement brought in the
Supreme Court of the State of New York, County of New York, the United States
District Court for the Southern District of New York and hereby further
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum.

(d) Waiver of Jury Trial. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS
CONSENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF
THE PARTIES HERETO OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR
OTHERWISE; AND EACH SUCH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS CONSENT MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

  5.3 Counterparts

This Consent may be executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one
and the same instrument.

 

  5.4 Headings Descriptive

The headings of the several sections and subsections of this Consent are
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Consent.

 

  5.5 Severability

In case any provision in or obligation under this Consent shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.

 

  5.6 Amendment, Waiver

Neither this Consent nor any of the terms hereof may be terminated, amended,
supplemented, waived or modified except by an instrument in writing signed by
the Contracting Party, the Company and Ormat.

 

CONSENT AND AGREEMENT   -8-   

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  5.7 Successors and Assigns

This Consent shall bind and benefit the Contracting Party, Ormat, the Company
and their respective successors and permitted assigns.

 

  5.8 Third Party Beneficiaries

The Contracting Party and Ormat hereby acknowledge and agree that Ormat and any
Subsequent Owners are intended third-party beneficiaries of this Consent.

 

  5.9 Entire Agreement

This Consent and any agreement, document or instrument attached hereto or
referred to herein integrate all the terms and conditions mentioned herein or
incidental hereto and supersede all oral negotiations and prior writings between
the parties hereto in respect of the subject matter hereof. In the event of any
conflict between the terms, conditions and provisions of this Consent and any
such agreement, document or instrument (including, without limitation, the
Assigned Agreement[s]), the terms, conditions and provisions of this Consent
shall prevail.

 

  5.10 Refinancing

The Contracting Party acknowledges that the Company may from time to time obtain
refinancing for the Project and Contracting Party agrees that it will execute in
favor of the lenders (or the representative of such lenders) providing such
refinancing a consent to assignment containing terms and conditions that are
identical in substance (taking into account required name changes and the like)
to the terms and conditions contained in this Consent.

[The remainder of this page is intentionally left blank; signature page
follows.]

 

CONSENT AND AGREEMENT   -9-   

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IN WITNESS WHEREOF, the parties hereto have caused this Consent to be duly
executed as of the day and year first above written.

 

Company: THERMO NO. 1BE-01, LLC By  

 

  Name:  

 

  Title:  

 

Contracting Party: [                                         ] By  

 

  Name:  

 

  Title:  

 

Accepted and Agreed to:

 

Ormat: ORMAT NEVADA, INC. By  

 

  Name:  

 

  Title:  

 

 

CONSENT AND AGREEMENT   -10-   

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EXHIBIT B-2 – Opinion Coverage (Additional Material Project Document)

Counsel to the counterparty to the Additional Material Project Document to
provide a usual and customary legal opinion addressing:

(1) corporate (or similar) existence

(2) corporate (or similar) power and authority to enter in such Additional
Material Project Document and Consent to Assignment (to the extent applicable)

(3) due authorization, execution and delivery of such Additional Material
Project Document and Consent to Assignment (to the extent applicable)

(4) enforceability of such Additional Material Project Document and Consent to
Assignment (to the extent applicable)

 

  Exhibit B-2   Page 1

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EXHIBIT B-3 – Form of Consent to Assignment (BLM ROW)

[United States Department of the Interior

BLM Utah Cedar City Field Office Letterhead]

In Reply Refer To:

BLM Right-of-Way Grant, UTU-83018

VIA CERTIFIED MAIL - RETURN RECEIPT REQUESTED

Thermo No. 1 BE-01, LLC

136 South Main Street, Suite 600

Salt Lake City, Utah 84101

Attention:                     

Ormat Nevada Inc.

6225 Neil Road

Reno, Nevada 89511

Attention: President

 

RE: Credit Agreement dated December     , 2011 between Thermo No.1 BE-01, LLC
(“Holder”) and Ormat Nevada Inc. (“Secured Party”) and secured by, among other
things, a deed of trust and collateral assignment of Holder’s right, title and
interest in and to the ROW (as defined below).

To Whom it May Concern:

The Bureau of Land Management (“BLM”) has granted the following right-of-way
(“ROW”) currently held by Holder on public lands managed by BLM and more
particularly described therein:

 

  •  

Right-of-Way Grant, UTU-83018, dated effective as of June 5, 2008, granted to
Intermountain Renewable Power, LLC (“Intermountain”) as assigned by
Intermountain to Holder.

As of this date, BLM confirms that: (a) the ROW is in good standing; (b) the
assignment of the ROW from Intermountain to Holder was approved by BLM and
(c) to the best of its knowledge and belief, (i) the ROW is in full compliance
as to all matters, (ii) the ROW is in full compliance as to the payments of
rents, as acknowledged by the Office of Natural Resources Revenue, and
operational (including environmental) matters, in each case under the terms of
the ROW and the applicable federal laws and regulations in accordance with
Title 43, Part 2800, as applicable, of the Code of Federal Regulations, and
(iii) Holder is the current holder of the ROW.

The BLM standard ROW grant form 2800-14, which was used to authorize the ROW, is
a document routinely recorded in county land records. BLM has no objection to
Holder recording the ROW grant documents in the land records of the county or
counties where the ROW grant is located.

 

  Exhibit B-3   Page 1

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At the request of Holder, BLM agrees to provide Secured Party with copies of BLM
Utah Cedar City Field Office correspondence with Holder regarding actions that
would materially amend, assign, supplement or otherwise modify the ROW. BLM
further agrees to provide Secured Party with copies of any written notice from
the BLM Utah Cedar City Field Office to Holder regarding any notice of
non-compliance or default under any of the terms and conditions of the ROW.

BLM will make a notation in the ROW file to show that correspondence with
Secured Party shall be at the following address:

Ormat Nevada Inc.

6225 Neil Road

Reno, Nevada 89511

Attention: President

Telephone: (775) 356-9029

Facsimile: (775) 356-9029

Re: Thermo No.01 BE-01, LLC

Please note that BLM will make every effort to fulfill the notification
requirements described herein, but cannot be held liable for failure to provide
any such notification.

All obligations of Holder under the ROW shall remain with Holder unless and
until assignment of the ROW is filed and approved by BLM, transferring all
rights and obligations under the ROW to Secured Party, or its designee. Secured
Party, such designee (as applicable), and the assignment application must meet
the requirements for approval under Title 43, Parts 2800 of the Code of Federal
Regulations.

The status of the ROW (as to operational (including environmental) matters only)
may be monitored by reviewing its official file held at the BLM Utah Cedar City
Field Office, by contacting the BLM Utah Cedar City Field Office at telephone
number (435) 865-2401, or by writing to the address on the above letterhead.

Should you have questions or concerns, please contact the BLM Utah Cedar City
Field Office at telephone number (435) 865-2401.

 

Sincerely,   

Field Manager

Cedar City Field Office

 

2

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EXHIBIT B-4 – Collateral Assignment Agreement

This Collateral Assignment Agreement (“Collateral Assignment Agreement”) is
entered into as of January 24, 2012 by and between the City of Anaheim, a
municipal corporation (“Anaheim”), and Ormat Nevada Inc., a Delaware corporation
(in such capacity, together with its permitted successors and assigns, the
“Secured Party”) and is acknowledged hereby by Thermo No. 1 BE-01, LLC a special
purpose entity subsidiary of mtermountain Renewable Power, LLC (referred to in
this Collateral Assignment Agreement as “Owner”). Each of Anaheim and Secured
Party is referred to individually herein as a “Party” and together they are
referred to as the “Parties”.

Recitals

A. Pursuant to that certain Renewable Power Purchase and Sale Agreement dated
for purposes of identification only as March 10, 2008 (as may be amended,
modified, supplemented or restated from time to time, including all related
agreements, instruments and documents, collectively, the “Assigned Agreement”)
between Anaheim and Owner, Anaheim has agreed to purchase energy from Owner and
Owner has agreed to perform the obligations set forth in the Assigned Agreement.

B. The Secured Party has provided or has agreed to provide financing to Owner,
and requires that Owner grant to the Secured Party a security interest in the
Assigned Agreement to secure Owner’s obligations in connection with the
financing.

C. Pursuant to the terms of the Credit Agreement (defined below), Owner has
entered or will enter into a Security Agreement (said agreement, together with
the Schedules thereto, as amended, modified or supplemented from time to time,
being hereinafter referred to as the “Security Agreement”) with the Secured
Party, in connection with, and to secure Owner’s obligations under, the Credit
Agreement.

D. In consideration for the execution and delivery of the Assigned Agreement,
Anaheim agreed to enter into a Collateral Assignment Agreement in such terms a
set forth in the Assigned Agreement for the benefit of Owner.

Agreement

1- Definitions. Unless otherwise specified, any capitalized term used but not
defined herein shall have the meaning specified for such term as set forth in
the Assigned Agreement.

2. Consent. Subject to the authority granted in the Assigned Agreement and
subject to the terms and conditions below, Anaheim consents to and approves the
assignment for security purposes, only, by Owner to the Secured Party of the
Assigned Agreement.

3. Limitations on Assignment. The Secured Party acknowledges and confirms that,
notwithstanding any provision to the contrary under applicable law or in any
security or other agreement executed by Owner, the Secured Party shall not sell
or otherwise dispose of the Assigned Agreement (whether by foreclosure sale,
conveyance in lieu of foreclosure or otherwise) unless, on or before the date of
any such sale or disposition, the Secured Party or any

 

1

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third party, as the case may be, purchasing or otherwise acquiring the Assigned
Agreement: (i) cures or causes to be cured any and all defaults of Owner under
the Assigned Agreement, if such default is capable of being cured, (ii) executes
and delivers to Anaheim a written assumption agreement of all of Owner’s rights
and obligations under the Assigned Agreement in form and substance reasonably
satisfactory to Anaheim, and (iii) otherwise satisfies and complies with all the
requirements contemplated in the Assigned Agreement. The Secured Party further
acknowledges that the assignment of the Assigned Agreement is for security
purposes only and that the Secured Party does not have rights under the Assigned
Agreement to enforce the provisions of the Assigned Agreement unless and until
an event of default has occurred and is continuing (a “Financing Default”) under
the credit agreement among Owner and the Secured Party thereto (the “Credit
Agreement”). If a Financing Default has been declared, the Secured Party shall,
concurrently with the delivery of any notice of Financing Default under the
Credit Agreement to Owner, provide a copy of such notice of Financing Default to
Anaheim pursuant to Section 11(a) of this Collateral Assignment Agreement;
provided, however, that any delay of the Secured Party to deliver such notice
shall not waive any of the Secured Party’s rights under this Collateral
Assignment Agreement.

4. Cure Rights.

(a) Notice to the Secured Party by Anaheim. Anaheim shall, concurrently with the
delivery of any Notice of Event of Default under the Assigned Agreement to
Owner, provide a copy of such Notice of Event of Default to the Secured Party
pursuant to Section 11 (a) of this Collateral Assignment Agreement.

(b) Cure Period Available to the Secured Party Prior to Any Termination by
Anaheim. Upon the occurrence of an Event of Default, Anaheim shall not terminate
the Assigned Agreement unless it has first afforded the Secured Party a cure
period in addition to the cure period of Owner under the Collateral Assignment
Agreement for a duration of:

(1) in the case of monetary defaults, thirty (30) calendar days from the
expiration of Owner’s right to cure such default under the Assigned Agreement;

(2) in the case of non-monetary defaults, other than in Section 4(b)(3) below,
sixty (60) calendar days from the expiration of Owner’s right to cure such
default under the Assigned Agreement; or

(3) in the case of Owner becoming Bankrupt (other than any such default arising
as a result of any proceeding under Chapter 7 of the United States Bankruptcy
Code, in which case there shall be no cure period), twenty (20) Business Days
from the expiration of Owner’s right to cure such default under the Assigned
Agreement.

(c) Failure by Anaheim to Deliver Default Notice. If Anaheim fails to deliver a
Notice of Default to the Secured Party as provided in Section 4(a), the cure
periods applicable to the Secured Party, as set forth under Section 4(b) herein,
shall be extended

 

2

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as to the Secured Party only, on a day-to-day basis until such time as Anaheim
delivers a copy of such Notice of Event of Default to the Secured Party. Except
for a delay in the commencement of the cure period for the Secured Party, delay
of Anaheim to deliver the Notice of Event of Default Notice shall not waive
Anaheim’s right to take any action under the Assigned Agreement and will not
subject Anaheim to any damages, liability, or claims, if any, for delay or
failure to provide such Notice of Event of Default to the Secured Party or
Owner.

(d) Extension for Foreclosure Proceedings. If possession of the Project is
necessary for the Secured Party to cure an Event of Default and the Secured
Party commences foreclosure proceedings against Owner within twenty
(20) Business Days of receiving notice of an Event of Default from Anaheim, the
Secured Party shall be allowed a reasonable additional period to complete such
foreclosure proceedings, such period not to exceed one hundred and twenty
(120) days; provided, however, that the Secured Party shall provide a written
Notice to Anaheim that it intends to commence foreclosure proceedings with
respect to Owner within twenty (20) Business Days of receiving a Notice of such
Event of Default from Anaheim or Owner, whichever is received first. In the
event the Secured Party succeeds to Owner’s interest in the Project as a result
of foreclosure proceedings, the Secured Creditor or a purchaser or grantee
pursuant to such foreclosure shall be subject to the requirements of the
Assigned Agreement and Section 3.

5. Setoffs and Deductions. The Secured Party acknowledges and agrees that the
Owner (or the Secured Party upon the Secured Party’s right to cure (on behalf of
the Secured Party) in an Event of Default) and Anaheim each have set off and
deduction rights as set forth in the terms of the Assigned Agreement. The
Secured Party further acknowledges and agrees that it takes the assignment for
security purposes of the Assigned Agreement subject to any defenses or causes of
action Anaheim may have against Owner in law or equity.

6. Replacement Agreement. If the Assigned Agreement is rejected in an Owner
bankruptcy or otherwise terminated in connection therewith and if Secured Party
or its designee, directly or indirectly, takes possession of, or title to, the
Generating Facility (including possession by a receiver or title by foreclosure
or deed in lieu of foreclosure), Secured Party shall or shall cause its designee
to promptly enter into a new renewal power purchase and sale agreement with
Anaheim, in Anaheim’s sole discretion, having substantially the same terms as
the Assigned Agreement.

7. Payment. Anaheim and the Owner agree that payments to be made by Anaheim to
the Owner under the Assigned Agreement, if any, will be made directly to the
following account:

 

Bank Name:    Zions Bank ABA Number:    124000054 CIK Number:    0001103078
A/C Number:    001161850 Acct Name:    Thermo No. 1 BE-01, LLC

 

3

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It is the responsibility and obligation of Owner to ensure that the bank,
account number, and wire instructions set forth herein remain up-to-date and
current. In the event of conflicting provisions, the provisions shall govern in
the following order: first, the Assigned Agreement, and second the Collateral
Assignment Agreement.

8. No Representation or Warranty. Owner and the Secured Party each recognize and
acknowledge that Anaheim makes no representation or warranty, express or
implied, that Owner has any right, title, or interest in the Assigned Agreement
or as to the priority of the assignment for security purposes of the Assigned
Agreement. The Secured Party (on behalf of the Secured Party) is responsible for
satisfying itself as to the existence and extent of Owner’s right, title, and
interest in the Assigned Agreement, and the Secured Party releases Anaheim from
any and all liability, if any, resulting from the assignment for security
purposes of the Assigned Agreement.

9. Amendment to Assigned Agreement. Anaheim shall promptly send notice to the
Secured Party upon entering into any amendment, restatement, revision or
replacement of the Assigned Agreement. Furthermore, Anaheim acknowledges that:
(a) Owner may not enter into an amendment, restatement, revision or replacement
of the PPA without the Secured Party’s consent under the Credit Agreement; and
(b) without such consent any such amendment, restatement, revision or
replacement shall be void ab initio.

10. Representations. On the effective date of this Collateral Assignment
Agreement each of the Parties hereby represents and warrants as to itself only
that:

 

  a. It is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation;

 

  b. The execution, delivery and performance of this Collateral Assignment
Agreement and, with respect to Anaheim, the Assigned Agreement are within its
powers, have been duly authorized by all necessary action and do not violate any
of the terms and conditions in its governing documents, any contracts to which
it is a party or any law, rule, regulation, order or the like applicable to it;

 

  c. This Collateral Assignment Agreement and, with respect to Anaheim, the
Assigned Agreement constitute a legally valid and binding obligation enforceable
against it in accordance with its terms, subject to any Equitable Defenses;

 

  d. It has not relied upon any promises, representations, statements or
information of any kind whatsoever that are not contained in this Collateral
Assignment Agreement or, with respect to Anaheim, the Assigned Agreement in
deciding to enter into this Collateral Assignment Agreement and the Assigned
Agreement, as applicable.

Each of the representations and warranties set forth in this Collateral
Assignment Agreement shall survive the transfer of the Assigned Agreement to the
Secured Party or its designee as contemplated hereby and shall survive the
termination of the Collateral Assignment Agreement.

 

4

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11. Miscellaneous.

a. Notices. All Notices hereunder shall be in writing (for purposes hereof,
“e-mail” is not considered a writing) and shall be deemed received (i) at the
close of business of the date of receipt, if delivered by hand or by facsimile
with proof of receipt, or (ii) when signed for by recipient, if sent registered
or certified mail, postage prepaid, provided such Notice was properly addressed
to the appropriate address indicated on the signature page hereof or to such
other address as a party may designate by prior written notice to the other
parties, at the address set forth below:

 

If to the Secured Party, addressed to:   

 

Name:    Ormat Nevada Inc. Address:    6225 Neil Road    Reno, Nevada 8951160
Telephone    (775) 356-9029 Facsimile:    (775) 356-9039 Attention:    President

with copy to:

Perkins Coie LLP

1201 Third Avenue, Suite 4800

Seattle, WA 60606-5096

Telephone: (425) 635-1409

Facsimile: (206) 359-9000

Attn: Robert E.Giles

 

If to Anaheim: Name: City of Anaheim Attention: City Clerk Address: 200 South
Anaheim Blvd., Suite 217 Anaheim, California 92805 Telephone:     (714)765-5166
Facsimile:     (714)765-4105 With a Copy to: City of Anaheim Attention: Public
Utilities General Manager 201 South Anaheim Blvd., Suite 1101 Anaheim,
California 92805 Telephone:     (714)765-4157 Facsimile:     (714) 765-4138

 

5

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b. Assignment. Anaheim hereby agrees that the Secured Party, upon the same terms
and conditions as set forth in this Collateral Assignment Agreement and more
specifically set forth in Sections 3, 8, and 9, may assign (on behalf of the
Secured Party) its rights, title or interest in and to the Assigned Agreement in
connection with an assignment or transfer of the Security Agreement upon
notification to Anaheim.

c. No Modification. The parties hereto acknowledge and agree that this
Collateral Assignment Agreement is neither a modification of nor an amendment to
the Assigned Agreement nor imparts rights or privileges greater than those set
forth in the Assigned Agreement.

 

  d. Choice of Law. THIS COLLATERAL ASSIGNMENT AGREEMENT AND THE RIGHTS AND
DUTIES OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND
PERFORMED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW THAT WOULD DIRECT THE APPLICATION OF ANOTHER
JURISDICTION’S LAWS.

 

  e. Jurisdiction. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST EITHER PARTY ARISING
OUT OF OR RELATING HERETO SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE
STATE OF CALIFORNIA IN THE COUNTY OF ORANGE OR THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA LOCATED IN ORANGE COUNTY, CALIFORNIA. BY
EXECUTING AND DELIVERING THIS AGREEMENT, EACH PARTY, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY ACCEPTS GENERALLY AND
UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS, AND WAIVES
AND DEFENSE OF FORUM NON CONVENIENCES.

 

  f- No Waiver. No term, covenant or condition hereof shall be deemed waived and
no breach excused unless such waiver or excuse shall be in writing and signed by
the party claimed to have so waived or excused. Waiver by a party of any default
by the other party shall not be construed as a waiver of any other default.

 

  g. Counterparts. This Collateral Assignment Agreement may be executed in one
or more duplicate counterparts, and when executed and delivered by all the
parties listed below, shall constitute a single binding agreement.

 

  h. No Third Party Beneficiaries. There are no third party beneficiaries to
this Collateral Assignment Agreement.

 

  i. Severabilitv. The invalidity or unenforceabihty of any provision of this
Collateral Assignment Agreement shall not affect the validity or enforceability
of any other provision of this Collateral Assignment Agreement, which shall
remain in full force and effect.

 

6

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  j. Amendments. This Collateral Assignment Agreement may be modified, amended,
or rescinded only by writing expressly referring to this Collateral Assignment
Agreement and signed by all parties hereto.

 

  k. Jointly Prepared. This Collateral Assignment Agreement shall be considered
for all purposes as prepared through the joint efforts of the parties and shall
not be construed against one party or the other as a result of the preparation,
substitution, submission, or other event of negotiations, drafting or execution
hereof.

 

  J- Usage Of “Or”. The word “or” when used in this Collateral Assignment
Agreement shall indicate the meaning “and/or” unless the context unambiguously
indicates otherwise.

 

  m. Headings. The headings used herein are for convenience and reference
purposes only. Words having well known technical or industry meaning shall have
such meaning unless otherwise specifically defined herein.

[SIGNATURES ON FOLLOWING PAGE]

 

7

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IN WITNESS WHEREOF, each of Anaheim, Owner, and the Secured Party has duly
executed this Collateral Assignment Agreement as of the date first written
above.

 

      CITY OF ANAHEIM a municipal corporation       By:       Marcie L. Edwards
        Public Utilities General Manager DATE OF EXECUTION:     ATTEST:        
By:   Linda N. Andal, City Clerk

Approved as to form:

CRISTINA L. TALLEY, CITY ATTORNEY

      By:       Alison M. Kott         Assistant City Attorney             ORMAT
NEVADA INC.       By:         Name:         Title:   Approved as to form:      
Perkins Coie LLP       By: Robert E. Giles      

 

8

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ACKNOWLEDGEMENT

The undersigned hereby acknowledges the Collateral Assignment Agreement set
forth above, makes the agreements set forth therein as applicable to Owner and
confirms that the Secured Party identified above have provided or is providing
financing to the undersigned.

 

ThermoNo. 1 BE-01, LLC By:   LOGO [g261816ex2_siga.jpg] Name:   NICHOLAS GOODMAN
Title:   CEO

 

Approved as to form:

Hunton & Williams, LLP

By: Peter S. Partee, Sr.

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EXHIBIT B-5 – Form of Consent to Assignment (the State of Utah, acting by and
through the School and Institutional Trust Lands Administration)

CERTIFICATE, CONSENT AND AGREEMENT

The undersigned State of Utah, acting by and through the School and
Institutional Trust Lands Administration (“SITLA”) is a party to or the
beneficiary under the document(s) listed on Schedule 1 hereto (collectively, the
“Mineral Leases”). ORMAT NEVADA INC. (in such capacity, together with its
permitted successors and assigns, the “Secured Party”) has informed SITLA that
the Secured Party is making a loan (the “Loan”) to THERMO No. 1 BE-01, LLC, a
Delaware limited liability company (“Thermo”) that will be secured in part by a
Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing (“Security Instrument”) covering the Mineral Leases, together with other
collateral. The Secured Party has requested that SITLA execute this Certificate,
Consent and Agreement (“Certificate”) to give the Secured Party additional
assurance with respect to the collateral securing the Loan. SITLA obtains
benefits from the ability of Thermo to meet its obligations under the Mineral
Leases and from the continued effectiveness of the Mineral Leases and is willing
to execute this Certificate to induce the Secured Party to make the Loan.

Therefore, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, SITLA certifies, consents, and agrees as follows:

1. SITLA irrevocably and unconditionally consents to the assignment, grant,
mortgage, charge, and demise of a security interest by Thermo to or in favor of
the Secured Party of all of Thermo’s right, title and interest in, to and under
the Mineral Leases.

2. SITLA acknowledges that pursuant to those certain Assignments and Partial
Assignments of Mineral Leases between Thermo, as assignee, and Intermountain
Renewable Power, LLC, a Delaware limited liability company, as assignor (“IRP”),
and between Thermo, as assignee, and Raser Technologies, Inc., as assignor
(“Raser”) (collectively, “Assignments”), Thermo was assigned all or part of
IRP’s and Raser’s leasehold interest in the Mineral Leases identified in
Schedule 1 (“IRP/Raser Mineral Leases”), limited as to certain real property
described in the Partial Assignments (“Assigned Parcels”). By Director’s Finding
dated August 12, 2008, copy attached hereto as Schedule 3, SITLA approved the
Assignments, including, without limitation, the division of certain leasehold
interests between IRP and Thermo and between Raser and Thermo (each one, a
“Leasehold Owner”). The Assigned Parcels were segregated from the IRP/Raser
Mineral Leases as separate mineral lease(s) between SITLA and Thermo identified
as New Lease ML-50921-A and New Lease ML-51151-A.

3. SITLA is not aware of any default by Thermo under any of the Mineral Leases,
nor is SITLA aware of any circumstance which with notice or the passage of time
or both would constitute a default under any of the Mineral Leases. Each of the
Mineral Leases is presently in full force and effect. Notwithstanding the
foregoing, nothing in this Certificate shall preclude SITLA from auditing Thermo
to determine if additional payments may be due to SITLA under the terms of the
Mineral Leases, collecting payments that are determined to be due pursuant to

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such audit, whether or not such payment obligations arose prior to the date of
this Certificate, or otherwise taking action to enforce the Mineral Leases in
accordance with their terms. SITLA has not assigned its interest under any of
the Mineral Leases to any other party.

4. SITLA will give notice to the Secured Party of any default by Thermo under
any or all of the Mineral Leases at the same time as SITLA gives notice to
Thermo of such default, by placing notice thereof in the U.S. Mail, postage
pre-paid, certified, return receipt requested, and addressed as follows:

Ormat Nevada Inc.

6225 Neil Road

Reno, Nevada 89511

SITLA acknowledges and agrees that, upon and after receipt by the Secured Party
of SITLA’s notice of default, the Secured Party shall have the right to cure
defaults by Thermo under the Mineral Leases, without assuming or being
responsible for any of the liabilities or obligations of Thermo thereunder.

5. SITLA will give the Secured Party at least 30 days’ prior written notice of
any proposed termination of any or all of the Mineral Leases (defined in
Schedule 1), and hereby gives the Secured Party, at the Secured Party’s sole
option, the right, but not the obligation, to cure the default or defaults
giving rise to such termination. SITLA shall not take any action to cancel or
terminate, or suspend performance under the Mineral Leases as the result of any
breach or default of Thermo without giving prior written notice in writing to
the Secured Party specifying the nature of the default giving rise to such
right. If the Secured Party is prohibited by any court order or bankruptcy or
insolvency proceedings from curing such defaults, the foregoing time period
shall be extended by the period of such prohibition.

6. Nothing contained in this Certificate or any action taken by the Secured
Party to cure any defaults shall make the Secured liable in any manner to SITLA
pursuant to the Mineral Leases or otherwise unless the Secured Party succeed to
the interest of Thermo under the Mineral Leases.

7. SITLA agrees that the enforcement of the Security Instrument shall not
terminate the Mineral Leases or disturb any Purchaser (defined later), including
the Secured Party if it should be the Purchaser, in obtaining the right of, and
continuing as, the lessee under the Mineral Leases (as successor-in-interest to
Thermo) in the possession and use of the Property (defined later), unless, after
such foreclosure, such Purchaser fails to cure any default under the applicable
Mineral Lease, in accordance with the terms of this Certificate. This
nondisturbance applies to any option to extend or renew the Mineral Leases terms
which is set forth in the Mineral Leases as of the date of this Agreement, or
which is later entered into between SITLA and Thermo with the consent of the
Secured Party. This nondisturbance shall be effective and self-operative without
the execution of any further instruments upon Purchaser’s succeeding to the
interest of the lessee under the Mineral Leases. Upon completion of any
foreclosure or trustee’s sale proceedings by the Secured Party under its
Security Instrument (or completion of an assignment of the Mineral Leases in
lieu of foreclosure), SITLA will recognize the Secured Party, or any other
successor thereby, to lessee’s interest in the Mineral Leases, as the lessee
under the terms

 

2

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of the Mineral Leases for all purposes thereunder and for the remaining term
thereof. As used herein, the term “Transfer of the Property” means any transfer
of Thermo’s interest in the Property, including, but not limited to, Thermo’s
right, title and interest under the Mineral Leases, by foreclosure, trustee’s
sale or other action or proceeding for the enforcement of the Security Interest
or by deed or assignment in lieu thereof. The term “Purchaser,” as used herein,
means any transferee, including the Secured Party, of the interest of Thermo as
a result of any such Transfer of the Property and also includes any and all
successors and assigns, including the Secured Party, of such transferee. The
term “Property” herein means all of Thermo’s right, title and interest under the
Mineral Leases.

8. Subject to Section 7 above, if any Transfer of the Property should occur, any
Purchaser, including the Secured Party if it should be the Purchaser, shall, and
hereby does, attorn to SITLA, as the lessor under the Mineral Leases, and
Purchaser shall be bound to SITLA under all of the terms, covenants and
conditions of each Mineral Lease for the balance of the respective Mineral Lease
term and any extensions or renewals of it which may then or later be in effect
under any validly exercised extension or renewal option contained in the
applicable Mineral Lease, all with the same force and effect as if Purchaser had
been the original lessee under the applicable Mineral Lease[; provided, however,
that the liability of Purchaser to SITLA under the Mineral Leases shall be
limited to the Purchaser’s interest in the assets and properties formerly owned
by Thermo and obtained via foreclosure or other exercise of remedies under the
Security Instrument].

This Certificate shall be binding upon and inure to the benefit of the parties
hereto and each of their successors and assigns.

Executed on                     , 2012

 

STATE OF UTAH, acting by and through the SCHOOL AND INSTITUTIONAL TRUST LANDS
ADMINISTRATION By:  

 

Name:  

 

Title:  

 

 

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Schedule 1 – Mineral Leases

 

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EXHIBIT C – Operating Statements and Report Requirements

Each operating statement of the Project delivered pursuant to Section 5.19 of
the Credit Agreement, dated as of December 19, 2011 (the “Agreement”), between
Thermo No. 1 BE-01, LLC., a Delaware limited liability company (the “Company”)
and Ormat Nevada Inc., a Delaware corporation (“Ormat”), shall contain the
following information, in addition to the information required by such section
of the Agreement:

1. Technical performance of the Project, including production;

2. An accident incident report

3. Safety and environmental compliance status

4. Equipment operating status

5. A summary of all major maintenance performed in the preceding quarter and
that planned for the coming quarter

6. Any known conditions which could adversely affect the technical or financial
performance of the Project

7. Any emergency expenditures incurred in accordance with Section 5.16 of the
Agreement

 

  Exhibit C   Page 1

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SCHEDULE 3.04 – Authorizations

Part 1

Owner Acquired Permits

 

Agency

  

Permit

  

Status

FERC          Qualifying Facility Certification    Obtained, needs to be
updated. Utah Division of Environmental Quality       Division of Water Quality
   Air Quality Permit    Obtained, needs to be updated. Division of Water
Quality    Underground Injection Control Permit    Obtained Division of Water
Quality    NPDES Storm Water Construction General Permit    Obtained Utah
Division of Natural Resources       State Engineers Office    Consumptive Water
Rights    Obtained State Engineers Office    Non-consumptive Water rights   
Obtained Beaver County       Planning and Zoning    Conditional Use Permit   
Obtained, may need updating. Beaver County Fire District #2    Hazardous
Materials    Obtained, needs to be updated.

Part II - Not Obtained

Owner Acquired Permits

 

Agency

  

Permit

  

Status

California Energy Commission

         Certified Renewable Energy Facility    Submitted, not obtained

Homeland Security

         If required   

 

  Schedule 3.04   Page 1

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SCHEDULE 3.05 – Financial Statements

Part I

As disclosed on Part II of Schedule 3.06 – Administrative Claims in Bankruptcy

Part II

Property taxes to be paid over 5 year period in amount of $688,920

Asset retirement obligation in amount of $2,911,391

Current trade payables and accrued liabilities in an amount reflecting normal
operations

As disclosed on Part II of Schedule 3.06 – Administrative Claims in Bankruptcy

 

  Schedule 3.05   Page 1

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SCHEDULE 3.06 – Litigation

Part I – Litigation

The Company is nominally a party to certain litigation involving Pratt & Whitney
Power Systems, Inc.

Part II – Administrative Claims in Bankruptcy

 

Claim No.

  

Creditor Name

  

Amount of
Claim

         

Debtor

  

Case No.

  

Disputed?

109 /123

  

City of Anaheim, Public Utilities Department

   $ 1,154,519       Estimated   

Thermo No. 1 BE-01, LLC

   11-11339    Yes

94

  

Pratt & Whitney Power Systems, Inc.

   $ 314,741       Estimated through 8/31/2011   

Thermo No. 1 BE-01, LLC

  

11-11339

   Yes

Total:

   $ 1,469,260               

 

  Schedule 3.06   Page 1

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SCHEDULE 3.10 – Real Property

None.

 

  Schedule 3.10   Page 1

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SCHEDULE 3.11 – Taxes

Following the Plan of Reorganization, the Company has a tax liability of
approximately $688,920 for certain property taxes which is to be paid over a 5
year period.

 

  Schedule 3.11   Page 1

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SCHEDULE 4.01(f) – Form of Opinions

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December 20, 2011

Ormat Nevada Inc.

6255 Neil Road

Reno, Nevada 89511-1136

Re: Thermo No. 1 Repowering

Ladies and Gentlemen:

We have acted as special counsel to Thermo No. 1, BE-01, LLC, a Delaware limited
liability company (the “Borrower”) in connection with the Credit Agreement,
dated as of December 19, 2011 (the “Credit Agreement”), between the Borrower and
Ormat Nevada Inc., a Delaware corporation (“Ormat”). At the request of the
Borrower, this opinion is provided in accordance with Section 4.01(f)(i) of the
Credit Agreement. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement.

For purposes of our opinions set forth below, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of such
documents, corporate records, certificates of public officials and other
instruments as we have deemed necessary or appropriate as a basis for the
opinions set forth herein, including, without limitation:

 

  (i) the Credit Agreement;

 

  (ii) the Security Agreement, dated as of December 19, 2011 (the “Security
Agreement”), between the Borrower and Ormat;

 

  (iii) the Pledge Agreement, dated as of December 19, 201 1 (the “Pledge
Agreement”), between Intermountain Renewable Power, LLC, a Delaware limited
liability company (the “Pledgor”), and Ormat;

 

  (iv) the Leasehold Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing, dated as of December 19, 2011, by the Borrower in favor of
Ormat;

 

  (v) the Engineering, Procurement and Construction Contract, dated as of
December 19, 2011, between the Borrower and Ormat (the “EPC Contract”);

 

  Schedule 4.01(f)   Page 1

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  (vi) the certificate of formation of the Borrower, certified as of
November 30, 2011 by the Secretary of State of the State of Delaware, and the
amended and restated limited liability company operating agreement of the
Borrower as presently in effect as certified by the Secretary of the Borrower as
of the date hereof (the “Borrower Charter Documents”);

 

  (vii) the certificate of formation of the Pledgor, certified as of
November 30, 2011 by the Secretary of State of the State of Delaware, and the
amended and restated limited liability company operating agreement of the
Pledgor as presently in effect as certified by the Secretary of the Borrower as
of the date hereof (the “Pledgor Charter Documents”);

 

  (viii) a certificate of the Secretary of State of the State of Delaware as to
the formation and good standing of the Borrower under the laws of the State of
Delaware as of November 30, 2011 (the “Borrower Good Standing Certificate”);

 

  (ix) a certificate of the Secretary of State of the State of Delaware as to
the formation and good standing of the Pledgor under the laws of the State of
Delaware as of November 30, 2011 (the “Pledgor Good Standing Certificate”);

 

  (x) resolutions adopted by the managers (and consented to by the member) of
the Borrower, certified as of the date hereof by an officer of the Borrower,
relating to the execution, delivery and performance by the Borrower of Financing
Documents to which it is a party;

 

  (xi) resolutions adopted by the sole manager of the Pledgor, certified as of
the date hereof by an officer of the Pledgor, relating to the execution,
delivery and performance by the Pledgor of the Pledge Agreement;

 

  (xii) a copy of a Uniform Commercial Code financing statement (the “Borrower
Financing Statement”) naming the Borrower as debtor and Ormat as secured party
to be filed in the office of the Secretary of State of the State of Delaware
(the “Delaware Filing Office); and

 

  (xiii) a copy of a Uniform Commercial Code financing statement (the “Pledgor
Financing Statement”) naming the Pledgor as debtor and Ormat as secured party to
be filed in the Delaware Filing Office.

The documents specified in items (i) through (v) above are referred to herein as
the “Opinion Documents”. The documents specified in items (i) through
(iii) above are referred to herein as the “New York Documents”. The Borrower and
the Pledgor are referred to herein as the “Opinion Parties”. The Borrower Good
Standing Certificate and the Pledgor Good Standing Certificate are referred to
herein as the “Good Standing Certificates”. The Borrower Financing

 

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Statement and the Pledgor Financing Statement are referred to herein as the
“Financing Statements”. Unless otherwise specified, terms which are defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York (the “New York UCC”) are used in this opinion letter with the same meaning
as in the New York UCC. As used in this letter, “Federal” refers to the federal
government of the United States of America.

In such examination and in rendering the opinions expressed below, we have
assumed, without any independent investigation or inquiry: (i) the authenticity
of all documents submitted to us as originals; (ii) the conformity to authentic
original documents of all documents submitted to us as copies; (iii) the legal
capacity of natural persons, (iv) the genuineness of all signatures; and
(v) except as expressly stated in our opinions below with respect to the Opinion
Parties, with respect to each Person expressed to be a party to the documents
submitted to us, that (A) such Person is validly existing and in good standing
under the laws of the jurisdiction in which it was formed or incorporated and is
qualified to engage in business and in good standing in all other jurisdictions
in which such qualification is necessary, (B) such Person has or had at all
relevant times all necessary power and authority to execute, deliver and perform
its obligations under such documents, (C) the execution and delivery of, and
performance of its obligations under, such documents have been duly authorized
by all necessary action on the part of such Person, and (D) such documents have
been duly executed and delivered by or on behalf of such Person and constitute
legal, valid and binding obligations of such Person, enforceable against such
Person in accordance with their respective terms.

In addition, we have made such investigations of law as we have deemed relevant
and necessary as a basis for the opinions expressed below. As to matters of fact
relevant to the opinions expressed in this letter, we have relied, without any
independent investigation or inquiry, upon certificates and similar documents of
governmental authorities, upon certificates of officers and representatives of
the Borrower and Pledgor and upon the representations and warranties of the
Borrower, Pledgor and other Persons contained in the Opinion Documents.

Statements in this opinion which are qualified by the expression “to our
knowledge”, “of which we have knowledge”, “known to us” or other expressions of
like import are limited solely to the current actual knowledge of the individual
attorneys in this firm who have devoted substantive attention to the
representation of the Borrower in connection with the negotiation, execution and
delivery of the Opinion Documents. We have not undertaken any independent
investigation to determine the accuracy of any such statement, and any limited
inquiry undertaken by us during the preparation of this opinion should not be
regarded as such an investigation.

We express no opinion in this letter regarding the laws of any jurisdiction
other than the laws of the State of New York and the Federal laws of the United
States of America, in each case as in effect on the date hereof, and, to the
extent that our opinions in paragraphs 1, 2 and 5(c) below relate to matters of
Delaware law, the Delaware Limited Liability Company Act and Article 9 of the
Delaware UCC, as more fully described below. We are not admitted to practice in
the State of Delaware and have not obtained opinions of counsel admitted in such
jurisdiction

 

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with respect to matters addressed in opinion paragraphs 1, 2 and 5(c). For
purposes of such opinion paragraphs, we have, with your permission, examined the
applicable provisions of the Delaware Limited Liability Company Act and Article
9 of the Delaware UCC, in each case as those provisions appear in a current,
standard compilation thereof, and our opinions expressed in opinion paragraphs
1, 2 and 5(c) below, to the extent such opinions involve conclusions as to
matters of Delaware law, are based solely upon such review. We have made no
investigation and we express no opinion herein concerning any laws of any other
jurisdiction, any laws of the State of Delaware other than those specifically
described above or any city, county, municipal or other local laws within any
state or the effect thereof.

Based upon and subject to the foregoing, and subject to the other assumptions,
qualifications and exceptions set forth in this letter, we are of the following
opinion:

1. Each of the Opinion Parties is a validly existing limited liability company
in good standing under the laws of the State of Delaware.

2. Each Opinion Party has the necessary limited liability company power to
execute, deliver and perform its obligations under the Opinion Documents to
which it is a party and to grant the Liens purported to be granted by it under
the Opinion Documents to which it is a party. The execution, delivery and
performance by each Opinion Party of the Opinion Documents to which it is a
party have been duly authorized by all necessary limited liability company
action of such Opinion Party.

3. Each of the New York Documents to which each Opinion Party is a party has
been duly executed and delivered by such Opinion Party and constitutes the valid
and binding obligation of such Opinion Party, enforceable against such Opinion
Party in accordance with its terms.

4. The execution and delivery by each Opinion Party of the Opinion Documents to
which it is a party, and the performance by such Opinion Party of its
obligations thereunder in accordance with the terms thereof, do not (a) violate
any provisions of the Borrower Charter Documents or the Pledgor Charter
Documents, or (b) cause such Opinion Party to violate any Federal or New York
state law, rule or regulation applicable to such Opinion Party or any order,
judgment or decree of any Federal or New York state court or governmental
authority which by its terms names and is applicable to such Opinion Party and
which is known to us.

5. (a) The Security Agreement is effective under the New York UCC to create in
favor of Ormat a valid security interest in the rights of the Borrower in the
Collateral (as defined in the Security Agreement) in which a security interest
can be created under Article 9 of the New York UCC (the “Borrower Collateral”).

(b) The Pledge Agreement is effective under the New York UCC to create in favor
of Ormat a valid security interest in the rights of the Pledgor in the
Collateral (as defined in the Pledge Agreement) in which a security interest can
be created under Article 9 of the New York UCC (the “Pledgor Collateral”).

 

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(c) Each of the Financing Statements is in appropriate form for filing in the
Delaware Filing Office. Upon the filing of the Financing Statements in the
Delaware Filing Office, the security interest of Ormat in the Borrower’s rights
in the Borrower Collateral described in the Borrower Financing Statement and the
Pledgor’s rights in the Pledgor Collateral described in the Pledgor Financing
Statement will be perfected under the Uniform Commercial Code as in effect on
the date hereof in the State of Delaware (the “Delaware UCC”), to the extent
that a security interest in such Collateral can be perfected by the filing of a
financing statement in the Delaware Filing Office under the Delaware UCC.

6. The provisions of the Credit Agreement do not violate the usury laws of the
State of New York.

7. (a) Assuming that the generating facility to be repowered by the Borrower
consists of a geothermal power plant in Beaver County, Utah with a planned gross
generation capacity of [twelve and thirty-four hundredths 12.34] MW (the
“Project”), the Project would be (i) a “qualifying small power production
facility” as that term is defined under Section 3(17)(C) of the Federal Power
Act (“FPA”), 16 U.S.C. § 796(17)(C), and the implementing orders and regulations
of the Federal Energy Regulatory Commission (“FERC”), including 18 C.F.R. Part
292 (a “Qualifying Facility”) and (ii) eligible for all of the exemptions from
regulation set forth in 18 C.F.R. §§ 292.601(c) and 292.602(b) and (c) (subject
to FERC’s authority to modify such exemptions under 18 C.F.R. §
292.602(c)(2)-(4)).

(b) So long the Project is a Qualifying Facility under Public Utility Regulatory
Policies Act of 1978 (“PURPA”), the Borrower will not, solely as a result of its
ownership and operation of the Project, be subject to regulation (i) respecting
the rates of electric utilities under Sections 205 and 206 of the FPA pursuant
to the exemption set forth in 18 C.F.R. § 292.601(c) and (ii) respecting the
financial and organizational regulation of electric utilities under the Public
Utility Holding Company Act of 2005 (“PUHCA 2005”) pursuant to the exemption set
forth in 18 C.F.R. § 292.602(b).

The foregoing opinions are subject to the following assumptions, qualifications
and limitations:

A. In rendering our opinion set forth in opinion paragraph 1 above with respect
to the valid existence and good standing of the Opinion Parties, we are relying
solely on the Good Standing Certificates.

B. In rendering our opinion set forth in opinion paragraph 2 above with respect
to the entity power and authority of the Opinion Parties, we are relying on the
Borrower Charter Documents, Pledgor Charter Documents and authorizing
resolutions certified by officers of the Opinion Parties pursuant to
certificates dated the date hereof and delivered to Ormat in connection with the
Credit Agreement and the Delaware Limited Liability Company Act.

 

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C. In rendering our opinion set forth in opinion paragraph 3 above with respect
to the due execution and delivery of the New York Documents by the Opinion
Parties, we are relying upon our examination of originals or copies, certified
or otherwise identified to our satisfaction, of such New York Documents and upon
the incumbency and signature certificates of officers and representatives of the
Opinion Parties dated the date hereof and delivered to Ormat in connection with
the Credit Agreement.

D. The validity, binding effect and enforceability of the New York Documents and
the security interests afforded thereby are subject to and may be limited by the
effects of (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other laws affecting the rights of creditors generally,
(ii) principles of equity (whether considered in a proceeding in equity or at
law), and (iii) public policy considerations and concepts of materiality,
unconscionability, reasonableness, good faith and fair dealing

E. We express no opinion with respect to: (i) any provisions of the New York
Documents providing for indemnification, release or contribution for claims,
losses or liabilities in an unreasonable amount, for claims, losses or
liabilities attributable to the indemnified person’s negligence or misconduct,
or to the extent enforceability of such indemnification, release or contribution
may be barred or limited by Federal or state securities laws or considerations
of public policy; (ii) any provision contained in the New York Documents
allowing any party to exercise remedial rights without notice to the Borrower or
the Pledgor, as the case may be, and opportunity for hearing or correction or
any provision allowing any party to exercise self-help or summary remedies
without judicial process; (iii) any waiver of any rights or procedural
protections or any defense or claim which as a matter of law or public policy
cannot be waived; (iv) any provision contained in the New York Documents
purporting to establish evidentiary standards or to authorize or validate
discretionary or conclusive determinations by a party; (v) any provision of the
New York Documents which purports to entitle any Person to specific performance
of any provision thereof, injunctive relief or other equitable relief or
remedies; (vi) provisions of the New York Documents providing for liquidated
damages, default interest, late charges, monetary penalties, prepayment or
make-whole premiums or other economic remedies to the extent such provisions are
deemed to constitute a penalty; (vii) any provision of the New York Documents
providing that invalid or unenforceable provisions thereof may be severed from a
New York Document without affecting the validity or enforceability of the
remaining provisions thereof; (viii) any provision of the New York Documents
which requires a Person to cause another Person to take or to refrain from
taking action under circumstances in which such Person does not control such
other Person; (ix) any provision of the New York Documents providing for the
effectiveness of service of process by mail or otherwise than in the manner
provided by applicable law; (x) any provision of the New York Documents that
requires waivers or amendments to be in writing; (xi) any provision of the New
York Documents that states that rights or remedies are not exclusive, that every
right or remedy is cumulative and may be exercised in addition to any other
right or remedy, that the election of

 

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some particular remedy does not preclude recourse to one or more others or that
failure to exercise or delay in exercising rights or remedies will not operate
as a waiver of any such right or remedy; (xii) any provision of the New York
Documents that purports to limit the liability of any party thereto to third
parties; (xiii) any waiver of objection to venue, claim of inconvenient forum or
right to a jury trial in a judicial proceeding; (xiv) any grant of set-off
rights, the right to appointment of a receiver or the appointment of any Person
as an attorney-in-fact for another Person; or (xv) any waiver or limitation
concerning mitigation of damages.

F. We express no opinion with respect to (i) any remedies or other provisions of
any Opinion Document to the extent such provisions are inconsistent with the
requirements of the New York UCC or, to the extent applicable thereto, the UCC
as in effect in any other jurisdiction, or (ii) any provision contained in the
Opinion Documents purporting to prohibit, restrict or condition the assignment
of any agreement to the extent such provision is rendered ineffective by
Sections 9-406 through 9-409 of the UCC as in effect in a relevant jurisdiction.

G. We express no opinion as to whether provisions in the Security Agreement and
the Pledge Agreement purporting to grant an absolute assignment of rights or
interests will be construed as effecting an absolute assignment rather than a
collateral assignment or security interest.

H. No opinion is expressed herein with respect to the validity or enforceability
of any provision of the New York Documents insofar as it purports to effect a
choice of governing law, submission to jurisdiction of any court or choice of
forum for the adjudication of disputes, other than (i) the enforceability by a
New York State court under New York General Obligations Law Section 5-1401 of
the choice of New York State law as the governing law of the Opinion Documents
(subject, however, to the extent limited by the Constitution of the United
States and by Section 1-105(2) of the New York UCC), and (ii) the enforceability
by a New York State court under New York General Obligations Law Section 5-1402
of New York State courts as a non-exclusive forum for the adjudication of
disputes with respect to any of the New York Documents.

I. Our opinions are based on those statutes and regulations of the State of New
York and the Federal laws of the United States of America which in our
experience are normally applicable to transactions of the type provided for in
the Opinion Documents and, to the extent that our opinions in paragraphs 1, 2
and 5(c) relate to matters of Delaware law, for purposes of such opinion
paragraphs, the applicable provisions of the Delaware Limited Liability Company
Act and Article 9 of the Delaware UCC, in each case as those provisions appear
in a current, standard compilation thereof. Without limiting any other
qualification or limitation set forth in this letter, we express no opinion with
respect to (i) tax laws, (ii) securities regulation or antiliaud laws,
(iii) antitrust, competition or trade regulation laws, (iv) bankruptcy,
insolvency or fraudulent transfer laws, (v) pension or employee benefit laws,
(vi) environmental or health and safety laws, (vii) except as expressly set
forth in opinion paragraph 7 above, energy or utility regulation, (viii) real
property, land use or siting laws, (ix) construction or building codes,
(x) patent, copyright, trademark, trade secrets or other intellectual property
laws, (xi) laws relating to

 

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national security, public safety or anti-terrorism, or (xii) criminal law or
enforcement. We express no opinion in opinion paragraph 4 above with respect to
the construction, installation or operation of any property or assets.

J. Our opinions in paragraph 4 above relating to the Borrower Charter Documents,
Pledgor Charter Documents and Opinion Documents are based solely upon the plain
meaning of the language of such agreements without regard to any interpretation
or construction of such agreements that might be indicated by the laws (other
than the laws of the State of New York) governing those agreements or any
extrinsic evidence as to the meaning or intent of the terms thereof. We express
no opinion in paragraph 4 with respect to any (i) financial covenants or
provisions contained in any agreements requiring financial or mathematical
calculations or accounting determinations to ascertain whether there is any
breach of or default under such provisions, or (ii) provisions in any agreement
that result in a breach or default of such agreement upon the occurrence of a
“material adverse effect” (or words of similar import) or other contingency.

K. We express no opinion as to the effect on our opinions arising out of the
status or activities of, or laws applicable to, any party to the Opinion
Documents (other than the Opinion Parties) or the affiliates of any party to the
Opinion Documents, and, without limiting the foregoing, we are not expressing
any opinion as to the effect of compliance or non-compliance by such parties
with any state or Federal laws or regulations applicable to the transactions
contemplated by the Opinion Documents because of the nature of any of their or
their affiliates’ businesses.

L. We express no opinion with respect to (i) the right, title or interest of the
Borrower, Pledgor or any other Person in or to any property, tangible or
intangible, (ii) except as expressly provided in opinion paragraph 5 above, the
creation, attachment, enforceability or perfection of any security interest in
any property, or (iii) the priority of any security interest.

M. The opinions set forth in opinion paragraph 5 above are subject to the
following additional assumptions, qualifications and exceptions:

(i) We express no opinion in opinion paragraph 5 above with respect to any law
other than (A) Article 9 of the New York UCC and, to the extent applicable,
Article 8 of the New York UCC, and (B) for purposes of opinion paragraph 5(c),
Article 9 of the Delaware UCC. Without limiting the generality of the foregoing,
we express no opinion as to the validity, perfection or enforceability of a
security interest arising out of any transaction or in any Collateral not
subject to Article 9 of the New York UCC, including those described in Sections
9-109(c) and (d), of the New York UCC, and to the extent relevant to the
attachment, perfection or priority of, or remedies with respect to, the security
interest of Ormat in the Collateral, the UCC in any other relevant jurisdiction.

(ii) We express no opinion with respect to any “commercial tort claim,”
“letter-of-credit-right,” “cooperative interest,” “deposit account,”
“health-care-insurance-

 

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receivable,” “agricultural lien,” “farm products,” “as-extracted collateral,” or
“manufactured home collateral” (as those terms are defined in Article 9 of the
New York UCC), any Collateral subject to a certificate of title, any goods
consigned by or to either Opinion Party, any documents or goods covered by
documents, any electronic chattel paper, or any standing timber.

(iii) We have assumed that (a) value has been given within the meaning of
Section 9-203(b)(l) of the New York UCC, and (b) the Opinion Parties have rights
in their respective Collateral or the power to transfer rights in their
respective Collateral to a secured party within the meaning of
Section 9-203(b)(2) of the New York UCC.

(iv) We have assumed that the exact legal name of each Opinion Party is as set
forth in the copy of the organizational documents of such Opinion Party
certified by the Delaware Secretary of State, and we have also assumed the
accuracy of the name and address of Ormat and other factual information set
forth on the Financing Statements.

(v) Under Section 9-315 of the UCC, the continuation of perfection of a security
interest in proceeds is limited to the extent set forth in such section.

(vi) Under Section 9-3 16 of the UCC, the continuation of perfection of a
security interest following a change in the jurisdiction, the laws of which
govern perfection, the effect of perfection and non-perfection and priority, is
limited to the extent set forth in such section.

(vii) In the case of property that becomes Collateral after the date hereof,
Section 552 of the Federal Bankruptcy Code limits the extent to which property
acquired by a debtor after the commencement of a case under the Federal
Bankruptcy Code may be subject to a security interest arising from a security
agreement entered into by the debtor before the commencement of such a case.

(viii) Ormat’s rights against account debtors will be subject to the terms of
the assigned account, chattel paper or general intangible, to dealings between
such account debtor and the Borrower or Pledgor, and to the other limitations
provided in Sections 9-403, 9-404, 9-405 and 9-406 of the UCC, and will be
subject to defenses as provided in Section 9-404 of the UCC.

(ix) We express no opinion as to the effect of any prohibitions against
assignment that may be contained in any account, lease agreement, promissory
note, chattel paper, payment intangible, health-care receivable or
letter-of-credit-right included in the Collateral. We note that prohibitions on
assignment contained in any account, lease agreement, promissory note, chattel
paper, payment intangible, health-care-insurance-receivable and
letter-of-credit-right are subject to the limitations contained in Sections
9-406, 9-407, 9-408 and 9-409 of the UCC.

 

9

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(x) We express no opinion with respect to matters as to which compliance with
any statute, regulation or treaty of the United States, including the Federal
Assignment of Claims Act and Federal patent, copyright and trademark laws, may
be required in addition to or instead of compliance with the New York UCC for
the creation, attachment or perfection of any security interest.

(xi) We express no opinion regarding any security interest, or the perfection
thereof, purported to be granted in any rights (including rights of payment) or
security entitlements in, to or under any account or other obligation on which
the United States government or any other Federal, state, local, foreign or
other government or any agency thereof is an obligor (a “Governmental
Obligation”). We call to your attention that the creation, attachment and
perfection of a security interest in certain Governmental Obligations or
security entitlements with respect thereto may require compliance with Federal
or other applicable statutes and regulations in addition to or instead of
compliance with the New York UCC, including without limitation Federal
Department of Treasury regulations governing the transfer and pledge of
marketable Treasury Securities as set forth at 31 C.F.R. Part 357.

(xii) We express no opinion as to the enforceability of any security interest in
goods that are not manufactured in accordance with the provisions of the Federal
Fair Labor Standards Act.

N. The opinions set forth in opinion paragraph 7 above are subject to the
following additional assumptions, qualifications and exceptions:

(i) Our opinions in opinion paragraph 7 above are based solely upon the FPA,
PURPA and PUFICA 2005 and FERCs implementing orders and regulations for each
such law (collectively, “Federal Energy Laws”). We express no opinion with
respect to any other law, statute, rule, regulation or legal authority.

(ii) We have made no inspection of the Project or any other asset or operation
of the Borrower. Our understanding of the Project and other assets and
operations of the Borrower is based solely upon representations of the Borrower
in the Opinion Documents.

(iii) We have assumed that the Project at all times will be constructed and
operated in accordance with the specifications and descriptions in the Opinion
Documents, and with all applicable design, construction, testing, performance
and operational standards under the Federal Energy Laws.

(iv) We express no opinion concerning any scientific, engineering or other
technical matters relating to the Project, including without limitation the
feasibility of constructing and operating the Project in accordance with the
specifications and descriptions in the Opinion Documents or with applicable
design, construction, testing, performance and operational standards under the
Federal Energy Laws.

 

10

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(v) We express no opinion concerning any actual or proposed sale of any energy,
capacity or other output or products of the Project, the applicability of the
Federal Energy Laws to any such sale or any consent, approval or filing by or
with any Governmental Authority that may be required to be obtained or made in
connection with any such sale.

This opinion letter deals only with the specific legal issues expressed herein,
and you should not infer any opinion that is not explicitly stated herein from
any matter stated in this opinion letter. This opinion letter is rendered to you
and speaks only as of the date hereof, and we do not undertake to advise you or
any other Person with regard to any change after the date hereof in the
circumstances or law that may bear on the matters set forth herein or which may
bear on the conclusions and other matters expressed in this opinion letter.

This opinion letter is rendered solely to you in connection with the above
matter. This opinion letter may not be relied upon for any other purpose or
relied upon by any other Person without our prior written consent.

 

Very truly yours, LOGO [g261816pg_123.jpg]

 

07877/07960

 

11

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LOGO [g261816pg_109.jpg]

 

A PROFESSIONAL CORPORATION

 

     

Roger G. Segal

Jeffrey L. Silvestrini

Vernon L. Hopkinson

Keith W. Meade

Ray M. Beck

A.O. Headman, Jr.

Julie A. Bryan

Daniel J. Torkelson

Leslie Van Frank

Dena C. Sarandos

  

Edward T. Vasquez

Joshua K. Peterman

Bradley M. Strassberg

Pete B. Sarandos

Justin D. Hatch

Jonathan D. Bletzacker

 

Of counsel:

Richard A. Rappaport

 

ATTORNEYS AT LAW         

 

257 East 200 South, Suite 700

Salt Lake City, Utah 84111

(801) 532-2666

(801) 238-4606 DIRECT FAX

aoh@erslaw.com DIRECT E-MAIL

  

Mailing Address

 

Post Office Box 11008

Salt Lake City, Utah

84147-0008

     

December 20, 2011

Ormat Nevada, Inc.

6255 Neil Road

Reno, Nevada 89511-1136

 

  Re: Thermo No. 1 BE-01, LLC Project Financing

Ladies and Gentlemen:

We have acted as special Utah counsel to Thermo No. 1 BE-01, LLC, a Delaware
limited liability company (the “Borrower”) in connection with the Credit
Agreement, dated as of December 19, 2011 (the “Credit Agreement”), between the
Borrower and Ormat Nevada, Inc., a Delaware corporation (“Ormat”). At the
request of the Borrower, this opinion is provided in accordance with
Section 4.01(f)(ii) of the Credit Agreement. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement.

For purposes of our opinions set forth below, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of such
documents, corporate records, certificates of public officials and other
instruments as we have deemed necessary or appropriate as a basis for the
opinions set forth herein, including, without limitation:

 

  (i) the Credit Agreement;

 

  (ii) the Security Agreement, dated as of December 19, 2011 (the “Security
Agreement”), between the Borrower and Ormat;

 

  (iii) the Pledge Agreement, dated as of December 19, 2011 (the “Pledge
Agreement”), between Intermountain Renewable Power, LLC, a Delaware limited
liability company (the “Pledgor”), and Ormat;

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Ormat Nevada, Inc.

December 20, 2011

Page 2

 

 

 

  (iv) the Leasehold Trust Deed, Assignment of Rents, Security Agreement and
Fixture Filing, dated as of December 19, 2011, by the Borrower in favor of
Ormat;

 

  (v) the Engineering, Procurement and Construction Contract, dated as of
December 19, 2011, between the Borrower and Ormat (the “EPC Contract”);

 

  (vi) the certificate of formation of the Borrower, certified as of
November 30, 2011 by the Secretary of State of the State of Delaware, and the
second amended and restated limited liability company operating agreement of the
Borrower as presently in effect as certified by the Secretary of the Borrower as
of the date hereof (the “Borrower Charter Documents”);

 

  (vii) the certificate of formation of the Pledgor, certified as of
November 30, 2011 by the Secretary of State of the State of Delaware, and the
amended and restated limited liability company operating agreement of the
Pledgor as presently in effect as certified by the Secretary of the Borrower as
of the date hereof (the “Pledgor Charter Documents”);

 

  (viii) a certificate of the Department of Commerce, Division of Corporations
of the State of Utah as to the existence of the Borrower under the laws of the
State of Utah as of December 20, 2011 (the “Borrower Certificate of Existence”);

 

  (ix) a certificate of the Department of Commerce, Division of Corporations of
the State of Utah as to the existence of the Pledgor under the laws of the State
of Utah as of December 20, 2011 (the “Pledgor Certificate of Existence”);

 

  (x) resolutions adopted by the managers (and consented to by the member) of
the Borrower, certified as of the date hereof by the Secretary of the Borrower,
relating to the execution, delivery and performance by the Borrower of Financing
Documents to which it is a party; and

 

  (xi) resolutions adopted by the sole manager of the Pledgor, certified as of
the date hereof by an officer of the Pledgor, relating to the execution,
delivery and performance by the Pledgor of the Pledge Agreement.

The documents specified in items (i) through (v) above are referred to herein as
the “Opinion Documents”. The documents specified in items (iv) and (v) above are
referred to herein as the “Utah Documents”. The Borrower and the Pledgor are
referred to herein as the “Opinion Parties”. The Borrower Certificate of
Existence and the Pledgor Certificate of Existence are referred to herein as the
“Certificates of Existence.” As used in this letter, “Federal” refers to the
federal government of the United States of America.

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Ormat Nevada, Inc.

December 20, 2011

Page 3

 

 

 

Assumptions

1. In reaching the opinions set forth below, we have assumed, without any
independent investigation or inquiry: (i) the authenticity of all documents
submitted to us as originals; (ii) the conformity to authentic original
documents of all documents submitted to us as copies; (iii) the legal capacity
of natural persons; (iv) the genuineness of all signatures; and (v) except as
expressly stated in our opinions below with respect to the Opinion Parties, with
respect to each Person expressed to be a party to the documents submitted to us,
that (A) such Person is validly existing and in good standing under the laws of
the jurisdiction in which it was formed or incorporated and is qualified to
engage in business and in good standing in all other jurisdictions in which such
qualification is necessary, (B) such Person has or had at all relevant times all
necessary power and authority to execute, deliver and perform its obligations
under such documents, (C) the execution and delivery of, and performance of its
obligations under, such documents have been duly authorized by all necessary
action on the part of such Person, and (D) such documents have been duly
executed and delivered by or on behalf of such Person and constitute legal,
valid and binding obligations of such Person, enforceable against such Person in
accordance with their respective terms.

2. In addition, we have made such investigations of law as we have deemed
relevant and necessary as a basis for the opinions expressed below.

3. As to matters of fact relevant to the opinions expressed in this letter, we
have relied, with your permission and without any independent investigation or
inquiry, upon certificates and similar documents of governmental authorities,
upon certificates of officers and representatives of the Borrower and Pledgor
and upon the representations and warranties of the Borrower, Pledgor and other
Persons contained in the Opinion Documents.

4. Whenever in this opinion any statement is made to our “knowledge” or any
statement refers to matters “known to us,” it means that none of the attorneys
in our firm who have been directly involved in acting as special counsel to the
Opinion Parties in connection with the transactions provided for in the Utah
Documents presently have actual knowledge and conscious awareness of any fact
that would render the statement inaccurate.

5. With your permission, we have further assumed (without investigation), and to
our knowledge there are no facts inconsistent with, the following:

a. The terms and conditions of the Opinion Documents have not been amended,
modified or supplemented by any other agreement or understanding of the parties
or by a waiver of any of the material provisions of the Opinion Documents.

b. All applicable Opinion Documents will be duly filed, indexed and recorded
among the appropriate official records, as set forth below, with all fees,
charges and taxes having been paid.

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Ormat Nevada, Inc.

December 20, 2011

Page 4

 

 

 

c. All exhibits and schedules to be completed and attached to the Opinion
Documents are completed and attached as contemplated by the Opinion Documents
and all factual and other information required to accurately complete the
Opinion Documents will be inserted as necessary.

d. The descriptions in the Trust Deed of real and personal property securing the
Trust Deed are accurate to provide notice to third parties of the Liens and
security interests provided by the Trust Deed and to create an effective
contractual obligation under applicable law.

e. There has been no mutual mistake of fact, fraud, duress or undue influence in
connection with the execution or delivery of the Opinion Documents.

f. All parties have complied with any requirements of good faith, fair dealing
and conscionability.

g. The Borrower has the title or other interest in each item of property,
whether real, personal, mixed, or intangible, in which it purports to grant a
Lien or security interest under the Trust Deed.

h. Opinion Parties received consideration in the form of credit, certain
agreements on the part of Ormat, and/or other value.

i. The representations and warranties of the parties contained in the Opinion
Documents are true and accurate.

j. The real property and real property interests subject to the Trust Deed is
located in Beaver County, Utah.

k. We have assumed that the exact legal name of each Opinion Party is as set
forth in the copy of the organizational documents of such Opinion Party
certified by the Delaware Secretary of State, and we have also assumed the
accuracy of the name and address of Ormat and other factual information set
forth on the Trust Deed.

1. The Opinion Parties have rights in their respective Collateral or the power
to transfer rights in their respective Collateral to a secured party within the
meaning of Section 9-203(b)(2) of the New York UCC (Section 70A(9)(203)(2)(b)
Utah Code Annotated 1953, as amended (“UCA”).

We express no opinion in this letter regarding the laws of any jurisdiction
other than the laws of the State of Utah. We have made no investigation and we
express no opinion herein concerning any laws of any other jurisdiction, or any
city, county, municipal or other local laws within any state or the effect
thereof.

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Ormat Nevada, Inc.

December 20, 2011

Page 5

 

 

 

Opinion

Based upon and subject to the foregoing, and subject to the other assumptions,
qualifications and exceptions set forth in this letter, we are of the following
opinion:

1. The Borrower is qualified to do business and in good standing in the State of
Utah.

2. Each of the Utah Documents is a legal, valid and binding obligation of the
Borrower, enforceable in accordance with its terms.

3. The Trust Deed is in proper form for execution and recording, and upon
recording in Beaver County, Utah, will create a valid and perfected Lien in
favor of Ormat, in the real property, interests in real property and fixtures
and other collateral encumbered thereby, to the extent that a security interest
in any such collateral can be perfected by recording the Trust Deed in Beaver
County Records under Article 9 of the Utah Uniform Commercial Code (“Code”).

4. Other than filing/recording fees, there are no recording, documentary stamp,
intangible, filing, privilege, transfer or other taxes or fees that must be paid
under Utah law in connection with the execution, delivery, recordation, filing,
existence or enforcement of the Trust Deed or any Financing Document.

5. Foreclosure of the Trust Deed will not preclude the exercise of remedies
under other Financing Documents to recover any deficiency; provided, however,
under § 57-1-32 UCA, an action to recover a deficiency must be brought within
three (3) months after any sale of property under a trust deed.

6. Execution, delivery and compliance by each of the Opinion Parties with the
Opinion Documents and granting of the Liens contemplated thereunder do not and
will not violate the provisions of any Utah rule or regulation, applicable to
such Opinion Party or to our knowledge, any judgment, decree, injunction or
order of any Utah governmental or regulatory authority which by its terms is
applicable to such Opinion Party and which is known to us.

7. The interest rate charged under the Credit Agreement does not violate the
usury laws of the State of Utah.

8. We are not aware of any Utah statute or Utah case that causes us to believe
that the choice of New York law to govern the applicable Opinion Documents
(other than the Trust Deed and the EPC Contract) will not be respected and given
effect by the courts of the State of Utah.

9. We are not aware of any Utah statute or Utah case that causes us to believe
that the choice of New York courts as a venue under the applicable Opinion
Documents (other than the Trust Deed and the EPC Contract) will not be respected
and given effect by the courts of the State of Utah.

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Ormat Nevada, Inc.

December 20, 2011

Page 6

 

 

 

Limitations and Qualifications.

In addition to the assumptions and qualifications set forth above, the foregoing
opinions are also limited by the following qualifications:

A. In rendering our opinion set forth in opinion paragraph 1 above with respect
to the valid existence and good standing of the Opinion Parties, we are relying
solely on the Certificates of Existence.

B. In rendering our opinion set forth in opinion paragraph 2 above with respect
to the due execution and delivery of the Utah Documents by the Opinion Parties,
we are relying upon our examination of originals or copies, certified or
otherwise identified to our satisfaction, such Utah Documents and upon the
incumbency and signature certificates of officers and representatives of the
Opinion Parties dated the date hereof and delivered to Ormat in connection with
the Credit Agreement.

C. The validity, binding effect and enforceability of the Utah Documents are
subject to and may be limited by the effects of (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other laws affecting the
rights of creditors generally, (ii) principles of equity (whether considered in
a proceeding in equity or at law), and (iii) public policy considerations and
concepts of materiality, unconscionability, reasonableness, good faith and fair
dealing.

D. We express no opinion with respect to:

(i) any waiver of any rights or procedural protections or any defense or claim
which as a matter of law or public policy cannot be waived;

(ii) any provision of the Utah Documents purporting to waive rights conferred by
law, constitution or statute;

(iii) any provision of the Utah Documents purporting to fix evidentiary
standards or waive or modify court rules or statutes regarding litigation;

(iv) any provision of the Utah Documents allowing extra-judicial setoff in
circumstances not allowed by law;

(v) any provision of the Utah Documents stating that the determination of
records of a party shall be final, binding or conclusive;

(vi) any provision of the Utah Documents fixing, establishing, eliminating, or
prohibiting the rights or remedies of non-parties;

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Ormat Nevada, Inc.

December 20, 2011

Page 7

 

 

 

(vii) any provision of the Utah Documents which purports to entitle any Person
to specific performance of any provision thereof, injunctive relief or other
equitable relief or remedies;

(viii) any provision of the Utah Documents providing for the indemnification or
release of a party from liability for its own acts where such release or
indemnification is determined to be contrary to statute or public policy;

(ix) any provision of the Utah Documents permitting any of the non-Borrower
parties to enter upon the Property and take control of it before completion of
foreclosure or sale or before a receiver is appointed by a court of competent
jurisdiction;

(x) any provision contained in the Utah Documents allowing any party to exercise
remedial rights without notice to the Borrower or the Pledgor, as the case may
be, and opportunity for hearing or correction or any provision allowing any
party to exercise self-help or summary remedies without judicial process;

(xi) any provision of the Utah Documents providing for enforcement of a security
interest that is covered by the Code contrary to the provisions of the Code;

(xii) any provision of the Utah Documents providing for liquidated damages,
default interest, late charges, monetary penalties, prepayment or make-whole
premiums or other economic remedies to the extent such provisions are deemed to
constitute a penalty;

(xiii) any provision of the Utah Documents providing that invalid or
unenforceable provisions thereof may be severed from a Utah Document without
affecting the validity or enforceability of the remaining provisions thereof;

(xiv) any provision of the Utah Documents which requires a Person to cause
another Person to take or to refrain from taking action under circumstances in
which such Person does not control such other Person;

(xvii) any provision of the Utah Documents that states that rights or remedies
are not exclusive, that every right or remedy is cumulative and may be exercised
in addition to any other right or remedy, that the election of some particular
remedy does not preclude recourse to one or more others or that failure to
exercise or delay in exercising rights or remedies will not operate as a waiver
of any such right or remedy;

(xviii) any provision of the Utah Documents that purports to limit the liability
of any party thereto to third parties;

(xix) any waiver of objection to venue, claim of inconvenient forum;

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Ormat Nevada, Inc.

December 20, 2011

Page 8

 

 

 

(xx) any grant of set-off rights, the right to appointment of a receiver or the
appointment of any Person as an attorney-in-fact for another Person; or

(xxi) any waiver or limitation concerning mitigation of damages.

E. We express no opinion as to whether provisions in the Trust Deed and the
Pledge Agreement purporting to grant an absolute assignment of rights or
interests will be construed as effecting an absolute assignment rather than a
collateral assignment or security interest.

F. We express no opinion as to the effect of any prohibitions against assignment
that may be contained in any lease agreement (including leases of real property,
real property interests, and leases of person property).

G. We express no opinion with respect to all (i) municipal, political
subdivision (whether created or enabled through legislative action at the
federal, state, regional or local level), local and county ordinances, statutes,
administrative decisions, laws, rules and regulations, and (ii) statutes, laws,
rules and regulations relating to (a) pollution or protection of the
environment, (b) zoning, land use, building or construction, (c) operation of
any asset or property, (d) labor, employment, employee rights and benefits, or
occupational safety and health, (e) utility regulation or regulation of matters
pertaining to the acquisition, transportation, transmission, storage or use of
energy sources used in connection therewith or generated thereby, (f) antitrust,
(g) taxation and (h) securities laws, in each case with respect to each of the
foregoing, (x) as interpreted, construed or enforced pursuant to any judicial,
arbitral or other decision or pronouncement, (y) as enacted, promulgated or
issued by, or otherwise existing in effect in, any jurisdiction, including,
without limitation, any state of the United States of America and the United
States of America, and (z) including, without limitation, any and all
authorizations, permits, consents, applications, licenses, approvals, filings,
registrations, publications, exemptions and the like required by any of them.

H. We express no opinion as to the effect on our opinions arising out of the
status or activities of, or laws applicable to, any party to the Opinion
Documents (other than the Opinion Parties) or the affiliates of any party to the
Opinion Documents, and, without limiting the foregoing, we are not expressing
any opinion as to the effect of compliance or non-compliance by such parties
with any state or Federal laws or regulations applicable to the transactions
contemplated by the Opinion Documents because of the nature of any of their or
their affiliates’ businesses.

I. We express no opinion with respect to (i) the right, title or interest of the
Borrower, Pledgor or any other Person in or to any property, tangible or
intangible, (ii) except as expressly provided in opinion paragraph 3 above, the
creation, attachment, enforceability or perfection of any security interest in
any property, or (iii) the priority of any security interest.

J. To the extent that the Lien of the Trust Deed is intended to extend to
after-acquired real properties or water rights, additional filings may be
required to perfect a security interest therein.

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Ormat Nevada, Inc.

December 20, 2011

Page 9

 

 

 

K. Section 16-10a-1501 UCA requires a foreign corporation transacting business
in the State of Utah to file an application for authority to transact business
in Utah with the Utah Division of Corporations. We express no opinion as to any
consequences that may arise from your failing to file such a statement.

L. Any purported waiver by a Borrower in the Opinion Documents, prior to
default, of a right to redeem any of the collateral that is subject to the terms
of Article 9 of the Uniform Commercial Code is not effective. Section 70A-9a-624
(3) UCA.

M. Under Utah law, § 78B-6-509 UCA, the court shall have the power to (a) hear
and determine all adverse or conflicting claims to the property sought to be
condemned, and the damages; and (b) determine the respective rights of different
parties seeking condemnation of the same property.

N. A Utah court may modify or limit contractual awards of attorneys’ fees.

O. A Utah court may decline to enforce Choice of Law Provisions to the extent
that the application of New York law offends the public policy of Utah which has
a materially greater interest than the State of New York in the determination of
the issue(s) that are subject of such action or proceeding and whose law would
apply in the absence of such choice of law.

P. In making the opinion we also have assumed that the Opinion Documents
accurately reflect the complete understanding of the parties with respect to the
transactions contemplated thereby and the rights and the obligations of the
parties thereunder.

Q. We make no opinion as to any document that is referenced in or attached to
the Opinion Documents other than the Opinion Documents themselves.

R. Our opinions relating to perfection of the security interests are subject to
federal bankruptcy law and federal and state insolvency, reorganization,
avoidable transfers, moratorium and other laws affecting the validity or
enforcement of creditors’ rights generally.

This opinion letter deals only with the specific legal issues expressed herein,
and you should not infer any opinion that is not explicitly stated herein from
any matter stated in this opinion letter. This opinion letter is rendered to you
and speaks only as of the date hereof, and we do not undertake to advise you or
any other Person with regard to any change after the date hereof in the
circumstances or law that may bear on the matters set forth herein or which may
bear on the conclusions and other matters expressed in this opinion letter.

The opinions set forth in this letter are limited to the internal laws of the
State of Utah. We express no opinion in this letter to the laws of any other
jurisdiction.

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Ormat Nevada, Inc.

December 20, 2011

Page 10

 

 

 

This opinion is addressed to you and is solely for your benefit and only in
connection with the above matter. This opinion may not be relied upon by any
Person for any other purpose or furnished to, circulated, quoted or relied upon
by any other Person for any purpose without our prior written consent (which may
be given or withheld in our sole discretion).

 

Very truly yours, COHNE, RAPPAPORT & SEGAL LOGO [g261816pg_118.jpg] LOGO
[g261816pg_118a.jpg]

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LOGO [g261816pg_119.jpg]     HUNTON & WILLIAMS LLP    

200 PARK AVENUE

NEW YORK, NY 10166-0005

   

TEL     212 - 309 - 1000

FAX    212 - 309 - 1100

 

December 20, 2011

Ormat Nevada Inc.

6255 Neil Road

Reno, Nevada 89511-1136

 

Re: Thermo No. 1 Repowering

Ladies and Gentlemen:

We have acted as special Federal bankruptcy counsel to Thermo No. 1, BE-01, LLC,
a Delaware limited liability company (the “Borrower”) in connection with the
Credit Agreement, dated as of December 19, 2011 (the “Credit Agreement”),
between the Borrower and Ormat Nevada Inc., a Delaware corporation (“Ormat”). We
also acted as Federal bankruptcy counsel to the debtors in the Raser
Technologies, Inc. jointly administered Chapter 11 bankruptcy cases in the
United States Bankruptcy Court for the District of Delaware (the “Bankruptcy
Court”). Case No. 11-11315 (KJC) (the “Bankruptcy Cases”). At the request of the
Borrower, this opinion is provided in accordance with Section 4.01(f)(iii) of
the Credit Agreement. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to them in the Credit Agreement.

I. FACTUAL BACKGROUND

For purposes of our opinions set forth below, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of such
documents, corporate records, certificates of public officials and other
instruments as we have deemed necessary or appropriate as a basis for the
opinions set forth herein, including, without limitation:

 

  (i) the Credit Agreement;

 

  (ii) the Security Agreement, dated as of December 19, 2011 (the “Security
Agreement”), between the Borrower and Ormat;

 

  (iii) the Pledge Agreement, dated as of December 19, 2011 (the “Pledge
Agreement”), between Intermountain Renewable Power, LLC, a Delaware limited
liability company (the “Pledgor”), and Ormat;

ATLANTA     AUSTIN     BANGKOK     BEIJING     BRUSSELS     CHARLOTTE    
DALLAS     HOUSTON     LONDON     LOS ANGELES

McLEAN     MIAMI     NEW YORK     NORFOLK     RALEIGH     RICHMOND     SAN
FRANCISCO     TOKYO     WASHINGTON

www.hunton.com

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Ormat Nevada Inc.

December 20, 2011

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  (iv) the Leasehold Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing, dated as of December 19, 2011, by the Borrower in favor of
Ormat;

 

  (v) the Engineering, Procurement and Construction Contract, dated as of
December 19, 2011, between the Borrower and Ormat (the “EPC Contract”); and

 

  (vi) the documents filed on the docket in the Bankruptcy Cases as of the date
hereof.

The documents specified in items (i) through (v) above are referred to herein as
the “Opinion Documents”. The Borrower and the Pledgor are referred to herein as
the “Opinion Parties”. As used in this letter, “Federal” refers to the federal
government of the United States of America.

II. ASSUMPTIONS

In such examination and in rendering the opinions expressed below, we have
assumed, without any independent investigation or inquiry: (i) the authenticity
of all documents submitted to us as originals; (ii) the conformity to authentic
original documents of all documents submitted to us as copies; (iii) the legal
capacity of natural persons, (iv) the genuineness of all signatures; and
(v) with respect to each Person expressed to be a party to the documents
submitted to us, that (A) such Person is validly existing and in good standing
under the laws of the jurisdiction in which it was formed or incorporated and is
qualified to engage in business and in good standing in all other jurisdictions
in which such qualification is necessary, (B) such Person has or had at all
relevant times all necessary power and authority to execute, deliver and perform
its obligations under such documents, (C) the execution and delivery of, and
performance of its obligations under, such documents have been duly authorized
by all necessary action on the part of such Person, and (D) such documents have
been duly executed and delivered by or on behalf of such Person and constitute
legal, valid and binding obligations of such Person, enforceable against such
Person in accordance with their respective terms.

In addition, we have made such investigations of law as we have deemed relevant
and necessary as a basis for the opinions expressed below. As to matters of fact
relevant to the opinions expressed in this letter, we have relied, without any
independent investigation or inquiry, upon certificates and similar documents of
governmental authorities, upon certificates of officers and representatives of
the Borrower and Pledgor and upon the representations and warranties of the
Borrower, Pledgor and other Persons contained in the Opinion Documents.

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Ormat Nevada Inc.

December 20, 2011

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Statements in this opinion which are qualified by the expression “to our
knowledge”, “of which we have knowledge”, “known to us” or other expressions of
like import are limited solely to the current actual knowledge of the individual
attorneys in this firm who have devoted substantive attention to the
representation of the Borrower in connection with the negotiation, execution and
delivery of the Opinion Documents. We have not undertaken any independent
investigation to determine the accuracy of any such statement, and any limited
inquiry undertaken by us during the preparation of this opinion should not be
regarded as such an investigation.

We express no opinion in this letter regarding the laws of any jurisdiction
other than the Federal bankruptcy laws of the United States of America (Title 11
of the United States Code) as in effect on the date hereof (the “Federal
Bankruptcy Laws”). We have made no investigation and we express no opinion
herein concerning any other laws of any jurisdiction, including, without
limitation, of any state, city, county, municipal or other local laws within any
state or the effect thereof.

III. OPINIONS

Based upon and subject to the foregoing, and subject to the other assumptions,
qualifications and exceptions set forth in this letter, we are of the following
opinion:

1. Borrower and Pledgor each was a debtor in the Bankruptcy Cases.

2. On August 30, 2011, the Bankruptcy Court entered an order (the “Confirmation
Order”) confirming the Third Amended Plan of Reorganization of Raser
Technologies, Inc. and its Affiliated Debtors (the “Plan”).

3. The Confirmation Order is final and non-appealable.

4. The Plan became effective on September 9, 2011 (the “Effective Date”).

5. Pursuant to the Plan and the Confirmation Order, as of the Effective Date,
all Assets (as defined in the Plan) of the Borrower and the Pledgor were vested
in the Borrower and the Pledgor, respectively, in each case free and clear of
all Liens.

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Ormat Nevada Inc.

December 20, 2011

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6. The execution, delivery and performance by each Opinion Party of the Opinion
Documents to which it is a party do not require any prior approval by the
Bankruptcy Court.

7. The execution and delivery by each of the Opinion Parties of the Opinion
Documents to which it is a party do not violate the Confirmation Order or any
other order of the Bankruptcy Court entered in the Bankruptcy Cases and known to
us.

8. Part II of Schedule 3.06 of the Credit Agreement accurately identifies the
disputed unpaid Administrative Claims asserted against the Borrower in the
Bankruptcy Cases.

9. Section 6.5 of the Plan and Paragraph 46 of the Confirmation Order provide
that on the Effective Date all of the Debtors’ right, title and interests in the
PWPS Claims (as defined in the Plan) were transferred to, and vested in, the
Litigation LLC (as defined in the Plan).

IV. QUALIFICATIONS

We do not purport to express any opinion herein other than the opinions
expressly set forth in Section III above, nor do we purport to express an
opinion herein on any laws other than the Federal Bankruptcy Laws. We express no
opinion herein with respect to the right, title or interest of the Borrower,
Pledgor or any other Person in or to any property, tangible or intangible.

This opinion letter deals only with the specific legal issues expressed herein,
and you should not infer any opinion that is not explicitly stated herein from
any matter stated in this opinion letter. This opinion letter is rendered to you
and speaks only as of the date hereof, and we do not undertake to advise you or
any other Person with regard to any change after the date hereof in the
circumstances or law that may bear on the matters set forth herein or which may
bear on the conclusions and other matters expressed in this opinion letter.

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Ormat Nevada Inc.

December 20, 2011

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This opinion letter is rendered solely to you in connection with the above
matter. This opinion letter may not be relied upon for any other purpose or
relied upon by any other Person without our prior written consent.

 

Very truly yours, LOGO [g261816pg_108.jpg]

07908/09010

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SCHEDULE 4.02(d) – Project Documents Requiring Consent to

Assignments from the Applicable Counterparty on the Phase Two Date

To be obtained per Section 4.02(d):

 

  1. Power Purchase Agreement

 

  2. SITLA Lease (See Exhibit B-5)

 

  3. Minersville Lease

 

  4. O&M Agreement

The Company shall use commercially reasonable efforts to obtain fully executed
Consents to Assignment with respect to:

 

  1. Interconnection Agreement

 

  2. MES Agreement

 

  3. Exxon Mobil Lease

 

  Schedule 4.02(d)   Page 1

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SCHEDULE 4.03(e) – Project Documents Requiring Consent to

Assignments from the Applicable Counterparty on the Phase Three Date

 

  1. BLM ROW

 

  Schedule 4.03(e)   Page 1

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SCHEDULE 5.05(b) – Specified Collateral

1. Geothermal Resources Lease, effective as of May 23, 2008, between
Intermountain Renewable Power, LLC and Mark and Cindy Whitney, as landlords, as
subsequently assigned to Thermo No.1 BE-01, LLC on August 27, 2008.

2. Geothermal Energy Lease, ML-50773, as amended and restated, effective as of
April 1, 2007, between Intermountain Renewable Power, LLC and the Utah School
and Institutional Trust Lands Administration, State of Utah, as subsequently
assigned to Thermo No. 1 BE-01 LLC on August 12, 2008.

3. Geothermal Energy Lease, ML-51193, effective as of March 1, 2008, between
Raser Technologies, Inc. and the Utah School and Institutional Trust Lands
Administration, State of Utah, as subsequently assigned to Thermo No. 1 BE-01
LLC on August 12, 2008.

4. Geothermal Energy Lease, ML-50856, effective as of June 1, 2007, between
Raser Technologies, Inc. and the Utah School and Institutional Trust Lands
Administration, State of Utah, as subsequently assigned to Thermo No. 1 BE-01
LLC on August 12, 2008.

 

  Schedule 5.05(b)   Page 1